Imf Structural Adjustment Programs in Africa
IMF STRUCTURAL ADJUSTMENT PROGRAMS IN AFRICA
INTRODUCTION
Beginning in 1980, the International monetary Fund (IMF) started to impose Structural Adjustment Programs (SAP) on African debtor nations. SAP’s have been imposed on 36 African Sub-Saharan countries under the assumption that neo-liberal reforms lead to economic growth and an increased standard of living.
For that reason, focus was put on macroeconomic policies with the open market based approach.
SAP’s generally mandated:
-the removal of protections in the manufacturing sector;the elimination of government subsidies for food and some other items
-trade liberalization;reductions in barriers to trade, as well as foreign investment and ownership
-increased role of the private sector in industry, which were previously owned by the government
-reductions in government spending on health and education
Regrettably, the economic model promoted in Africa by the IMF and subsequent SAP’s were not beneficial for African countries. Actually, SAP’s have impoverished people in Africa as will be seen using the examples of several African countries.
Zimbabwe
Zimbabwe implemented SAP’s in 1991 when it signed the agreement with the IMF in exchange for a $484 million loan.
The IMF’s SAP required: reducing trade tarrifs and import duties, removing protection for the manufacturing sector, deregulating the labour market, lowering the minimum wage, ending employment security, reducing the tax rate and deregulating the financial markets.
SAP’s stressed export-led growth in order to generate foreign currency to reduce debt. However, trade liberalization in Zimbabwe has led to impoerts growing more than exports.
These IMF-mandated requirements resulted with the fall of Zimbabwe’s GDP by nearly 8% in 1992 and by 1999, 68% of the population was living on less than $2 a day.
COTE D’Ivore
The country first implemented SAP’s in 1989. The IMF mandated labour market deregulation, price de-control, trade reform, reductions
INTRODUCTION
Beginning in 1980, the International monetary Fund (IMF) started to impose Structural Adjustment Programs (SAP) on African debtor nations. SAP’s have been imposed on 36 African Sub-Saharan countries under the assumption that neo-liberal reforms lead to economic growth and an increased standard of living.
For that reason, focus was put on macroeconomic policies with the open market based approach.
SAP’s generally mandated:
-the removal of protections in the manufacturing sector;the elimination of government subsidies for food and some other items
-trade liberalization;reductions in barriers to trade, as well as foreign investment and ownership
-increased role of the private sector in industry, which were previously owned by the government
-reductions in government spending on health and education
Regrettably, the economic model promoted in Africa by the IMF and subsequent SAP’s were not beneficial for African countries. Actually, SAP’s have impoverished people in Africa as will be seen using the examples of several African countries.
Zimbabwe
Zimbabwe implemented SAP’s in 1991 when it signed the agreement with the IMF in exchange for a $484 million loan.
The IMF’s SAP required: reducing trade tarrifs and import duties, removing protection for the manufacturing sector, deregulating the labour market, lowering the minimum wage, ending employment security, reducing the tax rate and deregulating the financial markets.
SAP’s stressed export-led growth in order to generate foreign currency to reduce debt. However, trade liberalization in Zimbabwe has led to impoerts growing more than exports.
These IMF-mandated requirements resulted with the fall of Zimbabwe’s GDP by nearly 8% in 1992 and by 1999, 68% of the population was living on less than $2 a day.
COTE D’Ivore
The country first implemented SAP’s in 1989. The IMF mandated labour market deregulation, price de-control, trade reform, reductions