The continent of Africa figures prominently in shocking new statistics that prove we are in the midst of a full-blown global inequality crisis. Six African countries-South Africa, Namibia, Botswana, Zambia, Central African Republic and Lesotho-are among the top 10 most unequal countries in the world. In these six countries, the richest 10 percent of the population own, on average, almost half their countries’ combined total income; the poorest 10 percent earn just one percent.
This extreme division of wealth is part of a worldwide trend that is-in every sense of the word-indefensible. Oxfam’s new inequality report published today before the World Economic Forum in Davos, An Economy for the One Percent, says that just 62 individuals now have the same wealth as the 3.6 billion people who make up the poorest half of the world’s population. As recently as 2010, 388 of the world’s richest people shared this dubious honour. So the problem is getting worse, despite the fact that world leaders are talking openly now about needing to tackle inequality and, in September last year, actually agreed a global goal to reduce it.
The consequences of these new extremes are huge. Economic inequality can act as a brake on growth, slow poverty reduction efforts, and spark social unrest. Oxfam estimates that the much-heralded goal to eradicate extreme poverty by 2030 will be missed if we do not resolve inequality. The damage that inequality does to people’s lives can be seen across our continent-for schoolchildren whose education is cut short because they cannot afford school fees, for women who work long hours but whose incomes do not cover their rent or the cost of the medicines for their children.
Of course, we must be proud of those in Africa who are doing well. It is good news that people across this continent are establishing businesses, developing new technologies and running multinational corporations.
But inequality on this level is not simply the natural outcome of talent, hard work and healthy competition. Over the last 30 years unchecked deregulation, privatisation, financial secrecy and globalisation has enabled companies and well-connected individuals to use their power and influence to capture and retain an ever-increasing share of the benefits of economic growth while the benefits for the poorest have shrunk.
As the President of the World Bank stated last year, wealth is simply not trickling down – it is being sucked up by a powerful and wealthy minority. And once there, an elaborate system of tax havens and an industry of wealth managers ensure that it stays there – far from the reach of ordinary citizens and their governments.
Tackling extreme inequality across Africa is going to require action on many fronts. Governments, businesses and those creating wealth in Africa must build inclusive economies that provide decent jobs for young people; reward hard work with fair pay; invest in health care and education, promote the economic empowerment of women and address injustices in the ownership of assets such as land. African governments must fight corruption which is diverting scarce resources from public budgets. Among the most urgent actions on the ‘to do’ list must also be putting a stop to tax havens.
By allowing super wealthy corporations and individuals to avoid paying their fair share of tax, tax havens are denying our governments’ vital revenue that could and should be spent on schools, health care, roads and other essential service and infrastructure.
Almost a third of the wealth of rich African—a total of $500 billion—was held offshore in tax havens in 2013, costing African countries an estimated $14 billion a year in lost tax revenues. This is enough money to pay for health care that could save the lives of four million African children and employ enough teachers to get every African child into school.
That is why I will be pressing political leaders, CEOs and others in Davos to act. I will be asking wealthy individuals and business leaders to commit to bringing their money back on shore and I will be urging our politicians to work together to agree a new global approach to end tax havens. n