OUR CONTINENT, OUR FUTURE This page intentionally left blank OUR CONTINENT, OUR FUTURE African Perspectives on Structural Adjustment Thandika Mkandawire & Charles C. Soludo INTERNATIONAL DEVELOPMENT RESEARCH CENTRE COUNCIL FOR THE DEVELOPMENT OF SOCIAL SCIENCE RESEARCH IN AFRICA AFRICA WORLD PRESS © Council for the Development of Social Science Research in Africa 1998 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise, without the prior permission of the publishers. COUNCIL FOR THE DEVELOPMENT OF SOCIAL SCIENCE RESEARCH IN AFRICA Avenue Cheikh Anta Diop, Angle Canal IV, BP 3304 Dakar, Senegal ISBN 2-86978-074-5 CODESRIA would like to express its gratitude to the Swedish Development Co-operation Agency (SIDA/SAREC), the Rockefeller Foundation, the International Development Research Centre (IDRC), the Ford Foundation, the Carnegie Corporation, the European Union, the Norwegian Ministry of Foreign Affairs, the Danish Agency for International Development (DANIDA), the Dutch Government, and the Government of Senegal for support of its research and publication activities. INTERNATIONAL DEVELOPMENT RESEARCH CENTRE PO Box 8500, Ottawa, ON, Canada K1G 3H9 Canadian Cataloguing in Publication Data Mkandawire, P. Thandika Our continent, our future : African perspectives on structural adjustment Includes bibliographical references and index. ISBN 0-88936-855-4 1. Structural adjustment (Economic policy) — Africa. 2. Africa — Economic conditions — 1960– . 3. Africa — Economic policy. 4. Africa — Social conditions — 1960– . I. Soludo, Charles Chukwuma. II. International Development Research Centre (Canada). III. Title. HC800.M55 1998 338.96 C98-901277-8 AFRICA WORLD PRESS, INC. PO Box 1892, Trenton, NJ, USA / PO Box 48, Asmara, Eritrea Contents Foreword . vii Acknowledgments . ix Introduction . xi Chapter 1 BACKGROUND — ASSESSING INITIAL CONDITIONS . 1 Physical conditions . 3 Human capital . 4 Economic performance . 5 Social development . 15 Overall political-economic structure . 18 Conclusions . 20 Chapter 2 THE CRISIS — DIAGNOSIS AND PRESCRIPTIONS . 21 Explaining the crisis . 22 Prescriptions . 40 Chapter 3 THE ADJUSTMENT EXPERIENCE . 49 Results . 49 Governance and state capacity . 75 The nature of success . 77 Extent of reform and degree of compliance . 81 v vi Our Continent, Our Future Chapter 4 WIDENING THE ROAD AHEAD . 87 Broadening the fundamentals . 89 Financing industrialization . 107 Agrarian revolution and reforms . 112 Mobilization of resources . 114 Reducing the debt . 121 Regional integration . 123 Sociopolitical fundamentals . 124 Developmental states, once again . 126 Conclusions . 138 Appendix — Abbreviations and Acronyms . 143 Bibliography . 145 Index . 155 Foreword Africa’s dismal economic performance over the past 20 years has given rise to a number of attempts to explain and understand the causes of such performance. Growth regressions of various vintages identified a large, negative “African dummy” indicating that, indeed, African growth rates were far below those in other regions of the world. As well, most studies seem to confirm the importance of the core variables targeted under past adjustment programs: inflation rate, exchange rate, interest rate, and budget deficit. However, despite nearly two decades of reform, much of Africa remains impoverished. A major irony of African development history is that the theories and models employed have largely come from outside the continent. No other region of the world has been so dominated by external ideas and models. A growing number of institutions and scholars have expressed serious concerns about this foreign domination, issuing a clarion call for Africans to lead in the reform process and to think for themselves. This major challenge is answered by this book. Our Continent, Our Future presents an attempt by a number of African scholars to regain the initiative in matters relating to the future development of Africa. It presents an African perspective on the accu- mulated evidence about Africa’s poor economic performance and is in keeping with the recent call by the Chief Economist to the World Bank, J. Stiglitz, for a search for wider goals and more instruments in a move beyond the Washington Consensus. vii viii Our Continent, Our Future A simple, straightforward, and correct reading of the accumulated evidence clearly shows that first-generation, or orthodox, adjustment programs did not answer Africa’s fundamental development questions. Evidence also demonstrates development work must transcend narrow concerns of macroeconomic stabilization. African policymakers and scholars have consistently called for a broadening of the objectives of development to include sustainability, equity, and governance. It is perhaps comforting that this call is now being widely heard and accepted. Thandika Mkandawire and Charles Soludo, two of Africa’s top scholars, have been active participants for many years in the debates on adjustment in Africa. In this book, they provide a succinct, yet compre- hensive synthesis of the adjustment debate from a truly African perspective. They urge Africans to re-enter the debate and to take control in charting their socioeconomic and development future. In light of the recent eco- nomic crisis in Asia, where development success was hitherto proclaimed, this call is all the more pertinent and timely. History and experience have taught us that development is a complex process and that no one has all the answers. At the turn of the millennium, Africans must take a long and hard look at their develop- ment problematique because, in the end, only Africans can develop Africa. This book provides important input in the search for a new consensus on Africa’s development agenda in the 21st century. I strongly recommend it to policymakers, analysts, researchers, academics, and development professionals around the world. K.Y. Amoaka Executive Secretary Economic Commission for Africa Addis Ababa, Ethiopia Acknowledgments In writing this synthesis volume, we have drawn extensively from some of the papers prepared under the case studies. The very stimulating discussions and debates during the two workshops on this project also influenced some of the arguments here. We thank members of the steering committee (Ali A.G. Ali; E. Inanga; A. Oyejide; G. Ssemogerere; T. Tshibaka; S. Wangwe) for their overall guidance. In particular, we thank Dr Osita Ogbu for his comments and tireless insistence on excellence and the “Africanness” of the viewpoints, as well as Professors Ali Ali and Eno Inanga for their insight- ful comments and suggestions on an earlier draft. Madame Ngone Tine provided able research assistance for the project, and the Council for the Development of Social Science Research in Africa — the host institution — provided excellent support and coordination. The African Economic Research Consortium (AERC) also gave logistical assistance during one of the meetings of the Steering Committee, and we benefited from contacts with researchers from AERC during one of its annual meetings. We also thank the Centre for Development Research, in Copenhagen, for its hospi- tality during the final writing of the document. Finally, we thank the International Development Research Centre, the Swedish International Development Authority, the Swedish Agency for Research Cooperation with Developing Countries, and the Dutch Ministry of Foreign Affairs for their financial assistance. In addition to the Steering Committee, we thank the following, who were project participants: S. Adejumobi, M. Ayogu, B. Bouabré, G. Daffé, A. Diagne, C. Dordunoo, O. Eghosa, D. Ekpenyong, C. Emenuga, C. Ewonkem, N. Hussain, C.V Izeogu, M. Jama, T.L. Kasongo, E.W.E. Khidir, O. Kouassy, N.A. Lumumba, R. Meena, H.P.B. Moshi, F. Mwega, F. Ogwumike, A. Olukoshi, T. Oshikoya, A. Salau, and H.H. Semboja. ix This page intentionally left blank Introduction For almost two decades, countries in sub-Saharan Africa (SSA) have implemented structural-adjustment programs (SAPs), and at the threshold of a new millennium, Africa may be graduating from being a region with “lost development decades” to becoming the world’s “forgotten continent.” After more than a decade of acrimonious debates and tonnes of evaluation reports, there is an increasing convergence of views that SAPs have not worked and that, as designed, they are grossly defective as a policy package for addressing the endemic poverty and pervasive underdevelopment of the region. In Adjustment in Africa, the World Bank (1994, p. 1) insisted, contrary to all evidence (including several of its own contradictory reports), that “adjustment is working.” More recently, however, such self-assurances of the past seem to be giving way to a subdued humility, expressed in such phrases as “development everywhere is a complex phenomenon,” “nobody has all the answers,” “learning from experience,” and “rapidly changing realities.” This recent “rethinking” and admission that the Bretton Woods institutions (BWIs) do not have all the answers signal an imperative for Africans to devise strategies for the future of their countries. One also hopes that others can be persuaded to be more open minded in “policy dialogues” with their African counterparts. On their part, African scholars and policymakers have been largely critical of the SAPs in their disparate writings on the subject. A careful reading of the writings of these African scholars