IMF Structural Adjustment Policies and Their Consequences in Malawi

Here is a brief review of Chapter 1 of "A Democracy of Chameleons".

The 1960s and 70s in Malawi saw decent levels of economic growth. By following the historical path introduced by the UK, Malawi had various levels of operative institutions and a strong central government led by the President for Life Banda, which held control of all of society. In some ways, the one-party nation resembled the politics of the Soviet Union: harsh authoritarian power structure, one pary state, idolization of one man, protectionist policies that included price controls and incentives to key industries.
The biggest market in Malawi was agriculture. Economic policy was centered around the Agricultural Development and Marketing Corporation (ADMARC) which provided incentives for farming. However incentives could do little to prevent surges of drought in the 1980s and 90s. Coupled with oil shocks in the late 70s, the sharp declines in world trade, the rise in interest rates on international financial markets, and the influx of refugees from war-torn Mozambique made a bad situation even worse (Chinsinga 2001).
The situation was so bad, that Malawi was forced to be the first country to adopt World Bank and IMF Structural Adjustment Programs (SAPs) in 1981. SAPs are programs the IMF and World Bank provide as non-negotiable in exchange for emergency loans. Typically these programs are based upon Washington Consensus, that is the liberalization and privatization of a country's economy regardless of the negative short term (or long term for that matter) effects it will have. One must remember that the US was not built in a day, and in fact became the most powerful nation in the world because it profited so well off of slavery and protectionism for 400 hundred years. Therefore, to assume developing countries can pick up the same liberal market policies the US has without first catching up to a legitimate starting point is to disregard empirical evidence to the contrary. One may produce post WWII Japan or Germany as examples of countries that became like the US, but these are hardly applicable to the case of Malawi. Malawi lacked and still lacks fundamental infrastructure, low levels of industrialization, high education standards, feasible means of transportation - all things Japan and Germany had prior to and after WWII. With this in mind, we can understand why Malawi would have a difficult time, even if it was provided with a Marshall Plan.
Effects of the SAPs have been devastating to Malawi:
SAPs have laid heavy social burdens on the vulnerable segments of society. Governemnt expenditure as a result of SAPs declined from 36 to 29% of GDP and debt-servicing nearly doubled (Chinsinga 2001). Even as Malawi became poorer, more money was pushed to paying off debt. How does this promote development?
ADMARC markets began to close in the 1990s as UDF came into power. Closure of many ADMARC markets has led to food insecurity for many poor households that were reliant upon it (Chinsinga 2001). An interesting aside is that most UDF party members were involved in commerce, as opposed to agriculture. We can see how their control over government aided the quick implementation of IMF policies.
Because of SAPs growth has nowhere near approached that of the 1970s and has been erratic. The main coping strategies for people vulnerable to the harsh economy has been reliance upon family and friends for support (Chinsinga 2001).