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History: From Colonialism to Neo-Colonialism
The Debt Crisis and Structural Adjustment
Duplicity in Debt Relief
Double-Standards in International Trade
Foreign Aid for Africa?
Agriculture and Food Security
Another Africa is Possible

The African continent starkly illustrates many of the paradoxes and failings of the current approach to international development. Despite being rich in natural resources and arable land, sub-Saharan Africa is the most aid-dependent region in the world, with 51 percent of the population living on less than US$1.25 a day.[1] It is home to almost 15 percent of the world's population yet has the weakest voice in international governance institutions. According to the World Bank's latest figures, around 80 percent of the region's population was surviving on less than $2.50 a day in 2005, a situation almost identical to that of 1981. The aggregate number of people in Africa living in poverty actually doubled over the same period, however, without even accounting for the extra millions currently falling into poverty as a result of the food, financial and climate crises.[2]

Economic globalisation, propagated primarily through the policy reforms prescribed by international financial institutes (IFIs) in the past few decades, has not reversed but rather deepened Africa's marginalisation in the global economy. Based on the development paradigm commonly called neoliberalism, reforms imposed by the Washington-controlled World Bank and International Monetary Fund (IMF) through conditional loans has resulted in African governments withdrawing protective trade measures, privatising key industries, and cutting back on social expenditure, all in the name of encouraging economic growth.

While an expanding private sector and increased international trade has led to greater wealth for large corporations in the Global North, analysts suggest there has been no ‘trickle down' effect felt by Africa's poor. Rather, Africa has experienced a consistent outflow of resources in the form of debt repayments, unfair trade, tied aid and ecological exploitation. The widespread poverty that exists in Africa today has deepened as a result of a system based not on meeting human needs, but on creating conditions where profit-driven corporate interests trump the demands of social justice.

History: From Colonialism to Neo-Colonialism

The devastation caused by neoliberal policies in Africa is rooted in its integration into the global economy up to and during the colonial period. European colonisation of Africa has had a long-lasting impact on the political and economic dynamics of the continent. The so-called ‘scramble for Africa'[3] that occurred between 1870 and World War I saw Europe's imperial powers partition the continent along artificial boundaries, the legacy of which continues to contribute to the instability of many African states today.

These borders, drawn with no consideration for established ethnic boundaries, threw together diverse cultural groups whose divisions were exploited in hierarchical systems of power. Colonial ‘development' was aimed chiefly at the exploitation of Africa's resource rich interior and the production of agricultural products for exportation, enriching the industrialised economies of the North whilst locking the colonies into a dependency on imported industrial goods. The result, as classically argued by Walter Rodney in How Europe Underdeveloped Africa,[4] was a system that rendered African economies permanently dependent on their industrialised counterparts. Africa's natural resource wealth continues to be drained through its dependence on primary commodity exports and value-added processed imports.

Colonial rule continued across much of the continent until the 1960s when the majority of African states proclaimed independence from their European rulers. Throughout the 1960s and 1970s, many countries adopted inward-looking economic policies aimed at restructuring their economies to lessen dependence on primary product exports. Loans were taken out from international lenders by newly independent governments, many of which were dictatorships strategically backed by the Cold War superpowers. The oil shocks of the 1970s and a wider economic crisis that spread across sub-Saharan Africa left many governments unable to service such debts.

In response to the crisis, international financial institutions (IFIs) introduced a policy package of market-oriented reforms, epitomised by the recommendations of a 1981 World Bank study entitled Accelerated Development in Sub-Saharan Africa (commonly known as the ‘Berg Report'). Ignoring underlying structural causes, the report blamed Africa's economic weaknesses on domestic "policy inadequacies and administrative constraints" and advocated for substantial currency devaluation and trade liberalisation, along with the dismantlement of industrial protection measures. These recommendations formed the basis of structural adjustment programmes (SAPs) - market-oriented policy packages that became conditional to International Monetary Fund (IMF) and World Bank loans made to African countries desperate for convertible currency needed to service external debts.

From the 1980s onwards, IFIs imposed this doctrine of ‘neoliberalism' (also popularly known as the Washington Consensus) through conditions attached to loans and aid, and via trade agreements later institutionalised in the World Trade Organisation (WTO). While no longer suffering under direct colonial rule, the imposition of externally formulated development policies, the enforced opening of African industries to the private sector, and the marginalisation of African economies through unequal trading conditions have maintained the structural inequalities and dependency that characterised the colonial era. Far from encouraging the development of local industry and a ‘trickle down' of wealth to the wider population, the neoliberal experiment has resulted in a cycle of debt, dependency and declining social services that has had a devastating impact on the wellbeing of the majority poor in Africa.

The Debt Crisis and Structural Adjustment

The injustice of Africa's debt burden is recognised by academics, activists and policy-makers worldwide. The debt crisis in the 1970s, due in part to rising oil prices and falling commodity prices, allowed the IMF and World Bank to gain substantial leverage over economic policy in Africa. Many debts originated as so-called ‘odious debts', incurred by reckless lending of petrodollars in the 1970s to corrupt and unaccountable dictatorships.[5] Far from benefitting the populace, such loans were often squandered on failed infrastructure projects and the widespread militarization that characterised Africa in the Cold War period. It has been estimated that odious debt easily exceeds 50 percent of Africa's outstanding debt.[6]

Loans to African governments from IFIs prior to the late 1970s had been restricted to project lending, until the World Bank's publication of the Berg Report created a case for ‘policy lending'. Through providing budget support for debt-stricken governments on the condition of policy reforms, the Bretton Woods institutions imposed structural adjustment programmes across much of Africa. The liberalisation and privatisation propagated through SAPs aimed to empower the private sector and facilitate greater international trade, thereby encouraging economic growth, reducing poverty and enabling a timely repayment of external debts. However, the failure of adjustment to bring about sustained growth led to continued borrowing in order to service the ongoing debts. Even a cursory glance at the figures reveals the true impact of these imposed policies. Between 1970 and 2002, Africa received US$540 billion in loans and paid back some US$550 billion in principal and interest, yet remained with a debt stock of US$295 billion.[7]

This massive drain on government budgets diverted funding from social services and public investment in both physical and social infrastructure. Even after various rounds of debt relief, sub-Saharan Africa still spends more on debt service than it does on health.[8] Aside from the burden of repayment, adjustment policies have deepened the impoverishment and marginalisation of local populations whilst increasing economic inequality.[9] At the same time as trade liberalisation depressed incomes in rural agriculture and contributed to food insecurity, the privatisation of state industries and services led to lower wages, less secure employment, and the introduction of user fees for essential services that fewer and fewer poor people could afford.

Duplicity in Debt Relief

The recognition that the neoliberal policies of the 1980s and 1990s ensnared many African countries in a cycle of debt, inequality and entrenched poverty led to widespread calls for a scrapping of structural adjustment policies and the cancellation of the illegitimate debt burden. The World Bank and IMF have attempted to shake off the negative image of SAPs through the introduction of ‘new' strategies aimed specifically at poverty reduction along with ‘sustainable' debt relief for Heavily-Indebted Poor Countries (HIPCs). However the PRSP documents (Poverty Reduction Strategy Papers), which have become prerequisites for debt relief under the HIPC initiative, continue to impose problematic free market reforms in the same vein as SAPs.

It has also been pointed out that the HIPC initiative largely applies unserviceable debts in any case, making their cancellation effectively meaningless in budgetary terms.[10] Of the 20 African countries that have reached completion point in the HIPC process, 11 are now facing moderate to high risk of debt distress through the re-accumulation of debt.[11] Underlying these concerns is the recognition that while debt cancellation is essential, it is merely a first step towards the redistributive justice that is needed to address the structural causes of Africa's poverty and economic decline.

Double-Standards in International Trade

The doctrine of trade liberalisation and market deregulation prescribed in World Bank and IMF policy reforms and enshrined in WTO agreements is based on the proposition that such measures will foster economic development and thus promote poverty alleviation in African countries. Imposed reforms include the reduction and elimination of subsidies, tariffs and quotas traditionally used to protect domestic industries from competition and to raise state revenue. The fact that these are opposite to the conditions under which the most industrialised countries developed has been recognised by analysts, yet the ‘free trade' mantra continues to govern the international development agenda imposed on Africa.[12]

This double standard has locked many African countries into unequal trade relations while restricting their ability to implement pro-development policies in the areas of agriculture, tariffs, investment and intellectual property rights. Export tariffs and subsidisation of basic commodities to protect African markets have been removed in the pursuit of export-led development. In the meantime, the US and EU subsidise their agricultural industries to the tune of US$300 billion a year and then depress global prices by ‘dumping' output at below the cost of production on world markets.[13]

Many African countries are now reliant upon exports whose value on the international market is declining and highly volatile, and on processed imports whose prices are protected and stable. As the development expert Yash Tandon observes; "There is a structured, or systemic, relationship between the products exported by Africa and those imported that ensures that Africa has to go on producing more and more of the same to get less and less of the imports from the rich countries. In other words, it is a ‘no win' situation for Africa embedded within the system itself."[14]

It is clear that trade liberalisation is not resulting in the bottom-up development and poverty alleviation that proponents of the Washington Consensus promised. While trade rose as a share of GDP in African countries, Africa's share of world trade fell from six per cent in 1980 to less than 2 per cent in 2002.[15] Christian Aid estimates that trade liberalisation has lost sub-Saharan Africa US$272 billion over the past 20 years, enough to wipe clean the debt of every country in the region and still have sufficient money to pay for every child to be vaccinated and go to school.[16]

Although arguments such as these have led to calls from African leaders and civil society for a renegotiation of international trade relations, the political marginalisation of Africa in WTO negotiations and the continued influence of the IMF and World Bank on domestic policies have repeatedly stalled progress. The collapse of the WTO ‘Doha Development Agenda', due in large part to a refusal by the US and EU to even contemplate an unconditional removal of their farm subsidies, reflects the self-interest of wealthy countries in forcing open emerging African economies whilst refusing to compromise their own domestic industries by doing the same.

Foreign Aid for Africa?

Foreign aid donated to Africa remains at the centre of much contentious debate.[17] On the one hand, aid is absolutely necessary to meet short-term humanitarian needs and can arguably assist with long-term development goals. In its variety of forms, however, aid has been accused of stifling pro-poor development, creating a culture of dependence, and negatively impacting on the democratic accountability of African governments.

A significant problem is the amount of aid received in comparison to government expenditures, and the power this gives donors over recipients. With the exception of Cameroon and Kenya, net aid as a share of central government expenditure in sub-Saharan Africa remains over 50 percent.[18] Far too often, the conditions attached to such assistance stipulate neoliberal reforms to the economic policies of recipient governments.

That such conditionality leads to exactly the type of development that exacerbates poverty and inequality may be worrying enough, but the risk that governments become more accountable to donors than their own citizens is a fundamental challenge to the health of democracy in Africa. The more aid-dependent a country becomes, the greater the problem, which helps explain the growing lack of support by African development analysts and civil society organisations for ongoing foreign aid assistance.[19]

The tying of African aid to export purchases from donor countries is also a common and highly controversial practice. The UN Economic Commission for Africa estimated that by obliging recipients to buy uncompetitively priced imports, the value of tied aid is reduced by 25-40 percent.[20] Whereas untied aid could provide much needed resources for meaningful pro-poor investment, tied aid is essentially a roundabout way of donor countries subsidising their own exports. Moreover, the enforced importation of goods can drive down the price of the same goods that are locally produced, ironically creating a new cause of poverty.[21]

Agriculture and Food Security

Africa, once self sufficient and a net exporter of food at the time of decolonisation in the 1960s, remains a tragic example of a failed policy paradigm in agriculture. Today, almost every African country is a net importer of food, with the food import bill across the continent increasing from US$6.5 billion in 2002/3 to US$14.6 billion in 2007/8.[22] In the grip of the food crisis and other disasters, one charity estimates that the number of people living "on the edge of emergency" in Africa has nearly doubled to 220 million in just two years.[23]  

The crisis of food price inflation in 2007/8 is only the most recent manifestation of a long-running decline in food security caused by changes to Africa's agricultural system. Influenced by the neoliberal policy recommendations of the Berg Report, structural adjustment policies introduced by the World Bank in the 1980s and 1990s pushed for a shift away from traditional smallholder farming in rural Africa aimed at local food production, toward an emphasis on cash crops and intensive industrial farming aimed at generating export revenue to pay off foreign debts.

With agricultural markets opened to global price fluctuations and the dumping of highly subsidised crops from the US and EU, international commodity prices declined dramatically from the 1980s to the early 2000s. Many of the poorest smallholder farmers, stripped of government protection and unable to create a sufficient economy of scale to compete in either domestic or global markets, were driven out of their livelihoods. Millions of poor and unemployed crowded into the burgeoning cities of the South. In sub-Saharan Africa, urban populations increased seven-fold over the last 15 years, while the number of slum-dwellers in the region almost doubled over the same period (from 101 million in 1990 to 199 million in 2005).[24]

The recognition that dumping subsidised surpluses as food aid can undermine domestic markets has prompted a welcome shift in focus to agricultural aid aimed at increasing local food security. However, much of the enthusiasm has been channelled through the call for a ‘new Green Revolution' in Africa, modelled on the Green Revolution of the 1960s and 1970s that vastly increased yields in Asia through the use of high cost technological inputs such as chemical fertiliser and pesticides. Serious concerns have since been raised about the social, economic and environmental costs of the prevailing industrial model of agriculture that the Green Revolution instigated; the use of large amounts of water and chemicals has degraded soil quality, reduced resilience to drought, and threatened local biodiversity.[25]

Although organisations such as the Alliance for a Green Revolution in Africa (AGRA) have refocused their emphasis to target small-scale farming to alleviate poverty, they still promote high input and environmentally risky agricultural practices, and they fail to acknowledge the consequences of further empowering transnational corporations through a dependence on patented technological inputs.[26]

A more recent phenomenon dubbed ‘land-grabbing' has seen foreign investors buy up vast tracts of African farmland in efforts to secure food and agrofuel imports in the face of a global food and climate crisis. Such developments could further undermine food security by dispossessing local landowners, increasing environmental degradation through intensive monoculture production, and endangering groundwater supplies through over-use. With climate change set to reduce crop yields in some African countries by up to 50 percent by 2020,[27] the prospect of more small farmers being driven from their land by export-focussed investors represents yet another threat to local food production in Africa.

Another Africa is Possible

Given the injustice ingrained in the international system in which Africa exists, much of the analysis and media coverage of the problems facing the continent portray an inescapably bleak future. Yet such pessimism fails to account for the strong voices of opposition in African civil society that continue to articulate alternative visions to the current market-focused system. At the seventh World Social Forum held in Nairobi in 2007, the first gathering of the worldwide citizens movement held in Africa, tens of thousands of activists debated new ways to battle marginalisation and social injustice across the continent through international collaboration.[28] These progressive ideas underscore a people-centred approach in which governments are given the policy space to implement alternative economic systems that provide universal access to basic social services, and where local communities are empowered to truly hold their governments to account.

It is widely recognised that wealthy countries bear much of the responsibility for addressing the structural causes of Africa's marginalisation in world development. Basic steps forward such as cancelling the illegitimate external debts that bind many African countries would give governments greater sovereignty and finances to implement truly pro-poor development strategies. Promoting policies that help African governments to invest in small-scale farmers and allow local economies and food systems to flourish could lift millions out of poverty and hunger. Reforming undemocratic global governance and international finance institutions would give African countries, as well as others in the Global South, a greater voice in determining policies which benefit the impoverished majority. Furthermore, removing conditionality from loans and aid is essential in allowing governments the self-determination needed to protect local economies and end aid dependence.

The modern history of Africa has underlined the misconceptions of contemporary development theory. A ‘one-size fits all' approach to economic advancement, based on ideology and policies that were never tested on the ground, has failed millions of the poorest people across the region. The countries of Africa have a crucial role to play in charting a new paradigm for development that can allow for a more equitable income distribution within nations, a rise in the living standards of the poor, and a narrowing of the gap between the developed and the developing world. In the words of Julius Nyerere, ex-President of Tanzania and one of Africa's visionary leaders in the 1960s and 1970s; "The development of a country is brought about by people, not by money. Money, and the wealth it represents, is the result and not the basis of development."[29]

[1] United Nations, Millennium Development Goals Report 2009, New York, 2009, p. 7.

[2] see Adam Parsons, World Bank Poverty Figures: What Do They Mean?, Share The World's Resources, 15 September 2008.

[3] This excerpt provides an overview of the ‘scramble for Africa' and colonialism's ongoing ramifications: Colonialism in 10 Minutes: The Scramble for Africa, a 10 minute clip from the documentary Uganda Rising, Mindset Media, 2006.

[4] Walter Rodney, How Europe Underdeveloped Africa, London, Bogle-L'Ouverture, 1976.

[5] For a full explanation of odious debt see, Steve Mandel, Odious Lending: Debt Relief as if Morals Mattered, new economics foundation, 2006

[6] Patrick Bond, Looting Africa: The Economics of Exploitation, London and New York, Zed Books, 2006, p. 40.

[7] UNCTAD, Debt Sustainability: Oasis or Mirage?, 2004, p. 9.

[8] Commission for Africa, Our Common Interest, March 2005, p. 28.

[9] SAPRIN, Structural Adjustment: The Policy Roots of Economic Crisis, Poverty and Inequality, the Structural Adjustment Participatory Review International Network (SAPRIN), Zed Books, 2004.

[10] Patrick Bond, Looting Africa: The Economics of Exploitation, London and New York, Zed Books, 2006, p. 41.

[11] ONE International, The DATA Report 2009: Monitoring the G8 promise to Africa, May 2009, p. 11.

[12] Ha-Joon Chang, Kicking Away the Ladder: Development strategy in historical perspective, London, Anthem Press, 2003.

[13] Oxfam, Causing Hunger: An Overview of the Food Crisis in Africa, Oxfam Briefing Paper 91, July 2006, p. 20.

[14] Yash Tandon, Root Causes of Peacelessness and Approaches to Peace in Africa, ISGN, 1999, p. 12.

[15] Commission for Africa, Our Common Interest, March 2005, p. 27.

[16] Christian Aid, The Economics of Failure: The Real Cost of ‘Free' Trade for Poor Countries, Christian Aid briefing paper, June 2005, p. 1.

[17] In this section, aid refers to overseas development assistance (or ‘official aid') given by governments and IFIs funded by governments, as distinct from the relatively small amount of private aid provided by private charity giving.

[18] Nancy Dubosse,  Lending Policies of the IMF: HIPC and Debt Relief in Africa, AFRODAD, January 2008, pp. 1-2.

[19] For a good overview of the controversial aid debate, see the New Internationalist's special feature on the issue in their September 2009 magazine.

[20] UNECA, Unlocking Africa's Trade Potential, Economic Report on Africa 2004, p. 4.

[21] Jonathon Glennie, The Trouble with Aid: Why Less Could Mean More for Africa, London, New York, Zed Books, 2008, p. 37.

[22] UNCTAD, Addressing the Global Food Crisis: Key Trade, Investment and Commodities Policies in Ensuring Sustainable Food Security and Alleviated Poverty, paper presented at the High-Level Conference on World Food Security, Rome, Italy, 3-5 June 2008.

[23] Amber Meikle and Vanessa Rubin. Living on the Edge of Emergency -- Paying the Price of Inaction, CARE International UK, 18 September 2008.

[24] UN-HABITAT, State of the World's Cities 2006/7, United Nations Human Settlements Programme, Earthscan, 2006.

[25] GRAIN, A new Green Revolution for Africa? GRAIN Briefing, November 2007.

[26] For a critique of the push for a ‘new green revolution' in Africa, see Eric Holt-Gimenez, Miguel A. Altieri, and Peter Rosset, Ten Reasons Why the Rockefeller and the Bill and Melinda Gates Foundations' Alliance for Another Green Revolution Will Not Solve the Problems of Poverty and Hunger in Sub-Saharan Africa, Food First/Institute for Food and Development Policy October 2006.

[27] IPCC, Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E.Hanson, (Eds), Cambridge University Press, Cambridge, UK, 2007, p. 435.

[28] Diana Duarte and Evelyn Sallah, Another Africa is Possible: The World Social Forum, Foreign Policy in Focus, 20th March 2007.

[29] Julius Nyerere, The Arusha Declaration, Tanganyika African National Union, 5 February 1967.