A Cloth Untrue: The Evolution of Structural Adjustment in Sub-Saharan Africa.

• Author: Green, Reginald Herbold

On a cloth untrue With a twisted cue And elliptical billiard balls.

-Gilbert and Sullivan, The Yeoman of the Guard, 1888

Since 1981, structural adjustment in sub-Saharan Africa has moved from a vehemently contested set of proposals to a widely if grudgingly accepted reality for most states in the region. The economic results of structural adjustment to date suggest that the countries of sub-Saharan Africa will continue to struggle with meager 3 to 5 percent output, 2.5 to 3.5 percent food production growth rates and limited capacity in basic services. In short, the predominance of structural adjustment, unless linked to a new transformation strategy; promises to continue the process by which sub-Saharan Africa has fallen behind the rest of the underdeveloped world.

Whether even these pessimistic projections are politically sustainable is an open question, particularly for countries seeking to rehabilitate after armed conflict--a category that covers fully one-third of all sub-Saharan African states. In any case, the prospect is deeply depressing, implying glacial increases in average personal consumption, constrained recovery in access to basic services and, at best, a halt to the proportionate (but not absolute) rise in absolute poverty afflicting one-third of all Africans.(1)

The structural adjustment policies that evolved in sub-Saharan Africa over the course of the 1980s and 1990s were shaped by a variety of key constituencies. Their roots can be traced to the World Bank's 1981 Agenda for Action,(2) where concerns with macroeconomic policy adjustment and public sector management (as well as Western pressure) produced a loosely neoliberal prescription for the wholesale reversal of state interventionist policies in an effort to avert impending economic disaster. Eight years later, the World Bank's Sustainable Growth plan(3) outlined a two-track strategy in which structural adjustment policies were hoped to provide greater sustainable economic growth and better resource allocation in basic services and infrastructure.

In 1990, the Bank's World Development Report(4) resurrected the goal of absolute poverty reduction, not only through the promotion of overall growth but also through investment in specific basic services and infrastructure as well as support and safety nets. The Report also highlighted the rising proportion of the absolute poor--a trend unique to the African continent.(5)

Four years later, the World Bank's enthusiasm for structural adjustment began to wane--and for more than cosmetic or public relations reasons. The statistical annexes to subsequent World Development Reports, as well as the annual reports of the United Nations Economic Commission for Africa (ECA) and the African Development Bank (ADB), showed slow overall growth in sub-Saharan Africa, averaging about 2 percent a year until 1985. In the second half of the 1980s, growth rose to nearly 3 percent, only to slide back a percentage point in the early 1990s. With few exceptions, external trade and recurrent gaps between states' domestic revenues and expenditures narrowed, but far less rapidly than envisaged.(6)

This poor record triggered a re-evaluation of structural adjustment policies. There was certainly agreement that structural adjustment had been necessary and that some of its elements were relevant. In particular, structural adjustment helped avoid unsustainable macroeconomic imbalances and grossly distorted government intervention in Ghana, Tanzania, Mauritius, Gambia and Mozambique; periodically did so in Kenya, Cote d'Ivoire and Zambia; and, to a lesser extent, in Zimbabwe. But there was also agreement that structural adjustment policies had at times been suboptimally designed and implemented. The key questions were: How much mileage was left in structural adjustment? Could production, trade and financial structures be transformed? Could economic growth and access to improved services and infrastructure be enhanced? And, perhaps most importantly, could a reduction in absolute poverty be achieved through structural adjustment?

Although economists both inside and outside the World Bank continue to struggle with these questions, it is clear that structural adjustment is no longer seen as an adequate long-term development strategy Nor is it seen as a short- to medium-term strategy capable, by itself, of fostering the conditions in which economic development can take root. Clearly, World Bank thinking has taken a turn from the late 1980s--the high watermark of apparent structural adjustment success.(7)

This article outlines the evolution of structural adjustment policies in sub-Saharan Africa in the 1980s and 1990s, highlighting the diverse constituencies--from the World Bank to the International Monetary Fund (IMF) to African governments--that have influenced their development. The paper argues that structural adjustment has run its course as a central development theme in sub-Saharan Africa. It therefore suggests a number of economic reforms designed to move beyond the limits of past policies, including greater attention to education, the transformation of output and external trade structures and a focus on post-war rehabilitation. Implicit in such recommendations is the need for greater participation from sub-Saharan African countries themselves in shaping economic programs.

WHAT IS, OR WAS, STRUCTURAL ADJUSTMENT?

Structural adjustment is not a World Bank strategic focus unique to sub-Saharan Africa. Nor is it a free-standing World Bank initiative, although it is fair to say that in sub-Saharan Africa it is largely the handiwork of the Bank. To understand the dimensions of structural adjustment, it is necessary to delve into its roots in the 1970s and explore the impact of its various components over time.

The Genesis of Structural Adjustment

The roots of structural adjustment lie in the emergence of neoliberal-leaning governments in Washington, London and Bonn in the early 1970s, which preached tight monetary and fiscal policy, less scope for government and reduced governmental intrusion in markets and enterprises. Inflation was viewed as the primary enemy, to be defeated at almost any cost--even at the expense of lost output growth and higher unemployment. That these governments did not uniformly practice what they preached--spectacularly so in President Ronald Reagan's reckless fiscal policy or Prime Minister Margaret Thatcher's increase in regulation and centralization--did not detract from the pressure they put on the World Bank to promote restrictionist, liberalizing policies and to use broad conditionalities to impose them on clients.

The Bank itself neither believed in nor adopted a true neoliberal focus. While it opposed lax fiscal and monetary policies, overblown bureaucracies, ill-managed state enterprises and extensive protectionism, its motivations were much more eclectic and mainstream than the policies advanced by neoliberal thinking. It therefore crafted structural adjustment policies as a means to enhance efficiency and transparency and reduce subsidization and monopoly. Only in the poorest of the poor countries--mostly in sub-Saharan Africa--did the Bank lead efforts to induce global structural adjustment policies. In middle-income countries, most structural adjustment programs were sectoral. It was in fact the IMF, not the World Bank, that led macroeconomic policy adjustment under quasi-structural adjustment programs elsewhere, such as the adjustment programs promulgated in the Caribbean in the 1980s.(8)

Structural Adjustment in sub-Saharan Africa

In light of this background, what is--or was--structural adjustment in sub-Saharan Africa? A concise answer is difficult because policies have changed over time. But five general prescriptions can be cited:

1. The imposition of upper limits on fiscal, foreign account and demand/supply imbalances, to bring them into line with sustainable resource flows and thereby restore macroeconomic stability;

2. The imposition of lower limits on output growth in an effort to ensure that the reduction of imbalances was consistent with rising personal consumption, enterprise investment and the provision of basic public services and infrastructure;

3. The implementation of a core set of liberalization policies that entailed the removal of obstacles to efficient markets and the reduction of state ownership, arbitrary intervention and bureaucratic delay. Targets of such policies included exchange rates, interest rates, price controls, single channel marketing and external trade licensing;

4. The restructuring of governments so that they engage more efficiently in fewer activities, especially provision of basic services and infrastructure; and

5. The promotion of sociopolitical sustainability through efforts to eradicate poverty, provision of minimal emergency social safety nets and awareness of ecological concerns, such as erosion, pollution, deforestation and desertification.

   In practice, the first two prescriptions have been the uniform operational core of structural adjustment in sub-Saharan Africa. Among the five elements, these policies have endured and changed the least, while the others have evolved considerably over time. The fifth prescription has largely remained peripheral to actual policy implementation and funding, though since 1990 the Bank has moved to correct this.

   In sub-Saharan Africa, the Bank took the lead in promulgating structural adjustment policies. The need for structural adjustment came as a response to failures of the developmental state model and poor economic performance in the region in the early and very late 1970s, caused by macroeconomic policy error, the mismanagement of public enterprises, market distortions and lack of transparency Two "pre-structural adjustment" programs from the late 1970s--applied in the Malagasy Republic and Togo--were perceived as sustainable models.(9) This is perhaps odd since both countries suffered at least a...