Has economic reform stalled?

Last month I rambled on about the personally enriching experience of being toughened up by dealing with all the various challenges of living and running an organisation in a developing country. Good for personal development, bad for economic development, I reckoned.

Then aid thinker Ranil pops up with his observation that the life seems to have gone out of the development / aid debate recently, or at least that bit that is conducted in the blogosphere. (Probably the least relevant bit, but we bloggers can continue to day-dream upon our self-importance.) So here’s half an idea to stir things up a bit.

That is, around here, and in other countries in sub-Saharan Africa from what I gather, the economic reform agenda seems to have rather stalled. The structural adjustment programmes of the 1990s were certainly harsh, but they did precede a remarkable era of economic growth compared to what had come before. (Note I am careful here not to ascribe cause and effect; I don’t have the economic expertise, and presumably some elements, e.g. the commodities boom, would have happened any way.)

However, since then things seem to have rather stalled with government retrenching in the opposite sense of the word, i.e. hunkering down in their current ways with minimal reform at the margins. White elephant projects seem to be back in fashion (Wade’s statue of the African Renaissance, Mutharika’s inland port at Nsanje), though maybe they never went away? Meanwhile essential economic investments such as in power generation fail to materialise as the Mr 10%s of this world demand their cut. Government debt appears to be on the increase again (e.g. this).

Thus while businesses in a few boom sectors such as mining and telecommunications have mushroomed spectacularly, growth has been very uneven (maybe this is inevitable in early economic expansion?), and companies in other sectors continue to struggle with a business environment that is challenging to say the least. Government leaders appear to have little in the way of vision (other than jam for you all tomorrow while I eat jam today) and even less of a sensible road map as to how to get there. At a more technocratic level the emphasis appears to remain on form over substance.

I have never lived through structural adjustment myself (and it looks like I’ll be on another continent while the UK goes through its forthcoming mini adjustment), but the stories I hear are scary. No doubt that, with the benefit of hindsight, if we had to do it all again we might do at least a few things differently to try and ease the pain, although even there I suspect that the IMF might reasonably point out that it is up to host country governments to make decisions about how to distribute the pain and provide the right cushions; the IMF’s role is just to set the limit on their overdraft.

Can African governments micro-reform their way to economic transformation? Or is there no gain without pain? (Not that the two are mutually exclusive; micro-reform can still cause pain.) My guess is that memories of the upheavals of structural adjustment are still too raw for anyone to attempt something similar so soon again, even if it were a good idea. Might this, however, be condemning poorly governed countries in Africa to another 20 years of gradual stagnation before once again we have the courage to wield the knife?

I have the macro-economic skills of a sea anemone, so all of the above are just my observations. I await informed comments from those who actually have half a clue …

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