Build a ‘human economy’, says Oxfam. It could help Africa to fight extreme inequality
Strong GDP growth in Africa is a good thing, right? Not if the benefits aren’t shared equally, argues a new Oxfam report.
Africa has experienced a decade of significant growth – at one point, six of the 10 fastest growing global economies were on the continent – but the proceeds haven’t been evenly distributed.
Millions have been left behind, and to make matters worse, slowing growth could increase poverty further, says Oxfam . The most pessimistic forecasts suggest 250 to 350 million more people could be living in extreme poverty in the next 15 years.
There is a solution though: the human economy.
Extreme economic inequality
Seven of the world’s 20 most unequal countries are in Africa, with Swaziland the most unequal, followed by Nigeria, Namibia and South Africa.
In South Africa, the richest 1% owns 42% of the country’s total wealth and three billionaires have the same wealth as the bottom 50% of the population, according to Oxfam.
Why is inequality so high? The impact of colonialism lingers, and the structure of many African economies means the benefits of growth have not been shared, according to the report.
Inadequate investment in agriculture, large informal sectors and over-reliance on extractive industries have exacerbated inequality.
The hardest hit are young people and women, particularly in rural areas. Ignoring their potential is having a major impact on African economies. Gender inequality costs sub-Saharan Africa more than $90 billion every year . Meanwhile, better policies and investment in young people could be worth up to $500 billion every year for 30 years.
With Africa’s large – and growing – youth population, there is an urgent need for action.
Putting people before GDP
The legacy of colonialism and current policies can be overcome, argues the paper.
Policymakers and leaders across the continent can tackle the issues of poverty and inequality if they take a “human economy” approach. This means focusing on “what works for the majority of African people” rather than measuring growth solely by GDP.
The report makes several recommendations to leaders and policymakers:
- Focus on rural areas, by investing in smaller agricultural producers – particularly women
- Support business models that promote positive values and equality
- Increase the fairness of taxation and tackle evasion
- Make investments in education and healthcare
Oxfam argues that hope is not enough. Reducing inequality and ensuring the poorest do not miss out on growth requires explicit plans and policies aimed at promoting inclusive growth.
Oxfam is not alone in arguing for inclusive growth. The World Economic Forum’s Inclusive Growth and Development Report 2017 highlights the work needed globally to share the benefits of growth more equally.
Inclusive growth and development is a self-reinforcing cycle: economic growth and inclusion feed into each other.
Some progress has been made in Africa though. According to the index, Lesotho, South Africa and Sierra Leone are among the most improved developing economies over the last five years.
SOURCE: World Economic Forum