As would be expected, given the reasons which the IFIs attributed for the crisis, the centre piece of these programs was the reduction in the role of the state through a reliance on market forces. The conditionalities were, at least in the initial stage, primarily economistic and were to be applied rather uniformly and mechanically by various African countries, regardless of prevailing situations in each country. Indeed both the stabilization and adjustment programs were expected to be mutually reinforcing. Increasingly, there was a convergence between the IMF and World Bank in their approach to lending and imposing conditionalities. In particular, both bodies, together with Western creditor nations, established similar conditions which African countries had to adhere to before obtaining loans and debt rescheduling agreements.
Devaluation of local currencies is another policy area that occupies a central position in adjustment policies. It is considered crucial for ending import dependency in Africa while at the same time promoting an export orientation. The argument is that the over valued nature of African currencies led to a situation where imports were considerably cheaper than exports, thereby encouraging massive importation of various goods, with many of them being irrelevant consumer and luxury goods, while discouraging production for export purposes. Closely related to devaluation is the policy of trade liberalization. Proponents of neoliberalism have argued that by removing all the bureaucratic controls over the foreign exchange markets, African entrepreneurs would be able to import the necessary inputs for their industries while more foreign investments would be attracted into the continent. However, the experience of the World Trade Organisation (WTO) Doha round of negotiations, suggests that the world trade and import regimes remain structured in favour of the developed capitalist countries that have imposed restriction on Third World imports to enter their markets. On the other hand, imports from developed capitalist countries have had unfettered entry into African markets.
The other related policies are those of reduction in public expenditures and the privatization of public enterprises. The idea behind the demand for cutting public expenditure is based on the argument that the huge subsidization of state enterprises and social services, such as health, education and social infrastructures constitute a large drain on the resources of African countries while at the same time benefiting only the urban elites to the detriment of the rural dwellers, who need to be encouraged to increase their agricultural outputs. In the case of the privatization of public enterprises, the argument is based on their poor performance necessitating regular subsidies which constitute a further drain on government resources. Privatization, it is argued, would expose these enterprises to market determined competition and therefore make them operate more efficiently if they want to remain in business.
According to Mkandawire (1994) privatisation is intended to achieve three things: (1) to contribute to the bridging of the fiscal budgets and rationalization of public finances by unburdening African economies of overextended and corrupt state and parastatal structures that have putatively wrought havoc on public finances; (2) to contribute to greater efficiency in the allocation of resources, to generate less inflationary pressures, to stimulate more competitiveness of African economies; and (3) to free both domestic and foreign private capital from corrupt and inefficient bureaucracies so that it can be productively engaged in those activities that has thus far been monopolized by the state or has been off-limits to the private sector. The experience in most African countries reveals that the aims of privatisation have rarely been met, apart from the the costs of dismissing thousands of workers, without adequate social security and income, the process of privatisation was manipulated to favour state elites or their cronies. Further, in other instances, as in the case of Zambia, the major sectors of the economy, such as mining were sold to foreigners, who had a free reign on how their operated, by determining whom they employed or where they sourced their materials.
In addition, the neoliberal strategy also envisaged that by abolishing government control and direct participation in the marketing of agricultural products, by removing the role of the marketing boards, would increase rural incomes. It was assumed that this would encourage increased production for exports by the rural dwellers. Callaghy (1994) makes the point that the “the primary thrust of these economic reform efforts is to more fully integrate African economies into the world economy by resurrecting the primary-product export economies that existed at the time of independence and
4 III Conferencia Internacional La obra de Carlos Marx y los desafíos del Siglo XXI – Neo Simutanyi