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

In January, 1978, in Bulletin of Tanzanian Affairs No.5 we reported on the trend in the cost of living in Tanzania down to the beginning of 1977. Since then, strong inflationary influences have pushed prices up and it therefore seems opportune to review once again the effect of this trend on the standard of living so far as this is apparent from the published figures.

The first general indication of the price trend is to be seen in the national consumer price index. Using a base line in 1969, this index rose by 687% in 1983. Within this period, food prices rose by 807%, clothing by 696%, fuel and water by 855% and furniture and utensils by 1,101%, only rents remaining but 8% above the 1969 level. After the nationalisation of buildings in April, 1971, rents fell by over 60%, but were subsequently increased in stages in 1978, 1980 and 1982. The trend of prices at the end of 1983 is clearly visible in the figures for the fourth quarter. Food prices were then 894% above the 1969 baseline, fuel and water 1,252% up.

The Dar es Salaam retail price index for the lowest paid workers showed a still more serious upward movement, while Dodoma was somewhat less seriously affected. The following table compares the trend in Dar es Salaam and Dodoma with the trend in the minimum wage for urban workers.

Percentage rise over 1969 of the retail price index for the lowest paid urban workers in Dar es Salaam and Dodoma

Dar es Salaam All items, Food
1972 18.6, 20.1
1974 69.0, 77.2
1975 148.5, 165.8
1980 412.2, 460.1
1981 569.5, 619.4
1983 907.9, 961.2

Dodoma All items, Food
1972 14.2, 13.4
1974 47.2, 70.2
1975 99.0, 144.4
1980 292.2, 324.4
1981 392.6, 424.0
1983 706.8, 784.4

Minimum wage % over 1969
1972 35%
1974 70%
1975 90%
1980 140%
1981 300%
1983 300%

Source: Hali ya Uchumi wa Taifa katika Mwaka 1983: Dar es Salaam 1984

The conclusion from the above table is inescapable that the standard of living of the lower paid town dwellers has fallen substantially. In July, 1984, there was a further rise in the minimum wage to 405% above the 1969 level, but the disappearance of the sembe subsidy in the 1984 budget must have given a simultaneous boost to the retail price index. The widespread cultivation of spare patches of land in Dar es Salaam, even to some extent in the middle class suburbs, is evidence of the straightened conditions in which many people now live.

There is no doubt that the pressure on urban populations shown by these figures is a cause not only of great anxiety on behalf of those affected, but also of concern for political stability. The figures well illustrate the caution shown by the Tanzanian government in accepting some of the more draconian proposals of the International Monetary Fund. Owing to the very great difficulty in bringing inflation quickly under control, the situation is unlikely to get better in the short term. The real solution to the problems of the urban poor is a turn round in the economy and every day that passes without an IMF agreement only exacerbates the problems of regeneration and increases the dangers of political disorder.

J. Roger Carter

(The budget speech was delivered to the National Assembly on 8th. June, 1984, by the Minister for Finance, Ndugu Cleopa Msuya)

The news from Tanzania continues to give cause for considerable concern and anxiety. The last year has seen a further decline in the standard of living. Income per head at 1966 prices fell from shs.665 in 1980 to an estimated shs.589 in 1983. The gross domestic product at constant 1966 prices likewise fell from shs.12,035 in 1980 to shs.11,671 in 1983. Tb balance the recurrent budget it was necessary in 1983-84 to borrow from the bank a record sum of shs.3,120 million, with all its inflationary implications, an amount equal to about 7% of GDP at current prices. The production of export crops has continued to be sluggish and to remain well below the levels of the last decade. By April, 1984, the crop authorities had accumulated debts to the National Bank of Commerce of shs.5,OOO million. Adverse weather conditions and a rapidly growing population have imposed on Tanzania the need to import food in the last three years and the prospects for the 1984 crop remain serious. An acute shortage of food is reported in Shinyanga and Mwanza Regions, while in Tanga, Kilimanjaro, Arusha and Mara Regions the long rains were four weeks late following the failure of the previous short rains. There is thus a danger that Regions which normally have a food surplus will become net importers of food.

In the face of this very grave situation the Government has adopted further drastic measures in an attempt to arrest the decline. First, the currency has been devalued by 26% in an attempt to bring it more into line with market realities. The dollar is now equivalent to shs.11 in place of the previous rate of shs.12.6 and the pound sterling exchanged at the end of June for about shs.22.5. Tb mitigate the effect on urban wage earners the minimum wage has been increased by 35% to shs.810 and the tax threshold has been raised accordingly. There have been corresponding increases on a diminishing scale in Government salaries falling to 15% for those receiving more than shs.4,OOO per month. Parastatal salaries are to be adjusted accordingly.

Secondly, various steps have been taken in an attempt to increase the output both of food and of export crops and also to expand certain industries, tourism and the exploitation of natural resources. Producer prices for farmers are to be increased by 46-55% according to crop. This will serve both to offset increased costs of production, including the effects of devaluation, and also to increase incentives. The accumulated debts of the crop authorities will be taken over and funded by the Government over a period of 6-8 years, leaving the new Cooperative Unions to take over crop marketing and movement on a fully commercial basis without the constraint of inherited debts. New facilities are being developed by the National Bank of Commerce, the Tanzania Investment Bank and the Tanzania Rural Development Bank in support of small scale projects in agriculture and industry, the development of local raw material supplies and the promotion of projects in the agricultural and irrigation sectors respectively.

Thirdly, a concerted attack is being made on cost reduction and inefficiency both in Government and in the parastatals, following the reports of two special enquiries, to be supervised by Ndugu Amir H. Jamal, Minister in the Office of the President. A streamlining of Government, involving the reduction of 22 Ministries to 15, is expected to yield savings of shs.40 million. A resolute attack on transport costs will be accompanied by measures to reduce the misuse of official transport facilities for private purposes. New procedures will be introduced to ensure that payment vouchers and local purchase orders are only effective with the approval of vote holders and when funds are available.

Except in key categories – teachers, medical personnel and agricultural Experts – new Government recruitment will be restricted or arrested, as in the previous year.

Fourthly, various steps are being taken to increase revenues. Notable among them is the imposition of a boarding charge in secondary schools of shs. 1,500 per pupil and a charge for lunches in secondary day schools of shs.350 per pupil. The trend in secondary education is towards the expansion of day schools. In addition, the abolition of the sembe subsidy and the subsidies on fertilisers and insecticides will yield substantial economies. The airport service charge is to be increased from shs.40 to shs.125 and foreigners will be expected to pay the equivalent of 10 dollars in foreign currency for trips abroad. Sales taxes on a number of items, including petrol, will be increased.

The measures now taken seem to provide somewhat greater freedom for market influences and a recognition of the contribution of local initiative and of the private sector. At the same time, in line with basic Government policy, the burdens imposed are widely distributed and care is taken to safeguard the poorest sections of the community. A central theme is the reduction of wasteful and unproductive expenditure. Nevertheless, some further fall in the general standard of living seems inescapable.

The Government has not given up hope of reaching an accord with the IMF. It is, however, good to learn that Denmark has decided to maintain its support in 1984 to the tune of £15.2 million, though with a shift of emphasis towards productive activities at the expense of infrastructure; and that Sweden has approved a programme for 1983-84 and 1984-85 totalling £64.4 million for the two years, including a valuable allocation of £11.9 million for import support in 1984-85.

Inevitably there is grumbling and the alternative market remains unquenchably active. But the general state of morale appears to remain remarkably buoyant. There is an assumption in this country- even in high quarters- that the Tanzanians have brought their troubles upon themselves. Such an unqualified judgment would be grossly unfair. Certainly there have been serious mistakes- the manner of implementation of the villagisation programme is an example- and certainly the remarkable speed of progress in the social sector has outdistanced the diminished resources required to sustain it. But by far the most important cause of the nation’s difficulties is the hostile world economic climate. Tanzania alone cannot change these external influences and is compelled to adjust to them. In the middle seventies it successfully came to terms with the first oil price rise. But the second round of increased oil prices combined with high world interest rates and the effects of the recession have created conditions too adverse for an easy escape for Tanzania’s frail and diminutive economy. The Government is making strenuous efforts, but there has never been a time when external help of the right kind was more needed.

In 1983 the IMF were understood to be pressing the Tanzanian Government to devalue the shilling from Shs. 12.6 to the American dollar to between shs. 25 and shs.35. In free market conditions, where the money earned by exports and services falls short of the money spent on imports and other external obligations, the value of the local currency will tend to fall in relation to foreign currencies. The effect of such currency depreciation will be to make imports more expensive in local currency terms and exports cheaper in foreign currency. As a result, imports will fall and exports will be encouraged to expand until a new equilibrium is reached. That is the simple theory.

But this simple theory has little meaning in a very poor primary commodity exporting country already restricting imports to a few basic necessities. In such circumstances the consequences of devaluation are complex and are most unlikely to follow the predictions of the simple model. While serious disequilibrium is easily recognised, an ideal or equilibrium rate of exchange is hard to establish. This has been seen recently in the discussions surrounding the sterling rate of exchange, where the interests of exporters, of importers and of the government have seemed to conflict.

First, there may be no scope left for choking off demand for imports, so that the import bill is not reduced. Secondly, the external prices of export crops are determined in world markets and the effect of devaluation here is limited to the indirect one of yielding higher domestic currency returns for given world prices. Thirdly, the stimulus to exports is not an instant reaction to higher prices. While there is ample evidence in Tanzania that farmers respond sensitively to changes in profitability, any marked increase in output will require new planting which, in the case of most export crops, will come into production only after a gap of several years. Further, the government has to consider the impact of export stimulation on food crops. Devaluation does nothing to enhance the profitability of food crops and may even reduce it by increasing the cost of transport and of imported fertiliser and insecticides. Any increased return to food crop producers, therefore, has to come from the consumer, or from government subsidies, or from savings on the handling and marketing of crops. It would, however, make no sense if food crop production were to suffer from a transfer of attention to export crops, resulting in the need for higher food imports. On the contrary, greater food production is one important way of correcting the imbalance in the foreign exchanges.

It seems likely the IMF’s advocacy of drastic devaluation has rested in part on the assumption that a substantial proportion of export crop production is disposed of in the more lucrative black market and is therefore lost to the nation’s foreign exchange account. A rise in official producer prices would therefore, it is assumed, restore the black marketed output to official trading channels, where it would substantially add to official foreign exchange earnings. The IMF may well over-estimate black market losses, for which there seems to be little evidence in the figures for the amounts officially marketed. It is possible, therefore, that the IMF in their calculations have set the corrective action too high and it remains to be seen whether the devaluation recently announced will be sufficient to eliminate such black market wastage in the form of unofficial cross-border sales to neighbouring countries.

Devaluation has the advantage of increasing producer incomes at no expense to the government by increasing the local currency income from sales. Some of the increase will be absorbed by greater production costs, which rely heavily on imports, notably transport, but a margin for increased profits should remain. The IMF clearly places reliance on the profit motive to induce farmers to produce more for export, but the reaction of farmers to monetary incentives is likely to be coloured by the availability on the shops of desired items of common consumption. Since the shops are largely bare of such items, the impact of devaluation will depend in part on the rehabilitation of consumer goods industries. Unfortunately, devaluation increases industrial costs and does nothing to encourage industrial growth for the home market.

The rise in the cost of imports in local currency terms will inevitably raise the cost of living. The extent of the rise will depend both on the import content of common consumer goods and also on the increased production costs of local commodities, notably food. The higher cost of fuel, machinery and vehicles for cultivation and transport will be an element in higher food costs. There has been disagreement between the government and the IMF about the inflationary consequences of their proposals for devaluation, but that there will be a substantially increased burden on the consumer, particularly in the urban areas, there can be no doubt. In view of the already intense pressures on the urban poor, the government has to take this effect carefully into account in their calculations as to the extent of devaluation that can be accepted.

This summary of some of the effects of devaluation, though incomplete, is sufficient to show that the timing and extent of devaluation are not matters for nice monetary calculation, but involve political judgments and the offsetting of benefits against costs, which in the last resort only the government can do. Any devaluation policy entails real losses in consumption and investment. The problem for government is to minimise these losses and to distribute their impact in such a way as to safeguard the urban poor, while securing the maximum adjustment in the balance of payments. It is worth keeping in mind that for Tanzania export rehabilitation is the only permanent and sound means of restoring balance to the foreign exchanges. Consequently, the government has to keep an eye fixed on the impact that any package of measures may have on the exporters. This is not Simply a matter of producer incentives, but involves action on a wide front to produce and distribute the inputs necessary for export production to create, in effect, an environment conducive to export growth.

The recent package of measures described elsewhere in this issue involving a devaluation of 26% is the outcome of the government’s detailed scrutiny of the problem in all its aspects. It is to be hoped that it will be sufficient to attract the sympathetic cooperation of the IMF.

J. Roger Carter

Between May and October, 1982, a Government task force undertook a major reappraisal of agricultural policy and its implementation in Tanzania with the object of defining alterations to existing policy and new priorities for the nineteen eighties. The results of that exercise are contained in two documents published by the Ministry of Agriculture – the report of the task force itself, “The Tanzania National Agricultural Policy (Final Report)”, dated October, 1982, and the official statement concerning future agricultural policies, “The Agricultural Policy of Tanzania”, dated 31st. March, 1983.

The intention of these notes is to summarise briefly the key changes in agricultural policy set out in the documents and also to provide some comment on the proposals within the context of agricultural development in Tanzania over the preceding decade.

The task force on national agricultural policy was chaired by Professor Simon Mbilinyi, formerly Personal Economic Assistant to the President and now Principal Secretary to the Minister of Agriculture. It was composed of roughly 15 members drawn from relevant Government agencies and from the University of Dar es Salaam. Its terms of reference were broad and its final report is extremely wide ranging, encompassing for example the organisation of agricultural production, land tenure, land use planning, agricultural research and extension, agricultural technology, agricultural marketing and prices, agricultural inputs and the problems and prospects of individual crops. With respect to each of these, as well as other topics, the report (which, incidentally runs into 240 pages) contains both a detailed interpretation of past performance and a set of policy recommendations for the future. It is clear that most of the task force recommendations were subsequently accepted by the Government as components of the new official agricultural policy, since the March, 1983, document is essentially a re-statement of the task force policy proposals with only minor amendments.

The task force report recognises various defects in previous agricultural policy, especially in the areas of motivation for production, agricultural marketing, agricultural input supply and extension. Within each of these areas heavy emphasis is placed on improving incentives, increasing efficiency and rationalising institutional arrangements. The outcome appears to take the form of a perceptible shift towards permitting more market criteria to enter the practical implementation of agricultural policy. However, considerable ambivalence surrounds this intention, since the report also contains a commitment to the existing apparatus of state controls and planning, such that it is difficult to envisage how some of the proposals will achieve their intention (on which more later). Some main policy shifts and the thinking which seem to lie behind them are summarised as follows:

1. The problems for agricultural production in some locations of village size (distance to fields) are recognised. The proposed solution is the concept of Central Service Villages, which would act as the focal point for satellite settlement located closer to production areas. The size of such satellite settlements is not specified in the task force recommendations.

2. Increased security of land tenure is strongly emphasised for all private forms of agricultural production, including the so-called ‘homestead shamba’, the family plot on the village ‘block farm’ and private commercial farms. A minimum leasehold of 33 years is proposed for all such farming in order to give tenants sufficient security to maintain and develop the long-term productivity of their land instead of carrying out short-term, soil-exhausting agronomic practices.

3. The formation of new, private commercial farms is to be encouraged, especially for the production of export crops, or crops needed as raw material for domestic industry. There seems to be a hint here of attempting to promote a new frontier spirit in Tanzania (including for outsiders) to take up the ‘challenge’ of private development under conditions of acute shortage of foreign exchange. (The whole of Canada and USA was opened up for grain production before the invention of the internal combustion engine.’)

4. The high costs and inefficiencies of the former parastatal crop marketing system are recognised. Proposals include:
(a) a reduction of the status of the export crop parastatals to marketing boards concerned principally with the sale, where possible by auction, of export crops;
(b) the concomitant reintroduction of Regional Cooperative Unions as the purchasing agents for all designated crops from Primary Cooperative Societies (villages, or groups of villages). This decision actually pre-dates the task force, but is integrated into its recommendations;
(c) for export crops a target proportion of 75% of the export price to be passed back to farmers. This compares with proportions which fell to as low as 30% for some export crops during the nineteen thirties;
(d) the encouragement of food crop transfers between Primary Cooperative Societies and between Regional Cooperative Unions to meet local variations in food self-sufficiency and to avoid the necessity of centralised procurement of all food crops by the National Milling Corporation;
(e) the associated limitation of National Milling Corporation functions to the delivery of urban food supplies, management of the Strategic Grain Reserve and food processing, especially for urban markets.

5. Some of the defects in the past implementation of producer prices policy, especially the relative neglect of export crops and the failure to adjust agricultural prices in line with inflation are recognised. It is proposed that producer prices should be biased towards export crops with a high net foreign exchange earning capacity and towards food crops, which minimise foreign exchange expenditures in their production, that is, minimise imported inputs. It is also proposed that the price fixing procedure should take account of changes in the cost of living index. In addition, it is recommended that annual farm management surveys are undertaken in order to obtain up-to-date and realistic estimates of production costs.

6. Both the supply of agricultural inputs and the organisation of agricultural extension are recentralised in the Ministry of Agriculture. This recognises the waste and duplication, as well as poor implementation, of the previous decentratisation of those functions to individual crop parastatals and other Government distribution agencies. The new agricultural policy thus represents an ambitious attempt to correct deficiencies in the past implementation of agricultural policies both by correcting perceived weaknesses in existing institutions and by once again modifying organisational arrangements. It also contains a strand of improved private incentives and greater market orientation. The new policy does not, however, challenge the most important implicit assumption of the Government approach to agriculture in Tanzania over the past two decades, which is that comprehensive state controls and planning in every sphere of agricultural activity is necessary in order to achieve centrally-determined targets and objectives. For example, one of the recommendations concerning agricultural production is that every single village in Tanzania should prepare two Master Plans, one on village residential areas and the other on economic activity, showing agricultural production targets, and so on. This may seem reasonable until it is pointed out that there are over 8,000 villages in Tanzania, making for 16,000 proposed Master Plans, and it becomes legitimate to conjecture how exactly the information generated by these plans is to be analysed and assimilated for policy purposes (perhaps each village should have a microcomputer?). Another example in the sphere of agricultural marketing is the reintroduction of cooperative societies and unions without actually abolishing the crop parastatals. It is difficult to see how unit marketing costs are to be dramatically reduced by this proliferation of marketing agencies. It has only to be recalled that one of the major reasons given for the previous abolition of the cooperative unions was their spiralling costs and losses.

7. The problem with extensive Government intervention in a country like Tanzania is that comprehensive controls down to the level of individual village or household require an immense diversion of resources in order to maintain the required administrative apparatus. The magnitude of this cost burden is usually out of all proportion to the gains, which are supposedly made in information and planning. The new agricultural policy unfortunately does not tackle or escape this dilemma. The policy contains numerous sensible suggestions for improving agricultural policy implementation, but there exists a considerable danger that good intentions will be lost in the maze of bureaucratic intricacies which surround them.

Frank Ellis

The basic 1982/83 – 1984/85 Tanzanian economic policy objectives and guidelines were presented to the National Assembly on June 16th, 1982 in the budget speeches of the Minister of State for Planning, K.A.Malima and the Minister for Planning A.H.Jamal. The broad policy structure of reconstruction planning is set out in Structural Adjustment Programme for Tanzania. The initial time frame set is 1982/83 – 1984/85, but the accompanying Budget Speech which contains the first year’s resource allocations implies that the period may be as long as five years.

In terms of immediate action the Structural Adjustment Programme’s 1982/83 tranche shows no marked changes on 1980/81 policy. It is a set of retrenchment measures. These result in a sharper proposed cut in recurrent, as well as capital expenditure because the end of the security expenditure related to the Uganda war and the subsequent reduction in the size of the armed forces has allowed a one-third cut in budgeted expenditure for defence. The 7 to 8.5% rise in nominal recurrent spending by other Ministries and by Regions implies a fall in real recurrent services of 4 to 7%.

The very sharp increase in parastatal rehabilitation and subsidy expenditure estimates for 1982/83 (not necessarily an equally large increase over actual 1981/82 expenditure) is related to past agricultural and transport parastatal losses and to the unsustainably high prices set for several crops – notably cotton, tea and tobacco – in 1981. The absence of either a sharp increase in staple grain and flour prices, or a minimum wage increase to offset inflation, represent a change from the approaches to deficit and income management in 1980 and 1981 as does also the absence of any tax increases.

There are no tax changes, resulting in a very large and uncertain local borrowing requirement of Shs.4,376 million. The uncertainty arises because the logic of the Structural Adjustment programme includes substantial additional foreign resource inflows – including $210 million in IMF drawings and a World Bank Structural Adjustment credit – which are not as yet negotiated. If they are negotiated and received promptly a smaller deficit is likely, but if late or not at all a much larger one is certain.

The Structural Adjustment Programme is in part a consolidation of elements from three earlier Tanzanian forward planning exercises: the abortive 1980-83 Structural Adjustment Programme, which foundered on non-acceptance by the Bank and the 1981 coffee price collapse; the 1980 decadal development proposals to the UNCTAD sponsored “least developed” conference series (notable for lack of practical response) and the 1981 and 1982 National Economic Survival Programmes. Because the external economic context ‘has worsened substantially during the period 1980 to 1982, the present Structural Adjustment Programme is far more draconic in its implications – albeit remarkably non-specific on what actual cuts are seen as acceptable. The policy statements on exports, incentives and efficiency consolidate those of 1980/81 and 1962/82 in a somewhat more coherent way, but specific measures (at least in an applicable form) are less evident than in the earlier statements.

The stated commitment to maintaining achieved degrees of egalitarianism and levels of basic services reads somewhat oddly in the light of what the Budget does not include in votes and wage changes, though the sharper decreases in defence spending and •the capital budget have allowed some protection of health, education and water (the key basic service heads). Given the level of subsidies to agricultural products, probably over Shs.1 ,500 million or over 10% of recurrent estimates as a whole totalling Shs.14,144 million, increases in peasant real incomes are clearly dependent either on increases of output, reductions of transport and storage losses, or cuts in procurement, transport and marketing costs in both the private and public sector.

A substantial number of proposals for directions of change, new approaches and rehabilitation packages are made. These are less interrelated, detailed or costed than in previous Tanzanian planning exercises. This may be because of the short time that elapsed between receipt of the report of “Three Wise Men” chosen jointly by the World Bank and the Tanzanian Government (formally known as the Tanzania Assistance Group, with three experts and a supporting secretariat)* in April and the mid-June budget deadline for the presentation of a Tanzanian programme harmonising their proposals with existing Tanzanian strategy. It may also relate to the fact that the detailed elaboration of proposals and programmes dependent on foreign finance prior to having been able to negotiate agreement on that finance, at least in principle and in order of magnitude, is not necessarily very useful and runs a distinct risk of over optimism.

The section on parastatal performance notes the very uneven performance – from good to abysmal – and the negative effect of the weaker parastatals on the performance of others. It re-stresses the problems caused by inadequate accounting personnel and by the refusal of many parastatal managements to accept responsibility. It calls both for the enforcement of the existing legal rules on the preparation of parastatal annual capital and operating budgets and the approval of budgets by Planning and Finance, also for substantially greater worker power through strengthened Workers Councils and enhanced representation at board level.

The outcome of the 1982/83 – 1984/85 Structural Adjustment Programme (and any extension to 86/87) depends in the first instance on negotiations with the IMF and the World Bank as well as other sources of external finance. With exports covering less than half of essential (slightly over half of actual) imports, no workable medium-term economic strategy, including one aimed at raising the ratio of exports to import requirements, can be made to work without either a sharp increase for three to five years in concessional resource flows, or a sharp recovery in the terms of trade (now perhaps 50 on a 1972 base of 100 or 45 on a 1976/77 base). The latter appears quite out of the question as neither a 100% increase in the price of coffee, tea, cotton and cashew nuts, nor a 50% fall in those of manufactured goods and petroleum, are in the least likely. Whether the reiterated stress on exports, incentives and productivity – now apparently in large measure endorsed by the “Three Wise Men’s” report – will have more success in allowing access to Fund and Bank resources than in 1980 and 1981 remains to be seen.

* see Bulletin No.13, page 2.