Socioeconomic problems abound as rich get richer - CNBC Africa

Socioeconomic problems abound as rich get richer

Special Report

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Socioeconomic problems abound as rich get richer. PHOTOS: Getty Images/Wikipedia

According to anti-poverty charity, Oxfam’s latest report, the richest one per cent of the world’s population will have more wealth than the remaining 99 per cent by 2016.

The report also stated that the wealth of this one per cent has increased from 44 per cent in 2009 to 48 per cent in 2014, while the least well-off 80 per cent currently owns just 5.5 per cent.

Based on current trends, Oxfam believes that the richest one per cent will own more than 50 per cent of the world’s wealth by next year alone.

Stewart Wallis, executive director of UK think-tank, New Economic Foundation, indicated that this could lead to disastrous social and economic difficulties.

“There are extremes of inequality in many countries, which means we’re going to see all sorts of social problems – we’re already seeing the start of it. But this [situation] is a breeding ground not just for terrorism but for all sorts of problems,” he told CNBC Africa.

“It doesn’t just matter morally and socially, but also economically.”

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Wallis explained that in the United Kingdom (UK), for instance, 40 per cent of households or around one million people do not have enough funds to participate in society.

“This means that purchasing power has gone down. The government cannot raise enough taxes to function and you have a much more unstable economy,” he said.

“The International Monetary Fund (IMF) says that when you’ve got extreme inequality, not only is it bad for growth but it’s also bad for financial stability.”

Wallis added that it is not about putting the rich into a guillotine, it’s about changing the economic system so that it functions better.

(READ MORE: Wealth gap seen as the biggest global risk in 2014)

He therefore recommended that global and business leaders focus on uplifting the majority of the population by increasing access to opportunities, job creation and strengthening the education systems. 

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