About 43 out of 55 AU countries could face about US$183 billion cut in public expenditure over the next five years if multilaterals like the International Monetary Fund (IMF) continue to insist austerity ideas to African countries, a report by Oxfam has said.
According to Oxfam, 87% of the International Monetary Fund COVID loans require new austerity measures.
Speaking to CNBC Africa, Vincent Ahonsi, country director of Oxfam in Nigeria said: “The report clearly shows that the IMF in its attempt to help developing countries especially Africa is not applying the same standards that it seems to be applying in Europe. 87% of the IMF loans that were granted during or after the pandemic now requires developing countries to have what they call projects cuts. They want them to cut their projects towards savings funds; to cut social spendings, to introduce VAT, taxes and all of them.
“We are saying for example that when you are in crisis situation like what we observing under this pandemic you do not cut social spending, you impoverish people the more.
He added: “You can’t go to Europe and advise them not to suffocate their recovery with the force of austerity and you’ve come to Africa, for example, you’re asking 14 countries out of 16 in West Africa to cut as much as US$69 billion over the next five years… and Oxfam is saying this is not the right approach…”
The new report, Africa’s extreme inequality crisis: building back fairer after COVID-19, is a continental briefing that draws on insights from the Commitment to Reducing Inequality (CRI) Index developed by Oxfam and Development Finance International (DFI). The index scores and ranks 158 global governments on three areas – public services, tax and labour rights – that are pivotal to reducing inequality.
Africa is facing a crisis of extreme inequality which is undermining growth, preventing poverty eradication and contributing to insecurity.
The six richest African billionaires are now wealthier than the poorest 50% of Africans combined.
This report by Oxfam shows that COVID-19 has deepened this crisis, and that the responses of African governments and international financial institutions are making little difference as debt burdens grow and austerity kicks in.
While some African governments were doing a lot to fight inequality before COVID-19, through equitable public services, progressive taxation and enhanced labour rights, especially for women, most were not.
The paper lays out a comprehensive plan of measures which could be taken by African governments, the AU and the international community, including the EU, to significantly reduce inequality, eradicate poverty, accelerate growth, and reduce insecurity throughout Africa.
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