Structural adjustment and public social spending

Edward A. Oyugui; David Kigozi; Oduor On'gwen.
KINGA (Kenya Indigenous Non-governmental Alliance); ADIN (African Development Initiative Network); ECONEWS.

In the last one decade and a half, Kenya has experimented with the World Bank and IMF prescriptions in structural adjustment programmes (SAPs) in order to reduce the role of the state in economic production and in regulating private economic activity (IBRD, 1994:35). This strategy ostensibly seeks «to enable people to develop efficient and productive businesses». While the Bretton Woods institutions have shouted at the top of their voices that SAPs are targeted at eradication of poverty, these policies' content and impact reveal the contrary.

As a matter of fact, eradication of poverty is not an objective of these programmes, and it is no surprise that they impact quite adversely on the poor.

The serious problems of under-development that this country sought to overcome using these strategies remain, with the levels of inequality and the incidence of absolute poverty increasing. In Kenya, poverty remains a major problem (GoK 1996).

The 1996 Policy Framework Paper thus estimates that at least ten million Kenyans are living below the poverty line (ibid). In its Social Dimensions of Development Paper the Kenya government seeks to explain this as a problem of strategy when it states that:

«Despite the progress made in structural adjustment and economic stabilisation programmes, poverty remains one of the greatest challenges in Kenya as 46% of Kenya's population is considered as still living below the poverty line» (GoK 1996a).

The economic growth model has arguably failed. It is for this reason that the concept of social development needs re-examination with a view to placing developmental efforts at the service of humanity and its environment. While basic needs approach has been useful, it is important that development interventions be economically feasible, socially acceptable, environmentally sound and technologically appropriate. We are therefore called upon to look at the concept of social development, especially as it lays emphasis on meeting basic needs -particularly food, better shelter, primary health care and water- as a primary objective of development strategy.

Social development strategies must be based on the need to overall and substantially improve the lives of all citizens and to eliminate inequities that do exist in our society.

It is for this reason that the government, in 1994, came up with the programme on Social Dimensions of Development (SDD). The overarching goal of this programme is alleviation of poverty and mitigation of the adverse impacts of Structural Adjustment programmes (SAPs). While the Government takes this programme as its blueprint for social development initiatives, not much is understood of the content and implementation strategies of this programme.

A brief look at the country's performance in the immediate pre- adjustment decade and the decade of adjustment presents these economic and social indices:

Table 1: Economic Indicators


Rate of Real GDP Growth

Rate of Inflation

Balance of Trade

Balance of payments (£ m)



























































































Source: GoK 1993.

From table 1 it can be seen that the real rate of growth in the pre-adjustment decade (1970-1979) averaged 4.89 percent while it averaged 3.85 percent in the 13 years of adjustment.

While inflation rate averaged 11.6 percent between 1971-1979, in the next decade it shot up to 13.68 but averaging 15.32 in the entire adjustment period. The overall terms of trade deteriorated significantly as can be seen from the table.

Important as they are, economic indicators are a bad measure of development. Social well being, environmental considerations as well as access to the society's wealth by a majority of the population are critical elements of the overall development package. The following statistics give us a pointer to the effects of adjustment programs on some of them.

Kenyans' daily calorie consumption per capita in 1980 was 2241 but had plummeted to 2109 by 1991 according to statistics from the African Development Bank, thanks to a decade of adjustment programs. In the period 1984-1988 as adjustment policies were yet to be introduced in the agricultural sector, the average annual growth of food production was 7.7 percent which dropped to -0.1 percent in the 1988-1992 period after the country got sector adjustment loans for agriculture. During the same period, per capita food production fell from 4.0 percent in the 1984-1988 period to -4.3 percent in the 1988-1992 period.

The trends in food production were of necessity reflected in food consumption. The growth in annual food consumption grew at marginal 0.7 percent in the 1988-1992 compared to an average growth of 6.2 percent in the preceding five year period. In per capita terms, food consumption grew at an annual rate of 6.2 in 1984-1988 only to dramatically fall to 2.6 percent in the 1988-1992 period.

In the period 1984-1988, the annual growth rate in food self- sufficiency ratio was 1.4 percent. This trend was reversed in the 1988-1992 period to register growth rate of 1.7 percent. The foregoing is explainable chiefly on the shift to production for export which is the linchpin of adjustment policies on agriculture while food production is de-emphasised. It is equally explainable on the diminished purchasing power of most people as well as removal of subsidies on agricultural inputs.

Cuts in government spending on such social services as education and health have had the effect of increasing the number of children who do not enrol at all as well as those who drop out of school system prematurely. According to Julia Mulaha, the director of Women's program at the National Council of Churches of Kenya (NCCK), it requires more than US$ 500 (KSh 28,0001) to keep a child in form one. Given the per capita GDP of US$ 280 and average earnings of KSh 2,000-3,500 a month, many cannot afford to pay for their children's education (The Tampa Tribune, 1994).

During the adjustment period, the rate of enrolment in both primary and secondary schools dropped quite significantly. While in the pre-adjustment decade 1972-1982 school enrolment grew at a rate of 8.2 percent, it slowed down to only 2.7 percent in the adjustment period 1982-1992. Secondary school enrolment witnessed a similar trend with enrolment growing at the rate of 9.1 percent in the decade 1972-1982 only to drop to 3.2 percent between 1982 and 1992.

This decline has begun to be witnessed in teacher training colleges where there had been a steady rise in enrolment from 8,683 in 1972 to 21,011 in 1990 but had declined to 19,154 in 1992 - a move the government itself attributes to SAPs (GoK 1993:30-31). In terms of government spending in education, there has been a marked decrease from 22.6 percent in 1986 to 18.7 percent in 1995 (World Bank: 1995 and GoK, 1996c).

While there is a dearth of authoritative information based on national child malnutrition, reliable data are obtainable from four Rural Child Nutrition Surveys of 1977, 1978/79, 1982 and 1987; household Welfare Monitoring and evaluation, completed in 1993; the North Eastern Drought Baseline study; and a few studies conducted in Nairobi and Mombasa. Using the universally accepted indicators for measuring the nutritional status of children below the age of five -namely height for age, weight for age and weight for height- the national percentages of children aged 1 to 4 whose growths were stunted were 24%, 27%, 28% and 22% respectively - with notable deteriorations in Nyanza and Western provinces.

The introduction of user fees in medical care has meant death for many poor people that do not have the wherewithal to pay for these services. Many people are therefore dying of diseases which are preventable and/or treatable. This presents a double-edged sword: people who are by large ignorant of their health needs are denied access to affordable education which means the enhancement of ignorance and the inability to afford medical fee means inability to effectively take part in production. The government spending in health has significantly dropped since the introduction of SAPs. While in 1980, 7.6 percent of the government's total expenditure went to health, this dropped to 6.5 in 1986 and 5.4 in 1992. It now stands at 5.2 per cent (World Bank 1995).

There are six major intervention sites in the SDD strategies. Among themm, pro-poor labour intensive public investment programmes and increased private sector investment in the provision of social services. The major component of the pro-poor labour intensive public investment is «the provision of basic social services infrastructure... to improve... human capital» (ibid.:20) while the basic social services considered are education, health, water, sanitation, roads, housing and shelter.

The struggle against poverty is essentially about empowerment of people living in poverty. This is not a definition to be found in our government's policy documents. However, the Kenya Government was party to and fully endorsed the Platform for Action that came out of the Fourth World Conference on Women held in Beijing, China, 1995. The «Platform» clearly states that «women's empowerment and their full participation on the basis of equality in all spheres of society, including participation in the decision-making process and access to power, are fundamental for the achievement of equality, development and peace» (Beijing 1995:13). If it is true for «half the humanity» disempowered because of their gender, it should also apply to one third of humanity disenfranchised by poverty.

In the words of the United Nations Secretary General Boutros Boutros-Ghali, social development should be understood in the broad sense implying progress towards higher living standards, greater equality of opportunity and securing certain basic human rights... enhancing the abilities of individuals to control their own lives through economic, social and political actions. But there has been this aberration of seeing poor people as victims to be pitied and given handouts. Other people have to generate labour-intensive investments that are pro them, they have to be «given» water, education and health services etc. It should be recognised that poor people are part of the solution to the problem of poverty. Primarily, social development is the responsibility of the government. However, this is no justification for the government to exclude the poor from decisions and operations that address poverty.

Of Kenya's total labour force of 9.2 million only about 1.37 million or 15 percent is in (the conventional) formal employment (World Bank 1995: 152). The rest is either in the popular sector -erroneously referred to as informal sector- or regarded as unemployed. This is yet another misnomer. In its strictest sense, unemployment as a concept pertains only to industrialised countries, where a worker, supported by social security benefits, can afford to spend time unemployed. In underdeveloped countries like ours, workers cannot afford that option. They always must work at anything they can do, no matter how unproductive, no matter how poorly paid (UNDP 1996: 46). The Government sees provision of menial jobs to the poor and the vulnerable as a way of fighting poverty. It identifies the construction of rural roads, agro-forestry, dams, irrigation and soil conservation, construction of rural schools and health centres, and residential housing (GoK 1996a: 21) as some of the areas that will provide pro-poor employment opportunities. A number of questions arise from the Government approach:

  • Is it the government policy under SDD to keep a reserve of unskilled labour to do menial jobs?
  • With the Government imposed minimum wage of about Ksh 2,090 against the prevailing price index, is the Government convinced that these jobs will address poverty? Do the people currently engaged in such employment live above the poverty line?
  • Does the Government intend to involve the private profit sector in these efforts? What would be the latter's role? How will it reconcile the quest for super-profits with social responsibility?
  • How does the Government intend to blend the urge to keep a reserve of unskilled labour with the commitment to provide functional education?

While employment creation is important in tackling widespread poverty, labour intensive approach is definitely not the answer.

Employment -conventional and in the popular sector- will definitely increase where there is qualitative and quantitative improvement in production of goods and services. It therefore calls upon NGOs to popularise simple, appropriate and socially acceptable technological innovations, fuse it with traditional coping mechanisms and base the same on available resources and real needs of the local communities. In all this, NGOs should simply play a facilitating role. The communities, using their traditional structures should be the central actors.

The Government expects the private sector to play a leading role in the delivery of the target social services. If our experience with private hospitals, private schools, private real estate developers is anything to go by, we can only wish the Government a lot of luck. Quest for profit does not go hand in hand with public responsibility.

Employment and economic opportunities

Kenya's employment problem has grown to enormous proportions in the 1990s - with unemployment and underemployment rampant both in the rural and urban areas. The country's labour force is currently estimated to be 11.5 million (1996) and with an annual growth rate of 4.1 % per year, it is forecast that it will be 14.6 million in the year 2000 and about 19.6 million in the year 2010. The development of productive employment, on the other hand, has not kept pace with the increased labour supply and since 1986, with the introduction of SAPs, the employment rate has slowed while the labour growth has accelerated, further aggravating the employment crisis. Significantly, women and youths in general constitute a higher proportion of the unemployment and underemployed especially in the rural areas. Currently more than 2 million people aged between 15-65 years or roughly 23.6 per cent are unemployed. Of the employed, males work 9.0 hours on average while females work 8.7 hours per day.

In addressing this most intractable problem, the Kenyan government has committed itself ( at least on paper) to a number of micro and macro economic policies aimed at creating employment opportunities and particularly targeting the poor and vulnerable groups. It is not possible to interpret the % expenditure in job market programmes but the policies currently in place generally emphasise encouraging environmentally sustainable, labour intensive growth via the private sector, encouraging rural development and urban employment; improvement in the productivity of labour; provision of skills and knowledge for the work force among others. Specifically, some of the measures in this regard include:

  • Promoting small-scale enterprises and small-scale agriculture. (The latter absorbs the largest share of the new entrants to the labour force.
  • For example, the Sessional Paper N-o 1 of 1994 on Recovery and Sustainable Development expects the sector to generate employment for more than 3.1 million people between 1996 and 2010 or about little less than half of all jobs created in that period).
  • Promoting urban informal sector growth. It is forecast that the sector will constitute 20-25 per cent of all employment in the year 2010.
  • Invigorating the private sector to provide more employment. The government has embarked upon a private enterprise led development strategy in which the sector is seen as the dominant driving force.
  • Equitable employment and empowerment of women programmes.
  • Reducing the population growth rate.

During the last four years, per capita income has declined from $340 in 1991 to $ 260 in 1994 (at current prices and exchange rates). Available data indicate that average monthly household income to urban employees is Ksh 6,438.3. The government is committed to a number of fiscal, monetary and other policies aimed at creating adequate access to income-earning opportunities. These include:

  • Broad-based improvements in per capita income in rural areas by raising small-holder yields of major food crops accompanied by crop diversification through improved research and extension as well as provision of adequate rural infrastructure.
  • Sharing benefits from economic growth among workers through higher wages, lower prices and higher returns on invested capital.
  • Instituting a progressive tax system.
  • Providing subsidies to those in low income.
  • Improving women's income earning opportunities through more gender focused agricultural research and extension activities.
  • Removal of price controls and import tariffs as well as austerity with regard to public spending to create more income to agricultural producers for the export market.

Kenya has no strong national social security system, not even an unemployment compensation scheme. Recent economic policies in regard to social security rendering aim at protecting the most vulnerable from the declines of welfare particularly in relation to basic health care, education, food and nutrition. The government is on paper committed to a broad range of reforms in the health and education sectors.

Measures aimed at creating access to resources include:

  • Improved and adequate infrastructure to enable individuals to efficiently produce and market output.
  • Vocational training for productive self-employment and income generation for youth and women.
  • Improving technologies which make best use of available resources.
  • Several economic policies have been put in place to address the issues of access to markets. These include:
  • Market liberalisation, especially deregulation of domestic market for agricultural commodities.
  • Divestiture of public enterprises which hitherto dealt with marketing and processing of agricultural commodities.
  • Reduction of unnecessarily high costs of marketing both inputs and outputs.

    For access to credit, there are commitments to:

  • Expansion of credit programmes.
  • Creation of micro-enterprise credit schemes.
  • Creation of special lines of credit to women income generating activities.
  • Improving women's access to productive resources such as agricultural inputs and credit.

Over the years, income distribution in Kenya has remained inequitable. There are glaring income gaps between and among rural and urban areas, wage differentials between sectors and earnings between different levels of education, etc.

Recent change such as the restructuring of the fiscal system from direct taxation to indirect taxation, subsidies to sectors of society adversely affected by SAPs e.g. bursary schemes to poor students in general and female ones in particular, etc., -have as their stated aims the reduction of social disparities.

However, the disparities are still great and will remain for a long time to come. For example, the distribution of benefits from better health and education in the previous years remain generally uneven and is largely related to income and locational differences.

What should be emphasised is that the foregoing reflect governmental commitment at policy level. Implementation is another story. Several years of government economic mismanagement, inefficiencies, inadequate supportive environment for efficient operation of policies, among other factors lead to scepticism. The policies summarised above are soundly-based, but sustained and across - the board implementation will be crucial if these are to be for the benefit of the poor, socially vulnerable or discriminated sectors.

While there are no glaring discrimination against women in the country's labour legislation, a government task force on laws relating to women is currently in operation and aims at reviewing all laws as they affect women. Also, there are no specific figures on the percentage of women in trade union governing bodies but the figure is undoubtedly very insignificant as women are generally not represented in these bodies.

Citizen participation

Kenya's economic model is a mixed market-oriented economy which is increasingly being liberalised and privatised. The effect of this has been the increasing domination of the economy by multinationals and foreign capital. With the introduction of the World Bank and IMF-driven Structural Adjustment Programmes (SAPs) in 1979, the economy has steadily moved from a public sector to a being dominated by market forces.

The majority of the citizens are basically small-scale agricultural farmers. However, the manufacturing and construction sectors are also growing.

Participation of marginalised sectors in the economy has been encouraged by government and donor support of the «Jua Kali» sector, which is a large emerging sector of indigenous artisans or small manufacturers.

Before 1992, Kenya was a one - party state and elections were conducted within that system. National elections were held in 1963, 1969, 1974, 1979, 1983 and 1992. However during the single and the multi-party elections of 1992, the civil society complained of electoral irregularities, distortions and undemocratic manipulations casting doubts on their fairness and legitimacy. The general elections of 1992 were characterised by full adult suffrage except for a sizeable electorate (approximately 20%) who were disenfranchised because of lack of valid national identity cards. Local and civic elections have always occurred on a fairly regular and periodic basis.

During the period 1990-1995, religious organisations, opposition political parties, politically - oriented NGOs and individuals pressurised for more democratisation and constitutional reforms. They also constituted the nucleus of resistance to harassment and intimidation of perceived government critics and erosion of individual human rights and freedoms. Among these were the National Council of Churches of Kenya (NCCK), the Church of the Province of Kenya (CPK), the Catholic Church, the Kenya Human Rights Commission, the Law Society of Kenya, Green Belt Movement and the Public Law Institute. Also in this group were the Centre for Law and Research International (CLARION) and the Mwangaza Trust which were eventually banned. CLARION has since been unbanned. However, opposition alliance is itself very fragmented. The major opposition political parties are FORD-Kenya, FORD-Asili, Democratic Party and the Kenya Social Congress. They have alternative political and economic frameworks and strategies but each is racked by internal divisions and inability to form sustainable strategic linkages with other parties.

Attempt to change or influence public awareness has mainly been the domain of a few religious organisations and NGOs working through public seminars, conferences, the print media and civic education campaigns.

The Kenyan Constitution provides for and guarantees basic constitutional, political and democratic rights. However, these are eroded by various by-laws, sub-regulations and parliamentary acts such as the Public Order and Security Act and the Chief's Act. Agitation for free democratic space continues even today.

Outside parliament and the electoral process, there is no formal mechanism for consulting citizens nor is it immediately foreseeable.

Various NGOs are engaged in advocacy and awareness-building to secure more participation of women in all sectors and for the removal of all traces of gender discrimination.

Reform of the Judiciary does not seem to be a major government priority but it is being tackled slowly by parliament and the Judicial Reform Commission. Judicial appointment is not based on democratic principles and there is no security of tenure for the office of the Chief Justice.

Plans for the eradication of poverty

In 1996, the Kenya Government released a policy document that outlines the broad conceptual framework and policy strategy for the implementation of the Social Dimensions for Development(SDD). The document is entitled «Social Dimensions of Development».

However, though the document was released in 1996, the process started in October 1994 as a high-level government initiative.

The first phase of the SDD programme of action envisaged an initial three year period (1996/7-1998/9). The total budget estimates for the three years is US $ 1024 million.

The SDD programme was initiated as part of the targeted poverty interventions as a response to the adverse effects of the implementation of SAPs and economic stabilisation programmes on the poor and the most vulnerable in society.

Within the SDD programme framework the Government recognises that the fight against poverty must be waged concertedly through the efforts of different stakeholders such as NGOs, private sector, international partners and local communities.

This has necessitated a review of Kenya's macro-economic policy orientation with respect to poverty reduction. Emphasis has shifted from focusing primarily on economic growth per sector to the redistribution of growth benefits including provision of basic needs.

The long-term policy thrust is to fight poverty through sustained economic growth with the private sector being the engine for growth and employment generation. The role of Government would largely remain that of establishing and sustaining an enabling policy environment for private initiative. A key priority of the SDD programme is thus to sharpen the focus and enhance the priority rating of poverty reduction in Kenya's overall development strategy and to ensure efficiency and effectiveness in the delivery of services to the intended beneficiaries.

Among the roles which NGOs are expected to play are the following: rendering advisory services to other stakeholders, acting as watchdogs on behalf of the communities, providing linkages through which the voluntary sector can interact with other stakeholders, mobilising and utilising resources, implementing, monitoring and evaluating projects. The key programme areas targeted within the SDD programme framework include: delivery of basic social services and infrastructure; women and children, food and nutrition and population programmes; promotion of employment creation and small scale enterprises in industry, agriculture and service sectors; environment and resource conservation; social mobilisation and sensitisation; and promotion of human rights, good governance, peace and conflict resolution and rehabilitation and re-integration of displaced persons.

The participation of civil society and social organisations in the SDD process has so far been limited but there are plans and efforts to widen its scope.

Since the inception of the SDD initiatives in 1994 the NGO sector has been considered as a key stakeholder in the SDD programme. The Chairman of the National Council of NGOs is the representative of the NGO sector at the National SDD Steering Committee.

The NGO sector is also making efforts to gain a wider participation and understanding of the SDD programme through intra-sector conferences and seminars and lobby / policy advocacy with relevant organs of government.

Outside the NGO sector, there has not been any systematic and co-ordinated process of involvement or input from other sectors of civil society. Political parties have stopped only at a general criticism of corruption and of the mismanagement of the economy.

However, it has been acknowledged that the participants will include the following stakeholders, some of whom are already involved on their own in poverty alleviation activities:

  • The Government (ministries and parastatals)
  • Religious organisations
  • Local authorities
  • NGOs and CBOs (Community Based Organisations)
  • Private Sector
  • Media
  • Trade Unions
  • Beneficiaries

By 1996, the SDD programme is already staggeringly on course. The progress is slow. Apart from the cumbersome bureaucratic machinery, lack of adequate funds could be a contributory factor. The programme is being implemented through existing state structures but the NGO sector has proposed new or modified structures for implementation. The government has agreed to consider alternative delivery systems. Thus another system of implementational machinery may still have to be defined and established.

As already outlined US $ 1024 million will be required for the three years (first phase). These funds will probably be administered from a National Anti-Poverty Fund. NGO-Government discussions on the viability of such a fund are still going on. Funds will come from the government, bilateral and multilateral donors. Contributions will also come from the general public and the private sector.

The SDD programme acknowledges the fundamental role played by women in economic and social development. To quote the section on women and children in development (p.21): «SDD programmes and policies will support the full integration of women into the development process as both agents and collaborators. This will largely depend on their equitable access to land, credit, education, training and health». Programmes that have been identified for the promotion of women are as follows:

  • The Kenya Expanded Programme on Immunisation (KEPI)
  • Supplementary feeding and the nutrition support programmes
  • Education and literacy programmes for women
  • Equitable employment and empowerment of women programmes
  • Participatory population and welfare management programmes


ADB (African Development Bank),1994: Selected Statistics on Regional Member countries, Abidjan.

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Bello, W with Shea Cunningham and Bill Rau, 1994: Dark Victory: The United States, Structural Adjustment and Global Poverty, Pluto Press, London.

Bijlmakers, L.; M. Bassett and D. Sanders, 1995: «Health and Structural Adjustment in Rural and urban Settings in Zimbabwe, Some Preliminary Findings» in Peter Gibbon (ed) Structural Adjustment and the working Poor in Zimbabwe, Nordiska Afrikainstitutet, Uppsala.

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The Government's commitment to availing universal access to quality education to all citizens and the implementation options are well documented. The Kenya Country Paper presented at the 1995 Social Summit echoes the same commitment. In the process of fulfilling this mission, some critical areas have been identified. The Country paper presented at the Summit identified the critical areas as finance, lack of alternative basic education programmes for youths out of school, inequitable access and lower quality education for the vulnerable groups in society and low enrolment and completion rates of female students at all levels of education.

Available statistical data show tremendous growth and development of education in terms of expansion of numbers of educational institutions while enrolment levels show a significant drop. The significant increase of the number of schools from pre-primary to secondary schools is illustrated in the table below.

Number of educational institutions, 1990-1994

























Source: Economic Survey, 1995


1 Ksh: Kenya shilling, Kenya currency unit.

KINGA is a Social Development network, comprising several NGOS whose mandates address Social Development in general and poverty in particular; ADIN is a regional platform which co-ordinates the activities of ca. 10 regional NGOs; ECONEWS is an environmental organisation, part of whose mandate is to monitor de WORLD BANK activities in Africa.