When times are tough, politicians reach for metaphors. In Ethiopia, which floated its currency and entered a $3.4bn IMF programme on July 29th, the prime minister Abiy Ahmed (pictured) compared reform to “the pain of surgery, endured for healing”. In Nigeria Bola Tinubu, the president, has defended two devaluations, saying the old system was “a noose around the economic jugular of our nation”. Both want to head towards orthodox policy, however much it hurts.

Lots of other African governments are tightening their belts. Most were already becoming more conventional in their economic policy. Nigeria and Ethiopia had previously stood out, and not just because they are the most populous countries on the continent. Each had spurned advice from the IMF in favour of a more interventionist path. Policymakers in both countries managed the exchange rate, restricted imports and directed the flow of credit.

In Ethiopia, especially, the turn to orthodoxy represents an important shift. Mamo Mihretu, the country’s central-bank governor, argues that the ongoing reforms, which also include plans to open up the banking sector and redesign monetary policy, are “a transformative moment in Ethiopia’s economic journey”, comparable to India’s decision to unleash markets in 1991. That is overstating the extent of the reform, but hints at its ambition.

Although the revolutionaries who took power in Ethiopia in 1991 drifted from their Marxist roots, they never abandoned the idea that development should be led by the state. They controlled the financial system in order to funnel savings into investment projects, protected banking and telecoms from foreign competition and opened industrial parks in pursuit of export-led growth. Nigeria’s approach was messier and inclined towards import substitution, using tariffs and import bans to nurture local production. Muhammadu Buhari, president from 2015 to 2023, turned the central bank into a financier for all sorts of ideas, providing cheap loans for everything from chicken-rearing to textiles.

Despite their differences, officials in both countries shared a belief that—in the words of Meles Zenawi, Ethiopia’s prime minister for nearly two decades—“the neoliberal paradigm is a dead end.” By that, he meant the kind of market-oriented reforms that many African countries had adopted from the 1980s onwards. Ethiopian leaders instead believed that an activist state was required in order to marshal the development of capitalism and raise productivity, as it had in parts of East Asia.

The first sign of trouble was strain on the current account. Both countries had propped up their currencies. By changing relative prices, overvaluation acts as a subsidy to imports and a tax on exports (hence why Asian industrialisers often undervalued instead). But officials argued devaluation would be little help to local manufacturers, who rely on imported machines and materials. They worried inflation would ensue. And so they defended the currency.

By the middle of last year, dollars were trading at a black-market premium of more than 60% above the official rate in Nigeria and 100% in Ethiopia. Coffee traders in Addis Ababa were selling their country’s biggest export at a loss, just to get their hands on greenbacks. Both countries rationed foreign exchange by restricting imports of items. In Ethiopia that included chocolate, fruit juice and umbrellas; in Nigeria, rice, soap and toothpicks. Before the IMF deal, Ethiopia’s international reserves covered barely two weeks of imports.

The second spur to reform was new leadership. When Mr Tinubu took office he was confronted with a squeezed budget, a crippled central bank and billions of dollars in foreign-exchange obligations. He has scrapped tariffs on some imports temporarily and brought in a new central-bank governor, who has undone some of his predecessor’s mistakes. Most significant, he has twice devalued the naira and axed a fuel subsidy. Annual inflation is now near 35%, its highest in 28 years.

In Ethiopia change has been brewing more slowly since Abiy took office in 2018. His outlook blends Pentecostalism, self-help and liberal economic instincts, even if his domineering style makes him reluctant to cede control. Reform was delayed by roiling political crises, including a two-year civil war. But after defaulting on a bond payment last year, and with other creditors insisting upon an IMF deal, the government was left with little choice.

Many of those around Abiy were already keen to act. They have signalled their intent by letting the market set the value of the birr, rather than managing it towards a new rate. The central bank has started using interest rates to conduct monetary policy, rather than controls on private credit as before. It says it will phase out a rule which mandates that commercial banks buy government bonds at below-market rates. Ministers have plans to allow foreigners to own property, run banks and buy coffee from farmers. They also want to sell a stake in the national telecoms firm and privatise state-run sugar businesses.

However significant, these reforms do not turn Ethiopia into a free-market economy—the country’s economic set-up remains statist. Government-run companies are ubiquitous, tariffs are relatively high and the state’s commercial bank owns 58% of total banking assets. Meanwhile, inflation could tug on an already frayed social fabric, at a time when kidnappings are frequent and the army is battling rebels. In Nigeria, too, the pain of reform could prove its undoing. Protesters have taken to the streets in anger at inflation, and lawmakers have just signed off on more government borrowing from the central bank. Recent changes are a step in the right direction. Now reformers must hold firm.