Neoliberalism and Poverty Reduction Strategies in Africa

It is conventional wisdom both that during the past two decades, Africa was ‘marginalised’ by globalisation and that the Bretton Woods Institutions’ strategies for stabilisation and recovery often produced neither. As recent solutions, three African presidents have proposed a ‘New Partnership for Africa’s Development’ (Nepad, launched in 2001), and the World Bank and IMF are promoting ‘Poverty Reduction Strategy Papers’ (PRSPs, since 1999) and the ‘Highly Indebted Poor Country’ (HIPC) initiative (since 1996). Although Nepad is advertised as a ‘homegrown’ mandate, it is notable for strengthening the role of the Bretton Woods Institutions and World Trade Organisation (WTO) in Africa, for it promotes neoliberal economic policies. The alleged solution to Africa’s marginalisation is posed in Nepad as yet more globalisation: more trade, finance and direct investment flows. At the same time, however, Nepad’s initial commitment to good governance (including empowerment of civil society) has been substantially watered down. Moreover, HIPC is failing on many counts, and PRSPs are being looked at sceptically because ‘participation’ in policy formulation means little in practice. The conflicts associated with elite, top-down reforms to African international economic relationships are profoundly ideological. By the end of the 20th century, as economic crises racked East Asia, large parts of Latin America, Russia and most of Africa--and as New York dot.com bubbles and bloated profit statements of many large corporations were beginning to burst--the ideology of neoliberalism began to wane. Tellingly, a Nobel Prize was given to former World Bank chief economist Joseph Stiglitz in October 2001. Although the prize recognised his ‘information-theoretic’ contributions to the neo-classical economic discipline, the implications of applying the idea of systemic market-failure to development could not be escaped, in part because Stiglitz (1998a, 1998b) coined the phrase ‘PostWashington Consensus’ as early as 1998 to signify the need for a backlash. Nevertheless, the residual power of the Washington and Geneva multilateral agencies, combined with the persistence of neoliberal conditionality in donor aid, meant that Africa did not witness much relaxation of pressure to conform to 1980s-90s orthodoxy. In the macroeconomic sphere, neoliberal policies include removal of import/export barriers, financial liberalisation, currency devaluation, lower corporate taxation, export-oriented industrial policy, austere fiscal policy (especially aimed at cutting social spending) and monetarism in central banking (with high real interest rates). In microdevelopmental terms, neoliberalism implies not only three standard microeconomic strategies-deregulation of business, flexibilised labour markets and privatisation (or corporatisation and commercialisation) of state-owned enterprises--but also various mandates specifically for social sectors: the elimination of subsidies, promotion of cost-recovery and user fees, disconnection of services to those who do not pay, means-testing for social programmes, and reliance upon market signals as the basis for local development strategies. Yet even if policies didn’t change, rhetoric did. The emergence of HIPC plans, PRSPs and Nepad together represent a new configuration with which civil society advocacy groups have had to