How tax dodging is hurting people’s chances to escape poverty in Malawi

The health system in Malawi is seriously under-resourced with shortages of staff and vital medicines. Recent budget cuts are making the situation even worse for the poor who have no way to pay for private clinics and schools.
The health system in Malawi is seriously under-resourced with shortages of staff and vital medicines. Recent budget cuts are making the situation even worse for the poor who have no way to pay for private clinics and schools.

Malawi is one of the world’s poorest countries, with half of its 16 million people living in poverty. While the mansions and shopping malls springing up around capital Lilongwe reveal growing wealth among the urban elite, it is not being shared with the majority of citizens. Economic inequality is getting more extreme – in the past seven years the gap between richest 10% of Malawians and the poorest 40% has increased by almost a third.

Three nurses for every 10,000 people

The health system is seriously under-resourced with shortages of staff and vital medicines. On average there are just three nurses for every 10,000 people. Public spending per primary-school child is among the world’s lowest – and 73% of education spending benefits only the most educated 10% of the population. Recent cuts to government budgets are making the situation even worse for the poor who have no way to pay for private clinics and schools.

“As a nurse I love my job and I love helping people. The shortage of staff is really impacting our delivery of services. Patients need to really be patient, to wait longer - for many hours - just to be attended to. It makes me sad because as a nurse I feel I am failing my job.”, says Vitumbiko Mhango, who works  at Kamuzu Central Hospital and Bwaila maternity clinic, in Lilongwe.

In Malawi, public spending per primary-school child is among the world’s lowest.

Tax revenue that should be helping to fund these public services in Malawi and other poor countries is disappearing at an alarming rate. Almost a third (30%) of African financial wealth – a total of $500bn – is held offshore in tax havens. It is estimated that this costs African countries $14bn a year in lost tax revenues. This is enough money to pay for healthcare that could save the lives of 4 million children and employ enough teachers to get every African child into school.

In Malawi, it’s impossible to get a full picture of the problem. However, Oxfam calculated, from last year’s Swissleaks scandal, that the lost tax revenue from the money held by Malawians in HSBC accounts in Geneva  could pay the salaries of 800 nurses for one year. ActionAid has found that tax dodging by just one mining company cost Malawi more than US$43 million over the last six years.

Nellie’s message: Pay taxes and help the poor

“We don’t have enough resources to teach in schools. We don’t have the basics - we don’t have pieces of chalk, we don’t have textbooks which we can use to teach our students. We don’t have good enough water, we don’t have pit latrines. But all these things, they need money”, explains Nellie Kumambala, teacher at Magwero Community Secondary School in Lilongwe.

Oxfam is calling for urgent action to tackle the global inequality crisis and is urging world leaders to end the era of tax havens which has seen increasing use of offshore centers by rich individuals and companies in order to avoid paying their fair share to society. This has denied governments the valuable resources needed to tackle poverty and inequality.

Help us end the era of tax havens, sign the petition now