Koba,Zakumi,Nyani McCain,Kuhani,Kafara,Pundit,Kishoka,Mwanakijiji,Jasusi,...
..samahani kwamba hii posting hapa chini ni ndefu kidogo.
..hiki ni kipande cha ripoti AID and REFORM in Tanzania.
..Ripoti hiyo iliandaliwa na wasomi toka Goteborg University na ESRF.
..Ripoti nzima inapatikana
kwa kubonyeza hapa
1979-1982: Stalemate
After the collapse of the commodity boom of 1975-1978, the Uganda war (1978-79) and thesecond oil crisis in 1979, the economy was faced with very severe economic problems. As aresponse to this, Tanzania agreed to a stand-by credit with the IMF in 1979, but since it failed toobserve the agreed budget ceiling the agreement was cancelled. During the discussion of therelease of the second tranche the head of the visiting IMF mission was ordered to leave thecountry. The Minister of Finance, Mtei, was perceived by President Nyerere as being to close tothe IMF and was removed. Mtei was succeeded by Jamal, who was less eager to reform the economy. Nyerere made a speech in which he criticised the IMF for trying to set itself up as the International Ministry of Finance and rejected their demands. Tanzania then turned to the WorldBank for assistance, but although the Bank had been supportive throughout the 1970s it now refused to support the Tanzanian government. Then there was little communication for about two years until 1981, when the Bank indicated that it could provide quick-disbursing aid if certainpolicy changes were undertaken and an agreement could be reached with the IMF. The latter demanded at 50-60 per cent devaluation, a significant reduction of the budget deficit, removal or reduction of consumer and producer subsidies, positive real interest rates, and higher agriculturalprices and import liberalisation. Some new measures were proposed in the National Economic Survival Programme (NESP) of 1981, which was essentially part of an application to the IMF.
The goals stated in the plan were to increase export revenue and to eliminate food shortagesthrough various supply side measures and to reduce public expenditures. This was to be achievedby tighter state control of public expenditures and increased production. The plan was whollyunrealistic, and the IMF found it to be completely lacking. Tanzania anti-reform elements arguedthat the problems causing the crisis were external and not internal policy weaknesses. The government's position was that Tanzania was a structurally weak economy and that the remediesproposed, including the dismantling of the socialist structures and major cuts in social spendingon education, health and water, would not help revive the economy. The government was notready to accept to carry out significant reforms. This partly explains why NESP I (1981) and NESP II (1982) were more of exhortations than policy change documents.
Moreover, at this time there were very few senior officers in central ministries capable as a groupto undertake independent macro-economic and sectoral analysis to generate new ideas and develop new programmes to address the crisis. Local intellectual capacity was not sufficientlyavailable to engage in a meaningful debate with the IFIs and even to counter-balance the ruling party's inclinations towards maintaining the status quo. There was excessive reliance on ahandful of expatriate advisors, most of who preferred to toe the party line. Sometimes, theseadvisors held divergent policy perspectives and it was a task to maintain harmony among them.
The academia at the University of Dar es Salaam had generally been weakened – either by thesocialist ideology or by opportunists within the institution who were eager to please the partyleadership. To identify with the party could open up opportunities for accelerated promotions orfor transfer to more remunerative positions in parastatal organisations or political structures.Because of a severe shortage of qualified people, such transfers were very frequent at the timeand contributed to the lack of consolidation of intellectual policy groups within the Governmentor around it.
1982-1985: Hard internal debate
The country was now in a desperate situation with the exchange rate greatly overvalued andexports at very low levels. The bilaterals and the World Bank were trying to find some middleground and sponsored a Technical Advisory Group (TAG) with well-known economists, whowere asked to come up with some compromise package. It proposed a more moderate devaluation, but the government did not accept even this. The government used the report toproduce its own reform package, which was a dilution of the policy changes, which wereproposed in the TAG report. This revision was done by the Planning Ministry, then underMinister Malima who was basically anti-reform (1980-1992), although he later became morepro-reform (1992-94). The government turned to the Nordic bilaterals to fill the gap left by the IFIs, but by now also those were becoming increasingly critical and did not provide the extrafunds. There was thus a steep decline in aid flows between 1982 and 1985, which was period ofextreme economic crisis.
Still, a sign of some movement on the government side was the appointment in 1982 of the then PM Msuya as Minister of Finance: He was more aware of the need to mend fences with the IFIs. Together with Rutihinda, who was the PS in the Ministry of Finance at the time, he tried within the government to push for reforms. There were similar attempts at the Bank of Tanzania. Still,the supporters of reform in the Ministry of Finance had to work hard to build up support for it within the government. There was at that time a large dominance of hard-line left-wingers in the Cabinet opposed to the reforms, with the Minister of Finance Msuya as one of the few advocatesof reform. The Minister of Planning Malima was a leading opponent of the reformers, and he quickly brought in Ajit Singh from Cambridge to write a counter-proposal to the reform plan.There was a head-on collision between Msuya and Malima, where the latter even wrote a memo to the President accusing the reformers of being "traitors". The parastatal establishment was also a major stumbling block in the process, although some could see that devaluation would make itpossible for them to improve their results.
It took time for the government to realise that parastatals were a problem. First, there wereattempts to peg the desired exchange rate at a level, which was sufficient to clear losses ofparastatals. This point was favoured very much in 1983 and 1984. Second, the extreme opposerof the reforms, Malima, submitted a paper to the ruling party suggesting that the problem ofparastatals was rooted in the existence of the private sector. The private sector would have to bephased out in order to give room for parastatals to recover! Presumably he had in mind that private sector was doing harm to the parastatals through the deals they had with them (e.g.supplying them with overpriced goods and services).
Public opposition to the policies of the early 1980s was limited, and people rather chose to withdraw into subsistence or to find other ways to deal with shortages and regulations. Parallel markets emerged, as did illegal cross-border trade. The rapid expansion of the underground economy as well as capital flight undermined the tax base. Semi-public discussions was started at the behest of the reformers within government, and an informal network of economists from the University of Dar es Salaam as well as private consultants plus personnel from key ministriessuch as agriculture, transport, industry and trade and the Planning Commission was set up toprovide a forum for debate and to increase the understanding of the politicians and the policymakers.
The strong political leadership made it possible to push through major decisions (or to rejectothers) without proper analysis and debate. Nevertheless, there were individuals of courage –notably Edwin Mtei or Cleopa Msuya – who could put forward reform ideas to the partyhierarchy and the Cabinet. Naturally, such people faced major resistance from the party and, assuch processes go, vacillating positions developed within the Cabinet depending on who couldget the President's ear. But the increasingly precarious social situation arising from severeshortages of consumer goods, especially in large cities, forced the leadership to search for solutions and, ultimately, to consider seriously the implementation of more comprehensive reform packages.
Up until 1983 the government essentially preserved existing policies. Instead of introducing measures to deal with the dis-equilibria, the government pursued campaigns against corruption and profiteers. Stewart, Klugman and Neyapti (1999, p. 82) argue that a side-effect of the political stability that characterised Tanzania was that it postponed pressures for economic reforms that were essential for economic development. Adam et al (1994) argue that the backing from a range of bilateral donors also made it possible to delay adjustment.
A second home-grown Structural Adjustment Programme (SAP) was anyway launched in 1983.This was more ambitious than the previous one, but it did not change any of the majorparameters of policy. Here one tried to identify a series of structural problems in the economyand then adjust the type of state-intervention for the economy to do better. It was not a matter ofliberalisation and deregulation. The main aim was to increase agricultural production andexports, and among the measures was a modest devaluation. It did have some positive effect on exports and agriculture, but was far from closing the gap between the official and the parallelrates. There was a further tightening of fiscal and monetary policies. Still, the measures were insufficient to reverse the trend. The situation remained grave, and there was increasing public criticism of the shortages. The increasingly tough security measures against smugglers and profiteers only increased the goods shortages, and it was mainly the smaller culprits that were sentenced in the end. Campaigns against corruption and profiteers were directed at attacking stockpiling of goods and improving distribution of goods. It was believed that the problem of shortages was caused by hoarding or unfair distribution of goods. When the shortage of goods became worse even with the campaigns, then the champions of this campaign began to realise that the problem of shortage of goods was more deep-rooted. This realisation influenced the decision to permit partial import liberalisation in 1984. In fact Mr. Sokoine, then Prime Minister,led the campaign against profiteers and later he also led the initiative towards partial liberalisation starting with transport (imports of pick-ups were allowed and supply improved)and these positive results were used to argue for further import liberalisation.
The failure of SAP was also aggravated by the two other factors. First, the receding aid inflows worsened the already low levels of capacity utilisation and therefore worsened the shortage ofgoods. Second, the allocation of whatever foreign exchange was available through CIS favoured projects, which had earlier been funded by the respective donors rather than follow efficiency criteria. The few resources available were spread too thinly to be effective.
In 1984 economists from the University of Dar es Salaam started to hold public meetings, wherethey advocated liberalisation measures. The initial discussions targeted policy makers andpoliticians and some private sector leaders. These meetings were, of course, against the officialparty line, but were supported by the reformers within the government, for example in theMinistry of Finance and the Bank of Tanzania. So in 1984, in the face of extreme goodsshortages, the government finally made a more substantial move. It chose to allow own fundedimports, it devalued the currency and it increased agricultural prices by about 30%. There was anexport retention scheme, and user charges were introduced in health. This was the first step onthe road to the restoration of relations with the IFIs. There was now some improvement in theeconomy and imports could increase somewhat. The government tried to mend relations with theIMF, which felt that the new reform programme was a least a basis for further discussion. Talks were reopened between the Government and the IMF at the end of the Nyerere era.
