Economic Reform and Democracy: Crisis and Opportunity in Africa

A profound pessimism pervades much recent commentary on Africa. According to many observers, the region’s increasing marginalization from the international arena is being accompanied by—if not contributing to—the collapse of central states under the pressures of economic crisis and ethnoregional conflict. The most pessimistic analysts see a generalized return to the violent lawlessness of the immediate precolonial period. ¹ Others, like Thomas Callaghy, discount the worst scenarios but suggest that the “specter of anarchy” will haunt the continent indefinitely, with many states ultimately succumbing to chaos. ² In the view of many such observers, the wave of democratization that has washed over the continent since 1990 will only add to the burden of the beleaguered African state. Reforms are likely to be short-lived, overwhelmed by the many severe problems that are devastating the region.

Africa does indeed offer ample cause for pessimism. Some states are clearly in the process of collapsing. Yet all hope is not lost, for the recent wave of democratization actually offers a golden opportunity to break out of persistent patterns of stagnation and crisis. How can African democrats seize this opportunity and begin the process of constructing stable democracies? The biggest threat to the consolidation of democracy in sub-Saharan Africa is likely to be the continent’s continuing economic crisis. The dozen African nations in which power has been transferred thanks to multiparty elections in the last five years are all beset by daunting economic difficulties. ³ The survival of these newly liberalized regimes depends first and foremost on their leaders’ ability to gain control of the economic situation.

To that end, should the new African democracies pursue the economic liberalization programs and trade-led growth strategies promoted by the World Bank and the International Monetary Fund (IMF)? Or should they pursue an alternative program—for example, the strategy long advocated by the United Nations Economic Commission for Africa (ECA) of “self-reliant” development that engages the international economy only very selectively, emphasizing instead state-led industrial planning, intraregional cooperation, and integration?

In fact, the specific economic policies that these regimes adopt are ultimately less important than whether they embark on the process of building institutions—in both government and civil society—that support economic development. It is clear that in the short run each of these states needs to find a spending-and-revenue mix that restores macroeconomic equilibrium. This process is bound to be politically difficult, and new democratic governments must take full advantage of the “honeymoon” that they are likely to enjoy. In the long run, various policies are viable, as long as they are predictable and sustainable. Such policies are most likely to be implemented if and when a nation succeeds in combining a professional and impartial public bureaucracy with a consensus regarding the general outline of economic policy. Building strong political institutions will go a long way toward ensuring both economic renewal and the consolidation of democratic rule.

In virtually every one of Africa’s emerging democracies, the economy inherited by the new democratic elites was in dreadful shape. It had typically suffered from two decades of mismanagement, exogenous shocks, and inappropriate policies, resulting in a declining level of public welfare, a growing debt crisis, and an ongoing process of negotiation and renegotiation of debts with international creditors. Moreover, the most recent decade of chaotic drift, in the context of a dwindling supply of resources, had devastated public institutions: public buildings were decrepit, taxes went uncollected, and the civil service had been drained of competent personnel. In addition, democratization itself had involved significant economic costs. In countries like Mali and Madagascar, democratic transitions were marked by extensive civil unrest and violence that resulted in considerable property damage and accelerated capital flight. In many states, the fiscal recklessness exhibited by authoritarian leaders as they tried to hold on to power had been equally costly. In Zambia, for example, President Kenneth Kaunda had curried favor with the civil service in the months preceding the election by doubling public-sector salaries, resulting in an explosion of inflation in 1992 after the new...