Beyond Structural Adjustment Programs

Published on 23rd October 2007

Structural Adjustment Programmes (SAPS) aimed at the efficient allocation of resources and the achievement of sustainable economic growth among African countries. Kenya embraced policy reforms under SAPS in the early 1980s. The key concern in the policy reforms with respect to trade was market liberalization.Markets were dominated by government controls. In the agricultural sector, the focus was on removing government monopoly in the marketing of agricultural commodities; price controls; and the removal of government controls on importing, pricing and distribution of purchasable farm inputs.

 

We have now reached a near complete liberalisation of the agricultural sector and economy in general. Yet, concerns remain on the functioning of the sector, the real impacts of the policy and the true winners and losers from these changes.   

 

Most studies recognize that poverty levels in the region are rising. Drawing on the diversity of experience from other countries, Foster (2004) notes that solutions must be system-specific and adjusted to the degree of service decentralization, level of privatization, level of farmer organization, and the scope for specialization of producer organizations.  A market is not a historical and abstract concept but rather a historical product. A market is not simply forces of supply and demand, but social forces meeting and trying to maximize gains.


Africa needs a commission to inquire into the role of the wealthy nations in her underdevelopment. They urgently need freedom from the patronizing ways of the rich nations. In discussing these and other challenges, the African Resource bank, a think tank that draws members from Africa and friends of Africa from Europe, declared that enforcement of property rights is a pre-requisite for a vibrant economy.Africa carries approximately 35% of the world’s natural resources yet she is still very under developed and are at the mercy of Multinational Trans -national Corporations (TNCs).

 

A respected economist and Nobel laureate James Tobin came up with a solution in the name of a Tobin tax. He put forward the intriguing idea of a small tax on all foreign exchange transactions in order to limit speculative, short term foreign exchange dealings. Such transactions do nothing for short term foreign exchange dealings since the objective driving them is short term capital gains. A major merit of the Tobin tax is its capacity to slow down speculative foreign exchange transactions while generating huge amounts of revenue for Africa. By 1997, The volume of foreign exchange transactions had reached US$ 1.3 Trillion daily.A  0.1% Tobin tax would yield enough autonomous revenue to put Third world development on a secure and sustainable footing without any `strings attached’ aid. This would end African development wobbles in almost an instance. The international community is still to implement this although the Tobin tax proposal was discussed at the Halifax G7 summit in 1997 and its technical feasibility well established.Africa should enforce this tax if to end the sprawling poverty in her midst.

 

The Kenyan economy has been showing notable economic growth which is in no way  attributed to the world bank/IMF policy makers but to the Kenyan tax payers who are forever surpassing tax revenue targets. This means that, no one will wake up in the morning to come and develop Africa but Africans themselves. We have the resources.We only need to reenergize our resource allocation and tax collection mechanisms and live well within ours means to make poverty history.


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