Africa: A continent Of Many Contrasts

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A recent study carried out by the Economic Commission For Africa and the UNDP country office for Zambia, revealed the great inequalities that exist in Sub-Sahara Africa despite having the highest economic growth rates in the world. The Region has over the past ten years been a magnet for investment and tourism. However, there has been no trickle down effect and many people remain largely disconnected from the “so called” economic progress taking place on the continent.

Africa Outlook 2014 Report compiled by the African Development Bank Group and the UN Development Programme indicated recently, that external financial flows continue to be an important contributor to Africa’s development. The report went on to further illustrate how Sub-Sahara Africa posted an average of 5% growth in gross domestic product in 2013 and was projected to reach 5.8% in 2014 at the time the report was released.

Despite this optimistic picture, there is, an increasingly widespread view, that Africa’s economic growth has not been “powerful enough to reduce poverty because of inequality” according to a recent report by Oxfam. A considerable number of main stream economists on the continent have focused on economic growth and how this would lead to a growing middle class and the disappearance of poverty. It is now becoming apparent that this has not been the case.

While the Africa rising story continues to showcase the opulence of the elite in urban parts of Africa, very little is said about the scrabble of dwellings on the fringes of many cities, where large numbers of people eke out a living. The challenges faced by 80% of the population working in the informal sector in countries like Zambia for instance – mostly women and youth – are unable to find decent work according to the Zambia Decent Work Country Programme 2013 – 2016 compiled by the International Labour organisation, the Ministry of Labour in Zambia as well as workers and employers organisations in the country.

It is now imperative that governments look at every aspect of the economy to encourage meaningful growth in the economy of the continent. Creating an enabling environment that will transform informal entrepreneurial activities into viable businesses, fully integrated into mainstream economic life is one way to bridge the widening disparities between the haves and have not’s.

The wave of multinational companies flocking into countries across the continent in the name of foreign investment has been of great concern particularly with regards to their infringement of labour laws. The weak Investment and regulatory framework that exists in many countries enable multinational companies to flout labour laws and entrap those at the bottom of the pyramid in some form of indentured labour, perpetuating the cycle of poverty for many families. According to a report by Sheila Kaela which highlights the “Plight of Zambian Workers”, she states that “employers in the private sector do not follow labour laws and sometimes subject workers to inhumane treatment”. She goes on to state that “foreign investors have taken advantage of high levels of unemployment and weak monitoring of labour laws to exploit workers”.

The idea that stringent laws will not attract multinational companies to invest in such countries has led to many governments failing to negotiate tax regimes that will benefit citizens. A good number of multinational corporations have not been transparent about their annual earnings. The present situation particularly in a country like Zambia where laws regulating multinational corporations remain weak, allows foreign investors to transfer a huge chunk of their profits to overseas banks without any restrictions. In his report on the conduct of mining companies in Zambia, Anthony Mukwita a prominent Zambian journalist described how Zambia got a raw deal in 2009 when the country earned $5m from mining royalty revenues from a combined revenue receipt bill of $5bn.

Deficiencies in the law have allowed multinational corporations to enrich themselves at the expense of the countries they operate in. According to research carried out by a Non-governmental organisation based in the United Kingdom, Health Poverty Action, the amount of money that Africa losses every year due to illicit financial flows, profits taken out of the continent by multinational companies and costs incurred as a result of climate change is a staggering $192 billion. There is no doubt that there is a scramble for the resources in Africa that will only benefit a few.

The current preoccupation with growth figures and the growing concentration of wealth in the hands of a few will ultimately have huge implications on the economy and security of the continent as a whole. The time for action is now.

As stated by Tax Justice Network – Africa and Christian Aid in their report released in February 2014 titled “Africa rising? Inequalities and the essential role of fair taxation”, countries across Africa along with the international community “must tackle financial secrecy and tax havens. Furthermore global reforms must take place within a democratic forum under the auspices of the UN”.

It is time for Africans to face the inconvenient truth. The discourse regarding the real causes of inequality and poverty should not just be confined to academic discussions. More practical solutions are needed. Unless this is done, we are unlikely to continue to see economic growth that is meaningful and beneficial to Africans as a whole.

By Kabukabu Ikwueme

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