Income Inequalities Threaten Africa

Members of the Young Communist League of the Republic of South Africa at their national conference held Dec. 9-12, 2010. The YCL is the youth wing of the South African Communist Party., a photo by Pan-African News Wire File Photos on Flickr.

‘Income inequalities threaten Africa’

Tuesday, 07 May 2013 00:00
Business Reporter
Zimbabwe Herald

AFRICA’S economic growth trajectory, largely driven by minerals and energy boom, is threatened by illicit capital outflows and widening income gaps, international agency Oxfam has warned as top Africa businesspeople converge on Cape Town,

South Africa, for this year’s World Economic Forum on Africa.

Several African countries are among the fastest growing economies in the world, boosted by new discoveries of oil, natural gas, and strategic mineral reserves.
But progress is being undermined by income inequalities and massive illicit capital outflows - often in the form of tax evasion and trade mispricing by extractive industries.

“Africa’s impressive growth needs to reach further,” Oxfam executive director Ms Winnie Byanyima said. “The continent’s resource boom must be harnessed to benefit all its citizens. If illicit capital continues to haemorrhage out of African countries, efforts to reduce poverty and boost economic growth will be undercut. Resource wealth should promote prosperity on the continent, not undermine inclusive economic growth, fuel corruption, or damage the environment.”

In 2010, Africa’s oil, gas and mineral exports amounted to US$333 billion. But illicit financial outflows are estimated at US$200 billion annually, dwarfing the development aid it receives.

“Too often extractive industries in collusion with corrupt government officials cheat Africa of its wealth and potential for social spending. African citizens must get their true share of extractive industry revenues and royalties paid to their governments,” said Ms Byanyima. Despite being on its way to being a pole for global growth, sub-Saharan Africa is also home to six of the top 10 most unequal countries in terms of economic disparity.

Inequality is bad for social stability, and undermines growth itself. Oxfam forecasts in South Africa, more than a million additional people will be pushed into poverty between 2010 and 2020 unless the growing inequalities are addressed.

Ms Byanyima said: “Good progress is being made towards bringing down poverty on the continent, but high inequality and corruption are threatening these gains.” Oxfam has since called for multinational enterprises operating in poor countries to conduct business responsibly by informing and consulting local communities affected by oil, gas and mining projects, and giving them the opportunity to approve or reject a project prior to the commencement of operations. Africa is taking control of its own destiny, but to meet its real potential, our leaders must stand behind those who growth is leaving behind,” said Ms Byanyima.


‘African economies must tackle poverty’

Tuesday, 07 May 2013 00:00

MAPUTO. — Stellar growth in Africa’s economies must be matched by efforts to tackle poverty and protect against less rosy times ahead, the IMF’s number two warned yesterday.

IMF deputy managing director David Lipton said “Africa is beginning to deliver on its economic potential” with sub-Saharan Africa overall expected to grow at 5,4 percent this year.

“Africa is changing and the world is noticing,” Lipton told an audience in Mozambique’s capital Maputo.

But, he warned, “there can be no complacency about Africa’s current success”.

“Poverty rates remain high — even where they have come down, such as here in Mozambique,” he added.

“Sub-Saharan Africa has made the least progress toward the United Nations Millennium Development Goals and still lags (behind) other regions on measures such as primary education and maternal mortality.”

Lipton warned that countries remain exposed to changes in commodity prices and “fickle” capital flows.

According to the latest figures from professional services firm Ernst & Young, Africa’s share of global foreign direct investment increased from 3,2 percent in 2007 to 5,6 percent last year.

More capital flows are expected. But Lipton warned African nations also to prepare for shocks.

He urged “sub-Saharan Africa’s countries (to) start rebuilding their reserves to guard against potentially adverse developments”.

— AFP.