caro
a smittering smattering of observations and thoughts from my summer in east africa
Sunday, September 4, 2011
Arrivals Gate
Thursday, August 18, 2011
Taking it all in...
Wednesday, August 3, 2011
Kanga kanga kanga!
Husband in Arusha!
Thursday, July 28, 2011
Field testing
Sunday, July 24, 2011
Agricultural policy in Tanzania (1986-present), Part III
1986-1995: Economic Liberalization and Partial Reforms
From 1986 to 1995, Tanzania pursued economic liberalization policies and partial reforms in accordance with structural adjustment programs mandated by international financial institutions. Policy reforms included liberalization of the exchange rate, trade regimes and agricultural marketing system.[1] The exchange rate was liberalized in 1993 as part of a nation-wide removal of “structural impediments” to growth.[2] Financial system reform and restructuring of parastatals also characterized this period; approximately 75 percent of parastatals were privatized.[3] The crop export marketing board monopolies were removed and replaced with cooperatives.
The industrial sector, however, was unable to recover while the agricultural sector was able to begin a slow path to recovery. Full recovery was not possible because of the “weak marketing and poor distribution chain [which] hindered an increase in food supplies to urban areas and a sharp increase in cash crop exports between 1987 and 1989.” Rent-seeking, corruption and inefficiencies hindered industrial productivity and that sector was unable to recover.
Tanzania’s partial and incomplete reforms were unable to stimulate the type of growth that the country required for complete economic recovery from failed policies of the previous decades. As a result, large monopolies still dominated the economy. Inherent flaws in institutional structures were not accounted for as budgetary management, fiscal policy and macroeconomic stability remained out of reach.[4] At this time, Tanzania also lost favor with the international donor community and aid flows began to dry up.[5]
1996 to the present: Macroeconomic stabilization and incomplete reforms
Since 1996, Tanzania has pursued complete macroeconomic stabilization and structural reforms. Policies include privatization of parastatals and the disintegration of monopolies. The financial sector has been liberalized. Some of the institutional impediments to growth have been targeted, including a market-oriented regulatory framework, fiscal consolidation, and trade reform. Donor agencies have provided large amounts of assistance for debt relief, grants and concessional loans.[6]
As a result, GDP growth has increased to an average 5.85 percent from 1995 to 2009.[7] The country has increased foreign reserves, maintained low rates of inflation, and created a competitive banking system. The agricultural sector has also shifted away from traditional exports to non-traditional exports.[8] Mwase and Ndulu note that financial liberalization was one of the keys to Tanzania’s economic recovery, specifically “deepening the financial system, independent monetary policy, and increasing competition in the financial system.”[9] The IMF contends that the economy has also become increasingly diversified, shifting from traditional exports such as cotton, coffee, tea and tobacco to mining and marine exports, for example. Tanzania currently has one of the most liberal investment regimes in Africa and is one of the largest recipients of foreign direct investment.
Friday, July 22, 2011
Agricultural policy in Tanzania (Intro and 1967-85), Part II
Tanzania’s History of Agricultural Reforms
The agricultural reforms in Sub-Saharan Africa provide a critical context to understand Tanzania’s agricultural policies from 1967 to the present. Radelet identified Tanzania as one of the emerging countries in Africa; it is endowed with a “rich natural resource base, easy geographical access to the international market, peaceful and politically stable environment, and… a cohesive national identity around a common language.”[1] Described as one of Africa’s “sleeping giants”[2], Tanzania remains heavily reliant on agriculture. Agriculture accounts for 28 percent of GDP[3], provides 85 percent of merchandise exports, both raw and processed, and employs between 60 to 80 percent of the country’s workforce.[4] Seventy percent of Tanzanians live in rural areas.[5] Tanzania has a comparative advantage in agriculture; the size of the labor force already dedicated to the sector and rich factor endowments will allow Tanzania to capitalize on agricultural investment.
Despite this comparative advantage, Tanzania has been unable to capture the gains from its agriculture-based economy. The following section will examine Tanzania’s agricultural reform in three phases from 1967 to 1985, 1986 to 1995 and 1996 to the present.
1967-1985: Strong control, socialism, and economic decline
The period from 1967 to 1985 was marked by economic decline and President Nyerere’s Ujamaa socialist policies. President Nyerere’s socialist vision for a united Tanzania included extensive state control which laid the foundation for the country’s growth to date. In 1967, the Arusha Declaration outlined the principles of Ujamaa villages that were based on Mao Zedong’s collectivization scheme in China.[6] It is important to note that Nyerere’s objective was national unity and equity; initiatives such as promoting Swahili as the national language fared better than the Ujamaa villages. Investments in creating this united Tanzania helped the country overcome inter-ethnic problems that have led to civil instability in other countries in the region. Armed with this unification scheme, then, Nyerere shifted major industry ownership to the public sector and discouraged foreign direct investment; this “Africanization” of the public sector was intended to promote the local economic base. The “villagization program” eventually shifted the population to rural villages, to a total of 60 percent by 1975.[7]
Economic reforms emphasized state control and the rural economy. The state took ownership of all major enterprises, especially heavy industry.[8] Public investment from 1970 to 1985 was high at 9.6 percent. Although industrial growth was high in the years following the Arusha Declaration, with the sector growing from 40 to 450 entities from 1966 to the mid-1980s, most of the industries were loss-making and had low productivity. Furthermore, the government pursued policies to shift the geographic economic base to rural areas, penalizing industry close to urban centers and creating dual consumer and producer prices that provided incentives to farmers in particular regions.[9]
The balance of payments crisis*, high inflation, and decreasing coffee prices at the beginning of the 1980s forced the country to slacken its control. In 1978 the coffee boom ended; in 1979 Tanzania was engaged in a war with Uganda and the oil price shocks brought to light the structural and institutional weaknesses of the Tanzanian economic policy. It is important to note that although the market reforms were implemented beginning in 1985 and fully taking force in 1995, the “institutional and legal remnants of hard control regimes remained" and may explain why scholars today do not consider Tanzania’s reform a success story.[10]
[1] The World Bank (2002). Tanzania at the turn of the century: Background papers and statistics. (Washington, D.C.: World Bank, 2002).
[2] Andrew Coulson, “Kilimo Kwanza: A New Start for Agriculture in Tanzania?” Institute of Local Government Studies, University of Birmingham, England (2010). 3.
[3] This figure is down from 50 percent estimated by the World Bank in 2002 (WB2002,7)
[4] Economist Intelligence Unit. “Tanzania: Country Profile 2008.” United Kingdom, 2008. 20.
[5] The World Bank (2002). xvi.
[6] Mwase and Ndulu. 427.
[7] Ibid. 444.
[8] Roger Nord, Yuri Sobolev, David Dunn, Alejandro Hajdenberg, Niko Hobdari, Samar Maziad, and Stephanie Roudet, Tanzania: The Story of an African Transition. (Washington, D.C.: International Monetary Fund, 2009).
[9] Mwase and Ndulu. 445.
[10] Mwase and Ndulu. 144.
