 Economic Reforms |
Responding to global economic and political changes Tanzania government thus chose to accept a long time Brettonwood institutions advice to liberalise the economy, which started at a slow pace in mid 1985 but took real steam in 1990. When the government first accepted International Monetary Fund and World Bank conditions to undertake economic reforms, which among other things advocated devaluation local currency, Tanzania Shillings (Tshs), liberalisation of foreign exchange market, privatisation of over 390 state enterprises and abolition of state control of the economy, real economic growth rate was at 2.6 percent, inflation was at 33 percent and there was generally shortage of necessities on local market as the country's foreign reserves run out of hard cash.
In order to incorporate forces of free market economy, the government has been undertaking major legal and institutional reforms in government ministries, departments and state run enterprise to end monopoly and to build capacity to supervise the new economic structure.
After almost ten years of economic reforms today, over 290 parastatals have been privatised, the economy is growing at 4.8 percent per annum, there is over 500m dollars in foreign reserves while the Tshs value has gone down from less than Tshs 20 to a dollar to Tshs 800 and inflation has been dramatically reduced from between 25 and 30 percent in 1995 to 6.2 percent by June 2000. Free social services offered under government sponsorship have been abolished and a cost sharing scheme has been introduced as the government is struggling to repay an over 6bn dollars foreign debt it owes multi-lateral and bilateral creditors.
 Privatisation |
Perhaps the most conspicuous development undertaken by Tanzanian government in liberalising the economy is the establishment of a presidential appointed Presidential Parastatal Sector Reform Commission (PSRC) by President Ali Hassan Mwinyi in 1992. Tanzanian government is committed to carry out economic reforms the core of which is privatisation of over 390 state enterprises and over 80 core businesses, a duty which PSRC has been given to undertake. "We have been going on with our privatisation process and a lot of our enterprises have been privatised. We are about 70 percent privatised now," Tanzania's Prime Minister Frederick Sumaye said. Although privatisation still remains unpopular among majority of Tanzanians because of the massive retrenchments conducted by new private owners who are recruiting new staff on grounds of merit and not friendship or relationship as was the case before, positive benefits have started being witnessed. Privatised companies such as Tanzania Breweries Limited (TBL) and Tanzania Cigarette Company (TCC), have raised wages by more than 1000 percent above the statutory minimum wage of about 45 dollars per month. TBL and TCC have also emerged as the biggest tax payers to the government in recent years with annual payments exceeding 40m dollars each. With well over 130 companies and over 80 core assets yet to be privatised, PSRC has been given an extra four years by parliament to conclude the process which was formerly required to be over by the end of 1998.
| Donors and debts |
Sound economic reforms; particularly Bank of Tanzania 's success in macro-economic stabilisation, improvement of the investment climate and regular payment of the country's foreign debt, have lured praises and support from the donor community. When President Mkapa's administration came to power in 1995, there was widespread corruption, smuggling of cheap Asian and Middle East consumer goods contributing to poor revenue collection by the government. Tanzanian President Benjamin William Mkapa has also strongly addressed the issue of smuggling by establishing a competent and strong revenue collecting agency, Tanzania Revenue Authority (TRA) in July 1997. The authority has managed to rapidly increase government revenue collection from less than 30m dollars in 1995 to more than 60m dollars per month by the end 1999. The Mkapa administration has further braved local critics by committing 40 percent of the government's annual revenue to repay overdue foreign debts. Tanzania's budget which this year will be around 1.75bn dollars is mainly dominated by recurrent expenditure which this year is allocated over 1.33bn dollars while the remainder goes to development projects which are largely dependent on donor aid. Such impressive developments have convinced the donor community and multi-lateral debtors such that they have compelled them to cancel, reschedule and provide more debt money to the country in support of infrastructure rehabilitation.
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Early this year, Tanzania became one of the three sub-Saharan countries to qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative with a total debt relief of 2bn dollars. "The debt reduction will be slightly more than 2bn dollars in net present value and about 3bn dollars in nominal terms," Bank of Tanzania Governor Daudi Ballali said. The latest credit facility was offered by World Bank in June when 212m dollars was approved of which 190m dollars is for the government to create conditions for a sustainable private sector development, and 22m dollars for health sector improvement of services for mothers and children. Tanzania is thus on the path towards establishing a strong market economy and the Bank of Tanzania Governor hopes that annual economic growth will reach more than five percent next year.
| Democratic reforms |
Apart from undertaking economic reforms, Tanzania has also been compelled to adopt multi-party democracy since 1992 after over three decades of one party rule. During the first ever multi-party general elections in 1995, there were 13 permanently registered political parties of which five fielded presidential candidates either on the mainland or in Zanzibar and parliamentary candidates. The ruling party experienced one of the toughest challenges yet when the four opposition parties namely National Convention for Construction and Reform (NCCR-Mageuzi), Civic United Front (CUF), United Democratic Party (UDP), Chama Cha Demokrasia na Maendeleo (CHADEMA) fielded presidential and parliamentary candidates both on the mainland and in the isles who were equally or more popular than its own candidates.
On the mainland, the ruling party managed to retain power winning over 80 percent of the seats in parliament while President Mkapa won the presidential constituency with 61 percent of the vote.
Things were not as smooth on the islands of Zanzibar where a popular CUF presidential candidate, also former Chief Minister in the ruling party government, Seif Shariff Hamad is said to have clearly won the vote which was manipulated by Zanzibar Electoral Commission (ZEC) in collaboration with the ruling CCM. The ZEC declared CCM candidate Salmin Amour as the World Investment News Ltdr with 50.2 percent of the vote while CUF were given just over 49 percent, on which international observers disputed as having been rigged. The donor community advised His Excellency President of Zanzibar Salmin Amour to form a coalition government with CUF but he refused and thus forcing western governments and institutions to suspend development aid to the spice islands in 1996.
In October 2000, the second multi-party elections are scheduled to take place in Tanzania and already all the five political parties with legislators in both the isles and union legislative assemblies and an emerging new party, Tanzania Labour Party, have nominated their presidential aspirants. Tanzania's Prime Minister Frederick Sumaye is optimistic that his party, CCM will retain power next October but said even if the opposition parties win, "I only hope that the good things that we have done will not be disrupted by whoever comes into power." |
