11 February 2013

Tanzania: Has Tanzania Benefitted From the 'Super' Nations?

IN the mid-1980s, Tanzania began to implement the structural adjustment programme (SAP) drawn up by the World Bank and the International Monetary Fund (IMF) to qualify for aid reception from these institutions.

The SAP was not only imposed on Tanzania but also on other developing countries which badly needed external financing to revamp their economies. SAP required aid recipient countries to implement three things to be eligible for aid -- namely to democratize the governance of the country, to liberalize the economy and to privatize the production of goods and services.

It was said SAP's aim was to bring about efficiency to promote productivity and to attract foreign market capital and technology. Another objective of this programme, as the government had pointed out, was job creation for Tanzanians. As a result, in the mid 1980s Tanzania embarked on a privatization programme which saw the divestiture of more than 350 public corporations, the introduction of the free market economy which paved way for competitive business, and subsequently in 1992 the introduction of a multi-party system in the country.

Tanzania had been a mono-party system since 1965 when it was governed by a party named Tanganyika African National Union (TANU) which in 1977 became to be known as Chama Cha Mapinduzi (CCM) after the meger with Afro-Shiraz Party (ASP) in the wake of the union between Tanganyika and a tiny island of Zanzibar. Today it is more than 27 years of implementing SAP in Tanzania.

The country, originally pursuing a socialist path of development, is implementing what is in other words called the mixed-economy or marketled economy. So far there have been both advantages and disadvantages of this programme which some critics dubbed "neo-colonialism". What has been achieved so far is economic growth, impressively at an annual rate of 7.0 per cent.

Yet many ordinary people say they are not reaping the benefits of economic growth. The cost of living is prohibitive, health and educational services are beyond the reach of many, they say. Yet economic experts say economic growth achievements cannot be seen if economic sectors which affect the largest section of the population - like agriculture and petty trade - are neglected.

Other experts argue that economic growth is not synonymous with economic development. While economic growth is measured in terms of trends in investment in such sectors as mining, tourism, forestry, construction and communications, economic development is measured in terms of acquisition of assets as a result of an economic activity. Such assets include a house, a car, TV set, and home furniture.

Agriculture in Tanzania involves the participation of the majority of the rural population whose country population stands at about 80 per cent. They use a hand-hoe to till the land; they raise farm animals, do fishing and hunting. Their economic activities are still undertaken in a traditional fashion. They say not much has been done to accelerate agricultural development and improve the livelihoods of rural dwellers.

On the contrary, the flourishing mining, tourism, forestry, construction and communications sectors mainly and substantially benefit foreign investors and a handful of affluent Tanzanians. In an effort to promote agricultural development, the Tanzanian government in 2007 introduced the Agriculture Kwanza (First) Initiative which calls for the involvement of the private sector - local and foreign - in modern large scale farming and in aiding small holders to up-grade their farming practices.

The initiative, however, is yet to bear fruit. Its critics say it is another "populist slogan" that is going to fail. The introduction of the free market economy has seen many indigenous Tanzanians becoming entrepreneurs. Many people have opened various petty businesses including hawking, shops, groceries, pubs, hair salons, and food vending; and a few are running small and medium enterprises (SME).

However, they're unable to operate large scale production of goods and services for lack of capital. Because of the free trade policy, outlets are now flooded with various products and services have substantially expanded in the country. Although free trade entails competition between businesses, seemingly various indigenous traders are not competing. Retail and whole sale prices of commodities as well as charges for various services are the same all over places as if they're under government control.

Prices were supposed to vary so as to facilitate business competition, but they're the same in shops, super-markets, groceries and what have you. Economists and politicians had anticipated that when there was a flood of products and services in the market, prices would automatically go down much to the relief of customers.

But it has become a trend in Tanzania that once prices go up they rarely go down until they triger a public outcry and subsequent government intervention. Same price levels are reminiscent of the era of the National Price Commission, a government agency tasked with the fixing and controlling of prices of commodities and services. It was dissolved when trade was liberalized and market forces were allowed to determine the pricing of products and services.

On the contrary, prices are uniform or insignificantly vary. Mobile phone companies - Vodacom, Tigo, Airtel and Zantel - are some of the few companies in Tanzania competing in business, thus significantly benefiting customers. Trade liberalization has also caused the intrusion of fake and substandard goods into the Tanzanian market. Such goods which are mostly imported from China have flooded the local market causing loss and health hazards to consumers as well as loss of revenue to the government.

It has become difficult to curb this trade which is mostly done by individuals and private companies because of corruption and limited human and financial resources on the part of public institutions charged with the control task. When the ruling party - TANU - decided to nationalize major means of production in 1967 after the promulgation of the Arusha Declaration, the country's blueprint for socialism, numerous public corporations were created which also created employment to many Tanzanian university, college and school leavers.

At the time Tanzania had a population of nine million people. These corporations were operational up to the 1980 when the government bowed to SAP demands and instituted the political and economic reforms that included privatizing the corporations.

It was said these corporations must go because they were, among other things, a burden to the tax-payer, inefficient, poorly managed, and under-capitalized. The government said it wanted the ownership of these corporations transferred to private hands were they would gain adequate capital and new technology and create jobs for locals. Therefore more than 350 parastatals were divested and thousands of people lost their jobs.

But after this privatization programme, only a few corporations operated to the anticipation of the government. These included the Tanzania Breweries Limited (TBL), the Tanzania Cigarette Company (TCC) and the National Bank of Commerce Limited (NBC) which pay good taxes to the government.

Some of the privatized enterprises operated contrary to expectations, others were transformed into other activities and others simply vanished. Some people are of the opinion that privatization and foreign investment in the country are yet to benefit the government, as its budget is still relying on beer, cigarettes and soft drinks for revenue collection. These products were sources of revenue for the government in the first phase government of Mwalimu Julius Nyerere.

Or does imply that planners are lacking creativity in exploring sources of government revenue or deliberately shunning contemporary investors? As for job creation for locals, instead of absorbing more people for employment some of the private industrial enterprises or companies decided to automate their operations and therefore do not need many workers as they are replaced by machines.

And other enterprises - because they wanted to maximize profit, only need a handful of people as permanent and pensionable workers and rely on the majority casual labourers. Unemployment is still high in Tanzania. About one million graduates from universities, colleges and schools compete for the labour market every year which can only absorb a fraction of these people.

Unemployment is a burning issue in Tanzania as educational establishments always prepare students for white-collar jobs instead of being self-reliant. One prominent senior government official recently cautioned that unemployment in Tanzania, if not tackled, was a "time bomb." In 1992, Tanzania had to change its political system from a single party system to political pluralism.

There are now 20 registered political parties in the country. The system gives voters a wide choice of candidates as well as parties and widens freedom of speech. Although the multi-party system has been in place for more than 20 years in the country, so far only three political parties seem to comand popularity, namely, CCM which has been in power since the start of multiparty democracy, Chama cha Demokrasia na Maendeleo (CHADEMA) and Civic United Front (CUF).

The latter two parties have gained popularity mainly because of being very vocal in Parliamentary sessions and outspoken in public rallies. Many of the other political parties are seemingly disorganised because of internal frictions and lack of financial resources, some are run as private companies of individuals, and also some of their members have joined them - not because they want to develop these parties - but to solve their unemployment problem.

These are some of the factors which have weakened these parties. The negative effects of multipartyism in Tanzania include public demonstrations to express discontent instigated by politicians, blood-shed as a result of political conflicts and constant wrangling between the MPs on the ruling party and those on the opposition parties in Parliament. Experience drawn from this lesson suggests that caution is needed before swallowing alien prescriptions for economic recovery because some of these prescriptions, if they're not revised, can instead harm recipient nations.

Author can be contacted on: 0754482237

Copyright © 2013 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.