INTRODUCTION OF STRUCTURAL ADJUSTMENT PROGRAMS (SAP’S)
Structural adjustment program (SAP)
This refers to the economic policies introduced by developed countries to the less economic developed countries (LEDCs) under the influence of international monetary fund (IMF) and world bank (WB).
The major aim of this program was to help the less developed countries to get rid from poverty.
REASONS/FACTORS FOR THE INTRODUCED OF SAPS IN TANZANIA
Qn: Explain six motives (reasons) for introduction SAPs to the less developed countries like Tanzania.
1. Economic crisis
The worldwide oil shocks of 1973 led to the back sliding of the economies of developing countries particularly Tanzania as this was accelerated by poor economic policies.
2. Decline of gross domestic products
Per capital income and Gross Domdec Product (G.D.P) fell rapidly to the most of sub-Sahara African countries. Hence, the SAPs emerged out of the western financiers’ tune to the poor countries as they requested for loan in order to expand their economy.
3. The increase of external debts
The increase of external debts has made many African countries to fail to improve their economic growth. For example, around 1987’s the external debt in Tanzania was reached about U$D 129 billion. Hence, they were to fulfill these conditional ties in order to get loan.
4. Poor provision of social services
The government of Tanzania was adopted SAP’s so as to solve the problem of poor provision of social services. Since due to inadequate fund the government was accused of being blotted with too many people doing very little work.
Hence, failure of government to provide services to the citizens and over burdened structural systems led to introduction of SAPs by donor countries.
5. Fall of export earning
Normally by the 1986 and 1987, the Tanzania export product was decline to about 40% which resulted in to decline of economy, hence let to introduction of SAPs.
6. The collapse of socialism (Ujamaa)
Normally by the 1992 Tanzania shifted from socialism to capitalism due to serious weakness of socialism specifically after failure to stabilize national economy, which resulted in to introduction of structural adjustment program (SAPs).
7. Existence of dependent economy
Tanzania like other developing countries its economy is largely depended from the developed countries. Hence most economic sectors like transportation sectors, industrial sector, agriculture sectors are not performing well, hence this has led to the introduction of structural adjustment program (SAPs).
8. Pressure from the developed countries
Normally the introduction of structural adjustment program (SAPs) in most African countries particularly Tanzania was largely motivated by the developed countries like USA, Britain and France under the influence of international monetary fund (IMF) and world Bank (WB) as the main agencies. These countries posed strictly conditions to the poor countries that, one one condition for finance assistance should accept structural adjustment program.
OBJECTIVES OF SAPs IN TANZANIA
1. To reduce trade restrictions: The developed countries aimed at removing all strictly conditions over trade.
2. To allows privatization to all public sectors: so as to improve the national gross products (G.N.P) through employment and improve the growth of per capital income to people found in less developed countries (LDCs).
3. To reforms agricultural sector: By means of growing more cash crops than food crops, through making Africans and other third world countries to adopt new agriculture methods.
4. To reduces poverty : by improving the living standard of the people found in Tanzania through improving gross national (G.N.P).
5. To improves public investments programs: by encouraging investors both from within the country and from developed countries.
6. To improves national economy: by promoting clear linkage of different sectors of the economy found in the in Tanzania.
PRINCIPLES/ CONDITIONS/ FEATURES OF SAP’S IN TANZANIA
QN: Highlight six conditions of SAP to the less developed countries like Tanzania.
1. To improves growing of cash crops: Normally in agriculture the less developed countries were forced to grow much cash crops. Normally the international monetary fund (IMF) and world Bank (WB) force the less developed countries (LDCs) to remove subsides on agricultural sector and growing much cash crops.
2. To introduce cost sharing in social services: whereby governments of less developed countries (LDCs) are forced to withdraw from providing free social services like free-education, health care, electricity, water supply.
3. Devaluation of local currencies: The less developed countries (LDCs) are forced to devalue their currencies in order to accept by the capitalist in their trade transactions in the world market.
4. To allow privatization in pupblic sectors: The less developed countries (LDCs) are forced to privatize their financial sector, industry, mining and reforming other sectors like trade and agriculture sectors.
5. Reduction of workers: majority of the civil servant face with the problem of unemployment in the less developed countries due to privatization of public sectors.
6. Elimination of trade barriers: All trade restrictions, ariffs and custom duties has to be removed in the less developed countries.
7. Introduction of western democracy: which based on liberal democracy which insists under multiparty and introduction of puppet leaders.
8. Introduction of trade liberalization. This is done by forcing the governments of the Less Developed Countries (LDCs) to remove the price commission of raw materials and manufactured goods in market to be determined by the law of supply and demand.
9. Destruction of local culture: By forcing less developed countries (LDCs) to practice their foreign culture which always destroy the culture of the people found in the less developed countries (LDCs).
IMPORTANCE/ ADVANTAGES/ ACHIEVEMENT OF SAP’S IN TANZANIA
QN: Critical assess six achievement of structural adjustment program (SAPs) to the less developed countries like Tanzania.
1. It has raised living standard in the country
Through privatization of public sectors SAP has created many employment opportunities.
2. It leads to the creation of employment opportunities to the people
Sectors which were privatized by the governments of the less developed countries (LDCs).
3. It has led to increase in agriculture production
Agricultural products and agricultural consumption is some how improved in the country.
4. It has led to increase of export of raw materials to the developed countries
Due to free trade by the mid of 1985 up to date Tanzania is enjoying free trade because of having access to free movement of goods and services in the world.
5. It has increased the rate of investment
The rate of investment in economic sectors like infrastructure network, investment in industry, agriculture, and financial institutions etc. which create the employment opportunity in the country has improved.
6. It has improved different economic sectors
Such industries, mining, and trade after these sectors privatized to the foreign investors.
7. It has improved democratic practice in the country
Normally SAP has increased the rate of democracy through free and fair election, multiparty system and observation of human rights.
WEAKNESS OF SAP IN TANZANIA
Qn: Assess six shortcomings of SAPs to the third world countries.
1. It has failed to eradicate poverty problem to the poor countries
It normally failed to fulfill some predetermined objectives and principles to the developing countries like Tanzania specifically solving poverty problem instead accelerated the rate of poverty in rural areas. This has mainly been due to the fall of agricultural sector which is the backbone of economy of most developing countries.
2. It has failed to diversify economy to the poor countries
The diversification of economy is still low due to low per capital earnings which resulted in to poor economy.
3. Existence of low capital investment
The export of capital and investment capital ratio is still low in developing countries especially in the sub-Sahara African countries. This is because the conditionalities issued by the IMF and World Bank to the developing countries affect the capacity of investing the imported capital.
4. The industrial and agricultural sectors still poor
Agricultural and industrial products are still not satisfactory due to the improper investment and inadequate technology.
5. It has failed to end debt crisis to the poor countries
Although some how debts is regulated by still is there in the developing countries.
6. Existence of low level of technology
Science and technology in the developing countries like Tanzania still big problem up to date.
7. Existence of unemployment
The program has failed to solve the problem of unemployment to the less economic developed countries.
NEGATIVE IMPACTS OF SAPs IN TANZANIA
Qn: Explain six weakness/negative impacts of SAPs to the less developed countries like Tanzania.
1. Increase in poverty
Normally the program instead of solving the poverty problem but was intensified due to intensive exploitation of goods through unequal exchange in the world markets.
2. It contributed to the emergence of corruption
The structural adjustment program contributed to the increase in corruption especially in privatized sectors.
3. Cultural interference
The structural adjustment program contributed to the destruction of local culture in Tanzania and other third world countries adopted this program due to high influence of developed nations.
4. It brought cost sharing
The program resulted in to introduction of cost sharing in social services in the less developed countries, since the poor countries were forced to stop provision of free social services. Therefore social services were to be provided through payment of cost. Example: Education, electricity, water.
5. It led to mass unemployment
Because of the external investors tend to invest to public sectors which resulted in to reduction of workers, hence cause many people to remain jobless.
6. Increase in prices of goods and services
Due to privatization policy where most foreign investors come to invest to the poor countries hence decide to fix the prices of goods and services and which in reality is so expensive.
7. Emergence of political instability to the poor countries
Normally the structural adjustment program (SAP) contributed occurance of many political instabilities to less developed countries Du to high imperialist supports through encouraging democratization.
8. Economic stagnation
Due to high conditions and exploitation imposed by developed countries.
9. Increase in debt crises to the third world countries
The program has increased debt crisis to the poor countries due to continues accepting loans from the developed countries.
10. Decline of local technology
The structural adjustment program (SAP) has contributed to decline of local technology due to over depending on external assistance and foreign experts like engineers, doctors.
