Jun 04

OPINION: How to make Africa work for the many not just the few

When I go to the World Economic Forum Africa this week I will, of course, be there as the Executive Director of Oxfam International. While on a deeper level, I will be there as a woman proud of the continent she comes from – a continent on the rise.

The impressive recent growth rate of many African countries, how this growth can be supported through continuing improved regulation and macroeconomic stability, and how this can be broadened, will be the theme of many discussions that I am looking forward to taking part in. With this focus in mind, a fact I am struck by is that Africa’s working-age population is expected to double to 1 billion in the next 25 years. These young people are better educated than ever and, if given the right environment, they are by far Africa’s greatest asset.

The challenge for African economies is therefore to design and pursue growth strategies that will create good jobs and incomes for all our young people. We have the resources to do this, if we can ensure that the wealth created from our natural resources – and the growing productive activity of multinational corporations in the continent – is kept in Africa, is delivering revenues for national governments, and is invested in skills and job creation.

I can, however, see two major threats to this optimistic image:

We must recognise that the inequality crisis has taken root in Africa as it has done around the world, for a start. Six African countries are among the top 10 most unequal in the world. Close ties between Africa’s economic and political elites mean that too much of Africa’s growth fails to reach its poorest people. The consequence of this: poverty will continue to blight the continent. It also will be increasingly apparent to our younger generation that the jobs, opportunities and investments, which should be their birth right, are denied to them.

Secondly, Africa is still losing out in a global financing system that ensures the continent is a “net creditor” to the rest of the world. We need to get away from our assumption that corruption or criminal activity is what is sucking the most money from Africa. Equally – or maybe more – troubling are the tax dodging tricks used by multinational companies. Oxfam has found that Africa was cheated out of US$11 billion in 2010 through just one of the tricks used by multinational companies to reduce tax bills. This is equivalent to more than six times the amount of cash needed to plug the universal primary healthcare funding gap in the Ebola affected countries of Sierra Leone, Liberia, Guinea and Guinea Bissau.

Add to this the full range of tax avoidance tricks and other illicit financial flows, tax incentives, and debt repayments and it’s clear that unless we tackle such issues, it is the rich world that is gaining the most from Africa’s progress.

This meeting in Cape Town comes as an opportunity for leaders to put these issues firmly on the table is just weeks away, at the pivotal Financing for Development Conference in Addis Ababa. During this moment, Oxfam believes:

African leaders have a responsibility to raise and spend resources to tackle inequality and create opportunities for our young people. This means a focus on raising more tax through improving tax administration but making sure that they tax progressively. It means fighting corruption, and it means focusing spending on those areas that deliver social mobility: on health and on education.

African leaders’ ability to do this depends on international efforts to reform the global tax system. A strong outcome from Addis should be the creation of an intergovernmental tax body that includes all countries as equal members. With the right resources and mandate, such a body could be the vehicle we need to finally tackle tax evasion and avoidance, harmful tax competition, and to ensure tax cooperation between governments.

Today, elites gathered at meetings such as The World Economic Forum on Africa 2015 talk about “Africa rising” and the increased investment into the continent.

Twenty-five years from now my hope is that we can talk about Africans rising, an increased investment and opportunities for ordinary African people. But this hope will be groundless unless we can stop wealth flowing out of the continent as fast as it arrives. Addis is an opportunity to stop this, and I urge African leaders to do all they can to take it.

The World Economic Forum on Africa 2015 takes place in Cape Town, South Africa from 3-5 June.

Author: Winnie Byanyima, Executive Director, Oxfam International