I owe my soul to the company store
Post-colonialism
In most countries, the colonial occupiers found they were making a loss by the 1960s, with the cost of providing facilities now exceeding export gains. They wanted out, and they passed the structural losses on to newly independent governments.
After independence in the 1960s, African countries sought to counter the inequities of colonialism. The new governments set about providing education and health for their people, and building up manufacturing industries so they could escape the prohibitive costs of imports. These activities were universally approved, but aid money to do it was given as loans, not as grants. Exactly what the lenders were thinking is hard to fathom. Lending money to poor people and poor countries places them under an indefinite debt burden and can hardly ever be seen as “aid”.
Ghana’s Kwame Nkrumah refused to engage with the IMF from the beginning, describing aid as a “neocolonialist trap”. In his 1965 book, he wrote, “these agencies have the habit of forcing would-be borrowers to submit to various offensive conditions.”
The fault did not entirely sit with the Western world. Nkrumah for example built “white elephants” including factories and road infrastructure that could not yet be justified. Those countries embroiled in war or civil unrest were in a much worse situation, where too much of the national product was consumed in military equipment. However, even in this case a fair amount of conflict was stirred up by Western powers, such as the CIA-engineered coups in Ghana and Zaire in the 1960s, when the USA sought anti-communist allies.
In the early 1970s the situation was turning bad as oil purchase costs began to run higher. Then in the 1980s, interest rates shot through the roof. Most developing countries were soon paying out more in interest payments to past lenders than they were receiving in aid.
From 1972 to 2004, Kenya’s real per capita consumption expenditure actually fell, in concert with the aggregate across Eastern and Southern Africa. The GNI did not begin to rise until 2014.
Structural adjustment
Structural adjustment has been one of the most destructive things ever done to poor African countries trying to move ahead. From the late 1970s, a series of stringent economic mandates known as Structural Adjustment Packages (SAPs) were imposed by the International Monetary Fund (IMF) and the World Bank, They featured drastic cuts in public spending, privatisation, removal of tariffs and quotas, deregulation (removing price controls, marketing boards and state subsidies). Many of these same practices were also introduced in the rich countries in the 1990s under the general rubric of neoliberalism.
Rather than fostering self-sufficiency, SAPs shifted the continent from state-led industrialisation toward market-driven, export-oriented frameworks, worsening poverty, increasing food insecurity and eroding public services. Premature deindustrialization occurred everywhere before manufacturing sectors could develop. Widespread urban unemployment and wage drops followed; so foreign debtors could hopefully be repaid.
The collapse of the Soviets meant “the end of history”, in which a single economic ideology was dominant. The USA no longer had to compete with the USSR in courting African leaders and supporting dictators. At the same time, the G77 gained control of the United Nations. The USA could no longer count on the UN to rubberstamp its continual wars and economic interests. It held back its UN dues y=under Reagan and Bush, until the UN repealed its anti-Zionism resolution in 1991.
Some of the unrest that Jack saw in Buffalo Gals– the general strike in Nairobi on his first visit, and the student riot in 1995, were due to widespread layoffs and eroding pay and conditions. The Quito protest during his brief visit probably had the same cause.
In 1996, the World Bank under James Wolfensohn moved its focus from growth to poverty reduction, and the Bank moved from complex infrastructure programmes to the social sector. In 1999 the IMF moved to a Poverty Reduction and Growth facility in 1999, though its commitment was less convincing.
Despite structural adjustment, indebtedness did not reverse. By 2023 Africa’s total external debt was estimated at $1.5 trillion, with debt service payments of $163 billion annually. Sub-Saharan Africa received $59 billion gross in Official Development Assistance.
Informality
One of the most startling outcomes of rising population and the stripping of formal sector jobs was the growth of informality and the rush to the cities. Food insecurity increased as population rose and land was turned from subsistence farming to cash crops drove many people to the cities. There, they threw up makeshift dwellings and pursued informal sector survival strategies as best they could.
Informal settlements burgeoned all over the developing world, even in middle-income countries, as rapid unplanned urbanisation outpaced affordable housing construction. The Indicators Programme estimated that in 1993 550 million people lived in these informal settlements, while by 2023 the numbers had expanded to 1.1 billion. This population is expected to triple.
In Sub-Saharan Africa, about 80% of all jobs are informal, while up to 90% of new jobs are created in the informal economy. Women have been particularly badly affected, as most of those in formal employment are men. Yet some 45% of households are women-headed – mostly single mothers trying to support and educate children, like the women in Buffalo Bills.
References
Flood, J (2003). Neoliberalism and housing - how the world was ruined. May. http://www.muprivate.edu.au/fileadmin/SID/Advertisements/Seminar_Dr_Flood_handbill.pdf
UN-HABITAT (2003). The Challenge of Slums: Global Report on Human Settlements 2003. (London: Earthscan, 2003). Chapter 3. http://mirror.unhabitat.org/pmss/listItemDetails.aspx?publicationID=1156
Tricontinental (2025). Africa’s Faustian Bargain with the International Monetary Fund. https://thetricontinental.org/dossier-faustian-bargain-imf-africa/#:~:text=In%20this%20dossier%2C%20we%20will,bankruptcy%20in%20the%20Third%20World