Global Policy Forum

Effects of Structural Adjustment on


By Dzodzi Tsikata

Third World Network
Fall 1995

Ecomomic policy and development issues, particularly Structural Adjustment Programmes (SAPs) have dominated African women's concerns because they have been implicated in the rise of poverty, especially of women, in Africa. SAPs, designed by the International Monetary Fund (IMF) and the World Bank (WB), have been the framework for economic and social policy in most of the South since the early 1980s. No less than 34 African countries have implemented SAPs. They have been cited as one of the factors responsible for the non-realisation of most of the provisions of the Nairobi Forward Looking Strategies. Without a fundamental rethinking of SAPs, African economies have no chance of reversing their present circumstances.

The opposition to SAPs gained some ground during the Copenhagen Social Summit, which accepted that SAPs have to be reformed based on the recognition of the centrality of people in development. Though limited, this recognition is nonetheless an important advance which must be built upon.

Essentially, SAPs in Africa have combined an IMF stabilisation loan with conditionalities for a longer term Structural Adjustment Programme overseen by both the WB and the IMF. The Stabilisation package which addresses monetary and fiscal issues typically attempts to address inflation, reduce the government's budget deficit and balance-of-payments problems. This is done with measures to reduce domestic demand, both government and private.

The longer term Structural Adjustment Programme is aimed at the promotion of production and resource mobilisation through the promotion of commodity exports, public sector reform, market liberalisation and institutional reform. The programme seeks to limit the role of government in the economy, promote private sector operations and remove restrictions in the economy and ensure market determined prices. The freeing of prices does not however, extend to labour with wages tightly controlled, leading to dramatic drop in real wages in some cases. For example in Tanzania real wages have fallen by 70% since 1986.

Troubles and Reactions

By the mid-1980s, there were many signs of trouble as the populations in various countries rebelled against the strictures of SAPs. Some flash-points in Africa for example, Zambia, were related to the removal of subsidies on food staples, the widespread retrenchment of workers, the high cost of social services and goods and the low wages of workers. The critics of SAPs include trade unions and urban-waged workers of various kinds, women's organisations, peasant farmers, non-governmental organisations (NGOs) and African governments themselves. The raging debate about the rights and wrongs of SAPs between the International Financial Institutions (IFIs) and their critics range over a broad spectrum of positions represented by the IFIs at one end and those who reject SAPs outright at the other extreme.

In the beginning, the dominant view was that SAPs were inevitable and essentially correct, but created hardships which had to be addressed to increase their acceptability. Thus the discussion did not extend to a questioning of the macro-economic policies underpinning SAPs. The anti-SAP lobby gained ground as the 1980s - 'SAP decade' - came to a close and it became clear that even the macro-economic policies were in dispute.

Since the late-1980s, the view that SAPs are based on wrong assumptions about Africa and are inimical to the continent's long-term development have gained ground as has the position that SAPs have either created or worsened poverty levels or at the very least, have ignored the adverse effects of the programme on the poor. The IFIs and their supporters continue to insist that SAPs are the only way forward and without them, Africa would have been worse off. In between these two positions for and against SAPs, are a range of positions which question the validity of specific policies which make up SAPs and insist on the consideration of macro-economic policies together with policy at other levels including their distributional effects.

What the SAP Critics Say

The criticisms of SAPs in Africa have been at a number of inter-related levels. Critics have challenged the basis and assumptions of SAPs. They have also pointed to the fact that the process of designing them is undemocratic and is usually dominated by officials of the IFIs yielding a product 'not owned' by the implementing country. These have been underlined by the expectations raised by the programmes' advocates at their inception not materialising.

The modesty of the macro-economic gains of SAPs has been compared to the programmes' profound socio-economic and political effects, with the lop-sided distribution of limited gains and extensive hardships raising questions of social justice. A number of analysts and activists assert that SAPs have failed in Africa because they have been based on an assumption that a uniform set of principles can yield successful policies for all countries irrespective of their differences. This overlooking of important differences, it is said, has led to policies which ignore the differences between Africa and other continents and the differences within Africa itself.

In all countries significant increases in private investment were expected once economies embraced deregulation and monetary and fiscal measures. Local private investment in manufacturing, which has never been significant in most of Africa, has not been able to respond because of SAP policies such as high interest rates and the deregulation of imports among others, while in some countries, foreign private investment has been disappointing except in the area of mining. Even if foreign capital could be attracted to Africa, not all countries would be able to benefit from such a strategy. Thus the expectations of job creation, foreign exchange earnings and expanded markets which were to wean the economy from aid and expand industrialisation according to the bank, have not been realised. Another criticism made against the SAPs by the United Nations Economic Commission for Africa (ECA) is that SAPs are too narrow, rely mainly on fiscal and monetary instruments and have little relevance to long term development goals.

SAP also disabled African economies from fundamentally changing their character as primary commodity producers, a situation which is the source of the crisis of Africa's economies. This is particularly important because many of the SAP policies are designed on the basis of a questionable 'comparative advantage' in that they aim to strengthen the ability of African economies to produce what they were already producing, primary commodities. The total trade liberalisation, high interest rates and the full removal of subsidies have threatened both agriculture and domestic industries. Agriculture, especially food production, has also been adversely affected by interest rates and the high prices of inputs. There is consensus that low commodity prices have not brought the economic returns expected from the promotion of export agriculture.

Also, SAPs have a negative impact on the environment. Export promotion has increased extractive activities, such as logging and mining, leading to deforestation and mining pollution and the reduction in and degradation of land which can be used for the livelihood of ordinary people.

Hand in Hand with Dictators

In political terms, it has been demonstrated that SAPs were predicated on authoritarian governments. The WB and the IMF comfortably negotiated SAPs with many such governments for years and the good governance conditionalities instituted in the late 1980s did not amount to support for democracy.

The distributional effects of SAPs have been criticised as undemocratic in that they support accumulation by the trading and propertied classes at the expense of poor peasants, workers and the urban poor, the majority of whom are women. The ownership of SAPs has been another area of widespread concern. SAPs are essentially seen as an imposition by the IFIs on developing countries which have no part in their design. This perception is fuelled by the lack of information about SAPs negotiations and decisions in adjusting countries. The SAPs debate has also been dominated by foreign academics with better access to research and publishing sources than African scholars. The foreign and undemocratic control of SAPs is an important factor in the stringency of conditionalities and their lack of attention to the social effects and the long-term development aspirations of adjusting countries and their populations.

SAPs Have Worsened Gender Relations

While gender inequality in Africa predates SAPs, the effects of SAPs and the policy climate they create are inimical to the promotion of social programmes and measures to address this issue. The problems of gender relations in Africa have been exacerbated by SAPs in a number of important ways. In the area of work, for example, there is evidence from studies of the impacts of SAP in Africa, that more women than men have become unemployed, wage differentials between men and women are growing, working conditions of women are deteriorating, a situation exacerbated by the fact that more women are swelling the ranks of informal sector workers.

For example in Tanzania and Nigeria, poor and middle class women are giving up formal employment for informal sector work because it pays better. Export cropping has often not benefited women. Studies in Kenya and Zaire have found that although there is no neat dichotomy between men's cash crops and women's food crops, women farmers are disadvantaged in relation to men because they focus on own food consumption production and have less access to farm support services and crucial inputs. In addition, there are gender inequalities in obligations and reciprocities regarding labour. Women's unpaid work has increased because of the removal of subsidies on social services; and women are in the majority of the poor in Africa.

Other indicators include adverse effects on the health and education of girls, changes in household structures which increase dependency ratios and increases in domestic violence against women and stress. UN studies have found that since 1980 there has been a slowdown in the rate of improvement in the ratio of female to male enrolment. During adjustment in Cote d'Ivoire in the 1980s, fewer women were completing secondary school than before.

Although the international financial institutions dispute some of these findings on grounds of the reliability of research methodology, there is a consensus that women are in the majority of those suffering the adverse social conditions blamed on SAPs. This situation has not been helped by the fact that the Women in Development (WID) policies of the WB since the 1970s have not focused much on gender equality and have usually involved piecemeal projects to address poverty, women's welfare or equip them to carry out their socio-economic functions 'more efficiently' to the benefit of themselves, their children and the society as a whole.

Gender Biased

Secondly, it has been shown that SAPs themselves are gender biased in various ways - the macro-economic policies, though appearing to be neutral, work out differently for different social groups based on class and gender relations. For example, the promotion of export crops has implications for women farmers, most of whom have to work harder on export crop farms they do not own. The promotion of mining also has implications for the access to agricultural land, and therefore food security of many women, but also men outside land owning groups. Also, the promotion of private capital and the relaxation of labour regulations has implications for the job security and working conditions of workers, especially those at the lower levels of employment, many of whom are women.

Most importantly, SAPs assume the unlimited availability of women's unpaid labour and time and the efficiency approach of SAPs have tended to see women as a resource to be tapped to promote the efficiency of free market policies and to deal with the short-fall in access to social services. Feminists, activists and academics have pointed out that these biases against certain classes of women under SAPs have their roots in the effects of gender inequality in society on dominant discourses in many disciplines, and economics is no exception.

Contrary to the claims of neo-classical economics, on which SAPs are based, to be a value neutral science, it has been demonstrated that it is affected by the values and gender and class biases of its creators. Some of the assumptions of this strand of economics have been shown to be flawed in the African context. One example is the assumption that all societies are fully monetised and market oriented and that all individuals have the freedom to respond to market stimuli. This view does not take account of social inequalities, which hamper the access to resources and opportunities of particular groups and the importance of unpaid labour and mutual aid in all economies.

The other limitations of neo-classical discourse include the ignoring of women's unpaid labour, in national accounting and the inability to account for the activities which women perform simultaneously in time-use studies and the lack of attention to the informal sector where the majority of working people in most African societies function. These have affected the perception of economic activities and have affected economic policies in ways that perpetuate women's subordination.

The international financial institutions have responded to these concerns about SAPs only partially, with add-on programmes to alleviate the hardships of the programmes and new conditionalities such as that of good governance. Thus far, these add on programmes, apart from not challenging the fundamental objections to SAPs have failed in their announced objectives. In Ghana, a Programme of Action to Mitigate the Social Costs of Adjustment (PAMSCAD) was only introduced in 1988, five years into SAP.

The PAMSCAD is widely acknowledged to have made no dent on SAP induced hardship. In Zimbabwe, a Social Dimensions of Adjustment (SDA) scheme was introduced in 1990, some years into an IMF stabilisation programme, and dealt with only a narrow part of the education sector. The Zambian government has also shown a similar lack of real commitment to dealing with SAP induced poverty. New plans recently unveiled for Africa by the WB, indicate that the thrust of Bank policy has not changed and is actually entering a phase of harsher conditionalities to further privatise state enterprises, especially the essential services such as water and electricity and to open up markets more completely.

No Alternatives to SAP?

Though the Social Summit Declaration acknowledged the limitations of SAPs, it did not fundamentally question the neo-liberal economic paradigm of the programmes. Thus there is a real need for the women's movement contributing to the search for alternatives. In the African context, one can point to at least one comprehensive attempt at formulating an alternative to SAPs. In 1989 the ECA formulated the African Alternative Framework to Structural Adjustment Programmes for Economic Recovery and Transformation (AAF-SAP). The AAF-SAP was adopted by African governments and the UN General Assembly also voted overwhelmingly - only the United States voted against - for a resolution 'inviting the international community, including multilateral financial and development institutions to consider the framework as a basis for constructive dialogue and fruitful consultation. The AAF-SAP has been slowly gathering dust since then, clearly killed by the opportunism of Africa's governments and the objections of the USA, the IMF and WB.

Many of the governments which supported the AAF-SAP have continued implementing their national SAPs and defending the programmes to their populations as the only way forward, notwithstanding the fact that the recommendations of the AAF-SAP, if implemented would have transformed the SAPs as presently constituted. The AAF-SAP stresses that the basis of economic policy should be the development of people and not a balanced budget which is an obsessive goal of SAPs. For example, AAF-SAP states clearly that productive capacity should not be constrained for the sole purpose of achieving financial balances and neither should budget deficits be reduced at the expense of expenditure on health, education and other social sectors.

The AAF-SAP makes some specific recommendations which include the need to strengthen the linkages between agriculture and industry, the need to correct the bias against food crops, the use of foreign exchange to import inputs for both agriculture and industry, the allocation of about 25% of public investment to agriculture and most importantly land reform to improve gender and class equity. The AAF-SAP document makes clear that it is a framework for specific country designs of an alternative to SAP based on each country's realities in a democratic process involving all sections of the society.

The Role of NGOs

African NGOs need to lobby African and other friendly government representatives and NGOs on this point, stressing the point about democratic participation in a review and making of economic policies. After all, AAF-SAP was accepted by African governments and their allies years ago. It is time to put it back on the agenda.

Many of the recommendations of the AAF-SAP are extremely useful to NGO activists, an example being the recommendation that land reform be carried out to promote the access of disadvantaged groups to agricultural land. In support of the AAF-SAP, the Platform of Action in Beijing should have language demanding a fundamental rethinking of economic and social policy in Africa, particularly SAPs in order to make human development and equity in social relations a fundamental goal of socio-economic policy.

The long-term development concerns of Africa and other continents should be seen as paramount and economic policy should not be prioritised and divorced from social policy and democracy. Governments should be urged to promote dialogue between themselves and their societies to ensure the indigenisation of socio-economic policy making and secure the broad acceptance of policy goals in the interest of stability, peace and development. Specific issues for inclusion in the Platform for Action is the question of developing methodologies which enable a more inclusive assessment of SAPs and their effects, particularly to factor in informal sector activity and unpaid labour into national accounting and develop more accurate criteria for measuring socio-economic progress.

Even more fundamentally, the nature of the informal sector and intra-household relations in Africa need to be understood properly to aid the promotion of institutional reforms and policies, to ensure that they are not exploitative to women and other disadvantaged groups. Indigenous gender research is extremely important in this regard. Research on SAPs should adopt gender analysis rather than women as a framework in order to aid the discovery of similarities and differences of the experiences of women and men under SAP.

Also important is the view that gender analysis tackles macro-economic issues and areas of economic policy previously considered gender neutral such as trade, resource management and monetary and fiscal policies. On the issue of trade, for example, the implications of the Uruguay Round of GATT and the creation of the World Trade Organisation (WTO) has received little attention among African NGO activists. The creation of the WTO is widely recognised as the single most important international economic agreement since the establishment of the Bretton Woods institutions and one with far reaching, largely negative consequences for Africa. These implications must be subjected to gender analysis. On the part of NGOs, it is important for gender researchers and activists, especially those from the South to examine critically the different strands grouped under the rubric of gender analysis and WID, which have dominated writing and policy making on women in developing countries for the last two decades.

In recent years, NGOs and women's organisations have become involved in implementing community based projects designed within the framework of SAP policies. This is one of the outcomes of NGO demands that they be consulted in economic policy processes. This has implications for their economic survival and is likely to muddy the SAP debate. On the other hand, some NGOs consider this to be a foothold into the policy making arena. This is an issue which NGOs need to discuss openly in the spirit of the women's movement's history of frank dialogue and philosophy of strength in diversity.

Dzodzi Tsikata is a Research Fellow at the University of Ghana, Legon, who also heads the Gender Unit of TWN Africa Secretariat based in Accra, Ghana.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.