Africa should not adopt a ‘business as usual’ approach to Covid-19 recovery

Nairobi – The coronavirus pandemic is affecting the population of Africa in a very differentiated way and significantly reinforces inequality. The greatest risk is the lives and livelihoods of the poor.

Millions are further pushed into hunger and poverty. Children have been forced out of school, and many of them, especially girls, have little or no chance of regaining access to education.

Without access to piped water and no food reserves, women would have had to bear the brunt of the pandemic and the exposure to the virus would have dared to keep families going. The reversal of profits achieved during the Millennium Development Goals (MDGs) period is more likely than ever before.

Leaders should refuse to use the easier option of failed economic models that allow few rich people to build up their wealth from the poor and thrive even in the midst of a pandemic. Political and business leaders must take bold steps to build a human economy for all Africans

This crisis has clearly shown how essential public services are to dealing with pandemics. Decades of underinvestment in public services and social protection systems have left the majority of governments deplorably unprepared to tackle Covid-19, according to the commitment to reduce inequality index, an analysis recently published by Oxfam and Development Finance International. The report ranks 158 countries on labor rights, taxes and spending on health, education and social protection.

While Africa and its people have seen a large part of the crises in the past and have shown a significant degree of resilience and ‘rebound’, Africa must not forget the Covid-19 crisis like the many crises before, and ‘ a “business as usual” approach to recovery.

Leaders should refuse to use the easier option of failed economic models that allow few rich people to build up their wealth from the poor and thrive even in the midst of a pandemic. Political and business leaders must take bold steps to build a human economy for all Africans.

An economy in which the size of your bank account does not determine how long you live or how many years your children spend in school. An economy that rewards and guarantees dignity for workers, especially with the entry into force of the African Continental Free Trade Area (AfCFTA). An economy where big corporations and rich people pay their fair share of taxes and public resources is not used for private benefit

A fairer and human economy is achievable!

Strikingly, some governments in Africa are taking steps to build an economy that works for everyone, not just a few super-rich and big businesses. They agree that inequality is not inevitable, but a consequence of their policy choices.

Sierra Leone has remained true to its commitment to making secondary education free for all. To improve his tax collection, he is pushing unnecessary tax incentives and limiting tax evasion by mining companies.

Ethiopia has consistently acted worldwide by spending the second highest part of the budget on education – the greatest equalizer in society. It has increased spending on health and social protection, with a tangible impact on reducing poverty and inequality.

Namibia, a country with a toxic legacy of great inequality and colonial expropriation, was able to institute payments for workers in the informal sector who lost their jobs during the pandemic. A new World Bank study found that Namibia’s tax and spending policies significantly reduce inequality. These governments can do more and other African leaders can learn a lot from it.

What should happen?

Africa must defend its tax revenues to finance a nation’s recovery. Across the continent, tax collection has declined, while government debt stocks have risen sharply. This trend needs to be reversed. Governments need to stop taking the easy path of debt and instead stop the bleeding of legal income through tax evasion and devastating tax competition.

West Africa, a region that has lost more than 2,500 lives to coronavirus, for example, loses an estimated $ 9.6 billion annually due to wasteful corporate tax incentives. This lost income is enough to build 100 modern and well-equipped hospitals every year. The region could indeed be better prepared to deal with the pandemic.

While global solidarity and action are needed to turn things around, political will is now, more than ever before, needed to apply the recommendations of the Thabo Mbeki – led panel on high-level illegal financial flows.

African countries can act separately to review, renegotiate or cancel tax treaties that expose them to profit-changing and treaty-buying, and collectively pursue a minimum effective tax rate for the profits of multinational corporations.

People’s lives must be put before the profits of creditors. High debt repayments hurt social spending. At present, interest payments are the highest and fastest growing public budget. Before the pandemic, more than thirty African countries spent more and more on debt payments than health care.

At the start of the pandemic, African finance ministers called for a waiver of all interest payments for 2020, estimated at $ 44 billion, to give governments more fiscal space. Unfortunately, the reaction of the G20 was overwhelming.

The much-needed resources to save lives and protect economies continued to flow from poor African countries to foreign banks in rich countries. In 2020, for example, 69 percent of all debt payments in Zambia will be owed to private creditors.

African governments need to consolidate and raise their voices on the urgent need for global action on debt. Private lenders and multilateral institutions such as the World Bank should be required to join the Suspension Services Suspension Initiative (DSSI).

Governments and their citizens must learn from the structural adjustment program and push back on any austerity measures imposed by new funding. 84 percent of Covid-19 loans by the International Monetary Fund (IMF) are already encouraging and in some cases require countries to take stricter austerity measures in the wake of the health crisis. Reducing social spending or increasing regressive taxes such as value added tax (VAT) on food products is borne by the poor which further widens inequality.

Developed countries must also pay their financial and moral debt. Aid is not only a way to channel additional funding to developing countries, but also a form of redistribution, especially in a world economy where inequality is alarmingly large and is characterized by an withdrawing, colonial and racial history.

The year 2020 is the fiftieth anniversary since rich countries committed to spend 0.7 percent of their gross national income (GNI) on aid to low-income and middle-income countries, most of which are in Africa.

Fifty years later, this figure averages only 0.3 percent. According to Oxfam’s calculations, donor countries owe $ 5.7 trillion to the poorest people. With the pandemic, there must be a renewed political commitment to international aid and there must be a transition from a charity-based system to one based on justice.

To build a more humane and just economy, Africa must avoid economic policies that trap Africans in unworthiness. African politicians and business leaders can choose to rebuild a divided Africa – one where only three men have more wealth than the bottom 50% of the population. Or they can choose the right path to rebuild an Africa for all by promoting efficient and progressive tax systems, investing in free, quality and gender-responsive public services and social safety nets that reduce the care of women and girls, and the protection of the rights of workers to dignified work and wages.

This is not the last pandemic. A more equal Africa will be able to handle the next pandemic much better.

Peter Kamalingin BL is the Pan Africa Program Director of Oxfam International


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