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Thursday, August 29, 2013

BEYOND RIGHT AND WRONGBEYOND RIGHT AND WRONG: THE LESSONS FROM ZAMBIA’S STRUCTURAL ADJUSTMENT IN THE 1990s. By KATELE KALUMBA MP MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT ZAMBIA


BEYOND RIGHT AND WRONG: THE LESSONS FROM ZAMBIA’S STRUCTURAL ADJUSTMENT IN THE 1990s.


By  KATELE KALUMBA MP
MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT
ZAMBIA




Rhetoric is to be able to see where unlike things are alike, to understand how unknown things are like known things. Anybody’s rhetoric belongs to all of us. Who thinks naked is ugly will not be able to write. All his energy will go into trying to conceal himself. He will fail: exposing in turn, a shameful intention. We should not intend to be honest. Intention is not good enough. The honest man writes to find out what he thinks, to test what he thinks, change what he thinks. He suspects himself always. He knows honesty is a skill that must be exercised always. Men want to be honest, few know how.

And from this angle, I approach my discourse with Mr John Phiri’s article that appeared in the Perspective column of the Zambia Daily Mail ( July 2001 ).I am aware, that I can only approach a realistic appreciation of Phiri’s account by enticing him into a dialogue. A continuous debate over his written text. I cannot satisfy myself by simply reading into what he wrote. That piece of work is finite. It cannot defend itself beyond what it has already said no matter how many times we question it. Only by engaging Phiri into an on-going dialogue can we approach understanding of each other’s view and possibly of the state of the matter we seek to understand. Yes seek to know, for above all, are we not admitting our ignorance as we write ? Understanding what has happened to the Zambian economy must be an effort of inquiry. The only person to make a genuine effort to understand is the person who knows he does not understand. I therefore mistrust ‘experts’ who simply regurgitate what they read three or so decades ago.

I definitely and absolutely think very low of  ‘commissioned thinkers’ whether they be for the State, the IMF or for some Civil Society organization. I have come across very few who think independently of the ‘politically right’ perspective of the Agency that commissioned them. If you want to pay me for my ideas, wait until I have written. If you do not like them, fair enough, do not waste your money. Intellectual prostitution says do not say that which will not please the IMF, the government or Jubilee 2000. One colleague from the media sent me an email telling me about how “pissed off” the IMF and the World Bank in Zambia were about what the media attributed to my paper presented in Berlin. Well, assuming this observation is correct, I can only say, that is very sad. Very sad indeed.

If the IMF and the World Bank do not have what it takes to inquire into Zambia’s policy experiences of structural adjustment, I understand the glee on Phiri’s face when he read my paper presented to the IMF/German Ministry of Finance and DSE Forum in Berlin in June this year. No other person than the Minister of Finance and Economic Development, admitting that structural adjustment has been a difficult experience, questioning whether it could give rise to sustainable economic and social development, well what more evidence do you need to indict the MMD government’s policies? It is a retreat!  In some order of explication, he uses my analysis as a vindication  of what Civil Society organizations like Jubilee 2000 Zambia  and the Jesuit Centre for Theological Reflection (JCTR) under Father Peter Henriot and,  even some opposition elements like Mr Dean Mung’omba, have been saying all along. Nothing new.

Assuming that the conclusion Phiri draws refers to the phenomenon I was discussing in the Berlin paper i.e., the problem of ownership and conditionality in structural adjustment programmes, I must admit I have not quite read in an exercised way what Mung’omba has said on the subject generally or on the various elements I discussed in the paper. He may have written but I will have to rely on Phiri to guide me to those works and where they are published. As for my concern on the social impact of structural adjustment, I would recommend Phiri to read my earlier works on the subject on Structural adjustment and Nutrition in the late 80s cited by ( ). My concerns on the need to put adjustment programmes to the litmus test of whether they are: poverty focused, growth oriented, technically sound in terms of design and politically manageable, is well appreciated by those colleagues who have cared to read my works or listen to my presentations. Again, nothing new. Except this time, there is a context. This is not simply another scholar writing, it is as Phiri correctly acknowledges, the Minister of Finance! That is where the problem starts, I think. I do not know how to think about the subject beyond the evidence available and the systematic tools of inquiry that scientific discipline demands. If something stinks, my sensory  experiences won’t register a sweet aroma.

Yes, Mr IMF and the World Bank, the majority of the human species have a problem with the design and implementation of conditionalities in Fund-supported programs. That is the real world. Yes Mr Phiri, structural adjustment measures are not only inevitable but necessary in economies such as Zambia’s which had serious dis-equilibrium. It is not a question of whether or not a country needs to adjust. It is only an issue of when and how? Not of right or wrong but of form and strategies.

The economic policy changes that external agencies require of national governments in the course of adjustment---known as conditionalities…remain a source of political contention between governments and their creditors and in the domestic politics of individual countries. Zambia is no exception. Or rather, in the experience of conditionalities during adjustment, there is no country where a huge party was thrown either by government or Civil Society organizations to celebrate their introduction. As Jack Boorman, Director of Policy and Review Department of the IMF said during the  Berlin meeting, it is unrealistic to think of ownership as meaning that everyone in the country supports the program. Why? Because, as Boorman argues, any program of economic policies creates winners and losers, and this ‘will be reflected in the views within the country on the approach to be taken’. He cites the case of Indonesia. He argues that while the Fund-supported program in the fall of 1997 and early 1998 was broadly supported within and outside government, it was not owned by the Suharto family and other elements of the political elite who feared exposure of their economic interests.

Assuming again that we are discussing the same thing, the relationship between production activities, factors and institutions is very complex particularly in relation to distribution of value added, income distribution by socio-economic groups and actual consumption patterns of socioeconomic groups. Epidemiologists know the incidence of malnutrition in households with high incomes but where children are taken care of by domestic workers with little education levels. Perhaps a rare phenomenon but by no means impossible. Structural adjustment measures that the IMF and the World Bank often design for countries like Zambia, are often very complex, too complex sometimes for most countries to fully grasp. Within them there are many unknowns. These are created by a variety of factors including sheer limitation in information. That is, there is no way of knowing because information is not available and assumptions have to be made. When such information is available, it may not be to the advantage of countries to reveal them to the Fund officials given perceived problems of contigent conditionalities that their consideration in the measures designed may entail. Cat and mouse game perhaps. But consequently, programs may be subject to many design flaws arising from inadequate analysis of activities, factors or institutions. It is not an exact science like predicting the eclipse of the sun.

How then shall we pass judgement? I say by continuous analysis and dialogue. The Fund is beginning to acknowledge the wake up call, in response to critique from developing countries, adjusting its mandate emphasizing “high-quality growth”. There is a worth of experience from which the Fund has had to learn in its design of conditionalities. Morris Goldstein , a Dennis Weatherstone Senior Fellow from the Institute for International Economics, told the Berlin meeting that the Fund ‘s conditionalities have been influenced by multiple factors. He listed among these: Expansion of IMF’s surveillance responsibilities; Fund’s role in transition economies; balance-sheet problems of banks and corporations in the Asian crisis countries; Vicious circle of low compliance and greater intrusiveness of Fund conditionalities; “pilling on” by legislative groups, NGOs, and other financial institutions to take advantage of the “leverage” in an IMF letter of Intent.

Listening to Goldestein on this point, I couldn’t resist remembering the most honourable member of Parliament for Lusaka Central , Dipak Patel waving Zambia’s Letter of Intent downloaded from the internet,  in Parliamentary debates in a manner always suggesting: government you can no longer hide anything, we know what you are up to and we shall keep you tracked. It is always a bewildering moment listening to him exhort this new found internet empowerment ! Actually governments authorize the Fund to publish their Letters of Intent as one way of enhancing commitment and transparency for both the Fund and the government in question. It is no longer a secret Mr Patel.

There is one other point Goldstein mentioned worthy noting here. Sometimes, he observed, the availability of ground troops and relatively high efficiency of the IMF (or as  I argued with him, the lack of it) affects the type and quantities of conditionalities prescribed. If the mission chief believes his job is that of policing, rather than work through problems with the country authorities, you will end up with a wide array of conditionalities particularly designed to force compliance.

Recent IMF Board resolutions following debates within and outside the Fund,have acknowledged the problem of conditionalities. It is now acknowledged that the Fund needs to “streamline” these conditionalities. How this exercise turns out in the end is a complex political process. But I strongly believe that in this debate, Zambia’s experience should be heard and very clearly. The Berlin paper was an attempt to capture the broad array of empirical problems that we have encountered in our adjustment history. If the paper succeeded in capturing what Civil Society organizations and political elements have been saying in Zambia, then our collective concerns were communicated. After all, the final Berlin Communique is to be presented to the IMF Board meeting on the subject. “Amano mambulwa” is an old Bemba wisdom. Knowledge is shared.  If the assumption in Phiri’s Perspective article, meant to suggest, the MMD government was making a policy retreat on adjustment measures in the economy, that would not be an accurate reading of my account in Berlin. Rather, I believed strongly that Zambia must help enrich, in an honest way, the process through which the Fund is going to define how best to streamline conditionalities in Fund-supported programs of adjustment. In my view, each Fund program must pass the litmus test: Is it poverty- focused, growth-oriented, technicallycorrect and politically implementable.