Can socialists transform the economy to free-market system?

Let me begin this piece by confessing first of all that I am not a social or political scientist, and neither am I an economist. For the record I am a banker (microfinance specialist) and educator by training and profession, with physics and accounting background. A renowned social thinker and scientist, Dr Albert Einstein, once said that a problem cannot be solved by the same people who created it in the first place.

The transformation of the Tanzania economy to me is one of the biggest challenges that the country faces today. We have a leadership that was educated and grew up in a socialist era. These have now declared that the private sector is the engine of growth. This is the same private sector that had been hounded and criminalized over the years as was the practice in the socialist era.

So in 2016, if the government is really serious about facilitating private sector growth, it first needs to understand how the private sector thinks. It also has to understand that it is virtually impossible to reorient core private sector thinking, because the risk/reward principle is basic to all investors internationally.

I have been an investor in Tanzania (farming, education, business consulting), Kenya (ICT, farming, business consulting) and Uganda (banking, business consulting) for over 25 years now, and I am not very impressed or encouraged by the way the Tanzanian economy is being managed and promoted. It must be understood that it takes much more than big pronouncements in conference halls that the private sector is the engine of growth. The private sector’s opinions and proposals are not embedded in the country’s strategic economic planning, why?

In socialist dogma the words entrepreneurship, investment, marketing, competition and profits are basically nonexistent. I remember being told on my first visit to Tanzania back in 1986, that profit is money that was stolen from the mwananchi. So how can the same people who created this socialist society and thinking in the past, now turn around in the present and promote free-market ideas, where profit is the centre-piece of all business and investment discussions?

It is clear to see that Tanzania has massive potential to become the leading and richest nation in East Africa, but it needs clear and unambiguous support and facilitation from the governing elite to make it happen. The leadership needs to mobilise and aggregate the human and financial capital that is available in the country, to bring about meaningful change. Maybe that is where they can leverage the already embedded and socialized “ujamaa” thinking for economic progress.

From my perspective, in concrete terms the Tanzania governing elite needs to do the following:

1. facilitate a process for all Tanzanians to have formal bank accounts which will result in an overall increase of the domestic savings -- GDP per capita ratio.

2. all land owners (including the massive numbers of small holder farmers) to have their land titles to unlock that hidden wealth.

3. all Tanzanians must have valid identification to be able to conclude commercial deals.

4. study what other countries are doing and “copy and adjust” their good ideas instead of trying to reinvent the wheel as we go along.

5. encourage the proliferation of new technologies like mobile phones, e-money platforms and internet connectivity.

6. teach and practice entrepreneurship education from primary school level.

7. promote youth owned and managed enterprises and encourage big companies to open up apprenticeship programmes.

8. give big companies a new set of tax incentives which will spur mentorship and small business promotion (forward and backward linkages) as new business startups.

9. entrench the country’s long term economic development plans into the laws of the land so that successive governments cannot redefine the path and rules every 5 years after there is an election

10. realign the country’s educational system to make it much more oriented to independent thinking, innovation, and self employment.

11. actively engage and empower the existing private sector bodies in the country, to craft their vision for Tanzania’s economic development which the government can use a blue print for a national discussion and consensus.

12. include the private sector in Parliament through the “special seats” option so that their informed opinions become a staple there.

My prayer is that Tanzania will become the de facto leader in East Africa, but I am very aware that this will not happen if the country’s elite continues to look inward for its inspiration. We are one country in a family of nations and others have achieved much more than us with much less than we have....can we learn anything from them?

Lascelles Chen is a banker and educationist based in Morogoro. He can be reached via Email [email protected]