17 August 2008

Tanzania's Economic Breakdown, 1970s

From The Fate of Africa: A History of Fifty Years of Independence, by Martin Meredith (PublicAffairs, 2005), pp. 256-259:
The disruption caused by the 'villagisation' programme nearly led to catastrophe. Food production fell drastically, raising the spectre of widespread famine. Between 1974 and 1977 the deficit recorded in cereals was more than 1 million tons. Drought compounded the problem. The shortfall was made up with imports of food, but the country's foreign exchange reserves were soon exhausted. In 1975 the government had to be rescued by grants, loans and special facilities arranged with the assistance of the International Monetary Fund and the World Bank and by more than 200,000 tons of food aid. Far from helping Tanzania to become more self-reliant and to reduce its dependence on the international market economy, Nyerere's ujamaa programme made it dependent for survival on foreign handouts. Nor did the idea of communal farming take root. Although by 1979 some 90 per cent of the peasantry had been moved into ujamaa villages, a mere 5 per cent of agricultural output came from communal plots.

Other aspects of Nyerere's socialist strategy were no more successful. His programme of state control spawned a multitude of state corporations that were inefficient, incompetently managed, overstaffed and mired in debt. By 1979 some three hundred parastatal organisations had been set up – state industries, state banks, state farms, state marketing boards, state shops. They were controlled by managers who acted more like bureaucrats than businessmen and ran their domains as civil service bureaucracies, exercising considerable patronage. Workers came to regard their jobs as guaranteed by the socialist state. In a candid speech in 1977 entitled 'The Arusha Declaration Ten Years After', Nyerere complained bitterly of the inefficiency, indifference and laziness of managers and workers in state-run enterprises. 'It is essential that we should tighten up on industrial discipline. Slackness at work, and failure to give a hard day's effort in return for wages paid, is a form of exploitation; it is an exploitation of the other members of society. And slackness has undoubtedly increased since the Arusha Declaration was passed.'

But state enterprises continued to operate in the same manner, incurring huge losses. Among the most notorious were ten state-owned crop authorities. The pyrethrum board, for example, spent more on its administrative costs in 1980 than the total value of the crop it purchased; the sisal board's overheads in 1980 were higher than the amount Tanzania earned from exporting sisal. Farmers meanwhile were offered inadequate prices and faced long delays in payment, sometimes lasting up to one year, and eventually they resorted to using the black market or growing subsistence food. The production of export crops like sisal, cashew nuts and pyrethrum fell drastically in the 1970s.

By the end of the 1970s Tanzania was in dire straits. Its trade deficit was widening all the time: in 1980 exports covered only 40 per cent of the value of imports; its foreign debt had soared. With sharp increases in world oil prices, its terms of trade were constantly deteriorating. Oil imports, which used only 10 per cent of the value of exports in 1972, took 60 per cent in 1980; a ton of exported tea in 1970 bought 60 barrels of oil, but in 1980 only 4.5 barrels. The shortage of foreign currency hampered the running of factories and farms. For want of spare parts and materials, machinery and trucks were idle. Inflation and drought added to the toll. A shortage of basic commodities like soap, sugar and cooking oil and other consumer goods produced black markets, petty corruption and smuggling – magendo, as it was called. Manufacturing output in 1980 was reduced to less than one-third of capacity. Agriculture declined by 10 per cent between 1979 and 1982. National output between 1977 and 1982 declined by about one-third. The average standard of living between 1975 and 1983 fell by nearly 50 per cent. In a broadcast in December 1981 to mark the twentieth anniversary of Tanzania's independence, Nyerere admitted: 'We are poorer now than we were in 1972.'

Whatever difficulties Tanzania encountered, however, Nyerere held fast to his socialist strategy, dismissing all suggestions that the strategy itself might be at fault. He acknowledged that the country was neither socialist nor self-reliant, but he argued that government policy had prevented the worst excesses of capitalism, in particular the emergence of a rich and powerful elite. Comparing socialism to a vaccine, he said in 1977: 'We are like a man who does not get smallpox because he has got himself vaccinated. His arm is sore and he feels sick for a while; if he has never seen what smallpox does to people, he may feel very unhappy during that period, and wish that he had never agreed to the vaccination.' At a ruling party conference in 1982, Nyerere admitted that Tanzania had many 'very serious' and 'very real' problems, but socialism, he said, was not one of them. 'We have good policies. We have good plans. We have good leadership.'

Throughout Nyerere's tenure as president, few in Tanzania questioned the course on which he had embarked. It was held to be a matter of ideological faith. Indeed, no serious political discussion of any kind occurred. Under Tanzania's one-party system, parliament remained impotent; the press muzzled. Real power lay in State House in Dar es Salaam, in party committees and with a ruling class of bureaucrats, all of them intolerant of opposition. Nyerere himself was by no means averse to using Tanzania's Preventive Detention Act to silence political critics, and Tanzania for many years remained high on the list of African countries with political prisoners.

Much was achieved as a result of Nyerere's efforts, notably in the fields of education, health and social services. Primary school enrolment increased from one-quarter of the school-age population to 95 per cent; adult literacy from 10 to 75 per cent; four in ten villages were provided with clean tap water, three in ten had clinics; life expectancy increased from forty-one years to fifty-one years.

Yet what progress was made was financed largely by foreign aid. During the 1970s Tanzania received no less than $3 billion, mostly from the West. In 1982 the annual level reached $600 million. Without such funds, Tanzania would have plunged into penury. Nyerere's achievement, therefore, was related not to the success of his strategy, but to his ability to persuade foreign sponsors that his objectives were sincere.

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