Biblical economic wisdom for Zim, SA

LISTENING to the African National Congress (ANC)’s secretary for International Relations, Lindiwe Zulu, on Wednesday night during a press briefing on the South African Broadcasting Corporation (SABC) made me realise that both South Africa and Zimbabwe need to review their economic models.

Zulu, as articulated as always, diagnosed the challenge accurately — she argued that the ANC and Zanu PF, as liberation movements in power, should be about putting the needs of the people first. In that vein, she posited that improving the economic outcomes of both countries was central to addressing the socio-economic challenges facing both countries.

She was clear that poor economic performance in Zimbabwe translates to socio-economic pressures on the regional neighbours, with South Africa as the biggest economy in Sadc facing a more disproportionate negative impact. These are valid submissions.

This article seeks to give a Biblical perspective on economics that can help shape the mindsets of nationals in both countries as well as informing national economic policies.

Two verses from the Bible will lay the foundation for the economic and financial ideas both countries can tap from.

Genesis 47:24 (NKJV) reads: “And it shall come to pass in the harvest that you shall give one-fifth to Pharaoh. Four-fifths shall be your own, as seed for the field and for your food, for those of your households and as food for your little ones.”

The context of this passage is the famine that ravaged Egypt for seven years, following seven years of plenty. The Egyptians lost all their monetary savings, all livestock, all land and, in addition to these devastating losses, they pledged servitude to Pharaoh.

Several economic insights emerge from this passage. For an economy to recover, it must have citizens educated to be financially literate.

Joseph’s counsel in Genesis 47:24 is an economic revival strategy in response to a deep recession that lasted seven years. Joseph anchors the economic revitalisation plan on teaching citizens to be productive. He shares a very profound idea; allocation of income resources from productive endeavours at houseold level was to follow a specific order: King first; second, seed for the field and food last.

First the king, conceptually representing national governing authorities, was to get a share of the income. We call this tax. It is the level of taxation that is interesting; it was capped at 20%. Taxation policy is critical to economic revival. Joseph’s taxation policy for productive income was built on three ideas: simplicity, reasonableness and stability.

Zimbabwe and South Africa need to implement these fiscal concepts in order to increase voluntary taxation compliance and give producers fiscal predictability. Botswana stands out in the region; it has a relatively simple and stable taxation policy, a factor cited by investors as an attractive element strengthening the case for investment in Botswana.

Productive entities need to be taxed at levels close to 20% to create more financial headroom for producers to finance further investments. It is trite economics that money ploughed back as investments by producers triggers a multiplier effect in the economy.

Governments need to rationalise their expenditures so that they can levy low taxation percentages for producers.

A second aspect of Joseph’s allocation triad that needs to be studied closely is his insistence that seed for the field receives an allocation before food. Seed for the field, at a conceptual level, stands for investment in productive pursuits. Food, conceptually, represents consumptive necessities. At the descriptive level, citizens need to be educated that they need to set aside funds from their income for their own productive enterprises before they can fund necessities such as food.

We can now introduce the second passage of scripture. Proverbs 24:27 (NKJV) states: “Prepare your outside work; Make it fit for yourself in the field; and afterward build your house.”

Proverbs 24:27 presents a subconcept of the Joseph king-seed for the field-food allocation principle. It is clear that “seed for the field” in Genesis 47:24 and “field” in Proverbs 24:27 speak to the same thing. This means food and house are in the same category — these are perfect indicators of consumptive necessities.

We are now in a position to extract more financial and economic wisdom from these passages of scripture. At the household level, individuals need to adopt a mindset that guides them to first allocate resources towards their own productive endeavours before allocating money to fund consumption.

Production should not be a monopoly of companies; individual citizens must establish some form of productive enterprise. Let me state that the seed-for-the-field concept is not the savings concept. The savings concept holds that households forgo consumption and make that money available to producers other than themselves.

The seed-for-the-field concept says individuals must deliberately set aside funds from their income, no matter how inadequate it seems, and invest it in top-quality assets that fulfil two conditions: generate cash flow and initial investment (seed) to grow in multiples, for example, 2x, 3x, 4x, 5x, etc. Here is the key message to the governments of Zimbabwe and South Africa: concepts such as shared economic growth are woefully.

Ordinary individual citizens must have a wealth-creation mindset no matter how small that wealth may appear to be. The standard assumption that households are consumers is very faulty. Households must be producers and investors before they are consumers.

This is Biblical wisdom that will create formidable Zimbabwean and South African economies. Zimbabwe, in giving out land to Zimbabweans, it was on the right path. The model was not holistic in that many recipients who benefitted from land allocation did not follow Joseph’s king-seed (for the field)-food allocation sequence.

Many abused government aid for the field by treating it as food instead of using it for productive pursuits. So a cycle of perpetual dependence on government handouts and productive inputs set in. If the king-seed (for the field)food mindset had been developed in Zimbabweans, the initial boost by government should have been used to create internally generated investment funds (by producers assisted by government), creating self-reliant producers. South Africa’s land reform plans need to learn from this challenge.

Fiscal model from accepted economic models are seriously flawed. They teach that surplus is what remains after meeting planned expenditures.

Stated in Joseph’s triad, it would read king-food-seed (for the field). This is a model that creates and perpetuates poverty and fiscal instability. Many oil-rich Arab nations apply the Joseph triad — they set aside funds (seed for the field) owned by government (meaning owned by citizens) for investment. We commonly refer to these as sovereign wealth funds.

Here we are talking of sovereign wealth funds beyond trust funds held by governments such as pension funds. The Joseph income allocation triad demands that Zimbabwe and South Africa create wealth funds for their citizens, especially for posterity. The two governments should lead by example; they must leave an inheritance of wealth to future citizens of grandchildren, not leave future generations saddled with debt. Individuals must do the same. Zimbabwe and South Africa will benefit immensely from appropriating ideas on economic and financial management from the Bible.