The Implementation of SAPs in Africa in the 1980's: the Issue of Conditionality

Résumé du document

When discussing the Heavily Indebted Poor Countries initiative (HIPC initiative), a joint debt relief initiative by the International Monetary Fund (IMF) and the World Bank currently being implemented in 29 African countries, one has to remember that debt relief programs are not new in the African continent. The issue of African debt is lingering since the 1970s and the making of this enormous debt. In this respect, the example of Zimbabwe is quite striking. According to estimates, in 2008 Zimbabwe, thought to be the most indebted country in the world, had a public debt amounting to 265.6% of its GDP1. Despite several attempts by the International Financial Institutions (IFI) to tackle this huge handicap for the development of African states, few countries actually succeeded in reducing their debt and their indebtedness towards the IFIs. Here, we will focus on explaining the issues stemming from the implementation of one of those programs in the 1980s, the Structural Adjustment Programs (SAP). Those were not ordinary loans, as one can easily understand by paying attention to the fierce and heated discussions and criticisms that arose from the implementation of the SAPs in Africa.

Extraits

[...] In practical terms, SAPs consisted of cutting social expenditures ( austerity devaluation of currencies to encourage exports, privatizing state-owned companies, tax reforms, improving governance, fighting state corruption In short, African states had to implemented free market policies so as to become more market oriented. These changes asked by the Fund are often referred to as the Washington Consensus7 because, according to John Williamson, father of this expression, these economic prescriptions are made by Washington DC based institutions such as the IMF, the World Bank or the US Treasury Department. This first African country that accepted a loan on such conditions was Senegal in 1979. It was then followed by Kenya in 1980 and Ghana in 1983 to mention but a few. [...]

[...] First, during periods prior to elections politicians in office tend to increasing social spending in an attempt to secure reelection. But, as seen above, conditionality is all about state austerity and cutting social expenditures, leading countries to noncompliance to IMF conditionality in election times. Second, when there is elite conflict for power, the regime is in dire need of support. That is why it tends to increase social spending toward specific groups so as to muster their support. Kwame Akonor develops the example of Ghana and shows that, despite President Rawlings' official discourse he affirmed that IMF conditionalities were “simple economic common sense”18 noncompliance happened four times in Ghana. [...]

[...] Western banks quickly understood that they may never see their dollars back and stopped lending money to African governments. That is when the IMF comes into play. Figures from class n°9. COOPER Frederick, L'Afrique depuis 1940, Payot Huq, M. M. (1989), The Economy of Ghana : The First 25 Years Since Independence. NewYork: St. Martin's Press The implementation of SAPs One has to remember that the debt crisis is not only an African phenomenon. [...]

[...] This is what is called conditionality. As we will see later on, the issue of conditionality goes beyond the problem of compliance or noncompliance with the IMF conditions or of the SAPs' effectiveness in reducing of the African debt. Although these IMF policies are a good example of the difficulties faced by the IFIs regarding the question of the African debt, the very notion of conditionality raises the following question: which conditionality ? IMF's policy changes recommendations were probably illadapted to the situation in Africa and led, to a certain extent, to the partial failure of the SAPs. [...]

[...] The very nature of African states in the 1980s, none of them actually being governed by a personal interest free regime did not help either. Whether the IMF learned from its alleged mistakes, one time will tell. But what is for sure is that Africa is still heavily indebted and that tackling this problem will require more than a one-sided policy neglecting the very nature of its recipient. BIBLIOGRAPHY The IMF Website www.imf.org AKONOR, Kwame, Africa and IMF Conditionality, The unevenness of compliance 2000, Routledge, New York and London HELLEINER, Gerald, The IMF and Africa in the 1980s, Essays in international finance, Princeton University, July 1983. [...]