Economic reforms bring hopes - and risks - to Africa
Many of Africa's nations are making the most significant and risky economic reforms since their days of independence some 20 to 30 years ago. These reforms are aimed at halting a devastating decline in Africa's overall economic situation and at providing a better life for their citizens - more food, more jobs, and better health and education.Skip to next paragraph
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The reforms include trimming government payrolls, cutting government subsides on food and other basics, selling many state-run industries and services, slashing the value of inflated currencies, and spending more on agriculture.
If carried out, they will put some two-thirds of Africa's sub-Saharan nations more firmly than ever before in the Western, capitalistic category, leaving many plans for African socialism far behind.
The United States State Department ranks the following countries as the top 10 in terms of numbers of reform measures adopted: Ghana, Madagascar, Malawi, Mali, Nigeria, Senegal, Somalia, Tanzania, Zaire, and Zambia.
But the reforms include some steps, such as massive layoffs and higher food prices, that could cause a political backlash, analysts point out. Riots in Zambia earlier this year, caused by a rise in food prices after subsidies were cut, forced the government to back down and lower prices.
And there are concerns among both African and Western officials as to whether there will be enough international assistance to support the nations during the economic transition period that these reforms are intended to spawn. There is also some concern about whether the reforms will even be effective.
In Latin America, where some of these reforms have also being tried, problems have arisen, says one World Bank analyst. Selling state-run industries is not easy. If the price is too high, it is unattractive; if too low, critics say friends of the government are being given a good deal, the analyst says.
The reforms have helped some Latin American countries, the analyst notes. But for the poorer countries, the reforms are not enough - people remain very poor. Also needed in these countries, says this analyst, are debt relief and private investment which might be encouraged by the debt relief.
Despite such skepticism, this is ``a profoundly hopeful moment'' for Africa, says Stephan Lewis, UN Secretary-General's special representative of for the African recovery program. Last June, the UN unanimously adopted a historic plan designed to help Africa work toward economic renewal. Initial signs are that the reforms are bringing some renewal, especially in nations such as Ghana, Ivory Coast, and Senegal.
Ghana began taking steps toward economic reform in 1983, well before the UN program was adopted. For the first time in a decade, Ghana has had three successive years of strong growth in per capita income, currently about 3 percent a year, according to the World Bank. The gross domestic product has risen about 6 percent on average in the past two years, the bank reports. It credits the change to reforms and good rains.
This is also a moment of ``desperation and anxiety,'' says Mr. Lewis, a Canadian. Although most Western donors support the need for the reform, some Nordic officials and some African leaders remain ``skeptical'' about their effectiveness.
Yet most African nations that have tried some version of African socialism, such as Tanzania, have little economic progress to show for it.
Africans currently feel that they have little choice but to go along with economic reforms as a way to get more international aid, since the major international lending agencies insist on the reforms in loan negotiations.
To make the reforms work, large amounts of additional international financial support must be provided at critical points throughout the reform steps. But there is no assurance that the amounts needed will be forthcoming from Western nations, warn UN and World Bank sources.
``We are in a very dangerous zone,'' says Jean Ripert, a top UN official. If enough funds do not flow into Africa now, during this reform period, the African nations will be ``in big trouble,'' he says.
The reforms, which these officials say are badly needed, involve major risks to the governments making them, African and Western analysts point out. ``They [the African leaders] are putting their necks on the line,'' says one UN official.