Tanzanian Affairs

The news from the Rwanda-Zaire border which has horrified the world during recent days has taken the spotlight away from the Rwanda-Tanzania border where, according to the media, a new city has been created – Benaco – the second largest in Tanzania – a vast encampment of 350,000 Rwanda refugees in Ngara District, Kagera Region. The new arrivals exceed the existing population (170,000) of Ngara District. This is how the media have been describing the situation as it developed:

Mangengesa Mdimi in the Dar es Salaam Daily News (June 3): If a blind and deaf person were to be driven along the road from Rusumo Bridge, on the Rwanda Tanzanian border, and asked to identify the refugee camp, he or she would have little difficulty. The revolting smell of human waste welcomes all visitors to the camp.. . .But the Tanzanian Red Cross and others have started organising the construction of latrines. There were two problems – lack of enough timber and lack of cooperation from the refugees themselves who demanded payment for digging their own latrines.-….at peak hours the main street becomes so congested that it is almost impossible to move….Minister of Home Affairs Augustine Mrema, visiting Ngara expressed his concern about the environmental damage caused by the refugee influx. “Very soon Kagera and Kigoma regions risk becoming deserts” he said. The refugees need poles to build their huts and fuel to cook and trees are being chopped down indiscriminately – the rate of tree cutting grows faster than a bush fire …..

The Economist (July 2): The (former) Ngara District Commissioner (a new DC, Brigadier Selvester Hemed, has since been appointed), whose fading Christmas decorations still hang on the walls of his home, could hardly believe his eyes. On his doorstep, in this sleepy corner of Tanzania, has sprung up one of the world’s biggest refugee camps …… Amid the chaos the place is thriving. Little shops have materialised along the roads that run through the camp. There are several big markets where refugees sell part of their aid rations to buy fresh vegetables. Tanzanian shillings, Rwandan francs, American dollars are all accepted. Beneath the blue and white makeshift awnings are bars, butchers, bicycle shops, hairdressers, electrical stores, tailors and even watch menders. A ‘nightclub’ is now open for business all day; it costs 200 shillings (38 American cents) for men and 100 for women. Zairean beer flows freely …. the new city has meant new business for Tanzanians who Sell cigarettes and cloth or hire out vehicles to journalists at $200 a day. Roads have been named after well-liked aid workers and one is named ‘Julius Nyerere’.

The reason Benaco could be set up so fast is that Cogefar, an Italian contracting firm was already in the area building roads. The government and the UN hastily altered the contract and the machinery was transferred to improving an impassable road to the local airstrip, preparing food storage sites, filling termite holes on the strip, and providing water tankers. The UN High Commission for Refugees said it was the best cooperative effort it had ever seen – 200 foreign aid officials, 300 Rwandan staff and many Tanzanians all working together.

W F Deedes in the Daily Telegraph (July 18) under the heading ‘Truly, this was hell on earth’: This is no ordinary city. Some 6,000 of the citizens are children who are totally alone. In one community of 2,000 more than a quarter are orphans. I have seen refugees in many places but nothing comparable to this … a new dimension of the human experience …. Due to tireless professional work by people like the Red Cross, Medecins sans Frontieres, CARE, Concern, Oxfam working round the clock this human swarm is ‘orderly, fed, watered and clear of epidemics’. This latter due partly to the 2,670 latrines laid out in 267 blocks of ten.

Rations are centrally distributed. Cooking is individual all of it over open wood fires. At the evening meal the district for miles around is under a gigantic smog. Along every road approaching the camp is an unending stream of people carrying bundles of wood from the surrounding countryside. What will Ngara be like in a few months time? Someone has said that it is as if a plague of locusts had crossed the land. This new city might soon strain even Tanzania’s tolerance….As one observer put it ‘To visit a land where a massive genocide has been perpetuated or condoned by a population which expresses no obvious guilt or remorse, is as close to experiencing hell on earth as I can imagine possible’.

Anthony Ngaiza writing in the Dar es Salaam Family Mirror (August): Frustrated, angry and confused Henry Mabula sits on his bench at Pasiansi Market near Mwanza gazing at a pile of fish he caught in Lake Victoria this morning. It is 6 pm and only two out of his morning’s catch of 207 fish have been sold. “For four months now we have not been able to sell fish” he said. “People believe that all the fish are polluted since they heard about the 40,000 bodies of Rwandans washed into the Lake via the Kagera River”. Fish prices have dropped by 50%. FAO and WHO experts have indicated that there is no danger – Tilapia are basically grazers; Nile Perch eat only live fish. Water quality has been tested and is unchanged. The governments of Tanzania and Uganda have made great efforts to remove all the bodies but people fear that some bodies have been trapped in the water hyacinths which are prevalent on the lake.

Tom Walker writing in the Wall Street Journal (July 18): Benaco is a microcosm of almost every evil that afflicts Africa. The aid agencies, caught up in dealing with possibly the greatest single tide of humanity this century, have unwittingly allowed social structures traditional in Rwanda to be recreated in Benaco. Some 95% of the camp is populated by Hutus who have been responsible for most of the killings in Rwanda….Hutu killers have re-established their personal fiefdoms. Tutsis and moderate Hutus who had the misfortune to end up in the camp are murdered at the rate of about five a day…. In the warming sun that followed the rainy season the atmosphere was compared to Woodstock. The comparison looks hopelessly naive now as Benaco is a dark, medieval bedlam where many aid workers now fear to tread…..after a recent riot the Tanzanian authorities promised to remove the ringleaders but when they tried there was an uprising of 5,000 refugees that led relief workers to leave the camp for a week.. Tanzania is having to strengthen its police force in the camp…..Up to one third of the food that arrives in the camp is immediately sold by refugees, trucked back from the camp and resold on Tanzanian markets…the price of maize in towns along the aid corridor has dropped dramatically. “We Tanzanians are wondering what we are getting out of all this (trouble)” said the Principal Secretary in the Ministry of Home Affairs sadly surveying a letter of complaint from a Dar es Salaam blanket company that had not sold a single blanket to the international aid effort. Tanzanian manufacturers are by-passed and even soap and bottled water have been brought in from Nairobi.

The 60 supporters of the Rwandese Patriotic Front (RPF) – the new RPF government has now been recognised by Tanzania – who, as indicated in the last Bulletin, had been arrested in Mwanza on the orders of Prime Minister Malecela for celebrating the death of the late President Habyarimana in April have been released. According to the Family Mirror this was done on the orders of the former Ngara District Commissioner.

‘PAX TANZANIANA’
Meanwhile, Mukete MP Tuntemeke Sanga has suggested that the volatile states of Rwanda and Burundi should be rejoined with Tanzania under a ‘Pax Tanzaniana’. He recalled that these small states had been removed from the larger German East Africa after the first World War and that ‘that had been the source of all their problems’. Within Tanzania they would not have been able to obtain arms to massacre each other. Mwalimu Nyerere, in a press conference in New York explained that the region affected – Rwanda, Burundi and Tanzania – had inherited, due to colonialism, artificial barriers; they had divided people who were ethnically the same. Previously, when Rwandese or Burundi refugees had crossed into Tanzania they had been absorbed but this influx was of too great a magnitude.

As we go to press there are reports of a new influx of 2,000 more refugees a day into hard pressed Tanzania.

Just after they had been celebrating the 1994 New Year – on January 2nd – Tanzanians woke up to a shock. Finance Minister Prof. Kighoma Malima suddenly announced a new budget – it became known as the ‘mini-budget’ – to deal with a financial crisis. There had been a severe shortfall in revenue collection and expenditure was surging ahead. Details were given in Bulletin No 48.

As Roger Carter explained in the last Bulletin, when a government cannot balance its books there are all kinds of unhappy consequences. The government must borrow more – public debt in Tanzania increased by 20.3% in 1994/95 compared with the previous year; the government owned National Bank of Commerce, which is the banker for numerous loss-making parastatals, has just had to raise its interest rates from 30% to a prohibitive 39%; the value of the currency will fall – in Tanzania it has fallen from TShs 475 to the dollar in December 1993 to TShs 520 to the dollar today; inflation will increase – it has increased from 19% in 1990 to 23.5% at the end of last year.

CLOSING THE GAP BETWEEN REVENUE AND EXPENDITURE

So, when Finance Minister Malima examined the books before planning his main budget statement in June he again had to deal with the large gap between revenue and expenditure. His budget for 1994/95 envisages the following:

Revenue 292,310 mill TShs
Expenditure 514,284 mill TShs – 20% more than last year
Gap 221,974 mill TShs

The main cause of the proposed increase in expenditure has been internal and external debt servicing and the cost of the restructuring of the financial and parastatal sectors.
The minister announced that he was determined to reduce dependency on foreign donors for recurrent expenditure but he anticipated TShs 168.846 billion still coming from donors in 1994/95 leaving a gap of TShs 53.128 billion. Sweden has indicated that it will contribute TShs 16 billion.

To avoid an increase in inflation the minister stated that he would not borrow any more from the banking system and, in fact, to indicate his determination to deal with the bulging public debt, he intended to reduce his accumulated bank borrowing by shillings 20.16 billion in 1994/95. This, of course, would increase the gap again to TShs 73.288 billion. To reduce it, the minister would raise TShs 36.319 billion by continuing to auction Treasury Bills (a procedure first adopted last year) and thus reduce liquidity and hopefully, inflation; his ambition to bring inflation down from 23% to 10% in one year seems unlikely to be achieved.

The budget gap was now down to TShs 36.978 billion and this last part would have to be raised by painful measures to increase revenue and reduce expenditure.

A whole range of such measures were announced. These included broadening the sales tax base so that contractors, accountants, consultants, tour operators and many others would now pay this tax; an increase in customs tariff from 40% to 50% and reduction in import duty on industrial imports from 10% to 5% to help local manufacturers; a 5% levy on petroleum products to stop smuggling to neighbouring countries; an increase in road toll from TShs 30 per litre to TShs 40 to help cover road maintenance costs; strengthening supervision of collection of revenue, although this is not going to prove easy given the extent of the temptation to corruption it offers; reducing the number of government ministries; strengthening the unpopular ‘cost sharing’ policy (payments made for some previously free education and medical services); and a substantial reduction in the number of government operated vehicles (a particularly heavy drain on the exchequer).

To tighten up revenue collection, regulations governing the use of custom bonded warehouses would be amended; a Revenue Board to scrutinise all tax exemptions would be set up; every taxpayer would be given an identification number; fines for offenders would be increased;

CONFUSION ON INVESTMENT INCENTIVES AND TAX EXEMPTION

The minister was less sure footed in his budget speech when he came to dealing with tax exemptions allowed under incentive schemes to attract foreign investment. These were being misused and abused he said. The minister first said that he was going to abolish all tax exemptions except for a short list including diplomatic establishments, recognised foreign NGO1s, religious institutions and very large new investments (US% 10 million or more). Responsibility for exemptions was being moved from the Investment Promotion Centre to the Minister of Finance who would have sole authority.

BACKTRACKING

Later however, it had to be admitted that where there had been unpalatable tax exemptions these had been authorised by the Ministry of Finance and not by the Investment Centre. Under heavy attack from investors and the press the ministry back tracked on July 14th. All investors whose projects had been approved and been issued with tax exemption certificates before the budget were to be tax exempt. But, future tax exemptions would be ‘expost facto’ i.e. exemption would be granted only after completion of the project and the beginning of production or of delivery of the service. Raw materials, consumer items including spare parts, projects related to transportation of transit cargo, banking, radio, television, restaurants, casinos and tour operators would not qualify for tax exemption. Exemptions would be given for new projects worth more than US$ 5 million or, in the case of projects involving rehabilitation/expansion where they were worth US$ 2.0 million or more.

These instructions disturbed an already not very favourable environment for attracting investment so on August 10th there was further backtracking. ‘Business Times’ reported that President Mwinyi had ordered a revision of the Finance Bill to restore the tax exemption authority to the Investment Promotion Centre. To add to the confusion it was announced that a number of other changes would be made in the budget including the $10 million and $5 million minimum tax exemption qualifications.

It was also decided to amend or repeal the Exchequer and Audit Ordinance so that the Minister of Finance would remain one amongst other institutions and not first among unequals in tax administration. Incentives would also be restored for imports of spare parts and raw materials.

News that an electricity rationing scheme would have to be introduced in Dar es Salaam on August 15th because of the low level of the Mtera dam which provides hydro-power must have sent a further shiver down the spines of investors but longer term prospects for electricity supplies are good with many projects under way and new ones starting.

DRASTIC CUTS IN DIPLOMACY AND VEHICLES

Tanzanian diplomats received a shock when Foreign Affairs
Minister Joseph Rwegasira announced on August 9th that six of Tanzania’s 26 foreign missions would close shortly including, it is believed, Ottawa, Geneva, Paris and Harare following the closure in 1993 of the embassies in Angola, Zaire and Rwanda. In the remaining missions staff would be reduced and no more than four diplomats would man the largest. It was hoped to save $10 million per year. A new embassy has been opened in South Africa.

The government has also announced that three-quarters of its 18,000 vehicle fleet would be earmarked for sale through public auction. There would be a loan scheme for certain government officers. Two vehicles would remain in pools for each ministry and government department.

REVENUE COLLECTION SUCCESS

By late July there was good news. Revenue collected during the fiscal year 1993/94 had reached TShs 242.4 billion, ahead of the government’s target; it was the largest collection ever and gave general satisfaction all round – DRB.