Corruption News

Inequality a product of policy and political choices – Oxfam


The Herald

Moses Magadza in Malawi

LILONGWE – The Head of Oxfam Country Office in Malawi Oxfam in Southern Africa, Ms Linga Mihowa, has stated that every government has the power to reduce inequality, no matter how poor or wealthy it may be.

Mihowa expressed this view in remarks she delivered on behalf of Oxfam in Southern Africa to the 51st SADC Parliamentary Forum in Lilongwe on 14 July, 2022.

Oxfam is a social justice organisation working at the intersection of poverty and inequality. Mihowa urged SADC parliaments to promote accelerated moves towards people-centred national budgets for high-quality public services in health, social protection and education.

“In this regard, Oxfam and its partners would be happy to work with SADC PF in facilitating generation and sharing of research evidence from the sectors in respective countries to support the cause for increased investments in these sectors,” Mihowa said.

She added that Oxfam welcomed the SADC PF leadership’s initiative to develop the SADC Model Law on Public Finance Management, because it will ensure that parliaments in SADC are enabled to conduct their legislative, budgetary, oversight function for PFM to be transparent, efficient and responsive to citizens in SADC.

“We believe such a Model Law should address moves to redistribute income through progressive and equitable taxation, strengthen budget accountability and fight corruption,” Mihowa said.

She highlighted that for the past two decades, Africa has experienced remarkable economic growth but only a tiny fraction of the continent’s population benefited from this economic growth, leaving hundreds of millions behind.

“As such, economic inequality in Africa is extremely high, making the continent among the top unequal in the world,” she noted.

According to Mihowa, Southern Africa is the most unequal sub-region, not only in Africa but in the world too. The region has six of the top-most unequal countries in the world. These are South Africa, Namibia, Zambia, Eswatini, Mozambique and Botswana.

Mihowa told the Forum that extreme inequality had been super-charged by various mutual and reinforcing factors including decades of colonial legacy that continue to plague the region.

“In South Africa for example, racial inequality is so high and has barely edged down since the end of apartheid nearly a quarter a century ago,” she noted.

She said although the SADC region is endowed with huge natural resources, the extractive sector contributes about only 10% of SADC GDP and about 20% of national government revenues.

She argued that instead of working for the well-being of everyone, the sector had become a poverty trap and an inequality enabler, working for a tiny minority due to transparency and accountability challenges.

Adding to that, problems of illicit financial flows, weak fiscal regimes, corruption and human rights abuses are a cause of concern particularly in mining communities.

The Oxfam official told SADC parliamentarians that agriculture is of significant socio-economic importance in the region, given that most rural communities depend on it for food and income and that the sector employs 53% of the labour force in Africa. Yet despite the enormous social economic potential, the sector has become a poverty trap and inequality amplifier, especially for small holder farmers.

She said small-scale farmers in SADC, as is in Africa as a whole, are net food buyers and are among the poorest. Their usage of inputs is dismal, infrastructure is lacking, financing options are inadequate and market linkages are too weak to support improved productivity.

There is evidence that the region is experiencing worsening food insecurity. In February 2022, SADC indicated that 36 million people were facing severe or moderate food insecurity. Whist climate change was playing a big role, inadequate investments in agriculture by the governments played a bigger one.

COVID-19 has supercharged inequality in the SADC region as dozens of millions have been forced into poverty while vulnerability and inequality have increased and the pandemic has reversed hard-won gains against extreme poverty.

The SADC region has been the worst hit by the pandemic, accounting for about half of the fatalities and cases. The pandemic reduced government revenue as people lost jobs and companies closed. But at the same time, it increased public spending as governments tried to cushion households and businesses from the worst of the pandemic.

Mihowa said global vaccine inequality has seen the region lag in the vaccination campaign. At the global level, the SADC region has been at the forefront in advocating an end to global vaccine inequality. In late 2020, South Africa proposed a waiver on the Covid-19-related vaccine, therapeutic and medical technologies at the World Trade Organisation. She said this was commendable.

The pandemic accelerated public debt which was already on the rise pre-pandemic period and at least 22 African countries were in debt distress or at the risk of distress.

“Five SADC countries are in debt distress or at risk of distress – these are the Comoros, Malawi, Zambia, Mozambique and Zimbabwe. Between 2020-21, SADC countries were spending about 42% of their revenue on debt servicing.

Debt servicing is crowding out government spending on public services like health and social protection. The weakening of local currencies, higher inflation and hike of the interest in wealthier countries were making servicing existing debt costlier,” she added.

Be that as it may, Mihowa said it was unfortunate that some SADC governments were planning massive austerity measures that would only exacerbate an already precarious situation.

She said nearly all SADC countries plan cutting government spending in the next four years and some of the most indebted countries are the biggest cutters. The austerity measures will have a compounding impact on the millions of poorest people in SADC who depend on public services like education and health.

Turning to SADC commitment to fighting Inequality Mihowa said since 2017, Oxfam and Development Finance International had produced a commitment to reducing the inequality index. This composite index measures and ranks about 160 governments’ commitment to reducing inequality through universal public services (health, education, and social protection), progressive taxation and decent jobs.

In 2018 Oxfam and Development Finance International highlighted that some governments in the region had realised the need to take stronger measures to reduce inequality. In 2021, Oxfam, Development Finance International and Norwegian Church Aid showed that while some countries in the region had taken positive strides against inequality, more was needed to offset a massive market inequality, now exacerbated by the pandemic, food crisis and climate change.

“However on a brighter note, SADC is the most committed region after North Africa to fighting inequality in Africa. Six of the top best performers in Africa in the Commitment to Reducing Inequality 2020 index are in SADC region, led by South Africa, Seychelles, Namibia, Lesotho, Botswana, and Mauritius.”

Mihowa said education was key in breaking the vicious cycle of poverty and inequality.

“Investing in a universal, affordable, accessible and quality education is key if SADC countries are to create a formidable human capital. Unfortunately, quality education remains out of reach for children in the poorest households,” she lamented.

The Oxfam official said in SADC, just three percent of pupils from the poorest quintile complete secondary education. Although education spending is relatively good, this means education is not reaching the poorest people thus it is not pro-poor.

She warned that government budgets alone would not reduce inequality without intervention in the inequality produced by the market. This involves the creation of decent jobs and conducive labour rights both in law and in practice, as well as eliminating barriers to women’s participation in the labour market.

Mihowa argued that the manner governments spend is as important as how they collect revenue. Most SADC countries have progressive tax policies on paper, but poor on tax collection only managing 36% of the collectable revenue.

She said economic and wealth inequalities perpetuate gender inequalities and Oxfam was cognisant of the progressive Model Laws that the SADC PF has initiated including the the SADC Model Law on Eradicating Child Marriage and Protecting Children already in Marriage adopted in 2016 and the Model Law on the Prevention of Gender based violence which is currently under preparation.

She said Oxfam and its partners applaud these efforts and will work with member states in popularizing such instruments and ensuring adoption to reduce gender inequalities.

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