This chapter reviews the distributional impact of agricultural sector reforms in Africa. African governments have intervened in the agricultural sector for decades, but generous pricing policies and operational inefficiencies have often necessitated large budgetary transfers to parastatals. Over the past 20 years many African countries attempted to liberalize their agricultural sector, with mixed success. This chapter describes the forms of government intervention in agricultural markets, the liberalizing reforms undertaken in the past 20 years, the channels by which these reforms affected stakeholders, and the outcomes of the reforms on poor households.100
The poverty and social implications of macroeconomic and structural reform policies are increasingly being recognized in IMF-supported programs and IMF policy advice. In 1999, the IMF replaced the Enhanced Structural Adjustment Facility, its assistance program for supporting low-income countries, with the Poverty Reduction and Growth Facility (PRGF), which explicitly gives poverty alleviation more prominence in its operations. In addition to its focus on promoting macroeconomic stability and growth, the PRGF program focuses on the relationship between macroeconomic policies and their poverty implications.
Trade liberalization and devaluation (TLD) policies have always been present in many IMF-supported programs. Tariffs, quotas, and other trade restrictions reduce the level of trade and tend to foster the development of import substitute industries that often fail to attain the degree of efficiency and flexibility shown by firms continuously exposed to international competition.66 Programs tend to promote the removal of trade restrictions in order to improve resource allocation and growth outcomes in the medium term. Devaluation policies in IMF programs tend to play a shorter-term adjustment role instead. The objective is in most cases to restore external viability by switching expenditures from the nontradables sector to the tradables sector.