8:54 AM Jan 26, 1996

AFRICA: NEEDS RECONSTRUCTION OF STATE, NOT NEOLIBERALISM

Geneva 26 Jan (Chakravarthi Raghavan) -- The solution to the African development crisis and marginalization lies in a reconstruction of the State and its public institutions, even in a more private-sector oriented economy, rather than more neo-liberalism.

In advocating this view, Brian Van Arkadie, Representative of the World Food Programme in Tanzania, notes that in the realities of contemporary Africa, considerable power has accrued to the bureaucrats of the international aid community (the Bretton Woods Institutions, bilateral, plurilateral and multilateral aid agencies the African governments: accountability, transparency and competitiveness.

While donors may help, Arkadie says, "eventual revival of Africa's fortunes" will depend on the reassertion of initiative by Africans -- a new decolonization".

Arkadie's views in "The State and Economic Change in Africa", is in a just published book, "The Role of the State in Economic Change", (Clarendon Press, Oxford). Edited by Ha-Joon Chang and Robert Rowthorn (of the Faculty of Politics and Economics at Cambridge University), and with contributions with several leading academics on a range of national and regional experiences, the publication is the outcome of UN University/Wider Research project. In the introduction, Chang and Rowthorn, note that the neo-liberal revival, represents a partial return to 19th century laissez faire, supplemented by the Austrian emphasis on limited transferability of knowledge and role of entrepreneurship and gained wide following throughout the world from mid-1970s.

Though by no means universally accepted, it is now frequently accepted that the neo-liberal programmes have mostly failed to live up to their promise, say the editors. "The problems of the world economy remain formidable; many developing countries which have followed this programme are still in great difficulty; in the advanced capitalist world, the Thatcherite experiment in UK was conspicuously unsuccessful in making the economy more competitive, and recently the Clinton administration in the USA has overtly refuted the ideas associated with Reagonomics. As a result of this experience, there is growing disenchantment with the neo-liberal programme. One partial exception to this new trend is perhaps Eastern Europe and the Soviet Union, but even there the initial optimism in the efficacy of the free market is fading fast."

While neo-liberals had served a useful historic function of questioning viability of existing forms of state intervention, they have failed to provide an intellectually successful and workable programme for comprehensively rolling back the state, and achieving their vision of a 'brave new world'.

But few believe that it is either possible or desirable to turn the intellectual clock back 20 years before the neo-liberal upsurge. The challenge, therefore, is not simply to return to some previous intellectual golden age, but form a new synthesis in which valid insights of neo-liberalism are stripped of their ideological baggage and integrated into a wider and more objective intellectual framework, the editors add.

In discussing the African crisis, Arkadie says that doubts about the capacity of the state in Africa are most obviously justified where government has actually disappeared (Somalia, Liberia) or controls only part of the territory as a result of civil war (Angola, Mozambique).

Such states, facing deep crisis, provide a miserable life for their citizens and pose difficult demands on international community. The logic of current international initiatives is that in some cases a period of internationally supervised colonialism seems to be on the agenda -- the appeal for humanitarian intervention having set the international community on a path of international trusteeship, just as the anti-slavery agitation and appeals to the White Man's Burden spurred nineteenth century colonialism.

Though African governments and their state planning and intervention in the economy are largely blamed for the current situation, Arkadie points out that in many cases the plans for structural change in the economy came out of those drawn up in reports by the World Bank visiting missions even before independence.

For example, the Tanzanian 'transformation' approach to rural development through village settlements, one of the antecedents to the Ujama village programme (attributed now by critics to President Nyerere and his socialism), he points out, was in the World Bank report on Tanganyika before independence.

Analysing the various efforts in the African countries which, despite the diversity of performance in the two decades after independence, were virtually all in decline by end of the 1980s, when structural change and planning gave way to structural adjustment.

"But structural adjustment did not replace planning - planning had already died," he comments. For planning to have any meaning at all, however modest, there has to be some degree to which government has control over events and has real choices in manipulating policy instruments. The combination of ambitious plans of fiscal expansion and costs of not very successful attempts to promote African entrepreneurship, public and private, placed a heavy burden on the export sectors, while such industrial investments as were implemented signally failed to reduce import dependence. At the same time, donor-financed projects, on which heavy reliance was placed, had on average extremely low productivity.

As a result African economies were vulnerable in the face of the new international economic disorder.

Arkadie notes that one view of the political aspects of the economic debacle in Africa, which has gained some currency among Western commentators, is that the root cause of weaknesses in 'governance' ("a not very meaningful term promoted by the World Bank") is absence of pluralistic politics based on open electoral process, reinforced by currently popular views within Africa that the continent has been ill-served by politicians and politics.

While not wishing to be apologist for the nastier African regimes, says Arkadie: "It is not obvious that poor economic performance in Africa can be explained by undemocratic nature of regimes nor that the solution will lie in pluralism. It has not been established that pluralistic democracy is either a necessary or sufficient condition for successful economic growth. The tigers of East Asia were long on aggressive development policy and short on democracy. And it is not evident that governments subject to popular pressure in very poor countries can make effective economic policy. The same donors who preach the pluralistic message, being practical men, seem to be particularly sympathetic to 'strong men' such as Rawlings (in Ghana) and Museveni (Uganda), who clothe their authoritarian rule with the merest fig-leaf of democratic practice."

The SAPs, the author says, has however three achievements in a number of countries that implemented them: revitalization of private economic activity which has mainly benefited from liberalization; there has been no regressive income impact, the very real deterioration in conditions of the poor being the result of the crises that required a policy change rather than the SAPs themselves; and more widespread popular acceptance of policy reforms from the public than politicians expected.

But on the negative side is the continuing weakness in African export performance - partly the result of the deplorable state of the world market for traditional exports and partly the structural weakness of African economies for which a solution is yet to be found. While the assault on 'inward-looking' trade policies is supported by reference to successful export-led growth of East Asia, these economies did so by dynamic adjustment of their comparative advantage with the State playing an active role, while African export trade continued to be concentrated on primary commodities.

As for capacity building under SAPs, while there is no shortage of entrepreneurial talent in Africa in small-scale activities, unlike in East Asia there is lack of large-scale national capital. But it is far from evident as to what is to be done about it. Public support of private business only too readily generates rent-seeking rather than entrepreneurial behaviour.

It is not clear, either in countries such as Tanzania, Uganda and Ghana in which SAPs have profoundly changed the system, or in countries like Kenya which have followed a more capitalist policy since independence, whether a national capitalist class is emerging that is capable of working with the state to develop a project for more advanced capitalist development.

While SAPs have trimmed the role of the state, the tasks left with government are not only critical, but in some ways more complex. In extreme cases the state has withered away, though not as intended by Marxist visionaries -- and societies in such deep crises are not faced with issues of development, but with establishing a certain minimum degree of social order and basic survival, while international efforts focus on peacekeeping, relief efforts and refugee support.

Analysing the state of the public services and the state apparatus, it could be argued that what is required is nothing less than reconstruction of the state, Arkadie says. Even an essentially private economy in a post-structural adjustment era, needs a more effective state institutions.

Effective government participation in development has both a bureaucratic and political dimension and "reconstructing the state" in Africa would require movement on both fronts. In the longer term it would be necessary to again address issues of economic structural change, learning from the lessons of failures of earlier efforts of the 1960s and 1970s.

An essay on the role of government in economic change in any continent other than Africa would probably discuss the role of foreign aid agencies in a paragraph if at all, the author notes.

But it is part of current African predicament that it is not possible to cast donors in a merely subsidiary role. Given the current reality, it is too often the donor community which takes the lead in defining the policy agenda and, to be fair, donor support which in many countries has ensured that at least some public services have been maintained.

Discussing various things that donors could do, the author adds that while much of the dialogue on institutional performance in africa has addressed weaknesses of performance of African governments, given the power that has accrued to donor agencies in Africa, the 'governance' question must involve the governance of the donor agencies themselves.

Applying the criteria they apply to the African governments, -- criteria such as accountability, transparency and competitivity -- the donor agencies themselves perform badly: The agencies are not democratically accountable to those affected by their policies and agency officials are themselves typically insulated from being affected by any consequences of their actions -- either from being directly affected by performance of the programmes or having their incomes or career prospects connected to programme performance.

"When agencies, either national or multilateral, are subjected to democratic pressures, these are more likely to reflect concerns of the lobbies currently fashionable in the First World than the agenda and concerns of the Third World."

The conclusion, the author says, is that while donors may be able to help, the eventual revival of African fortunes will depend on the reassertion of initiatives by the Africans - a new decolonization, But to be successful, that will have to be based on a political process which articulates national goals and supports a policy-making and implementation process that is more successful than the decolonization of the 1960s".