tanzania: IS TANZANIA FINALLY ON THE RIGHT TRACK?

IS TANZANIA FINALLY ON THE RIGHT TRACK?

Today sees the opening of the Consultative Group meeting between Tanzania and its development partners. The government will receive the usual plaudits for its sound economic policies, and a commitment of one billion US dollars (100 billion shillings) in grants and loans for the coming year. Inflation is down to under five percent, the economy grew by 5.6 percent last year, foreign investment is high by African standards, domestic and foreign debt are at sustainable levels. Compared to earlier years of ‘negative’ growth and rampant inflation, these are solid achievements. There’s one big blot on this otherwise rosy landscape: the expected benefits of economic stabilisation and growth are not reaching the poor, especially in the rural areas.

Surveys of household consumption suggest that reductions in poverty during the nineteen-nineties were insignificant. During the decade, little or no progress was made in improving the nutritional status of children, with large disparities between rural and urban areas. The steady progress made in reducing infant and child mortality rates was reversed after the mid-nineteen eighties. One Tanzanian child in six dies before reaching the age of five.

Other surveys show that the poor feel they have not benefited from past reforms. For example, last year’s Afrobarometer survey found that 60% of respondents agreed with the statement: ‘the government’s economic policies have hurt most people and only benefited a few.’ Large majorities thought public policy performance was bad in ensuring food security, job creation, reducing poverty and the rich-poor gap. In another recent national survey REPOA found nearly two-thirds of respondents agreeing that ‘the gap between rich and poor people has worsened over the last five years…’. Three out of five respondents spontaneously mentioned poverty as their ‘most important personal problem’.

From 1985 to 2000, Tanzania implemented a series of structural adjustment programmes. There was no claim by the advocates of SAPs that in the short-run they would benefit the poor. Indeed, cutting government spending on social services was pushed by donors as a means of reducing inflation. In a partial response to its critics, the World Bank began lending to poor countries to reduce the negative consequences of structural adjustment!

It is now widely agreed that structural adjustment failed to kick-start sustained growth and poverty reduction in poor countries like Tanzania. So exit SAP, enter Poverty Reduction Strategy Papers. The main components of PRSPs -- trade liberalisation, privatisation of public utilities, ‘good governance’-- are the same as those attached to SAPs. The main differences between SAPs and PRSPs are that the latter are designed to deliver ‘pro-poor growth’, they are locally owned, and do not involve heavy donor conditionalities. The other new feature is debt relief, which paves the way for an expansion of government spending in agreed priority sectors, in particular, basic social services, roads and agriculture. So PRSP equals SAP + debt relief + more spending on priority ‘pro-poor’ sectors. Dozens of poor countries have obtained or will soon obtain significant debt relief on the basis of PRSPs.

The problem with all this is that the policies that are now ‘locally owned’ -- and therefore in theory more likely to be implemented -- are fundamentally the same policies that failed to stimulate broad-based growth under SAP. If neo-liberal policies failed in the past, why should they succeed now? The pro-liberalisers argue that SAPs failed to increase growth and reduce poverty because they were not actually implemented, just as the anti-liberalisers argue that SAPs failed because they were implemented! If the anti-liberalisers are right, then PRSP will fail just like its predecessor. If the pro-liberalisers are right, they still have to explain how opening up primary commodity-based and badly managed economies to international competition will lead to sustained growth and poverty reduction.

What seems clear is that the public perception that only a small group of people have benefited from the policies that the government has implemented in the last decade and a half is essentially correct. This could be for a number of reasons. The rural-urban poverty gap has widened as a result of systematic urban bias in investment and growth. Local government decentralisation has increased the tax burden in rural districts. Market liberalisation has not benefited smallholders, and the ‘new’ marketing boards are an additional burden on farmers. Investment is concentrated in sectors with little employment generation potential, particularly mining and tourism. Lastly, systematic corruption and mismanagement affect the poor disproportionately.

Both conservative and radical pundits now challenge the fundamental tenets of neo-liberalism. Growth is automatically ‘pro-poor?’ Stabilisation is a precondition for growth? Trade and capital market liberalisation are essential for growth? ‘Good governance’ (=democracy) is a precondition for all of the above? None of these claims stands up to critical review.

I am not advocating a return to government over-spending, closing our borders to foreign trade and investment, or reintroducing the one-party state. But I would challenge those who think they have found the solution to the problems of growth and poverty in neo-liberal economics, more pro-poor government spending, and better governance.

A quick tour of Dar es Salaam’s highways, byways and slipways will convince the interested visitor that somebody must be benefiting, and massively, from present economic policies. One might even expect such policies to continue. For now, Tanzania’s development partners seem happy with our own ‘locally owned’ policies. Whether these policies, plus a billion dollars of aid per annum, will do anything to ‘alleviate’ the poverty of the majority of the population, is another question altogether.

* Brian Cooksey [email][email protected] is an independent consultant and writer based in Dar es Salaam