“Disastrous and anti-development” education and health cuts by nearly every African country under World Bank and IMF programs

New global index reveals that nine out of ten African countries are pursuing policies that are likely to increase levels of economic inequality. 

Ninety-four percent of African countries (44 out of 47 countries) with current World Bank and International Monetary Fund (IMF) loans have cut vital investments in education, health and social protection over the past two years, according to a new report published today by Oxfam and Development Finance International (DFI).  

“Austerity policies borrowed from a 1980s playbook have set us years back in the fight against inequality in nearly every African country. These disastrous and anti-development policies are pushing governments to make the torturous choice between investing in education and health or paying ballooning debt,” said Fati N’Zi-Hassane, Director of Oxfam in Africa. 

“While we welcome acknowledgements from the World Bank and IMF that levels of inequality should be a focus of concern, they must walk the talk by supporting countries in putting resources where they are most needed. Any further inaction will continue to widen the gap between the rich and those living in poverty, especially in the most unequal regions of the world such as Africa,’’ said N’zi-Hassane. 

In 2023, under growing pressure from economists, shareholders and civil society, the World Bank introduced its first-ever “vision indicator” aimed at reducing the number of countries with high inequality (Gini of 0.4 or above). Despite this step forward, the Bank has watered down previous commitments to support progressive taxation, including increased taxation of the super-rich. Tackling inequality has so far not been meaningfully incorporated into the policy framework for the upcoming replenishment of the Bank’s International Development Association (IDA), which provides grants or low-interest loans to the world’s poorest countries, over half of which are in Africa. Inequality is high or increasing in 54 percent of countries that receive funds from IDA.  

Using the latest data from government budgets, the “Commitment to Reducing Inequality (CRI) Index 2024” ranks 164 governments on their policies regarding public services, tax, and workers' rights —policies central to reducing inequality. This year’s edition shows that 9 out of 10 (89 percent) African governments have backslid across one or more critical areas since 2022. 

Besides cutting investments in education, health and social protection, 4 out of 5 (79 percent) African countries have weakened their tax systems’ ability to reduce inequality, and in 9 out of 10 (89 percent) labour rights and minimum wages have worsened. 

In the CRI Index, eight of the 10 worst performing countries are African. The continent has the highest labour income inequality in the world, reflecting high levels of vulnerable employment. Seven African countries (Burundi, Ethiopia, Rwanda, Somalia, South Sudan, Uganda and Zimbabwe) have no minimum wage or have not updated it for more than 20 years. The Central African Republic drastically cut its investment in health even though only a third of the country’s population is covered by essential health services. 

Some countries have improved their ranking since 2022. Burkina Faso increased its minimum wage and Sierra Leone introduced new laws on equal pay and gender non-discrimination in hiring. Uganda increased its health budget by 29 percent since 2021. 

In addition to low tax revenues, the debt crisis, conflict and climate breakdown are diverting scarce resources from education, health and social safety nets. On average, low- and middle-income countries are spending 48 percent of their budgets on debt service, far more than they do on education and health combined. Five African countries in the CRI Index’s bottom ten performers (Burundi, Liberia, Sierra Leone, South Sudan and Zimbabwe) are in or at high risk of debt distress. 

Higher taxes on the income and wealth of the super-rich could raise trillions of dollars to plug financing gaps for public services in low and middle-income countries. At the G20 Finance Ministers’ Meeting in July 2024, for the first time in history, the world’s largest economies agreed to cooperate to tax the ultra-rich, a move welcomed by President of the World Bank Ajay Banga. 

African governments, specifically, need to commit to mobilize domestic revenue through progressive taxation and prioritize investment in public services, especially in inequality-busting sectors such as education, health and social protection. 

‘‘The CRI index shows that the fight against inequality is not just the responsibility of global financial institutions, but that the political choices made by governments can make a significant difference to people's lives”, said N’Zi-Hassane.