New dawn for investors; we’ve surely heard this before

A January 4, 2021 article in this newspaper by the Minister of State in the President’s Office (Investment), Prof Kitila Mkumbo, heralded a “new dawn for investors in Tanzania”.

 The article highlighted the government’s vision towards achieving its economic growth targets through promotion and facilitation of investments.

 The tone and contents of the article were positive and progressive, but one was still left wondering – haven’t we heard all this before?

 The article described what the minister called an “8-8 economic agenda” -the government’s target of growing the economy at an annual rate of eight percent and generating eight million jobs in the next five years.

Given Tanzania’s low economic base and the fact that three quarters of its population is below 25 years of age, which means that millions of youth will be joining the job market in the coming years, an economic agenda focused on accelerating the growth of the economy and increasing job creation should be welcome news for many Tanzanians.

The World Bank’s 2019 Tanzania Poverty Assessment report reveals that, despite Tanzania averaging annual growth rate of over six percent since 2000, the number of people living in poverty has increased to 14 million, that half the population still lives below poverty line and that the impact of economic growth on poverty reduction has dropped dramatically between 2012 and 2018.

Therefore, increasing the pace of economic growth and making the economy more inclusive through creation of better jobs is necessary for poverty alleviation.

 After all, for a country that is as well endowed with diverse sources of natural wealth as Tanzania, an annual economic growth rate of eight percent is not only achievable but it is the least that one can expect from a visionary leadership.

Indeed, some of us have been waiting for Tanzania’s political masters to articulate a vision for a double- digit growth rate for years, so we can settle for 8 percent.

The government’s intention to place the private sector at the centre of its growth agenda is also welcome. No nation has achieved a dramatic transformation in its economy without a productive engagement with its private sector.

And Tanzania will not be different. Currently employing 70 percent of the youth, private businesses are at the forefront of job creation in Tanzania.

Reports from other countries show that without the private sec- tor, especially new startups less than five years old, net employments would have been negative. This is particularly true of the United States since 1980.

Unfortunately, the private sec- tor in Tanzania has been working in extremely difficult circumstanc- es, and this has hindered innova- tion and growth, thus denying the economy of its regeneration effect.

Nothing articulates this problem more comprehensively than the policy document that the minister himself referred to, the Blueprint for Regulatory Reforms to Improve the Business Environment in Tanzania.

 For example, if one were to establish a medical facility in Tanzania, one would be subject to 15 regulatory bodies which have little or no coordination among themselves.

The multiplicity of requirements and the inefficiencies that are cre- ated are what is ultimately reflect- ed in the nation’s exceedingly poor position in rankings such as The Ease of Doing Business, leading to needlessly highly increased cost of doing business.

The government’s willingness to adopt the reform blueprint as a policy decision is encouraging, more so the recognition of the use of international rankings such as The Ease of Doing Business as useful feedback to their performance in the management of the economy.

 Indeed, the government cannot pretend that these reports which influence investors’ decision around the world on whether to invest in Tanzania or not do not matter – hence the minister’s deci- sion is praiseworthy. That said, there are questions which one would have wished the minister to answer, but were not.

For example, how does the minister expect the nation to achieve sustained economic growth without transforming the agricultural sector which, while providing two thirds of all jobs, has suffered from general disinvestment, has incredibly low productivity levels, has failed to meet required growth targets of six to ten percent, and has instead been growing at an inadequate rate of only four percent?

While the minister’s focus is on promoting and facilitating investments, but the only true way of predicting future performance of the economy is through increasing productivity, and we hope that he has a clear agenda of unlocking the untapped potential of the sector in which tens of millions of Tanzanians find their living.

All that this shows is that it takes much more than what Prof Mkumbo articulated to take Tanzania’s economy to another level.

 However, again, we have had many economic programmes aimed at increasing growth before Mkukuta, Mkurabita, Big Results Now, and now Prof Mkumbo’s 8-8 Economic Agenda.

If we were to put ourselves in the minds of the investors he is targeting, haven’t we heard all this before, and those supposedly new dawns only proved to be yet more false dawns?

 Ultimately, it comes down to one thing when investors, foreign and domestic, listen to these promises and look at the people making them in the eye, will they really believe that they have reliable partners in them? Too often in Tanzania, investors are quite needlessly being let down.