Mkapa’s policies were key in attracting investors, says Ambassador Ami Mpungwe

In 1999, Ambassador Ami Mpungwe took a bold decision to retire from Foreign Service at the age of 48, a time when many of his contemporaries considered him ripe and ready for better things to come as Tanzania’s envoy to South Africa.

Several issues had informed his decision to take up early retirement including the fact that he had reached the pinnacle of his diplomatic career at that age.

In his own assessment, the events that had transpired in Tanzania on the economic sphere in the six years after President Benjamin William Mkapa assumed office in 1995 ware part of the impetus.

Having served under Mkapa as foreign minister twice before the latter becoming President, Ambassador Mpungwe was confident that the incoming president would make the necessary changes to bolster the economy.

“When President Mkapa came in October 1995, he took over from President Mwinyi who had during his 10 year-tenure opened up the country, when he came in 1985 he found the economy still very socialist and over controlled with all the major means of productions owned by the state,” he says.

 He adds: A huge parastatal sector and politics too, so Mwinyi opened up politics because it was during his time that we joined the multi-party politics fray but he also opened up the economy by starting up the privatization program as part of the World Bank and IMF conditions.

According to him President Mkapa did not only sustain that program but he further deepened that process which had been started by President Mwinyi.

“He started by first strengthening and deepening the macro-economic fundamentals such as issues revolving around the exchange rates and controlling the inflation.”

 As part of that drive in addition to macro-economic policies he also went to micro-economics related to various sectors for example the mining sector where he started with the mining policy of 1996 and then the mining Act of 1997.

“This kick started the mining sector and others such as the tourism and manufacturing sector was opened up as way to kick start growth. He also intensified the privatization process therefore giving the private sector a key role in the growth of the economy, by micro-polices but also the legal framework, the fiscal incentives and many others,” he says.

He says that in order to back up these policies approaches he also put in place regulatory frameworks for various sectors with the establishment of various entities such as regulatory bodies for the mining sector, tourism, manufacturing, shipping and many others.

As part of the drive to mobilise for FDI (Foreign Direct Investments) inflow he introduced a lot of clarity in the Tanzania Investment Centre (TIC) to stabilise the policies but also to give assurance to the investors’ expectations.

The stabilisation of policies and assurances to the investors was a key component in an economy that was making a transition from a state owned to liberalized economy.

“Let me take the mining sector as an example, up to that point, apart from Mwadui Diamonds which also had foreign ownership, there was literally zero, and as you can see the measures taken by the new mining Act of 1997, Tanzania moved from zero exporter of gold and by 2001 we became number three after South Africa and Ghana.”

According to him, this was one of the demonstrations that President Mkapa’s interventions in stabilizing the macro-economic fundamentals and focusing on the micro sector, which as result yielded a lot of investments both local and foreign.

“Privatisation of certain areas in the manufacturing sector was also key, for example the Tanzania Breweries Ltd (TBL), Kilombero Sugar, Kagera changed hands from government to private hands. All this led to the turnaround of fortunes of these key sectors which were ailing under government ownership,” he says.

He adds: In the case of Kilombero, its installed capacity was 90,000 tonnes but by the time it was privatized in 1998, it had deteriorated to 28,000 tones and employees were on half pay.

Mr Mpungwe says that apart from the regulatory frameworks President Mkapa also pushed for the creation of private sector institutions such as the Tanzania Private Sector Foundation (TPSF), Confederation of Tanzania Industries (CTI) and the CEO Round Table.

“The president would sometimes spend a whole day with CEOs of major entities where the private sector would be raising their issues and their concerns and possible recommendations on how to strengthen policies and regulatory frameworks.”

However, even with this goodwill that the president had put in, there were times that he was misunderstood by the public.

“We were still very socialist in our approaches and thinking, but he had to deal with it within his own party CCM who had to buy into it. And as far as the general public was concerned he used to have his monthly addresses to the nation where he would clarify some of these issues.”

As diplomat in South Africa, he says,  Mkapa made light of their work because the fundamentals were being established and being depend at home so it was easy to mobilise FDI inflow into Tanzania because the statistics were there to back this up.

“For me it was much easier to get the likes of SAB Miller to invest in Tanzania Breweries, in the Banking Sector we managed to get both Stanbic and Absa, in the tourism sector we had Holiday Inn, Royal Palm and other high end entities such as the Conservation Cooperation Africa (CCA) which had invested in Serengeti, Manyara, Ngorongoro and Zanzibar.”

This was not an isolated case because this scenario played out across the world because diplomats were properly armed with economic diplomacy that was backed up with strong policies and legal frameworks that protects FDI.

“The regulatory frameworks were quite transparent and predictable, so it was a very conducive for foreign investors to come to Tanzania,” he says.

He insists that after President Mkapa had retired there was a lot for his successors to build on.

“The strong foundations was laid during his period, it was now upon his successors to carry forward because the fundamentals were already established, the trust and the confidence of the investor community was there,” he concludes.

Today, the Benjamin Mkapa Foundation remembers a Resilient Leader.