Africa Rising: Time for a fairer deal for all
I have joined global decision makers in Maputo this week for the IMF and Mozambiquan government’s joint “Africa Rising” conference, to take stock of Africa’s economic performance, resilience and challenges.
Much of Africa’s impressive economic growth over the last decade has been driven by new discoveries of oil, natural gas and mineral reserves. The continent has six of the top 10 fastest growing economies in the world. This growth is worth celebrating.
Growth and inequality
But even though Sub-Saharan Africa’s economic performance is strong, it is home to six out of the 10 most unequal countries in the world. In fact, African economies growing on the back of oil, gas and minerals exports have tended to increase, rather than reduce inequality. Clearly, Africa is not rising for ordinary citizens.
Spectacular growth will not do enough to help our poorest citizens as long as Africa’s natural wealth is hemorrhaging from the continent.
Thabo Mbeki, Chair of the UNECA’s High Level Panel on Illicit Financial Flows, recently revealed that African countries lose $50 to $60 billion annually through trade mispricing alone – much of this by extractive corporations. The resource drain from Africa over the last 30 years is almost equivalent to its current GDP.
Harmful tax exemptions also erode African countries’ tax base. African governments give an estimated $138 billion each year in corporate income tax exemptions. The amount of unpaid tax by companies is estimated at $104 billion every year. These losses combined could pay twice over the $120 billion needed to meet the MDGs related to poverty, education and health.
Poorest hit hardest
These losses hit the poorest hardest, because African governments are denied vital revenues that could be used to invest in public services, social safety nets and productive infrastructure.
I am in Maputo to remind the IMF that African leaders need support to clamp down on tax dodging by multinationals draining revenue from the continent. Corporations should no longer be allowed to rig the rules and take advantage of poor countries, fuelling a vicious cycle of inequality.
I am also encouraging African governments to invest more in essential services for their people. Public services like health and education are one of the strongest weapons in the fight against inequality. They benefit everyone, and the poorest most of all. They redistribute revenue by putting virtual income into the pockets of the poorest.
For millions, “Africa Rising” will remain a mirage until policy makers begin to tackle increasing inequality.
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Read the report: Working for the Few: Political capture and economic inequality
What do you think, is Africa Rising?