THE ECONOMY

1980 is being described as the worst year since Independence. The economy continues to suffer from the effects of the war in Uganda and a poor harvest due to inadequate rain. These problems come on top of the steady decline in the production of export crops and stagnant or falling world prices. From her declining earnings of foreign exchange, Tanzania has to pay increased prices for imports, particularly for oil, which this year is expected to take about 45% of the country’s foreign exchange earnings. In 1972, Tanzania spent 29 million dollars on oil. In 1978, the figure was 278 million dollars.

Petrol is rationed and its sale restricted. In March, the price per litre was put up to sh.7-90. Then, in the budget in June, pump prices were put up between 10 and 50 cents more. As a result of higher prices and controls on sales, consumption in the country of diesel oil and petrol fell by 11.4% between August, 1979, and April this year.

Despite these measures and strict import controls, the value of imports continues to run ahead of exports and the delay in external payments has now reached the equivalent of nine months’ imports. Serious interruptions continue to occur in fuel industrial sector due to shortages of spares and raw materials.

It is now clear that this year’s harvest will be seriously deficient. The short rains, which should have come last November and December, failed, or were insufficient, in 10 out of the 19 Regions and the long rains were very late. The situation has been aggravated by a shift in cultivation from drought resistant crops in some areas, such as cassava and millet, to crops dependent on a reasonable rainfall, such as maize.

Many appeals have gone out for assistance from both the developed world and the oil producers. Tanzania has received some help from OPEC, but nothing approaching the sums OPEC members have received from Tanzania in increased oil payments. Of the oil producers individually, Algeria has lent 30 million dollars at only 3% interest specifically to help Tanzania to recover from the cost of the war with Idi Amin. Algeria was one of the few countries in Africa to come out openly in support of Tanzania’s action. And Iraq has granted a low interest loan of 8 million dollars. Iraq has also guaranteed Tanzania the oil supplies that it needs. Iraq lent Tanzania 30 million dollars last year.

It is interesting to note that in Sweden, Tanzania has now replaced Vietnam as that country’s most favoured aid recipient. Between July, 1980, and July, 1981, Swedish aid to Tanzania will total 95 million dollars. West Germany is to give Tanzania a grant of 732 million shillings to finance a number of development projects during the next financial year. The grant will finance a water project in Arusha town and the reinforcement of bridges on the Central Railway line, the purchase of railway engines for TAZARA (the Chinese-built railway) and road construction in the Usambara hills. Under an agreement signed in Dar es Salaam on 25th. April, the Netherlands granted Tanzania a loan of 420 million shillings for water, livestock, sugar and industrial development projects.

May Day was marked in Tanzania by the announcement of new policies to boost productivity. Chama cha Mapinduzi (the Party) announced that in future workers’ pay would depend on results. For example, if a state owned factory made a loss, none of its workers or managers would be eligible for a pay rise or promotion. Workers might even be liable for pay reductions. But bonuses would be payable where there was increased productivity and profits. The new policy is intended to answer the criticism that Tanzanian socialism offers no incentives. The CCM statement said that financial rewards would be given to scientists and others who made discoveries that boosted economic growth and that workers or managers who failed to perform specific tasks would be penalised.

The National Price Commission has been ordered to scale down the many items on which it controls prices and allow a free market to operate. Meanwhile, the President announced a 20% rise in the national minimum wage to shs.480 a month for an urban worker and shs.340 a month for a rural worker.

In the June Budget, taxes on beer, cigarettes, petrol, spirits and soft drinks were put up. Beer now sells at Sh. ll.OO per half litre. Budgetary expenditure in the coming year will total Sh.l6,382.8 million. Sh.9,342 million is earmarked for development expenditure; the rest is recurrent.

At the meeting of the National Executive Council of the CCM in May a 20 year plan for Tanzania was approved. The plan is scheduled to commence in July next year. Between 1981 and 2001 the CCM plans to increase the GNP from Sh.42,334 million to Sh.136,032 million. Per capita average annual income wi11, it is hoped, be increased from Sh.2,423 to Sh.3,845, and life expectancy is to be raised from the present 47 to 55 years.

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