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World Bank: Report on Tanzania shows its current posture, development outlook

10th November 2012
World Bank

There is an English expression that says ‘tell me your friends, and I will tell you who you are,’ which is applicable in matters of state or collective interest as in personal life.

Academic or NGO seminars are usually organized by and for like-minded people, in same way as other gatherings, that unless there is something that puts them together, which constitutes a standpoint, and there are certain variations around that standpoint, a collective thought-entity collapses.

That is what happened to the World Bank, that it started as a bank to relatively developed countries coming up from ashes of war into prosperity – and expected to keep that ethos for newly emerging developing countries, which it has largely failed.

Concepts that used to be in the vogue for economists in Africa and which are clearly wrong are surfacing in the current World Bank report on Tanzania.

It says for instance that “with a Gross Domestic Product growth of 6.5 per cent during 2011/2012 and manageable fiscal and current account deficit, Tanzania has performed better than most developed countries and better than many fast emerging economies, including India and Brazil,” attributed to Jacques Morrisset, lead economist for Tanzania, Uganda and Burundi. One wonders if this is how the World Bank now seeks for friends, that is, brings down its own standards so as to please its clients, implying that the development issue per se is closed, just good ties.

Indeed it is questionable whether there is still any development agenda remaining, as vital conditions necessary for its being observed are lacking – the first being sufficient levels of aid that make developed countries effective development partners to African countries, and the second, lack of alternatives for Africa (as its leaders aren’t interested in ‘development.’) It is western NGOs who have put in plenty of effort so that basic welfare goals (converted to human development goals so that bureaucrats are even attracted to cast a glance at that agenda), while our rulers are satisfied with GDP growth, crude as it is, and pay lip service to demands of populations. And the World Bank says we’re doing exceptionally well!

Surprisingly, Tanzania is particularly well placed to receive this ‘crown of grass’ if one translates a Swahili idiomatic expression, because it has an element of this sort of risky redefinition of economic concepts to suit its psychological needs. That is how Mwalimu Nyerere altered Adam Smith’s formula of ‘land, labor and capital’ as the basis of economic growth (treat it as the same as development, as in the World Bank report) for ‘people, land, good policies and good leadership,’ which boiled down to Ujamaa and TANU or later CCM leadership being non-corrupt. Between 1967 and 1987 when he was president and also party chairman all this was in place; people reached a point of walking barely clothed, with shortages all over.

Evidently in that definition Mwalimu was trying to skip capital as a key factor of economic growth – by trying to make ‘capital’ into just ‘money,’ which loses its critical economic function or strategic mobility for purposes of pouring scorn on it. Tanzanians have lived with that concept for 45 years with scarcely any economist raising a finger at that drawback, and now the World Bank says 6.5 per cent growth for a country like Tanzania is phenomenal. The bank tries to suggest that if Brazil has 3.1 per cent growth or India 3.6 per cent growth, we did far better than them, which is economic red herring and totally faulty.

What is factual is that the value and significance of a country’s growth rate depends on its income per capita, in which case one compares real growth rates, that is, becoming richer if one is already rich, or inching out of poverty. At 6.5 per cent growth Tanzania hasn’t as yet started reducing poverty, as earlier analyses (in the 1990s) indicated that it needs at least 7.0 per cent growth for poverty to just be touched – in which case it requires growth rates of two digit levels across ten years or slightly above for poverty levels to be eroded and the vast majority of the population to live above the poverty line.

Tanzania has not yet conducted the reforms needed to push growth to two digit levels, let alone in a sustainable way.
This is what is missing in the World Bank report, and without such observation and actually judging how the current policy stance hinders or propels growth towards two digit levels, it is hard to say that the report contributes positively to comprehending the country’s economic climate, or policy imperatives at present.

Praising the 6.5 per cent growth levels to the sky, and imagining that when a poor country registers 6.5 per cent growth rate and a middle income country registers half of that growth rate the former is better managed is an error that one would not expect from the World Bank. But differences of standards is something of a relic, since by recruitment and internal reshaping of attitudes, little is seen to separate World Bank economists and their colleagues in developing countries, which is their clientele.

Developing country economists working for institutions allied to the World Bank are quite often state officials, in which case they put forward national dignity above sober economics, which now interacts with the declining influence of the World Bank in altering policy, and thus the preference to praise and go along – or adopting developing country perspectives in compiling reports.

Only the IMF, since its key mandate stretches to all countries and at any particular moment some major economies are touched by fiscal and monetary frailness has retained a sober outlook on economy, largely because it can’t afford to fail. The World Bank is by contrast chiefly a conveyor of funds for projects approved by its management – with oversight from a US citizen as its president, while the IMF needs no US citizen to check its policies.

Examining the report itself, it is clear that the World Bank shall accompany Tanzania through its throes of anguish in modernizing its economy, on account of reform measures that the government and its elite sources of support (academia, MPs, NGOs, parastatals, civil service) detest to hear being discussed, to its explosion and subsequently picking up the pieces.

At that time it is possible the World Bank shall tune its focus to relate to urgent needs, just by listing them – whereas all points of explosion are right there at present, for instance in the process of commercializing agriculture that the report makes plenty of hay about.

The report talks about ‘connecting’ rural areas to markets whereas the government prefers to refuse them to sell to nearby markets; the farmers want higher prices, the government depends on low prices of grain to ensure stability in urban areas – and the World Bank can’t see there is collision ahead.

The World Bank shows surprising lack of comprehending economic growth when it seems to agree with political rhetoric about uplifting the peasant and exercising moderation on urban migration, ignoring the fact that if peasants are ‘uplifted’ and can double their production levels, the prices fall catastrophically.

At the same time, no credit can go to the peasants to create dam or pump types of irrigation because the land is not bankable as collateral, and the World Bank sees things politically (“what the government should do”) while its local allies like JeneraliUlimwengu say peasants should be seen as ‘entrepreneurs.’ In that case they must first have right to private ownership of land, sell it for capital, raising productivity.

Perhaps the worst aspect in this ‘clean bill of health’ the World Bank report gives to the government is prospects of agricultural modernization and what is meant by ‘inclusion’ and ‘participation,’ as this notion has been held in its usual NGO sense, where Tanzania has lately scored highly in the Ibrahim Index on African Governance (IIAG).

When the notion is conceived in that manner, it requires that the peasants be consulted before land is alienated to an investor, which can’t work as a lot of interest in land will simply be denied. The government operates on the formula that two thirds of arable land in the country or perhaps up to three quarters, is not being put to use, whereas land conflicts pile up each day.

The point is that there is a difference between land being properly put to agriculture and vacant or no-man’s land, a difference that the government is now ignoring and stocking conflicts all over the place. Conservatives (in this country not followers of George W. Bush and Mitt Romney but those sticking to the Arusha Declaration) want the government to repeal existing land acts enabling alienation of land to investors.

Yet this is the soul of the government’s agricultural modernization policy, and the World Bank can’t figure out that this is something neatly mapped out for aggravated conflicts all over the country, and that only by offering peasants proper freehold titles and ability to sell would they really be included.

Perhaps one should not be overly critical of the World Bank because United Nations organizations are supposed to work with member states of the UN, not dictate policies to them.

In that case if we don’t know the definition of poverty-eliminating growth, nor indeed the risks involved in our current policies on land, it is not up to the World Bank to dig up these risks and tell us about them, but rather find the most plausible language – by getting the most sympathetic economist with the policies and results we have in Tanzania, Uganda and Burundi – to write a likeable report, the sort we have right now.

In that case this report is all about what we want to hear, while a genuine one tells us what we ought to hear.

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