| Two major U-turns for the economy | Send to a friend |
| Friday, 09 December 2011 16:01 |
 By Honest NgowiThe then Tanganyika used the first few years after the December 9, 1961 independence from Britain to cope with the reality of its new status. On the economic front, the 1961–1967 period remained more or less the same as it was in the colonial times in some aspects. The economy continued to be owned, controlled and managed by the private sector. The main actors in terms of ownership of major means of production such as plantations, mines, industries and banks were, by and large, Europeans and Tanzanians of Asian origin. Indigenous sons and daughters of Tanzania remained passive “actors” in the economy, more as spectators than meaningful players in the game. The 1967 U- turn The first U-turn in the economic history of Tanzania came in 1967. This was the year when the much debated Arusha Declaration saw the light of the day. Along with it came the famous Ujamaa ideology that is, at times, seen to be a brand of African socialism. It was at this time that Tanzania nationalised major means of production that were owned and controlled by the private sector. It was an epoch when the country embraced a Marxist-Leninist inclined economic philosophy. It was an era of state controlled, owned and planned economy. This time period was characterised by state monopolistic market structure in virtually all sectors of the economy. Air Tanzania dominated the sky, Radio Tanzania Dar es Salaam controlled the air waves and the Daily News and Uhuru were the standard references in the print media. The market-oriented and influenced private sector was seen as the enemy of the state. Some politicians would call the private sector such names as exploiters, capitalist and economic saboteurs. In those days, it was almost sinful to be a rich person or to be seen attempting to become one. The Ujamaa ideology planted anti-entrepreneurial attitudes in most Tanzanians. As part of this, the education system produced white collar jobseekers instead of crafting entrepreneurs who would be job creators. An interventionist state had its hands fully visible in the economy. It planned, owned, produced, distributed and even influenced consumption of goods and services through its 400 or so parastatals. The rather closed economy was locally owned, managed and controlled. The 1967 to mid-1980s period was punctuated with a shortage of goods and services. Rationing of essential consumer and other goods including soap, flour mill, rice, khanga, cooking oil and sugar was the norm rather than exception. This was mainly done through Regional Trading Corporations (RTCs) and village shops where staff was like kings and queens. The other key characteristic of this epoch was price fixing. The free interplay of market forces of supply and demand was not given a chance. In the money market, fixed, as opposed to flexible, exchange rate regime reigned. The shilling exchange rate to dollar was artificially fixed for a period of time, for example. Foreign exchange was heavily controlled and rationed by the monetary authorities. Seeing and holding a dollar was a very rare phenomenon. No wonder the black market in foreign exchange grew and people would hide dollars wherever they could when entering and exiting the country’s borders. This was an era of inward looking economy. There are those who describe the period from 1967 to the mid-80s as lost years economically. The country and its people did not have it so good. We could not even begin to think of the current material and consumer society. But it is also at this time that most of the key fundamentals that this economy enjoys today were laid down. Most of the industrial infrastructure, plantations and mines that were divested and privatised in the mid-80s saw the light of the day at this time. It is also then that most of the current elite, captains and titans of industry that move and shake the economy were educated at the government’s expense. The fabric that has held this nation together so far was partly cemented in this era through inculcation of a sense of nationalism. In the era in question, one experienced the good elements of distributive justice and equitable distribution in such key social services as education and health. The Mid-1980 U-turn The second U-turn in the Tanzanian economic journey unfolded in the mid-80s. The U-turn brought Tanzania to the current epoch. It is more or less a mirror image of the Ujamaa era that lasted between 1967 and the mid-80s. The Zanzibar Declaration kissed goodbye the Ujamaa era and embraced this epoch that is characterised by private-led and market-led economic thinking. It is an epoch characterised by neo-liberal economics following Structural Adjustment Programmes (SAPs) of the World Bank and the International Monetary Fund. As opposed to the era immediately before this, the economy is now largely foreign-owned, managed and controlled through foreign direct investments (FDIs). The economy is more outward-looking, there is flexible exchange rate regime characterised by, inter alia, exchange rate volatility. Although there is free interplay of market forces of supply and demand, the government has its hands on the economy. Its role now is that of a facilitator and creator of a conducive business and investment climate. This is done through overseeing policies, laws, rules, regulations, peace, order and tranquillity that are essential for a proper functioning market economy. Although the market rules the economy, there are various sectoral regulatory authorities. They have the role of ensuring that the private sector is not abusing its market power. Ewura and Sumatra are among such regulators. One also sees executive agencies providing none-core public services on commercial basis as agents of the government whose role is one of a principal. In order to make the best of the two worlds composed of the private and public sectors, this epoch is experiencing various forms of private sector participation in the delivery of none-core public services. The most popular approach for private sector participation so far is through Public Private Partnership (PPP). Compared to the 1967 U-turn, the mid-80s one brought with it more economic prosperity in form of availability of material goods and services. The scarcity of goods and services that doted the 1967 to mid-80s epoch is now history. The question is the extent to which we, as a nation, should be proud of the goods and services that are readily available in shops and supermarkets when we look at their countries of origin. The economic outcomes for Tanzania in the coming 50 years depend a lot on the extent to which the country and its people pick key lessons from the epochs outlined here. Add this page to your favorite Social Bookmarking websites           |
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