Structural Adjustment Programs in Developing Countries

morphologic allowance account chopines in Developing CountriesINTRODUCTIONDevelopment frugals sens be divided into two broad categories which argon neoclassical stintings and geomorphologicism. The structuralist throws the world as inflexible. Change is inhibited by obstacles, bottlenecks and constraints. People risk it hard to move or adapt, and re arisings t mop up to be stuck. In economic terms the tote up of most things is inelastic. Such general inflexibility was opinion to apply mappingicularly to Least Development Countries. Entrepreneurs were lacking and communication was poor, this assert inflexibility was married to the evident fact that ingatheringion structure of under substantial countries was very different from that of developed countries. To achieve using it had to be flipd rapidly.The sturcturalist guess of the world provides a reason for distrusting the price mechanism and for trying to do conk nigh diversity in separatewise manners. If supp lies and demands atomic number 18 very inelastic large price changes atomic number 18 directed to achieve small duodecimal enrollments. Large price changes are disturbing both directly and similarly because they result in changes in in experience distri barelyion, if the losers are powerful they may be up to(p) to resist the change by dint of organized industrial or governmental action. geomorphologicalism primarily seeks to provide a reason for managing change through administrative action.Structural try-on is a term that is utilise to explain indemnity that are driving change in countries economic congenerships especially the serviceman buzzword and Inter discipline M nonpareiltary Fund (IMF) towards maturation countries. In mavin way or a nonher are among the conditionalities oblige by the inter subject area organization, thus Structural leeway Programs (SAPs) these are political classs use by IMF and World Bank in what is said as helping ontogenesis coun tries to come through in their economic loser nevertheless with conditions to jump to.The main(prenominal) objective of structural adjustment programs (SAPS) is to amaze economic changes to Governments of evolution countries merely with conditions the IMF and World Bank grants loanwords to underdeveloped countries to make these economic changes in their Economies. ab initio Structural tolerance Programs (SAPs) was created as a method of economic recovery from the second world war (WWII) it was a mechanism for traffic with the balance of payment (BOP) problems that resulted from the second world war which its effects in world economies as there was massive economic recession of slowly(a) 1970s and 1980s by this time more developing countries were adopting collectivistic or command economic dust, therefore IMF and World Bank target area was to change these countries to the other form of frugality that is change these countries to free mart save or comm unless k straightwayn as laissez fair it was non lightsome for the IMF and World Bank to change these countries as there could be immunity to change that is why the World Bank and IMF specifyd to utilise these policies.The main tools for economic changes which the IMF and World bank were implementing consisted of major changes in countries economic, the conditions imposed in order for the developing countries to get loans included the fol get-going-Devaluation of currencies in relation to us dollars,Cutting or removing subsidies on intersection points and serve,Price marks on consumer goods or minimum wage labor justices are often removed (Bakker 1994), ease of trade and privatization of domain heavenss,Encouraging Least Developed Countries(LDCS) to invite international companies to invest in these least developed countries(LDCS)Political changes from single company to multiparty political brass late 1980sThose were the main changes which the World Bank and IMF were implementing towards the developing countries which I am going to explain it more than than later, in general I am trying to gather more discipline to gain confidence about the office of Structural allowance account Programs (SAPs) towards these developing countries that is why Im conducting this study to assess the contributions of Structural Adjustment Programs (SAPs) towards the rescue of Tanzania. At the end of this study workers will be able to get word more about Structural Adjustment Programs(SAPs) and its contribution in the economy of least developed countries(LDCS) especially for the case of Tanzania.1.1 BACKGROUND OF TANZANIAN providence AND morphologic registration weapons platformS (SAPs)Tanzanian economy and Structural Adjustment Programs(SAPs) bear be traced from when Tanzania got independence in 9th December 1961 when it was under the reins of late Mwl, J K Nyerere By this time Tanzania was under collectivist economy, under socialist leadership from 1961 to 1985 enjoyed a peaceful socioeconomic environment however Tanzania is quiet of galore(postnominal) ethnic screenground but both were united by the national language of Kiswahili introduced by the late father of the national Mwl,J K Nyerere.In the late 1970s and 1980s there was economic mishap in many developing countries especially Tanzania, do Tanzania among the poorest earth in the world thus this is where IMF and World Bank started to provide conditionality to least developed countries(LDCS) so that they can recover their economy.1.2 ECONOMIC DEVELOPMENT BEFORE STRUCTURAL ADJUSTMENT PROGRAMS (SAPs)After independence the government of Tanzania was non prepared to get word and guide the national economy as the system of hear of the economy used aft(prenominal) independence was that of the British economy. During this period the main products were law materials to Europe in consisted of the following bills crops much(prenominal) as sisal, cotton, chocolate and tea in this p eriod horticulture contributed more than 50% to rough-cut National Product (GNP) and sisal, c slayee and cotton contributed about 60% to distant exchange earnings (Taube 1992)In 1967 Tanzania implemented the Ujamaa policy of villagization by the settlement of Arusha this program helped the villages with greater accessibility to input and getup commercialises in our res everydaya it helped to improve the al-Qaeda in Tanzania such as transport system, pee and energy supply unitedly with health and education facilities.In 1978 to 1979 Tanzania went in a war with Uganda where Idd Amin Dada was Dictator in Uganda this war went off in 1979 with a lot of negative consequences to the national economy and social welfare of Tanzanians together with the collapsing world market prices and it was this period when Tanzania was required by the IMF and World Bank to transform its economy from socialist economy (Command economy) to free market economy by trade relaxation behavior and pr ivatization of the public welkin. Tanzania was doubtful to make this transition under the reins of late Mwl, J k Nyerere he was not ready to make this transition but because the earth was in sobering economic problems it started to implement the policy.Tanzania subsequently negotiating with the IMF on a standby loan failed in 1979, due to this failure the res publica launched the first Self guide National Economic survival program (NESP) in 1981 the objective of this program was conditional loosening of the economy. In 1982 the government adopted a triplet category plan of SAP at first the program did not add any significant changes in the national economy.At the end of the fiscal year of 1984/85 Tanzania launched its significant economic reforms. The aim of this translation was trade liberalization. The economic diversity consisted of some policy measures to be abided to these policy measures included the following (Taube 1992 Wenzel and Wiedemann 1989)-Prices of agricul tural products were raised by 46-55 shareage,Cooperative unions for crops were formed, derogation of Tanzania shillings by 40 percent,Frozen government budget deficit at prior year amounts,Rise in government wages at an average of 29.9 percent,Domestic trade of food were liberalized,Elimination of subsidies both consumer price and agricultural subsidies, (Taube 1992 Wenzel and Wiedemann 1989)The own fund import scheme which allowed imports purchased with abroad coin deposited was initiated.Those measures were welcomed by international presenters as the first step towards economic ripening, although those measures affected the economic performance with very little margin.1.3 THE ORIGIN OF STRUCTURAL ADJUSTMENT PROGRAM IN TANZANIA FROM 1986Structural Adjustment Programs (SAPs) started in 1986 it was welcomed by the bare-assed political leader, it is when Ali Hassan Mwinyi was a chairperson after 24 years of the conventionalism of Mwl Julius K Nyerere the new Government adopte d a terzetto year ERP (1987/88-1989/90, the main objective of ERP was to extend offset assess per capital income, a primitive Domestic Product (GDP) target growth of 4.5% and reduce ostentatiousness bellow 10%1.4 TANZANIAN ECONOMYTanzania is among the poorest countries in the world Economies in terms of per capital income. Tanzanian economy depends heavily on agriculture, which contributes more than 40% of Gross Domestic Product (GDP), provides 85% of exports, and employs 80% of the work force. Climatic conditions, however, limit cultivated crops to still(prenominal) 4% of the land area. perseverance traditionally featured the processing of agricultural products and light consumer goods. The World Bank, the IMF, and two-sided donors have provided funds to rehabilitate Tanzanias out-of-date economic alkali and to comfort poverty. Long-term growth through 2005 featured a pickup in industrial production and a substantial increase in end product of minerals led by gold. Rec ent banking reforms have helped increase private-sphere growth and investment. continue donor assistance and solid macroeconomic policies set uped a compulsory growth rate, despite the world recession.Tanzanian economy Through Gross Domestic Product (GDP) by the end of 2009 consist of the main three sectors namely Agriculture, exertion and service sector where agriculture contributes 26.6%, industry sector contributes 22.6% and function sector contributes 50.8% to the national economy, in general service sector contributes more than any other sector in the national economy consider the following figure-Source-www.theodora.com/wfbcurrent/Tanzania/tanzania_economy.html2. THE CONTRIBUTION OF STRUCTURAL ADJASTMENT PROGRAM TO THE ECONOMY OF TANZANIAFollowing the above explanations I will now deviate my focus by discussing the contribution of StructuralAdjustment Programs (SAPs) to the economy of Tanzania the psychiatric hospital of structural adjustment programs (SAPS) in Tanzania has a lot of advantages and disadvantages to the national economy. first with the Economic recovery program (ERP) of 1987/88-1989/90 financial year of Structural Adjustment Programs (SAPS) the following are the Advantages of structural adjustment programs (SAPS) in Tanzania.2.1 expediency IN AGRICULTUREOne of the objective of Structural Adjustment Programs (SAPS) in 1985/86 was to increase the output of food and export crops that is to say cash crops this was possible by alter the market structure for these crops not whole this but also providing more incentives for production. at present pull down in the preceding(a) ,agriculture is still the back born of our national economy thus improving agriculture was the only way to help Tanzanians because about 80 percent of the population of Tanzania are living in rural area where agriculture is taking situation thus many Tanzanians could benefit ofttimes from this program. Initially the Gross Domestic Product (GDP) responded posit ively consummate(a) domestic product change magnitude from 21.8 to 25.3 to 40.6 percent during 1990-1992. As seen on the Annual growth rate of GDP at factors costs, 1989-99 figure 2.1 below.From the above agricultural sector contributes 552 of the gross domestic product Percent, from the above figure it shows gross domestic product falls much in 1994 because of the government reduced effort to implement the structural adjustment programs(SAPs) measures following this the IMF and World Bank with recall from financial backing the government and blush other donor countries refused to give grants/loans, again the rural performance shows to fall down in the year 1998 this fall in economic performance was due to poor weather condition at the end of 1998 elnino rainfall lead to the destruction of peoples properties and crops as agriculture is the back born of the national economy, it lead to the poor performance thus low gross domestic product, not only agriculture was affected but h orizontal other economic activities were badly affected.2.2 IMPROVEMENT IN pedestal OF TANZANIAEarly 1986 structural adjustment programs (SAPS) through Economic Recovery Program the IMF and World Bank started among other measures to improve the Tanzanian infrastructure through rehabilitation of the existing infrastructure which were inherited from the colonial government, there were need for improving these infrastructures because they were in bad conditions, and they included roads, railway, airports and harbors. The main importance of infrastructure is for fostering the economic emergence in our country together with make the country more accessible in all regions.Road infrastructure helps to make transport and communication so smooth in a country, do agricultural activities to grow and expand the market from rural areas to urban areas and together with making exportation of cash crops abroad so easy. As Tanzania was transforming its economies from command economy to free mark et economy that is privatization in place where private investors are increasingly investing in the country, infrastructure is one of the ingredients of the national economy. These infrastructure were improved in this phase from 1995-2000 and 2001-2005 Tanzania transport vane have improved significantly. Today if you want to travel from any part of Tanzania you can r to each one without any problem this is the success of structural adjustment programs (SAPs) and the Government at large because structural adjustment programs (SAPs) cannot be able to run itself.2.3 PROVIDING GREATER SUPPORT FOR PRIMARY EDUCATION AND BASIC health SERVICESOne of the major areas which the structural adjustment programs (SAPS) contributed to the national economy was for funding for these basic needs of human beings, providing education and health services is one way of developing the nation and making the country more productive, further more is the way for preparing the country for future development.If we compare from when the country got independence, now primary education have changed a lot even the number of primary school and supplemental school have increased in 1980s we were speaking of one school in each district by those years they were known as middle schools but nowadays every ward is having at least two secondary school as from 2005 to date and a lot of primary schools just about every village is having its primary school in Tanzania today, this is also the contribution of structural adjustment programs(SAPs).2.4 TRADE LIBERALIZATION AND PRIVATITATION OF PUBLIC SECTORSStarting from 1985/86 among conditionalities imposed by the IMF and World Bank was to change the country economy that is change to free market economy together with privatization of public sector in Tanzania, privatization lead to many advantages some of them includes, recovery of dead industry increase national output as I remember in 1978/79 Tanzania experienced a lot of Economic problems as the count ry were coming from the war with Uganda.Generally the world economy was down, trade liberalization was like an incentive to attract many external and internal investors to come and invest in Tanzania indeed the number of investors increased and the national output increased too, not only that but also trade liberalization lead to removal of many trade barriers such price and market reforms, tariffs, embargoes, custom duties and other duties.Trade liberalization was preparing Tanzania and other developing countries to the system of open market where the forces of demand and supply are the only determining(prenominal) of price in the market, therefore the government is not supposed to hinder in any matter, farther more, it also lead to independence of brass which later I am going to discuss, through freedom of side the country also lead to change in the political system from single party system to multiparty political system which I see as development.2.5 TRANSFORMATION OF POLIT ICAL SYSTEM IN 1985In 1985 Tanzania changed its political system from socialist economy to free market economy this finale come as a result of structural adjustment programs (SAPs) in order to make the economy more free from government intervention, the transformation went together with trade liberalization. The political transformation was successful in 1985 but the first election under multiparty election was in 1995 were the first president elected was Benjamin William Mkapa who were the first president to implement the Structural Adjustment Programs(SAPs) seriously than any other president.By transforming the political system it had many merits including the country performed poor the public could question about what went wrong, not only that but also it introduced in the country the rule of law and freedom of expression both of these are very important ingredients of economic development in any country, rule of law and freedom of expression are the foundation of peace and secu rity in any country failure to have rule of law and freedom of expression it can lead to retardation in countries economic development. Thus the current economic development is a result of the peace and security2.6 GLOBALIZATION OF THE WORLD food marketTrade liberalization of 1980s lead to the world market as a single market that is to say globalization is the process of making the world as a single village where through engine room communication makes integration and linkage in the world market wheresoever you are you can be able to communicate and make affair by using your mobile phone, as indicated today many people have mobile phone, to date a lot of proceedings are done using a mobile phone, including bank transactions, saving money for any emergency (Vodacom and Tigo service known as M-Pesa and Tigo Pesa).Today you can transact via mobile phone, all these are the results of Structural Adjustment Programs (SAPs) through the effort of IMF and World Bank is through liberaliz ation which attracts impertinent investors to invest in developing and developed country as a result of integrations in the world market it also lead to the growth of industrial and financial sector. At the same time Structural Adjustment Programs (SAPs) creates conditions for developed country to exploit by the process known as neo-colonialism.3. THE NEGATIVE CONSEQUENCES OF THE STRUCTURAL ADJUSTMENT PROGRAMS (SAPs)Structural Adjustment Programs apart from having advantages it has a lot of negative consequences of which the SAPs measures and conditionalitys imposed to developing countries including Tanzania perhaps that is why our late Mwl.J K Nyerere was reluctant to implement the Structural Adjustment Programs (SAPs). Mwalimu thought about the fund and World Bank to set conditions for future financial support he saw it as infringement on Tanzanias national sovereignty.On the other baseball mitt devaluation of currency Nyerere argued that it would be political felo-de-se and co uld lead to riots in the street. The following are the negative consequences of Structural Adjustment Program (SAPs) in Tanzania today-3.1 REMOVAL OF INPUT SUBSIDIESBefore the presentment of structural adjustment programs in Tanzania late 1970s bring forth inputs were exceedingly subsidized making these inputs available at a cheaper price and even the agricultural recruit were available at low price, but after introducing structural adjustment programs in 1980s, things changed subsidies were removed in 1984 they were not permanently eliminated but they were eliminated in phases but in 1995 subsidies were completely eliminated, soon after this elimination farm input such as fertilizers in combination with inflation lead to increase in prices and even farm produce shoot up unexpectedly.3.2 DEPENDENCE THEOREM AND authorities DEBTIntroduction of structural adjustment programs in one way or another was the way of making least developed countries to become strung-out instead of ind ependence as seen from all these countries few African countries are independent, this is the evidence of those conditionalities imposed by the IMF through structural adjustment programs of 1986 in Tanzania.Perhaps this is a source of todays massive national debt, no country could say no to structural adjustment programs, as doing that was meaning that loosing the grants, loans and any other assistance from donor countries, thus the only way was to accept those conditionalities in order to survive from the economic problems. Generally structural adjustment programs are making conditions so that these countries are supposed to follow on the other hand it makes developing countries to have no say to developed countries.3.3 DEVALUATION OF TANZANIAN SHILLINGSThe main aim of devaluation of currency was to encourage exportation of farm production, but on the other hand devaluation of currency was affecting those farmers who were producing not for exportation and not only that but also the value of Tanzanian shillings in relation to other currency it was depreciating, the depreciation of currency has some big impacts to Tanzanians as it goes together with inflation in the country. Higher inflation in the country center harming the economy as the inflation of 1992 it caused a lot of problems to farmers as farm inputs were so high and even prices of goods and services were very high.3.4 ELIMINATION OF GOVERNMENT CONTROL ON THE ECONOMYStructural adjustment programs through privatization of public entities to private sector lead the government to have little consider of the national economy that is to say the decision about the price of goods and services are now left in the hands of the forces of demand and supply that is market mechanism to decide one of the major weakness to allow the market to decide is that the government have no power to decide on economic variables, even to control monopolies and other market failure, it does not mean that the government have n o control it have control but not as much as it had during socialist economy, this is evidence that Tanzania inflation is increasing every year the government have failed to control this inflation.4 SUMMARY AND CONCLUSIONFrom the explanations about structural adjustment programs (SAPS) contribution to the national economy of Tanzania I can be able to draw my conclusion by saying that structural adjustment programs have contributed much to the national economy where it was able to bring up new engineering science in our country in Swahili we call it UTANDAWAZI was possible to come in our country as a result of trade liberalization and privatization of the public sector.Late 1980s the country were transformed into a new political system that is multiparty political system which brought about the rule of law and freedom of expression to allow individual to freely express their views about the national development it is a good news to us Tanzanians as now we can be able to express ours elves without fear from any one unlike during single party political system today in Tanzania economic development is a result of frequent critics from opposition parties such as CHADEMA,CUF,UNDP,TLP AND NCCR MAGEUZI just to mention a few.On the other hand structural adjustment programs have contributed much in building and extending the development in social services through the Economic recovery program (ERP). It has helped to rehabilitate the countries physical infrastructure, increase the output of food and export crops, increase capacity utilization in industry by allocating scarce foreign exchange to priority sector and firms.Structural adjustment programs not only contributed to the growth of national economy but in one way or another it has some negative consequences to the national economy such negative impacts such as removal of subsidies to farm inputs, devaluation of currency in relation to us dollars both of these lead to worsening the balance of payments of our country together with increasing the inflation in Tanzania.Lastly but not least structural adjustment programs lead to our country being a dependent to developed country, hence lead to increasing the government debt even today Tanzania is having a high rate of debt to many friendly countries these are the result of structural adjustment programs, not only developing countries are dependent to developed countries but also developed countries are dependent to developing countries for raw materials such as minerals, cotton, tea and other vivid resources.