Why Mkapa pushed through privatisation despite criticism

Dar es Salaam. When one thinks of the privatisation policy in Tanzania, the name of President Benjamin Mkapa—who died on Friday—comes into mind at the top.

The policy was widely criticized as it was marred with controversies due to how it was being implemented.

Mr Mkapa, who summed up his philosophy in the slogan ‘Ukweli na Uwazi’, Swahili for ‘truth and transparency’, introduced reforms that breathed some life into the economy, which was in a dire situation, including the selling of the state-run businesses that were performing poorly.

Some critics even equated the manner in which state enterprises were being privatised as selling the country to foreigners and a few individuals.

On the other side, he is also credited for having done a lot in reforming the public service, particularly in making it functional and efficient by changing mindsets of civil servants—a move that helped it to regain the lost public confidence.

“There was no option but privatization really. Enterprises should have been making money and helping with government revenue, yet they were dependent on government handouts. People were fed up with those parastatals which were taking money out of the treasury, instead of generating money for the treasury. Some socialist ideologues were uneasy, but no-one could offer an alternative. What else was there to do other than to try to find businesses to partner with, or to sell these enterprises outright?” Mkapa defended his privitisation policy in his memoir—My Life, My Purpose—published last year.

“We had reached a point where many of the pastatal enterprises were looking to the government for subsidies to keep operating, yet these were supposed to be business enterprises,” he added.

The policy, however, resulted in mischiefs that the former president regretted. The negative outcomes such as the dying of the privatized companies was a result of lack of skilled labour, and failure to competently analyze tender bids submitted for buying the state-run businesses. Mkapa also put blame on some executives for their failure to follow up the performance of the privatized entities, a move that left the investors deciding to do whatever they wanted with the enterprises they had acquired from the state.

“For example, we expected the fruit processing factory in Korogwe to be developed into a major fruit canning enterprise; but disappointingly the new owners cannibalized the equipment and installed it in their existing factory in Dar es Salaam. They would not have won their bid for this factory in Korogwe if we had known their intention was to do this,” he stated in the memoir.

“I acknowledge that once you have handed an enterprise over without conditions you must accept that you have no say, but I regret that I concentrated more on regulatory agencies than on the performance of the entities,” he stated.

“We just disposed of the entity and then left it at that. We should have had a mechanism for monitoring what was going on in these privatized industries,” he added. However, Mkapa regarded mischiefs of the privatization as challenges alongside some success stories and did not allow going back, believing that the decision was right.

The decision was also influenced by the broader globalization trend, which, he said, Tanzania could not isolate itself from. Mr Mkapa was also criticised for privatizing the state owned enterprises to foreigners more than locals but he defended himself, saying it was an “unfair” blame.

According to him, some 319 individual enterprises were privatized and 121 of them (38 percent) were taken by Tanzanians. Some 171 enterprises (54 percent) were bought through partnership of foreigners and Tanzanians while 27 of them (eight percent) were sold.