While sub-Saharan Africa appears to be recovering from the worst effects of the 1982-1984 drought, the region continues to suffer from declining real incomes and increasing impoverishment. Under growing pressure from multilateral agencies and mounting financial difficulties, more and more African governments have taken significant steps to reform their economies. Recent policy shifts have increased incentives for agriculture and reformed the public sector. While in some cases output is responding, rigidities in African economies are proving to be more stubborn than many had expected. This paper reviews the present economic problems of the region, and assesses the future potential for adjustment.