Search for approach to make Tanzania economic growth inclusive

Thursday December 09 2021
Economic pic
By Jacob Mosenda

Dar es Salaam. Despite Tanzania having entered the lower-middle income economy earlier than expected, stakeholders - including researchers - are proposing a different approach to make the country’s fast growth benefit people.

They say the country’s economic growth is not reflected in the national economic development.

The group argues that some Tanzanians cannot afford a single meal and die due to a lack of health services and that the ignorance level seems to have increased as the country’s facilities are not enough to cater for the needs of an increased number of pupils enrolled for primary education. They further says that the education system also does not match with job requirements and the agriculture sector, which is taken as the backbone or the country’s economy, does not produce adequate results.

“This situation calls for new approaches, a new philosophy, a new direction and a new thinking for the benefit of the current and future generations,” notes Dr Charles Kitima, a researcher and senior lecturer at St Augustine University of Tanzania (Saut).

He says that it is deemed necessary now that the country needs a new economic order to achieve its objectives.

“The lessons learnt from Germany, other EU countries and other countries worldwide and our own experiences through all reforms since independence drive us towards a Social Market Economy Model, which proves success in inclusive economic development,” says Dr Kitima in an interview with The Citizen.

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The former Saut Vice Chancellor says Tanzania can move to the next level, and become a strong economy and competitive in regional and international markets if the country adopts the model according to its own circumstances.

“This is because our country witnesses some encouraging economic growth rates but very disappointing economic development. The majority of citizens still live in abject poverty,” he insists.

The reasons for success and failure, he says may be complex but the main ones may be the approach, the philosophy, and ideology and that all these can be explained by the type of the economic model used.

He notes that countries which succeeded may be role models for others to learn, though circumstances and conditions may be different.

The model comes after a scientific research and analysis from economists from Mzumbe University, St. Augustine University of Tanzania (SAUT) and University of Dar es Salaam under the coordination of religious leaders in Tanzania.

The suggested economic system, they say, is traced back to Alfred Muller Armack, Walter Eucken, Leonhard Miksch, Franz Bohm, Wilhelm Ropke, Alexander Rustow, Konrad Adenauer and Ludwig Erhard who had a vision to strengthen and build individual economies under their own government.

“We need a clear economic ideology which focuses the country’s development activities towards an inclusive economy in which free trade and competition are balanced,” notes Dr Kitima.

He said the system would affect the informal sector which has the potential to employ more people at a time when unemployment has constantly been a crisis both locally and globally.

“Since the formal sector has not done well in terms of the economy compared to the informal sector which includes many people, that is why we have come up with the idea of a social market economy to further boost the existing economy in those sectors,” he says.

Also in a recent workshop that brought together experts from Germany, which is among the most successful countries through the social market economy model, religious leaders and representatives of Tanzanian lawmakers, the stakeholders believed that every Tanzanian could feel a share of economic growth if the model is adopted.

“Social Market Economy combines private enterprises with regulation and state intervention in order to establish fair competition- maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions and social welfare,” observes, Mr Gordon Hoffmann, secretary general of Germany’s outgoing ruling party CDU.

“As opposed to other economic models, Social Market Economy is inclusive of the local people, allowing them to participate and positively contribute to the economic growth of their country,” he adds during an interview with The Citizen’s business week magazine.

Mr Hoffmann further notes that for them (Germany) the story of social market economy is a success because it brings together different aspects, economic strength but also taking care of the people who need support, an achievement that guarantees the inner peace of the entire society.

“It makes me very proud as the CDU implemented the model of social market economy in Germany and proved very successful. It is therefore very exciting that this model is spreading all over the world including Tanzania,” he notes.

He however says that he is not in Tanzania to tell how to do it but only to share the experience and the importance of such a model to a ‘speedy’ developing country like Tanzania.

“I’m here just to give you some views on Germany’s experience with this model and I hope you can find some aspects that you can adopt to your country which you may fit them to your country,” he says.

He says through this model they have been able to unite the country economically and make everyone feel like one of the nation’s development partners by establishing a system for educating young people and giving them opportunities to contribute to their national economy.

He says they have different laws for example, companies and businesses are directed to educate young people (employees) and if they don’t they pay a fee.

“We are also supporting young people who are struggling with special needs so they can successfully participate in the society’s growth and this is a major aspect of social market economy, in which you don’t only care for the strong but also those who need a little support,” he notes.

Mr Hoffmann believes that the model that has been researched since 2016 by Tanzanian experts will enable Tanzania to create a sustainable economy for individuals.

“The uniqueness of this model is how it links the free market economy with the role of government in controlling the country’s economic growth if it is to ensure justice for all and to promote fair competition,” he explains.

“This is a system that takes a little longer to succeed, Germany succeeded due to the enactment of laws and regulations that provide equal economic opportunities between the haves and the have-nots,” adds Hoffman.

Since gaining independence, Tanzania have never had a system to guide the kind of economy needed, they argue, saying between 1961-1985 the country followed the African socialism economy; 1985-1995 the liberal economy system; from 1995 up to 2015 the privatization system; and from 2015 to the present it’s the industrial economy.

“This is making Tanzania a nation that lacks economic direction,” says Mr Pansian Ntui, a lecturer at SAUT.

Mufindi South MP David Kihenzile who is also the National Assembly chairman and the parliamentary committee chair on Trade, Industry and Environment says the model will help in making the country’s plenty of resources reflect on people’s livelihoods.

He says despite Tanzania being rich in many resources including livestock, minerals and even being among the biggest egg exporters, “but the question is, to what extent have all these resources that God has blessed us with are touching the life of the individuals? He queries.

“This is why the social market economy model needs to be given special attention so that it can support the government efforts to improve the lives of its citizens,” he notes, adding that he will table a motion on the same to speed up its adoption in the country.