The Future is Equal

Poverty and extreme inequality worsen in southern Africa as COVID-19 battered countries embark on a dangerous austerity path

The COVID-19 pandemic has worsened the extreme inequality in Southern African Development Community (SADC) countries and pushed millions into poverty, reveals a new analysis from Oxfam, Norwegian Church Aid (NCA) and Development Finance International (DFI).

The Commitment to Reducing Inequality Index (CRI) report shows that the fifteen SADC member states lost about $80bn in 2020 due to lower-than-expected growth. which is equivalent to around $220 for every SADC citizen.

This analysis estimates that this economic crisis could take more than a decade to reverse, erasing all hope of countries meeting their national development plan targets to reduce poverty and inequality by 2030.

The organizations say that if countries act decisively now against inequality, with policies aimed to help support citizens with public services and support, the impact of the crisis could be reversed in just three years. However, the report finds that SADC countries have responded with belt-tightening measures that are likely to do more harm to people than good.

“The poorest in our societies are bearing the brunt of Covid-19 and are now facing the extra cost of austerity policies. Governments have a choice and must act now to reverse damage of the pandemic, increase social spending and tackle the inequality crisis”, says Felix Ngosa, senior programme officer in Norwegian Church Aid.

As many as 35.5 million people in SADC countries lost their jobs in 2020 due to the pandemic, down by 26% on 2019 employment numbers. The Democratic Republic of Congo, Madagascar and Tanzania were hardest hit, with over five million jobs lost in each country.

While the majority of SADC citizens have suffered from the pandemic and its effects, the story is different for the region’s wealthiest people. The six wealthiest men in SADC – four in South Africa and one each in Tanzania and Zimbabwe – saw their wealth expand from $18.1 billion to $27.7 during the two years of the pandemic, a 42% increase in real terms. This increase is more than enough to fund a full COVID vaccination program (plus a booster) for everyone in SADC. The richest 10% earn around or above 60% of national income in eight SADC countries, and 50% in the other seven, the report finds.

This wealth concertation by a small group of people has left a majority struggling to meet their most basic needs, such as quality education, healthcare and decent jobs.

“The findings of this analysis are shocking, but they confirm the reality of many countries in this natural resource-rich but poor and unequal region” says Dailes Judge, Oxfam in Southern Africa Programme Director. “The inequalities in most countries in the region are major drivers of reduced economic growth and weakened essential services such as quality healthcare and education”.

“Sadly, a majority of the people feeling the sting are the poor – those living in vulnerable conditions with little or no assets. Women- headed households represent a distressingly large proportion of those struggling and suffering.”

In 2021, with COVID-19 infections rising, the critical health, social protection and economic programs put in place by most governments in 2020 were rolled back and replaced with austerity policies, in the context of growing debt burdens and lack of external support for country budgets.

Governments have felt pressured by their increasing debt service payments to cut social spending. Even before the pandemic, debt servicing was reaching astronomical levels with SADC governments spending almost three times as much on domestic and external debt service as there were on health. In 2020–21, debt servicing took 42.2% of government revenues on average.

The report says that many Southern African Development Community (SADC) member governments are still showing considerable commitment to fighting inequality – but still nowhere near enough to offset the huge inequality produced by the market and exacerbated by the COVID-19 pandemic.

“The combination of budget cuts, rising debt and a slow recovery due to global vaccine inequity risks raising the SADC inequality crisis to new heights,” says Mathew Martin, Development Finance International Director.

“Recovering from the pandemic, however, offers SADC governments a once-in-a-generation opportunity to do what their citizens want – to increase taxes on the wealthy and large corporations, to boost public spending especially on healthcare, education and social protection, and to boost workers’ rights in order to tackle joblessness and precarious work. With external support, for instance through debt relief and aid, SADC governments could reduce inequality drastically and eliminate extreme poverty by 2030.”

Notes

Southern Africa is the most unequal region in the world and contains the world’s three most unequal countries (South Africa, Namibia and Zambia), and another 3 of the 10 most unequal (Eswatini, Mozambique and Botswana). All SADC member states, except Tanzania and Mauritius, are in the top 50 most unequal countries.

The region has low proportions of workers with formal contracts and rights (and therefore access to sick pay, job protection, etc.), with fewer than 40% having such rights in Malawi, Zimbabwe, Angola, DRC, Zambia, Tanzania, Mozambique and Madagascar.

Many countries had limited access to essential health services, reaching under 50% of the population in seven countries, and forcing 5.4% of people to spend catastrophic proportions (i.e. more than 10%) of their income on healthcare across the region. These poor indicators reflected low commitments to healthcare spending, with this accounting for under 10% of government budgets in Zambia, Mozambique, Malawi, Madagascar and Tanzania.

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