Tanzania at 58: the economy in two major U-turns

Saturday December 7 2019



Honest Ngowi

Honest Ngowi 

Every December 9, Tanzania celebrates its political independence day. In 2019, the then Tanganyika, now Tanzania, turns 58.

In this article, the author argues and documents that Tanzania has seen two major U-turns in its economy in the past 58 years. The U-turns separate three different epochs.

Each of the U-turns brought with it major changes with major and far-reaching implications in many spheres of life.

The 1961 – 1967 Epoch

In 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 were Europeans and Tanzanians of Asian origin. Indigenous Tanzanians largely remained spectators than meaningful players in the game.

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The 1967 change (U-turn)

The first U-turn (change) in the economic history of Tanzania was made in 1967. This was the year when the Arusha Declaration saw the light of the day. Along with it came the Ujamaa ideology.

It was the time period when Tanzania nationalized major means of production that were hitherto owned and controlled by the private sector.

It was an epoch when the country embraced Marxist-Leninist inclined economic philosophy. It was an era of state controlled, owned and planned economy.

State monopoly

This epoch was characterized by state monopolistic market structure in virtually all sectors of the economy.

Air Tanzania Corporation dominated the sky, Radio Tanzania Dar es Salaam controlled air waves as Daily News and Uhuru were the standard references in the print media, to list but a few.

Market-oriented and influenced private sector was seen as ‘the enemy of the state’. Some would call the private sector such names as exploiters, capitalists and economic saboteurs.

Entrepreneurship suffered

It was almost sinful and politically incorrect to be rich or to be seen attempting to become one. The Ujamaa ideology planted anti-entrepreneurial attitudes and mental framework amongst most Tanzanians.

As part of this, the education system produced white colour job seekers instead of crafting entrepreneurs who would be job craters.

Keynesian economics was put in action in form of interventionist state having its visible hands fully in the economy. It planned, owned, produced, distributed and even influenced consumption of goods and services. The rather closed economy was locally owned, managed and controlled.

The Mid-1980s U-turn (change)

The second U-turn unfolded in mid 1980s. It is more or less a mirror image of the ujamaa era.

It is the Zanzibar Declaration (1991) that kissed goodbye the Ujamaa era and embraced this epoch that is characterized by market-led economic thinking. It is an epoch characterized by neo-liberal economics following Structural Adjustment Programmes (SAPs) of the World Bank and the International Monetary Fund.

Foreign economy

As opposed to the era immediately before this, the economy is now largely foreign-owned, managed and controlled through Foreign Direct Investments. The economy is more outward-looking, there is flexible exchange rate regime characterized by exchange rate volatility.

Government role

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 facilitator and creator of conducive business and investment climate. This is done through overseeing policies, laws, rules, regulations, peace, order and tranquility that are essential for a proper functioning market economy.

Although the market rules the economy, there are various sectoral regulatory authorities. There have the role of ensuring that the private sector is not abusing its market power.

One also sees executive agencies providing non-core public services on commercial basis as agents of the government whose role is one of a principal.

Lessons from the journey

Tanzania’s economic journey since independence is eventfull. The more dramatic epochs are those of 1967 to mid 1980s and mid 1980s to now.

Among the lessons that should be learnt include the fact the state controlled economy era was not particularly successful when one uses such indicators as availability of goods and services.

However, the ideology of the time has been crucial in laying foundations on which the mid 1980s U-turn was built.

For future success of the economy, it is very important for the government to do what governments do best in market economies.

It has to ensure that there are very attractive and friendly investments and business environment for private sector to succeed.