Structural adjustment in the 1980s : Kenya
Did the World Bank's policy-based
            lending to Kenya in the 1980s allow Kenya to undertake
            adjustment, or to postpone it? The answer is mixed, says the
            author. Success was greatest in trade liberalization (and
            exchange rate depreciation), and to a lesser extent in
            export development -- and these reforms would probably not
            have occurred without steady Bank lending. But one could
            argue that budget support through funds from the
            International Development Association may have helped Kenya
            postpone critical public sector reform -- in the civil
            service and social sectors and in divestiture of parastatals
            (including the National Cereals and Produce Board). Was aid
            to Kenya (including the Bank's) overgenerous? The
            author concludes that, based on reform behavior and
            performance, Kenya may deserve less aid than Ghana
            (Africa's best performer) but it does not exhibit the
            same aid dependency as other donor favorites in the region.
            But its public investment program did a poor job in ranking
            priorities, and growing reliance on grants and counterpart
            funds undoubtedly contributed to more consumption spending
            by government, particularly on the civil service and
            parastatals. Implementation of structural adjustments in
            Kenya was often lethargic and sometimes even contrary to
            stated policies, says the author. And despite a fairly
            stable political climate, commitment to the adjustment
            program was patchy and intermittent. Reforms ostensibly
            undertaken were in fact not always implemented. In
            principle, for example, an auction market for government
            paper was created, but in practice financial institutions
            typically undertook up most of that paper "by
            arrangement." And restrictions on movement of maize
            were removed but reimposed. Moreover, the design of the
            structural adjustment loans appears, in retrospect, to have
            been faulty. Too many conditions -- too general, and based
            on dated sectoral information -- were attached to each loan,
            in part because of political considerations. And the Bank
            released credit tranches when conditions were met in letter
            but not in spirit. The adjustment program benefited in the
            second half of the 1980s from lessons learned in the first
            half of the decade, particularly concerning trade
            liberalization and export development. But the design and
            dimensions of reform in the agricultural sector were too
            limited to achieve significant restructuring of the sector,
            and political interests effectively sabotaged the program.
            The second attempt at adjustment was also undermined by
            increasing financial laxity. The experience in Kenya
            underlines the difficulty of implementing structural
            adjustment under either financial laxity or extreme
            financial stringency. Note, too, that many things have
            changed in Kenya since this study was completed in the early 1990s.