Closing the income gap between rich and poor countries of the world will be on the table at a U.N.-sponsored policy conference this week in Addis Ababa, Ethiopia. Despite months of planning and debate, few expect the needle to move on this important issue.
A relatively obscure gathering, the Finance for Development confab is the first of three high-level international meetings with the lofty goal of determining the international community’s level of financial commitment to combat poverty and inequality over the next 15 years. Without adequate funding, the U.N.’s goals on poverty and climate could be expected to die on the vine.
Along with political leaders, representatives of social-justice organizations have come to this African capital. Current tax policies, they charge, have enabled multinationals to deprive Africa and other developing regions of billions of dollars in tax payments.
According to the International Monetary Fund, more than $200 billion of potential tax revenue each year is diverted through a shell game by companies who set up their offices in low-tax countries, such as Luxembourg and the Netherlands, and pay no tax where they do business.
“It is unconscionable, a crime, the extent to which corporations talk about corporate responsibility, but when it comes to paying your fair share of taxes, they are totally irresponsible,” economist and Nobel laureate Joseph Stiglitz said in a press interview.
“It is no longer up to a small group of developed countries to set tax rules,” he added. “If we are going to have globalization, we need to have global rules. And those global rules can’t be made by a self-appointed group of advanced countries; it has to made globally.”
U.N. Secretary-General Ban Ki-moon weighed in, calling on world leaders to put aside “narrow self-interest.” He quoted an African proverb that says, “Fine words do not produce food.”
Despite progress in reducing global poverty, 836 million people still live on less than $1.25 a day, according to the U.N.
Kanayo Nwanza, president of the U.N.’s International Fund for Agricultural Development, underscored the contradiction. “Africa is rich,” he said “Its extractive industries have provided revenues in the hundreds of billions of dollars. Yet Africa’s resource-rich countries have some of the world’s highest child mortality rates and a dozen have in excess of 100 child deaths for every 1,000 live births.
“The vast wealth of Africa is often not being translated into development. Often it benefits only a few, or is squandered altogether. But without a solid consensus over the financing and resources needed, goals remain simply wishes.”