AFRICAN ALTERNATIVE FRAMEWORK
to Structural Adjustment Programs for Socio-Economic Recovery and
Transformation
The document published here is an abridgement of A Popular Version of the AAF-SAF, published by the Economic Commission for Africa in Addis Ababa in April 1991. The wording is taken directly from the Addis Ababa edition. Omitted words or phrases are indicated in the text by ...; transitional phrases inserted by the editor for clarity are set off by brackets.
Larger Image | Special OfferThe African Alternative Framework to Structural Adjustment Programs for Socio-Economic Recovery and Transformation (AAF-SAF) originated from studies by Adebayo Adedeji and other economists at the United Nations Economic Commission for Africa, in Addis Ababa, and was originally presented as a proposed framework in July 1989. Intended as an alternative to orthodox prescriptions presented by international agencies such as the World Bank and the International Monetary Fund, the draft was welcomed as "a basis for constructive dialogue" by the United Nations General Assembly in November that year. Only one country, the United States, voted against the resolution. Complete versions of the AAF-SAP should be available in libraries that are depositories for documents of the United Nations. A book describing the debate around the AAF-SAP, African Development: Adebayo Adedeji's Alternative Strategies, by S. K. B. Asante, was published in 1991 in association with Hans Zell Publishers of Oxford, England.
The whole world knows that ... the African nations and their 650
million people have suffered a bitter and persistent social and
economic crisis, especially during the 1980s. ...
[The question is:] What are the underlying causes of Africa's
social and economic crisis? This question [must be answered],
otherwise we will never know how Africa gets out of the crisis
and gets on with the business of development for the benefit of
its suffering people.
The very structure of the African economy is the primary underlying
cause of its persistent crisis. It is a structure that
obliges Africa to keep producing commodities it does not need
because its people consume very little of such commodities while
it depends on other people for the production of its own need.
It is a structure of dependency rather than self-reliance. It is
a structure that is more import-export oriented rather than
production-oriented. The other main features of the African
economy are:
The social structures also fundamentally contribute to Africa's
persistent crisis. First, Africa has very distinct and deeply
rooted types of social differentiations. These relate to
linguistic affinities, gender, ancestral origins or blood
relations such as those that result in ethnic groups or
nationalities or clans. This has many implications on social
mobilization for development; on efficient and objective economic
management; on the proper functioning of national institutions;
and, on political stability in general.
The political environment is also a major cause of the African
problems. Basic rights, individual freedom and democratic
participation are often lacking in African countries. Yet,
without them people feel alienated and are unable to devote their
energies to development and productivity. Indeed, in a place
where injustices are the norm rather than the exceptions, it is
almost impossible to expect a momentum of progress. What you
often find is disillusion, lethargy, repression, civil strife and
an environment where fear and man's inhumanity against man
prevail. Given such circumstances, people do not work hard or
produce optimally and, naturally if people do not work hard, the
pace of development, if any, is at snail's speed.
The combination of the social and political weaknesses has also
led to an acute crisis of skills and management in Africa. This
has led to a breakdown of institutions, closure of industries and
a failure of others to maintain profitability. Lack of
accountability has been a major problem for Africa. ...
Self-enrichment at the cost of development has become a cancer
that is eating away at the resources that otherwise would have
been invested in development.
At first glance, simple cause-and-effect governs the relation
between declining economic performance and declining standards of
living: the former brings about the latter. But ... causes and
effects travel a two-way street. In a world economy that places
a premium on technology and information processing, only a
healthy, secure and literate population can engineer an economic
upturn. Desperate living conditions fuel both social unrest and
the internal strife and civil wars that we identified earlier as
a major cause of social and economic crises ... These, in turn,
discourage outside investment, cripple domestic productivity and
erode the will of citizens to work for a better future. In
short, government initiative, private investment and assistance
from overseas will be unable to establish the conditions for
sustained economic growth unless there is an improvement in the
standard of living of the African people.
... The whole economic setting has been put out of gear. Let us,
for example, take agriculture. Once net exporters of food,
African countries now have difficulty feeding their own people.
Harvests per capita fell by about 10 percent over the course of
the 1980s. About one-third of Africa's people rely wholly or in
part on imported food ... Modern agricultural techniques are now
applied mostly to export crops. The tremendous contribution of
African women to the raising and harvesting of crops is
diminished by their meager share of land, capital, credit and
technology and by social and cultural customs and taboos that
marginalize their role in the economy. Low-technology economies
that depend on natural resources are exhausting the land through
overgrazing, cutting down trees for household fuel, and farming
techniques with long-term disadvantages.
Consider also the external trade sector. With a land mass second
among continents only to Asia and a 12 percent share of the
world's population (a share that will grow rapidly in the years
to come), Africa accounts for a mere 3 percent of world trade.
This share is also declining rapidly. Too many African countries
depend on too few export items ... Most exports are minerals and
agricultural commodities, and the world market prices of many of
these raw and semi-processed materials fell sharply in the 1980s.
Unfortunately they are also unlikely to recover significantly in
the foreseeable future. ...
Even if production of traditional export items could be
increased, there will be no instant solutions for African
economies. In the first place, flooding the markets with
increased exports would, under a perverse trick of supply-and-demand,
lower the prices of these items. Secondly, most
industrialized nations, the major customers for African raw
materials, protect their own miners and farmers by putting a
ceiling on imported materials or fencing them out with protective
tariffs.
Clearly then emergency borrowing to fend off the economic shocks
of the 1980s did not and cannot promise to solve or stabilize the
problems of African countries. [Instead it] led to rapidly
growing debt. Debt payments to the International Monetary Fund
(IMF) ... now outstrip new loans and grants coming in. In 1986,
45 sub-Saharan African countries paid out $895 million more to
the IMF than they took in. The net outflow in 1989 was $657
million. So, African countries are just borrowing to pay out - a
situation that is obviously unsustainable.
It is clear that simply sopping up red ink by cutting government
spending and balancing imports and exports will not deal with
African underlying problems. These problems ... have to be dealt
with structurally. They are not purely economistic. They are
political and social as well ...
But the realization that Africa has to tackle the root-causes of
the underdevelopment problem is not new or recent. Even before
the shock waves of the 1980s had struck, African leaders had seen
the need for a long-term strategy for structural transformation.
Under the auspices of the Organization of African Unity (OAU) and
the Economic Commission for Africa (ECA), a conference of Heads
of State and Government in Lagos, Nigeria in April 1980 ...
adopted the Lagos Plan of Action for the Economic Development of
Africa, 1980-2000 ... Up to this day, this blueprint contains a
valid analysis and the right prescriptions for African countries
to transform their economies.
The central principle of the Lagos Plan is that the worth of
economic development is measured only by the well-being of the
people. No program of adjustment or of development makes sense if
it makes people indefinitely more miserable. Africa's central
objective, therefore, is the alleviation of poverty and general
improvement in living standards of the people. A second
objective, essential to meeting the first, is increased
production through expanded and diversified productive capacities
that can be sustained over a long period of time ... The third
goal is self-reliance -- both national and collective...
Let us look more closely at each of these objectives ...
First, alleviating poverty and raising the welfare of the people
means, in essence, that people including the poor and the
vulnerable ... have access to the goods and services that are
essential for their survival and well-being. ... Services such
as education, health and transport must also be available and
affordable. ...
But what are those critical goods and services that Africa has to
focus on? ... Of course, we all know that anybody on an empty
stomach cannot be happy or productive. As such, the Lagos Plan of
Action had food self-sufficiency on top of the African
development agenda. The other elements of the LPA agenda include
potable water, shelter, primary health-care, education and cheap
transport. If the African people can have these in sufficient
quantity and quality, then we could say that Africa has made a
start.
[This] entails other more specific aims. The most prominent of
these are:
The second objective is that of establishing a self-sustaining
process of economic growth and development. As of now, Africa's
growth ... depends on world events and on natural phenomena like
rain or drought. Whenever there is a drought or a flood African
growth stops and calamity takes over. Whenever the world economy
suffers a recession with falling demand and prices for primary
commodities, Africa's growth goes in reverse gear and economic
crisis ensues. So Africa has to transform its economy to make it
produce what it consumes; market what people produce and need and
produce what is needed to produce other industrial goods.
To achieve the second objective will not be easy. It will also
not be possible in the short run. ... It must be pursued with a
long-term perspective, [including]:
Africa urgently needs to integrate its economies. The go-it-alone
approach that has characterized Africa's development efforts
since independence has proved a total failure. African countries
must realize that only by working together will they survive and
develop. ...
It must, therefore, be emphasized in the strongest possible terms
that, as envisaged in the Lagos Plan of Action, Africa should aim
at the establishment of an African Economic Community by the year
2000. This community must be based on the objective realities of
a unique cultural heritage, the massive potential for product
specialization and the enormous advantages that will result from
a unified large African market.
[This requires]:
Removing trade barriers and increasing the role of regional
trade associations;
It should be emphasized that the crisis that struck Africa in the
1980s had many causes. The drought resulted in one of the worst
famines Africa has known this century. The fall in the prices of
Africa's major commodities made foreign exchange to become very
scarce and very expensive. A black market for foreign exchange
became widespread.
Countries could not import enough goods and
could also not produce enough essential goods domestically. So,
there were queues everywhere and domestic prices rose, almost
everyday. Life was expensive and national currencies were nearly
valueless. ... Finding themselves in a tight and desperate
situation, African countries sought financial assistance from the
World Bank and the IMF mainly because they could not get any
assistance elsewhere ...
So, in essence, the World Bank and the IMF became primary lenders
to most of the African countries and quite naturally they made
such assistance available on their own terms. Their objectives
were less to help African countries than to "discipline" them
and, above all, reorient their economic policies to the market
economy model.
In this policy reorientation which is often described as policy
reforms, the World Bank and the IMF took as their model for
proper economic functioning in Africa the classical free-market
system, in which prices are set by supply and demand and
profitable enterprises provide the engine of economic growth. ...
When they looked at Africa, they saw practices sharply at odds
with this free-market model. Many of the large industries were
state-owned and not private-owned and a good deal of the
agricultural products were bought and sold by government-run
marketing boards at government-set prices. In many countries, a
high percentage of these government enterprises did not operate
efficiently or operated at a loss.
The world's two most powerful financial institutions also felt
that in Africa, domestic food prices were often kept artificially
low to make it easier for local people, especially those who
lived in the cities, to feed their families although, the
institutions reasoned, the governments could not finance the
difference in prices. They further argued that raising the import
duties on some imported products in the hope of giving local
industries a competitive edge only made African industries less
competitive ...
National currencies were, in the view of the World Bank and IMF,
artificially maintained at high rates of exchange, which made
imported goods much cheaper to buy and also made earnings from
African exports in local currencies rather low. Lastly, budget
deficits which have their origin in the dwindling earnings from
exports were regarded by these institutions as wrong. A balanced
budget was regarded as a policy which must be pursued even if it
results in lower expenditure on education in a continent with the
largest illiteracy ratio and in slashing health expenditures in
societies with the highest infant mortality ratios. Also the
number of civil servants on government payrolls, in the judgement
of the IMF and the World Bank, made for unnecessary bureaucracies
and contributed to national budgets running in the red.
To ensure that African Governments pursued policies that the two
institutions liked, the institutions as well as donors decided
that to qualify for loans - any type of loans - borrowing
countries would have to adopt structural adjustment programs
(SAPs). These SAPs were mainly concerned with policies that would
ensure that African countries would, first of all, reduce the
deficits on external accounts and, secondly, achieve a balanced
government budget.
... Although the specifics of the agreements ... varied, [they]
generally, if not always, included the following:
The overall result of these measures, it was hoped or believed,
would solve the fiscal and trade imbalances and improve the
capacity of the governments to service their debt obligations.
The "fat" of government spending and intervention in the economy
would be cut away, leaving the "muscle" of a re-invigorated
private sector to push development forward. Government
development projects and social service initiatives would be
suspended until adjustment was carried out. Africa would import
less and export more. ...
Were these policies likely to work in the African context? What
would be their impact on the day-to-day aspects of real life? A
hard look at the specific IMF/World Bank policy mechanisms shows
that ... their advantages are likely to be easily offset by their
disadvantages.
Cuts in government expenditure may, in some cases, be necessary.
However, what often happens is that it is the so-called soft
sectors of education, health, housing, etc., which suffer from
the cuts. Many governments do not reduce expenditure on the army
or on other non-productive and unnecessary areas. The result is
that cuts in government expenditure end up harming the welfare of
the people.
Devaluation of currencies is supposed to increase
self-sufficiency by making imported products more expensive and
African exports cheaper. [But] in the case of import-dependent
African economies, heavy generalized currency devaluation also
makes imported spare parts, fuel and other inputs to African
industries more expensive, thereby raising the cost of doing
business. And since many African countries do not produce these
products, it is not possible to replace them with locally
produced ones.
On the other side, most of the countries that buy
African products have set quotas on how much can be imported or
have fixed prices in foreign currencies ... to shelter their own
producers from foreign competition. Under these conditions,
African products, even when they become cheaper in local
currencies, do not necessarily gain new outside markets or earn
more foreign exchange. So devaluation rarely can, if ever,
achieve its desired effects. But worse it leads to inflation,
capital flight and bad allocation of scarce resources.
High interest rates may increase the incentive to save money, but
they also encourage speculative investment that brings quick
paper money profits to a few people while adding nothing to
productive capacity. High interest rates and tight credit also
make capital to start new businesses harder to come by. Therefore
they result in stagnation. ...
Privatization of government enterprises that do not function well
cannot be challenged. But wholesale privatization of everything
that is government-owned cannot also be justified ... In any
case, there are a few difficult issues [such as]:
External trade liberalization for underdeveloped economies can
have some serious side-effects. For one, it can lead to dumping
of cheap products from outside such as clothes, shoes, creams,
etc. This undermines the local industries that produce or those
that would have started to produce these products ... So African
infant industries fail to take-off under extensive trade
liberalization. This is also very critical with respect to
imported food such as rice, wheat, milk, etc. Developed countries
which have an excess of these food items reduce their price and
export them to Africa to get rid of this excess at any price. If
such a situation is not controlled, Africa will never be able to
produce its own food.
What can we also summarize about the eventual impact of the
policies advocated under the SAPs? In general, we can assert that
by directing the major attack of reform on global fiscal imbalances,
SAPs were addressing the symptoms rather than the
fundamental factors responsible for Africa's persistent
socioeconomic crisis. They failed to address the need for
improved social and technological infrastructure and failed to
mobilize the enthusiasm, support and creative abilities of the
people and grass-roots organizations.
Instead, SAPs simply led to
the postponement or total abandonment of development programs ...
As such no new roads, schools or hospitals could be built. Even
existing ones were short of basic materials. Schools lacked
chalk, writing materials and textbooks. Hospitals were
perpetually short of medicines and drugs.
As the 1980s drew to a close, it became clear that economic
turnaround had not occurred in almost all of the countries that
had tried SAPs. ... Even the countries that followed adjustment
programs with the most rigor were barely holding their ground.
Most were suffering further set-backs including high inflation,
lower spending on health, education, housing, sanitation and
water. Also, laying off people from their jobs or the declining
real wages made suffering to reach unbearable proportions.
Four other aspects of the track record of orthodox structural
adjustment programs are worth commenting upon:
In several instances, the installation of structural adjustment
programs were met with popular discontent, riots and political
instability. Unless there are clear and concrete goals for
long-term improvement to justify immediate sacrifices,
governments imposing adjustment programs on the people are always
in danger of losing credibility. The SAPs offered no such set of
positive, tangible goals ...
However many African countries went along with SAPs because it
was only by so doing that they had access to the badly needed
foreign exchange, could have outstanding and overdue
debt-servicing obligations rescheduled, and could attract
additional official development assistance.
The many disappointments and deficiencies of orthodox SAPs must
have affected the thinking of many people and institutions. What
did these people say and what do they suggest? First of all, the
institutions that strongly supported these programs namely, the
IMF and World Bank - have become as frustrated as the countries
themselves. These institutions have made a re-examination of the
policy bundles they prescribe and have, in a few cases, been more
understanding of the realities of the African economic
structures. They are, in a way, trying to make the new
generations of SAPs to wear a human face - i.e., not to harm
people - especially the poor and the vulnerable ...
But the evolution of these programs into more people-centered
policies is slow and evasive. Most proposals seem to stick to the
core of the old types of SAPs and to merely add some aspects of a
human face. ...
The failure of African countries to bring about a process of
sustainable development in spite of SAPs as well as the suffering
of the people led to an outcry for an alternative. ...
It was generally agreed that any alternative to SAP must at least
have the following basic features:
It must be a broad framework and not a standard program to be
applied uniformly in all countries ...;
... Any alternative to SAPs should attempt to find convincing
answers to at least the following four fundamental questions ...:
First, to what should African countries be adjusting? While
most, if not all, SAPs in African countries had taken the short-term view that Africa should be adjusting to the financial crisis ... what the African economies require is to bring about
structural transformation, diversification and increased
productivity ...
Balancing budgets on its own can never make the African people
richer and can also never bring about real development. The
alternative framework was, therefore, anchored on the premise
that any adjustment program ... must not compromise long-term
development ...
Second, what should African countries adjust? ...
This was one of the most difficult questions ... it touches
on almost all aspects of socio-economic life: political, social,
cultural, environmental and economic. ... The answer that was
found was that African countries should adjust three basic
elements ...:
The different forces in the African society ... such as the
domestic systems of government, the nature of the public sector,
the learning systems, the cultural motivations and value systems,
etc.;
The third question that the alternative set out to answer is that
of how to adjust? ... Any adjustment that a country does should
be done in such a way that ... that human welfare is improved
rather than worsened and that economic transformation will occur
along with the adjustment. ...
The last, but not the least, important aspects of the alternative
framework relate to the question of Adjustment for whom and by
whom? ... Adjustment must be for the benefit of the majority of
the people and as such, adjustment programs must derive from
within rather than from without the people. Hence the
alternative framework insists that adjustment with transformation
must involve:
Access of the poor to basic factors of production;
Regarding the issue of who is to implement the alternative
framework, it is necessary to emphasize the role of popular
participation. Programs of adjustment with transformation should
not be the property of only the government or the Ministry of
Finance ... It should be the property of the people and the
people's own grass-roots organizations. It is the people who
should decide on the main thrust of such programs ... and also
devise the means and actions to be taken to implement these
programs.
[The African Alternative] maintains that meeting the needs of
local populations and investment in basic development goals, such
as those outlined in the Lagos Plan, are not luxuries to be
easily dismissed or pushed aside while austerity programs stretch
on into an indefinite and unknown future. Indeed the framework
further maintains that solving the peoples' basic problems and
establishing a momentum for transformation are the real solution
...
This chapter takes a close look at the broad range of policy
options ... to be applied flexibly to the specific cases of
individual countries. It is ... a sort of "menu" from which each
government can select a set of policy measures ... that suits its
purpose, the condition of the country and the problems to be
tackled. ...
[There are] four main categories or blocs. ... It
is imperative in order to pursue the path of adjustment with
transformation - to have a wholesome and balanced meal as it were
- to select from each and every one of the four blocs ... :
Strengthening and diversifying Africa's production capacity;
The narrow range of goods and services that Africa presently
produces either for export or to meet local needs has to be
greatly widened. To do this a number of policies become very
important. For example, credit should be extended on favorable
terms to enterprises that manufacture essential goods as well as
to food production. Investment from overseas in these sectors
should also receive favorable treatment. A larger share of
foreign exchange has to be accumulated and channeled for the
import of spare parts, fertilizers, chemicals, machinery and
other vital production inputs in selected priority sectors ...
For Africa to develop, it has to use its strengths in natural
resources to build up its weak industrial sector. A strategic
starting point is to carry out processing of raw materials,
agricultural and mineral, within African countries. Processed
exports will always earn more money overseas and local industrial
capacity will be increased and diversified. Even employment will
increase very much. Links between agriculture and industry will
fortify both sectors and make both sectors dynamic. Certain
agricultural products, for instance, may be employed as raw
materials in new industries, and some by-products can be used as
fertilizers or as sources of energy. Manufacturing on its part
would supply agriculture with what the sector needs in order to
produce more and more efficiently: agricultural tools and ma-
chinery, irrigation equipment, pesticides, etc. Manufacturing
will also produce essential goods such as sugar, salt, soap,
clothes, books, etc., to satisfy the needs of the rural farmers.
... It is the development of human resources that will, in the
final analysis, determine the course and content of the transfor-
mation process. The creativity and imagination of the African
people will be the real factor in what Africa will be able to
achieve. Hard work, understanding of the issues, dedication to
African causes and a clear vision of the people will also be
essential. [Therefore] it is necessary to focus on the
development, mobilization and efficient utilization of one of
Africa's most abundant resources: its people. ...
Another requirement to build a broader base for production is to
get scientific researchers involved directly with productive
enterprises. ...
An additional area of strategic opportunity is to be found in the
informal sector of Africa's economy. Cottage and small-scale
businesses like car repair services, sewing, brick-making as well
as light manufacture and assembly operations can effectively
occupy a large proportion of overall economic activity in Africa.
Already, these small enterprises in the informal sector are
filling a large vacuum ... Instead of harassing this sector, it
should be supported and encouraged ... through access to credit
and flexible regulatory procedures ...
Food self-sufficiency is a very special category in the area of
strengthening and diversifying Africa's production capacity. If
it can feed its people, Africa will strengthen its human
resources, reduce political instability and stem the loss of
foreign exchange that has to be spent on imports of food.
Therefore, AAF-SAP accordingly proposes that national governments
should allocate a minimum of 20-25 percent of total public
investment to agriculture and particularly to food production.
Government spending in agriculture should not only be on direct
inputs such as seeds, fertilizers, or on extension services and
technical assistance to farmers and farmers' cooperatives, but
also on improvement of rural infrastructures like roads and
storage facilities. Creating more jobs in the countryside and
making the rural area attractive to live in will reduce the
exodus of rural people to cities and provide a larger domestic
market for national industries.
Land reform - more equitable distribution of land on which to
grow crops or to raise cattle and more open rules for legal
ownership of land - is high on AAF-SAP's agenda for Africa.
Special emphasis is placed on granting legal recognition to the
rights of African women to land. This is very basic because more
than 85 percent of the African women of working age are estimated
to be involved in agricultural production.
The common tendency to favor production of crops for export (the
so-called cash-crops) over production of food for local consump-
tion needs to be corrected. ... AAF-SAP strongly advocates price
support policies for food production.
Trade and currency exchange rates are also very important in the
process of strengthening and diversifying Africa's production
base. Thus, a central feature of AAF-SAP is ... the use of
multiple exchange rates ... Under this policy, the rate at which
the currency of an African country is exchanged for foreign
currency will vary in the cases of different imports and exports
and other financial transactions. African Governments can promote
industries of strategic national importance by assigning
favorable terms of exchange to designated products ...
Conversely, vital imports can be encouraged.
Unfavorable rates of exchange on non-essential imports and luxury items and on capital
flight (wealth amassed in African countries but taken outside of
Africa) will help the balance of payments ... Specially assigned
currency exchange rates can also be applied to earnings of
Africans working abroad, if they wish to send some of the
earnings to their families or to transfer their savings to the
home countries ...
Careful use of multiple exchange rates ... is an alternative to
the problems associated with highly over-valued currencies ... It
also avoids some of the drawbacks that have emerged from
across-the-board and massive currency devaluations especially
those of very high price rises, falling purchasing power and
blockage of necessary imports such as medicines, spare parts,
industrial inputs and petrol. ...
In undertaking adjustment with transformation, AAF-SAP calls for
aiming at increasing the level of income. ... It is very costly
and perhaps even counter-productive to undertake programs of
adjustment that deflate the economy like one deflates a balloon.
When an economy does not grow or goes into a recession, more
people become unemployed, real wages decline and poverty
increases. AAF-SAP strongly advises against such policies.
What it recommends are those policies that will increase the
dynamism of the economy and increase incomes of the people. In
this respect, resource mobilization and their efficient
utilization is a necessary first step.
Governments are urged to find innovative ways to get more
revenue. It also urges on governments the reduction of defence
expenditure and of other non-productive public expenditure ... In
contrast to Latin America, where average expenditures in
education are twice those for defense, developing Africa spends
less on education and health put together than on the military.
As of now, only in cases where countries face outside aggression
and destabilization are there legitimate reasons for maintaining
current levels of military spending. ...
Decisive government action is needed to plug financial leakages, such as payments for
unnecessary imports or overpriced imports or underpriced exports,
flight of capital to foreign banks by foreigners and Africans
alike, government inefficiency, and untaxable profits made
through criminal activity.
Also, an unacceptably high share of
Africa's scarce foreign exchange is tied up in payments on
foreign debt. To free financial resources for productive
investment, debt relief on the part of international creditors is
called for as is improved debt management by African Governments.
Only a small proportion of the massive amount of debt that exists
worldwide is owed by African countries. Relinquishing a portion
of the African debt will not threaten the international credit
system, but will make a tremendous difference to national
economies which are presently making debt payments which are
nearly as large as their export earnings.
... Because the people of Africa must be equipped to lead a new
generation of development programs, and because human well-being
is the central goal of economic development, AAF-SAP recommends
that at least 30 percent of total government spending be
allocated to health, education and other vital social services.
Cutbacks in spending achieved at the expense of investment in
Africa's human capital are unproductive in the long run ...
Privatization of government enterprises is not neglected by AAF-SAP ... The framework recognizes that governments ... must give up ownership of certain unprofitable operations, by selling them
off preferably to national private businessmen and business women. But ... under current African conditions, governments cannot completely abandon their role in ensuring development.
Essential social services must be provided. Protecting the
environment, building ports and roads, modernizing communication
networks, establishing a system of primary, secondary and
technical schools and colleges that will promote mastery of
modern technology, to mention but a few, are all functions that
must be carried out even if they rarely will produce high visible
financial profits. In other cases, it is better to concentrate
efforts on improving the quality of management of important
state-run enterprises than to sell off valuable public property
at a loss ...
Therefore, AAF-SAP suggests that African countries should strike
a pragmatic balance between the public and private sectors by
eliminating subsidies to enterprises that do not provide social
services or promote strategic development needs; adopting
investment codes to encourage new businesses; making loans
available at low interest rates; and, maintaining government
involvement as and when necessary especially in the crucial
sectors of the economy.
Concerned about the need to improve the way national wealth is
shared among the population, AAF-SAP proposes a strong policy of
guaranteed minimum prices for food crops managed through
strategic food reserves. This policy is seen as being crucial in
assuring income to farmers. ... It should always be stressed to
government that the majority of the African people are in rural
areas mainly as farmers. According to AAF-SAP, policies must
favor and protect this majority rather than the urban elites as
most plans and programs have tended to do up to now.
Old-styled types of SAPs put a lot of emphasis on the adoption of
policies that would reduce expenditures of government and peoples
to bring them to the level of incomes, [such as] cuts in
expenditure on wages, elimination of subsidies on consumer goods
and essential services and to government enterprises, reductions
in the number of public employees, and other budgetary reduction.
Normally, governments found it easier to slash expenditures of
the "soft" sectors like education and health. The governments
would also quite easily, if not readily, postpone expenditures on
development projects ...
AAF-SAP flatly refuses to accept this very narrow view of adjustment. ... It is possible and better to deal with well-studied government expenditure switching. Such switching can bring about
significant changes in the delivery of services and effectiveness
of government without increasing spending. For example, AAF-SAP
suggests that resources can be switched from the military to
social services and development projects. In this way social
services and development itself need not suffer ...
AAF-SAP sees nothing wrong at all with the use of selective trade
policies. Unlike traditional SAPs, AAF-SAP sees clear advantages
in using import controls including even the banning of
non-essential goods. In this way, the essential goods for the
people and the machines and equipment for development projects
can be imported. The banning of certain imports can also help the
growth of domestic substitutes and protect infant industries that
would otherwise be swallowed up by cheap imports ...
A special feature of AAF-SAP policy alternatives that deserves
special mention here is the aspect of regional cooperation in the
design, choice and implementation of programs ... Many
improvements in Africa's development pattern will involve
projects that stretch across national boundaries. ... The
exploitation of African rivers to produce hydro-electric power is
one example. Rail and highway links that run in a straight line
from the interior to the ports -- a legacy of colonial times --
need to be extended into a spider-web network connecting the
African countries. Improved transportation and communication
links will encourage intra-African trade and ease dependence on
overseas markets. Trade taking place within the continent will
also be facilitated by taking down of barriers between African
countries, coordinating exchange rates between countries to make
it easier to exchange goods and, when appropriate, bartering
commodities of equivalent values without the medium of national
currencies. ...
Research, especially agricultural research, that might be too
expensive for any one country can be mounted by multinational
efforts that pool resources. [Examples include] regionally
sponsored research into improved seeds for staples like maize or
millet, applying modern agricultural techniques to tropical and
arid soils, contending with drought and stemming the spread of
deserts, and preventing and curing disease ...
Similarly, Africa's productive capacity would be enhanced if
countries could develop regional production schemes. National
industries can be developed to complement those of neighboring
countries instead of competing with them. Areas of high priority
are iron and steel, machine tools, fertilizers, farm machinery
and transportation and construction equipment. ...
Marketing is another area of cooperation that needs to be
investigated. AAF-SAP calls for agreements between African
countries and overseas purchasers to stabilize the prices of
primary export commodities. It also envisions the possibility of
assigning export specializations, so that competition between
African countries for export markets is reduced and downward
pressure on prices of basic commodities is eased. It is clearly
self-defeating for all countries to struggle to produce more of
the same primary commodity (e.g., coffee or cocoa) as this will,
in the long run, lower the price of the commodity in question.
For all the above policies to work effectively there is need to
support them with institutional arrangements. This could involve
the setting up of new institutions in rural areas and
strengthening old ones. Examples of such institutional support
include clear legislation of property ownership; financial
institutions for self-help programs or for small farmers or
cottage industries; supervised food production credit; indigenous
non-government organizations, etc.
It is certainly not enough to have an African Alternative on
paper. It must be put into action. [This] requires the active
support and participation of the entire population and their
grass-root organizations; the full dedication and commitment of
the government ... as well as the support of the international
community.
At the national level the activities of government will have to
be closely coordinated within it and between it and people's
organizations like trade unions, employer's associations as well
as non-government organizations. Governments must find ways to
yield a measure of authority to localities and community
self-management ...
At the subregional level, [there must be] close cooperation
between the countries of the region: specialization of industries
and specialized production of commodities for foreign markets;
pooling of resources for research and industrial development;
environmental protection; and, channels for increased
intra-African trade. Coordination of consumption as well as
production should be high on the agenda. ... It should be
stressed that lack of regional cooperation was one factor that
bedeviled conventional SAPs. More often than not, exchange rates,
interest rates and pricing policies were adjusted at different
times and to differing degrees among countries in the same region
or subregion, with contradictory impact and, in many cases, with
policies in one country nullifying the effect of other policies
in a neighboring country.
At the international level, multilateral development and
financial institutions as well as bilateral donor agencies will
have a useful role in implementing the policies of AAF-SAP.
First, the international financial institutions such as the World
Bank and the IMF should encourage and support programs designed
by African Governments to solve specific national problems of
economic recovery and transformation. Second, donors should do
all they can to respect the development priorities that African
countries set themselves. Third, donors should give their
assistance at the most favorable terms.
To adjust the ongoing selection of policy mechanisms and get
early warning signals of deviations from objectives, programs
need to be closely monitored. National, subregional and regional
data systems will have to be in place to assess the success or
failure of new policies. Statistical indicators of economic
growth and financial flows need to be studied, but so do
qualitative factors such as the extent to which basic needs are
satisfied, political and social vitality and progress in
transforming production structures and consumption patterns.
National agencies need to become more sensitive to the plight of
ordinary citizens, whether this plight is of hunger, disease,
ignorance or the inability to educate their children.
Gaining the support of the population, however, will require more
than an extensive public relations campaign. There needs to be
genuine participation of the people in rebuilding African
political economies. This will require that decision-making is
democratized at the national, local and grass-roots levels.
People will have to be convinced that their leaders are
accountable to them and that genuine ... consultations take place
at every stage of policy formulation, planning and implementation
with local authorities, non-governmental organizations and
village and neighborhood associations. ... AAF-SAP offers an
opportunity for the leadership of African countries to regain the
initiative in getting national development going ahead with the
people. ... Its implementation will require perseverance,
responsible decision-making, alertness to changing economic
conditions and full commitment to genuine democratization.
A Continent in Crisis
Chapter Two:
What Africa Really Needs
Chapter Three
Structural Adjustment Programs (SAPs) and Their Impact in the
1980s
Chapter Four
An Alternative Framework to SAPs
Chapter Five
Policies for the Alternative
Strengthening and Diversifying Production
Improving the level of income and its pattern of distribution
Adjusting the pattern of expenditure for the satisfaction of
vital needs
Providing institutional support for adjustment with
transformation
Chapter Six:
Implementing the Alternative