Your Excellency,
IN the past five years, I have delivered 6 public lectures, 11 talks and 8 paper presentations. I have also written 61 articles, and made countless live and recorded radio and television appearances. In most of my writings and talks (over 90%), I wrote/talked about Tanzania’s economy.
I have spoken to some Cabinet members and Members of Parliament of Tanzania, some military and police officers across the country, academic conferences and workshops, political foundations, common wananchi, professional groups, business
executives and entrepreneurs; rotary clubs,and a cross-section of multi-selected groups.
I have also addressed regional conferences on subject related Tanzanian and sub saharan economies.
While running around the country, I have noticed a few trends. First, in almost all the lectures, talks, paper presentations, articles, and radio and television panel discussion, my audiences have largely agreed with my presentation of the facts about Tanzania as well as the diagnosis of her economic challenges.
Second, debates have mainly been on prescription, particularly how Tanzania’s economy can be transformed ( but not what needs to be done per se).
Third, on average, politicians(on both sides) middle and lower-level bureaucrats and the general public agree that Tanzania’s economy is not working for majority of Tanzanians, and most importantly that is more likely, the economy will either remain the way it is or even worsen.
A STUDY THAT REVEALED WHAT TANZANIANS THINK
On the other hand, top bureaucrats in government and its agencies officials working for international financial institutions( such as the IMF and World Bank and African Development Bank) and western aid agencies (USAID, DFID, UN, EU e.t.c), as well as top executive bankers, believe that Tanzania’s economy has, since the reforms of 1990’s, been transforming, and that despite a few challenges the economy is on track.
Towards the end of 2017, I headed a team at Maarifa Institute that examined the main features of Tanzanian economy ( specifically its identical policies) and their implementation.
We spoke to cross-section of who-is-who in the management of the economy as well as politicians, academics, bureaucrats, private sector executives and civil society.
The single study corroborated much of anecdotal evidence I provided above. Most importantly, the study confirmed to me why, as Tanzanians, we have failed to do what we know needs to be done to transform our country.
First, what do we know? My interactions with Tanzanians, right from you, Madam. President (through your speeches), to a manufacturer in the industrial area to a trader down town Dar es Salaam to a small holder farmer in a typical Tanzanian village, has taught me that Tanzanians agree we over liberalized the economy.
ALLOWANCES KEEP BUREAUCRATS
Most Tanzanians know that the strategy to get government out of the way and allow the economy to flourish, create jobs, eradicate poverty and inequalities, and get it integrated in the global economy ( through private sector-led strategy) has failed.
However, a few elites are saying the policies have succeeded mainly because they have benefited and continue to benefit from the skewed economy.
Tanzania’s economy is structured this way; over 67% of it is concentrated around the capital city and/or government institutions in some emerging cities. This is where the elite particularly government bureaucrats work, reside, and own property. The rest of the country (over 80%) hosts just about 33% of the economy.
Although Tanzania’s economy is depicted as a private sector-led economy, the reality is much of it either foreign owned and managed or public; of course bureaucrats work in the public sector.
Although official public sector wages are not so different from those offered by private sector, the bureaucrats use corruption ( which is the standard way of doing business in public sector) as well as budget for travel allowances and per diem to boost their earnings.
CORRUPTION IMPEDING GROWTH
Before 2015 when Tanzanian corruption used to be “productive”(where stolen money was used as a means of primitive accumulation whereby the thieves invested in productive sectors of the economy within Tanzania), it generated growth that trickled down to the villages of Tanzania leading to some dramatic poverty reduction.
In recent years when President Magufuli’s government( in which you were second in command) became nosy in the name of cracking the whip about corruption, it turned predatory ( the stolen was either invested in difficult-to- trace speculative activities or shipped out of the country), the corruption impeded growth.
A simple survey will reveal that the most accounting officers in government and top politicians have their wealth in the following properties: rental apartments in Dar es aalam; office blocks and mini-shopping malls in the same areas; and land covered by commercial forests or just fenced-off somewhere in the countryside.
HOW DOES THIS AFFECT THE ECONOMY?
First, economists categorize the above-mentioned capital ” assets” as non tradeables- you cannot export them. This has locked Tanzania’s scarce capital resources in things that do not fetch the country foreign exchange.
Secondly, public resources are transformed ( through corruption) from where they would cause optimal multiplier effect to low multiplier activities. This reduces the rate at which the economy would grow.
BUREAUCRATS ARE COMFORTABLE TO THINK
Thirdly, and perhaps more importantly, the people who should initiate economic reforms are currently too comfortable to think about alternative. The bureaucrats budget for themselves a number of parks ranging from free fuel and cars, housing, health, travel, and other allowances.
They use the bonuses to run their private businesses. In effect the perks are used as business subsidies. A bureaucrat or a top politician may not find it difficult to surprise their businesses or farms every weekend using government vehicle and fuel.
In the meantime, other Tanzanians have to hustle to run their businesses and farms at market costs. They often find such risks and costs typically too high to be worth it, let alone being competitive.
They, thus, opt for alternative investment opportunities that are less risky and immediately profitable, but unfortunately not the right-mix for Tanzania i.e imports, trade, real estate and construction. These sectors do not create jobs yet they worsen Tanzanian’s balance of trade.
Importantly, Madam.President, because your political authority is based on patronage and various forms of rent-seeking( which political scientists call neo-patrimonialism), you are stuck. You do not know where to start to reform government and the economy.
WHAT IS PREBENDALISM?
I have a practical solution for you. You are stuck because of what political scientists call prebendalism. It didn’t start with you, Madam. President. Your predecessor’s government in which you were Vice President amplified it. This is a political system where elected leaders and government workers ( I prefer calling them bureaucrats) feel they have a right to a share of government revenues, use them to benefit their supporters and hangers-on.
Reform in Tanzania is not being stopped by politicians. It is the bureaucrats who are scaring you, Madam.President, telling you how you might lose your power when you reform government and economy.
Madam President, as I have elaborated above, we should not be surprised that the bureaucrats are comfortable with the status quo. It is working for them. Unfortunately, they are very few. The economy is not working for majority of Tanzanians.
Secondly, as Prof.Dan Rodrikloves put it, “Let us not forget that government officials must have the incentives to do the economically ” correct things”. We should not presume omniscience or altruism on the part of the bureaucrats.
Therefore, my suggestion is simple; send all the bureaucrats, who are claiming how “the economy is robust” to a sabbatical of two years. In their places, employ other Tanzanians with comparable or even better qualifications. Trust me when they come back in January 2024, we shall have a very progressive debate on the way forward.
VALUE OF DOMESTIC POLITICS
In that period, the bureaucrats in economic sphere( who perhaps have not bought a litre of fuel for the past 4 years using their own money) will understand that market failures in Tanzania can manifest themselves into a warning fuel gauge.
In that period, these individuals will learn that markets in Tanzania are sending entrepreneurs the wrong signals- invest here, not there, and you should have invested there.
Most importantly, when they turn jobless, these bureaucrats will learn that allocating resources in an economy according to comparative advantage, as revealed by market prices, would be socially optimal.
They will learn that the private sector they talk about for fun( but have never practiced in an open furnace) needs the state to facilitate it with subsidised investment funds, particularly in activities whose short-term risks exceed potential(uncertain) longterm development benefits.
They will appreciate that the comfort of their bottom-less public wallets have all along blurred their vision for state schemes that compensate for uncompetitive cost structures for firms while learning takes place.
Finally, the proposed sabbatical will also help you, Madam.President, to appreciate the importance of domestic politics in shaping the incentive infrastructure for business and other activities. In the end, you might realise that your let’s build the economy first mantra could easily be realized by revisiting our constitution set up
Happy Independence day Madam President!
