Mkapa envisaged people using land to bootstrap themselves out of poverty

Former Tanzania President Benjamin Mkapa

Summary

  • President Mkapa was also an anti-poverty crusader. His acquaintance with Peruvian Economist, Hernando de Soto, convinced him that if land is formalised it moves from being “dead capital” to “live capital” and can be monetised.

On the second anniversary of the demise of President Benjamin William Mkapa, the Mkapa Foundation organised a two-day Symposium in Zanzibar which was closed by Her Excellency, the President of the United Republic of Tanzania, Samia Suluhu Hassan. In her speech, she praised the late Mkapa for his apt management of the economy and his trust in the private sector as an important driver of rapid and sustainable economic development.

Indeed, when President Mkapa took over the leadership of this country in 1995, inflation was hovering around 27 percent and, state coffers were empty. He brought inflation down to single digit, a no mean feat. Among the measures taken was the controlling of government expenditure, and enhancing tax collection. This made people who had got used to handle lots and lots of money, to complain of shortage of money in circulation, and the term “ukapa” was coined. However, the shilling and the economy in general got stronger.

President Mkapa was concerned that many of the parastatal organisations were working inefficiently and were a drain on national coffers. He therefore embarked on a major privatisation exercise, which, at the same time, saw a regulatory regime put in place to ensure that the consumer got a fair deal. As President Samia pointed out, the late Mkapa had trust in the private sector as a key partner in the economic and social development of the Nation.

President Samia lamented that some, in the government system, do not have the vision that Mkapa had, of working closely with the private sector. There are many, many hurdles put in place, for anyone wanting to do business in this country. These are perpetrated by, among others, licencing, business registration, and, taxation authorities.

The President has, time and again, called for the creation of a friendly environment for the private sector to do business. However, she needs to realise that these calls may fall on deaf ears, since officials who put in place the systems which these authorities run, have no idea on what doing business is. She is shielded from knowing how the systems work. The officials themselves have never engaged in any business. Their picture of the private sector is that they are tax, or regulatory requirements evaders.

That the private sector takes risks, invests, creates crucial goods and services and provides employment, makes little sense to them. That the private sector may face hard times and be unable to comply, is un-understandable; and is addressed by serious monetary punishments in terms of penalties, fines, interests and so on.

Failure to submit the unnecessary, notorious and numerous “ritani’s” on time, or other compliance regulations, attracts unreasonable punishments. Even failure to predict how much business one will do in a year attracts punishment. When the private sector makes no money in a certain period, it is slapped with monetary penalties, milking blood from a milk-less cow.

There have been calls that, for the private sector to work well with the government, people who run the various authorities must be people who have done business in the private sector themselves. Existing systems must be audited and all the unnecessary and oppressive requirements, expunged. This calls for a change of both laws and those who oversee the laws.

President Mkapa was also an anti-poverty crusader. His acquaintance with Peruvian Economist, Hernando de Soto, convinced him that if land is formalised it moves from being “dead capital” to “live capital” and can be monetised. Formalised (i.e. titled) land becomes fungible, and can be used to get access to financial credit facilities. To oversee that, Mkapa created the Property and Business Formalization Programme (MKURABITA), to spearhead land formalization in the country

He was also on the international “High Level Commission on Legal Empowerment of the Poor”. Another prominent member of this Commission was former US Foreign Minister, Madeleine Albright. The Commission held a National Consultation Conference in Dar es Salaam between 29th-30th November 2006, whose theme was “Poverty Reduction through Improved Asset Security, Formalisation of Property Rights and the rule of Law”, and was graced by the then President Jakaya Kikwete. It was emphasised that people can bootstrap themselves out of poverty by leveraging land and property, provided a conducive legal framework was put in place.

To realise the Mkapa legacy with regard to the private sector, it is important to have the licensing, business registration and taxation systems revisited to audit the processes and regulations put in place. The manpower too must be private-sector friendly officials.

There is also the need to revisit the property-poor nexus, to get, especially low income households, to use their land to propel themselves to economic prosperity.