Country Profile: TANZANIA

East Africa

Monday, 23 November 2009 00:00

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

As late 2009 ushered in 2010, the year in which Tanzania holds general elections, the ruling Chama Cha Mapinduzi (CCM) and President Jakaya  Kikwete are already contemplating what they will do with another five years in power. The CCM has ruled uninterrupted for the last 32 years and the boom times brought by high gold prices and regional integration do not set the scene for a major shake-up. Meanwhile, the leadership of the opposition Chama Cha Demokrasia na Maendeleo (Chadema) is trying to manage schisms caused when the youthful Zitto Kabwe faced off against Freeman Mbowe for the party presidency. Kabwe hopes to challenge the traditional leader of the opposition, the Civic United Front, which has a strong  representation on Zanzibar.

  TANZANIA President Kikwete will end his first term more or less as he started, with people questioning the status of his health. Before clinching the presidency in December 2005, he collapsed while addressing a Dar es Salaam rally at the Jangwani Valley. In  October 2009, it was exhaustion, thought to be caused by extensive travel, which forced him to take a break before he could continue officiating at a church function. State House issued a clean bill of health and said it was reviewing his work schedule so that he could save his energy for the electoral campaign. Kikwete’s most immediate task, however, is to clip the wings of members of the ruling CCM who have said that they might contest the presidency. 

Another concern for the ruling party is the emergence of a group of MPs within the CCM who say they are championing the fight against corruption. A lot of spleen was vent in the direction of MPs Anna  Malecela and Harrison Mwakyembe, but the president quietly voiced approval of their efforts. More voices then rallied behind them in the hope of being seen as fighting powerful and wealthy groups within the ruling party. Divisions within the CCM might cost the ruling party at the coming polls, if it does not properly read the mood of the electorate. 

The president has come up with the novel idea of fielding live questions on radio and TV, a move that has earned him both admirers and critics, who see it as a campaign gimmick. His live programme came at a time when the donor community was  voicing its displeasure over lack of progress in the fight against corruption, with some threatening to scale down their support. 

The Bank of Tanzania (BoT), Tanzania’s central bank, has not been spared corruption scandals, starting with the siphoning of TSh120bn ($117m) from the over-pricing of construction costs for the BoT’s twin towers, and a gold-auditing contract with the firm Alex Stewart Assayers. Two former ministers and the treasury’s former permanent-secretary in addition to more than five officials from the BoT, were charged in connection with the deals. 

On the economic front, the president appointed the BoT governor to head a special team to monitor the after-shocks of the world financial slowdown. Governor Benno Ndulu has since gone on to win the Best Bank Governor in Africa award for his management of the Tanzanian shilling’s stability in the face of inflation that has remained in double digits.

 The country recorded an impressive economic performance in 2008, with real GDP growth of 7.4%. Industry, construction and services, particularly real estate and business services, marked good performances. Based on the IMF’s projections, real GDP growth is expected to slip to a solid 5% in 2009 and then to rise back up to 5.6% in 2010. Now convinced that regional integration is vital for economic development, the Tanzanian government has dropped many of its initial objections to the deepening of cooperation with the East African Community.  Even though the BoT had promised to bring inflation down, it has not been achieved in the difficult business climate because of inflationary pressure from the lagging effects of soaring world commodity prices earlier in the year. This was compounded by severe food-supply shocks in the region, and poor rains in some areas of Tanzania in the last quarter of 2008. As result, the annual inflation rate reached a peak of 13.5% in December 2008, driven by food-price inflation of 18.6%, while non-food inflation was contained at 6%. Annual headline inflation declined to 12% by the end of April, while non-food inflation reached 2.9%. 

Tourism was a only a minor victim of the global crisis and saw a mild  decline in arrivals, to 672,279 during the year ending 31 July, compared with 706,425 arrivals recorded the year before. Tanzania has been able to attract tourists who would normally have visited Kenya but who did not due to negative publicity linked to the post-election violence there in January 2008. The sector has overtaken agriculture, emerging as the most rapidly-growing sector of the economy.  

The government is still focused on making agriculture a priority through the Kilimo Kwanza (Agriculture First) scheme, promising the AU and the Southern African Development Community that it would allocate 10% of the national budget to agricultural development. That goal is far from being met, but the current level of the budget spent on agriculture, 6.2%, is more than twice the 2.9% of  recent years. Some of the priority areas are improved seeds, increased quantities of fertiliser and other inputs, better water management, as well as mechanisation and agricultural finance. 

TANZANIA GRAPH Textiles are a dominant sector in the manufacturing industry and increased production from 139 square metres in 2007 to 141 square meters last year, in spite of strong competition from Asia. The construction industry has also experienced a bit of a boom, with paint manufacturers and cement factories picking up added business. The same cannot be said for steel and iron-sheet producers, with the two sectors scoring about 20% declines in production in the past year.

 The mining industry is a key contributor to government revenue, accounting for about 3% of GDP. Kikwete’s government has announced a long-delayed review of policy in the mining industry so that the government can take a greater share of revenues after foreign mining companies have recouped their initial investments. The government is also addressing some of the areas where corruption has occurred in the past, and gold auditing will now be conducted by the ministry of energy and  minerals, rather than by a foreign firm.  

In the mining sector, rather than implementing sweeping changes, President Kikwete’s team is adopting a more cautionary approach. Mellowing their initial criticism of plans to review and increase taxes, royalties and duties, companies like AngloGold Ashanti have come around to the new reality, saying that what they want is consistency and  predictability, so as to not scare away new investment. The opposition’s Zitto Kabwe, who was part of the  government mining-sector review team, said that most of their proposals were modelled on recent changes to tax structures in Zambia, but even that copper-rich country had to renege on some of the measures it had introduced.

Zanzibar, islands of discord

After violence following national elections in 2000 and 2005 due to rigged polls, the question of who should rightfully govern Zanzibar remains unresolved. President Jakaya Kikwete was the first cabinet minister in former President Benjamin Mkapa’s government to openly admit that there were problems in Zanzibar after the first botched multiparty elections, and this helped to lead to the creation of the Muafaka Committee on reconciliation and power-sharing. But now in charge, Kikwete has done little to appease political tensions. The Muafaka talks collapsed in 2008 and political overtones are getting harsher as new elections approach. Donors have already expressed worries about the voter-registration process.  The rhetoric of the CCM, the ruling party on the mainland and Zanzibar, suggests that a conciliatory view may be slow to arrive. In October, minister for information George Mkuchika said that the opposition CUF should all but forget power-sharing on the islands, so the  stalemate is likely to continue. An additional hiccup is that Zanzibar President Amani Abeid Karume has to step down after ten years in power. The succession debate is gaining momentum but there are no clear favourites. Names circulating include, those of the current chief minister, Shamsi Vuai Nahodha, former chief minister Ghalib Bilal, national defence minister Hussein Mwinyi and union affairs minister Seif Khatib.