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Ten drivers of inequality in Africa

85 people hold as much as half the world's wealth, while millions live as refugees across this continent with nothing to their names

By Alex Prats, HECA Deputy Regional Director

Globally, the 85 richest people hold as much wealth as half of the world’s population. These current levels of inequality are outrageous and condemn millions of women, children and men to live in poverty. This is why Oxfam will launch a new global campaign to fight inequality later this month.

Our new campaign will seek to reverse the existing patterns of increasing inequality between the rich and the poor. We are determined to create changes so that all people have similar opportunities to flourish and strive, regardless, for instance, of place of birth or sex. However, if we want to succeed, we first need to identify and grasp the key drivers of inequality in each specific context where we operate – be it local or global.

What follows is a list of ten drivers of inequality in this region. Not all are equally important everywhere, but when inequality is unpacked in a given territory it becomes visible that combinations of these have certainly worked as its determinants.

    1. Unfair tax systems. Tax systems lead to inequality when the poorer pay more taxes than the richer, when measured as percentage of total income. Also, in many African countries, the revenue foregone due to excessively generous tax incentives to multinational companies has often been compensated by higher taxes on consumption (eg. VAT), which has brought an excessive tax burden on the poor. According to Tax Justice Network-Africa, tax incentives to multinational companies cost Kenya, Tanzania, Rwanda and Uganda a total of US$ 2.8bn every year. Finally, international loopholes make it easy for the rich to engage in tax avoidance and evasion strategies, thus artificially – if not illegally – increasing their capital gains. Policy makers need to introduce reforms to ensure that companies and rich individuals pay their fair share of tax. This also includes fostering cooperation on tax matters to reverse the current race to the bottom caused by competition to attract foreign direct investment.
    2. Corruption and illicit financial flows. Research by the Global Financial Integrity (GFI) revealed that corruption and illicit financial flows have cost African countries as much as $854bn between 1970 and 2008. This amount is double the amount that Africa received as official development aid over the same period.  This financial haemorrhage has been motivated and facilitated by decades of intense financial deregulation, coupled with the emergence of tax havens where corrupt officials and criminals can easily hide their ill-gotten money away from authorities. Initiatives such as the Stolen Asset Recovery (StAR), which seeks to bring stolen capital back to where it belongs, have produced positive but limited results so far. As GFI shows, the cost of corruption and illicit financial flows seems to have been higher in countries with rich natural resources, such as Sudan and DRC. According to investigations conducted by Global Witness, the Government of the DRC is alleged to have sold off major mining concessions in secret and at prices steeply below market value, losing out on at least US$1.36bn in the process – equivalent to twice the country’s health and education budgets combined. The bulk of the money obtained is alleged to have gone, according to the investigation, to a number of offshore companies, mostly registered in the British Virgin Islands. Policy makers need to foster transparency in public affairs and tackle financial secrecy so that corrupt officials have less opportunity to siphon away public resources.
    3. Unfair distribution of public investment and expenditure. Inequality increases when some groups of citizens are given much better access than others to essential services like education and health, or to infrastructures such as roads or electricity. This has been the case in countries such as Kenya, Uganda or DRC, among others. For instance, violence in Kenya after the 2008 elections cannot be understood without taking into consideration what has been referred to as the ‘politics of identity’. In the countries mentioned above, for many decades, networks of patronage have benefitted specific groups of the population over others, based on factors such as ethnicity or religion, thus significantly contributing to increasing inequality.  In some cases, patronage dynamics in post-independence Africa have mirrored those established during colonialism.
    4. Unfair access to land. Similarly, public policy has determined access to land. In many countries we have seen processes of land concentration in the hands of a few rich and powerful individuals. Land-grabbing by foreign investors has also negatively affected the poor. Every second, poor countries loose and area of land the size of a football pitch to banks and private investors. Policy makers need to establish policies that help combat landlessness and promote equal opportunities to access land and other natural resources, such as water, that are essential to agriculture and food security.
    5. Unfair access to capital, knowledge and technology. In today’s world, the possibility to strive is determined by one’s capacity to access capital, knowledge and technology. It is for instance the weak access to these three assets what explains, among other factors, the vulnerability of populations living in arid and semi arid lands of East Africa to suffer the consequences of droughts. Capital, knowledge and technology are essential to build population’s resilience to natural disasters. Access to these factors also determines the options for citizens to become entrepreneurs, thus contributing to jobs creation and economic diversification. Although mobile phone-related services have brought significant improvements in this area, there are still big chunks of population in Africa that are not able to benefit from the potential they offer.
    6. Privatisation. In some instances, privatisation of public services, such as provision of water and sanitation, has had a negative impact on those that cannot afford the prices established by the private sector. Policy makers need to adopt measures to ensure that privatisation fulfils the citizens’ most fundamental human rights, rather than undermining them. In South Africa, for instance, the effects of the privatisation of water services has led some analysts to talk about ‘water apartheid’, a term used to describe the challenges found by some specific groups of the population to secure their right to health. A similar story could be told for education.
    7. Unfair access to information and exclusion from public decision-making. Deficits in governance create the perfect context for injustice and inequality to flourish. Lack of transparency and exclusion from decision-making of specific groups of the population create the conditions in which unfair policies, as the ones described above, are developed. In the extreme, there have been cases where the state apparatus has been controlled by elites and used to their own benefit, at the expense of the rest of the population. In order to reduce inequality, policy makers need to ensure that all citizens enjoy equal access to information and have equal opportunities to influence and shape the policies that affect their lives.
    8. Gender injustice. Inequalities between men and women have mostly been determined by policies, practices and beliefs that have favoured boys and men over girls and women. Girls and women have had, in many places, more challenges to gain access to land and capital, more barriers to go to school, or more obstacles to take part in politics and public decision-making. This is the case in Somalia, where the discrimination of girls and women has been a key driver of inequality. In fact, Somalia scores as the fourth worst country in the Gender Inequality Index. We need to urge policy makers to promote gender justice if we want to see more equal societies. This would not only benefit girls and women, but all.
    9. Impunity and control of the judiciary. The rule of law must apply equally for all citizens. No one should be allowed to enjoy impunity for crimes committed, including organised violence, the stealing of public resources or the illegal collusion between political and economic interests. In places where impunity is rife, this has become a key driver of inequality, and citizens have the added challenge of demanding reforms in order to protect one of the basic pillars of democracy.
    10. Conflict. In some cases, violence and conflict have not just produced poverty, but have been a way to reaffirm and perpetuate power over specific groups of the population, or to consolidate privileged access to public wealth, be it the treasury or natural resources. In places such as Eastern DRC, policy makers should reform the police and security sector, and implement effective plans to disarm, demobilise and reintegrate combatants. Greater levels of equality cannot be achieved amidst violence.

            Understanding which of these factors drive inequality in a given territory and identifying the groups that suffer the consequences mostly are the first steps required to reverse it. This is why, at Oxfam, we all feel excited to have partnered with Blog Action Day to engage in a global conversation about inequality, in Africa and elsewhere around the globe. And this is also why we will work hard with our allies to deliver a successful campaign.

            It is now time to set the new terms of the debate and make the voices of the poor and powerless heard !

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