Paper short abstract:

This paper addresses the confusion surrounding the purported return of failed 1980’s and 1990’s IMF-World Bank Structural Adjustment in Africa. It argues that Structural Adjustment is not returning but re-affirming itself, for it had remained the standard paradigm for Africa and the global economy.

Paper long abstract:

This paper addresses the confusion and anxiety surrounding the purported return of failed 1980’s and 1990’s IMF-World Bank Structural Adjustment in Africa.

The newly independent Africa borrowed in international banks at low interest rates to finance long-term development projects. This credit availability followed massive OPEC petrodollar revenues, the first oil shock of 1973, deposited in Western banks, creating excessive money supply within a low profit rate environment, hence no new investment, leading to stagflation in the West and collapse of Keynesian economics and the rise of monetarism. Monetarists explained stagflation ushering in a new era and paradigm shift in multilateral trade system governing the IMF and World Bank. Following the second oil shock of 1979, monetarist governments of Ronald Reagan in the USA and Margaret Thatcher in the UK, raised interest rates to curb inflation causing debt overhang and balance of payment crisis as Africa could not service the debt. As a condition for debt rescheduling and access to international credit markets, Africa had join the World Bank and IMF and implement structural adjustment. Structural adjustment aimed at economic restructuring towards lessening state economic role and unleashing the private sector via liberalization, privatization and fiscal and monetary austerity in order to relaunch economic growth and debt payment. Structural adjustment failed to deliver on structural change, capacity building and human development. This paper argues that Structural Adjustment is not returning to Africa, it is rather re-affirming itself, for it had remained the standard paradigm for Africa and the global economy.