Economic Recovery in The Gambia: Insights for Adjustment in Sub-Saharan Africa.
Small countries such as The Gambia are rarely the subject of an entire academic study. This is perhaps because publishers see a limited market for material which may not appear to lend itself easily to generalization. As the title of this volume suggests, the authors disagree, arguing that an unusually successful programme of economic stabilization from the mid-1980s makes The Gambia a model for other African countries intent on reform. Success is defined in terms of a speedy correction of internal and external economic imbalances with little political or public resistance, as well as in terms of a high degree of `ownership' of the programme in spite of substantial technical and financial donor support. The authors are able to offer an exceptionally detailed account of the reform process in The Gambia given that they are all past or present members of the Harvard Institute of International Development, which acted as consultants to Ministry of Finance staff between 1985 and 1992.
What strikes the reader most forcibly, however, as she/he passes from a discussion of the background to economic collapse to an analysis of the micro-economic and macro-economic components of the reform programme, is that the wealth of example and anecdote supports the conclusion that the programme had little long-term effect. Indeed, it is admitted that early, administratively simple policy changes such as a ban on new non-concessional borrowing, foreign exchange deregulation, and the introduction of market-based interest rates and agricultural prices may have made structural and institutional reform more difficult, because they removed the urgency associated with a crisis situation. Less successful or failed reforms included the restructuring of para-statals, reform of the agricultural credit system, budget reform, tax reform, and attention to the problems of recurrent expenditure.
Furthermore, it appears that many macro-economic and institutional reforms were only partially introduced under extreme pressure from donors, particularly from the International Monetary Fund and the World Bank. In a sombre chapter on the Programme for Sustained Development (PSD), which succeeded the Economic Recovery Programme (ERP) in 1990, Walsh sees the close adherence of the budget to targets as indicative of the degree of control exercised by the IMF programmes over the daily management of the Gambian economy. This hardly supports the notion of strong ownership by Gambians of the reform package. The sacking of corrupt managing directors at several parastatals came only after the donor community made its concerns known. At the end of each quarter, the Central Bank would make a flurry of payments to the creditor whose requests had been most vocal, or from which the government wished to borrow additional funds. And once the pressure eased, as in the case of customs fraud, the same problems re-emerged.
The implications of such a donor-driven reform process were two-fold. First, the Gambian economy became highly dependent on aid flows. Foreign aid accounted for 74 percent of GDP in 1986/87, significantly distorting the relative cost of resources, and more than 80 percent of the country's development budget is still financed by external grants and loans. Second, donors sometimes pressurized the government to implement policies that were inappropriate to the Gambian situation, as when an external consultant recommended reporting requirements for para-statals far in excess of what was either feasible or necessary. As McNamara and Shipton point out in their fascinating chapter on Rural Credit and Savings, reform of agricultural loan institutions requires a recognition that in rural West Africa, most loans are enmeshed in non-economic meanings, and creditors who are least known and farthest away are likely to be the last to get repaid.
Radelet and McPherson argue that The Gambia's implementation of the ERP and PSD shows that democratically elected governments can implement strong stabilization programmes. Yet the evidence presented elsewhere suggests that the reforms that were implemented succeeded because the speed of implementation preempted resistance, rather than because they were backed by a broad political and public consensus. More complex reforms soon foundered on the rocks of vested interests. It is noted, meanwhile, that 80 percent of the Gambian population are Moslem, yet Islam's dominant belief in fatalism is not even alluded to as a factor in the absence of resistance to reforms.
An attempt to place Gambian experience in the wider African context is to be commended, but too often the authors underplay the peculiarities of the Gambian experience, particularly those idiosyncracies associated with small size, in an effort to justify the book's relevance to a wider audience. Radelet and McPherson, for example, argue that the risks of reform, or lack of it, in The Gambia, were greater because a major disturbance due to continued economic deterioration or in protest at reforms might lead to the overthrow of the Jawara government and the incorporation of The Gambia into its neighbour, Senegal. This is hardly a scenario that can be envisaged in many, if any, other African countries. Dependence on aid and technical assistance is not the only problem posed by small size. Trade openness reduces autonomy in setting macro-economic policy. The longer term growth prospects of agriculture, which employs the majority of the Gambian population, have been limited by serious resource constraints. Such constraints have been exacerbated by the military coup in July 1994, which appears to have reversed many of the early gains of the reform programmes.
The book's strength lies in its depiction of what really goes on in a reforming country behind the policy pronouncements. As such it will provide useful background for the primary target audience of African policy-makers involved in economic reform programmes, although one wonders how many will ever get to read it. It also represents an important contribution to the literature on the application of economic policy in small states, as well as being an indispensable historical document for The Gambia.
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|Article Type:||Book Review|
|Date:||Apr 1, 1997|
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