ActionAid’s report ‘Fifty Years of Failure: the IMF, Debt and Austerity in Africa’ is based on new research and powerful personal testimonies from across 10 African countries. It is timed to coincide with the first IMF / World Bank Annual meeting to be held in Africa for 50 years. The report documents how the IMF imposes austerity policies, undermining health, education and wider development across the continent. Rather than seek systemic solutions to the mounting debt crisis in Africa, and rather than exploring obvious alternatives such as progressive tax reforms, the IMF continues to enforce cuts to public spending that hurt women and disadvantaged groups most acutely.
This new research covers Ghana, Kenya, Malawi, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe. And shows that 8 out of 10 countries have recently been advised to cut or freeze public sector wage bills. Indeed ,all ten countries were effectively advised by the IMF to target spending on public sector wage bills that would leave them spending under the global average on frontline workers in health, education and other sectors. This has resulted in recruitment freezes, even in countries with acute shortages of teachers and health workers, salary freezes despite rising living costs, and even the firing of frontline workers in some countries. Women have been most affected as they make up the majority of frontline public sector workers and tend to be on the most vulnerable employment contracts.
Despite following the IMF’s advice for decades, 19 of Africa’s 35 low-income countries are in debt distress or facing a high risk of debt distress. Most countries are now facing an acute cost of living crisis and rising debts, largely owing to external factors such as Covid, the war in Ukraine and rising global interest rates, over which they have had no control. The amount African governments are forced to spend on interest payments is often higher than spending on either education or health. Yet there is no serious effort being made to find a systemic solution to the debt crisis. Countries have to negotiate on a one-by-one basis as if the fault is all theirs and the people who end up paying the price tend to be those who have the least.
In Fifty Years of Failure ActionAid shows that there are clear alternatives for transforming the public finances of countries across Africa, especially through ambitious and progressive tax reforms that target the wealthiest individuals and companies. The IMF’s own staff analysis suggests that the best way to finance the Sustainable Development Goals would be for countries to increase their tax to GDP ratios by five percentage points. However, the IMF never offer this advice in practice at country level and instead advise austerity policies, cutting public spending rather than raising more revenue. When the IMF do offer advice on taxes it is usually to recommend regressive taxes that place the burden on those least able to pay.
Matters are made worse by the fact that African countries still have very little say in decision-making in the World Bank and the IMF with less than 10% vote share in the IMF board - and the 46 countries in sub-Saharan Africa are represented by only two executive directors. Indeed, the fundamental voting structure at the IMF dates back to before most African countries were independent.
This report builds on a cycle of previous reports including Who Cares for the Future(2020), The Pandemic and the Public Sector (2020), The Public Versus Austerity (2021) and The Care Contradiction - The IMF, Gender and Austerity (2022). Each of these provided compelling evidence of the need for the IMF and African governments to change course and as the IMF meetings happen on African spoil for the first time in fifty years, now must be the time for action.
In the light of this new evidence, the report calls for action from the IMF and from African governments:
- We call for the IMF to definitively move away from the failed neoliberal economic model and stop imposing austerity policies and constraints to public sector wage bills. Instead, the IMF should support debt cancellation and ambitious and progressive tax reforms nationally and internationally
- We call for African governments to coordinate collectively for a resolution to debt crises, based on radical renegotiation or debt cancellation, including through advancing this case in climate negotiations. It is time for African governments to pursue alternative economic paths that place quality public services, social and economic justice at the heart of building sustainable and truly sovereign states.
Download the full report below. You can also download a political statement made by ActionAid’s country Directors from across Africa on the eve of the IMF / World Bank meetings in Marrakech.