Article

Tackling the Social Dimensions of Adjustment in Africa

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 1990
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Behind the economic aggregates revealing mounting debt and faltering growth and exports lies the day-to-day reality of life in Africa: crumbling roads, growing unemployment, clinics without medicines, schools without teaching materials—a reality of diminished prospects, especially for the poor. As African governments adjust their economies in the face of these realities, they confront two major questions: Beyond restoring growth over the medium- and long-term, how can macroeconomic and sectoral policy reforms be designed to meet the broader social objective of ensuring the participation of the poor in the process of adjustment and development? In the shorter term, how can vulnerable groups be protected during the adjustment process?

To support African governments in their quest to integrate poverty reduction policies and programs into their adjustment and development efforts, the United Nations Development Programme, the African Development Bank, and the World Bank launched the Social Dimensions of Adjustment (SDA) program in 1987. Since then, 12 other multilateral and bilateral agencies have become involved. Based on a comprehensive conceptual framework, the SDA program aims at improving macro and sectoral policy management, designing social action programs, strengthening national informational systems, and stepping up training and institutional development. The program is supporting each of these activities in 30 participating countries, with the mix of program elements determined by each country’s specific needs.

Poverty-conscious reform

In an effort to help countries design poverty-conscious reforms, the SDA program has developed a framework which explicitly recognizes the links between macroeconomic policies and actual behavior and decisions made at the micro (or household) level. Using this approach, policymakers can craft a strategy that encompasses the social dimensions of adjustment and development programs. Thereby, they can design a better combination of short- and long-term measures for securing the livelihoods of the poor. The strategy consists of five essential elements:

• Investing in the households’ human capital through nutrition, health, and education programs, as a basis for greater participation and growth;

• Increasing the households’ productive assets, in order to increase the income of the poor;

• Raising the return on these assets, mainly through changes in relative prices;

• Promoting wage employment, especially for urban and nonfarm rural workers in the tradable sectors and helping those in the nontradable sectors to shift occupations; and

• Empowering the poor to expand their economic and social participation through community-based projects and other schemes that give them greater control over their own destinies.

The SDA program helps participating governments include social dimensions in the macroeconomic policy-making process at the earliest possible stage. At the outset, this may involve evaluating existing data to provide policymakers with social indicators that show how various socioeconomic groups are faring under adjustment. During the life of the SDA program, assistance is provided to systematically build up countries’ policymaking and analysis capacity in line with evolving data and institutional conditions. Such work has begun in Togo and Tanzania. The emphasis is on developing operational tools that can feed directly into the policymaking process in order to make the designers of macroeconomic policy more conscious of its effects on poverty.

The program has also prepared Analysis Plans to provide government policymakers and planners with guidelines and methodologies for determining how adjustment policies affect key sectors. These plans attempt to establish the relationship between adjustment and a number of key topics and target groups. These include poverty profiles, employment and earnings, food security and nutrition, education, health, women, and smallholder farmers. Such plans are being produced in close collaboration with local research institutions in Côte d’Ivoire and Ghana.

Public finance reforms have a powerful effect on poverty. The SDA program helps participating governments design core public expenditure programs to ensure that basic social services are delivered in a cost-effective manner and reach the most vulnerable groups in society. Once a government defines the kinds of expenditures it wants to protect, it can introduce specific budgeting procedures to clarify and systematize the translation of these priorities into public expenditure decisions. Expenditures can then be committed not only for the type of service or budget program, but also for a specific region or institution. This task goes beyond ensuring a certain level of government spending for each social service. Greater attention to efficient administration and delivery, the introduction of user charges based on the ability to pay, better provision of services to the poor, and a corresponding reduction of leakage of services to those who are better off—all can actually improve the quality of service to the poor even after overall expenditures have been cut. Such core public expenditure programs are currently being designed in Senegal and the Central African Republic.

Social action programs

Improvements in macroeconomic, sectoral, and public finance policies are necessary, although not sufficient, to achieve poverty reduction in Africa. Existing economic, social, and institutional impediments may diminish the ability of the poor to profit from the newly emerging policy environment. At the same time, vulnerable groups (e.g., the poorest, women, and young children) need to be protected through the period of adjustment. In addition, some other groups, who may not necessarily be poor, must be eased through the adjustment process. These groups include, for example, public employees who may be laid off as a result of adjustment measures.

To address these concerns, African governments are increasingly implementing, in conjunction with their policy reform programs, social action programs with two essential objectives:

• To foster greater participation of vulnerable groups in the process of socioeconomic development; and

• To mitigate the effects of adjustment on specific target groups.

The first category of interventions seeks to overcome the social and economic barriers that thwart economic participation by the poor. These actions are meant primarily to rehabilitate neglected infrastructure and debilitated support services and to promote community-based initiatives. In Cameroon and Guinea, the Governments have established, in conjunction with structural adjustment programs, community development funds to finance small-scale community initiatives, create employment, and provide basic services for the vulnerable groups. In Chad, the Government has established a loan scheme for very small businesses to be managed by nongovernmental organizations. This scheme is accompanied by technical support for such small enterprises.

The second category of interventions is concerned with protecting the welfare of specific groups during the initial phases of the adjustment process. These interventions consist of specific programs for vulnerable groups, including a food-for-work program, food distribution schemes to the neediest groups in Mauritania, and a special program to provide short-term employment for dislocated workers in Madagascar. Further, such actions may also cover transitional arrangements for laid-off public sector employees, as was done in The Gambia, Guinea, and Senegal.

National information systems

In order to make effective policies, decision makers need a clear picture of the various segments of the population in the course of the process of adjustment and development. Continuous planning and analysis, predicated on a national information system that provides a quantifiable measure of changes in key social and economic indicators for specific socioeconomic groups, are essential. Such information is needed not only at the macro level but at the sectoral and micro levels, too.

Social action in Cameroon

A good example of the SDA Unit’s work for the design and follow-up of social action programs is an $85-million project in Cameroon, formulated as an integral part of the structural adjustment program there. The social program under this project will support initiatives in health, education, population, employment, community development, and women in development.

Among other activities, a national employment program has been designed to channel public, private, and donor resources into counseling, apprenticeship, and vocational training programs—and to provide technical and financial support to small enterprises. A community development fund, administered by the Ministry of Planning in association with provincial authorities, is financing small-scale community efforts to create employment opportunities and provide basic services for vulnerable groups.

In line with the growing emphasis on integrating women into the process of development, the education service of the Ministry of Women and Social Affairs is running an information and education program. It is also working with other ministries in the design and management of the social action components for health, education, population, employment, and community development.

The SDA program is offering help with data collection and surveys to expand the quantity and improve the quality and reliability of data on social indicators. It has helped build a consensus in the international statistical community on a survey strategy to assess how households react to changes in policy and to monitor living conditions in households during adjustment. This survey strategy uses three complementary methods:

• A prototype integrated survey gathers information on the impact of adjustment on different household groups and establishes the relationships between macro policies and their effects on the household. This survey uses a detailed multisubject questionnaire on a relatively small, nationally representative sample;

• A prototype priority survey, based on a shorter questionnaire for a larger sample, identifies vulnerable groups and monitors changes in their socioeconomic conditions; and

• A prototype community survey provides baseline and monitoring information on product markets, labor markets, and social and physical infrastructure.

Ghana provides a good illustration of how an SDA survey program can be developed and integrated with current national survey activities. The Ghana Statistical Service has elaborated a four-year survey program with the support and advice of the United Nations National Household Survey Capability Programme, the Economic Commission for Africa, and the Bank’s SDA Division. The program includes all three SDA survey methods. It also addresses national concerns about the recomputation of weights for consumer price indexes, expands the review of labor and employment issues, and provides details of informal sector activities.

Institution-building and training

The long-term success of the SDA program will be ultimately measured by its ability to help participating countries develop their own capacity to design poverty-conscious macroeconomic, sectoral, and public finance strategies, and to effectively design and implement complementary social programs. Toward this end, the SDA program is supporting, as a contribution to the broader Africa capacity building initiative, a program of training and institutional development focusing on the following elements:

• Improved capabilities for social policy analysis;

• Reinforced policy-making procedures; and

• Expanded participation by local groups.

This program supports training for civil servants and professionals from local research institutions in the areas of macro-economic strategy, the design and analysis of adjustment programs and their effects on poverty, and public finance reforms. It also includes training for survey management and data analysis, and for the design of social action programs.

At the central level, institution-building efforts are supported to ensure that the results of policy analysis are thoroughly integrated into policy-making decisions. For example, the program supports the establishment of user’s groups involving policymakers, analysts, and data producers in each participating country to provide feedback on the effects of policies on the poor and the vulnerable.

At the local level, the SDA program is exploring ways to associate the representatives of NGOs, private associations, and the academic community more closely into the design of social policies and programs. In three countries, poverty task forces have been established for that purpose. In Senegal, journalists have also been invited to participate. New institutional arrangements are being experimented with to avoid the traditional top-down approach in favor of decentralized program and budgetary authority for community or municipal organizations, NGOs, and other similar groups. An interesting example of this approach is the grassroots development initiative program in Togo, based on a partnership between the Government and the NGO community in support of NGO-sponsored projects.

Conclusion

Programs of adjustment and development in Africa cannot be sustainable in the longer term unless the poor fully participate in the emerging economic environment. Adjustment programs provide the opportunity to focus attention on, and marshal efforts for, tackling the problems of the poor. The SDA program should help participating countries toward meeting the critical and mutually reinforcing goals of sustainable growth and poverty reduction.

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