INTRODUCTION
B. Holding Version of Corporate Organization
III. STRUCTURAL ADJUSTMENT LEGACY
Despite the IFI’s strong-arm tactics and the infusion of much needed foreign exchange into the political economy of Africa, the 29 states that adopted SAPs have had a largely negative experience with adjustment.19During the initial stages
of adjustment in the late 1970s, the annual mean rate of growth in per capita income in Africa was 0.8%; from 1980 to 1989 this dropped to⫺2.2%.20Africa’s total debt, which was $55 billion in 1980, almost tripled to $160 billion in 1992 with an average debt service ratio of 25%.21By 1990, Africa’s external debt as a percentage of GDP averaged between 60% to 80% with Mozambique, Tanza- nia, Ivory Coast, Mauritania, and Zambia saddled with at least 250%.22 In the 1980s the average commodity prices for manufactured goods was the lowest this century with 25% of Africa’s purchasing power lost.
Africa’s dismal performance continued into the 1990s, and ‘‘though it had been hoped that Africa’s economic performance would show improvements be- ginning in the early 1990s, economic growth in the 1992–1993 biennium re- mained lackluster.’’23By 1994, there was still no visible sign of economic recov- ery or significant improvement in the standards of living which fell through the 1980s.24This decline continued on all fronts into 1995 as Africa was gripped by a steadily declining share of world economic production coupled with population growth rates twice the global average.25 In the 1990s the debt service ratio for African states rose to 40%.26 Foreign investment lagged behind IFI projected levels, and both the agricultural and manufacturing sectors have contracted throughout the decade (1990–1996).
There is no evidence that the performance of low-income countries in terms of balance of payments, growth, inflation, savings, and investment was any better for countries with Fund programs than those without.27In a study of adjustment experience in 1980–1981, the Fund admitted that only a minority of countries in Africa had met their targets. Only five countries out of 23 reached their growth targets, 13 out of 28 reached their inflation targets and 11 out of 28 reached their trade targets.28Further, in 1980 and 1982 there was a significant increase in the number of SAPs in Africa that were breaking down in their first year, from 36%
to 58%.29
In two recent studies done by Sayre Schatz, data show that this trend has continued through the 1990s. Both analyses argue that those with and without fund programs have no appreciable differences in economic performance. And these studies further show that promised economic growth did not materialize for those who embraced SAPs. Schatz argues that ‘‘it is appropriate to say that no relationship was shown between fiscal reform and economic growth.’’30
In the halls of corporate and state power, it was widely believed that the solution to Africa’s crises rested in the market. Therefore SAPs in Africa have
‘‘generally involved a set of policy reforms to maximize reliance upon markets in domestic and external trade and capital flows, minimize the governments inter- ventionist role; by reducing public ownership, subsidies and regulation, and im- prove the state’s efficiency in allocating and using resources.’’31Such a neoliberal approach was intended to open markets to free competition and strengthen the African economic structure bringing with it much needed private capital invest-
ment, growth, and inevitably development across the board. But the SAPs only served a self-fulfilling purpose. Donors and the IFIs concerned about their invest- ments and past development failures hoped that through effective conditionality, structural changes would take place and subsequently African economies would provide a return on their costly investments. Yet, First World investment did not materialize.
Commercial investment declined as the need for strategic minerals and other like products in Africa dissipated with the end of the cold war coupled with the development of alternative sources elsewhere. In addition, the opening of the Asian and Eastern European markets in the wake of Communism’s collapse, decreased Africa’s bargaining power further. In 1992, investment in the continent totaled $500 million, or less than 2% of total investment in the Third World.32 In fact, investment in Africa declined over the past two decades for reasons men- tioned above as well as TNC concerns regarding political stability and economic commitment to capitalism and adjustment reforms. Essentially, the promised re- turn on Africa’s ‘‘investment’’ in the SAR has not materialized further undermin- ing the adjustment process.
While primary criticism of the SAR came from African leaders and schol- ars, the United Nations Economic Commission for Africa (UNECA) grappled with the problem trying to explain the downward trend. UNECA examined all of the facets of Africa’s economic position and concluded that the common Western rationale for poor performance including political instability, ethnic conflicts, hostile economic investment climate, and climatic catastrophe in agriculture (in other words, indigenous events and trends) simply did not explain the economic performance of the continent.33 The UNECA along with several other African and non-African critics place a great deal of the blame on the SAR. The UNECA report of April 1994 states, ‘‘Despite several years of implementing SAPs, most African countries are yet to outgrow the narrow confines of inherited colonial economic structures or to diversify their economies beyond the groundnuts, cof- fee, cocoa-based system of monoculture.’’34Economic indicators show that even the most basic goal of the adjustment programs to set up a free market that pro- duces incentives for the accumulation of capital and the best allocation of re- sources has yet to be achieved.35
In addition, the political and social ramifications were not lost on the UNECA study as concerns were raised regarding the impact of poor growth and economic contraction on African political systems and culture. As the March 1995 UNECA report states,
The fact is that most of the African countries have yet to take even the first faltering steps in the transition towards a modern industrial and technological society. They have remained essentially the fragmented mini-states they were when they achieved political independence, increasingly incapacitated and unable to sustain even a modicum of modern institutions and consistent gov-
ernment policies, not to talk of the lack of an overall enabling environment for development.36
Africa’s economic decline and experience with the SAPs is well docu- mented. Much of the past political and scholarly debate centered around two fundamentally different conceptions of responsibility underlining the philosophi- cal and political differences between Africa and the West. The neoliberal, West- ern argument is that local regimes failed to adequately embrace the SAR. IFIs and the G10 contend that Africa’s poor results reflect the indigenous problems and mistakes made by African regimes. They contend that local factors must account for the failure as IFIs continue to insist that only the consistent, long- term application of SAPs will work. As part of this argument, a few so-called success stories are offered up, especially Ghana, to vindicate this argument. In addition, when marginal signs of economic growth are identified, they are offered as proof of the righteousness of SAPs and the need for continued application.
Technically, IFIs are partially correct in their criticism of African imple- mentation. With empty coffers and limited financial support to back the drastic changes sanctioned by the IFIs and donors, many African regimes have failed to fully implement conditionality programs.37 Also, several African regimes mired in corruption-ridden systems (Nigeria) or outright kleptocracies (Zaire) have served to work against the goals of the SAR through their own mismanage- ment. However, blaming Africa for a failure to ‘‘try hard enough’’ misses the larger issue, which is that the very limitations that inhibit regimes from fully adopting SAPs are complex and interconnected and not merely a product of one artificially demarcated area (domestic) over another (international).
The second viewpoint which comes from Africanists and many African regimes argues that SAPs failed in terms of program conceptualization and the values and assumptions inherent in the neoliberal model of development. Many contend that the root of the problem lies in the inherent Western centric concepts of ‘‘development,’’ ‘‘market,’’ and ‘‘progress’’ so embedded in the logic of capi- talism. These critics maintain that it is nearly accepted as scientific fact and an article of faith that capitalism, modernization, and development are synonymous and that such policies that promote the market are inherently positive even if success is not readily apparent.38They contend that Western models of industrial development are predicated on uniquely Western political and social experiences that took place in a fundamentally different international system. In addition, this view contends that a mythology of laissez-faire state involvement that has gained credence in the West is largely untrue. They point to the nurturing and outright partnership between 19th and 20th century state governments and private industry designed to promote and encourage indigenous economic growth.
These two orthodox views have been challenged in recent years both within the IFI and African political community and among scholars themselves. More moderate and balanced views have emerged within the World Bank and among
African leaders as blame and ideology has given way to pragmatism and problem solving. Recent World Bank reports have shown a more moderate wing of the IFI community willing to accept the shared responsibility of failure while Afri- canists have shunned some of the more leftist rhetoric of years past for a more pragmatic problem-solving approach.39
This has opened up the dialogue to include heretofore underrepresented perspectives including the potential of NGO-state partnerships based on local projects aimed at sustainable development. While the exact nature of NGO-state relations is ambiguous and potentially combative (IFI-state relations) the argu- ment rests on the assumption that by developing locally defined goals and explor- ing ways that NGOs and states can work together to satisfy them, true develop- mental progress can be made.40 This argument is particularly persuasive when examined at the grassroots level, where community development and empow- erment are fostered by NGO work in selected states. This builds on the more pragmatic voices emerging in both the IFI and African communities.