Exploring the Genesis, Nature, Etymology and Efficacy of Austerity Policies: Drawing Lessons for Austerity Policy Initiatives in Africa

Abstract

This article presents a diagnosis of the concept of austerity and its evolution as a policy tool in public affairs in a bid to sniff out sustainable factors for the implementation of austerity policies in Africa and beyond. To this end, experiences in Greece, the three European Baltics, Portugal, Italy, Argentina and Spain were reviewed to draw lessons for Zimbabwe and Africa in general. The term austerity, whose intellectual roots lie in neo-classical school of economics, denotes economy, frugality, thriftiness, stinginess, prudence in the use of resources by an individual, corporate or nation. Austerity becomes a national policy where governments create restrictive and difficult economic conditions in order to revive economies in crises by cutting public expenditure, debt and deficits. In recent years, austerity policies have become the dominant global wisdom for solving economic and fiscal stress. Cuts in social welfare budgetary allocations, cuts and freezing of posts in the public service and state enterprises—generally characterise countries under austerity policies. For austerity policies to be effective, the article proposes an interplay of factors such as strong political will, buy-in and ownership of the policy by business, labour and civic society; bailouts to support the reform; strong regulatory frameworks for the supervision and surveillance of the banking and financial services sector towards market stability; institutional policy consistency and coherence, and embedded institutional fiscal discipline, among others.