Structural Adjustment in Africa
By: Justin O'Connor
Tags: Politics, Poverty, Global Health, Economics, Africa

Structural Adjustment in Africa

International Monetary Fund headquarters, seen during IMF-World Bank annual meeting in Washington, DC, on October 18, 2019. © 2019 Yuri Gripas / Sipa via AP Images

African decolonization from 1950–1975 was a multifarious operation that by no means ushered in a clean break between the continent and its European colonizers. Systemic dimensions of empire, like the core-periphery division, colonial bureaucratic structures, governing ideologies, etc., persisted in a transnational form through the process (to varying degrees in different national and colonial contexts).[1] It is in this sense that a historiographical taxonomy of the period commands the name “neocolonial” rather than “postcolonial”; African decolonization was ironically characterized by a reworking of empire.

European perspectives of the colonial era reveal that this reconfiguration was not simply pragmatic circumstance, but rather an intentional undertaking. Built into British colonialism was “a Whiggish teleological view of empire as a pax Britannica and decolonization as a benevolent British-led project, whether constitutional or socio-economic, or both.”[2] The French, similarly, held a “belief in a pragmatic ‘managed decolonization’ in sub-Saharan Africa — structurally similar though not identical to the British vision — that manifested in the Brazzaville Conference of 1944 and the creation of the French Union in 1946, leading to the Communauté of African states in 1958.”[3] The colonial viewpoint maintained its disregard for African agency through all phases of empire, preferring to execute a “project… directed from the cent[er]” even as it devolved control to formally independent African nations in the face of popular unrest.[4]

It is in this context that the structural adjustment programs of the International Monetary Fund and the World Bank must be understood and analyzed. The era immediately following African independence was characterized by development policies that centered on “large-scale industrialization, heavy government intervention, and trade [policies] aimed at protecting the domestic economy against competition on the world market.”[5] These “structuralist” ideas and their proponents emphasized the imperfections of the market, the overwhelming importance of fundamental structural changes in the economy (namely through industrialization), and the role of national capital accumulation in economic development, which ran counter to the neoliberal line of reasoning that focused on individualism rather than social structures, the self-regulating and efficient nature of markets, and the structural fluidity of developing countries.[6]

These policies brought economic growth alongside structural insecurities in effectively every country in which they were enacted, including Latin America. Orienting their economies internally led these countries to “depend… on volatile primary-product markets” and cultivated private sector rent-seeking which aimed to take advantage of government policies that targeted specific sectors of the economy (i.e. subsidies or nationalization). The 1970s exposed these insecurities when an assortment of individual commodity shocks and a massive global oil shock forced these primary-product economies to turn to international loans to sustain government spending and cover import costs.[7]

These loans were extended by the IMF and the World Bank and took several forms. The two credit facilities extended by the IMF to the very poorest countries were their Structural Adjustment Facilities (SAF) and Enhanced Structural Adjustment Facilities (ESAF), and their World Bank counterparts were Structural Adjustment Loans (SAL) and Sectoral Adjustment Loans (SECAL).[8] All of these required the borrowing country to adopt a policy framework paper (PFP) laying out the adjustments to be made in exchange for the loan, and the conditions of the PFPs were mostly dictated by the IMF and World Bank rather than the borrowing country.[9] In total, 42 African nations have taken up structural adjustment loans from the World Bank and/or the IMF.[10]

The implementation of structural adjustment programs took different forms in different countries, but four elements were present in every case, including “currency devaluation, the removal/reduction of the state from the workings of the economy, the elimination of subsidies in an attempt to reduce expenditures, and trade liberalisation.”[11] Effectively, structural adjustment ushered in a reversal of the aforementioned post-independence structuralist agendas in favor of the implementation of neoliberal policies aiming to decenter the state as a barrier to capitalist markets governed by transnational law and institutions (written and controlled primarily by the West). This neoliberal ideology was the driving force of an international Western project aiming not to liberate markets or roll back the power of governing institutions but to “[redesign] states, laws, and other institutions to protect the market”; in other words, structural adjustment was a consequence of a wider undertaking that intended to “encase” markets and shield them from intervention via international protections, with the IMF and World Bank playing key roles in this pursuit.[12]

The effects of structural adjustment are evident in individual case studies, but more difficult to analyze when generalized over the continent; however, there are clear trends that have emerged across national contexts resulting from those four elements existing in each of the cases. To begin, currency devaluation led to a reduction in standard of living by making basic necessities unaffordable to a bulk of African consumers. It also increased the costs of industrial and agricultural inputs, medicines, and piped water.[13] Currency devaluations had drastic negative effects on markets for domestic goods thanks to “knock-on” effects,[14] though many African countries avoided further negative impact thanks to a lack of a strong reliance on imports for basic needs, which became vastly more expensive after the change.[15]

The diminished role of the state in African economies, another common component of IMF and World Bank demands, led to unemployment for former public-sector workers (alongside broad wage cuts for those who were kept employed in government jobs[16]) and a complete decline in the quality of public services. Given that the public sector was the most common source of employment in adjusting nations, these effects were exacerbated greatly.[17] Decreases in the quality of healthcare, a core offering of the state in many African countries, came as a result of the World Bank’s blueprint for handling health services in adjusting nations that aimed at decreasing state participation via charging user fees, introducing private insurance, supporting non-governmental organizations’ and private groups’ provision of care and services, and decentralization.[18] By 1993, the World Bank had supplanted the World Health Organization as the driving force of global health policy,[19] and the decade saw a deterioration of health indicators across Africa and the growth of informal healthcare provision in countries like Uganda and Zimbabwe (though likely others as well) resulting from healthcare workers’ attempts to supplement their decreased incomes.[20] All of this intersected with the emergence of the HIV/AIDS and malaria epidemics, which produced a climate where “SAPs and neoliberalism exacerbated the social conditions that propelled the epidemic, and undermined the public infrastructure needed to scale-up AIDS treatment in poor countries.”[21] The marketization of healthcare under structural adjustment, which was a consequence of a wider aim of decreasing the state’s role in the economy, worsened humanitarian crises that took a particular toll on Africa’s poorest citizens.

The third aspect of structural adjustment advocated by the international financial institutions was a reduction in sectoral subsidies. Immediately after independence, many African countries took to subsidizing important goods like fuel and food in order to keep costs of living low for poor citizens, particularly in urban areas. The IMF and World Bank criticized these supports as a distortion of market operations and required their removal, which had a number of impacts. Increased fuel costs reverberated throughout economies and across class lines, which pushed up prices of other goods and services. Removal of food subsidies left basic subsistence out of the reach of massive swaths of the continent’s population and created irregular migration patterns to and from cities depending on whether subsistence farming was more economically viable than urban work and food purchases at a given time. [22]

The final universal element of structural adjustment was trade liberalization, which entailed removing capital controls and import tariffs. These policies were intended to insulate local businesses from exposure to competition against more-developed international markets and the unsustainable pricing that would come with that exposure. The reduction of these controls, aimed at creating an older international economic balance rooted in “the production of cheap raw materials for the developed parts of the world in exchange for more expensive processed goods,” led to the collapse of protections for local industries that were primed to become drivers of economic advancement due to how they advocated investment in other stages of production and, thus, economy-wide development. These industries were also key employers that were forced to conduct layoffs after becoming insolvent.[23]

The cumulative result of these layered and interconnected effects was the deepening of several existing problems in African societies. Inequality grew, access to land and water diminished further, gender disparities were accentuated, unemployment grew while incomes fell, and social relations and cultural elements were increasingly commodified.[24] These “kinks” in the neoliberal project were repeatedly written off by the international financial institutions as short-term logistical hurdles that would be overcome as countries approached economic stability and success in the long-run.[25] This flew in the face of findings that “countries with below average macro-policy implementations [that aligned with the World Bank and IMF’s prescriptions]… had above average growth performance” and that these nations ranked quite highly in growth performance relative to nations that had more readily adopted the international financial institutions’ policy proposals; overall, the relationship between structural adjustment and improved economic performance was, at the most generous and even when using the international financial institutions’ own publicly-released data to draw conclusions, a mixed bag that fell far short of supporting IMF and World Bank proclamations of success that would have warranted continuance of policy implementations.[26] Nonetheless, the structural adjustment period lasted for many decades and the debts from the programs persist to this day.

To return to the central point of argument, structural adjustment was not merely a byproduct of objective social-scientific postulations that went awry. It was the intentional realization of a “neoliberal vision of federation [which] held that national independence was acceptable as long as… ‘internationalism’ prevail[ed] with respect to commercial treaties, sanctity of contract, and property.”[27] This vision saw decolonization as acceptable, so long as “free nations remained snug within the bonds of world economic order.”[28] The Cold War saw Africa become a theater of conflict, and structural adjustment was one weapon in the arsenal of the capitalist West to buck the influence of socialism and expand its own sphere of power. In this sense, structural adjustment was an extension of a colonial-era attitude that completely rejected African agency and saw Western geopolitical goals as worth the economic costs of poor policies conducted in Africa (and across much of the global South).[29] Once again, the continent was reduced to how useful it could be in the struggles of larger world powers.

However, the complete history of structural adjustment cannot be understood without still centering the African agency it rejected. It spurred, much like the colonial era, popular resentment and demonstration against the West and its institutions; once again, Africans across the continent fought for democratization and national control of economic policy without foreign interference.[30] These demonstrations and demands were, of course, checked by resistance from the West and their African collaborators, but this local pressure, combined with the collapse of the USSR reducing the West’s interests in the programs, helped pave the way for democratizing reforms and the era of encouraging growth (mostly thanks to capital infusions from China and South Africa) seen across the region today.[31]

[1] Collins, Michael. “Nation, State and Agency: Evolving Historiographies of African Decolonization.” In Britain, France and the Decolonization of Africa: Future Imperfect?, edited by Smith Andrew W.M. and Jeppesen Chris, 17–42. London: UCL Press, 2017. Accessed December 1, 2020. http://www.jstor.org.ezp.lib.rochester.edu/stable/j.ctt1mtz521.6.

[2] Collins, “Nation, State, and Agency.”

[3] Collins, “Nation, State, and Agency.”

[4] Collins, “Nation, State, and Agency.”

[5] Lensink, Robert. Structural Adjustment in sub-Saharan Africa. (London and New York: Longman, 1996).

[6] Lensink, Structural Adjustment in sub-Saharan Africa.

[7] Crisp, Brian F., and Michael J. Kelly. “The Socioeconomic Impacts of Structural Adjustment.” International Studies Quarterly 43, no. 3 (1999): 533–52. Accessed December 1, 2020. http://www.jstor.org/stable/2600942.

[8] Note that SECALs were intended for use towards specific development projects. They were not for general economic support, unlike the other credit facilities.

[9] Lensink, Structural Adjustment in sub-Saharan Africa.

[10] World Bank, Adjustment in Africa: Reform, Results, and the Road Ahead. (Washington, D.C.: World Bank, 1994) and Riddell, J. Barry. “Things Fall Apart Again: Structural Adjustment Programmes in Sub-Saharan Africa.” The Journal of Modern African Studies 30, no. 1 (1992): 53–68. Accessed December 1, 2020. http://www.jstor.org/stable/161046.

[11] Riddell, “Things Fall Apart Again.”

[12] Slobodian, Quinn. Globalists: The End of Empire and the Birth of Neoliberalism. (Cambridge, Massachusetts: Harvard University Press, 2018).

[13] Riddell, “Things Fall Apart Again.”

[14] Riddell, “Things Fall Apart Again.”

[15] Hoogvelt, Ankie. “The Crime of Conditionality: Open Letter to the Managing Director of the International Monetary Fund (IMF).” Review of African Political Economy, no. 38 (1987): 80–86. Accessed December 1, 2020. http://www.jstor.org/stable/4005899.

[16] Hoogvelt, “The Crimes of Conditionality.”

[17] Riddell, “Things Fall Apart Again.”

[18] Pfeiffer, James, and Rachel Chapman. “Anthropological Perspectives on Structural Adjustment and Public Health.” Annual Review of Anthropology 39 (2010): 149–65, p. 151. Accessed December 1, 2020. http://www.jstor.org/stable/25735105.

[19] Pfeiffer and Chapman, “Anthropological Perspectives.”

[20] Pfeiffer and Chapman, “Anthropological Perspectives.”

[21] Pfeiffer and Chapman, “Anthropological Perspectives.”

[22] Riddell, “Things Fall Apart Again.”

[23] Riddell, “Things Fall Apart Again.”

[24] Pfeiffer and Chapman, “Anthropological Perspectives.”

[25] Riddell, “Things Fall Apart Again.” Also see publications like World Bank, Adjustment in Africa published in 1994 and the quarterly publication of the international financial institutions called Finance and Development (Washington D.C.) which heralded structural adjustment as a success waiting to be fully realized.

[26] Schatz, Sayre P. “Structural Adjustment in Africa: A Failing Grade So Far.” The Journal of Modern African Studies 32, no. 4 (1994): 679–92. Accessed December 1, 2020. http://www.jstor.org/stable/161569.

[27] Slobodian, Globalists.

[28] Slobodian, Globalists.

[29] Bates, Robert H. “Democracy in Africa: A Very Short History.” Social Research 77, no. 4 (2010): 1133–148. Accessed December 1, 2020. http://www.jstor.org.ezp.lib.rochester.edu/stable/23347122.

[30] Bates, “Democracy in Africa.”

[31] Bates, “Democracy in Africa.”