Democracy and structural adjustment in Africa

by Bernard PETIT

The African scene is dominated by two powerful ideas-the transition to democracy and the notion that economic reforms must be undertaken or pursued.

Economic reform, which began to be put into effect and attract support from external funders in the early 1980s, is a sine qua non of a return to growth in most of the countries concerned. Yet since deficits have to be reduced and imbalances righted, reform means bringing in measures to shrink demand, which may, and usually do, entail high social costs.

Human rights and democratisation, the vital underpinning of lasting, sustainable development, are changing African societies and plunging the continent into a new phase in its history.

These parallel trends are welcome, of course, but it must also be realised that running economic and political reform simultaneously poses difficult problems and is one of the major challenges for the African States and their external partners in the world today.

Why a challenge?

Because the opening to democracy has of course aroused enthusiasm among people who, in many cases, have been oppressed by authoritarian regimes, but also aroused great economic expectations. The 'forces in society' clearly expect a democratic process to make visible and rapid changes to their state of economic wellbeing.

But democracy itself does not bring growth. That should be the job of the structural adjustment process. Unfortunately, however, structural adjustment, with its trail of hardship and austerity and its slow-acting effects on growth, is ill suited to meeting the immediate expectations born in the transition to democracy, for there may well be a negative correlation between democratisation and economic reform programmes, in the short term at least.

Experience seems to suggest that, when it comes to enforcing programmes of reform, authoritarian regimes have more means of coercion available to them than democratic ones, which have to engage in dialogue with the other forces at work in the economy and society and cope with a free press, the right to demonstrate, the right to strike and so on.

The best-known example here is of course the Chilean 'success story', or the unadulterated form of adjustment devised by the economists of the Chicago school (who were unencumbered by either social claims or pressure groups), and which had such impressive results in terms of growth under the Pinochet regime-although those who were poor before Pinochet were still poor afterwards.

In fact, the dialogue which starts up under a democratic system-and it is absolutely vital that that dialogue should take place-is the very essence of what is usually termed the internalisation of programmes of reform.

But if this dialogue coincides with what can easily be a fragile process of democratisation, it is bound to mean some degree of adaptation (particularly in terms of taking reform measures in stages and the need to take maximum account of their economic and social effects), which will take the country out of its adjustment process for a time or at least prevent it from fully meeting the performance criteria agreed on with its external partners.

In situations of this kind, its partners, and the Bretton Woods Institutions especially, tend to suspend or completely withdraw their financial support.

The State in question, now without the financing it needs to carry out the agreed reforms, sees arrears piling up and deficits mounting and ultimately abandons the structural adjustment programme, thus opening the way to inexorable economic decline, general discontent in society when expectations are no longer met and a serious threat to the stability and democratic viability of the State. This is an open door for the return of the authoritarian system and the countless excesses it brings with it.

This disaster scenario may be something of a caricature, but there are signs, here and there, of the transition to democracy losing ground or grinding to a halt altogether as the economic situation in the countries in question declines. ln a democratisation process, there is a very fine line between the need to run growth-generating economic reforms and the demands which express the legitimate aspirations of the people.

Governments must, in fact, constantly adapt to the economic logic of structural adjustment programmes and the political logic of democratisation processes and reconcile the demands of their constituencies at home (the voters) with the demands of their constituencies abroad (the funders) .

A democratic approach should of course not be an excuse for displaying a high degree of economic laxity or allowing a government team to 'buy' its support or legitimacy with the wholesale granting of each and every exaggerated corporate or other claim, often from urban social groups and leading to demagogic policies which reject the reforms of substance that would reverse economic decline.

At the same time, however, it would be wrong for beneficiary States' external partners to ignore this democratic dimension, a feature of which should be that it prompts the international donor community to be more pragmatic and display more political sense, particularly when it comes to the rate and progressiveness of the projected reforms.

Above all, the democratic dimension should lead the Bretton Wood Institutions to seek a dialogue and look for systematic coordination with the State and the donor concerned, in order to see whether the mistakes and slippages which occur in implementing the reform actually threaten the economic viability of the structural adjustment process; before they somewhat mechanically withdraw financial support.

When the time is right, the Community will take the necessary steps to ensure that the donors involved maintain the continuity and coherence of the framework of support for the reforms under way in the States concerned.

The external partners of countries engaged in both a move to democracy and structural adjustment must be aware of the considerable danger and serious political responsibility involved in being excessively and sometimes unrealistically harsh in their perception of economic reform and thereby threatening a fragile democratic process and opening the door to the return of the previous regimes and all their excesses. B.P.