Work in Progress
Not in final form for publication
Comments welcome. Please send them to [email protected]
From the Arusha Declaration to Big Results Now: The Political Economy of Tanzania
Andrew Coulson, University of Birmingham, England
Conference on 50 Years of Development in Sub-Saharan Africa - The Experience of Tanzania
Bradford, England 29-30 May 2014
Tanzania holds an important place in the study of political economy in less developed countries. In
the 1960s, those who wrote about Tanzania were influenced by Western development economists,
but also by events and theorists from Eastern Europe, and by Maoist thinking. In the mid-1970s
these were criticised by neo-liberal Marxists who looked to the tiger economies of South East Asia as
models. In the last ten years or so, as the country has endeavoured to develop on the basis of free
markets and a floating exchange rate, the concept of political economy has been used by writers
from the World Bank and American universities to consider the interaction between politics and
economics in the development process, the role of institutions, and the impact and functions of
corruption in the development process.
The 1967 Arusha Declaration, Tanzania’s commitment to socialism, had two balancing components –
leadership conditions designed to prevent an elite becoming distanced from the rest of the
population, and the nationalisation of the large-scale means of production and financial services. But
Tanzania’s economic position deteriorated rapidly in the 1970s – declining terms of trade made
much worse by the first OPEC oil shocks, the impact of forced villagization, poor weather, and poor
marketing systems –and its situation became much worse in the 1980s and early 1990s.
The country rejected the conditions proposed by the IMF, including devaluation, until 1986. After
that there was an almost complete reversal of what had gone before. State control was abandoned
with regard to imports and exports, large industries, banking, and marketing. Corruption, which had
been present in the 1970s, greatly expanded in the 1980s when civil servants could not survive on
their salaries alone, and from the mid-1990s on became a major political issue. However, in the
same period new reserves of gold were discovered or exploited, as well as oil, gas and other
minerals. The population grew to 48m by 2013 with Dar es Salaam exceeding 4m – Tanzania was
becoming an urban economy – but the population numbers in the rural areas also continued to
increase. Agricultural production, especially of food, grew faster than overall population growth,
and with high world prices the country had the possibility to export both maize and rice.
The paper will look at this economic change and opportunity in the context of class formations as
they developed and are developing, and the ambition for the country to achieve the prosperity of a
middle income country within 25 years, paying particular attention to the latest policy process, Big
Results Now, assisted by specialists from the Malaysian Performance Management and Delivery
Unit.
1
Political Economy
The classical economists, notably Adam Smith, David Ricardo and Thomas Malthus wrote about
political economy – how wealth was created, and how it was distributed between classes –
landlords, rentiers (owners of finance), manufacturers, workers and peasants.
Karl Marx in Das Kapital Volume 1, turned this thinking into a determinist theory of development –
societies would proceed from a state of primitive existence, to feudalism, which would give way to
capitalism, which would pave the way for a revolution in which the working class would take over
the state. In his later years, however, Marx recognised that some feudal, or “asiatic”, societies
would be stable, that the stages were not pre-determined, and that each society should be studied
on its own terms (Shanin 1983; Ramirez 2011; Coulson 2014). But the mainstream Marxist tradition
stayed with the earlier Marx, and Lenin, in The Development of Capitalism in Russia (1899) and
Imperialism the Highest Stage of Capitalism (1917), took determinist theory as given. In the 1950s
this thinking was applied to third world development in what became known as dependency theory
(e.g. Baran 1957, Prebisch 1963, Amin 1977). Colonies were exploited by the capitalist classes of
their ruling countries for their raw materials: minerals and agricultural products; after
Independence, this exploitation continued through the activities of large multinational companies.
These thinkers on the left as well as neo-Keynesian economists argued that these countries had to
accumulate surpluses for industrialisation, which would be the next “stage” of economic growth; the
only means to do this was, in the short term, to increase their exports of primary raw materials.
The sociologists Hindess and Hirst (1975), among others, attempted to identify and specify many
detailed forms of modes of production. There was a reaction against this by scholars who pointed
out that classes do not inevitably act in their class interests (Nyerere and ujamaa being a case in
point), and that this kind of sociology takes the history and agency out of political economy. Leaders
have choices, and how they make them will have an influence of what happens in their countries
(Hussain and Tribe 1981: 148-9). Coulson (1982 and 2013) illustrates this use of political economy to
structure a historical approach to what happened in Tanzania.
In 1981 Robert Bates showed that the effect of marketing boards especially in West Africa but also in
Tanzania was to transfer resources from the agricultural sector to the state – a form of primitive
accumulation. This led to research on institutions and in the 1990s reinforced the emphasis of the
Washington consensus in favour of market-based policies. The language of political economy began
to be used by economists and political scientists who recognised that political power and resulting
policies and strategies impact on economic growth and reacted against the narrow empiricism which
characterised much of economics and development economics. This is how Wikipedia summarises
this new approach to political economy:
Today, political economy, where it is not used as a synonym for economics, may refer to very
different things, including Marxian analysis, applied public-choice approaches emanating from
the Chicago school and the Virginia school, or simply the advice given by economists to the
government or public on general economic policy or on specific proposals. A rapidly growing
mainstream literature from the 1970s has expanded beyond the model of economic policy in
which planners maximize utility of a representative individual toward examining how political
2
forces affect the choice of economic policies, especially as to distributional conflicts and
political institutions. (Wikipedia, “political economy” accessed 17 May 2014, at
http://en.wikipedia.org/wiki/Political_economy)
This kind of use of the term can be seen in a recent World Bank article (Hoffman 2013), or in the
recent book on Tanzania by Michael Lofchie (2014) in which he examines the class interests of the
Tanzanian elite and demonstrates how with an overvalued exchange rate, anyone who can get
access to foreign exchange and trade on unofficial markets, can multiply their wealth many times
over; the fact that this was happening widely was, he suggests, the main reason why for a period in
the 1980s members of the elite who could access foreign exchange benefited from opposing
devaluation of the Tanzanian shilling. Only later, in the 1990s and subsequently, by which time many
business links were established, did they realise that they had even more to gain from open markets
- and ceased to oppose devaluation.
The debates in Tanzania
Before and after Independence in 1961, the strategies followed in Tanzania were not materially
different from those that could be found in most other former colonies in Africa. Agriculture was
growing fast, based largely on the “improvement approach” (small scale agriculture and cooperative
marketing). The Government also promoted the “transformation approach” (large scale agriculture
and irrigation), and especially “settlement schemes” similar to those in Kenya, though most were on
virgin land than former settler farms. But by 1966 it was clear that the settlement schemes had
failed. In 1967 Nyerere committed the country to African Socialism. The Arusha Declaration – a
statement of socialist principles - was followed by nationalisation of the banks and major industries
– and then of other financial institutions, much of the large scale agriculture, and all imports,
including consumer goods. A second 1967 policy statement “Education for Self-Reliance” proposed
a reorientation of education to make it directly relevant to development challenges. A third 1967
policy statement, “Socialism and Rural Development” was a commitment to “ujamaa” [socialist]
villages. These were supposedly voluntary, but from 1969 onwards “villagization” was imposed by
force.
One of the paradoxes of this was that the commitment to self-reliance made the country extremely
attractive to aid donors. Aid to Tanzania rapidly increased, especially from the Nordic countries and
the World Bank.1
The key economic strategy statement of this period was the 1969-74 Second Five Year Plan, largely
drafted in 1968 by a team coordinated by Brian van Arkadie, but with Cleopa Msuya, Principal
Secretary at the Ministry of Economic Development and Planning, playing an important role.
Volume 1, an in-depth analysis of policies, concluded that it was possible for the country to grow at
6.5% per annum. The target growth rate for marketed agriculture was 7.3% per annum. Volume 2
refers to a list of 380 industrial projects – mostly import substitution or processing of agricultural
products such as sisal - but there was little discussion of how these might be coordinated, or funded.
Most were never implemented, which was perhaps just as well given that almost all the industrial
projects that were implemented were profoundly uneconomic [e.g. inefficient import substitution].
1
Sebastian Edwards titles his book Toxic Aid (2014), on the basis that the donors were uncritical of what was
happening at this period, and should have reduced their aid or at very least threatened to do so.
3
In 1970, Issa Shivji, then an undergraduate in the Law Faculty of the University of Dar es Salaam,
published his essay “The Silent Class Struggle” as a special issue of the student magazine Cheche.2 It
provided a much more local form of dependency theory. The class enemy was no longer just the
ruling classes and owners of large companies in the West, it now also included a “bureaucratic
bourgeoisie” inside Tanzania. This was an accurate description. Power had been handed to an
educated elite, almost all recruited into the civil service or other parts of public administration
immediately after Independence. It was this group that signed contracts and had at least some
responsibilities for what transpired, even if, overwhelmingly, power was still held outside the
country.
In the early 1970s the Caribbean economist C Y Thomas then at the University of Dar es Salaam
formalized what was understood as a “basic industries strategy” – the deliberate creation of
intermediate goods producing industries – steel, basic chemicals, cement, plastics, textiles, as well as
electricity generation and machines to make machines.3 A country that possessed all these, could, he
argued, make almost any consumer good. This was the strategy followed in the Soviet Union
adapted as far as possible to small countries in Africa and the Caribbean; whether and how it would
work in a country as backward as Tanzania was another matter. In the end the argument became
irrelevant, because the wherewithal to invest in these industries was not there. But meanwhile
another group of left-inclined academics was looking at the tiger economies of Asia, especially at
that time South Korea and Taiwan, and arguing for a much more open form of industrialization (Kay
1975, Warren 1980, Foster-Carter 1985, Sender and Smith 1986).
The oil price rises in 1973 were very bad news for Tanzania – especially as the world prices for its
agricultural exports showed no corresponding rises. The forced villagization of 1969-1974 had an
adverse impact on agriculture in those parts of the country where it was implemented.4 State
control of the import trade led to extreme shortages of many essential items. By 1979 the IMF was
making it clear to Tanzania that there was a structural imbalance in the balance of payments, and
proposing retrenchment in the public finances, and devaluation. Nyerere, supported internally by
the academic turned Minister of Finance, Kighoma Malima and externally by a number of academics
including Ajit Singh of the University of Cambridge and the former advisor to the Treasury Reg
Green, adamantly refused.5 First in 1982 and later, more formally under the auspices of the IMF in
1984-5, groups of economists including Gerry Helliner, Knud Eric Svendsen, Tony Killick and the
Tanzanians Benno Ndulu and Ibrahim Lipumba tried to broker a deal. Significant devaluations
ensued, but not enough to deal with rampant inflation or a rising disparity between the official
foreign exchange rate and the unofficial. Finally, in 1986, after Nyerere had stood down as President,
2
For a study of the contributions of left wing students at the University of Dar es Salaam in this period, see
Hirji (ed. 2010).
3
A basic industry strategy is also discussed in Justinian Rweyemanu’s book Underdevelopment and
Industrialisation in Tanzania, Oxford University Press, 1973. Thomas is more analytical, basing his definition
of basic industries on those which have forward linkages to a wide range of other sectors in input-output tables
for developed countries.
4
This was not the whole country, because the coffee-growing highland areas were deemed already to be in
villages, as was much of the cotton-growing area South of Lake Victoria, and cities such as Dar es Salaam. Thus
Edwards’ claim that the numbers of people living in villages was 9 million by 1975 and 13 million – nearly the
whole population – by 1977 is an overestimate; people living in the coffee and cotton producing areas did not
move, nor in the cities (Edwards 2014: 88); Lofchie’s figure of 1.6 million by the end of 1974 is nearer the mark
(Lofchie 2014: 81).
5
This paragraph draws on Edwards (2014:96ff.)
4
his successor Hassan Mwinyi came to terms with the IMF. The Tanzanian shilling was devalued so
that a US dollar exchanged for 17 shillings rather than 40, the marketing of crops and the import of
consumer goods were opened to the private sector, much of Tanzania’s accumulated national debt
was written off, and a number of foreign donors again started lending to Tanzania. The cuts in
government spending were such that many of the achievements of the Nyerere period, notably near
comprehensive primary education and a health point in almost every village, ceased. Government
employees could not survive on their official salaries – so either had to create businesses in parallel
to their official jobs, or engage in corrupt practices. From 1995, under President Ben Mkapa, there
was mass privatization and closure of many factories, and Tanzania became an openly capitalist
state. Salaries rose. Many in the rural areas, or employed in the informal sectors in the urban areas,
were little better off (Atkinson and Lugo 2010).
In the 1990s, and on to the present, Tanzania recorded significant growth in its GDP6. Much of this
came from minerals, especially gold, where high world prices enabled new large mines to be
opened, and Tanzania to become the third largest producer of gold in Africa (after South Africa and
Ghana).7 Tourism also flourished, aided by political uncertainties in neighbouring Kenya. Mobile
phones spread to almost every centre of population, and the internet to most settlements on main
roads. There were building booms in almost all urban centres, but especially Dar es Salaam, new
supermarkets, office buildings and hotels, and the road transport network was improved by new
tarmac and bridges (e.g. over the Rufiji South of Dar es Salaam). Highly ambitious plans were
prepared for duty-free industrial areas, new ports and new forms of public transport (notably the
advanced bus-based rapid transit system for Dar es Salaam which involved extensive demolition and
road widening). Agricultural production also grew, faster than population, though less with the
traditional exported crops, and more with maize, rice and other foods.
The political debates were increasingly about corruption. High profile cases were in electricity
generation, an air traffic control system, an office building for the Bank of Tanzania, and its
allocation of foreign exchange to companies (Policy Forum 2013; Aminzade 2013: 337-349; Lofchie
2014: 217-220). The details were widely discussed in blogs, in publications by NGOs such as
Transparency International , and in the newspapers. Academics were slow to follow up. Lofchie
(2014: 179-80), much of whose book Is about corruption, includes a section which sets out some of
the conditions under which it may have beneficial consequences – though not drawing on the more
radical formulations of Mustaq Khan (e.g. 2000) who relates it to the benefits that can arise from
monopolies.
The contemporary role of the state – Big Results Now
By the end of the 2000s, many Tanzanians began to realize that while an open economy and the
ready availability of consumer goods was very desirable, completely unfettered markets were not
necessarily in their best interests.8 They looked to countries in Asia, especially Vietnam, which had
6
There are however problems with the statistics, see below, and GDP is not necessarily an appropriate measure
of welfare.
7
There was also a rapid increase in small scale “artisanal” mining – see Bryceson and Jønsson (2013).
8
The point was made at the Annual Research Workshops of the organisation REPOA in 2012 by speakers from
Vietnam and China, in 2013 by a keynote speaker from Malaysia, and in 2014 by speakers from Japan.
5
survived a very unpleasant war, followed by a period of socialism, and then enforced structural
adjustment, but where the state had kept control of key aspects of the economy; growth in Vietnam
was faster than in Tanzania. Links were maintained with China – whose contracting firms
increasingly won building contracts in international competition. But the most interesting
exchanges, and perhaps those with greatest long term impact, were with Malaysia, where leading
politicians and civil servants were explicit about the need for an active and interventionist state (Tan
2013).
President Kikwete visited Malaysia in 2011, and was impressed with their “delivery lab” approach to
planning, in which case stakeholders in relevant sectors were closeted in a hotel for 2-3 weeks until
they had agreed an action plan for their sector. The Malaysians agreed to send key experts from
PERMANDU, their Performance Management and Delivery Unit, to explore how such an approach
might work in Tanzania. In October 2012 six “focus areas” were agreed by the Cabinet: Agriculture,
Education, Energy, Transportation, Water and Resource Mobilization. Between February and April
2013 the six “labs” met and worked long hours at the White Sands Hotel outside Dar es Salaam.
Their proposed “implementation status” was then agreed by the Cabinet, and Key Performance
Indicators were set for the managers of the chosen sectors. The total cost was calculated at over
Source: BRN (2013a) Presentation to PER Annual Review Meeting, 4th October 2013
6
$10b over 3 years. However for the first year less than half of this was available from the
government budget or other sources; it was hoped that much of the balance would come from the
private sector (BRN 2013a).
This is an interesting and innovative example of South to South cooperation. How well it works is
another matter. Such an approach makes good sense in sectors such as transportation, where
projects can be identified (such as reconditioning or rebuilding the Central Line railway, or improving
the capacity of the ports) or energy (a series of power generating projects). It is less clear that it can
lead to radically improved pass rates in education, though the experience of the Asian tiger
economies is that improved education is essential to economic growth. Getting a water supply to 15
million people involves detailed work in very many different places and it is hard to see how it can
be planned in a workshop in Dar es Salaam. It is remarkable, and perhaps significant, that
manufacturing was not one of the six labs (Is the assumption that manufacturing industries do not
need help from the state in the way that, say, large-scale agriculture does?)
The plans chosen in agriculture are extremely ambitious (BRN 2013b). 25 commercial farms for rice
and sugar cane total over 350,000 hectares, with almost the same area to be farmed by smaller scale
“outgrowers” supplying their crops to one of the commercial farms. To achieve this there will be
fast-track routes for the private sector to gain access to the necessary land, and a dedicated unit to
attract outside investors. A “land task force” will visit the areas affected, to work with the existing
small scale farmers and help them prepare for what is to come, and then conduct soil surveys,
environmental assessments, land use plans (including demarcating the sites and erecting beacons),
and work with the farmers on “pre-engagement training”.9 The 78 collective rice irrigation and
marketing schemes will appoint professional managers to existing irrigation projects, to work with
farmers and their collective organisations; the rice yields on these schemes are expected to double.
275 warehouse-based marketing schemes are designed to assist maize farmers in the Southern
Highlands, Rukwa, Mpanda and Songea – a continuation of the present Warehouse Receipt Schemes
in those areas.
This approach is an epitome of top-down planning. The plans are drawn up by a lab of technical
experts and investors or potential investors with interests in the specialist areas. Only a fraction of
the money needed has been identified. Many of the targets are, almost certainly, unrealistic – such
as the targets for irrigated agriculture, or increases in overall average agricultural yields. Villagers or
local residents are involved, if at all, in a cursory manner – as the objects of a process not the
subjects. As far as ambitions for large-scale agriculture are concerned, nothing on this scale has been
seen since the Groundnuts Scheme of the 1950s – and what is proposed now could easily repeat
many of the mistakes that were made at that time.
9
Tanzania has been accused of land-grabbing (e.g. Sulle and Nelson 2010; Pearce 2012) although a recent
article points out that the companies allocated land to grow bio-fuels have made slow progress (Abdallah et al
2014). However, it is clear that the Big Results Now plans, and the earlier Kilimo Kwanza [Agriculture First]
policy commitments give strong support for large scale agriculture. Both BRN and Kilimo Kwanza include
commitments to speed up the allocation of land for large scale farming, and the legislation allows land disputes
involving foreign companies to be settled in international courts, so that even if the land is not developed it is
likely to remain in foreign ownership for many years.
7
The Political Economy of the 21st Century
The bureaucratic bourgeoisie of the 1970s is converting itself into a property-owning bourgeoisie.
The process is uneven. It is a product of the clear commitment to capitalist development in the
Mkapa and Kikwete years. It has been made possible partly by corruption, which enabled capital to
be accumulated in private hands. It goes along with an encouragement of direct investment by
international companies. It will almost certainly exacerbate inequality.
Tanzania’s reported GDP growth rate of just under 7% is in many regards an artificial figure –
boosted by rapid growth in minerals (especially gold) and tourism. The figures for agricultural
production and yields, and for other activity in the informal or subsistence sectors, are to say the
least suspect (see e.g. Ponte 2002; Edwards 2014: 242-252). Currently, the gold market has stalled,
but there are many other mineral exploitation projects in the pipeline – for iron and steel, coal,
uranium, nickel, rare earths and manganese, to name but some. China is a key investor in several of
these projects. However, the key growth in the future is likely to come from natural gas, exploited in
the Indian Ocean off Mtwara and Lindi and exported in liquefied form. There are small quantities of
oil, but, with the gas, sufficient to develop local chemical and plastics industries. But in terms of
direct employment none of these is going to make an impact on Tanzania’s population which will
rise to 50 million in the next few years.
Corruption in a country such as Tanzania is both functional and dysfunctional. It makes possible an
accumulation of capital in private hands, but that capital may end up in havens abroad. It may, as
Lofchie argues, enable entrepreneurs to break free of bureaucratic regulation and red tape. But it is
also debilitating, and creates an atmosphere of resentment and disillusion. All political parties are
against corruption, but opposition parties such as CHADEMA are in a stronger position than ruling
parties to exploit the disillusion.
A majority of Tanzanians will for at least a generation continue to live in rural areas and to depend
on agriculture for survival and their needs for cash. Here the prescriptions offered by extension
workers for how small farmers should increase their productivity are tired, and often not
appropriate – most farmers have tried them and could implement them if they so choose. But
instead they minimise risks and remain as self-reliant as they can. Much of the hard work is done by
women, but they are not necessarily involved in the decision making about cash crops, and are at
risk of losing their land and livelihood if anything goes wrong (Da Corta and Magongo 2011). They
will not gain much from large scale farming (Koopman and Faye 2012). The real constraints on
increased production from small scale farmers lie in marketing – if farmers are not paid, or not paid
on time, or not paid fairly, for their crops, or if they have no way of preventing them deteriorate
when stored, they will produce not increase their production of those crops (Ponte 2002). On the
contrary, they will choose crops that can be sold in small quantities on local markets, or look for
other means of earning the cash they need. Thus the emphasis on warehouses and storage makes
good sense, as well as mall scale irrigation. There is potential in the Southern Highlands to expand
the “green revolution” there based on hybrid maize and fertilizer (Rasmussen 1986). But in many
parts of the country the investments that would most help small-scale agriculture are in feeder
roads and better market information systems. It would be possible to write a political manifesto for
the rural areas of Tanzania, just as the “peasant parties” did in Central Europe between the two
World Wars – and won large numbers of votes (Mitrany 1951). But so far there is no suggestion in
8
Tanzania that small farmers can organise themselves as a political force, and win elections, or that
“worker-peasant alliances” can be formed in which the workers produce the agricultural
implements, inputs and consumer items needed to improve productivity in the rural areas, while the
farmers produce the food to feed both urban and rural areas. The politics of Tanzania remains
urban, and, in the last resort, elitist. Whether the bourgeoisie that is emerging has the capacity to
improve life for the majority of Tanzanians in rural areas remains an open question.
Returning, finally, to political economy, power in Tanzania is held by a relatively small elite or class
some of whom are successful in business and own significant amounts of capital, others depend on
salaries from state organisations or parastatals and have access to foreign exchange. They govern in
close alliance with donors and their organisations, and, increasingly, with large international
companies. Their interests are in exploiting Tanzania’s raw materials, including agricultural products
produced on large farms. Meanwhile most workers are in the informal sector, where they are poorly
organised and subject to exploitation. In the rural areas, agriculture is also part of the informal
sector. But the elite does not depend on small scale agriculture. However, if surpluses are not
produced and sold from the informal agricultural sector, which becomes seen only as a kind of
welfare state keeping the majority of the population alive, and if this sector is not seen as the or at
least a major market for the products of manufacturing industries, there will be at best slow growth
in this sector, and rural poverty will continue – no dissimilar to a path followed by, say, Nigeria. The
challenge for economists is to demonstrate how surpluses can be generated from small scale
agriculture, and for politicians to find ways of using democracy to ensure that this path is followed
so that the whole population can participate in economic growth.
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