Oxfam challenges African leaders to champion new economic models that are ‘fit for the future’

African leaders must build a new more 'human economy' to tackle inequality and poverty, said Oxfam today ahead of the World Economic Forum (WEF) on Africa. The meeting, which takes place in Durban from 3 – 5 May, will bring political and business leaders together from across the continent to discuss how to achieve inclusive growth. 

New data on top incomes from the Brookings Institute reveals that levels of inequality in many African countries are far higher than previously thought. Seven of the 20 most unequal countries in the world are African: Swaziland is the world’s most unequal, now closely followed by Nigeria. In South Africa, three billionaires own the same wealth as the poorest half of the population – around 28 million people. 

Decades of record GDP growth have benefited a wealthy elite but left millions of ordinary Africans behind. As a consequence, poverty has declined more slowly in Africa than any other region, and pessimistic growth forecasts predict that a further 250 to 350 million people could be living in extreme poverty within the next 15 years. The human cost is felt the most by women, young people and children. In middle-income Nigeria over ten million children do not go to school, and one in ten do not reach their fifth birthday. 

Winnie Byanyima, Executive Director of Oxfam and co-chair of WEF Africa 2017 said: “Inequality in Africa is fuelling poverty, fracturing our societies, and stifling the potential of millions of people. It will become a major drag on economic growth. Africa should stop imitating the failing policies of Europe and America and develop a new economic model that works for all Africans – not just the fortunate few.” 

“African leaders must not kid themselves. If the well being of our people and the protection of our environment are our primary aims rather than a hoped-for by-product of free markets, we need to explicitly design economies to achieve these things,” said Byanyima.

A new Oxfam report, ‘Starting with people,’ sets out how Africa’s political and business leaders can use economic and taxation policy and social spending to build economies that work for all. 

• Invest in economic activities that support people’s livelihoods. Over half of Africa’s total labour force works in agriculture, yet smallholder agriculture, that offers the greatest potential to reduce poverty, has been neglected for decades. More investment is needed to provide extension workers to train men and women, access for all to credit, technology, and social protection; and support for light manufacturing and agro-processing that creates value for producers and will meet the demand from growing urban markets.  Africa currently imports a third of its processed food and drinks – a far higher share then Asia or Latin America.

• Foster business models that share the benefits of economic success with their workers and society as a whole. Alternative business structures, such as cooperative or social enterprises, are not new. Nearly half of all Kenyans derive their livelihoods from the cooperative movement, in which enterprises directly benefit their producer-owners 

• Create tax systems that ensure big business and wealthy individuals pay their fair share of tax. African countries lose billions every year because of tax dodging and overly generous tax incentives. It was estimated that Kenya, Tanzania, Rwanda and Uganda spent up to $2.8 billion a year on corporate tax incentives in 2012, yet business surveys indicate these types of incentives play a very small role in attracting foreign investment. 

• Resist the pressure to privatize education, invest in public services particularly healthcare and education - and remove barriers, such as user fees, which prevent the poorest people in society from accessing these services. 

“Oxfam is not advocating a return to Africa’s economic past – we are championing economies that are fit for the future,” said Byanyima. “New economies that create quality jobs rather then just GDP growth; foster businesses that enrich all of society, not just their shareholders; support public services that will create a healthy educated workforce; and build tax systems where everyone pays their fair share.” 

Oxfam South Africa Executive Director Siphokazi Mthathi said: “We would like to see an economic revolution across Africa which ensures that the poorest people can share the benefits of economic success. The favoured approach of donors, many governments, and WEF is to invest in large-scale industrial agriculture and ‘mega’ public-private-partnerships that do more for the bank balances of an already wealthy elite then for women or those living in poverty. African leaders must start putting people first.”