Answer to Question #235678 in Accounting for Atiyah

Question

QUESTION

The notion of Structural Adjustment Programmes (SAPs) being effective in, and necessary for, achieving African development would likely be favored by the Bretton Woods institutions— the IMF and the World Bank—the creators of them (Chabal & Deloz, 1999: 119). To assist African development, Structural Adjustment Programmes (SAPs) provided “conditional lending” (Thomson, 2010: 197). Throughout the 1980s and 1990s, the U.S. has been a principal force in imposing Structural Adjustment Programs (SAPs) on most countries of the South. REQUIRED Discuss the expected impact and outcome of the Structural adjustment programs (SAPs) provided by the International Monetary Fund (IMF) and the World Bank (WB) in Third World countries with special reference to Zambia. 

Answer 1

Solution:

The Structural adjustment programs (SAPs) have completely failed to develop African nations leaving them crippled with huge debts and economic downfall. These programs have also been linked to the high rate of income inequality, inflation, unemployment, retrenchment, and massive corruption, which have lowered the living standards of the citizens. Furthermore, it has also led to discrimination and welfare problems especially in the areas of health and education.

In Zambia, for instance, the effects of SAPs have been devastating. The repayment of accumulated Zambian debt has been rescheduled several times due to skyrocketing prices for essential products and shrinking. It has led to the devaluation of the local currency and escalation of the cost of living of the urban wage earners, including deterioration in workers living conditions. It has also led to the removal of subsidies at some point resulting in chaos, demonstrations, and deaths. It has brought pain, malnutrition, and death to the Zambian people and thwarting its economic potential.

SAPs have resulted in high social costs because they undermine access to affordable and quality public services due to government cuts in health and education services, including the reduction of food subsidies and a decline in wages, affecting vulnerable populations in particular. Furthermore, SAPs have encouraged widespread corruption in public institutions destroying public confidence in the government.