Last week, we carried the first of a two-part interview with EDWIN MTEI, the last secretary general of the first East African Community – which collapsed in 1977 – and former Tanzanian minister for finance. This week he talks to Special Correspondent STANLEY KAMANA on the economic path taken by Tanzania during the rule of former president Ali Hassan Mwinyi and incumbent President Benjamin Mkapa
The Mwinyi era started with the continuation of the negotiations with the IMF and World Bank. These had started seriously in May 1985 and I had the honour to be the go-between in my capacity as executive director of the IMF.
At the domestic level, president Mwinyi also tried to tackle the scarcity of goods. For example, he directed that coffee, which was then being harvested, should be sold to a coffee dealer in Germany who was prepared to give Tanzania cash immediately for the purchase of petroleum products. This might have been unfair to the coffee producers, since it interfered with the normal operations of the coffee auction at Moshi, but the availability of fuel immediately eased the transportation bottleneck and enabled a number of factories to reopen. Goods started trickling into the shops.
The first effective round of negotiations with the Bretton Woods institutions was completed in 1986. A structural adjustment programme was agreed; the shilling was substantially devalued and Tanzania was then able to draw from the Fund and to obtain credits from the World Bank.
Bilateral donors were also now ready to offer more credits or grants to the country. As a result, there was considerable relief in the whole country and "Mzee Ruksa" was able to settle down, lifting many of the restrictions and allowing the importation of erstwhile banned items.
The SAP agreement involved the restructuring of the parastatals, the financial system and reforms of the tax structure as well as the civil and local government services. These measures were to be implemented over time as the various studies and negotiations got under way. It is, however, also significant to recall that Mwinyi at this time took further political steps by modifying the economic posture of Tanzania. The terms of the Leadership Code, which, since the Arusha Declaration, had barred political leaders and senior civil servants from engaging in commercial activities, were abrogated in the so-called Zanzibar Declaration.
The structural adjustment programme entailed ongoing negotiations and consultations with donors, especially the Bretton Woods institutions. The economy, however, continued to grow slowly during the whole of the Mwinyi presidency. The government was unable to control the deficit in its financing in spite of increased flows of donor funds. Inflation was in double digits, prices continued to be high and the ordinary Tanzanian was getting poorer.
The measures that the Mwinyi government took appeared to have little impact in restoring agriculture as the prime mover of the Tanzanian economy. Tackling poverty must entail giving a real boost to agriculture, in which about 80 per cent of the population is engaged. The acceptance of restructuring, which led to negotiations, has resulted in the privatisation of many of the parastatals.
Unfortunately, it does not appear that at the initial stage, the authorities made enough efforts to encourage local Tanzanians to participate in the ownership of the national assets that were being privatised.
Long-term stability and peace, in my view, can best be guaranteed if the natives of this country have a stake in the "commanding heights of the economy" rather thanbeing rendered onlookers or peripheral partners as employees. In fact, it appears that even as employees, the current authorities are not too bothered to ensure that Tanzanians get jobs. Work permits for foreigners are being granted even for jobs that can easily be performed by Tanzanians.
The Mkapa presidency has pursued the negotiations for privatisation of the parastatals. It appears also to have acknowledged the need to curb inflation by avoiding deficit financing and an over-valued currency.
Its push for real investment in manufacturing, mining and tourism has seen a commendable gross domestic product growth averaging above 5 per cent per annum. The beneficiaries of this economic growth have, however, been the upper and middle classes, while the peasants and most urban residents are even more poverty-stricken than before.
The Mkapa government’s efforts to revive and boost agriculture seem to be perfunctory, with debilitating taxes on produce lingering on, unsure subsidies for inputs, impassable feeder-roads, lack of an agricultural bank for long and medium-term financing coupled with adverse international commodity markets.
As I have said before, without ensuring that agriculture is put on a profitable track, the fight against poverty will remain mere talk. Without a big boost for agriculture and serious attention to employment for ordinary wananchi in the towns, the tourist hotels and mines, the gap between the rich and the poor will continue to widen with all the adverse consequences for genuine peace and stability.
The Nyerere regime relied on appeals to patriotism to enthuse public workers to apply themselves rather than on monetary and physical incentives. As a result, many qualified Tanzanians left for greener pastures in other countries and in various UN organisations.
Some who remained in Tanzania became virtual part-time workers in the sense that in order to make both ends meet, civil servants found themselves as backyard poultry and pig farmers.
Others became dairy farmers, vegetable growers or part-time traders. Those with weak morals started to steal some of the equipment they were supposed to work with or demand bribes from those they were expected to serve.
When complaints regarding inadequate pay increased, the authorities resorted to dealing with the security forces first instead of the whole civil service.
Later, reviews of remuneration were carried out piecemeal, department by department, depending on which one made the most noise. As a result, distortions now appear in the way in which merit, education and professionalism are being rewarded.
The lack of proper and systematised incentives in the public service has been one of the causes of the growth of corruption in Tanzania. I have already referred to Mwinyi’s abrogation of the Leadership Code emanating from the Arusha Declaration.
Unfortunately, it does not appear that the policy makers of Tanzania at that time thought of any substitute code of conduct for public servants, be they politicians or civil servants. As a result, I have the impression that the rush to catch up for lost time on the part of politicians and senior civil servants has unleashed a spate of corruption that is of such magnitude and so widespread that no leader appears to recognise it or know how to tackle it. This is the dilemma for President Mkapa.
Taking to task any of his colleagues who have been obviously corrupt has proved impossible, probably because few will be left untouched. Using the Prevention of Corruption Bureau effectively has become a non-starter, since the PCB are only "mice;" and mice cannot bell free-roaming cats.
Even the law is being deliberately misinterpreted with impunity. For example, the law clearly states that when a wife acquires property that property has also been acquired by the husband. But when there was a hue and cry recently that a big shot had unfairly bought a parcel of land from a group of poor peasants, the top legal adviser to the government retorted, "This has only been acquired by his wife!" And both the legal adviser and the big shot continue in their posts.
However, even if the economy is growing in GDP terms by more than 6 per cent, as claimed by the authorities, the fact is that the gap between the "haves" and the "have nots" is widening at an alarming rate. It is also sad and alarming that the authorities appear to be unconcerned about the resultant unemployment situation.
Youths in both urban and rural areas are without gainful means of livelihood and are increasing in their thousands. Loitering at the roadside or selling worthless trinkets and indulging in drug abuse is the order of the day.
Theft and highway robbery, sometimes with guns, has become commonplace and endangering the very economic recovery that we have been struggling to achieve.
Granted that the economy must continue to be managed in such a manner as to minimise inflation and maximise the productive effort, the inflow of foreign capital should be facilitated so that our natural resources are exploited. But such exploitation must be for the benefit of the masses, while assuring reasonable returns to the investor, whether local or foreign.
I have the impression that, of late, Tanzanian officials have bent backwards in order to attract foreign investors, especially in the mining sector. The royalties paid to the government are too little and there is an element of laxity in the control of the export of precious minerals.
It appears that many officials are prone to accepting arguments by foreigners with consideration of the national interests. It may be that this is the result of being naive, but it could also be the result of corruption. In either case, we are the losers, and proper, sustainable development cannot be achieved this way.