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Ever heard of the 80/20 performance principle? Vilfredo Pareto, an economist in the early 1900s, made a famous observation where 80% of the nation’s wealth belonged to 20% of the population.

 

This was later generalized into what’s commonly referred to as the Pareto principle (also known as the 80-20 rule), which states for any phenomenon, 80% of the consequences come from 20% of the causes.

 

Born July 15, 1848 in France, Vilfredo Pareto died August 19, 1923 in Lausanne, Switzerland. He made several important contributions to economics, sociology and moral philosophy, especially in the study of income distribution and in the analysis of individuals’ choices.

 

He introduced the concept of Pareto efficiency and helped develop the field of microeconomics with ideas such as indifference curves. His theories influenced Benito Mussolini and the development of Italian fascism.

 

The Pareto family moved to Italy in 1858. In 1870, Pareto received an engineering degree from the Turin Polytechnic Institute and he took employment with the Italian state railways.

 

In 1886, he became a lecturer on economics and management at the University of Florence. In 1893, he was appointed as a lecturer in economics at the University of Lausanne in Switzerland where he remained for the rest of his life.

 

In 1906, he made the well-known observation that 20% of the population owned 80% of the property in Italy, later generalized (by Joseph M. Juran and others) into the so-called Pareto principle (for many phenomena 80% of consequences stem from 20% of the causes), and generalized further to the concept of a Pareto distribution.

 

What Do Zambian Abroad Have To Do With Pareto Principle? There are several estimates; most of them very unverifiable about the actual number of Zambians living abroad. Some say there are over three million some say two million and whatever the figure, reasonable estimates maybe just about the later.

 

Let’s say there are really about two million living abroad then with a population of roughly ten and half million, Zambians abroad are roughly 20% of the entire population.

 

While latest figures show that the current GNP per capita income for those living within the Zambian Enterprise is $1,033.00, unconfirmed reports show that of those living abroad to roughly $29,898.00.

 

The Zambian government earned about $10 million in terms of tax revenues for the fiscal year ending 2007 but Zambian living abroad sent well over $30 million home far exceeding total GRZ revenues from all sources.

 

If we were to use the Pareto Principle one would argue that the 20% is not producing the required 80% but at least we have seen that there exists some capacity to be fully cultivated and be put to good use.

 

It is no wonder that when President Levy P Mwanawasa, SC called Zambians living abroad as failures who according to him at the time were individuals who could not make it at home was quickly excoriated by those familiar with the premise.

Top remittance recipient countries

Country  

Remittances (2003–2004)  

Remittances (2006–2007)  

Remittances (2007–2008)  

India

$21.7 billion

$26.9 billion

 

China

$21.3 billion

$22.52 billion

 

Mexico

$18.1 billion

$24.7 billion

$23.97 billion

France

$12 billion

 

 

Philippines

$12 billion

 

 

Pakistan

$3.9 billion

 

 

Bangladesh

$3.4 billion

$ 5.97 billion

 

 

Imagine if the Zambian Enterprise could receive remittances close to the figures enumerated above, what an impact that could have as economic engine. Remittances are playing an increasingly large role in the economies of many countries, contributing to economic growth and to the livelihoods of needy people.

 

Remittance receivers often have a higher propensity to own a bank account and remittances promote an essential aspect of leveraging cash flow to promote economic development.

 

Money sent home by migrants constitutes the second largest financial inflow to many developing countries, exceeding international aid.

 

Latest estimates vary between IFAD estimates of [US$]]401 billion and the World Bank information from central banks at a more conservative [US$]]250 billion for 2006 and these figures are increasing by almost 30% year on year.

 

No one can have it both ways, you either benefit from remittances or you don’t and the Zambian classy-daddy-3.gifGovernment needs to encourage those living abroad to contribute to national development by encouraging them because these transfers also promote access to financial services for the sender and recipient, thereby increasing financial and social inclusion.

 

That’s this week’s memo from us at the Zambian Chronicle, thanks a trillion.

 

Brainwave R Mumba, Sr.
CEO & President – Zambian Chronicle

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