During 1992 and 1993 and indeed subsequent years, there was a lot of anxiety in academic research and civil society organizations as well as in Faith Based Organizations (NGOs and FBOs especially) on the structural adjustment programs (SAPs) that were being implemented by African countries as part of their programs with the World Bank and the International Monetary Fund (IMF). The anxiety was centered on both the short and long term effects of SAPs but more importantly, by the reality of a different expectation of what the North could do to save the untenable reality of African high indebtedness and inability to pay back their debts.
The SAPs were in themselves deepening the debt crisis as a result of currency devaluation measures African countries had to undertake. African countries were being faced with high debt repayment obligations so much so that they were unable to spend on health and education: compromising African development prospects. It was not clear if Creditor countries could write off the debt and usher in a Marshal Plan as was the case with USA and Germany after the Second World War which enabled Germany to rise from the ashes in spite of its negative global intent.
Instead, the north offered the infamous SAPs through which the south including African countries, had to implement reforms towards reduced budget deficits, devaluation, reduced domestic credit expansion, freeing controlled prices and interest rates, reducing trade barriers, and privatizing state enterprises. The World Bank provided adjustment loans which included structural adjustment loans, sectoral structural adjustment loans and structural adjustment credits. At the time, everyone knew the consequences of this medication: a blanket reduced deficits idea was not a good one since in Keysian economics budget deficits aimed at infrastructure and capital formation is really not a bad idea! It creates employment and wealth needed for poverty eradication. Yes, budget deficit for consumption is a bad idea and should be limited to the IMF prescription of 3 percent of the GDP. So, there seemed to have been a hidden agenda in having a blanket ban on budget deficits. Devaluations really broke the camel’s back because devaluation was there just to reduce the ability of African countries to pay and to create a situation in which Africans had to work even harder. This was in many ways a form of primitive accumulation of wealth from Africa to the north.
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