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Poverty and extreme inequality worsen in southern Africa as COVID-19 battered countries embark on a dangerous austerity path

The COVID-19 pandemic has worsened the extreme inequality in Southern African Development Community (SADC) countries and pushed millions into poverty, reveals a new analysis from Oxfam, Norwegian Church Aid (NCA) and Development Finance International (DFI).

The Commitment to Reducing Inequality Index (CRI) report shows that the fifteen SADC member states lost about $80bn in 2020 due to lower-than-expected growth. which is equivalent to around $220 for every SADC citizen.

This analysis estimates that this economic crisis could take more than a decade to reverse, erasing all hope of countries meeting their national development plan targets to reduce poverty and inequality by 2030.

The organizations say that if countries act decisively now against inequality, with policies aimed to help support citizens with public services and support, the impact of the crisis could be reversed in just three years. However, the report finds that SADC countries have responded with belt-tightening measures that are likely to do more harm to people than good.

“The poorest in our societies are bearing the brunt of Covid-19 and are now facing the extra cost of austerity policies. Governments have a choice and must act now to reverse damage of the pandemic, increase social spending and tackle the inequality crisis”, says Felix Ngosa, senior programme officer in Norwegian Church Aid.

As many as 35.5 million people in SADC countries lost their jobs in 2020 due to the pandemic, down by 26% on 2019 employment numbers. The Democratic Republic of Congo, Madagascar and Tanzania were hardest hit, with over five million jobs lost in each country.

While the majority of SADC citizens have suffered from the pandemic and its effects, the story is different for the region’s wealthiest people. The six wealthiest men in SADC – four in South Africa and one each in Tanzania and Zimbabwe – saw their wealth expand from $18.1 billion to $27.7 during the two years of the pandemic, a 42% increase in real terms. This increase is more than enough to fund a full COVID vaccination program (plus a booster) for everyone in SADC. The richest 10% earn around or above 60% of national income in eight SADC countries, and 50% in the other seven, the report finds.

This wealth concertation by a small group of people has left a majority struggling to meet their most basic needs, such as quality education, healthcare and decent jobs.

“The findings of this analysis are shocking, but they confirm the reality of many countries in this natural resource-rich but poor and unequal region” says Dailes Judge, Oxfam in Southern Africa Programme Director. “The inequalities in most countries in the region are major drivers of reduced economic growth and weakened essential services such as quality healthcare and education”.

“Sadly, a majority of the people feeling the sting are the poor – those living in vulnerable conditions with little or no assets. Women- headed households represent a distressingly large proportion of those struggling and suffering.”

In 2021, with COVID-19 infections rising, the critical health, social protection and economic programs put in place by most governments in 2020 were rolled back and replaced with austerity policies, in the context of growing debt burdens and lack of external support for country budgets.

Governments have felt pressured by their increasing debt service payments to cut social spending. Even before the pandemic, debt servicing was reaching astronomical levels with SADC governments spending almost three times as much on domestic and external debt service as there were on health. In 2020–21, debt servicing took 42.2% of government revenues on average.

The report says that many Southern African Development Community (SADC) member governments are still showing considerable commitment to fighting inequality – but still nowhere near enough to offset the huge inequality produced by the market and exacerbated by the COVID-19 pandemic.

“The combination of budget cuts, rising debt and a slow recovery due to global vaccine inequity risks raising the SADC inequality crisis to new heights,” says Mathew Martin, Development Finance International Director.

“Recovering from the pandemic, however, offers SADC governments a once-in-a-generation opportunity to do what their citizens want – to increase taxes on the wealthy and large corporations, to boost public spending especially on healthcare, education and social protection, and to boost workers’ rights in order to tackle joblessness and precarious work. With external support, for instance through debt relief and aid, SADC governments could reduce inequality drastically and eliminate extreme poverty by 2030.”

Notes

Southern Africa is the most unequal region in the world and contains the world’s three most unequal countries (South Africa, Namibia and Zambia), and another 3 of the 10 most unequal (Eswatini, Mozambique and Botswana). All SADC member states, except Tanzania and Mauritius, are in the top 50 most unequal countries.

The region has low proportions of workers with formal contracts and rights (and therefore access to sick pay, job protection, etc.), with fewer than 40% having such rights in Malawi, Zimbabwe, Angola, DRC, Zambia, Tanzania, Mozambique and Madagascar.

Many countries had limited access to essential health services, reaching under 50% of the population in seven countries, and forcing 5.4% of people to spend catastrophic proportions (i.e. more than 10%) of their income on healthcare across the region. These poor indicators reflected low commitments to healthcare spending, with this accounting for under 10% of government budgets in Zambia, Mozambique, Malawi, Madagascar and Tanzania.

Donor pledges must end hunger in Syria

In reaction to the pledges made today at the Brussels conference on Syria, Oxfam in Syria Country Director, Moutaz Adham, said:  

“The pledges made today are welcomed and show that the international community has not forgotten Syrians.

“However, donor’s priorities do not reflect the situation in Syria. For over a decade, there has been too much focus on emergency aid with limited focus on long term solutions to problems like lack of food and water. What the Syrian people need is schools and hospitals, homes that can stand and are cleared of rubble and old bombs, and jobs, so they can feed their families and stop relying on aid. Humanitarian agencies haven’t been able to provide for the long term needs of Syrians due to political considerations. These politics are denying Syrians a future and causing more Syrians to mire in poverty.

“Syrians have never been so hungry – 3 in 5 people do not know where their next meal will come from. One month’s living costs equals two months’ salary. The war in Ukraine will only increase hunger and poverty.

“Last year, donors only gave half the money needed to help people in Syria. Syrians cannot afford for this to happen yet again this year. Donors need to think long-term. Short-term solutions are not good enough.”

Notes to the editors 

Response to global hunger catastrophically inadequate

Today’s “Global Report on Food Crises” – led by the UN along with 16 partner organisations including Oxfam – says that more than 193 million people across 53 countries are experiencing acute hunger and require urgent food, nutrition and livelihoods assistance. 

Oxfam Global Food Security and Livelihoods expert, Emily Farr, said: 

“It is deeply concerning to find extreme hunger increasing to a magnitude never seen before. 40 million more people have been pushed to extreme hunger, nearly a 25 percent surge since last year, and 80 percent since 2016. But tragically, this comes as no surprise. Even as the alarm bells have been sounding, governments across the globe collectively failed to tackle this mass suffering and deprivation.

“There are no more excuses. All the warnings are there for countries facing famine-like conditions such as Ethiopia, South Sudan and Yemen. The world has the tools that have anticipated this worsening hunger, and yet continues to choose not to act fast or adequately enough.   

“G7 governments and the EU have pledged US$2.6 billion into the UN’s humanitarian appeals to date but these pale in comparison to the promises they made last year to commit $8.5 billion to end famine. To make matters even worse, some rich countries have effectively cut some of their humanitarian aid to countries facing mass hunger, malnutrition and starvation such as Mali and Syria, as they diverted aid to other crises.  

“Global crises, worsened by the economic turmoil of COVID-19 and more recently by the Ukraine conflict, have pushed food prices to an all-time high in March 2022 – up by 12.6 percent over February – which is putting food ever more out of reach for millions of people. 

“Mariam, a Somali girl suffering severe malnutrition, has done nothing to cause a global pandemic, the Ukraine war or the climate crisis. Yet governments responsible for these crises have largely chosen to forget Mariam and millions of children like her.  

“Hunger, in a world of plenty, is an avoidable tragedy. Rich countries can save millions of people if they immediately fund the UN global appeals. They can save lives now. Warring parties can help avert hunger by allowing aid to reach those at risk of dying from food insecurity and malnutrition. 

“G7 nations also must meet their responsibilities to cut their CO2 emissions. They are most responsible for the climate crisis which is causing chaos for farming and agricultural systems, and driving hunger and displacement. They should pay low-income countries for the loss and damage they are suffering, and to help smallholder farmers – especially female farmers – to adapt to climate change. This is not a matter of charity, but rather a question of justice.” 

Notes to the editors 

  • The Global Report for Food Crises is an annual report published by The Global Network for Food Crises which is an international alliance of the United Nations, the European Union, governmental and non-governmental agencies working to tackle food crises together. 
  • New OECD data shows that overall aid spending from 30 OECD members summed 179 billion dollars in 2021. Rich countries only committed 0.33 percent of their gross national income (GNI) to development aid, the same as 2020, and well below the 0.7 percent they promised back in 1970. In 2021, just 5 countries – Luxembourg, Norway, Germany, Sweden and Denmark – have lived up to this promise. 
  • Recently, Oxfam has expressed concern that some donor governments are already shifting aid budgets to pay for Ukrainian assistance and the costs of hosting more than 4.5 million people who have fled the country recently. Compared to 2020, aid for hosting refugees has not changed and is stabilising at 5.2 percent since its peak in 2016 when it amounted to 11 percent of aid. The current statistics do not take into account 2022 aid which has seen this shift towards aid diversion. 

Big pharma urged to address vaccine inequity

In separate virtual addresses to the shareholders of Moderna, Pfizer, and Johnson & Johnson (JNJ), Oxfam called on the pharmaceutical corporations to improve COVID-19 vaccine equity and access so that everyone, everywhere has access to these life-saving shots.
 
Oxfam’s resolutions to Moderna and Pfizer call on the companies to study the feasibility of transferring vaccine technology and know-how to urgently ramp up production and improve sustainable access around the world. In a separate resolution before Johnson & Johnson shareholders, Oxfam seeks transparency on how the company determines pricing for its COVID vaccines in light of the billions of dollars of public funding from US taxpayers the company received.
 
Oxfam has urged all three vaccine manufacturers to share their technical know-how with the World Health Organization (WHO) to leverage the world’s full manufacturing capacity and support regionally based production as a means to increase the overall supply, reduce on-the-ground distributional challenges, and respond to the desire of low-and middle-income countries to produce doses for their own citizens.
 
“If Moderna worked with us, we could submit the WHO’s COVID-19 Vaccine mRNA Technology Transfer hub’s vaccine for approval at least one year sooner, which would save lives, decrease the risk of variants, and reduce the pandemic’s economic toll,” said Dr. Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization, in his unprecedented presentation of the Oxfam resolution to Moderna shareholders via a pre-recorded statement. “We urge Moderna to share technology and know-how with the WHO hub and commit to not enforcing patents for COVID-19 and other essential vaccines in countries hosting the WHO hub and spokes. We also urge them to offer training to scientists working on those efforts through the Moderna mRNA access program.”
 
“We are in the midst of the greatest public health crisis in 100 years. Despite safe and effective vaccines like Pfizer’s, thousands of people are still dying every day because protections against the coronavirus have not been made accessible to all,” said Ady Barkan, Founder and Co-Executive Director of Be A Hero, presenting the Oxfam resolution to Pfizer shareholders via recording. “Billions of people remain unvaccinated in part because Pfizer cannot produce enough doses on its own. And yet, Pfizer refuses to share its technology to boost global manufacturing.”
 
JNJ’s COVID-19 vaccine has protected people against severe illness and saved lives—yet the company has not done enough to ensure equitable access and transparency about its pricing strategy, despite the massive investment of 1.5 billion dollars in public funds that JNJ received,” said Maaza Seyoum, Global South Convener, People’s Vaccine Alliance, presenting the Oxfam resolution to Johnson & Johnson shareholders via recording. “This injustice has heartbreaking consequences. Millions of grandparents and healthcare workers across Africa are not protected from this virus. In India alone, over two million children have lost a parent to the pandemic. These lives matter.”
 
Oxfam filed the shareholder resolutions because more than two years into the COVID-19 pandemic and a year after the introduction of highly effective life-saving vaccines, 74 percent of people in high-income countries are fully vaccinated, while just 12 percent of people in low-income countries are.
 
The failure of major pharmaceutical companies to do more to ensure vaccine equity and access threatens the companies’ reputations and the interests of corporate investors who are impacted by the pandemic’s continued impact on the global economy, in addition to the devastating toll in illness and death.
 
“Moderna, Pfizer, and Johnson & Johnson have prioritized short-term profit-making over long-term sustainability and reputational risks, as well as public health needs. The flawed donation-based model has produced vast vaccine inequity, despite the desire, willingness, and ability for countries around the world to produce their own doses for their own citizens,” said Abby Maxman, President and CEO of Oxfam America. “We are proud to partner with Dr. Tedros, Ady Barkan, and Maaza Seyoum to urge shareholders to realize that a model based on tech sharing and local production will not only help end the current pandemic but also make the world more resilient for the future.”

Significant number of Moderna and Pfizer shareholders support vaccine technology transfer

An Oxfam resolution before Moderna shareholders received 24% of the nominal vote, or 29% of the independent vote factoring in the 17% of the vote share owned by the company’s directors and senior executives. A similar resolution before Pfizer shareholders garnered 27% of the vote.

The unprecedented Oxfam resolutions, introduced at the Moderna Annual General Meeting today by Dr. Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization and by Ady Barkan, Founder and Co-Executive Director of Be A Hero at the Pfizer Annual General Meeting, urged the companies to study the feasibility of transferring vaccine technology and know-how to urgently ramp up production and improve sustainable access around the world.

In reaction to the votes, Robbie Silverman, Oxfam America’s Senior Manager of Private Sector Advocacy, made the following statement:

“We are pleased to see that nearly 30% of Moderna and Pfizer’s investors agree that the companies should explore the feasibility of transferring its technology to spur manufacturing in low- and middle-income countries.  This is the first time that shareholders have voted for a resolution like this on any company proxy ballot.

“Unprecedented risks posed by an unprecedented global pandemic call for novel solutions – and a significant number of Moderna shareholders agree with the bold action we proposed.

“Only 12% of people in low-income countries are vaccinated today– as Dr. Tedros said, this is a “failure of humanity” and threatens the health of all of us, as new variants continue to emerge. 

“The countries most impacted are clear on what they believe is the best and most effective way to vaccinate their own citizens – transferring the technology and investing in locally-based manufacturing. 

“By every metric, the current donations-based model has failed – it leaves countries at the mercy of rich countries and profit-driven countries; exacerbates on-the-ground distributional challenges; and leaves the world with the same inequities and vulnerabilities that have plagued the global response since the start of the pandemic. 

“We believe this strong vote share demonstrates that a significant number of Moderna and Pfizer’s shareholders recognize that the only sustainable way to end the pandemic is to leverage the world’s full manufacturing capacity as quickly as possible. We call on these companies to actively collaborate with the WHO to use every possible tool to combat the scourge of COVID-19, save lives, and restore public health and the global economy.”

At its Annual General Meeting, Johnson & Johnson did not announce vote totals for the resolutions it faced, including Oxfam’s resolution, introduced by Maaza Seyoum, Global South Convener, People’s Vaccine Alliance, calling on the company to be more transparent about its pricing for its COVID vaccines in light of the billions of dollars of public funding from US taxpayers. The company has four days to file that information with the Securities and Exchange Commission.

Demands for austerity and spiralling debt are ‘sabotaging’ Africa’s Covid-19 recovery

43 African governments are facing expenditure cuts totalling $183 billion (equivalent to 5.4 percent of GDP) over the next five years, reveals new analysis from Oxfam and Development Finance International (DFI) today. If these cuts are implemented, their chances of achieving the UN’s Sustainable Development Goals will likely disappear.

The Commitment to Reducing Inequality Index: Africa Briefing Paper shows that Africa’s debt burden is stifling post-COVID economic recovery and stagnating the public services necessary to reduce poverty and inequality. Africa’s debt burden has been climbing steadily, averaging 67 percent of GDP in 2021. Debt repayments are equivalent to 51 percent of African countries’ budget revenue and 22 times more than their spending on social protection. Debt servicing exceeds spending on healthcare in all but six African countries, rising to 77 times more in South Sudan. The G20 countries have so far offered little relief: debt cancellation or suspension amounts to just $9.3 billion.

‘‘Majority of African governments know and want to lift their citizens from poverty but their coffers are empty, so they need support instead of more pressure,’’ said Peter Kamalingin, Oxfam’s Pan Africa Program director. ‘‘At a time when poor countries are faced with increasing costs of living and with poor people unable to afford food, it cannot be the time to suffocate them with more austerity. That is the surest way to undermine recovery, widen inequality and destroy livelihoods.’’

The index ranks 47 African countries on their policies on public services, tax and workers’ rights. South Africa ranks first, followed by Seychelles, Tunisia, Namibia and Lesotho. At the bottom are South Sudan, Nigeria, Chad, Liberia and the Central African Republic. North Africa outperforms Africa’s other subregions, with Central Africa ranking last.

The analysis shows that African governments’ failure to tackle inequality ― through support for public healthcare and education, workers’ rights and a fair tax system ― left them woefully ill-equipped to tackle the  COVID-19  pandemic.  The IMF has contributed to these failures by consistently pushing a policy agenda that seeks to balance national budgets through cuts to public services, increases in taxes paid by the poorest,  and moves to undermine labour rights and protections. As a result, when COVID-19 struck, 52 percent of Africans lacked access to healthcare and 83 percent had no safety nets to fall back on if they lost their job or became sick.

Quality public services are proven to reduce inequality. For example, they have reduced inequality by 34 percent in Namibia, 22 percent in South Africa and 19 percent in Benin. However, Africa’s unfair tax system is increasing inequality by 1 percent. In Tanzania and Tunisia, fair tax policies have slashed inequality by 10 percent.

Oxfam and DFI are urging the G20 to reallocate and waive off unnecessary conditionalities so that lower-income countries can access most of the $100 billion worth of IMF Special Drawing Rights (SDRs) with ease. They are calling for increased aid flows to Africa to increase access to inequality-busting public services and COVID-19 vaccines. The vaccination rate in Africa needs to increase significantly if the continent is to meet the 70 percent vaccine coverage target set for June 2022.

‘‘That some governments have fared better than others at tackling inequality confirms we can end inequality if we make the right policy decisions. This must include taxing the wealthiest, curbing illicit financial flows, restructuring debt held by poor countries and ending the pandemic through equitable access to COVID-19 Vaccines and therapeutics.’’ ― Peter Kamalingin.

 

Notes to editors

Download Oxfam’s Commitment to Reducing Inequality Index: Africa.

Our analysis of the IMF’s COVID-19 loans during the first year of the pandemic is also available for download.

Copyright © 2024 Oxfam Aotearoa.

Oxfam is a worldwide development organisation that mobilises the power of people against injustice. Oxfam Aotearoa is a registered charity with the New Zealand Charities Register (registration CC24641). Donations are tax refundable.

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