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AfricaNeoliberalism, Structural Adjustment, And The African Reaction

African recommendations between 1976 and 1980 set the scene for a protracted debate between African intellectuals and the Bretton Woods Institutions over the terms of capitalist development on the continent. In 1981, the World Bank rejected the LPA in its famous Berg Report (Towards Accelerated Development in Sub-Saharan Africa), which attributed economic stagnation to poor government policies rather than external factors. In pursuing Import-Substitution Industrialization, Africa's leaders had turned their backs on the continent's comparative advantage in raw materials, in favor of propping up inefficient domestic industries and a bloated public sector. The Berg Report recommended returning to an outward-oriented program of raw materials exports, to be accomplished by rolling back state intervention and freeing up market forces. Specific recommendations promoted under the rubric of Structural Adjustment Programs (SAPs) included eliminating subsidies and controls (on imports, wages, and prices), devaluing local currencies, and letting the market determine the prices for raw materials exports.

In 1989 UNECA responded to the Berg Report by reaf-firming the Lagos Plan through the African Alternative Framework to Structural Adjustment (AAF-SAP). This rejected the outward-oriented, market-based strategy of structural adjustment in favor of an inward-looking, state-led program of African self-reliance. The report also recommended subsidies for exports, bilateral and multilateral trade agreements, and debt forgiveness. Finally, the AAF-SAP stressed the importance of human development, especially the provision of basic social services and education. In short, it advocated a modified version of ISI, with a greater emphasis on the export sector.

The World Bank accepted the need for human-centered development in its 1989 report, Sub-Saharan Africa: From Crisis to Sustainable Growth. Citing the LPA and UNECA, this accepted the need to consider human-centered development in creating an environment to enable sustainable economic growth in Africa. The report, however, clung to the bank's commitment to structural adjustment and export-led development. A subsequent bank report emphasized SAPs even more strongly, claiming that "adjustment is working" in countries that followed its prescriptions, in agriculture as well as industry. In 1999, African critics countered once again with a systematic critique of structural adjustment entitled Our Continent, Our Future: African Perspectives on Structural Adjustment, which modified earlier calls for African self-reliance by accepting the need to compete in the global economy on the basis of comparative advantage. This was not to be achieved, however, through SAPs and raw materials exports; instead, the study recommended a modified version of ISI in which African governments would nurture high–value-added, labor-intensive industries producing manufactured exports for the world market. Thandika Mkandawire, coeditor of Our Continent, Our Future, subsequently argued for the creation of developmental states in Africa—along Asian lines—which he believed could be socially engineered by political actors and civil society within the context of African democratization.

The World Bank has not accepted ISI in the early twenty-first century, but recent bank initiatives have made more concessions to African participation and social development, particularly through the new Comprehensive Development Framework (CDF). This moves beyond structural adjustment to focus on poverty reduction and social development; it also emphasizes local ownership of the development process. African leaders have responded to this shift by creating the New Partnership for Africa's Development (NEPAD), led by Thabo Mbeki of South Africa. NEPAD accepts the BWIs' neoliberal program for capitalist development as well as the need for peace, security, and good governance. To guarantee that Africa will benefit from globalization, however, NEPAD also seeks to reform the rules of globalization to guarantee equity as well as economic growth, by reducing Western protectionism and providing for African social needs. Separating itself from UNECA, the OAU (now reconstituted as the African Union) came out in support of NEPAD in 2001.

Several prominent African scholars have criticized NEPAD for rejecting the programs proposed by UNECA in favor of the neoliberal model of the Bretton Woods Institutions. This acceptance of neoliberalism threatens to reproduce African dependence on Western donors, which is especially dangerous in an age of shrinking Official Development Assistance. African critics of NEPAD argue that any concessions to Western donors must not compromise the principles of the LPA. Some of these critics call for a return of the developmental state. Other African scholars, such as Claude Ake, have tried to find a middle ground between this position and the neoliberal program. Ake proposes a populist alternative, drawing on "the energy of ordinary people" and geared toward the development of smallholder agriculture underwritten by popular democracy. Driven by farmer participation, this approach would increase the efficiency and productivity of small farmers and provide the basis for rural industries such as food processing and packaging. The result would be a bottom-up process of endogenous economic and human development. This process would have to involve African women, who appear to have been left out of the NEPAD blueprint, in what some critics consider a step backward from the LPA on the issue of gender and development.

Claude Ake's work illustrates that the debate over capitalism in Africa in the early 2000s revolves around three poles—the market, the state, and the community—rather than two. It remains an open question, however, which of these will emerge as the preferred trustee over African capitalism in the twenty-first century.


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Jeff D. Grischow

Additional topics

Science EncyclopediaScience & Philosophy: Calcium Sulfate to Categorical imperativeCapitalism - Africa - The Colonial Legacy And Uneven Capitalist Development, Independence, State-led Development, And Import-substitution Industrialization