It is the season and many people are soaking in the festive mood. It’s time for Christmas again.
Yay! It’s the season we all remember the birth of the Our Lord Jesus Christ, who was born in Bethlehem, according to the Holy Scriptures.
In keeping with this theme, today’s article will be a reflection on Jesus’ compassion – a trait He’s known to have exhibited in abundance.
In our case, we focus on “compassionate capitalism” or capitalism with a human face.
With the prevalent high gender-income-wealth inequality in sub-Saharan Africa (SSA), is this a necessary upgrade or is it just another utopian and idealistic ideology?
Can compassion really cure the ills of an enduring “free-market” belief that markets are self-correcting?
And for Africa to achieve the goal of “leaving no one behind” by 2030, will injecting more compassion to business aid the process? To begin, no one doubts, the SSA has got problems. It remains one of the most unequal regions globally.
Indeed, 10 of the 19 most unequal countries globally are in SSA with seven outlier African countries driving this inequality.
According to the Organisation for Economic Co-operation and Development (OECD), African countries lose at least Sh5 trillion in taxes every year — more than the amount of foreign development aid.
The United Nations Economic Commission for Africa (Uneca) puts the estimate much higher at Sh10 trillion.
The continent is the world’s second fastest-growing region, yet 100 million Africans live in extreme poverty today compared to the 1990s. Gender inequality is estimated to cost SSA on average Sh9.5 trillion a year, peaking at Sh10 trillion in 2014 — or six percent of the region’s GDP according to the UNDP Africa Human Development Report.
Seven out of the bottom 10 countries are from Africa according to the Corruption Perceptions Index (CPI) 2018.
In all this, unfair business practices — bribery, nepotism, greed, injustice, sub-standard goods — take quite a share of the blame.
What many do not appreciate is that compassion does not grow naturally in the harsh climate of an unfettered free market.
Although businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services, its sole focus on “self-interest” (read maximising profit) is having multiple undesirable consequences.
In my view, free-market capitalism not only needs a complete rethink of the existing paradigm of “profit before people” but also needs a retooling of the principles underpinning it to place people before profit.
Yes, down with the high-sounding but compassion-deficient Chicago-school of economics.
Indeed, the late Chicago School of Economics expert, Milton Friedman, laid the basis for the prevailing model when he said “There is one and only one social responsibility of business. To engage in activities designed to increase its profits.”
I conclude with a quote from the Holy Bible.
1 Timothy 6: “Command those who are rich to be rich in good deeds, to be generous and willing to share. In this way, they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.”
Mwanyasiis MD, Canaan Capital.