With all the attention being paid to Africa by so many people from rock stars to the Pope here is a reflection from an Australian perspective on who is responsibile.Central to finding solutions to Africa’s problems is an understanding of their causes; answering the question “why is Africa in the state that it’s in?” must be a precursor to answering “how can Africa get out of that state?”
One answer which seems popular among newspaper columnists is that Africa’s problems are Africa’s own fault, the results of decades of rampant corruption by African leaders and wars fought between Africans. The corollary is that Africans need to fix these problems before rich countries can do anything. “Nothing to do with the West and hence not our problem”, is the implication.
The facts, however, dispute this hypothesis. Look back just a few decades and it is obvious Africa hasn’t always been doing as badly as it is now. For instance, between 1960 and 1980, Sub-Saharan Africa’s GDP grew by 36 per cent: not as much as developed nations, but not bad. Now compare this with the next 18 years, 1980 to 1998, when Sub-Saharan Africa’s GDP actually decreased significantly: its economic output shrank by 15 per cent.
Did Africa suddenly discover corruption and war after 1980, but not before? No, these have been happening since at least the time of European colonialism. So what has changed since the 70s that might explain Africa’s decline?
Well, two significant elements of the global economy changed in the early 80s. The first was the general displacement of Keynesian economics, which argues for a positive role for government in managing economies, by “neoliberal” economics (a belief that open markets, deregulation and privatisation can solve all society’s ills). The second change was the move by International Monetary Fund and World Bank from providing short-term credit to the developed world, to providing long-term “structural adjustment” loans to developing countries.
Joseph Stiglitz, winner of the 2001 Nobel Prize for economics, describes, “In the 1980s, the era when Ronald Reagan and Margaret Thatcher preached free market ideology in the US and UK, the IMF and World Bank became the new missionary institutions, through which these ideas were pushed on the reluctant poor countries that often badly needed their loans and grants”.
The IMF and World Bank’s structural adjustment loans have been used to impose the dictates of neo-liberal economics on over 100 developing nations around the world, including most of Africa, and at the same time created the hundreds of billions of dollars of debt that has forced most African countries into a slave-like relationship with the West.
But while the Live 8 concerts have drawn attention to the massive debt burden on poor African countries, the most significant cause of African poverty has gone unmentioned: the “structural adjustment” conditions imposed by the IMF and World Bank on African economies in return for the loans. These conditions have forced radical changes on most African nations, including huge cuts to public spending on health and education, trade liberalisation, privatisation and deregulation. Stiglitz describes how these policies have “led to hunger and riots in many countries, and … often the benefits went disproportionately to the better off, with those at the bottom sometimes facing even greater poverty”.
Take Zambia for example. During the 1990s, the IMF imposed a structural adjustment package on Zambia in return for its loans. The package involved liberalising Zambia’s trade barriers, privatising its industries and cutting budgets for health and education. IMF-imposed trade liberalisation led to a flood of imports, devastating Zambia’s farming and manufacturing sectors, particularly textiles. Whereas in 1992 Zambia had sported 140 textile manufacturers, by 2002 this had been reduced to just 8.
Tags: Poverty Analysis
