Structural adjustment programme

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Structural Adjustment Programme (SAP):  Good or  Bad

Hearing Massimo mention the Structural Adjustment Programme (SAP) a few times in our last lecture juggled my memory to my secondary school days back home in Ghana. The SAP dominated news in the tabloid in that era and a lot of politicians seem to embrace the SAP with open arms. So considering the seemingly lasting negative effects or problems of the SAP, I find it amazing how it was seen as the ‘mother’ of all solutions- as it was going to turn Ghana into a developed country in the long term -An idea that remains an illusion.

There is no hiding from the fact that Ghana saw some significant transformation over the years with the Structural Adjustment Programme.  Under SAP, Ghana’s annual inflation dropped from 123% p.a in 1984 to 10% in 1999. Also, there was a  shift towards the developing non- traditional exports goods like horticultural products and art and craft. Again Ghana experienced consistent growth in GDP(4-6%)  which signifies a huge increase from 1.5% in 1970-83. Thanks to the SAP Ghana’s economy has attracted foreign capital in areas like banking, Telecommunication, mining and infrastructure.

These positives notwithstanding, the SAP left Ghana with a legacy of negatives that requires an inquest into the real gains of such policies. The program brought with it the concept of Modernization which meant Ghana had to follow same patterns that were deemed successful in the Global North especially USA which demanded that Ghana shelved certain cultural, social and behavioural traits which were seen as anti development by the Bretton Wood institutions. Significant borrowing s over the years which is a feature of the SAP has resulted in Ghana being listed among the 41 highly indebted poor countries (HIPC,) http://go.worldbank.org/TQUQE8C1M0,Serrcing serving the debt from these borrowings takes a large proportion of the Ghana’s export revenue and as a result spending on basic infrastructure, health and education suffer immensely. It’s worth mentioning that the external indebtedness is largely to the IMF and other Bretton Wood agencies, plus organisations in the G-7 countries (G-7 countries are the brains behind the SAP and benefit directly from these borrowings). There was also the issue of devaluation of currency which has left its negative impact the country’s ability to import (2.75 cedis = US$ 1 in 19983 to 22,500 cedis = US$ 1 at present).  Again, there was drastic cut back on government expenditure on vital services like education, health and welfare. Private sector and government employment also suffered cuts backs.

Primarily, the SAP was seen as model for development: thus economic growth (increase in GNP and GDP with a trickledown effect), poverty alleviation and reduction in unemployment amongst others.  However, there is evidence that the SAP hasn’t fulfilled its primary goals. One can argue that there are more poor people in Ghana now than there were prior to the introduction of the SAP and the gap between the rich and the poor seem to have grown wider.  The increase in GDP has not had the expected trickledown effect. Economic success is not the same as welfare and the same measures indices will not be applicable to both. Economic growth alone cannot be seen as development as despite this economic that the SAP brought, Ghana has been sliding down the HDI scale since 1995 Human Development Report 2009 – HDI rankings.

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