Africa

Massive cuts in public spending and regressive taxes fuelling inequality in East Africa

February 4, 2022

The COVID-19 pandemic pushed millions into poverty and dramatically increased inequality in East Africa, but not all are equally affected. 52 million people in Sub-Saharan Africa were projected to be pushed into extreme poverty between 2019 and 2021. But today, the richest 10 per cent of East Africans are earning an average of 47 per cent of pre-tax national income across the region. Meanwhile, the poorest 50 per cent of citizens earn 13.3 per cent of national income.

Instead of taxing the wealthy, East African governments are planning to slash their public spending on pro-poor services like healthcare, education, agriculture and social protection in the coming years.

These cuts will worsen East Africa’s economic crisis, and deepen poverty and inequality in the region, but it is not too late to change direction – says the latest edition of Oxfam and DFI’s Commitment to Reducing Inequality Index (CRII) report. Titled “The Inequality Crisis in East Africa,” the new report will be launched publicly at an international forum of government, civil society, private sector and donor representatives from East Africa and beyond, in Nairobi on 9th February, 2022.

Parvin Ngala, Regional Director (Interim) of Oxfam Horn, East and Central Africa, says:

“With these spending cuts, the region and respective countries risk spiralling into a never-ending cycle of inadequate health services, poor education facilities, economic decline with women and youth caught at the centre of the fall out/unable to maximise and indeed shape the future that the continent has potential for.”

East African countries have seen impressive economic growth in the past two decades, and significant reductions in poverty in most of the countries. But three have seen a widening gap between the richest and the poorest, and there has been little progress in reducing inequality in the other countries.

The pandemic, compounded by locust infestations and climate crises across East Africa, has brought the region’s worst economic crisis in decades, with millions losing their incomes, working hours, and education; exacerbating poverty, inequality and food insecurity:

Over 60 per cent of citizens reported losing income or work due to the pandemic, according to surveys from four East African countries.
The pandemic will push 11 million people into poverty in DRC, 6 million in Tanzania and 2.4 million in Uganda, according to UN estimates.
Some 900,000 Rwandans or 7 per cent of the population will have fallen into poverty by 2021, according to the World Bank.
1 million people in Kenya and 3.8 million people in Somalia are at risk of starvation due to drought.

According to the report, COVID-19 revealed that East African countries were unprepared for a pandemic. They had:

limited access to essential health services – reaching less than 60 per cent of the population in all countries;
an average of 7 per cent of people spending catastrophic proportions (more than 10 per cent) of their income on healthcare;
limited commitment to spending on healthcare, with under 10 per cent of government budgets dedicated to health in almost all countries;
extremely low access to social protection benefits (using pension coverage as a proxy), with only 10.5 per cent coverage on average, and under 10 per cent in six countries;^[1]
very low social protection spending of only 7 per cent of budgets (only 40 per cent of the global average);
an average of only 20 per cent of workers on formal contracts, therefore having rights to sick pay, job protection etc.

During the COVID-19 crisis, many governments increased their spending on health and social protection. But now they have long-term plans to slash public spending, which are being encouraged by lending bodies such as the IMF. From 2022 to 2026, five East African countries plan to reduce annual public spending by $4.7bn compared to 2021, IMF projections indicate. According to “The Inequality Crisis in East Africa,” not implementing these cuts would allow East African countries to quadruple health spending from now until 2026.

In South Sudan, where military generals outnumber doctors, health spending could rise by 13 times if these spending cuts are reversed. On the other hand, the cuts threaten to hamstring the abilities of East African governments to spend on health, education, social protection and food security so as to protect and support those marginalised by the pandemic and the economic crisis.

Matthew Martin, Director of Development Finance International, says:

“All the countries of the region are nowhere near reaching their national development goals on education, health and social protection. If these cuts are allowed to happen, this will mean East Africa is abandoning all hope of reaching the Sustainable Development Goals by 2030, and allowing extreme inequality to grow unchecked.”

To make matters worse, most East African governments have been forced to use more and more of their budgets to service their ballooning debts, rather than investing in their people. The report notes that from 2020 to 2021, 35.2 per cent of government revenues in East Africa were spent on debt repayment, an average of five times as much as they spent on health. South Sudan spent 28 times as much on debt servicing as they spent on health.

So, what can be done to reverse this crisis?

According to DFI and Oxfam, the report shows that taxing wealthy East Africans and corporations would give governments a way out of the crisis, and allow them spend more on public services that reduce inequality. Surveys from Kenya, Ethiopia and Uganda show that over 71 per cent of citizens think it is fair to tax the rich more to fund programmes that benefit people living in poverty. If East African governments increase their tax revenues by just 1 per cent of their GDP, they would raise an additional $4.9bn each year for the next five years, which would be enough to raise health spending by an average of 77 per cent annually.

DFI and Oxfam also argue that comprehensive debt relief is essential for many countries in the region to have enough money to increase spending on basic services

Matthew Martin, Director of Development Finance International, says:

“All countries in the region need to increase taxes on the wealthiest individuals and largest corporations, and stop giving them tax exemptions. But this alone will not produce anywhere near enough money to fund universal free health care, education, social protection, food and water. External creditors should cancel all debt payments between now and 2030 to help pay for these basic needs.”

DFI and Oxfam recommend that East African governments urgently:

reverse the planned budget cuts and increase spending for health, education and social protection.
fund these enhanced spending efforts by increasing taxes on the wealthiest individuals and largest corporations and ending wasteful tax exemptions.
dramatically improve labour rights, including introducing or raising minimum wages.

They also recommend that the IMF and World Bank should transform their lending programmes to encourage East African countries to increase pro-poor and social spending, redistribute wealth through progressive taxation, and enhance labour laws and protections.

They urge the international community to accelerate the distribution of free COVID-19 vaccines to all East African countries, to ensure high levels of vaccine coverage by June 2022; and to cancel all debt service obligations between now and 2030, in order to allow East African countries to reach the Sustainable Development Goals.

Finally, DFI and Oxfam recommend that the African Union and East African Community urgently recognise their members’ inequality crises, and establish a plan and monitoring systems to track government measures to reduce inequality.

Notes to editors

Download the “The Inequality Crisis in East Africa,” report here after Feb 9, 2022 at 00:01 EAT.

The report launch event will take place on 9th February, 2022 at Kenyatta International Conference Centre (Abadares conference hall) in Nairobi, Kenya, and have in attendance dignitaries including (remote or physical):

E. Dr. Abdirahman Dualeh Beileh, Minister of Finance, Federal Government of Somalia (Keynote address)
Haji Farhiya Ali – Senator, Deputy Majority Chief Whip, & member of Committee on Finance and Budget (Kenya)
Eric Wafukho – Chief Administrative Secretary, The National Treasury and Planning Ministry
Usher Wilson Owere – Chairman General, The National Organisation of Trade Unions (Uganda) (remote)
Jason Rosario Braganza – Executive Director, AFRODAD
Filbert Baguma – General Secretary, Uganda National Teachers’ Union (remote)
Gilbert Wangalwa – Deputy Country Director – Amref Health Africa
Alvin Mosioma – Executive Director, The Tax Justice Network Africa (TJNA)
Tang Xiaoyang – Vice Chair, Department of International Relations | Tsinghua University (remote)

^[1] Pension coverage is used as a proxy because data on overall social protection coverage are not available for all countries.

Tough, urgent choices for African leaders as they launch “Year of Nutrition” to help millions of people facing hunger

February 2, 2022

African governments should boost funding for agriculture, address peace and security challenges, and do more to genuinely tackle inequality.

African Union leaders face one of their most important summits (Feb 5-6) in launching a “year of nutrition” amid worsening levels of hunger and malnutrition that are now threatening sustainable development across the entire continent.

One in five people (282m) is now under-nourished and 93 million in 36 African countries are suffering extreme levels of hunger. Women and children are hit hardest. In Sub-Saharan Africa, one in three children under five is stunted by chronic undernutrition while two out of five women of childbearing age are anaemic because of poor diets.

The UN estimates that food prices in Sub-Saharan Africa are now 30-40% higher than the rest of the world, taking into account comparative levels of GDP per capita.

“The triple threat of the climate crisis, COVID-19, and conflict will require an extraordinary response from African leaders. Many countries have already taken important steps, increasing investment in healthcare, providing shock responsive social protection systems and empowering local, women-led, peacebuilding initiatives. However, such actions are still too few and far between,” said Oxfam’s Pan-African Program Director Peter Kamalingin.

“People are having to skip meals to feed their children, selling livestock and other assets, begging, pulling children out of school, or harvesting immature crops. Over three million people in Somalia have recently migrated, in large part because of hunger, while millions of households in pastoralist communities in Chad, Benin, Niger, Mali and Mauritania say they are having to sell more animals than they otherwise would to pay for more food”, said Kamalingin.

Historical injustices, inequality and wealth extraction have left generations of Africans poor and national economies indebted. Africa has stood last in line for Covid vaccines as the rich world hogged supplies. The continent has also been hit hardest by climate change and is already heating at a faster rate than the global average of 1.2 degrees.

“While the deck seems stacked against Africa, there is a lot more that African leaders can do to improve food security. Instead of allocating 15% of national budgets to the health sector and 10% to agriculture, military spending across Africa rose by over 5% in 2020. African’s leaders must prioritize food, trade and medicines over bullets, guns and bombs” said Kamalingin.

Twenty African countries are today facing insecurity and conflict including seven coups in the last year alone. In Ethiopia—the home of the AU—conflict has contributed to catastrophic levels of food insecurity in the Tigray, Amhara and Afar regions.

“AU leaders must make better, more effective use of all existing mechanisms they have to prevent and resolve conflicts,” said Kamalingin.

Here are how regions have been impacted:

The Horn of Africa is experiencing one of its most severe droughts in 40 years, following three back-to-back poor rainy seasons, and there are active conflicts across Ethiopia and Somalia. Nearly 15 million people are suffering from extreme hunger and severe water shortages.
In West Africa, the number of people in need of humanitarian assistance could rise to 35.7 million during the lean season from June to August 2022.
In Southern Africa, communities in southern Zimbabwe, Lesotho, Mozambique, and Malawi are struggling to cope with the cumulative consequences of climatic shocks and COVID-19 economic shocks. Until the 2022 harvest begins in April, many countries, including Madagascar, will continue to rely on food assistance.

Farmers and pastoralists have been particularly hit by food insecurity. Droughts on the continent have decimated thousands of hectares of crops and depleted livestock, often a primary source of income. COVID-19 restrictions have caused delays in the trade of critical agricultural inputs like fertilizer.

Jean-Paul Ndopoye, president of the Union des Riziculteurs de Paoua (URP) in the Central African Republic told Oxfam: “Our major problem is the sale of farm products. With the security crisis and the calamitous state of the roads, we can no longer travel to sell these products in neighboring towns and countries such as Chad. Our wish is to be connected to profitable marketing channels to sell all these products.”

Achta Bintou, who was displaced from her home and now lives in the Amma site in Lake Chad told Oxfam: “Today, the crisis has completely changed our lives. We had to move from Boma to the Amma site where we live in a makeshift shelter that barely hides the sun. Our water is not drinkable and we cannot get enough to eat. Imagine your diet dropping from three meals a day to one.”

Ahead of the Africa Union Summit, Oxfam calls upon African leaders to:

Meet the targets laid out in the 2014 Malabo Declaration to halve poverty and end hunger by 2025 by increasing agricultural investment to at least 10% of government budgets; encouraging women and youth in agricultural businesses and boosting intra-African agricultural trade.
Develop national agricultural investment plans that are gender-sensitive and climate-proof, which seek primarily to support small-scale farmers in non-cash crop sectors.
Commit to non-violent conflict resolution and enforce the African Peace and Security mechanisms that prevent and resolve conflict. They should ensure that international humanitarian law is respected in conflicts and condemn human rights violations and bring perpetrators to account.
Ensure that safe humanitarian access is granted to those most in need.
Adopt the draft Protocol to the African Charter on the Rights of Citizens to Social Protection and Social Security and encourage member states to sign and ratify it, in order to ensure universal access to adequate food and nutrition and to address vulnerability and inequality.
Ensure national humanitarian organizations at the forefront of addressing the hunger crisis, are at heart and centre of the political effort to resolve it.
Drawing lessons from the COVID-19 pandemic injustices, and collectively investing in partnerships that secure long-term health for Africans, including allocating 15% of annual budgets to health as per the Abuja declaration.
Redouble Africa’s political voice to urge heavy carbon emitters, like China and the United States, to reduce their emissions, pay for the loss and damage that the climate crisis is causing in Africa, and to support Africa in mitigating the impact of climate change.

Notes

Oxfam has reached nearly 12 million of the most vulnerable across 22 countries in Africa with lifesaving support including clean water, food, and cash. In addition, together with our local partners, we work on gender, climate, and income generation programs to help people rebuild their lives, demand for their rights and cope with the devastating impact of climate change.
The number of people unable to afford a healthy diet in Africa is 1 billion, or one third of the global figure. Source: FAO et al., “State of Food Security and Nutrition in the World 2021”
FAO figures on the prevalence of undernourishment in Africa (including N. Africa) = 21% in 2020, up from 17% in 2015. That translates to 282 million people, up from 200 million in 2015. Ibid.
Figures of “nearly one out of five Africans experienced hunger in 2020 – more than double the proportion of any other region” from Policy Brief: Africa and Food Security. United Nations, Office of the Special Adviser on Africa October 2021
Figures on extreme coping mechanisms are from WFP food security analysis monitoring survey. Data is collected on a rolling basis. For more details on the methodology kindly check the Hunger Map
Figures of sub-Saharan women being anaemic and children under five being stunted is from the Global Report on Nutrition 2021.
The number of African countries facing conflict based on figures from Uppsala Data Conflict Program and International Crisis Group reports.
State of Climate in Africa https://public.wmo.int/en/our-mandate/climate/wmo-statement-state-of-global-climate/Africa
Data on arms sending and conflict in Africa from SIPRI trends in World Military Expenditure 2020
Food price figures from OECD report. Also, in the 20 Sub-Saharan African countries for which there is monthly price data, food prices were up 11% in October 2021 as compared to a year earlier.

Oxfam is today greatly saddened at the loss of Archbishop Desmond Tutu

December 26, 2021

Gabriela Bucher, Executive Director of Oxfam International said: “All of Oxfam is united in grief at the death of Archbishop Tutu. We express our deepest condolences to the Archbishop’s wife Leah, their children and grandchildren. We express our condolences to the South African people”.

“Rarely does a name inspire so much courage as that of Archbishop Tutu. The flame that Archbishop Tutu carried against injustice lit millions more. The world is a better place because of him”.

“Archbishop Tutu was Oxfam’s former global ambassador – raising global attention and tackling issues with us, from global hunger to the climate crisis. He was a friend, and a critical friend when needed. Most recently he gave his support to tackling the issue of global vaccine inequality”.

“Oxfam’s own role in supporting the anti-apartheid movement forged our own connection with his generation of leaders, who continue to inspire us today. Oxfam will play its part in preserving his legacy by continuing the struggles that he fought for throughout his life.”

COVID-19 recovery in West Africa is “austerity on steroids” and sets the region on a destructive path ahead: Oxfam

October 14, 2021

Austerity, spiralling debt and vaccine inequity will bring the inequality crisis to levels never reached before, reveals new index.

West African governments are planning to “slash and burn” their way out of COVID-19 induced economic loss, reveals new analysis from Oxfam and Development Finance International (DFI) today. The organizations are calling for an urgent change of course as West African governments are preparing their annual budgets and participating in the Annual Meetings of the World Bank and IMF, which are crucial discussions to focus the recovery on fighting inequality and poverty.

The Commitment to Reducing Inequality Index (CRII) shows that 14 out of 16 West African nations intend to cut their national budgets by a combined $26.8 billion over the next five years in an effort to partly plug the $48.7 billion lost in 2020 alone across the entire region due to the pandemic. Such austerity has been encouraged by the IMF, through its COVID-19 loans.

This massive raid on public finances could push millions more West Africans into poverty and hunger and potentially trigger the worst inequality crisis in decades. Women will be impacted more severely due to their very high concentration in low paid informal jobs and unpaid care work. Meanwhile, the collective net worth of West Africa’s three wealthiest men surged by $6.4 billion in the first 17 months of the pandemic ―enough to lift 18 million people out of extreme poverty.

“This plan is austerity on steroids,” said Oxfam’s West Africa Regional Director Assalama Dawalak Sidi. “Rather than investing toward a positive new future for the people of West Africa, the region’s governments are instead reaching back to a 1980s playbook ―despite it being a hugely discredited one. The danger is that these governments will cut their way into worsening poverty and skyrocketing inequality.”

“This comes at a time when the region has lost the equivalent of seven million jobs, infection rates are increasing, there is no vaccine in sight for the vast majority of people and the Sahel is facing one of its worst hunger crisis,” said Sidi. “This is not the time for governments to be ripping away the public goods, support and services that millions of people need.”

The index ranks 15-member states of the Economic Community of West African States and Mauritania (ECOWAS+) on their policies on public services, tax, workers’ rights, smallholder agriculture and pandemic response spending, all areas pivotal to reducing inequality and weathering the COVID-19 storm.

The index highlights that West African governments are again the least committed to reducing inequality in Africa. Most support measures in response to COVID-19 were temporary and did little to reduce inequality, while triggering a sharp increase in debt ―debt servicing in 2020-2021 will siphon off about 61.7 percent of government revenue in West Africa. The support programs have been replaced with austerity measures as COVID-19 infection rates are increasing in many countries of the region. Less than 4 percent of West Africans are fully vaccinated.

Sierra Leone ranks low (13th) on the index. Its government was trying to implement anti-inequality policies before COVID and sharply increased education and health spending. But large corporations pocketed 92 percent of government pandemic support funding, while only 1.5 percent was spent on social protection. Sierra Leone’s $860 million upcoming spending cuts (2022-26) are equivalent to two and a half times its annual healthcare budget.

Nigeria was the region’s worst performing country in tackling inequality going into the pandemic. Nigeria’s health budget (as a percentage of its overall budget) is the third lowest in the world (3.6 percent) and 40 percent of its population does not have access to healthcare services. Nigeria loses $2.9 billion a year from tax incentives to corporations but in 2021 increased value-added taxes (VAT), which apply to everyday products like food and clothing and fall disproportionately on poor people, from 5 percent to 7.5 percent.

Mali has the highest level of income equality among ECOWAS countries with a tax rate on the richest people that is 9% higher than the world average. But it ranks last on healthcare spending, devoting less than 5 percent of its annual budget on health. Nearly 38 percent of Mali’s population (8 million people) have no access to healthcare and 6.5 percent of households face catastrophic healthcare costs spending each year. Women’s labor rights are often not respected and they lack legal protection from marital rape and sexual harassment. Mali plans to slash its budget by $3.3 billion over the next five years.

Burkina Faso ranks middle (9th) on the Index. It spends nearly 23% of its budget on education, the highest share in the region and 9th in the world. But the wealthiest 20% of the population has 44% of the income, and in rural areas, 47.5% of the population lives in poverty. According to the IMF, such a level of inequality reduces Gross National Product growth by at least 1% per year. The government plans to cut $1.27 billion through 2026.

If the governments of West Africa were to increase fairly their tax revenue by 1 percent in the next five years, they would raise $56.89 billion. This is more than enough to cancel the planned $26.8 billion budget cuts and build 600 fully-equipped hospitals across West Africa.

Matthew Martin, Director of Development Finance International, said: “West Africa is at a crossroads. Will the region come out of COVID-19 with policies which exacerbate inequality, or implement a recovery plan that works for everyone and not only for the privileged few?”

“The pandemic has taught us it is urgent to invest massively in public education, health and social protection and to use more progressive taxation of income and wealth to pay for this. We also need to increase worker’s rights ― especially for women who disproportionately take on the most precarious jobs.”

Notes

Download Oxfam and DFI’s index “The West Africa Inequality Crisis: Fighting Austerity and the Pandemic” and country profiles.

Oxfam and DFI published in 2019 the first “West African Commitment to Reduce Inequality (CRI) index” showing that West African governments were the least engaged across the continent in reducing inequality.

Download “Adding Fuel to Fire: How IMF Demands for Austerity Will Drive Up Inequality Around the World” for more in-depth analysis on austerity measures encouraged by the IMF through its COVID-19 loans. Between March 1, 2020 and March 15, 2021, all countries in West Africa received IMF emergency support to respond to the pandemic through various types of loans. For more information on austerity measures encouraged in the loans received by West African countries refer to Annex 1 and Annex 2 of the report.

Oxfam Report: After the storm – barriers to recovery one year on from Cyclone Idai

March 10, 2020

Tens of thousands of people across Zimbabwe, Malawi and Mozambique are still suffering 12 months after Cyclone Idai battered Southern Africa, warned Oxfam today. Cyclone Idai, one of the worst cyclones to hit Africa, made landfall on 14^th March 2019.

A new Oxfam briefing, ‘After the Storm,’ highlights that over 100,000 people in Mozambique and Zimbabwe are still living in destroyed or damaged homes and makeshift shelters, while critical infrastructure including roads, water supplies, and schools have yet to be repaired making it difficult for people to access vital services or get back to work. It also shows that 9.7 million people across the three countries remain in desperate need of food aid as a result of cyclones, floods, drought and localised conflict.

Click here to read After the storm – barriers to recovery one year on from Cyclone Idai

Tiger toilets on the rise

January 4, 2017

A stunning low-cost piece of green technology is changing toilets around the world: The tiger worm.

As the ranks of migrants reaches 65 million and refugee camps swell, development agencies are facing up to a rather large problem – how to create a low-cost, flexible toilets.

Enter the tiger worm or the African Night Crawler. This worm measures 8 inches. It can exist purely on human faeces. And it has a voracious appetite.

“It’s a multi-national citizen and it has proven itself to be highly adaptable,” says Andy Bastable, Oxfam’s head of water and sanitation.

Andy Bastable became acquainted with the tiger worm in 2002 in Ethiopia and instantly thought it could be a better more sustainable, cost effective alternative for the 4 million people who use latrines that are unhygienic or unpleasant.

The toilets work like a sophisticated wormery – the worms sit on a bedding mix of coconut fibre to create a vermicompost that is passed through sand, gravel and charcoal.

As well as reducing the sheer volume of the waste by 70-80%, the end product – vermicompost – comes loaded with mico-organisms that helps to supress disease-causing pathogens. So it only needs to be sludged every five years or so.

In the past two years, Andy and his team worked on proving the effectiveness of the tiger toilet across semi-urban, rural and refugee camps in Myanmar, Ethiopia, Liberia, India and Kenya. So far, over 1000 tiger toilets have been installed.

“The tiger toilets have survived fluctuating temperatures, a monsoon in India, occasional overuse, and even flooding.” The only challenge? Getting your hands on this highly-prized piece of green technology. “You just need 1kg- 2kg of tiger worms to get you started. In some countries, like Ethiopia, this can be a challenge.

Caption: Women like Martha,45, no longer have to risk thier safety by defecating in the open at night or in dirty government-built toilet blocks that cost 10 Liberian dollars per visit. The value of a private toilet in your own home is evident in the pride with which women are maintaining their tiger worm toilets.