It might be possible to infer from articles that have appeared recently in The Times and The Economist that Tanzania is the locus classicus of failed economic policies in Africa. There have of course been failures and misjudgements, well documented by President Nyerere himself in his address to the National Conference of the Party on 20th. October, 1982, and elsewhere.
But the performance of the Tanzanian economy does not differ greatly from most of the other oil-importing low-income countries of Africa.
If we look at a recent World Bank publication (1) we find that output per head in the oil-importing countries of Africa fell in 1982 by 1.7% and in 1983 by a further 2%. The corresponding figures for Tanzania were 5% and 1.5%. Between 1970 and 1982 Tanzania’s output of food crops by volume grew at an average rate of 2.1% per annum: the average growth rate for the 23 low income countries of Africa in that period was 1%, for Kenya 2%, for Uganda 1.7% and for Malawi 2.9%. All of these growth rates were less than the rates of growth of population. As a result, there was a negative growth rate per head of -1.4% for all low-income countries, for Tanzania -1.3%, for Kenya -1.9%, for Uganda -1.0% and for Malawi -0.1%. The high figure for Kenya was influenced both by low growth in food production and the phenomenally high population growth rate, as will appear later.
There are, of course, differences both in resources and in response between the different low-income countries of Africa, but such variations do not justify singling out Tanzania for special criticism. As the writers of the World Bank report point out, ‘evidence suggests that the deterioration in most countries has been under way for more than a decade and that it has deep-seated causes. Compared with the rest of the world, African countries have been independent for a shorter time … The colonial powers typically favoured their own settlers, or certain local groups. Independent African governments, almost irrespective of ideological preference or broad development objectives, have always had to contend with the high expectations of their people. Many governments created projects and institution~ that outstripped their capacity to be staffed and operated effectively …’ (2)
If we look more closely at the underlying causes of the crisis as it affects Tanzania, we find a remarkable resemblance with the causes of decline in other countries of Sub-Saharan Africa. Three such causes may be singled out for mention.
First, the population of Africa is growing faster than that of any other continent. The average growth rate in Sub-Saharan Africa as a whole in the last two decades of this century has been estimated to be 3.3% per annum, in Tanzania 3.5%(3) and in Kenya a formidable 4.4%. In 1982 it was estimated that the average number of children born to women during the years of child bearing (12 to 50) was 6.5 in Tanzania and 8 in Kenya. This compares with 4.8 in India, 4.3 in Indonesia, 2.3 in China and 1.8 in the United Kingdom. As the World Bank report maintains, the growth of population is the single greatest long-term threat to Africa’s economic development.
What this means for Tanzania is that, assuming the figures to be approximately correct, the population will be in the region of 40 million twenty years from now. The burden that such an increase will impose on the economy requires no emphasis, for example, with respect to food production. It is true that there will be many more persons of working age. But a characteristic of a rapidly growing population is the exceptionally large numbers of children below working age and the heavy burden that they will impose on the educational system, the health services and the country’s resources generally. In the United Kingdom, 64% of the population were of working age (15 to 64) in 1982, in Tanzania only 51%, in Kenya 47%. Rapid population growth is bound to militate against efforts to combat deforestation and soil erosion, a problem that is rapidly becoming acute in many parts of Africa. Political and social problems may well be caused by the increasing numbers of children leaving school with inadequate opportunities for work or further training. In Butiama, for example, it is understood that deeply worrying problems are already arising from the large and increasing number of school leavers unwilling, or unable, to devote themselves to farming and faced with far too few opportunities for higher education, training, or wage employment.
If rapid population growth could be matched by rapid economic growth, the adjustment problems would be much less acute. In fact a rapid increase in the population drains away and diverts resources that might otherwise have been invested in technological change and wealth creation. We are, moreover, witnessing population changes of proportions unparalleled in history. ‘In today’s developed countries fertility was never as high as in developing countries now and morta4ity fell more slowly. Population growth rarely exceeded 1.5% a year. (4) The Third World countries of Africa therefore face formidable problems of employment and wealth creation for which the early experience of the industrial countries can offer us no precedent. The second cause of economic crisis lies in the process of development itself. Propelled forward by the growing expectations of people and the inherent urgency of change, Third World governments have pressed ahead with development projects often beyond the limits imposed by the available resources of managerial and administrative skills and with inadequate provision for maintenance. We read of territories like Hong Kong achieving growth rates bordering on 10% and it would be providential if the countries of Sub-Saharan Africa could match this performance. But Hong Kong possesses sophisticated infrastructural and administrative advantages and investable resources far beyond those enjoyed by any country in Africa.
A critical problem posed by development is the growth of demand that it inevitably makes on the country’s foreign exchange resources. Machinery and machinery spares are almost all imported in Tanzania. Much of the raw material used by industry, notably fuel, is imported. Even in the service sector, development is liable to create new demands for scientific equipment and books for the schools, medical equipment and drugs for the hospitals and dispensaries, pumps and engines for the clean water schemes, nearly all of them imported. And in both the economic and social sectors transport, telephones and air communications play a critical role. All of these developments are of fundamental importance for raising the living standards of a rapidly growing population; but all of them also make serious claims on the country’s resources of foreign exchange. It is the availability of foreign exchange resources for maintenance rather than the availability of new capital that imposes the principal constraint on development.
The key to this problem lies in a steady upward trend in export earnings. But here again most of the oil-importing low-income countries of Africa are caught in a serious difficulty. Their exports are for the most part raw materials of agricultural origin for which world demand is comparatively inflexible and which are notoriously subject to price fluctuations due to the vagaries of climate and changes in the level of economic activity in the 1uropean markets in which they are for the most part sold. Tanzania may be able to increase its market share of some products and the impact of unfavourable price changes may be blunted by the operations of the STABEX scheme; but any drastic rise in earnings is unlikely, at least in the short term. Nor is it likely that Tanzania will be able to penetrate new export markets with new products on any large scale. While, therefore, the enhancement of export earnings from traditional exports, or in new ways, remains a matter of first priority, there seems at present little ground for expectation that, short of a miracle, such as the discovery of oil in commercial quantities, Tanzania will in the near future be in a position to generate sufficient foreign exchange resources by its own efforts to remove present constraints on development.
The third ground for anxiety affects future prospects more than present circumstances, namely, the growing proportion of export earnings that are syphoned off to pay for interest and amortisation on loans. At the moment Tanzania is less seriously affected than some other countries in the region because much of its loan finance has been on concessional terms. Moreover, Tanzania has benefited from the conversion of many bilateral loans into grants, by the UK for instance. In 1982 23.5% of Tanzania’s merchandise export earnings were mortgaged to pay for debt service, which contrasts favourably with Kenya, where debt service payments consumed 38.4% of merchandise earnings due in part to Kenya’s greater use of commercial loans. (5) Compared with the Sudan, where the estimated debt service of 1.1 billion dollars in 1983 was slightly more than total export earnings, these figures seem moderate, but according to the Bank ‘debt service payments are scheduled to increase dramatically in the near future.’(6) In Sub-Saharan Africa as a whole interest and amortisation is due to rise from 5 billion dollars in 1983 to 9.9 billion dollars in 1984 and something like 11.6 billion dollars in 1985. While the precise impact on Tanzania is not known, it is clear that a large proportion of export earnings will be committed to debt service even before imports are considered.
This brief account of some of the problems that beset not only Tanzania, but also in varying degrees many of the countries of Sub-Saharan Africa, makes clear the dependence of these countries on external capital flows if the momentum of development is to be resumed. Tentative estimates for 1983 ‘suggest that Sub-Saharan Africa’s import capacity declined Significantly, the result of declining export earnings, falling capital inflows … less finance from the IMF and the exhaustion of foreign reserves.’(7)
Tanzania has already taken radical steps to arrest economic decline in the Structural Adjustment Programme and more recently in the 1984 budget described in the Bulletin of Tanzanian Affairs No.19. There is, however, a real danger that the measures taken will fail to reverse the decline unless there is timely complementary support from without. As the writers of the Bank report contend, ‘there are already several countries in which domestic reform programmes are threatened by inadequate external support.’ (8) Given such support, however, there are grounds for hope that the present downward trend, already slowed by Tanzania’s own efforts, may be reversed if present policies are unremittingly continued. But there are other ground for qualified optimism.
First, Tanzania is bound to be helped by an upturn in the world economy, particularly through its effect on prices and markets for Tanzania’s exports. Secondly, efforts now in train to increase food production to the point of self-sufficiency can substantially reduce the present drain on foreign exchange as well as eliminate the distress caused by famine and the costly measures needed for its relief. Apart from the importance of transport in contributing to this end there is the elimination of waste that has characterised crop collection and marketing. The intention here is to curtail considerably the functions of the crop authorities and transfer crop collection and the distribution of fertilisers to regional cooperative unions. Unfortunately, these changes are proceeding but slowly and adequate measures to curtail the expenditure of the crop authorities have still to be taken. Reducing collection and marketing costs is essential not only to contain inflation, but also to maintain producer incentives without further burdening the urban consumers.
Thirdly, as new planting under the coffee rehabilitation programme comes into operation, there is a prospect that Tanzania’s market share of this expanding commodity market will increase. Finally, there now seems some prospect in the medium term of export from the Mufindi Paper Mill and of urea and ammonia from the Songo Songo natural gas plant; while the last named products may also enable the Tanga fertiliser factory to manufacture nitrogenous fertilisers with less dependence on imported raw materials. None of these developments, if realised, will create spectacular foreign exchange balances, but they may enable Tanzania to sustain the momentum of industrial rehabilitation. It is important to realise, however, that such projects take time and that aid remains the only hope in the short term of giving new life to the economy. As the writers of the Bank report cogently argue, ‘donors must be particularly willing to make available adequate financial assistance in a timely and suitable form to support those Sub-Saharan countries that are implementing major programmes of policy reform … There is no escaping the fact that, if these countries are to be effectively assisted in reversing the downward trend in per capita incomes, they will require large increases in net capital inflows.’ (9)
Thus the prospect, though difficult and uncertain as far as the eye can see, is not without hope. It depends on such external influences as the world economic environment, but it also depends crucially on measures taken within Tanzania itself and the continuation of supportive aid from without. It is not so much the volume as the character and relevance of aid that matters most. The old practice so noticeable in the past in various Third World countries of aid hunting by departmental ministers must give place to carefully devised projects and programmes closely geared to the government’s priorities and managerial resources and having a calculated impact on the foreign exchanges. But to have the required impact in the short term it must be adequate in volume nevertheless.
J. Roger Carter
(1) Towards Sustained Development in Sub-Saharan Africa: A Joint Program of Action: The World Bank, September 1984.
(2) Towards Sustained Development in Sub-Saharan Africa, p.25
(3) Owing to the lack of full demographic analysis, the Tanzanian figure may be insecure, though it is not inherently improbable.
(4) World Development Report 1984: World Bank, July, 1984, p.184.
(5) In 1982 Tanzania’s outstanding debts from official sources at 1,550.5 million dollars were almost the same as Kenya’s at 1,572.7 million, but Kenya also had debts from private sources of 828.9 million dollars against Tanzania’s 81.1 million.
(6) Towards Sustained Development in Sub-Saharan Africa p.12
(7) Ditto p.13
(8) Ditto p.47
(9) Ditto p.47