Economic recovery programs fail Africa

01.07.2008 LISTEN
By myjoyonline

When the economic crisis of the late 70s compelled Africa to go look for ideas outside its boundaries, many were those who thought that the prescriptions given by the new partners would bring the needed and expected relief.

Rather, the economic recovery programmes prescribed to African countries have, in the long run, been found to contain many mistakes, the Director of the United Nations Research Institute for Social Development, Geneva, Dr Thandika Mkandawire has observed.

According to him, the mistakes have created maladjusted economies which resulted in many countries going round in circles and unable to achieve any economic progress.

Speaking at the 3rd Ghana Speaks lecture in Accra Dr Mkandawire did not mince words in condemning the ad-hoc and wholly experimental measures, virtually untested anywhere in the world, which were forced down the throat of Africa in a bid to improve her economic conditions.

The lecture, which was on the topic: "From Maladjusted States to Developmental States in Africa", brought together civil society organizations, government officials, academia and the general public to brainstorm on the way forward for Africa. It was organized by the Institute for Democratic Governance (IDEG) in collaboration with Joy FM, an Accra based radio station.

According to him, the current interest in State capacity building is a recognition of the maladjustment of the state that has taken place during the last three decades of neo-liberal economic reform.

The reforms required the downsizing of the state because of alleged bloated public sector employment which had resulted in a huge wage bill putting undue pressure on the fiscal health of the state, and retrenching its traditional social and economic functions. It was argued that those prescribed reforms had become necessary because the active commitment of the state to multiple social and economic functions had constrained the market and rendered it inefficient, bred corruption and distorted the economy in many respects.

Dr Mkandawire contends that the multi-purpose formula prescribed as part of the package of solutions to the continent's development crisis resulted in what may be described as an anaemic state, where the state, as the key institution was relegated to the background.

In other spheres of the continent's economic, political and social life, he noted, the reform had insisted on what he termed mono-cropping, where "one size fits all" institutions were prescribed for all countries, irrespective of their peculiar needs as well as "mono-tasking", which reduced the role of institutions to performing narrow and single objectives. The reform also significantly involved limiting the choices of elected governments by ring-fencing a number of institutions and policies to keep them away from oversight by parliamentary institutions.

The maladjusted or anaemic state accounts largely for Africa's failed development after decades of reform, contrasting sharply with the experiences of newly industrializing nations. Evidence adduced from contemporary world history, Dr Mkandawire recounted, was that all successful "late industrialisers" like India and China had states that assumed more than just regulatory roles, adding that in those instances, the state had stimulated private actors, taken up entrepreneurial roles and coordinated economic activities.

He said African countries have to find a key institution that can play functionally equivalent developmental roles in today's more competitive world if they are to develop, emphasizing that that key institution is the State.

In the face of severe economic and social crisis in the 70s and mid 80s, many African nations started the process of structural adjustment, funded largely by the International Monetary Fund, the World Bank and bilateral donors, to establish market-based economies. Many officials believed, however, that this process was inappropriate, ineffective and inequitable and would have deleterious consequences on the poor since such reform initiatives were expected to result in falling wages, higher unemployment, higher prices for staple goods and fewer services.

These apprehensions have been confirmed after testing the reforms prescribed over the years by the bilateral donors eliciting questions from many citizens on why we still keeping going to them for solutions again and again.

Some of the participants dailyEXPRESS spoke to expressed disgust at leaders of the continent for not having confidence in themselves and the citizens and falling to the whims and caprices of the donors which is eventually bringing Africa under its knees. They contend that the reforms should increase incentives to small agricultural producers and eliminate economic policies that disproportionately benefited the elite and urban middle class.

Furthermore, many of the participants were of the view that the declining living standards in countries receiving loans from the World Bank and IMF are a failure of policy but added that the failure to institute reform, due to political environments that prevent elimination of excess state controls, was the most serious impediment to economic recovery in Africa.

Credit: Daily Express/Liberty Kofi Amewode
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