Bank of Zambia governor Christopher Mvunga says only the private sector can help grow the economy.
He says expecting the economy to be government driven is a wrong concept.
“…for any economy to thrive it has to be private sector driven. And if we expect our economy to be government driven then we are on the wrong thinking because we need to promote and enable the private sector to drive the economy. And let government provide an enabling environment,” says Christopher. “I think the Minister of Finance [Dr Situmbeko Musokotwane] has made that point. The President has made that point. That we need full participation of the private sector if we are to push this economy forward. It’s the private sector that is going to create jobs, leaving government to establish an enabling environment for the private sector to drive.”
It is a fact that any growth, development, will only happen if everyone participates and works fully. It takes hard labour, commitment and dedication to achieve sustainable development. That is why we are told that you reap what you sow. For the private sector to thrive, there must be a conducive environment. In this case, the government has to provide that platform. This comes with an array of aspects – taxation policy, monetary and credit policies, industrial and licencing policies, policies related to income and wages, technology and employment policies, import and exchange policies, foreign exchange policies to environment and industrial safety policies.
It calls for predictability – that is what gives business confidence to invest in long term projects; in huge and high value projects.
But is it correct to say government has no business in business? Is it correct to say “if we expect our economy to be government driven then we are on the wrong thinking?”
Can the private sector alone drive the economy? Is the private sector motivated to take care of the general welfare of the people once they thrive?
At what point should or can the government intervene to prop up the economy – to drive the economy to ensure equitable socio-economic development?
According to Economics discussion, in a mixed economy, the private sector constitutes the largest sector of the economy. The role of a government is grouped into two categories, namely, regulatory roles and promotional or development roles.
The regulatory role of the government involves formulating and implementing various direct and indirect measures to monitor and regulate the economic activities of the private sector. These measures are required to prevent the socially restrictive activities of businesses and concentration of economic power and encourage private businesses to work towards the growth of the economy. On the other hand, the promotional role of the government involves policies and measures taken for the progress of development infrastructure of an economy. The development infrastructure of an economy involves economic and social overhead capital that is necessary for the growth of industries and optimal utilisation of resources. In addition, it is required to improve the production capacity of an economy. These activities, in a mixed economy such as India, are performed by the government by implementing various developmental programmes.
And as Joe Biden once argued, “…Good guys and women on Wall Street, but Wall Street didn’t build this country. The middle class built the country, and unions built the middle class…My fellow Americans, trickle-down – trickle-down economics has never worked and it is time to grow the economy from the bottom and middle out.”
In a way government has a huge role to play in the economy – to drive the economy. As it is said, a government’s active role in responding to and influencing the economic circumstances of a country is for the purpose of preserving and furthering the economic interests of important stakeholders or the general citizenry.
We emphasise that government has a big role to play in the growth of the economy. For example, the PF government brought our economy down to its knees purely based on its directionless policies and actions. Instead of providing an enabling environment for the local industry to grow, it was the same government that was busy closing down companies. They made a hostile environment by politicising everything; making the situation rough for those they perceived as their enemies. This is how bad an economy can become when there is a reckless and highly sensitive government. So, the private sector alone cannot grow the economy if the government of the day is not supporting them. There should be a serious partnership between the two parties.