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“Economic Development Means Promoting the Standard of Living and Improving the Quality of Life of Citizens” President Isaias Afwerki

It is to be recalled that President Isaias Afwerki conducted an extensive interview on the occasion of New Year with national media outlets on 28th and 29th of December 2012.  The interview focused on national development programs, political and diplomatic developments in the Horn and Eritrea’s stance and outlook on different scenarios as well as other local, regional and global issues. First part of Excerpts of the interview follows:

Happy New Year, Your Excellency.  Most of our questions are related to domestic issues. Some regional and international issues that influence Eritrea one way or the other will be also covered in the interview.

Let us start with the progress of the development programs in Eritrea. There are often economic growth figures that are announced on the Eve of New Year. In this case, the economies of all states in the world are measured using the same or universal standards. To this effect, some figures are announced regarding the economic growth of Eritrea. In many occasions, you assert that these figures do not properly reflect the development progress of nations. Rather these figures are misleading as it is not possible to measure the economy of all nations using the same standards. Bearing this in mind, basically how do we define an economic growth or development? By the standards of economists, there is a tendency to place more emphasis on the increase of national income (GDP).  Is this the only indicator of economic growth? If such calculations fail to indicate economic growth of nations, do we have alternatively objective criteria for measuring and properly reflecting the economic performance of different nations? What type of standards does the Eritrean Government apply for assessing the progress of its development programs?  Taking into account the no peace no war situation; how is the state of the economy in Eritrea? In the last few years, we used to come across different figures (described in different media outlets) stating the growth and the predictions associated with the Eritrean economy. What is the real objective of these statements?

You have asked me a number of questions. It takes a long time to respond to all of these questions. I will just try to briefly focus on the main issues you have raised. It may not be that useful to be much concerned about the controversies associated with the standards of measuring economic growth. Most of the time, such statistical calculations tend to be misleading as they are often used for news consumption or as a means for glorifying ones performance. Instead of being obsessed about the figures and the controversial arguments associated with them, it would be far better to assess the economic performance of a nation in terms of its stated goals and objectives. The frame of reference for measuring the economic performance of a nation, therefore, must be the positive changes that are experienced by the general public in terms of the improvements in their living standard and the quality of their lives. All economic growth plans and programs have to be designed for realizing the aforesaid goal.  The process of achieving this goal through various economic growth programs is a dynamic one and it is hardly possible to actually assess its progress on how it has changed the quality of life of the people in a short term. There are a number of factors that influence this process and the objectives are realized stage by stage.  Therefore, using numeric figures may not appropriately measure the economic performance of a nation. For this reason, it may not be that sensible to compare the economic performance of nations based on such numeric figures, which are less likely to reflect the improvements associated the quality of life of citizens. In short, the progress of a nation’s economic performance must be described in terms of the achievements in improving the standard of living of the people. In fact, such progress has to be also stated not only qualitatively but it also needs to be quantitatively justified.

When assessing the economic performance of a nation, one also needs to consider the different types of economies of different countries that are at various stages of development. As part of the developing world, our economy, for example, is mainly based on traditional agricultural practices. Yet we have not been able to appropriately modernize the way we do things and we have not been able to properly exploit technological opportunities. Having such an economy, it is unlikely even to self-sufficiently feed yourself. How we measure such economies must be accordingly contextualized and customized. In this type of an economy, among other things, we may say there are improvements in the economic performance of a nation if it is able to have its traditionally backward way of doing things replaced with new technologies and modern way of doing things.

There are also other economies that are more developed than the economies of our type. There are also far better developed ones that are considerably equipped with modern technology and they are characterized by innovative practices. The nature of such economies is different and they have their own historical development. Being in the 21st century, when we talk about economic performance it means we are talking about three or so types of economies which have markedly different features and different stages of development. So is it sensibly possible to assess the performances of these various economies using the same measurement criteria?  We may need to have certain standards relevantly applicable for measuring the economic progress of the well developed economies of America, Europe and Australia.  Can we apply the same measurement criteria in the case of African states where, in most cases, the economies have not been kick started? Likewise, there must be another set of standards that must be contextually applicable for assessing the economies in Asia – Japan, China, Korea, Malaysia, India and other nations. Therefore, instead of being unnecessarily preoccupied with such controversial arguments, which happen to be misleading, as I said earlier, the performance of an economy must be examined in terms of the positive changes in the quality of life of the general public.

When it comes to our case, putting aside the controversial arguments- how was the state of our economy before 1991?  At that time, we had an economy that was almost entirely devastated due to the 30 years war. Then the starting point was below zero. In this case, it would be better if we talk in terms of the things that have been done to recover and move forward the economy. In other words, it would not be that sensible to say there is a two or three per cent increase in the economic growth of the country.

Economic growth has its own basics. One of these is investment or capital formation. In this case, since saving alone may not be effective to the extent required, the need to have effective infrastructure and the need to introduce new technology and other resources is helpful for materializing the goals of economic growth.  For instance, for modernizing agricultural practices you need to introduce modern machinery and other technologies. Similarly, for exploiting natural resources effectively, you need to have appropriate investments. To have a successful investment, in return, you need to have adequate financial resources as well as capital goods. However, this aspiration cannot be realized in a year or two. This is a dynamic process and accordingly the goals and objectives of economic development are naturally realized in a cumulative manner.

A second important and critical success factor in the process of realizing development goals is the quantity and quality of skillful manpower. This is one of the most important determinant factors simply because all other resources and endowments are nothing unless there is quantitatively and qualitatively adequate manpower that has the required skills.

A third basic factor for realizing development goals is natural resource. In this case, natural resources may have different forms such as rainfall patterns in a country, water and land resources, different minerals, sea resources, including the resources in the coastal areas, even the climate of a nation and others. Unlike technology, these are mostly locally available resources that one may not need to import. All these resources are said to be useful once they are effectively and efficiently exploited.

The forth important factor is technology. In this case, technology should not mean acquiring advanced technology only but it also should include the innovative practices that are helpful for making effective use of the technologies you happen to import.  Here, one needs to continuously upgrade the skills that are required for the innovative use of technology and the technology itself must be updated whenever the need to do so arises.

The fifth basic factor is leadership and management. Given all the above resources, it may not be possible to realize development goals without instituting competent and effective leadership and management practices.

The issues and concerns associated with the above resources, for example, leadership and management issues, may also have varying forms and practices.  Further, taking into consideration only these resources are not enough in connection to the factors that determine or influence the realization of development goals. Whether what you produce or what you do in general produces the effects you intend on the quality of life of citizens is influenced and ultimately determined  not only by domestic factors like the aforesaid basics of development. In other words, every economy is networked to other economies. The interrelations with regional and/or global actors are likely to affect what you intend to do, what you actually you do and what you achieve at the end of the day.

For providing the goods and services that enable you to promote the living standard of your citizens, you need to be aware of what you are required to have or do in terms of the demands for your goods and services elsewhere in the world. This is a fundamentally important factor for realizing development goals.

Provided that one is okay with all the said requirements and resources, one may not be that effective or productive if there is lack of political stability in a society. Lack of political stability in this case is associated not only with external threats. Internal problems and challenges such as corruption can also have equally harmful effects on your attempt to realize development goals as they are capable of eroding or incapacitating one’s capacity to achieve goals and to remain sustainably productive.

If you have the said resources and you are able to effectively deal with the problems mentioned above, then you can annually assess where you are heading to.  In our case, the starting point was below zero. Then we moved forward to zero. What about our further progress towards the improvement of the living standard and the quality of life of our people?  And what does it mean to say a real improvement in this case? This simply means the goods and services provided to and consumed by everybody have to increase. To this effect, in simple terms a household that used to live in a simple traditional house must be able to move upward to a better housing accommodation. Essential services such as electric services, educational services and health care services should be also available and accessible to the citizens.

Generally speaking, there are certain standards that are used for evaluating the improvements associated with quality of life of the citizens. What you do in a year must be planned having these standards as benchmarks. Therefore, what we call development has to achieve the goals determined in this manner. In such a situation, the most important aspect is that the achievements have to be dynamically cumulative and sustainable.

To make achievements dynamically cumulative and sustainable, you need to have realistic goals and objectives. To this end, you need to be properly aware of what your current state is, what your resources are, and what the critically important factors that enable you to effectively materialize your aspirations are. Besides, you need to evaluate your progress periodically in terms of clearly stated benchmarks. This is what we mean by economic development. Saying that economic growth this year is 10%, it has been further improved or declined by 2% and the like is meaningless.

In our case, what have we achieved within the last 20 years? Previously, we did not have infrastructure, we did not have effective delivery of essential social services. Consequently, the living standard of the people was not to the standard. More importantly, we had a number of challenges. The central question in this case is how much have we positively changed our given situation, for example, in terms of expanding services all over the country?  Economic development is not sustainable unless it is based on even distribution of resources and services. Given this situation, it may not be possible to effectively assess development in a year. Trying to numerically indicate annual growth rates may enable you to imagine something. But what matters more is the direction of your progress. To do this, how many years’ growth rates do you take into account? How are the ups and downs felt in the economy? What fluctuations are experienced in the economy? You need take years to really examine sustainable development as the yearly statistical calculations are less likely to be effective indicators of sustainable development. In many countries, there are 10 year, five year or three year plans and programs. The real effects of such plans cannot be annually determined. How do you relate what happened before five years and what may happen at the end of the fifth year? But this does not mean that annual evaluation of such plans and programs is not necessary. The point in this case is development should be measured in terms of its sustainable nature.

In Eritrea, we have been implementing our plans and programs by taking into consideration the cumulative lessons drawn from our experiences. Our economic programs in some cases were not being properly planned in a way to be measured or to be justified against specifically and clearly predetermined benchmarks. Certainly there are considerably positive changes that are qualitatively visible.

Let us try to retrospectively assess what has been done in the last 20 years in Eritrea?  What changes have been realized in different dimensions of lives of the citizens that further improve their standard of living?  Have we effectively used the resources and success factors I mentioned earlier?   What are the changes associated with our management practices, with the effective management of our natural resources, with the number and quality of our human resources we have in the country, with the type of technology we are applying and the innovation related with it, with the capital goods we have so far acquired? What about the things that we have learned from our experiences?  The point is we need to evaluate what we have so far achieved in terms of these important questions.

Once we retrospectively assess how much we have achieved and how much we have learned from the experiences associated with our achievements, it will be helpful to proactively plan for the future. The central issue is how many years’ plans and programs do we need to examine so that we can properly comprehend the importance and sustainability of our achievements? This is a demanding and complicated task. We may possibly assess our performance sector by sector or region by region taking into consideration many relevant factors. We evaluate the impact of what we do not to eventually say we are better than others. We are just interested in ascertaining how much we have progressed in improving the quality of life our citizens. In this case, you take into account what the accomplished programs and projects are, what the strategies employed are, how effective are they all, accordingly what changes have been realized. In this way, we can figure out our weaknesses and strengths in order to adjust what we do and how we do and why we do things.  Nowadays, it has been common for some institutions in the West to specialize in providing a certificate of performance to societies. By way of their certificates they let you know how much you have performed in terms of the figures or annual rates of economic growth. They let nations know how they are progressing or regressing based on their calculations. But when it comes to our economy, they do not know it appropriately. It is not impossible to selectively take some data that is not representative and calculate something based on the inadequate data and look at the issues remotely with inadequate information. This cannot lead to objective and holistic assessment. The most important issue in such a case is where do you base your calculations and conclusions?  What is done by such international institutions is baseless; it is guesswork.  Sometimes, what they announce or share with the world public is politically motivated and colored with their own interests.

In relation to the question you have asked, it is said, for example, that in Eritrea there is gold, and there are also other minerals.  In this case, there may be information shared by the companies that have been involved in such activities. Having information gathered in such a way, people tend to say or conclude that the Eritrean economy has grown by such and such rates. As I have explained it earlier economic growth has to be determined taking into consideration the improvements in the standard of living of the people.  Simply because you have been able to have some minerals mined in a year does not mean that the quality of life of the citizens can be immediately improved. This is not how an economic development should be measured. This has to be judged by taking into account not only the national income of the country. Rather we need to consider the overall programs and challenges of the nation. People are talking about investment opportunities in the country. Many say since there are important prospects and economic growth in the country, it may be the opportune time to fiercely compete so as to make better use of the opportunities in the country. We are not concerned about such calculations.

What we are more concerned about is whether our programs have been accomplished and our objectives have been realized. Do they enable us to realize the changes we want to have realized?  Some come to you in a hurry in order to share the good news they may have read in a particular news paper about the growth rate of our economy. Such news and rumors should not mislead and misguide us. What should matter to us more is how we are progressing towards the improvement of the quality of life of the general public in our country. This must be our standard for assessing our performance. Stated differently, we need to be much more concerned not about the things that are achieved in a year but we need to be much more preoccupied about the things we ultimately want to have realized.  For example, we can plan that every adult in our country must secure a residential house. This may appear to be unrealistic. But it is good to look at things from such a perspective.

Regardless of its type, how many of our citizens do have their own residential houses? In this case, our ultimate goal is, regardless of their current situation, every citizen must secure a decent house of their own. This is one benchmark for evaluating our performance and economic prosperity in the country. Having this yardstick as a frame of reference, given our current situation how many of the citizens own houses that have acceptable standards?  If we eventually aim that every citizen must own his or her own house with acceptable standard, how much have we moved forward towards achieving this goal in a year? What about the cumulative yearly incremental achievements? In this case, we can have easily measurable indicators of our economic performance bearing in mind the intention to improve the living standard of the people. We can also further examine our performance in terms of clearly stated standards or goals in relation to what is provided in terms of goods and services for the family members inside their house like the quality and quantity of the food that is affordably available and accessible for the households. These things affect the quality of life of a household. What about other essential services that affect people’s standard of living? In each dimension of life, what has been clearly planed and periodically achieved have to be stated in a measurable manner and the progress in each area has to be properly explored.

In the end, the national income or the overall economic performance in the nation has to be judged or measured in terms of the improvements in the respective households or lives of the citizens in the society. More importantly, we need to be much more concerned about the even distribution of the improvements in the life of the people. In sum, instead of being more obsessed about the annual numeric and statistical calculations or rates of economic growth, we need to examine our economic performance in terms of what I have said above.  

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