Tanzania’s October 29 general election proved a watershed in the country’s 38-year history, validating its free market policies even as it raised troubling questions over its union with the semi-autonomous island of Zanzibar.

Garnering 90% of the seats in the Tanzanian Bunge (parliament) President Benjamin Mkapa’s Chama cha Mapinduzi (CCM) Party won a clear mandate in an election the world generally saw as fair on the manland but highly questionable in Zanzibar.

The island of Zanzibar held its own 50- seat presidential election under the loose union arrangement with its mainland neighbour.

Amid scenes of violent rioting, the arrest of 18 senior members of the opposition Civic United Front (CUF) on treason charges, the detention of 150 opposition party activists and the boycotting of a re-vote in 16 of the island’s 50 constituencies, Mr Amani Karume was declared the presidential winner in an election termed a ‘sham and total fraud’ by some international observers.

This will have a negative impact on Tanzania’s standing with the IMF, World Bank and international donors, something that Tanzania can ill afford at a time when the country is requesting extensive debt cancellation and an increase in borrowing facilities.

Socialist experiment jettisoned

Chinese-inspired socialism under Tanzania’s founding father Mwalimu (teacher) Julius Nyerere proved disastrous to Tanzania’s progress following independence from Britain in 1962.

Collectivised agriculture and centralized socialism proved unpalatable to independent minded Tanzanians. Under President Benjamin Mkapa and the Chama cha Mapinduzi Party (CCM), those policies have been discarded in favour of a free-wheeling capitalist system more suitable to the industrious nature of Tanzania’s tribal diversity.

Proof that such policies are effective is highlighted in a UN report confirming that the poverty level fell from 63 to 51% in seven years.

Determined to accelerate this progress further, President Benjamin Mkapa and his team established a comprehensive blueprint for infrastructure development designed to lift the standard of living of all the country’s citizens.

Foundations of prosperity

By upgrading Tanzania’s main transport arteries to all-weather status, approving the construction on a proliferation of new hotels, lodges and motels and licensing cellular phone companies to service the local market, Tanzania is modernising the antiquated, ex-colonial infrastructure that held back its development for nearly two decades.

Private industry has risen to the government’s challenge with enthusiasm. Cyber cafes on every corner, locally produced General tyres, Addax/Onyx service-convenience stations, and an ever increasing amount of horticultural products air-freighted to Europe are the result.

With unrivalled tourist facilities, thriving cash crop production despite the ravages of El Nino, and a vast array of mining ventures generating increasing amounts to foreign capital, Tanzania is well on the road of capitalism, backed by Central Bank of Tanzania guarantees on foreign capital repatriation.

Tanzania’s external debt in the year 2000-2001 is projected at $7.6bn, a not unreasonable figure considering the planned 30% development expenditure. An improving environment for private sector development and increased revenue collection are now the cornerstones of the government’s budgetary policy.

To reinforce foreign donor confidence, Tanzania has installed a modern computerised system to track the issue of LPO’s (local purchase orders) and to standardise expenditure control and fiscal discipline enforcement.

In a speech last July in Dodoma, President Benjamin Mkapa reiterated his satisfaction at the level of development achieved and reaffirmed his government’s strong belief in the multi-party democracy that led up to the elections in October. Contested by both his CCM (Chama Cha Mapinduzi) Party and at least five opposition parties, this second democratic election set Tanzania well and truly along the path of free and fair governance.

“We have achieved significant progress in developing the economy, with a 131% increase in the collection of government revenue from TShs299.9bn ($1=TShs800) in fiscal 1994-5 to TShs694bn in fiscal 1999,” President Mkapa stated, while confirming a government-mandated increase in the minimum monthly wage from TShs17,500 to TShs 41,000.

Going further, the President re-affirmed his government’s intention to beef up the judiciary and the rule of law while commending members of parliament for approving 91 bills intended to introduce major changes in the management of the economy and to create a favourable investment climate for the participation of the growing private sector.

Ten countries are investing heavily in Tanzania. With 190 projects, Britain ranks number one, followed by Germany, the Scandinavian countries and even South Africa which has 25 projects, among them are investments by Castle Breweries, Kilombero Sugar Scheme and the Amalgamated Banks of South Africa.

Tourism ranks as the number two industry in Tanzania, with ever-increasing foreign investment involved in developing a sophisticated leisure industry infrastructure. Accounting for 14% of Tanzania’s GDP, tourism earned $733.28m in 1999, ranked second only behind the 34% of GDP generated by the agricultural sector. With a 20% increase to 777,219 recorded visitors in the last tourism season, Tanzania’s thriving tourism development is set to capitalise on the country’s unrivalled wildlife attractions with a projected annual, double- digit growth rate over the next 10 years.

Gemstone mining, gold production and hydrocarbon exploration are all experiencing an upsurge in foreign investment interest. With gold production running at 1.4m ounces per annum, Tanzania has targeted the number three spot in world production with four new projects expected to come on stream by the year 2003, surpassing even Ghana and South Africa in production capacity. (See stories on pages 18 - 20)

Reversing socialist mind set

Tanzania is fast becoming the Tanzanite jewel on the African continent. Problems still exist however. Years of socialist mind set have proved difficult to reverse in just eight years, but Tanzanians are natural born entrepreneurs, as witnessed by the rapid growth of the middle class.

Tanzanian women in particular have risen to the challenge, a not inconsiderable feat in a nation with a large Muslim population. Establishing flower and garden nurseries, small grocery stores, curio centres and secretarial businesses, the results of their efforts are a prominent feature on every town and village main street.

With the October 29 election now history - marred only by a localized Zanzibar power struggle - the Tanzanian government under re-elected President Mkapa has both a resounding endorsement and a strong mandate to continue its free market policies.

Enjoying a comfortable majority in parliament, President Mkapa’s first order of business is the privatisations of the infrastructure, particularly the inefficient telephone, railway and aviation sectors.

As such the government has proposed a number of parliamentary bills directed at opening opportunities for foreign investors interested in participating in Tanzania’s development under its capital repatriation guarantees.

Positive investment climate

Tanzania’s star is on the rise. President Clinton’s September 2000 visit to the country, the first ever by a sitting US President, was a milestone of symbolic significance.

At a time when foreign aid under a new American administration is expected to be severely curtailed, Tanzania, with its transparent election process and forward-looking fiscal policies is well positioned to garner an ever increasing amount of both US and World Bank development aid.

Projecting an increase in economic growth from a current 4.1% to 5.8% by the year 2001 and in reducing inflation to below 6.5% - its lowest level in 20 years - Tanzania has set extremely ambitious targets in its drive to improve the living conditions of its multi-racial population.

Tanzania is an African country with a positive investment climate. With extensive natural resources, unlimited agricultural potential, and unrivalled wildlife attractions, Tanzania’s future appears positive.

President Mkapa summed up his government’s intentions thus: “If the Almighty God wishes, we will build a nation with a strong economy, a nation that will be the shining example in Africa for peace, tranquillity and development.”

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