Constraints on the Success of Structural Adjustment Programmes in Africa

260 Pages·1996·0.3 MB·English

by  Charles Harvey (eds.)

CONSTRAINTS ON THE SUCCESS OF STRUCTURAL
ADJUSTMENT PROGRAMMES IN AFRICA
Also by Charles Harvey
AGRICULTURAL PRICING POLICY IN AFRICA: Four Country Case
Studies (editor)
ANALYSIS OF PROJECT FINANCE IN DEVELOPING COUNTRIES
ECONOMIC INDEPENDENCE AND ZAMBIAN COPPER: A Case
Study of Foreign Investment (co-editor with Mark Bostock)
ESSAYS ON THE BOTSWANA ECONOMY (editor)
EXPORTS AND THE PRESSURE OF DEMAND: A Study of Firms
(with R. A. Cooper and K. Hartley)
MACROECONOMICS FOR AFRICA
MACROECONOMICS IN AFRICA
POLICY CHOICE AND DEVELOPMENT PERFORMANCE IN
BOTSWANA (with Stephen R. Lewis, Jr)
RURAL EMPLOYMENT AND ADMINISTRATION IN THE THIRD
WORLD: Development Methods and Alternative Strategies (with B. L.
Jacobs, G. B. Lamb and B. B. Schaffer)
WORLD PRICES AND DEVELOPMENT: The Impact on Developing
Countries of Imported Inflation (co-editor with Stephany Griffith-Jones)
Constraints on the
Success of Structural
Adjustment Programmes
in Africa
Edited by
Charles Harvey
Professorial Fellow
Institute of Development Studies
University of Sussex, Brighton
First published in Great Britain 1996 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS
and London
Companies and representatives
throughout the world
A catalogue record for this book is available
from the British Library.
ISBN 978-0-333-64293-1 ISBN 978-1-349-24373-0 (eBook)
DOI 10.1007/978-1-349-24373-0
First published in the United States of America 1996 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue,
New York, N.Y. 10010
ISBN 978-0-312-12665-0
Library of Congress Cataloging-in-Publication Data
Harvey, Charles, M.A.
Constraints on the success of structural adjustment programmes in
Africa I Charles Harvey.
p. em.
Includes bibliographical references and index.
ISBN 978-0-312-12665-0 (cloth)
I. Structural adjustment (Economic policy)-Africa, Sub-Saharan-
-Case Studies. 2. Africa, Sub-Saharan-Economic conditions-1960--
-Case Studies. I. Title.
HC800.H378 1996
338.96--dc20 95-19961
CIP
© Charles Harvey 1996
All rights reserved. No reproduction, copy or transmission of
this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London WI P 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
10 9 8 7 6 5 4 3 2 I
05 04 03 02 01 00 99 98 97 96
Contents
List C!fTables vii
List of Figures IX
Preface X
Notes on the Contributors xi
1 Introduction 1
Charles Harvey
2 Interest Rate Liberalisation and the Allocative Efficiency of
Credit: Some Evidence from Small and Medium Scale Industry
in Kenya 7
Peninah Kariuki
3 The Structural Adjustment Implications of Real Exchange Rate
Depreciation on the Manufacturing Sector in Zimbabwe 29
Joseph Muzulu
4 The Impact of Economic Stabilisation on the Wage Structure in
Zimbabwe: 1980-90 52
Godfrey Kanyenze
5 Liberalisation of Maize Marketing in the Arusha Region in
Tanzania 76
Willy Parsalaw
6 Structural Adjustment, Labour Markets and Employment Policy 100
John Toye
7 Constraints on Sustained Recovery from Economic Disaster in Africa 130
Charles Harvey
8 Constraints on the Effectiveness of Structural Adjustment
Packages in the Production and Availability of Pharmaceutical
Products in Kenya 152
Pius Owino
v
vi Contents
9 What Role for Stock Exchanges, Venture Capital and Leasing
Companies in Developing the Private Sector in Africa? 174
Mike Faber
1O Economic Crisis, Adjustment and the Effectiveness of the
Public Sector in Zambia 192
Dennis Chiwele and Christopher Colclough
11 Economic Adjustment, the Mining Sector and the Real Wage
in Zambia 210
Dennis Chiwele
Index 235
List of Tables
2.1 Major real interest rates(%): 1968-1980 8
2.2 Major real interest rates (% ): 1982-1990 9
2.3 Proportion of SMEs with annual increases in commercial
bank credit 15
2.4 Perceptions of major problems by borrowing and non-
borrowing proprietors 19
3.1 Average sectoral shares of employment (%) 32
3.2 Average sectoral proportions to total GDP (%) 33
3.3 Proportion of output by activity and by firm (%) 34
3.4 Additional reasons for not shifting from capital to labour in
production 37
3.5 Summary of reasons for not shifting 39
3.6 Export versus domestic prices of manufactured goods 41
3.7 Reasons for low exports 42
3.8 ICORs for the manufacturing sector 44
3.9 Main reasons for investing 46
3.10 Reasons for not investing 47
4.1 Real 1990 average annual earnings as a percentage of 1980
and peak 1982 levels 56
4.2 Difference between actual and predicted average annual real
consumption earnings (%) 61
4.3 Quantity responses in the tradable and non-tradable goods
sectors, annual average growth rates(%): 1981-90 63
4.4 Estimated labour demand functions by sector: 1970--90 67
5.1 Main economic indicators 77
5.2 Intra-regional transfers pattern of maize in Arusha region in
the 1980s 83
5.3 Estimates of intra-and inter-regional maize trade in Arusha
region in the 1980s 83
5.4 Classification of maize traders on the basis of date of
entry in Arusha region 83
5.5 Estimates of the amount of maize marketed through different
channels in Arusha region in the 1980s 84
5.6 Classification of maize traders on the basis of mode of
transport used in Arusha in 1991 84
5.7 Private traders' storage capacity in Arusha 86
5.8 Maize marketing margin for private traders in Arusha 88
5.9 Maize marketing margin for official channels in Arusha 89
5.10 Regression coefficients for six markets in Arusha (1986-88) 91
vii
viii List of Tables
5.11 Regression coefficients for six markets in Arusha (1989-91) 92
5.12 Co-operative profits and losses (1986-91) 94
5.13 Co-operative losses from non-marketing operations 95
5.14 National Milling Corporation profit and losses by 31 July of
each year 95
6.1 Employment and unemployment in Chile, 1970-1990 117
6.2 Indices of real wages in Chile, 1970-1990 118
6.3 Unemployment in Indonesia, 1982-1990 119
6.4 Wage employment by sector in Indonesia, 1986 and 1990 119
6.5 Real wages indices in Indonesia, 1983-1991 120
7.1 Net ODA as a proportion of imports, 1991 133
7.2 Real interest rates, 1980-92 143
7.3 Real interest rates, 1980-92 144
7.4 Market share and bad debts of government-owned commercial
banks in Ghana, Mozambique, Tanzania, Uganda and
Zambia prior to restructuring 145
8.1 Health expenditure indicators, 1980-90 163
8.2 Actual distribution of drug kits as a percentage of requirements 165
9.1 Main features of some African emerging stock markets 181
10.1 Educational qualifications held by Zambian employees,
1965 and 1983 194
10.2 Sample of employees by major occupational group and
nationality, 1983 195
10.3 Index of real wages/salaries in the civil service, 1966n-1991/2 199
10.4 Index of public sector compensation: basic salary plus
housing benefits 202
10.5 Sex and age profiles of the informal sector 205
11.1 Economic indicators for Zambia: period averages 213
11.2 The financial performance of ZCCM 217
11.3 Classification of industries by tradables and non-tradables sectors 220
11.4 Capital-labour ratio by industry, 1980 220
11.5 Regression results for the SSR model 222
11.6 GFCF as a ratio of GDP and GFCF real index 225
11.7 Share of operating surplus and labour cost in GDP, 1979-89 226
List of Figures
2.1 Commercial bank real deposit rates 11
2.2 SMEs: some costs of borrowing 17
2.3 Real maximum lending rates 18
2.4 Share of bank credit to small farmers 24
3.1 Exchange rate indices 31
3.2 Relative prices 31
3.3 Relative factor prices 35
3.4 Capital-labour ratios 35
4. 1 Trends in actual and predicted real average consumption
wages: 1980-90 62
8.1 Price changes and contributions to GDP 153
8.2 Price changes and pharmaceutical exports supply 155
8.3 Liberalisation of pharmaceutical imports 160
10.1 Average government real wage 198
10.2 Ratio of director's to lowest paid civil servant's starting salary 200
10.3 Share of personal emoluments in total budgeted expenditure 201
10.4 Cost of a food basket to average government earnings (1975-89) 204
11. 1 London metal exchange copper prices: 1962 to 1991 212
11.2 Annual average real wage 214
11.3 Tradables to non-tradables relative price movements ( 1965-1990) 221
11.4 The capital-labour ratio 222
11.5 The real wage with labour costs at constant share in value added 227
ix