Lessons for SA in fast-tracking poverty reduction
The country of Bhutan, which sits between Northeastern India and China, has a development philosophy that many in the developing world should seek to emulate. According to Bhutan’s 1629 legal code, “If the government cannot create happiness for its people, there is no purpose for the government to exist.” Guided by that philosophy, Bhutan has spent decades trying to reduce its poverty rate, and has made unprecedented progress in poverty reduction over the past two decades. In the past 13 years Bhutan has reduced its poverty rate by 23.5%, which is the fastest poverty reduction among South Asian nations in the region.
China represents the most successful case of poverty reduction in modern history, accounting for 70% of global poverty reduction since the 1980s, and having lifted over 850 million of its citizens out of extreme poverty according to the World Bank. China aims to lift its remaining citizens out of poverty by the end of this year, in keeping with its philosophy of “Leave no-one behind.” These successful models of poverty reduction are worth examining, particularly at a time when our country is being plunged into greater levels of poverty due to the Covid-19 pandemic. Now is the time to put in place strategic long term policies and plans which replicate the most relevant aspects of China and Bhutan’s experiences, so that we can fast track poverty reduction in our own country.
Bhutan will graduate from being a least developed country in 2023, due to the results of successive five year plans, the common denominator of which has been the expansion of social amenities, rural development, and income generation sources. Most of Bhutan’s poverty has been in the rural areas, and so a number of initiatives have focused on changing the lives of the rural poor through the Rural Economic Advancement Program.
Bhutan has 62% of its population living in the rural areas, and 11.9% of that population has been living in poverty. The government identified 75 villages as requiring targeted support, and responded to those needs through the provision of land, livelihood support, and socio-economic facilities. Initiatives have been implemented such as the construction and renovation of houses, the supply of agricultural inputs, and income generating interventions. The provision of basic infrastructure has been a key component, such as the construction of farm roads, rural banks and farm shops. There has also been the provision of 100 units of free electricity to each rural household, and tax exemption for small scale business.
As a result of these efforts there has been a convergence with the Sustainable Development Goals so that 16 of the 17 goals have been integrated. Today the country has achieved the commercialisation of agriculture, expansion of roads, hydropower, and increasing volumes of commercial crops to neighboring countries. Its average annual growth rate has also increased to 7.5%. South Africa is already implementing a number of similar measures, but we should perhaps focus on rural development strategies to a greater degree.
China has also implemented successive long term development programs with great success. In 1994 China implemented a seven year Poverty Alleviation Program, which remarkably lifted 80 million people out of poverty. China then proceeded to implement two 10 year poverty alleviation programs in 2001 and 2011. Living conditions and access to public services improved markedly and China became the first country to achieve the 1st Millennium Development Goal of halving poverty.
China’s strategy was to pursue a Rural Minimum Living Standards Guarantee Scheme, which improved electrification, education, rural infrastructure, and rural cooperative medical care. But most importantly it built the capacity of the poor for self-development. It has not been about giving handouts to the poor, but rapid national development, which involved work in factories, increasing wages, and improving access to quality education. Large scale poverty alleviation programs targeted women and children, the disabled and ethnic minorities - always prioritising development as the fundamental way to get out of poverty. China also pursued an innovative strategy of getting industry to support agriculture, and cities to support the rural areas by mobilising public and private sector resources.
China’s strategy for creating a large middle class has been industrialisation, liberalising the private sector, and embracing global trade. The Chinese government always reiterates that the key to poverty eradication is inclusive growth. South Africa can adopt many of these priorities as it moves towards eradicating poverty in our own country, particularly prioritising greater levels of industrialisation and support to the rural poor.