Flooding in Nigerian villages is just one of the effects of climate change that the country will have to address in drawing up its “intended nationally determined contributions” (INDCs) for the U.N. Climate Conference in Paris in December: Credit: Courtesy of NDWPD, 2011

By Ini Ekott
LAGOS, Aug 2 2015 (IPS)

Nigeria seems in no haste to unveil its climate pledge with just four months to go before the U.N. Climate Conference scheduled for December in Paris.

However, unlike Gabon, Morocco, Ethiopia and Kenya – the only African nations yet to submit their commitments – Nigeria has just commissioned a committee of experts to draw up targets and responses for its “intended nationally determined contributions” (INDCs).

INDCS are the post-2020 climate actions that countries say they will take under a new international agreement to be reached at the U.N. Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) in Paris, and to be submitted to the United Nations by September."The whole exercise [of preparing INDCs] will consider some priority sectors, look at the baseline and look at our needs for development and see what we can put on the table that we are going to strive to mitigate in terms of greenhouse gases” – Samuel Adejuwon, Nigeria’s Federal Ministry of Environment

Ahead of that date, Nigeria says its goals are clear: balancing post-2020 greenhouse gas (GHG) emission cut projections with its development peculiarities, according to Samuel Adejuwon, deputy director of the Federal Ministry of Environment’s Department of Climate Change in Abuja.

Nigeria is Africa’s fourth largest emitter of CO2, and there is no doubt climate change is already a problem it faces.

From the north, encroachment of the Sahara is helping to fuel a bloody insurgency by the jihadist group Boko Haram, as well as resource conflict between farmers and pastoralists in its central region, while the rise in ocean levels and flooding are affecting the south.

In a report issued in October 2014, the Mapelcroft global analytics company said that Nigeria, along with Bangladesh, Ethiopia, India and the Philippines, were the countries facing the greatest risk of climate change-fuelled conflict today.

Nigeria’s hopes for slashing its emission levels as part of its INDCs face several tests.

One is that for an economy almost solely dependent on oil – which accounts for a major portion of its 500 billion dollar gross domestic product (GDP), Africa’s highest – the commitment it takes to Paris will reflect how jettisoning fossil fuel cannot be an urgent priority and why doing so will require significant time and resources.

“The whole exercise will consider some priority sectors, look at the baseline and look at our needs for development and see what we can put on the table that we are going to strive to mitigate in terms of greenhouse gases,” says Adejuwon.

Another test is Nigeria’s energy shortage. The country produces about 4,000 megawatts for 170 million people, leaving much of the population reliant on wood, charcoal and waste to fulfil household energy needs such as cooking, heating and lighting.

In 2014, Nigerians used at least 12 million litres of diesel and petrol every day to drive back-up generators, according to former power Minister Chinedu Nebo. The country’s daily petrol consumption (cars included) stands at about 40 million litres, according to the state oil company, Nigerian National Petroleum Corporation.

Cutting the level of pollution that this consumption causes will require big investments in renewable and cleaner energy, says Professor Olukayode Oladipo, a climate change expert and one of three consultants drawing up the INDCs for the government.

Last year, former finance minister Ngozi Okonjo-Iweala said the country needed 14 billion dollars each year in energy investments and related infrastructure.

Oladipo argues that the key to the issue lies in striking a balance between a future of lower greenhouse emissions and immediate developmental realities.

“Every country is now exploring how to use less energy … in an efficient manner, how to rely on renewable energy sources.” In Nigeria, we are looking at “how to be able to drive our economy through reduced energy consumption without actually reducing the rate at which our economy is growing.”

Last year, minister of power Chinedu Nebo said that while solar panels were welcome for use in shoring up generation in distant communities, the government will deploy coal in addition to the hydro power currently in use.

“There is no doubt that the potential is there. Clean coal technology can give us good electricity and minimum pollution at the same time,” he said.

Insecurity

Oladipo also stresses that besides fuel, Nigeria’s climate plans will focus on agriculture, partly to diversify from oil and also as a response to growing resource conflict.

“We are not saying it is the only determinant of crisis,” he says of climate change stoking conflict over resources, “but at least it is adding to the degree and the frequency of the occurrence of these conflicts.

Apart from Boko Haram activities in the north which have been responsible for at least 20,000 deaths, clashes between pastoralists and farmers over land has killed thousands in Nigeria’s central region in recent years.

In the latest attack in May this year, herdsmen from the Fulani tribe slaughtered at least 96 people in the central state of Benue, Nigeria’s Punch newspaper reported.

The government agrees that climate change is one of the causes of the frequent bloodletting, alongside factors like urbanisation, but not much has been done to address the problem.

Oladipo says he believes that Nigeria’s new leader, Muhammadu Buhari, will do more to address fundamental climate change issues, point out that in his inaugural address on May 29, Buhari pledged to be a more “forceful and constructive player in the global fight against climate change.”

However, Nnimmo Bassey of the Health of Mother Earth Foundation argues that proposals put forward by Nigeria and Africa can barely be achieved if the developed nations – the biggest polluters – fail to act more to meet their commitments and cut down on their emissions.

“Nigeria should insist that industrialised nations cut emissions at source and not place the burden on vulnerable nations,” says Bassey.

Urging action from those nations, including the United States, will form a key element of Nigerian and African INDCs, adds Oladipo.

Edited by Phil Harris    

By Daya Thussu
LONDON, Jul 22 2015 (IPS)

The formal opening of the BRICS Bank in Shanghai on Jul. 21 following the seventh summit of the world’s five leading emerging economies held recently in the Russian city of Ufa, demonstrates the speed with which an alternative global financial architecture is emerging.

The idea of a development-oriented international bank was first floated by India at the 2012 BRICS summit in New Delhi but it is China’s financial muscle which has turned this idea into a reality.

Daya Thussu

The New Development Bank (NDB), as it is formally called, is to use its 50 billion dollar initial capital to fund infrastructure and developmental projects within the five BRICS nations – Brazil, Russia, India, China and South Africa – though it is also likely to support developmental projects in other countries.

According to the 43-page Ufa Declaration, “the NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS and other developing countries and emerging market economies and for enhancing economic cooperation between our countries.”

The NDB is led by Kundapur Vaman Kamath, formerly of Infosys, India’s IT giant, and of ICICI Bank, India’s largest private sector bank. A respected banker, Kamath reportedly said during the launch that “our objective is not to challenge the existing system as it is but to improve and complement the system in our own way.”

The launch of the NDB marks the first tangible institution developed by the BRICS group – set up in 2006 as a major non-Western bloc – whose leaders have been meeting annually since 2009. BRICS countries together constitute 44 percent of the world population, contributing 40 percent to global GDP and 18 percent to world trade.“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way” – Kundapur Vaman Kamath, head of the New Development Bank (NDB)

In keeping with the summit’s theme of ‘BRICS partnership: A powerful factor for global development’, the setting up of a developmental bank was an important outcome, hailed as a “milestone blueprint for cooperation” by a commentator in The China Daily.

The Chinese imprint on the NDB is unmistakable. The Ufa Declaration is clear about the close connection between the NDB and the newly-created Asian Infrastructure Investment Bank (AIIB), also largely funded by China. It welcomed the proposal for the New Development Bank to “cooperate closely with existing and new financing mechanisms including the Asian Infrastructure Investment Bank.” China is also keen to set up a regional centre of the NDB in South Africa.

If economic cooperation remained the central plank of the Ufa summit, there is also a clear geopolitical agenda.

The Global Times, China’s more nationalistic international voice, pointed out that the establishment of the NDB and the AIIB will “break the monopoly position of the International Money Fund (IMF) and the World Bank (WB) and motivate [them] to function more normatively, democratically, and efficiently, in order to promote reform of the international financial system as well as democratisation of international relations.”

The reality of global finance is such that any alternative financial institution has to function in a system that continues to be shaped by the West and its formidable domination of global financial markets, information networks and intellectual leadership.

However, China, with its nearly four trillion dollars in foreign currency reserves, is well-placed to attempt this, in conjunction with the other BRICS countries. China today is the largest exporting nation in the world, and is constantly looking for new avenues for expanding and consolidating its trade relations across the globe.

China is also central to the establishment of the Shanghai Cooperation Organisation (SCO), a Eurasian political, economic and security grouping whose annual meeting coincided with the seventh BRICS summit. Founded in 2001 and comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the SCO has agreed to admit India and Pakistan as full members.

Though the BRICS summit and the SCO meeting went largely unnoticed by the international media – preoccupied as they were with the Iranian nuclear negotiations and the ongoing Greek economic crisis – the economic and geopolitical implications of the two meetings are likely to continue for some time to come.

For host Russia, which also convened the first BRICS summit in 2009, the Ufa meeting was held against the background of Western sanctions, continuing conflict in Ukraine and expulsion from the G8. Partly as a reaction to this, camaraderie between Moscow and Beijing is noticeable – having signed a 30-year oil and gas deal worth 400 billion dollars in 2014.

Beijing and Moscow see economic convergence in trade and financial activities, for example, between China’s Silk Road Economic Belt initiative for Central Asia and Russia’s recent endeavours to strengthen the Eurasian Economic Union. The expansion of the SCO should be seen against this backdrop. Moscow has also proposed setting up SCO TV to broadcast economic and financial information and commentary on activities in some of the world’s fastest growing economies.

Whatever the outcome, it is clear that a new international developmental agenda is being created, backed by powerful nations, and to the virtual exclusion of the West.

China is the driving force behind this. Despite its one-party system which limits political pluralism and thwarts debate, China has been able to transform itself from a largely agricultural self-sufficient society to the world’s largest consumer market, without any major social or economic upheavals.

China’s success story has many admirers, especially in other developing countries, prompting talk of replacing the ‘Washington consensus’ with what has been described as the ‘Beijing consensus’. The BRICS bank, it would seem, is a small step in that direction.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Roberto Azevêdo
GENEVA, Jun 29 2015 (IPS)

The latest report by the World Trade Organisation (WTO) on G20 trade measures shows a slight deceleration in the application of new trade-restrictive measures by G20 economies, with the average number of such measures applied per month lower than at any time since 2013.

According to the thirteenth such WTO report, issued on Jun. 15, G20 economies had applied 119 new trade-restrictive measures since mid-October 2014, an average of 17 new measures per month over the period.

Roberto Azevêdo

A slight decrease in the number of trade remedy investigations by G20 economies has also contributed to this overall figure.

But it is not yet clear that this deceleration will continue and the WTO calls on G20 leaders to show continued vigilance and reinforced determination towards eliminating existing trade restrictions.

The longer term trend remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise.

Of the 1,360 restrictions recorded by this exercise since 2008, less than one-quarter have been eliminated, leaving the total number of restrictive measures still in place at 1,031. Therefore, despite the G20 pledge to roll back any new protectionist measures, the stock of these measures has risen by over seven percent since the last report.

The broader international economic context also supports the need for continuing vigilance and action. According to the WTO’s most recent forecast (14 April 2015), growth in the volume of world merchandise trade should increase from 2.8 percent in 2014 to 3.3% percent 2015 and further to four percent in 2016, but remaining below historical averages.“The longer term trend [vis-à-vis protectionism] remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise”

The overall response to the 2008 financial crisis has been more muted than expected when compared with previous crises. The multilateral trading system has proved an effective backstop against protectionism.

During this period, G20 economies also continued to adopt measures aimed at facilitating trade, both temporary and permanent in nature.

These developments confirm that G20 economies overall have shown a degree of restraint in introducing new trade restrictions. However, it is not yet clear that the deceleration in the number of measures introduced will continue in future reporting periods. It is also relevant that the slow pace of removal of previous restrictions means that the overall stock of restrictive measures is continuing to increase.

The broader international economic context also supports the need for continuing vigilance and action.

Trends in world trade and output have remained mixed since the last monitoring report, as merchandise trade volumes and GDP growth picked up in the second half of 2014 but appear to have slowed in the first quarter of 2015.

Economic activity remained uneven across countries as the United States and China slowed in the first quarter, while growth in the Euro area and Japan picked up.

Plunging oil prices and strong exchange rate fluctuations, including an appreciation of the U.S. dollar and a depreciation of the Euro contributed uncertainty to the economic outlook.

Lower prices for oil and other primary commodities were expected to provide a boost to importing economies, but reduced export revenues weighed heavily on commodity exporters.

In light of these developments, our most recent forecast (14 April 2015) predicted a continued moderate expansion of trade in 2015 and 2016, although the pace of recovery was expected to remain below historical averages.

In the area of government procurement, work from the Organisation for Economic Cooperation and Development (OECD), identifying 65 measures implemented since the financial crisis, suggests that discriminatory government procurement policies have become increasingly popular and potentially affect 423 billion dollars of government procurement in the implementing economies.

This report shows that G20 economies implemented 48 new general economic support measures during the period under review, with the majority targeting the manufacturing and agricultural sectors through various incentive schemes, often, but not exclusively, in the context of exports.

The overall assessment of this thirteenth report on G20 trade measures is that the continuing
increase in the stock of new trade-restrictive measures recorded since 2008 remains of concern in the context of an uncertain global economic outlook.

Individually and collectively, the G20 must show leadership and deliver on the pledge to refrain from implementing new measures taken for protectionist purposes and to remove existing ones. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Mismanagement of India’s vast river system has caused severe water stress in urban and rural landscapes, with many water bodies too polluted for human use. Credit: Malini Shankar/IPS

By Anantha Duraiappah
NEW DELHI, Dec 19 2014 (IPS)

Virtually all countries use Gross Domestic Product (GDP) as their primary measurement of economic progress and overall societal progress. At the same time, countries express allegiance to the doctrine of sustainable development. This exposes an obvious disconnect.

GDP measures the value of all the goods and services a country produces. Thus, maximising production is the best way of achieving high GDP. And increasing production is fine as long as it is within one’s means to maintain that production.When climate change, oil price fluctuations and total factor productivity is included, less than 50 percent of the 140 countries assessed are on a sustainable trajectory; more than half are consuming beyond their means.

But relate this in terms of personal spending patterns: our list of desirables are seemingly infinite –- the majority of us have insatiable appetites constrained only by personal budgets.

You can increase your spending by taking on debt, but this too is determined by your ability to pay. We are constrained!

At the country level, the situation is no different. A nation can’t produce goods and services without the required assets. It can borrow or buy from other countries but again, consumption is constrained by an ability to pay, which in a well-behaving market is determined by national assets.

Granted, the system of national accounts upon which GDP is computed tracks changes in capital assets such as infrastructure, transport and communications, among other types of national capital produced.

But the skills and education of people determine a country’s output. So too do natural assets, like land, minerals, fossil fuels, and forests, and the many other goods and services nature offers as direct production inputs.

Where are these assets accounted for in GDP?

The Inclusive Wealth Report, first introduced at the Rio+20 summit and welcomed by The Economist magazine as an ambitious effort, provides fresh insights.

This year’s second edition, IWR2014, created in a collaboration with the UN Environment Programme and the UN University, provides a comprehensive analysis of 140 countries, up from 20 two years ago. And the results are sobering, to say the least.

When climate change, oil price fluctuations and total factor productivity is included, less than 50 percent of the 140 countries assessed are on a sustainable trajectory; more than half are consuming beyond their means.

A key factor, according to the report: a lack of effort in promoting creativity and innovation, primarily in developed countries.

As well, the 2014 report further substantiates an earlier finding: Human capital in a country’s asset base is most highly valued by policymakers, followed by natural capital. Produced capital comes in third.

What does this mean?

Using a combination of market prices, when appropriate, and social prices when no market prices are available or are imperfect, the data shows people in most countries place highest value on human capital, key to which is education.

This is followed by natural capital — energy sources and timber, for example — but also the many ecosystem services nature provides to humankind.

Using these values, the IWR2014 report finds that the produced capital our national accounts help to track and manage only represents 18 percent of the total value of a country’s asset base.

In other words, some 82 percent of a nation’s productive base — its “inclusive” wealth — is not reflected in national accounts. This simply makes no economic sense. And, as the popular saying goes, “you manage what you measure.”

The remedy?

Let’s build momentum to revise the system of national accounts, expanding it to include education and natural resources as part of the core accounts.

While there has been some movement to develop satellite accounts for these categories, the scale of their contribution to the asset base of an economy makes it imperative that they be an integral part of core accounts. They can no longer be treated as externalities.

Developing inclusive wealth accounts is complex and challenging, involving some strong assumptions and projections of the future flows of existing asset bases for our offspring and theirs. Despite this degree of uncertainty, initial reactions from national statisticians have been positive.

The former prime minister of India, Manmohan Singh, a prominent economist, established a high level panel under his national statistics office and the intellectual leadership of Cambridge economist Sir Partha Dasgupta to explore the development of inclusive wealth accounts.

The initial report was a innovative and intellectually robust national document identifying possible actions over the short, medium and long terms.

If a country such as India with its myriad challenges can acknowledge such a need, every country can embrace the challenge and start to revise its system of national accounts.

Edited by Kitty Stapp

Excerpt:

David Kamau on his farm in Nyeri County, Central Kenya. Although he now grows carrots for sale in addition to maize, he says his efforts are yet to pay off. Credit: Miriam Gathigah/IPS

By Miriam Gathigah
NAIROBI, Dec 17 2014 (IPS)

David Kamau is a small-scale maize farmer in Nyeri, Central Kenya, some 153 kms from the capital Nairobi. He recently diversified into carrot farming but is still not making a profit.

He says that inputs cost too much and if this trend continues he will sub-divide and sell his five hectares.

This is the story of many small-scale farmers in this East African nation, where agriculture accounts for about one-quarter of the Gross Domestic Product (GDP). But small-scale farmers – accounting for about 75 percent of total agricultural produce – barely break even.

“A 150 kg bag of carrot is now going for about 27 dollars, up from 22 dollars, but as prices go up, so does the cost of inputs,” says Kamau.“The growth of both urban and rural slums is an indication that more people are falling on hard times” – Dinah Mukami of the Bunge la Mwananchi pro-poor social movement

According to the Ministry of Agriculture, an estimated five million out of about eight million Kenyan households depend directly on agriculture for their livelihoods. Yet agriculture fails to provide an adequate return to farmers because their sector is significantly underfunded, explains Jason Braganza, an economic analyst based in Nairobi.

The percentage of the budget for the agricultural sector is 2.4 percent, down 0.6 percent from the 3 percent in the 2012/2013 budget and well below the threshold of the 2003 African Union Maputo Declaration on Agriculture and Food Security, which mandated that at least 10 percent the national budget should be allocated to agriculture.

The result, says Kamau, is that “farmers are slowly moving out of the farms and trying other economic ventures, Central Kenya used to be a breadbasket but farmlands are being replaced by residential and commercial complexes.”

Farming is not the only sector feeling an economic downslide. Small businesses in Kenya are faced with a lack of essential business support services, especially financial services. Two-thirds of Kenyans do not have access to basic financial services such as banking accounts.

“The growth of both urban and rural slums is an indication that more people are falling on hard times,” according to Dinah Mukami of the Bunge la Mwananchi [People’s Parliament] pro-poor social movement.

She says that the group is planning to hold the government responsible regarding the use of the information in the ‘Socio-Economic Atlas of Kenya’ which the government released last month. The report exposes significant disparities in poverty levels across the country.

“The Atlas is a powerful tool, but whether the government will use the information to change lives and improve living standards remains to be seen,” she says.

Felix Omondi, a resident of Kibera, a division of Nairobi considered the largest slum in Africa, and a member of the Unga Revolution, a local activist group, is one of those who believes that the Atlas is doing some good.

He told IPS that that a programme is under way to upgrade slums and said that this is “one of the ways that the government is using the Atlas to improve the lives of people in the slums.”

In the last three months, the government has been working with residents of the slums to establish income-generating projects and provide basic amenities such as toilets, lighting and drainage.

At least 3,000 youths in Kibera will benefit from these projects. Omondi, a beneficiary, says that he is running one of the posho (corn meal) mills set up by the government to generate income.

Kenya now officially a “middle-income country”

Meanwhile, in autumn the news came out that Kenya had seen its economy grow 25 percent after statistical revision and is now officially a “middle-income country”. A few months ago, a similar type of revision brought Nigeria’s economy to the top of African countries in terms of the size of the economy, surpassing South Africa for the first time.

A growing middle class population is an important driver of this growth, but what does that middle class look like? The recently revised Kenyan figures indicate that the Gross National Income (GNI) per capita is 1,160 dollars against the World Bank’s “middle income” threshold of 1,036 dollars.

The latest income-distribution indicators for Kenya (which date back to 2005) show the following:

• 45.9 percent of the population was at the national poverty line;
• The income share held by the top 10 percent was 38 percent.

This out-of-date, official information excludes the informal economy, observes Africa Arino, professor of strategic management at the IESE Business School in Spain.

“A taxi driver makes KES 15,000 a month (about 178 dollars or 132 euro), and pays KES 3,500 (close to 25 percent of his income) to rent a room where he lives with his wife and two children,” Arino explains.

“They don’t have a kitchen or a bathroom: these are facilities shared with others in the same building lot. His income is pretty much the average salary of a driver, according to the Kenya Economic Survey 2014. Is he middle class?”

According to Braganza, one of the main challenges facing Kenya is that while the country’s economic growth is real and sustainable, the structure of the economy has remained unchanged. Resources have not shifted into the most productive sectors of the economy which would increase overall productivity and an increase in remunerative employment.

Braganza says that for people to feel the trickledown effect of the economic growth, there must also be structural transformation. “There is a need for more investment in the more productive sectors, as well as investment in emerging sectors. This will contribute towards a reduction in unemployment and poverty.”

(Edited by Phil Harris)

By Manuel F. Montes
GENEVA, Nov 12 2014 (IPS)

As the international community wades into the political discussions regarding the alternatives to the Millennium Development Goals (MDGs) after 2015 and the design of the Sustainable Development Goals (SDGs) as mandated by the Rio+20 conference, it is timely to consider the question of whether development is a matter mostly of individual effort on the part of nation-states or whether there are elements in the international economic system that could serve as significant obstacles to national development efforts.

If there are obstacles in the international economic system, it is important that the post-2015 development agenda and the SDGs address the question of the elimination or the reduction of these obstacles.

Manuel F. Montes

The limited number of successfully developing countries since the 1950s has provoked a debate over whether the success of these countries required their success in eluding international obstacles to development.

The question is to evaluate features of the international system on the basis of how these features are conducive to enabling long-term investment toward economic diversification.

Terminologies of previous development orthodoxies litter the development literature – import substitution, industrialisation, basic needs, structural adjustment, Washington Consensus and Millennium Development Goals (MDGs).

Each of these orthodoxies tended to be a reaction to perceived weaknesses or missing elements from the immediately previous one. The most recent orthodoxy, as exemplified by the MDGs, is that development is about poverty eradication.

But poverty eradication is an overly narrow, possibly misleading, perspective on development.“Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment”

Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment.

The association of development with poverty reduction created for the donor community the pride of place in economic policy in developing countries.

But this place can be at the cost of reducing the responsibility of donor countries in helping to maintain an enabling international environment for development in trade, finance, human resource development and technology.

In the MDGs, these issues are crammed into “MDG-8”, the so-called global partnership for development, with a very selective and poorly defined set of targets.

Development requires not just higher levels of income, nutrition, education, and health outcomes but in the first place involves higher levels of productivity and capabilities.

Higher levels of productivity and capabilities are possible only with structural transformation of the economy.

In turn, in most societies, according to a report by the Secretary-General of the U.N. Conference on Trade and Development (UNCTAD), such a structural transformation has been “associated with a shift of the population from rural to urban areas and a constant reallocation of labour within the urban economy to higher-productivity activities.”

Structural transformation is only possible with substantial and sustained investment over decades in new activities and products, not just in anti-poverty programmes.

Where the international economic system is hostile to investment in new, productivity enhancing economic activities is where its elements create obstacles to development.

One example of an externally based obstacle is aid volatility which has been shown to have highly negative impacts on macroeconomic performance and domestic investment.

Capital and technological investments are required to overcome the enormous productivity gap between developing and developed countries which characterises the world economy.

In 2008, a ratio of the average Gross National Income (GNI) per worker in the countries of the Organisation for Economic Cooperation and Development (OECD) versus those in the least developed countries (LDCs) was 22:1 in favour of the OECD countries.

This imbalance has worsened by a factor of five in comparison to the earliest days of capitalist development. In the nineteenth century, taking the Netherlands and the United Kingdom as the richest countries and Finland and Japan as the poorest, the productivity gap was only between 2 to 1 and 4 to 1.

The international economic system is lacking crucial mechanisms for delivering long-term, stable resources required by developing countries to upgrade their capabilities.

Dependence on commodity exports sustains the productivity gap between developed and developing countries.

Abundant global liquidity and growing trade imbalances fuelled a commodity boom in the 2000s which benefited many developing countries, including many LDCs.

All previous global liquidity booms had ended with serious economic crises in developing countries. The more recent commodity price boom did not introduce an enduring improvement in macroeconomic balances, especially for low-income countries (LICs).

While in the 2000s LDCs experienced the strongest growth rates since 1970s, according to UNCTAD, more than one-quarter of LDCs actually saw GDP per capita decline or grow slowly in the 2002-2007 global boom.

Even the middle income region of Latin America presents evidence of insignificant structural improvement in fiscal and current account balances.

Previous commodity boom periods had similarly not been an occasion for structural change in LDCs. UNCTAD suggests that between the 1970s and 1997, manufacturing as a proportion of GDP increased by less than two percentage points in LDCs as a group, a period which saw various episodes of commodity and global liquidity booms.

When considering LDCs from Africa alone and including Haiti, manufacturing fell from 11 to 8 percent during the same period.

Developing countries had extensively liberalised their trade regimes in the 1980s. In the aftermath, UNCTAD finds that some LDCs have more open trade regimes than other developing countries, and others are more open than even developed countries.

These policies had been intended to facilitate economic diversification. Instead of the expected outcome, greater trade liberalisation has been accompanied by greater concentration in the structure of exports.

The international economic system labours under the constraint that the highest decision-making bodies in key institutions, such as the International Monetary Fund (IMF), do not provide sufficient voting weight and policy influence to countries most affected by their operations.

One effort under way but under enormous political obstruction is to update voting weights in line with the changed economic structure. Even the G20, where important developing countries sit, has been unable to advance progress. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

*  Click here for the Research Paper on which this column is based.

Excerpt:

By Hazel Henderson
ST. AUGUSTINE, Florida, Aug 1 2013 (IPS)

As of Aug. 1, 2013, the U.S. Bureau of Economic Analysis (BEA) finally stepped into our new 21^st century. Gross Domestic Product (GDP) will now include much of the intangible production and services which actually make up some 70 percent of mature 21^st century economies, such as software, research and development, entertainment, trademarks, copyrights, design and other creative innovation.

Thus U.S. GDP rose 1.7 percent (with these changes adding .41 percent) in the second quarter of 2013 while the revision added 0.93 percent of the 1.1 percent increase reported for the first quarter. So far, the shift of these intangibles from “costs” to “investments” is slight, and it will be revised again on Aug. 29.

For decades, critics like me had urged modernising GDP still stuck in the early materialistic Industrial Era, counting manufacturing and obsessed with goods you could drop on your foot.

Hazel Henderson

For fifty years, services and less tangible forms of wealth had been quietly overtaking the total output of maturing economies.

From the 18^th and 19^th centuries, when farming employed most U.S. workers, the economy had transformed, with agriculture employing only two percent of the workforce.

Today, over 70 percent of the U.S. economy is dominated by intangible production: education, healthcare (now over 17 percent of GDP), innovation, R&D, the rise of the internet, software, media, entertainment, sports, the arts and public sector services, police, firefighters, the legal system, oversight of food safety, environmental quality, financial services, safety of drugs, toxic substances, etc., with more than 21 million U.S. jobs in public sector services at city, state and federal government agencies and military service.

Meanwhile, GDP remained blind to much of this new economy and still over-counted manufactured goods, ignoring the vital role of R&D and misclassifying what new services it did count as “costs” instead of valuable economic output.  I and others had criticised GDP for confusing the “goods” with the “bads” (pollution and other social costs of production) and totaling all as valuable output.

This was why Citizens for Clean Air, the NGO I cofounded in New York City in 1964, called for subtracting air pollution “bads” from GDP. We took our then senator, the late Robert F. Kennedy, on a helicopter ride to show him New York’s pollution sources. In his famous speech in 1968, he agreed that GDP gave a grossly distorted picture, “measuring everything except that which makes life worthwhile.”

Now the new revisions to GDP will boost growth totals, and the BEA has started counting R&D and artistic creation as “investments,” back casting this R&D revision from 1959 to 2007. This would have raised annual growth rates by .07 percent – mapping innovation made famous by Joseph Schumpeter as “creative destruction.”

Yet GDP still needs further fixing, and new indicators beyond economics are proliferating, including the OECD’s Better Life Index, the Canadian Index of Wellbeing and others tracked at Ethical Markets’ Beyond GDP.

The fundamental investment all societies make in their future is education of their children. GDP will still treat this as an “expense.” For decades I have called for shifting all education into the “investment” column.

In 2003, I co-convened the First International Conference on Implementing Indicators of Sustainability and Quality of Life (ICONS), in Curitiba, Brazil. Over 700 statisticians and public and private executives called for GDP to also include an asset account so that all democratically mandated public investments in infrastructure (sewers, roads, hospitals, airports, etc.) would be counted as assets to balance their costs, which GDP recorded only as debt.

When these valuable long-term infrastructure assets are added, many countries’ debt to GDP ratios shrink by as much as half!

A step in the right direction toward this capital budgeting was taken in the U.S. administration of Bill Clinton in 1999 when some infrastructure “costs” were also recorded as “savings.” This stroke of the pen, plus cuts in the military budget, contributed to Clinton’s budget surplus. And when Canada began its capital budget, it turned a 50 billion Canadian dollar deficit into a small surplus.

Macroeconomics is now unmasked as normative at its core, with economists’ various “weighting” of the value of a range of goods and services as essentially arbitrary.

If all unpaid production (about 50 percent in most industrial countries and up to 70 percent in traditional and developing countries) were included, they would all appear much richer (the 1995 UN HDI estimated unpaid production at 16 trillion dollars). 

And richer still if all the unpaid production of natural ecosystems and biodiversity were included, as the United Nations TEEB research shows. If all those “bads” (pollution; social and cultural disruption) were subtracted, they would make countries look poorer ( Trucost-TEEB reports say by some seven trillion dollars).

No wonder economics is now dismissed as a form of brain damage, as I and E. F. Schumacher joked in the 1970s!

Hazel Henderson, author of Ethical Markets: Growing the Green Economy and other books, is president of Ethical Markets Media (USA and Brazil) and creator of the Green Transition Scoreboard®.

(END/COPYRIGHT IPS)

Excerpt:

By Johan Galtung
ALFAZ, Spain, Jan 14 2013 (IPS)

The problem of the U.S. economy lies much deeper than the fiscal cliff. Wise people–Robert Borosage, Paul Krugman, Joseph Stiglitz–see neither the fiscal deficit nor the U.S. debt as the key problems, but the lack of growth.

Johan Galtung

They point to the Bill Clinton years and how, through growth, the Debt/Gross Domestic (GDP) ratio went from a half to a third. Important, but then there is a fourth consideration: some Americans are suffering, out there. The bottom “16 percent” of people and families below the poverty line do not know for sure where their next meal will come from and have no medical insurance. Macro-economics is blind to basic human needs, yet there are solutions.

After Clinton, increasing expenditure with enormously costly wars making conflicts even worse, and, in addition, lowering the revenue by reducing taxes on the super-rich. That a fiscal deficit would rear its ugly head, fed by such policies year after year, was a foregone conclusion. U.S. voters, you asked for it, you got it.

Congress voted a compromise on ten fiscal cliff factors. The market reacted “positively”, if that is the right word when the finance economy makes a Dow Jones Index leap upwards while the real economy is stagnant, thus increasing the gap feeding future crashes.

It was a lazy compromise, little new beyond the juggling of old factors. Major problems like Medicare payment–the U.S. health services, at 17 percent of the GDP, produce less health than the typical European services at eight percent of GDP–and unemployment insurance were postponed, not solved. Like the debt ceiling. The new Congress inherits ever more intractable and pressing problems. One reason is obvious: the fiscal cliff discourse is much too narrow.

There is nothing pointing in new directions. How about a Municipal Uplift Authority (MUA) as a major federal programme? Hovering over the U.S. municipal map, identifying the municipalities with the highest levels of misery–people below the poverty line, with hunger threatening and no health coverage–is easy. Lift them up!

Cutting some expenditure and increasing taxes on the rich is indispensable, but limited and limiting. A huge imaginative programme for the 16 percent to lift themselves up by their own bootstraps, with credits for small companies-cooperatives designed to produce food, clothing and housing, health and education all at affordable prices might do miracles.

Carefully monitored, MUA should be self-sustaining, and after the credits have been repaid, generate domestic demand for considerable economic growth. Sixteen percent is a major proportion. A more realistic approach to getting the economic wheels turning than hoping to become the major world hydrocarbon exporter by 2030–by then hydrocarbons may be phased out. Better turn inward, facing the fact: U.S. and Western world trade dominance is gone. Outcompeted.

But there are also other approaches, and they in no way exclude each other, nor do they exclude the fiscal cliff avoidance compromise.

The U.S. debt is increasing. States and corporations buy U.S bonds at low interest–parking dollars for some limited time to avoid the costs of buying other currencies–trusting to be serviced by freshly printed dollars. But that cannot last forever, given the many schemes for regional and world currencies based on a mix, not on any single currency.

With a (flexible) U.S. debt ceiling of 16.3 trillion dollars the major creditor, China, has problems. Could the two agree on something in return for some debt forgiveness? Like the reduction of a major U.S. federal expenditure, the one trillion dollars on military expenses?

A creditor is entitled to look at the debtor’s budgets to identity cuts; the debtor is entitled to say “that one has to do with you (and Russia)”, and the creditor to reply, “if so, let us talk; our economy is still smaller than yours, to match you militarily is more of a burden on us; how about bilateral-balanced-controlled disarmament, and we could throw some debt relief into the bargain?” China might demand no encircling of China militarily, nor any Trans-Pacific Partnership bloc excluding China economically. Who will benefit? Obviously both; relieved of military waste, of a sizeable tip of the debt iceberg, cooperating rather than competing in the global arena.

We sense three possible losers: European Union, Russia and Japan, with Australia, hoping to be favoured by one or the other. But USA-China together matter more; they might even engage in imaginative joint projects for poverty alleviation elsewhere. Lift up the bottom, create customers.

The two policies, lifting up municipalities and tying debt relief to disarmament, are both rational. But in the way of rationality stands the arithmetic of Congressional voting, as adjusted to the arithmetic of the deficit reduction as a hand to a glove; even if the hand becomes paralysed. They fit too well, blocking out other views.

Some other input is needed if the legislative power has no other game to offer. The onus is on the executive power. Could there be a latent New Deal, hiding in Obama’s second term? If not, poor U.S.–four more years of the same, downhill.

In the swamp of problems there are bubbles waiting to burst: finance versus real economy, printed money versus real value, debt service versus people service. There is a way out.

(END/COPYRIGHT IPS)

Excerpt:

There are numerous reasons to believe that the forces that have been driving growth in developing and emerging economies since 2009 cannot be sustained over the medium term. At the same time, it is impossible to return to the extremely favourable international economic conditions that prevailed before the eruption of the global crisis.

Yilmaz Akyuz

This means that unless there are fundamental changes in the way these countries are integrated into the world economy, the stunning recent ascent of the South may prove to be a passing phenomenon, and the speed of its convergence with the income levels of advanced economies may slow considerably in the coming years.

Developing countries face two interrelated challenges, which demand a rethinking of their strategies:

In the immediate future, they face the risk of a significant drop in their growth rates, which could be quite severe if the European recession deepens, bringing down the U.S.

Second, in the medium term they cannot go back to the kind of growth they enjoyed during the subprime expansion even if the advanced countries succeed in recovering fully and settling on a rigorous and stable growth path.

Developing countries now have a narrower policy space for a countercyclical response to deflationary and destabilising impulses than they had after the Lehman collapse in September 2008.

In the past few years, fiscal and external imbalances have widened significantly in many emerging economies. Despite this, they need to deploy all possible means to prevent a sharp slowdown of economic activity and a hike in unemployment.

By Jinty Jackson
Sep 20 2012 (IPS)

Carolina Poalo strikes the dry earth over and over with her hoe, her frail body bent almost double. She is determined to begin planting. During the long, dry season in Mozambique, she and her two young grandchildren have eaten little but cassava leaves.

In a country where the average life expectancy is 50, the 65-year-old is considered very old, but her golden years are far from restful.

Instead, life is a constant battle for the many elderly living in the semi-rural outskirts of the capital, Maputo.

Violence and abuse against the elderly – ranging from rape to psychological abuse and neglect – are on the rise, say authorities. Often this is linked to witchcraft accusations, although no official statistics exist about the phenomenon. Perpetrators are often family members.

Carolina Paolo’s sister, Amelia Paolo, fled her home when her sons accused her of witchcraft. “They threw me out, calling me a witch,” she tells IPS. “I only survived thanks to my plot of land.”

It was a bit unclear how she got access to land where she lives now, but she has a plot of land next door to her sister’s in Bilalwane, on the outskirts of Maputo.

“I don’t get any help from my children. Sometimes they dump their kids here when they get pregnant,” Carolina Paolo tells IPS of her two daughters.

The women survive by earning extra cash when they can, working in nearby fields. The five dollars a month state elderly grant, the lowest in Southern Africa, is enough to buy them a one-kilogramme bag of salt. With no access to running water, the money also comes in handy when filling up at a nearby tap – one barrel of water costs them three cents.

Mozambique’s social welfare office is notoriously corrupt and inefficient. Only one in three people interviewed by IPS said they received the grant despite all three having applied for it.

Her body shrunken and her eyes grown over with cataracts, Maria Chambale (70) admits she is frightened of what might happen when she can no longer work, “I must go on fighting,” she says and shrugs. “What else can I do?”

She, like the other elderly in Mozambique, works on her own small plot of land to grow vegetables to feed herself. She also accepts “piece jobs” or day jobs in nearby fields owned by richer neighbours who have land but do not have the time to farm it.

Despite the heady pace of Mozambique’s economic growth – the World Bank expects the economy to expand by 7.5 percent in 2012 – little benefit is trickling down to the poor, many of whom are elderly people.

“Sixty-eight percent of the elderly live below the poverty line in Mozambique,” says Janet Duffield, the director of the aid agency HelpAge International in this country.

For the elderly in the city who cannot grow food to feed themselves, conditions are even worse.

Sixty-year-old Armando Mattheus is amongst the many elderly people who now find themselves begging on the streets of the capital, unable to cope with the high cost of living. “Before I could buy something with the little I have but today I can’t buy anything,” says Mattheus, who spends his days outside a popular Maputo restaurant, begging tourists for handouts.

It is a situation experts say Mozambique’s government needs to address urgently. Eighty percent of people work well into old age in Mozambique – one of the highest rates in the world.

“The population in Mozambique works until they die because there aren’t alternatives,” says the director of Mozambique’s Institute of Social and Economic Studies, António Francisco.

With half its population of 23 million under 18 years old, Mozambique is often referred to as a country of young people. Those who can remember the devastating civil war that ended two decades ago are now in the minority.

Newly discovered natural gas and coal deposits promise untold riches for a lucky few and will soon fuel what is already one of the world’s fastest growing economies.

The aged make up a tiny fraction of the population – just five percent.  However, by the time a child born today reaches 60, that number will be nearly three times as high, according to Francisco’s research. This represents, he says, “an unprecedented demographic transformation in the history of Mozambique.”

Nearby countries – South Africa, Swaziland, Botswana, Namibia and Lesotho – all spend between 0.3 and two percent of GDP on grants for the elderly. Like Mozambique, they have a young population structure but such an approach can pay dividends.

Japan, which in 2010 registered 38 percent of its population over the age of 65 – the world’s largest proportion – spends over 10 percent of GDP on pensions, according to the International Monetary Fund. And the United Kingdom spends five percent of GDP on pensions, according to the Organisation for Economic Cooperation and Development.

Studies show that providing state pensions can reduce hunger and poverty because elderly people share resources with the family.

A 2003 study by HelpAge International found that “social pensions increase the income of the poorest five percent of the population by 100 percent in Brazil and 50 percent in South Africa.” And a 2005 study by the University of Manchester in the U.K. found that people living in households receiving a pension were 18 percent less likely to be poor in Brazil and 12.5 percent less likely in South Africa.

One fifth of all families in Mozambique include an elderly person. This is one reason why aid agencies are pushing the government to fall into step with other countries in the region. Another is that 43 percent of orphans are cared for by grandparents in Mozambique. The country has an HIV prevalence rate of 16.2 percent, one of the highest rates in the world.

“Of the 10 African countries with the highest HIV prevalence, eight have introduced some form of social pension or cash transfer directed at older people,” says Duffield.

The government would need to provide citizens over 60 with a minimum of 26 dollars a month to have an impact, estimates Francisco. The figure represents three percent of the country’s 12.8-billion-dollar GDP.

But universal social pensions would be too costly, argues Felix Matusse, who heads the government’s Department for the Elderly. “We still depend on external aid,” he explains, pointing out that foreign donors contribute over 30 percent of the entire state budget.

But the government cannot go on pleading poverty for long. By some estimates, Mozambique stands to collect over five billion dollars a year in the long term from its natural gas alone.

Bolivia, South America’s poorest country, financed its universal pension scheme or “Dignity Pension” in 2007 through a direct hydrocarbon tax. Could Mozambique do the same?

“Improved revenue collection from new-found mineral resources could free up fiscal space more than adequate to provide a cash transfer for all older people,” suggests Duffield.

Others argue that caring for the elderly should not have to depend on hydrocarbon windfalls. “What kind of state do we have that cannot look after five percent of its population?” asks Francisco, adding that nearby Lesotho finances a pension scheme but has no natural resources to speak of.

Few expect a major shift in government policy on pensions before the next national elections in 2014. But in the run-up, the government is showing greater willingness to tackle its elderly problem.

A draft bill, due to go to parliament before the end of the year, aims to protect the aged from abuse, meting out specific tough penalties for violence related to witchcraft accusations. However, there is no mention of universal old age pensions.

Matusse points out that Mozambique will not begin to reap the benefits of hydrocarbons for at least another five years. “Then we will see what is going to happen in terms of social security,” he says.

When you board Mozambique’s national carrier, Linhas Aéreas de Moçambique, you will most likely be given small blue packets of peanuts to munch as the jet whisks you from the country’s capital, Maputo, to as far afield as Europe. Sugar, salt or chilli flavour. Take your pick.

Mozambican entrepreneur Lucia Bebane has a budding peanut business despite the challenges for small businesspeople. / Johannes Myburgh/IPS

The snack, also available in bright orange packaging, is called Ndoiiim, a shortened version of the Portuguese amendoim, which simply means peanuts. And it is the brainchild of Lucia Bebane, an entrepreneur who is carving out a place for her small company in this southern African country despite the harsh conditions for businesspeople here.

Bebane’s story is unique in Mozambique, where small and medium enterprises (SMEs) contribute up to 70 percent of GDP. But despite this, SMEs here do not produce much or make significant profits.

The National Statistics Institute estimates that the country’s per capita GDP was just 423 dollars in 2010. In contrast, per capita GDP in neighbouring South Africa was almost 25 times more, at 10,700 dollars, in 2010.

It is an economic climate in which many companies fail.

“To start something is hard. There are some entrepreneurs in this country, but Mozambicans have a tendency to imitate what others do,” says Bebane.

For example, the traders who roam Maputo’s streets all sell the same peanuts in the same bags.

Three years ago the 54-year-old former secretary saw the traders and had an idea to process the locally-grown peanut into a product that can compete with the best on the market.

“It was almost impossible … because no one had done it here before,” she explains as a peanut toaster whines loudly in the small factory outside her office.

Bebane is the first Mozambican to roast and package peanuts on an industrial scale here. Whereas peanut sellers manually roast the nuts and pack them by hand, she was the first to import roasting and packaging machines and thereby mechanise the entire process.

Mozambique is one of the world’s poorest countries: over 54 percent of the population is living below the poverty line, according to the country’s Millennium Development Goals report to the United Nations in 2010.

It also lacks the industries and infrastructure which are taken for granted elsewhere. There are no roads linking factories to markets, the electricity supply is often unstable, and there are no machinery manufacturers, forcing Bebane to import the machines she needed for her business.

But a few years after her company started “in a timid manner,” production is now almost completely mechanised. Raw peanuts are trucked in from the northern city of Nampula, which is about 1,400 kilometres from Maputo.

When the peanuts arrive, Bebane’s three permanent employees sort the best from the rest. One machine roasts and flavours the peanuts, and another packages them in the bright orange plastic bags that have become part of her now-visible brand.

But despite selling her peanuts to the country’s national airline, Bebane says that she still barely manages to pay the bills and is waiting to make a profit.

Economist João Mosca from the country’s Pedagogical University says that this is typical of the country’s small businesses.

“Mozambique’s economy is growing, which means there are more and better business opportunities. However, there isn’t an entrepreneurial tradition in modern-day formal companies.”

Mozambique’s economy grew by a whopping 7.3 percent in 2011, but companies have not grown with it.

“Companies are generally not very modernised and aren’t used to working in competitive environments. That’s why they are not competitive themselves,” Mosca tells IPS.

Throughout Mozambique’s modern history small businesses have had it rough. During colonialism under Portugal, Mozambican traders could not develop. The country adopted socialism after independence in 1975 and actively suppressed free enterprise, explains Mosca.

Entrepreneurship only emerged in the late 1980s to a limited extent, but then politicians grabbed the opportunity to monopolise the economy, he says.

“This emergence was politicised so that politicians had privileged access to privatised companies, many of them sold at symbolic prices. These businesspeople formed economic interest groups with sweeping protection against public policy, access to credit and selective law enforcement,” he says.

So in order to get as far as she has, Bebane has had to avoid the pitfalls of a corrupt and nepotistic system and raise her own capital.

The report “Corruption Assessment: Mozambique” commissioned in 2005 by USAID, the U.S. government agency providing economic and humanitarian assistance, pointed to “favouritism and nepotism in public appointments and procurements, conflicts of interest and insider dealing that benefit friends, relatives and political allies, and political party and electoral decisions that reduce democratic choices and citizen participation.”

So entrepreneurs like Bebane, who are less well connected, struggle to find the money to breathe life into their companies.

“Another problem is not the lack of ideas, but the risk of entering the market. You have no family to guarantee loans, you have to borrow from the bank,” says Bebane. “I had to put up my house as collateral.”

More needs to be done before the country’s smaller businesses start making money and raise people from below the poverty line, says Mosca.

But the task is daunting.

“We need to improve the business environment – especially access to credit and the cost of borrowing money – reduce corruption and institutional disorder, and create a more open and competitive market. We need to train human resources, with specific attention to quality,” he says.

Teaming up with companies from outside Mozambique could be healthy for the business sector, Mosca says.

“Partnerships with foreign business can be a way to speed up the birth of entrepreneurial and competitive capitalism,” he tells IPS.

Bebane is not merely waiting for her business to improve. She is searching outside Mozambique’s borders for security and a business partner who will hopefully help propel her towards success.

“I am running from one end to the other, looking at China, looking at Brazil, looking for a permanent partner.”

KUALA LUMPUR, Feb 26 (IPS) – A plan by the Malaysian government to privatise its public healthcare system and get consumers to pay for it through salary cuts is rapidly turning into a major election issue.

Whistleblower doctors let the cat out of the bag this month by sharing details of ‘Icare’ that the government had shared with doctors and select stakeholders.

Currently, the government pays Malaysian ringitt 34 billion (11.2 billion dollars) annually for a healthcare scheme that it wants to pass on to consumers under ‘Health Care Financing’ that the public and conscientious doctors are opposing.

These doctors are fundamentally opposed to any scheme that requires citizens to pay a part of their earnings – in this case 10 percent of net monthly wages – if the cost of health financing is passed on to consumers.

The existing system, which consists of a network of government hospitals and clinics and caregivers throughout the country, provides cheap, affordable and effective healthcare.

“Why fix something that is working reasonably well,” said Dr. Ng Swee Choon, deputy president of the Private Medical Practitioners Association, a group of doctors opposed to Icare.

“Malaysia has excellent healthcare coverage as nearly 90 percent of the people stay within a five km distance from a government-run clinic or hospital,” he said.

Ng told a Feb. 18 forum that the World Health Organisation (WHO) had acknowledged in its annual report of 2007 that Malaysia had an effective and efficient healthcare system and had rated the service “excellent”.

Currently, 4.7 percent of the GDP is set aside for healthcare, way below the WHO recommendation of eight or nine percent.

“It’s more important to increase the bill of healthcare as a percentage of GDP than to go and change the system,” said another activist doctor T. Jayabalan.

The government is moving away from providing nearly free healthcare to a financing scheme that will be paid for by all citizens, he said.

 The government, however, says healthcare is getting more expensive by the day and believes that a better option is one that is financed by citizens.

“Everybody is entitled to equal healthcare…there won’t be a private or government distinction,” said health minister Liow Tiong Lai of a scheme in which people contribute monthly in return for getting best medical care available.

Currently, those who can afford it patronise the expensive, well-equipped private hospitals that have sprung up all over the country while others make do with crowded government hospitals that are under-equipped and under-staffed.

 Icare is expected to pool resources under the National Health Corporation (NHC) that will foot the medical bills, assign the sick to a doctor and regulate treatment according to a fixed schedule.

Many people are not confident about giving a part of their wages to a government-managed NHC and fear it will be mismanaged and overtaken by cronyism and nepotism, like other public sector outfits.

 “We fear pilferage and that other forms of corruption would overtake the scheme,” said Dr. Michael Jeyakumar, a lawmaker from the small Parti Sosialist Malaysia.

“Right now the government is simply telling the people to wait quietly for them to tell what is best for them,” he said. “This type of top-down policy does not work anymore,” he said.

Health minister Liow came forward last week to say the opposition is spreading “false” details to confuse the public about Icare.

He said the assertion that 10 percent of salary would be mandatory to finance Icare is false. “I myself will oppose the scheme if that is the case,” Liow told The Star daily on Feb. 19.

But neither the health ministry nor Prime Minister Najib Razak have accepted a challenge from the opposition to release all the details.

The government has asked Malaysians not to speculate about Icare and reserve judgment for when the system has been given a chance to develop.

The opposition Pakatan Rakyat has urged the people to vote out the ruling Barisan Nasional or National Front. “The Front cannot be trusted with the people’s money,” said Jeyakumar.

The opposition has rejected Icare as exploitative and is using the issue as campaign fodder for elections that are due by April 2013.

A top-down planning system is the hallmark of the National Front which has ruled the country since independence in 1957 and is dominated by the powerful United Malay National Organisation party.

Moves to privatise state-run public healthcare can damage the National Front which has projected itself as the protector of the socio-economic interests of its main constituency, the rural Malays.

Voters rejected the Barisan Nasional’s hold on power in the 2008 general election when nearly 49 percent abandoned the Front in favour of the incipient Pakatan Rakyat opposition coalition led by Anwar Ibrahim, a former deputy prime minister in the Front government.

The Pakatan Rakyat and the National Front are nearly equally matched for a return match in their contest for state power in a general election that is widely expected to be called mid-year.

“Many members of the public are unaware of the implications of the scheme,” opposition legislator Charles Santiago told IPS.

“The federal government argues that Icare will make healthcare more affordable and its delivery more efficient to the public,” said Santiago.

“But they are actually privatising our healthcare services through a social health insurance scheme that will only further burden the people, especially the poor,” said Santiago who has started an awareness campaign in his constituency of Klang, 30 km west of the capital.

Unless leaders act promptly, climate change and environmental degradation will only worsen and cause greater global problems, scientists warn. Crustmania/CC by 2.0

By Stephen Leahy
VANCOUVER, Feb 21 2012 (IPS)

Unless governments work actively to build a brighter future for humanity, climate change, poverty and loss of biodiversity will worsen and continue to exacerbate existing global problems, top scientists warned ministers attending the United Nations Environment Programme’s (UNEP) governing council meeting in Nairobi, Kenya, on Monday.

Replacing GDP as a measure of wealth, ending damaging subsidies, and transforming systems of governance are some possible steps they can take, the scientists said.

“The current system is broken,” declared Bob Watson, the UK’s chief scientific advisor on environmental issues.

“It is driving humanity to a future that is three to five degrees C warmer than our species has ever known and is eliminating the ecology that we depend on for our health, wealth and senses of self.”

Watson and 19 other past winners of the Blue Planet Prize, often called the Nobel Prize for the environment, presented their 23-page synthesis report, “Environment and Development Challenges”, at the UNEP meeting.

Ministers warned that because the adverse impacts of climate change and biodiversity cannot be reversed, “The time to (act) is now, given the inertia in the socio-economic system.”

“The good news is that (solutions) exist, but decision makers must be bold and forward thinking to seize them,” Watson said.

“We have a dream – a world without poverty – a world that is equitable… a world that is environmentally, socially and economically sustainable…” wrote Watson and his co-authors in their report.

Among the co-authors were James Hansen of NASA; Emil Salim, former environment minister of Indonesia; Nicholas Stern, former chief economist of the World Bank; M.S. Swaminathan; and José Goldemberg, Brazil’s Secretary of Environment during the Rio Earth Summit in 1992.

The Tipping Point

“There has been very little progress in the 20 years since the Rio Earth Summit,” said Harold Mooney, a biologist at Stanford University and 2002 winner of the Blue Planet Prize, adding that poor governance is one of the key issues.

“Decision makers and the public need to understand that we’re not going to make it,” he said.

The report recommended that leaders look beyond the interests of their own states. It also said that decision-making processes need fundamental reform, so that they empower marginalised groups and integrate economic, social and environmental policies instead of having them compete.

Mooney called preliminary plans and hopes for the Rio+20 conference in June this year tepid as well as vague, even thought the twentieth anniversary of the Earth Summit offers a major opportunity for world leaders to set human development on a new, more sustainable path.

“We are not getting to the crux of the matter. There is an urgent need to raise the stakes.”

“Weaning ourselves and the world off our fossil fuel addiction, moving on to clean energies, cannot be solved by the U.N. process,” said James Hansen of NASA, the 2010 Blue Planet winner, along with Watson.

Hansen told IPS that it is too easy for a country to refuse to meet its carbon reduction commitments, as Canada did with the Kyoto Protocol.

Fossil fuels are heavily subsidized and fossil fuel companies do not pay the huge costs of air and water pollution. Nor do they pay for the impact they have on the climate.

Hansen argued that the simplest way to address this problem would be to collect a fee from fossil fuel companies at the domestic source (mine or port of entry) and distribute the money uniformly, on a per capita basis, to legal residents, he said.

Fuel costs would rise under this “carbon fee and dividend” scheme, but the costs for the majority of people would be covered by their share of fees collected. It would also act as a financial incentive for individuals to reduce their carbon footprint, he said.

“This will have a tremendously positive impact on the economy, as entrepreneurs introduce carbon-free energies or energy efficiency.”

The Blue Planet Laureates’ paper also urged governments to replace GDP as a measure of wealth with metrics for natural, human and social capital, as well as how they intersect.

The paper also called on governments to eliminate subsidies in sectors such as energy, transport and agriculture with high environmental and social costs. In addition, it urged leaders to tackle overconsumption and address population pressure by empowering women, improving education and making contraception accessible to all.

(END)