SAGA Proposal: Perspective and Motivation

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SAGA Research Proposal:

1.1 Perspective and Motivation

Over the past twenty years, many sub-Saharan African countries have engaged in macroeconomic policy reform (Sahn 1994). Parallel foreign exchange markets have virtually disappeared from countries where they were a central feature of economic life only a decade ago. Governments have reduced or eliminated the most blatant biases against agriculture. Trade taxes, implicit and explicit, have been reduced in many countries where they were previously set at punitive rates. The state has begun to release its grip on commerce through privatization of loss making state enterprises and liberalization of investment codes. And despite frequent slippages, the enormous fiscal deficits of the 1980s are becoming a thing of the past.

These reforms have yielded some benefits for Africa’s poor, but with rare exceptions, the achievements on growth and poverty reduction have been disappointing (Sahn, Dorosh, and Younger 1997; Sahn 1996). Some part of this is because of the descent into civil war and chaos in countries like Sierra Leone, Liberia, Angola, Sudan and Congo. The turbulence in these countries is affecting neighboring countries as well. But even in politically stable countries, growth usually has not been robust and, as has been increasingly noted, what growth there is has not been sufficiently pro-poor for it to have a greater impact on poverty reduction. Looking ahead, most forecasts are gloomy. If levels and patterns of growth continue as before, the numbers of poor people in Africa will continue to increase. The additional burden of the HIV/AIDS crisis compounds this pessimistic assessment for sub-Saharan Africa.

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