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`Ways out of Tanzania`s industrial mess` shows why we won`t be getting out this decade

24th November 2012
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After taking over as CCM secretary general, former EALA Speaker and earlier, Minister for Defence, Col. (rtd) Abdulrahman Kinana visited the southern regions not just to inspect party activities in Lindi and Mtwara regions, but also give a solemn word of advice.

Those who were handed over cashew nuts processing factories and have not lived up to government expectations should prepare to surrender those properties to the state (or one would say those businesses). It is a measure of how the ruling party is attached to the revitalization of industries agenda—as an urgent dimension of a wider job creation effort without which chastisement could descend in 2015, and fixed attitudes.

There are of course plenty of reasons for concern on the slow growth of the industrial sector, whose reasons all the experts seem to be baffled, and that is why parliamentary innovation or legislative creativity is solidly directed at the past.

They want the state to reclaim what was privatized because wisdom since the early 1990s has it that the whole IMF-backed and World Bank coordinated structural adjustment program was an error and a waste of time, a thesis not just by local radicals but held by plenty among the donor community.

A radical ex-Bank staffer later wrote of himself as economic hit man for the Bretton Woods institutions, specializing in identifying a good slice to sell it off...

This global alternative development ideology has of course its rival statistical logic, of the Human Development Index, partially buttressed by less noticeable governance indexes, which count more in chaotic Africa than elsewhere.

It is in this fraternity, for instance in a recent article by Jacques Morrisset, the World Bank lead economist for Tanzania,  Burundi and Uganda, that we heared how Tanzania's 6.5 per cent projected growth rate for this year is among the best in the world, dwarfing even the developed countries as hardly any of them reached 3,0 per cent growth. 

This fraternity reverses the order of things such that the poorest continent worldwide right now has the best policies!

Even before seeking answers for something rather complicated like reviving industries, smaller but clearer ideas as to what the problem really is, or rather its size, could be gleaned elsewhere in one business-oriented newspaper.

Writing under the rubric 'Urgent reforms needed to improve tourism industry,' it said in an inset that "Travel and Competitiveness Report 2011 ranks Tanzania 110th out of 139 countries,  (having) dropped 12 places (more intensely than the four placed it dropped in the Doing Business rankings).

It would imply that the DB ranking was average and sober; it could be worse.

The Trade and Tourism Competitiveness Report is prepared by the World Economic Forum, and what it expresses local bureaucrats would love to see but without auxiliary details- as they aren't a bouquet of roses.

It says a bit discordantly that Tanzania is ranked 2nd after Brazil in terms of natural resources attractiveness by WEF "thus potentially it can be at the top in attracting tourists.

" That means climbing something like 110 places from where it is now, after having lost 12 places in one year - on the basis of tendencies in governing that have become a headache in the fourth phase administration, and it is these negative outlooks that are most popular, and seen as a solid, wise path to chooose.

"The report says that despite Tanzania's impressive attractions, smaller countries receive more tourists every year as compared to Tanzania. A country like Jordan for example received 8 million tourists in 2010 and Singapore received 9.16 million in the same year, while Tanzania's number still fell short of one million," the newspaper story noted.

The key issue cited in the report is the Tourism Act 2008 and its supporting regulations, and recently a master plan to increase tourist arrivals was launched - anchored on the idea that the world doesn't know that Mount Kilimanjaro is in Tanzania, and thus millions of dollars are needed to advertise the country's attractions, which clearly is beside the point.

This rather exhaustive digression serves at least one purpose, that Tanzania and those it counts as its best friends in the policy making spheres, is not capable of diagnosing its problems because of its fixed ideas on ownership and governance.

The model ownership it has in mind is state ownership, if not of the business as a whole then at least of the land on which the business stands, which cripples hotel construction, for instance the former Sheraton, Royal Palm, Movenpick and now Serena Hotel changes hands each five years because it isn't worthwhile after the tax exemption period is over.

But recently Tanzania Revenue Authority Commissioner General Harry Kitiliya was telling an august assembly that 'frauds' cost Tsh1.2trillion yearly; all these shifts are just tax evasion ways.

So while Tanzania gets some penetrating criticism from reform-minded ranking agencies like the World Bank and the World Economic Forum, it has quite a few adherents from among UN agencies generally, including the same World Bank as in the case of the recent accolades that lead economist Morrisset gave to Tanzania.

In that case there were unlikely to be radical reformers in the WEF logic of things when a report on industrial sector revival was produced jointly by the United Nations Industrial Development Organization (UNIDO), the Ministry of Industry and Trade, and the President's Office - Planning Commission.

There is hardly anyone among them who doubts 'planning' logic, in which case the conception of revival of industrial growth is seen virtually as a 'plan,' which, for those who are rather unfamiliar with the 'political market' of ideas, instantly gives credence to a certain outlook, reinforces government legitimacy, that it will deliver.

One reason why this planning mode of thinking which is supposed to be antiquated and buried with the defunct Union of Soviet Socialist Republics, not to speak of the ruins of Tanzania's own planned economy and the debilitating shortages of the early 1980s rtefuses to go is Africanisation.

When one accepts privatization as the formal method of revival and modernisation, it is to accept that Europeans, Indians and Arabs become one's employers and bosses, and a few among us become experts at various levels, while Africans increasingly also take to industry.

Most of those in the government, parastatals and in their community gatherings don't think of Africans starting all sorts of entreprise via the agency of land when they already are experts; they detest foreign bosses, firstly.

In order therefore to avoid a situation where there as many chances of being employed by an Indian or European as by an African, it is necessary to retain parastatal organizations in the more important areas, and as we can't sell shares, seek loans.

Either way we shall only be looking for 'money' to conduct the business, in the language of the old Arusha Declaration, whereas it is one thing for a business to seek a commercial loan in order to operate or expand, and another for someone to put his own money, or use an asset as a collateral, or sell such asset to get capital.

In the latter case it takes time before he is in the red, for he has no one to payback nearly all of the capital he started with, unlike in a situation where land is frozen, and commerce has to start with loans; it is uncompetitive.

No one however expects UNIDO, the Ministry of Industry and the Planning Commission to make a new discovery worth an economic award that one major difference between Kenyan and Tanzanian industries is their sources of capital, and risk exposure, thus how much they can invest in quality, marketing or even qualified personnel.

Since there is still no realisation in Tanzania that land as a factor of production is best considered when it is mobile, can be disposed at will because it is privately owned, the solutions espoused in a  summary, 'Way out for Tanzania's industrial mess' is merely a reinforcement of the mess.

It is slanted in the usual elitist manner that when that particular sector is privileged, the state of the nation shall improve for the better, and experts in each sector say it is theirs!

Industrialisation should thus be made a national policy priority, which is an illogical proposition because one can't build industries without having effective demand for those goods, and when they can pricewise or qualitywise at a given price level compete in an advantageous manner with foreign goods.

Those who privilege ideas of priority need to say how they will ensure that consumers buy their goods in priority. When the document asks for policy linkages between agriculture, trade and industry, what it is seeking isn't a workable market framework but tying down local producers to cater for needs of a few industrialists.

This is especially the case in exports of raw hides, with frantic objections. Nor is anything changed by urging donor support for industry, without freeing up capital.

Arguments for a policy platform for trade which "must be supportive of industrial policy by providing protection to certain industries while at the same time encouraging export-oriented industries to perform better' is an example why Tanzania is always frustrating East African integration efforts.

One cannot have import-substitution industrialisation strategies of the 1970s and a modern day generalized market following the World Trade Organisation dictum that January 2007 ended all protected cotton manufacturing and its benevolent trading affinities with former colonies, etc.

In what manner does the Planning Commission seek to 'protect' some industries from the market if not by rolling back the process of EA integration, the customs protocol and the common market, and now also cutting back on legislative powers of the East African Legislative Assembly, all of this meant to check Kenyan goods, to 'protect' our loans-based industries from utter failure?

SOURCE: THE GUARDIAN