Criticism of the SAP/SAF and ESAF

Criticism of the SAF and ESAF in sub-Saharan Africa is numerous, with many addressing the social impact of the SAP and ESAF. Most of the criticism is leveled at the effects that were brought about by the policy changes caused by the SAP in the short run. For example,

Osei-Hwedie and Bar-on documents the traumatic short run experience in Sub-Saharan Africa due to the SAF, citing falls in Sub-Saharan African real GDP per capita of 1.0 percent per year between 1988 and 1992, and the fall in per capita consumption in 23 our of the 41 countries in the region. Other negative social impacts documented includes massive unemployment, of which Zambia is used as an example, where 85percent of the population was unemployed due to the governments privatization of its government owned business. In another working paper by the IMF titled “The IMF's Enhanced Structural Adjustment Facility (ESAF): Is It Working?

” (September 1999), the IMF addressed the major criticism of the ESAF programs. The main criticisms will be summarized as follows in the next sections. 1. 1. ESAF programs fail to meet their own objectives--they do not generate growth or external viability This criticism refers to evidence of internal and external reviews of ESAF-supported programs that point towards slow growth generation, or results which have brought countries closer to external viability.

The IMF defense is that this is a misunderstanding of the evidence available, and proceeds to demonstrates that growth performance in ESAF-program countries between the early 1980s prior to the ESAF creation, and the mid 1990s, showed a marked turnaround, with real capita growth catching up with that in other developing countries and showing strengthen growth, from a decline in the 1980s. Furthermore, the IMF goes on to demonstrate that half of the improvement in ESAF program countries’ growth performance could be attributed to strengthened macroeconomic and structural policies.

1. 2. The IMF emphasizes short-run stabilization over poverty reduction This criticism states that the IMF places short run stabilization measures, such as budget cutting and inflation reduction, ahead of other objectives, such as long term growth, social spending and poverty reduction. The IMF defence is that stabilization and long term growth are goals consistent with each other, quoting evidence that proves high inflation and large fiscal deficits are inimical to sustainable growth and poverty reductions.

Social spending is also protected even under austerity packages, and in some cases, increased. 1. 3. ESAF "austerity conditions" reduce the availability of social services This is the most common and popular criticism of the ESAF, and it’s argument is that the reduction of government expenditure inevitably reduces social spending, such as spending on education, health and provisions of basic services, all of which hurts the poor.

The IMF defense is that it has emphasize the need for ESAF program design to take explicit account of the impact of reforms on the most vulnerable groups in society, requiring the inclusion of targeted social safety net measures. Targets for health and education spending are also integral part of ESAF-supported programs, with formal conditionality regarding these targets attached in some cases.