The macroeconomics of adjustment in sub-Saharan African countries : results and lessons
Despite the satisfactory performance of several intensely adjusting sub-Saharan African countries - and successful results in agriculture and food production - the overall results of adjustment achieved in Africa have so far been modest. Adjustment has not yet succeeded in raising the rate of growth enough to make major inroads in reducing poverty. Sub-Saharan Africa's economic recovery is still fragile. Currency depreciation and inflationary pressures have not yet been fully subdued in several countries because of persistence of underlying expansionary fiscal and monetary policies. Many sub-Saharan countries still rely exclusively on external grants and concessional financing to close their fiscal gaps. Per capita consumption remains stagnant, and private investment has not yet revived. Unemployment rates are still high, particularly in urban areas, and poverty is on the rise. When there is civil strife, adjustment, of course, has not worked. There is a general consensus that consistent and unfetted implementation of adjustment policies and attainment of macroeconomic stability do improve the outlook for growth in Africa. But the record of implementation is mixed and uneven. Adjustment is necessary even if it is bound to work slowly. But for it to work at all depends on the strong commitment by leaders of these countries to sustain reform policies in the face of adverse and harsh external circumstances and domestic political pressures. What is less clear, and thus invokes controversy, is the speed, timing, and sequencing of adjustment programs. As each reform has a different impact on the various segments of the population - creating winners and losers - mediating among these conflicting claims is highly political. There are no technocratic solutions or quick fixes to provide satisfactory solutions. No amount of external assistance can help in this process. Consensus-building, open communications, consultations, and debate - and reaching compromises - will bring about the durable results. But in practice, this path has proved difficult. It is equally clear that adjustment policies, even when they are put in place after reaching internal consensus, will not lift African countries out of poverty. The agenda of policy reforms should be considered as part of the broader long-term development strategy of each country. This strategy should aim not only at changes in policies, but also at improving investment in human resources and physical infrastructure, accelerating opportunities for private sector development, enhancing the quality of governance, strengthening institutional capacity, and - most importantly - maintaining national solidarity and social cohesion.
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