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Aspects of economy and society in SS Africa
In most developing economies, agricultural productivity both in total and per capita has been rising in the past decade despite world recession, whereas in the developing countries of Africa, on the basis that 1979-1981 = 100, the indices of agricultural production and food production per capita for 1989 were both 93 and were below 100 in 1985, 1987, and 1988 (FAO 1991a: 166, 169). For SS Africa, on the basis that 1971-1980 = 100, the index of food production per capita for 1987-1989 was 95, the lowest of all the major global regions, and compared with an index of 112 for "low- and middle-income" economies (World Bank 1991a: 211). One should add that revision of the SS African population figures to take account of the Nigerian 1991 census result does improve the SS African food and agricultural production per capita indices, although SS African figures without Nigeria only confirm the decline. This data problem and the agricultural "crisis" factor are discussed in Morgan and Solarz (1994).
The droughts that were widespread in the world in the 1980s were particularly severe in SS Africa, sometimes combined with warfare, creating huge refugee problems, and combined again with severe economic shocks such as the oil price hikes, rising international interest rates linked to the international debt crisis, and declining terms of trade. In the semi-arid marginal lands in particular there were marked crop production failures, leading to increased demands for imported staple grains and adding to SS Africa's growing dependence on imported food. However, in the 1980s many countries had little foreign exchange to spare to pay for these imports without further borrowing. Several came to depend on aid to cope with this and other economic problems. Aid as a percentage of GNP in SS Africa amounted to 7.9 in 1989 (compared with all "low- and middle-income" countries at 1.1 per cent, but a startling 59 per cent in Mozambique, nearly 39 per cent in Somalia, and 32 per cent in Tanzania) and rose from nearly US$6 billion in 1979 to US$13 billion in 1989. Direct food aid in cereals in most years in the 1980s varied between 2 million and nearly 5 million tons (World Bank 1991a: 242243, 210 211, and earlier World Development Reports of the World Bank). Most SS African countries have been affected by macroeconomic disequilibrium, with inflation and unsustainable current account deficits. At the same time, in most countries the balance of investment has shifted to the towns while the productive sectors of their economies have continued to depend largely on the rural areas. Agriculture produces about one-third of GDP in SS Africa and is second only to services, while employing about two-thirds of the labour force. In several countries, mining rather than manufacture is the main alternative source of wealth, but was adversely affected in the 1980s by trends in the world markets.
In some ways the weakest feature of the SS African economies, apart from the low income and investment base, has been the failure to develop major industrial strength. Between 1965 and 1989 manufacture's contribution to GDP rose from 8 to 11 per cent compared with 15 to 17 in South Asia and 27 to 33 in East Asia. Zimbabwe seems to have produced the best performance with an increase from 20 to 25. Of all the developing global regions SS Africa has the worst overall economic performance, including the worst industrial performance. It is also worth noting that, in the few countries for which there are reliable figures, the urban-rural income disparity in SS Africa is of the order of 5-6 times (Lipton 1990a: xiii) and, despite several exceptions, clearly depends more on the contrast between employment in government and the service industries on the one hand and employment in agriculture on the other than on differences between manufacture and agriculture. There are also huge urban-rural disparities in access to health, water, sanitation, and child nutrition as listed in UNDP (1991: 136-137). Rates of growth of GDP and of the contributions to GDP of agriculture, industry, and services have been highly variable (fig. 2.1), but have tended to be mostly low or negative since 1976. The importance of agriculture compared with industry in sustaining GDP was especially noticeable in 1977, 1982, and 1985-1989.
Much of the rural poverty problem is connected with the existence of: increasing landlessness, a large class of farmers with very small holdings, a lack of investment resources for agricultural improvement, the urban effect, low levels of rural education and migration to the towns of those who do achieve some acceptable educational standard, overvalued exchange rates discouraging agricultural exports, and poverty amongst women.
Increasing landlessness
Increasing landlessness has emerged as a serious problem, especially in Kenya and Malawi (Addison and Demery 1989: 76; see also Morgan and Solarz 1994 for discussion of this and related agricultural problems). Land privatization in Kenya has become widespread, with evidence of a growing concentration of land ownership as some poorer farmers have been forced to sell (Wiener 1987: 24). The numbers of the landless have been swelled by those redundant urban workers who have chosen to return to the rural areas and who have lost their rural property rights. In much of SS Africa, traditional usufructuary systems of land tenure gave everyone at least some share in the land endowment. The growing commercialization of agriculture has increased the demand for private land in order to realize the benefits of long-term capital investment and even to use property as collateral. Privatization for some may be of benefit in transforming agriculture, but it is a loss for others, marginalized and made poor by the loss of their former rights.
A large class of farmers with very small holdings
The incomes from very small holdings are low and can be raised only by considerable investment in very intensive production and an increased labour input. For many of these farmers their living is precarious, partly dependent on market sales and partly on subsistence, which protects against market price fluctuations, but also dependent on inputs from their own production, with in consequence low yields and low output per man-day. Higher and more flexible prices for food and other agricultural raw materials, combined with less government interference and the introduction of higher-value crops, have been seen by the World Bank and by many monetarist economists as essential for transforming agriculture and as especially beneficial for smallholders (World Bank 1989a: 89-93). The World Bank's Accelerated Development in Sub-Saharan Africa (1981: 51) quoted in support of the case for smallholder agriculture the result of a survey in Kenya in 1974 that showed that holdings of less than half a hectare were 19 times more productive per hectare than holdings of over 8 hectares, but employment was 30 times greater, which may be excellent for reducing underemployment or unemployment but clearly is also a recipe for lower incomes.
The lack of investment resources for agricultural improvement
Investment has been discouraged in many countries by the poor prospects for profitability except in a few limited areas of export production and of specialized food production for urban markets, often in pert-urban zones. Peri-urban production in some cases has also been encouraged by the poor quality of rural roads and transport services. In the poorer African countries about 20 per cent of public investment in agriculture is provided by aid (World Bank 1982: 52; Lipton 1990b: 6-9).
The urban effect
Many of the evils of peasant poverty are primarily the result of decisions centred in, and made in the interests of, cities and urban groups (Lipton 1990a: xi). As Lipton points out (199Oa: xii): "Where urbanbased development depends on the flow of surpluses - marketed food; savings - from country to town, it is a natural urban reaction to put such resources as the rural sector does get at the disposal of larger farmers, who will use them to generate surpluses of that sort." The answer ought to be not large farms as such, but larger farms than the peasant average, able to use modern inputs and pay higher wages as farm incomes improve. But it also needs a successful urban sector, generating the wealth to pay higher prices and the ability to provide alternative employment for redundant farmworkers and dispossessed farmers.
Low levels of rural education, and migration to the towns of those who do achieve some acceptable educational standard
It is useless to improve rural education if there are no rewards at the end of the road (Lipton 1990a: xvii) and it is particularly important that the rewards to farmers are attractive to the educated if a more productive and more efficient agriculture is to be realized.
Thus in sum and substance, the man who is bound by traditional agriculture cannot produce much food no matter how rich the land... Instead an approach that provides incentives and rewards to farmers is required. The knowledge that makes the transformation possible is a form of capital, which entails investment - investment not only in material inputs in which a part of this knowledge is embedded but importantly also investment in farm people. (Schultz 1964: 205-206)
This is not to deny that there is a case for promoting the use and development of traditional agricultural knowledge and methods of production. If more attention had been paid to such knowledge in the past, many mistakes could have been avoided, but systems of production that will offer substantially higher incomes will mostly require structural change and new inputs.
Overvalued exchange rates discouraging agricultural exports
Overvalued exchange rates have been true of some but not all SS African countries and keep the costs of food, fuel, machinery, and technical equipment imports low. They can also be part of an antiinflation strategy. Attempts to promote industrial development can be protected by selective tariffs. Imported food can be cheap partly because Western countries, particularly those in the European Union (EU), subsidize their food exports, and may thus in certain cases help to undermine African agriculture and indirectly promote African rural poverty for the benefit of Western farmers, while keeping prices down to African urban consumers. More recently, however, food price inflation has occurred in certain cases of food import dependence. There is also the well-known example of the oil boom and "Dutch disease" in Nigeria, which was associated with the decline of non-oil tradables, i.e. export crop agriculture, and appeared to be an equivalent process in Nigeria to deindustrialization in the West (Collier 1987).
Poverty amongst women
The largest of the groups of particularly poor people is poor women, especially widows and the heads of single-parent households. Women participate in farming - in some communities they are the chief farmers, especially where men have migrated temporarily in search of work. In Lesotho the migratory labour system has left women to maintain households, look after children, search for cooking fuel, and look after the smallholdings. Most depend in part on remittances, but some, especially the growing number of divorcees and widows, are recognized as people at high risk (Wiener 1987: 25-28). Similar problems with women-headed households and difficulties in finding work for extra incomes or time in which to undertake the many duties imposed by women's precarious situation have been reported, for example, from Kenya (Wiener 1987: 24-25) and Nigeria (Morgan and Moss 1981: 32). In the latter case women, especially older single women, were often employed as fuelwood dealers, a job regarded as having low social status. In several SS African countries, e.g. Senegal and Tanzania, female labour force participation in work for wages or in trade is estimated at over 65 per cent of women of 15 years of age or more and women constitute 45 per cent of the labour force, but in others, e.g. Zambia, Kenya, Botswana, and Zimbabwe, women constitute only between one-quarter and one-third of the labour force and in some Islamic countries even less (Chant with Brydon 1989: 35)
The vulnerability of the poor, as discussed in the introductory section on poverty, is a vulnerability to stress, including extremes of temperature and rainfall, general financial shortage, minor but especially persistent illness, family bereavements, which may be sudden but are often not unexpected, harvests below par but not severely deficient, damage to or deterioration of assets. It is also a vulnerability to shock, including war, civil war, riot, unexpected death, especially of a valued family mentor or earner, accidents involving severe or permanent injury, epidemic disease, not just amongst human beings but also amongst animals and plants, fire, drought with famine, flood, earthquake, landslides, volcanic eruption, bankruptcy, market collapse, sudden change in interest or exchange rates (poor people without savings or the need to travel across a border can still be affected by, for example, the consequent loss of a job), and changes in prices and wages (including hyperinflation).
Except in the poorest nations where welfare funding is totally inadequate, the worst effects of stress may be anticipated and at least some relief may be offered. In some cases international welfare may be available. Sudden shocks, however, often arrive without any or with very little national or household provision. A succession of climatically stressful years may, for example, be followed by the shock of severe drought, when the only recourse left is to migrate elsewhere more in the hope of relief than in the expectation of it. Even where national or international aid may be made available, it may be misdirected, opposed by those who see it as a threat to their interests, mismanaged, or arrive too late. Stress may also be offset by tradeoffs, particularly in the case where short-term adverse pressures are reduced by long-term payments: so future income expectations may be traded against immediate financial demands, or the environment may be subject to heavier, even damaging, demands in order to achieve a survival income (it may also be damaged to earn wealth, but the argument here is that part of the process of environmental damage and sustainability may be seen as a strategy for short-term survival). Unfortunately, environmental degradation may reduce the prospects for future livelihoods (Pearce, Barbier, and Markandya 1990: 13-14), especially where, as in the poorest countries, innovation in resource use and environmental management is limited. A sustainable development path occurs "only if the ecological boundary is shifted" by the application of appropriate technology (Pearce and Markandya 1989: 44). There can also be a trade-off with development, where investment has to be set aside and savings used for current expenditure. Finally, politically there can be a trade-off of the poor versus the rich, a trade-off in which the rich can be taxed or the poor can be further deprived in the interests of the other group.
Sustainability is not just about maintaining an economy or a given social condition, but about coping with stress and insuring against shock. To some extent the survival process of combining several activities and resources may offer some protection against stress and against the smaller shocks. However, it can rarely cope with the more severe shocks to which SS Africa is subject and which can overwhelm the more vulnerable communities whose range of strategies may be very limited. Some protection against future stress or shock may be achieved amongst the African poor by, for example, having large numbers of chidren, being part of an extended family, or using varied resources and storing whatever can be stored.
Shocks and disasters at the national instead of the family level need a different approach. In the richer capitalist nations people buy insurance. We have the World Bank, why not its parallel - a World Insurance Corporation that will operate at national and community levels? Of course there are nations that will not be able to afford a full subscription, but subscriptions to many of the international agencies are graded according to means and there is no reason why in this case it could not be similar and why insurance cover could not operate as of right. That still leaves the almost totally unexpected shocks, which may be regarded as unpredictable or "acts of God." But in these cases the richer nations and the relief agencies have normally attempted to provide aid and relief. It should not be beyond our global actuarial wit to widen the basis of cover and to provide funding and physical assistance on an organized instead of on an ad hoc basis as a kind of charity.
Economic reform provides a special case of the vulnerability of poor people in developing countries to rapid or sudden change in an economy. It is currently of particular interest in SS Africa in that most SS African countries have been affected by International Monetary Fund (IMF) and World Bank programmes of economic reform, with varying results for their economies and varying effects on the poorest people. All economic development as opposed to growth (i.e. structural change as opposed to increased production, savings, and consumption within an economy) involves investment that will require borrowing or the use of savings. For the most part development makes people poorer in the short to medium term, and also in the long term if it is unsuccessful, as much development in Africa has been. It is in effect a major contributor to poverty in the developing countries, whatever the long-term hopes. All change in the operation and structure of an economy has to be paid for. That payment is the investment that, even when profitable, may nevertheless reduce the standard of living of the poor where restructuring is loaded in favour of the richer members of a given community.
Structural adjustment and stabilization policies are normally the product of International Monetary Fund and World Bank advice, usually worked out in cooperation with a national financial team and linked sometimes to approval and loans from richer nations, sometimes from the G7 ("Group of Seven": Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States). Differences in role between the IMF and the Bank have become blurred as the Bank's funding has become linked to structural adjustment programmes (SAPs) and to financial stabilization, which also appear to overlap (for discussion of the close relationship between the Bank and the IMF see The Economist, 12 October 1991). The roles of the two institutions in what has become in effect a world financial system are extremely powerful. There is a general consensus within the IMF and the Bank on the principles of economic reform, although there are differences amongst individual economists. This consensus may be described as either neoclassical or monetarist (for a useful summary see Hunt 1989: 305-307, 311-315, and 321-322, and in relation to agriculture see FAO 1991a: 81-107) and supports policies aimed mainly at monetary and fiscal stabilization and supplyside measures, usually including agricultural reform, input supply improvement, and market liberalization, mostly in sequenced operations in which the supply-side measures take longer to produce an effect than the monetary and fiscal measures. The latter have usually involved some or even all of the following: restraining demand, reducing current account deficits, devaluing exchange rates, eliminating hyperinflation and controlling inflation, reducing government expenditure, restraining wages, raising interest rates, encouraging savings, and liberalizing international and national trade by removing subsidies and protective tariffs. Some of these measures have been described as "getting the prices right" (Green 1989a: 39) and are based on a belief in the removal of factor distortions in economies and in the attempt to seek equilibrium through the operation of a free market.
What makes the changes of policy associated with the monetarist approach to economic reform of special importance for this paper is the effects on the poor of the introduction of these formidable reform packages, including the short-term nature of many of the measures introduced, involving economic shock and often including the removal or reduction of many of the welfare services and other forms of protection for the poor, thus greatly increasing the stresses put upon them. Of course, one should allow against this the effects on the poor of either not introducing the programmes or taking other courses of action, both of which, unfortunately, are hypothetical or even speculative. Here one can only examine what has happened.
Structural adjustment programmes have been adopted by more than 30 SS African countries, more especially in the 1980s, although African countries were affected by World Bank and IMF policies even in the 1960s, e.g. Zaire, which was one of the first countries to accept such policies. Despite all these programmes, real GDP growth in SS Africa in 1980-1988 averaged only 0.8 per cent per annum, compared with 4.8 per cent in 1965-1980, international debt grew at 12 per cent per annum, and social conditions deteriorated. Obviously world recession problems had to be overcome and African governments cooperated with the Bank and the IMF in various ways and to varying degrees. Nevertheless the results have given cause for debate, criticism, and the expression of doubt (Stein and Nafziger 1991).
The World Bank contrasts its "shock treatment" or reforms implemented in less than two years, usually to resolve a crisis, with what it calls "gradualism" or reforms spread over rather more than two years, but essentially even these are what many social scientists would regard as short to medium term (World Bank 1991a: 117). The model the Bank has in mind was shown in World Development Report 1990 (1990: 105) where a diagram indicated the supposed effects of adjustment in Ecuador, including an increase in the percentage of total population in poverty above the percentage level predicted for "no adjustment" for three years in the rural areas and four years in the urban, while real GDP fell below that expected under "no adjustment" before it eventually rose. The same model included a "no external shock" case, but such a scenario does not appear to have occurred in SS Africa. The World Bank claimed that the real beneficiaries of the SAPs were the rural poor (World Bank 1991a: 106) because even in the "short run" they were protected in relation to the urban poor by depreciation of the real exchange rate, which stimulated exports and increased farm incomes, offsetting in part the effects of a general decline in wages. But how many of the rural poor are engaged in export crop production, which has declined severely in SS Africa, and what is the time-lag on the expected growth of export production? Several years in the case of tree crops. In some countries there is increasing privatization of land and the introduction of herbicides, pesticides, and machinery to reduce labour use, tending to encourage the growth of larger private farms and adding to the numbers of rural landless and urbanward migrants. In some cases the rural areas have been forced to accept people returning to the family farm after being made redundant in the town. It is in any case unsafe to argue on the basis of a rural-urban dichotomy. What, for example, is happening to rural incomes partly dependent on remittances from urban workers?
SS Africa in the 1980s experienced far worse levels of shock from deteriorating terms of trade and interest rates than did East or South Asia or Latin America, and these were on top of macroeconomic imbalances and severe structural weaknesses (World Bank 1990: 107). Figure 2.2 shows the decline in GNP for SS Africa as a whole since 1980 (for comparison, examples of high [Botswana], medium [Kenya], and low {Chad] GNP trends have been provided). SAPs aimed to reduce imports and raise export earnings, but also generally raised the prices of tradable goods relative to the non-tradables. Pinstrup-Andersen (1989: 94) argued that many of the poor were more occupied with non-tradables than with tradables and were in consequence made worse off. Higher retail prices, where passed on to full-time farmers, have benefited that particular rural group, but those part-time farmers who depend more on the market for their basic goods have gained little. Only the mainly subsistence farmers who could maintain a low level of dependence on markets have managed to escape the effects of sudden changes in market prices and of changes in the demand for agricultural goods, more especially of any rise in the prices of inputs needed for export production or for commercial food production.
Three examples will illustrate these points.
First, in Uganda the implementation of IMF-World Bank policy packages since 1980 has been claimed to have been followed by reduced food remittances from rural to urban areas, reduced cash remittances from urban to rural, a decline in food production, and a decline in the social services. From 1980 to 1984 overall real wages fell, but agricultural producer prices rose 12-15 times, only to be partly offset by a rise in the consumer price index by 10 times, adversely affecting those peasant families depending on the market for a major part of their domestic consumption (Banugire 1989). Uganda began an economic recovery programme in 1987, but this was followed by inflation, which reached 240 per cent per annum at the end of 1988. More devaluation plus higher interest rates and other measures followed, but inflation still persisted. Conditions were made worse by the collapse of the International Coffee Agreement in 1989 (World Bank 1991b: 550-555).
Secondly, Zambia received an IMF programme in 1985, abandoned it in 1987, and returned to the IMF conditions in mid-1989, when consumer prices were decontrolled and the kwacha was devalued. Inflation rose to more than 120 per cent per annum by early 1990 and there was a considerable foreign cash shortage. The agricultural marketing boards were abolished and attempts were made to increase maize production, mainly through subsidies, which contributed significantly to the budget deficit, and unfortunately involving increased marketing costs and serious transport and storage problems. In 1989 maize had to be rationed and maize meal prices rose, followed by riots in Lusaka (FAO 1991a: 50-53). Some progress has been made since in financial reform and in reducing the power of the parastatals, although the toll on living standards has been heavy, including deterioration of all the key indicators of social development (World Bank 1991b: 599-605). Although Zambia has a higher GNP per capita than most SS African countries and a measure of industrial development, it is overdependent on the world metals markets and has shown a marked disparity of income levels (table 2.2).
Thirdly, in the Sudan in the 1970s economic reform measures included a wage freeze, limits on government employment levels, and limits on government expenditure, but seven years later the Sudan had failed to achieve its economic targets and by 1985, after some help from the US government, the Sudan was deep into economic crisis and the government was swept from office. The debt service ratio climbed to 150 per cent of GDP and the country was forced in part to engage in counter-trade. There is evidence that the economic austerity required in the Sudan imposed severe burdens on the poor, and Cheru (1989) asked whether the IMF was "the enemy of the poor. " By the late 1980s the disposable income of the Sudanese peasant was only 30 per cent of what it had been in 1970, and GDP per capita had been markedly reduced. Social services had been cut, wages and salaries frozen, and the purchasing power of the poor had been reduced by devaluation and the removal of price controls. Severe shortages of essential inputs and consumer goods became commonplace. Investment as a proportion of GDP fell together with national and public savings. Budget deficits led to high levels of inflation, jumping by 1989 1990 to 120 per cent. More economic reforms were introduced in 1991, but unfortunately on an ad hoc and inconsistent basis, which has undermined their effectiveness (World Bank 1991b: 507-512). The Sudan has a harsh environment combined with considerable irrigation potential. It has been severely affected also by civil war and pressure from time to time from Ethiopian refugees. In the complex process of combining several strategies against poverty the Sudan suffers from its limitations, and the Sudanese poor are in consequence amongst the more vulnerable.
Despite the limitations discussed, current SAPs and World Bank programmes have claimed an intention to benefit the poor, at least in the longer term, by enhancing the rates of return on the few assets they hold, by increasing their access to the factors of production, by creating employment opportunities, by maintaining their human capital, and by increasing income and consumption transfers (Addison and Demery 1989: 71-89; FAO 1991a: 111-113). The FAO report on The State of Food and Agriculture 1990 (1991a), much of which was focused on structural adjustment and agriculture (pp. 81-152), claimed that SAPs had a negative effect on the chronically poor, while creating a new poor sector with extra burdens on women, very small farmers, and low-income groups (pp. 113-114). Attempts have been and are still being made to reduce the social costs of adjustment, such as the PAMSCAD programme in Ghana (Programme of Actions to Mitigate the Social Costs of Adjustment), but, although "it is true that no social group has lost out massively in Ghana,... it is equally true that those who have lost, even if not massively, are those with relatively poor ability to withstand such losses" - particularly the poor northern farmers, the women food farmers in the south, and the petty retail traders (Toye 1991: 169).
" Poverty, vulnerability, inequality and threats to the social fabric in Africa are not a product of the 1970s or 1980s, much less of Fund and Bank prescriptions for stabilization and adjustment. Nor are they purely imported colonial phenomena" (Green 1989b: 32). SS Africa, in common with the rest of the world, has a history of poverty, war, and famine extending over millennia. However, it is evident that the SS African economic and financial problems were made very much worse in the 1970s and the 1980s by a combination of:
1. an investment in growth and development that failed to earn the expected rewards;
2. the international debt crisis, oil price hikes, and rising interest rates, plus the inadequacy of the aid programmes that were meant to provide relief;
3. repeated drought, crop failure, and widespread famine;
4. the failure of agricultural production to contribute significantly to growth and the increased dependence on imported food;
5. widespread warfare and civil unrest;
6. the fact that SAPs have been only partially successful and that that success has been in terms of system rather than people, who somehow have to survive in the hope that decisions linked to short- or medium-term deterioration based on theories that are unknown or unappreciated could solve their problems in the future.
Price incentives have been held up as one of the most important means of promoting agricultural production and reducing rural poverty, but they will not solve the problems of extremely poor people dependent wholly or at least in part on the market. They and the urban poor need cheaper food, which only a more efficient use of inputs in agriculture can provide, and they need employment.
The evidence of the general review of the nature of poverty, the statistical examination, and the study of vulnerability has shown the existence in SS Africa of a mass of rural people who are on or below margins regarded as the minimum for the avoidance of malnutrition and whose condition has been severely worsened by the combination of economic crises and droughts and then further impoverished by some aspects of the economic reforms attempted. The evidence suggests that their condition can be relieved only in the long term, not just by economic reform but by appropriate investment and trade in a world in which the major powers are concerned to promote growth rather than restrict it and to encourage open access to world markets. Perhaps "don't do as I do, do as I say" may be said to express a great deal about some of the major development problems of today's poor countries and poor rural people, which are as much a problem of double standards in the world trading system and in the politics of international finance as they are the product of their own development problems.
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