Africa’s debt burden, worsening inequality, and weak social protection systems have become a ticking time bomb, warns Kwesi Obeng, Oxfam’s Accountable and Inclusive Governance Lead in Africa. In this interview with CHRISTIAN APPOLOS, he explains how these forces are pushing the continent toward a crisis that could dwarf the Arab Spring.
How serious is Africa’s debt problem at the moment, what other factors pose a great threat to Africa?
Debt, weak social protection, and extreme inequality are the three most dangerous threats to everything Africa aspires to become. The reason is simple: those who lend to African governments dictate what these governments can or cannot do. They tell them not to fund public institutions such as schools and hospitals, or to invest in social protection. In short, they discourage spending on anything that serves the public good.
Because of this, debts owed by our governments limit or completely cancel social protection programmes, deepen inequality, and drive millions into extreme poverty and hardship. The consequences are unemployment, insecurity, and in many cases, violent crises and wars. That is the simple truth, and the most alarming part is that the worst is yet to come. If a coordinated and targeted intervention is not taken soon, Africa will be in a very sorry state. The Arab Spring will look like child’s play.
See, debt is a massive burden on African countries. At the moment, quite a number of countries are paying close to half of their annual tax revenue just to service debt. In some cases, it’s only the interest they are paying, not even the principal loan. So, debt has become a huge drain on African economies.
The cost of borrowing exacerbates the problem. Africa borrows at almost 5 per cent to 10 per cent times what economies in the Global North borrow. African countries are charged between 8 per cent to 12 per cent interest rates, while countries in Europe borrow at rates below 1 per cent. That cost differential is a big part of the problem. But beyond the cost, our economies are structured in ways that keep us perpetually dependent. We import almost everything, including food. When we import food, we convert local currencies: the naira, cedi, shilling, or rand, into foreign currencies. What that means is that we are sending our capital and potential jobs abroad, while we only buy to consume.
This dependency puts pressure on our local currencies, making them unstable. It also increases the cost of imports and forces us to borrow even more. Yet, we have the natural and human resources to produce what we consume. Food is fundamental, without food, nothing works. It’s the fuel of human productivity, just as electricity powers industry. We must therefore invest our resources in productive sectors so we can depend on ourselves.
Another layer to the debt problem is the role of the big credit rating agencies. They consistently rate African countries as ‘high risk,’ often for dubious reasons. This bias is rooted in colonial and neo-colonial structures that make it difficult for African countries to raise capital competitively. Their methodologies are skewed against developing nations, particularly African ones.
But even beyond external factors, our governments also fail to make the best use of the loans they acquire. The value derived from these loans is often minuscule compared to the burden they create. The result is that citizens bear the cost of debts that did not contribute meaningfully to development. Tax revenues that should fund basic services are now being used to pay off unsustainable debt.
That is the connection between the debt, social protection and extreme inequality, and its impact on access to basic services that all citizens depend on.
How do these economic realities affect jobs and well-being of the African people?
As I said, when we spend hundreds of millions of dollars importing food we could produce locally, we are exporting jobs. We are sending our manufacturing potential abroad.
We saw during the COVID-19 pandemic how fragile global value chains were. When they crashed, many African countries couldn’t even access basic needs such as food and medicine. Some countries have since re-engineered their economies to produce basic manufacturing inputs domestically. We need to do the same.
Now, in our (Oxfam) report on Africa’s inequality crisis, we found that in the last five years, particularly during and after COVID, the wealth of Africa’s richest 0.02 per cent increased by 56 per cent. Today, just four men own nearly half of the continent’s total wealth. Meanwhile, about 850 million Africans face some form of food insecurity.
Many people now eat only once a day, skip meals, or go without protein. The implications are severe, especially for children’s development and the elderly. Malnutrition destroys human potential.
The social protection gap is a dangerous reality in this situation. Outside of a few exceptions like South Africa, most African countries have no social safety nets. Less than 10 percent of people contribute to any form of pension scheme. As people age, they become fragile and vulnerable, yet there is little to fall back on. The burden, therefore, is carried by a small, overtaxed segment of the population.
Meanwhile, Africa is the only region in the world where taxation of the wealthy does not contribute to redistribution of wealth. Elsewhere, taxes on the rich help fund education, healthcare, and infrastructure. Not here. Our governments often say they borrow because they lack revenue but the truth is, they can raise revenue by taxing the wealthiest properly. Some of the rich are even calling for fair taxation. But in Africa, the poor are the ones carrying the heaviest tax burden.
The poor pay for public services they barely benefit from. For example, wealthy communities have access to piped water, while the poor buy water in gallons and barrels at higher cost. It’s both unjust and inefficient.
We (Oxfam) calculated that if all African countries could match Morocco’s property tax performance: 1.5 per cent of GDP, they could collectively raise $70 billion annually. Imagine how many hospitals, schools, and jobs that could be created in just five years. But the wealthy don’t feel the urgency because their children don’t attend the underfunded schools, and they don’t rely on the failing public hospitals.
Yet, inequality hurts everyone. Studies show that once inequality passes a certain threshold, it undermines growth, fuels violence, increases corruption, and erodes governance. Look at the crisis in the Sahel region. For years, it has been seen purely as a military crisis. But it’s actually a crisis of inequality. In Niger, just a few years ago, a girl had only a 1-in-24 chance of advancing to secondary school compared to a boy. Poverty, early marriage, and lack of essentials force girls to drop out. Many of the children begging on the streets of Accra, Abuja, or Lagos come from such inequality-stricken regions. They’re not fleeing war, they’re fleeing inequality.
How wide is the inequality gap in Africa, especially in West Africa? And what will it take to close it?
African governments are the least committed to tackling inequality anywhere in the world, and West Africa is the weakest region in that regard. Of the 30 least committed countries globally, 25 are African, and more than half of those are in West Africa. Nigeria is one of them. There are over 10 million Nigerian children out of school. That’s our future being wasted.
Our data show that at the current pace, it will take over 600 years to eliminate extreme inequality. But if we could grow our economies by 2 percent annually and reduce inequality by 2 percent, we could eliminate extreme inequality in less than 70 years. That would save lives, give children from poor backgrounds a shot at life, and build safer, more stable societies. Because people who feel they have nothing to lose can easily turn to violence, drugs, or extremism.
Unfortunately, rich countries and international financial institutions are pushing African governments to slash public spending. As of now, 44 out of 47 African countries with IMF programs have agreed to reduce social spending, deepening inequality even further.
Almost 90 per cent of countries have reversed progressive taxation. That means the poor are now carrying an even greater burden.
China offers a powerful lesson. In one generation, they lifted over a billion people out of poverty. Africa can too, if we show the same seriousness. But at this rate, it will take us over six centuries to achieve the same.
How did Africa get to this point of extreme inequality, and who is responsible? What’s the way out?
Africa is not poor. Africa is crazily wealthy. What we lack is sound policy and political will. Corruption, stealing or diversion of public funds for personal use and lack of political will got Africa to this point.
One simple example of a way out is capital gains tax. When you sell property or stocks and make a profit, that profit should be taxed. But in many African countries, it isn’t. Kenya introduced a capital gains tax in 2015 at 5 per cent, but the wealthy fought it and it was withdrawn. In 2023, the government reintroduced it at 15 per cent, and the Kenya Revenue Authority has since recorded a significant increase in tax revenue from the wealthy. Every African country can do the same. Inequality is not a divine condition, it’s a man-made failure of public policy.
And if it’s caused by policy, it can be fixed by policy.
Also, governments must have the courage to tax wealth properly. We are not anti-wealth. We want more Africans to prosper. But those who are able must contribute fairly to society.
I’ll give you an example: a Ugandan woman, Abby Christine, a mother of five who sells mixed flour in northern Uganda. She pays local market dues that amount to 44 percent of her income annually, yet the wealthiest companies and individuals pay very little tax.
She has no social protection. If she falls ill and cannot work for a month, her children may go hungry. That’s the human face of inequality.
The solutions are available. The African Union has already urged member states to reduce inequality by 15 percent over the next decade. It’s possible but only with political will. At the current pace, it will take 600 years to close the gap.
What would be the role of trade unions across Africa in these issues?
Well, every African citizen must play a role if the narrative must change. Everyone must come to terms with reality. People should not think it is just a fairy tale or the responsibility of trade unions. However, trade unions must reconnect the struggles of labour with the broader struggles of society. For a while, labour became somewhat complacent and disengaged. But now we are seeing re-engagement, and that’s encouraging.
Labour and civil society and citizens have a common agenda and a common enemy: extreme inequality. Together, we can push governments to invest in productive sectors, create decent jobs, and strengthen the formal labour market.
This will make trade unions stronger and more influential in shaping public policy. The renewed mobilization of trade unions, led by ITUC-Africa and other partners, is a positive development. We must build on it. This is a fight we must win at all costs.