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Structural adjustment - pro or anti-poor?

Zimbabwe is one of the ideological battlegrounds for proponents and opponents of structural adjustment. But what has been the impact of adjustment on rural life? In the 1990s did conditions improve or worsen for critical parts of the Zimbabwean economy - the informal sector and Communal Area households?

A report from the University of Oxford’s Centre for the Study of African Economies examines data from over 200 households in 30 villages in the Shindi Ward of Chivi Communal Area, south-eastern Zimbabwe. Interpretation of the data is complicated by the fact that communities are dependent on rain-fed agriculture and income variation over time occurs due to rainfall and other climatic variations. Household welfare was measured by income, divided into four categories: cash income, gifts, own produced goods, and the value of environmental utilisation.

Shindi is typical of Zimbabwe’s Communal Areas. Electricity, piped water and sealed roads are non-existent. High transaction costs limit engagement with higher income markets. Farming is insufficient for subsistence and so remittances play a vital role in the local economy. Those with access to water are privileged in this drought-prone environment.

The report finds no hard evidence that structural adjustment had a detrimental effect on household incomes or on the high levels of poverty in Shindi. Also, recorded increases in inequality were caused not by adjustment but by the longer-term impacts of the terrible drought of 1991/92. Data for the period 1993-1997 show that:

There were no significant changes in average real incomes, so while poverty levels remained extremely high they did not worsen.
Inequality did get worse - for the top quintile the median real total income rose by 18 percent, for the bottom quintile it dropped by 13 percent.
However, this rise in inequality is most strongly linked to the long run changes in cattle ownership that occurred following the devastating 1991-1992 drought which killed 80 percent of Shindi cattle, rather than the adjustment programme.
A 42 percent rise in income from remittances is at odds with the conventional assumption that structural adjustment resulted in substantial urban job losses and subsequent decline in urban-rural income flows.
Poverty in Shindi remains fundamentally linked to a lack of productive land and a lack of jobs in the wider economy.
The value of wild foods, firewood and livestock make such use of the environment the single most important source of income for poor households –the commons plays a vital role in sustaining the livelihoods of the 'poorest of the poor'.

A few households had succeeded in raising their standards of living. But strikingly these all required strong support from the public sector, whether through state support for agriculture, jobs in the public sector, or government contracts. All public buildings built in Shindi since independence, for example, have been built by one contractor.

The policy implications suggest that:

The connection between rural private capital accumulation and the public sector indicates the dynamic impact government interventions could have in rural areas.
Given the failure of private markets in isolated areas such as Shindi due to high transaction costs and entry barriers, rural entrepreneurs will only emerge with supportive government policies.

Source(s):
‘Incomes and poverty in rural Zimbabwe during adjustment: The case of Shindi Ward, Chivi Communal Area, 1993/94 to 1996/97’, Centre for the Study of African Economies, University of Oxford by William Cavendish March 1999 Full document.

Funded by: UK Department for International Development (Southern Africa section)

id21 Research Highlight: 10 September 2001

Further Information:
William Cavendish
Department for Education and Skills
Sanctuary Buildings
Great Smith Street
London SW1P 3BT
UK

Tel: +44 (0)20 7925 6530
Contact the contributor: will.cavendish@dfes.gsi.gov.uk

Department for Education and Skills, UK

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