The paper looks into the plight of Sub Saharan African (SSA) countries despite following IMF-World bank prescribed policies which were meant to rescue them from their miseries.

For SSA, the new generation policies espoused by the “Washington Consensus” – now involving “getting prices right”, “getting institutions right” and “good governance” – are still routinely offered as advice, if not imposed as conditionalities. Meanwhile, under the Heavily Indebted Poor Countries (HIPC) initiative, only part of total debt is eligible for relief and, even then, only for some indebted countries. Furthermore, despite some recent acceleration in implementation, HIPC progress remains slow. As of June 2006, some ten years after the launch of the HIPC initiative, only 15 of the 32 African countries included in the HIPC list of 38, had reached completion.

Over the last two decades, real wages have fallen and income inequality has risen as adjustment policies have hollowed out the nascent middle class in SSA. It is very difficult to reduce poverty through redistribution when average income levels are low, as in SSA. Hence, sustained poverty reduction can only proceed on the basis of rapid and sustained growth and job creation. However, the link between structural adjustment recommended by the Bretton Woods institutions (BWIs) and economic growth is generally weak, even when positive.

The paper concludes that in view of the pervasive influence of erroneous and harmful policy advice and conditionalities, it has become crucial to increase ‘policy space’ for governments to be able to pursue policies for development. Countries need to be able to choose or design their own development strategies as well as to develop and implement more appropriate development policies. Besides enhancing policy space, it is also crucial to be able to increase resources for development. The removal of the huge debt overhangs of the poorest countries through debt relief is an important step in this direction. Three decades of economic stagnation, contraction and increased poverty have also taken a huge toll on the continent’s economic, social and political fabric, and pro-active efforts are urgently required in order to build new capacities and capabilities for development.