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Provincialism, non-harmonized tariffs and economic reform
2005-11-03 06:57:17
By Nimi Mweta
While the results of ongoing campaigns may not be holding surprises for anyone, there are aspects of debate likely to outlive the polling, or so it appears.
The most noticeable is probably the demand for non-harmonized tariffs in external trade for the Mainland and Zanzibar, while another is a provincial administrative model that CHADEMA has been campaigning to install.
This doesn’t of course suggest that Tanganyika is down and out.
In a way the two projects, like their cousin the restoration of a Tanganyika government, appear to be a thrust into the past.
But after 1989, few people are that sure what really constitutes the past and what makes the future – for instance Adam Smith was considered dead and buried even during the time of David Ricardo in the 1820s, placing taxation as a more basic idea than zeal, enterprise.
Then came the tax cutters of the globalization era, who essentially abandoned taxes, and thus ’big government’ like TRA as key to growth.
While the campaign by CHADEMA presidential candidate wasn’t anchored in the long tale of the history of economic theory, it can’t be fully appreciated without an element of this problem.
In a wider or perhaps closer (historical) view it addresses the issue of model of government which permits greater efficiency in resource mobilization and utilization.
As all this finally boils down to vested interests, it isn’t easy to say whether the basic, familiar model of centralized government is better than a decentralized form he envisages.
Taking up the tax-cutting dispute, it is clear that Tanzania entered the globalization phase of economic policy as it were, walking backwards the way witches do.
Neo-liberal tax policy is about cutting taxes generally, reducing the cost of government, and ensuring that basic welfare is maintained so that there is a ’safety net’ in the period of retrenchments.
In our case we did the opposite, fully backed by bodies like the IMF and the World Bank owing to rural-based social structures. We increased government costs, reduced welfare.
When Mbowe picks examples like Singapore to see what can be done, the error perhaps is to fail to see that not one island nation in Africa has prospered.
The only island countries that have prospered are those led by entrepreneurial classes, not parasitic bureaucracies preying on investors and traders, in which case they place financial or industrial assets in other countries, and seek markets – or clients – in the other countries.
In the Caribbean a number of them are prosperous but African and native Indian-majority enclaves stagnate.
In a way Zanzibar could be prosperous if it was positive towards enterprise, but then it is impossible to welcome investors in Zanzibar while detesting the ’Hizbu’ portion, viz, Arab countries.
With this basic sentiment of hate underlining its nationalism, rather than eliminating slavery (by the British, not ASP) and then merely rectifying the biases of an electoral character, and facilitating a land market, far simpler methods were used.
They are still the basis of policy, on top of which elaborate plans are hatched, to ’fight poverty.’
Thus there is something eerily foreign to what the CHADEMA campaigner was talking about, as it isn’t on the basis of the country’s administrative culture that a provinciality policy can work.
It requires a fundamental change in the ownership of land in particular, such that each portion of land in an asset of some sort, has some visible investment on it, and its owner pays a significant tax related to ownership of property.
This way a class of owners and professionals can be created within each territory, starting from district levels.
Taking an example of a situation where contractors for roads, buildings, culverts, schools, health centres, granaries, dips, etc have their own equipment, and access to bank loans, hundreds of projects would be taken up each year in a district.
All that is required is a contract where district authorities pay ten per cent of the principal sum and interest charge (well above deposit interest rates or Treasury bills), in accords countersigned say by local representatives of commercial banks.
When there is no possible failure of such payment, contractors can proceed to build facilities, and run them until payment is out.
Since a contractor may not wish to operate a service once it is placed on a running footing, it is possible for such assets to change hands, or be paid his cash up-front by an investor.
The latter would be ready to await the long-term council payments, speculating on the interest part, etc while the specific investor could be in need of purchasing of tools or meeting down payment for such equipment while picking a bank loan for the remainder.
It is obvious that chambers of commerce would be busy, and policy discussion surface too.
But in an environment where the quasi-totality of the country’s politicians hate Indians, Arabs and Europeans and won’t tolerate seeing them pick up property in the country, none of this will happen.
Property can’t have value unless the market is open for every interested investor, since curtailing investors to ’black’ or ’indigenous’ ones means that at most they will be fighting to win a tender to construct, by having the cash paid out prior to constructing.
It is this method which has been used for 40 years; it ensures stagnation.
The trouble with Mbowe’s provincial concept is that it can only succeed in a climate that is positive for enterprise, like the Asian environment he talks about or he could just have picked the US example.
But typical of the talk that one hears from bureaucrats, knowing of ’Asian tigers’ has become a sort of fad, a fashionable way of showing that one is also aware of who is making progress in the world economy.
But characteristically he has little or no idea of the key issues leading to such success, in which case he basically projects administrative decentralization based on existing economic structures, a recipe for chaos.
Thus there is a point in what the CHADEMA contender says, but the odds as to actual relevance to existing realities is another.
Assuming the candidate has a dislike of the sort of communal land ownership existing, he then should say that he is ready to issue titles to male residents of this country who are 18 years old and above.
It would follow that from then on everyone can sell or in any manner transfer his portion of land, in which case the climate of investment that is desired would start existing, which isn’t quite relevant yet.
And it is precisely for the same reason that the whole problem that Seif Shariff Hamad, a sort of alter ego to Mbowe rather than his Mainland associate, Prof. Ibrahim Lipumba may also be wrong.
Saying that harmonization is negative for Zanzibar is only valid in case the latter is placed on an investment footing, which to an extent the Isles opposition leader might be ready to contemplate, but it is hard to say how far it would work.
Isn’t it necessary to create the basic consensus to changing policy in Zanzibar to privatized land ownership that welcomes anyone to the land market, or can it work just as fiat, an order?
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