Message-ID: <Pine.SUN.3.91.960202124854.13724B-100000@altair.herts.ac.uk> Date: Wed, 15 Jan 1997 10:50:27 +0000 From: Ade Angwafo III <mailto:A.V.Angwafo@HERTS.AC.UK> Subject: Re: Haunted by the dream of ...isms To: Multiple recipients of list DEVEL-L <mailto:DEVEL-L@AMERICAN.EDU>
Fellow netizens of planet DEVEL,As I increasingly read about development on this forum, it seems to me that too many structural idealists are more concerned with ideology (...isms) than with the suffering their policies are causing, especially in that forever young but endengered continent of Africa.
One of these ideologies is captialism which walks hand in hand with the democratisation movement presently sweeping through the continent of Africa and leaving fire in its wake. It is market capitalism at that, defined to ensure the survival of multinational companies like Shell in Ogoniland. (Shell is FREE to shell-out the heart of Ogoniland in search of wealth). It is the emphasis on the macroeconomics of foreign exchange which sometimes, and quite often, does not help the poor feed themselves nor truelly assist the Southern farmer feed his fellow countrymen. It's market forces (the hidden hand of God that supports the Northern guinea and devalues the Southern guinea), that's it! It's market forces disguised to ensure that companies in Northern Guineas get UNLIMITED access to, and FREE exploitation of, resources in Southern Guineas, that's it!.
Anyone, anywhere in the world would plant a cash crop for export if that was more profitable and the market is available. Not only are cocoa, tea, and coffee expected to make money, but the majority of the training by agricultural experts in countries of the South concerns these crops. The basic food growing farmer who produces corn, rice, cassava, sweet potatoes and the like gets hit with price freezes or low prices. This leads to less and less land being utilised for such needy crops (needed by citizens of the South). Presently, many, if not all the states in sub-Saharan Africa have bought into recovery plans like the structural adjustment programmes (SAPs) of the World Bank and IMF. The programs, as I understand its doctors, recommend channeling expertise and subsidies to export-crops production. Very interesting recommendation, don't you think?
It is good form, these days, in African and Euro-American liberal circles, to highlight the supposed benefits of one of the golden rules of SAP: devaluation. The sort of adjustment that was IMPOSED on countries in Francophone Africa as recently as 1994. Theoretically, as I understood it, devaluation was expected to stimulate exports in proportion to the benefits exporters will gain from a surplus of CFA francs after having converted their receipts into local money. This will increase their capacity to invest and CREATE WEALTH and so will ripple throughout the whole economy. A pipe DREAM?
Three (3) years after devaluation the above scenario seems to be an angelic and optimistic vision of things, an easy solution for intellectuals who no longer stop with a resignation. This reminds us of another wave of Promethean optimism, that of independence. In the political-juridical arena, some thought then, with good reason, that, given time, the adoption of a constitution of French, British or American inspiration would suffice for the young African republics to accelerate on the road of political maturity. The rest as some of us now read about is history...that seems to repeat itself, ad infinitum!
Concretely, what were the nations of Francophone Africa TOLD to expect from devaluation?
(1) A better competitivity of local industries and an increase in the receipts from exports in local money? But for that to have occured, it would have been necessary that national productivity be sensitive to a devaluation and/or use few imported inputs. But it is rare that either of these two hypotheses hold, since the principle exports are raw materials -- agricultural or mineral -- for which a long-term reduction in price on the international markets have not increased demand by much. There are two reasons for this: the existing overproduction and the perishable nature of these products. There is also the pretended loss of interest in these raw materials linked to the existence of replacement products (often synthetic) conforming to new tendencies in the consummer markets - the postmodern economy of the West. As far as local enterprises go, due to the poverty of the industrial fabric, they are dependent on imported inputs, whose costs has been boosted by the devaluation.
(2) The reduction of foreign purchases due to the increase in the cost of imports? I'm not sure if the importation of champagne into Francophone Africa has reduced. In anycase, once luxury products are eliminated, there will remain all the same a very large volume of incompressible imports (like medicines & medical supplies), whose price will have considerably increased, which can't help but nourish the severe recession which these countries must grapple with. Perhaps jumping from frying pan into fire?
(3) An amelioration of the balance of trade? This is unreliable due to the incompressible character of imports whose cost is henceforth higher as we have just pointed out.
(4) An increase in state funds due to more tariffs and stabilization grants? This is a very theoretical conclusion which doesn't take into account a certain number of empirical realities, such as the reduction of administrative personnel, their extreme lack of motivation and the deviant behavior that economic difficulties exacerbates.
(5) The increase in multilateral public aid? Oh Yes and leading to the inevitable increase in the volume of external debt. Certainly, there were proclamations here and there that France and the Breton Woods institutions (World Bank & the IMF) will augment their aid in the guise of accompanying the devaluation. But nothing is secure, when we see what came from such thunderous proclamations as the G7 made with respect to Russia, for example.
(6) Encouragement to local industries to substitute for imported products which have become too dear? This is theoretically true when the industrial fabric is solid and diversified. But these are countries which at best are very weakly industrialized (even in the case of the heavyweights like the Ivory Coast and in a certain measure, Cameroon). Adapting to the new scheme will be long and woeful. At worst, the effect of this monetary depreciation on the industrial fabric will be mortal.
To these effects, others intrinsic to any devaluation have to be added: the decrease in buying power already strongly limited (salary reduction in countries in the CFA franc zone ranges from 15 % in Senegal to 70 % in Cameroon - assuming they receive the pay), price hikes, if not hyperinflaction, due to the price rises in imports whose incompressiblity is very high, the flight of existing foreign investments and skilled labour and probably a series of devaluation which in the long term will destroy the CFA franc zone, for better or for worse.
In fact, for some decades now African countries have followed policies of structural adjustments and monetary stabilization which up to the present have not established a healthy basis for their economic growth. Unfortunately, as shown by the above example, sub-saharan Africa, once again, has been an object rather than an actor in the choice of its future. Some western technocrats, who would not envision for their own countries a tenth of the measures they have recommended, without exposing themselves to uncontrollable reactions, have acted as if economic choices were experiences under glass and did not affect millions of individuals already on the edge in their bones and being. All they are interested in is to safeguard their ideologies....
This example is in fact very simply the illustration of an unfavorable relation of forces, not sure of its real name, which from slavery to the end of the 20th century, passing through the era of colonialism, has always marked the relations of sub-saharan Africa (at the periphery of the world market) with the nations at the center of the world economy. It's time for a change, it's time for international developers to stop behaving like bulls in a china shop!
May the forces of the market be with you all. Amen.
Ade