Imf Structural Adjustment Programs in Africa

IMF STRUCTURAL ADJUSTMENT PROGRAMS IN AFRICA

INTRODUCTION

Beginning in 1980, the International monetary Fund (IMF) started to impose Structural Adjustment Programs (SAP) on African debtor nations. SAP’s have been imposed on 36 African Sub-Saharan countries under the assumption that neo-liberal reforms lead to economic growth and an increased standard of living.

For that reason, focus was put on macroeconomic policies with the open market based approach.

SAP’s generally mandated:

-the removal of protections in the manufacturing sector;the elimination of government subsidies for food and some other items

-trade liberalization;reductions in barriers to trade, as well as foreign investment and ownership

-increased role of the private sector in industry, which were previously owned by the government

-reductions in government spending on health and education

Regrettably, the economic model promoted in Africa by the IMF and subsequent SAP’s were not beneficial for African countries. Actually, SAP’s have impoverished people in Africa as will be seen using the examples of several African countries.

Zimbabwe

Zimbabwe implemented SAP’s in 1991 when it signed the agreement with the IMF in exchange for a $484 million loan.

The IMF’s SAP required: reducing trade tarrifs and import duties, removing protection for the manufacturing sector, deregulating the labour market, lowering the minimum wage, ending employment security, reducing the tax rate and deregulating the financial markets.

SAP’s stressed export-led growth in order to generate foreign currency to reduce debt. However, trade liberalization in Zimbabwe has led to impoerts growing more than exports.

These IMF-mandated requirements resulted with the fall of Zimbabwe’s GDP by nearly 8% in 1992 and by 1999, 68% of the population was living on less than $2 a day.

COTE D’Ivore

The country first implemented SAP’s in 1989. The IMF mandated labour market deregulation, price de-control, trade reform, reductions in civil service employment and privatization, Between 1989-1995 the intensity of poverty doubled. The number of people earning less than $1 a day increased from 17.8% to 36.8%.

From 1990 t0 1995 real per capita public spending on education declined dramatically by more than 35% because of required reductions in spending on education.

The The External Review said:’The requirements in public expenditures were imposed on a system which was already failing to meet social basic needs.’

ZAMBIA

After decades of suffering through a series of SAP’s, poverty has increased in Zambia and the social sectors have been devastated. On the other hand, in 1960’s Zambia was a third largest copper producer in the world.(after the United States and the Soviet Union). In that time, Zambia was potentially one of the African richest countries.

Unfortunately,these days Zambia is one of the world’s poorest countries with three-quarters of the population living below $1 a day. One of the reasons which contributed to the crisis is that the country was paying an inflated price for the oil imports, while for the exported copper they were underpaid.By December 2002 Zambia’s external debt was $5.4 billion.

GHANA

Ghana implemented SAP’s in 1983. The impact of SAP’s was catastrophic for GHAna as it was for many African countries.

In 1975, GDP per capita was $411. In 1998 it was lower than in 1975 with GDP $390.

In Ghana 78.4% people live on $1 a day and 40% live below the poverty level. In the field of health care, the statistics are even more dramatic: 75% Ghanaians have no access to health services and 68% have no access to sanitation.

SAP’s have been especially damaging to the mining sector. 70-85% of the important mining industry for Ghana is now foreign-owned, while before 1986, 55% were government-owned.

SENEGAL

From the late