The economic situation of most African countries south of the Sahara is characterised by low levels of development - manifested by poor infrastructure (bad roads, weak railway links, poor housing, inadequate water and sanitation system, inadequate energy mostly derived from wood fuel as electricity distribution is very limited), poor access to medicines and food and low literacy levels, in short low standards of living.
Other issues such as human rights, in all its manifestations of freedom of expression, freedom of association, the right to employment, the right to land and other means of production and sustenance, political representation, gender balance, etc are very important.
1.1 HDI and HPI
In its 2000 Human Development Report for southern Africa, the United Nations Development Programme described human development as a process of enlarging people's choices so that they can live better and longer, be educated, enjoy political, economic, social and cultural freedoms and rights, and full self respect and esteem1.
To measure development and its inverse, economists now use the Human Development Index (HDI) and the Human Poverty Index (HPI). The Human Development Index is a ratio derived from three indicators, namely life expectancy at birth, educational attainment (which comprises indicators for adult literacy and the combined primary, secondary and tertiary enrolment rates) and the standard of living as measured by the Gross Domestic Product per capita.
HDI = f(GDP per capita + educational attainment + life expectancy)
The inverse of HDI is the Human Poverty Index which measures the level of deprivation in the three areas cited above, i.e. low GDP per capita, low educational attainment and low life expectancy.
Strategies that governments in Sub-Saharan Africa have pursued over the last 3 to 4 decades have all sought to raise not only the HDI but bring about comprehensive development as well.
These strategies started with national development plans and inward looking import substitutions and protectionist policies. Government's influence was not only noticeable in the political arena but was very strong in business and the rest of the economy as well.
Following inadequate rates of development (as measured by the annual rate of growth of GDP) attained by most countries in the region for the greater part of their post-independence era, notably in 1960s and 1970s, and the need by these countries for external resources to finance development projects and even government operations through external loans, international financial institutions began to take a keen interest in the management of their economies and began to recommend structural adjustment policies that sought to minimise government's direct involvement in the economy.
1.2 SAPs, SAFs and ESAFs
These policies were contained in Structural Adjustment Policies (SAPs), and later Enhanced Structural Adjustment Facilities (ESAFs), supposedly agreed between the client government and the international financial institutions and co-operating partners who were providing overseas development assistance through grants. These basically started off as austerity measures that affected fiscal and monetary policies of the borrower government and sought to introduce more prudent economic policies and economic management of government.
As the debt burden grew heavier and more and more unbearable, and yet development was still elusive, more innovative strategies were sought by both governments in sub-Saharan Africa and the institutions and agencies offering them assistance. This led to the formulation more liberal policies and the divesting of government interest from day to day economic and business operations in their countries. Strategies to implement this have included privatisation, commercialisation of government and quasi-government entities, and mere withdrawal of government from some economic undertakings.
More recently, this has led to the formulation of Poverty Reduction Strategy Papers (PRSPs) under the auspices of the Bretton Woods Institutions, following the much-publicised evaluations of ESAFs towards the end of the last decade. PRSPs were preceded by, and are now coupled with the Highly Indebted Poor Countries Initiative (HIPC) and its successor the Enhanced Highly Indebted Poor Countries Initiative.
SAPs and ESAFs did not bring about the development (or poverty reduction) that African governments sought. While the HIPC and Enhanced HIPC have granted relief to the fiscus of most governments, it is still neither clear nor assuring that development will be realised soon. In fact, most economists in the region are sceptical that any these policies will lead to any marked reduction in poverty.
1.3 Regionalism
This scepticism has led governments in the region to focus more on home-grown policies and strategies, especially economic integration at the regional level.
These strategies include reinforcing trade liberalisation and cross-border investment promotion in the regional context. This approach is gaining appeal in view of the wide and far-reaching effects of globalisation on nearly all countries of the world and the on-going multilateralism and its binding commitments and obligations for members of the World Trade Organisation (WTO). Regionalism is being seen as good preparation for globalisation and multilateralism, and so presents countries of sub-Saharan Africa an opportunity to negotiate as a united, stronger front at that level.
Footnote:
- SADC Regional Human Development Report 2000, page 16. SARIPS, Harare.
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