The impact of the structural adjustment programmes on Kenyan society

This article examines the effects of structural adjustment programmes (SAPs) on Kenyan society. A series of economic and political reforms initiated by the World Bank and International Monetary Fund in Kenya since 1988 and especially after 1991 have transformed many aspects of the daily life of Kenyan people. These programmes have been linked to the high rate of income inequality. inflation, unemployment, retrenchment, and so on, which have lowered living standards, especially, those relating to the material resources in thefamily. Furthermore, the SAPs in Kenya have been linked to the increasing deviant and crime rates, ethnic hatred and discrimination and welfare problems, especially in the areas of education and health. Introduction WHEN KENYA GAINED Independence in 1963, it did so in a period of global economic expansion and stability. Commodity prices were generally high and the country benefited from these high prices. In addition, the country was left with significant foreign exchange reserves and was therefore able to deal with economic instability. The first decade after Independence was, therefore, a period of economic prosperity and high aspirations (Swamy 1994). In the first decade oflndependence Kenya made tremendous progress in the area of economic development in that the gross domestic product (GDP) grew by 6.6 per cent. Savings and investment were relatively high for its per capita income. The expansion of primary, secondary, I Depanment of Sociology,Moi University.Kenya VOL 17 NO 1 JANUARY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 81 technical and university enrolment has been generally impressive since 1963. For instance, the number of primary schools doubled between 1963and 1983while their enrolment rose almost five times (Ikiara 1990). In secondary school education, the number of schools expanded by almost 14 times between 1963 and 1983, while the number of students rose from 30,100 to 493,700 in the same period. Life expectancy at birth, which at Independence was 44 years, increased to 69 years in the 1980s while the mortality rate of219 deaths per 1000 live births in 1962 dropped to 68 deaths per 1000 live births by the 1980s.These indicators reveal that Kenya was well above the average for sub Saharan Africa (Swamy 1994:196). While the first ten years of Independence in Kenya are sometimes referred to as the "Golden Years", marked with an impressive record of economic growth, the period 1980-1990 is sometimes referred to as the "lost decade" characterized by severe external and internal difficulties and challenges that began in 1973. Since the increase of oil prices in 1973, the living conditions of the Kenyan people, as those of most African countries, have moved from bad to worse. In addition to the increase of oil prices the 1970s presented Kenya's economy with challenges and hardships as a result ofthe world recession that followed the economic crisis of 1970s. These included the fluctuating prices of the country's major exports, low levels of technology, drought and famine, high population growth, the collapse of the East African Community, high rates of urbanization, increasing debt, land fragmentation, widespread poverty, disease and ignorance. These had a negative impact on the country's economy. The gross domestic product per capita fell, followed by food shortages and declining standards of living. In order to deal with these economic difficulties, the state responded in a number of ways, which are reflected in Kenya's development plans since 1980. The most notable change in the management of the Kenyan economy was the implementation of the structural adjustment programmes (SAPs) that began to be introduced during the 1980/81 fiscal years. However, SAPs did not become an important part of economic management until after the publication of the Sessional Paper No. 1 of 1986. Since then 82 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 No 1 JANUARY 2002 Rono/STRUCTURAL ADJUSTMENT PROGRAMMES IN KENYA SAPS have been integrated as policy tools for economic management. The adoption of SAPs was aimed at restoring efficiency in all sectors of the economy and consequently raising the rate of economic growth (Central Bureau of Statistics 1997b). According to Stanley Fischer there are two types of adjustment po(icies, The short run or microeconomic adjustment, which means basically adjusting to living within your means; and structural adjustment, which means changing the structure of our economy to enable your means to grow more rapidly (Fischer,April 3, 1989). Thus structural adjustment programmes consist of a set of economic policies designed to generate rapid and sustainable economic growth with macroeconomic stability. SAPs that evolved over the past decade initially focused on eliminating fiscal and external imbalances and reviving growth. The implementation of SAPs has involved the following main subject areas: the liberalization of prices and marketing systems; financial sector policy reforms; international trade regulation reforms; government budget rationalization; divestiture and privatization of parastatals and civil service reforms (Central Bureau of Statistics 1997b). These elements have so far been implemented invariousdegrees. Because the market is expected to playa critical role in the growth and adjustment process, structural adjustment programmes also emphasize market liberalization, market competition and the development of the private sector (Central Bureau of Statistics 1997b, 1999). The key ingredients of structural adjustment programmes are based on an economic model of private ownership, competitive markets and an outward-oriented development strategy. Developing free and competitive markets and liberalizing the price systems are necessary for allocation efficiencies. A stable macroeconomic environment is also essential to allow markets to operate efficiently and investors to make correct decisions based on market signals. Since 1980 Kenya has adopted economic reforms designed to achieve macroeconomic and structural adjustment, as well as economic growth. These programmes were initiated at the behest of and supported by the International Monetary Fund and the World Bank. VOL 17 NO 1 JANUARY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 83 Some of the major reforms that have been undertaken by the government to date include price decontrols; foreign trade liberalization; decontrol of domestic marketing of agricultural commodities, customer and producer prices and decontrol of interest rate and foreign exchange rates. The latter includes the promulgation ofthe Exchange Control Act (Central Bureau of Statistics 1997b). The SAPs are intended in the long run to improve the economy. However, in the short run, one area that suffers from the immediate consequences of the SAPs, which has been ignored, is the social aspect of human development; namely, the erosion of social services, especially among vulnerable groups, families and individuals. In the vast majority of sub Saharan African governments, there is general agreement regarding the social, political and economic tensions, coalitions and conflicts, which SAPs have generated. In Zaire, Zambia, an~ Nigeria, to name a few, adjustment programmes have accentuated the delegitimization of the state, leading to political violence, riots and regime turnover and culminating in severe economic dislocation and deterioration. ihere is now almost unanimous agreement among intellectuals and policymakers in and outside the African continent that orthodox adjustment programmes, as devised and supervised by the International Monetary Fund and World Bank, are not working (WorldBank-UNDP 1993). An overview ofthe impact ofstructural adjustment on the Kenyan economy These structural adjustment programmes have had numerous effects on the economy, such as inflationary pressures, the marginalization of the poor in the distribution of educational and health benefits and a reduction in employment (Ikiara 1990, Mwega and Ndulu 1994, World Bank-UNOP1993,Swamy 1994). The International Monetary Fund and World Bank and the government of Kenya have criticized one another on the nature of implementation of structural adjustment programmes and their consequences. The International Monetary Fund and the World Bank, 84 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 1 JANUARY 2002 Rene/STRUCTURAL ADJUSTMENT PROGRAMMES IN KENYA on their part, have criticized the Kenya government for undermining the implementation process by being, Often lethargic and sometimes acting contrary to the stated policies; Transparency and financial discipline were not undertaken, trade reforms were not carried out, the pace was not incremental, and the commitment of top officials waxed and waned and thus lack of discipline and transparency dampened or nullified the structural reforms (Swamy 1994). This was in a context showing that the adjustments were beginning to work in that the economy was showing signs of growth. Within Kenya, the impact of these programmes has been a matter of controversy. Today, almost 20 years after they were first introduced in Kenya, they continue to be unpopular because they were accompanied by a series of conditions that were harsh and rapid. These conditions are based on economic models that do not fit the Kenyan social structure and conditions. In addition, the International Monetary Fund and the World Bank continue to add objectives and conditions to the programmes. For example, initially these programmes were meant to address economic problems but have shifted their objectives to political issues, based on Western political models. Consequently, World Bank reports moved from its traditional position of focusing purely on economic matters to emphasizing the needs for popular participation in decisionmaking, decentralization of power structures, accountability and the reduced role of government in the state economy. It also demanded the empow