Defence forces v market forces

14Nov 2018
By Financial Times Reporter
Financial Times
Defence forces v market forces
  • CONTROVERSY Top businessman Rostam Aziz backs President John Magufuli's decision to deploy the army in the cashew nut prices row, saying government intervention was unavoidable

BUSINESS tycoon Rostam Aziz yesterday praised President John Magufuli's economic policies amid debate over the overall business climate in Tanzania and the president's recent decision to deploy the military to tackle a commercial problem over cashew nut prices.

Aziz, who is ranked by Forbes magazine among the top 5 richest men in the country, applauded Magufuli for his stewardship of the country's economy, saying Tanzania was on the right track under the president's firm leadership.

"When the free market economy unfortunately does not function as it is supposed to, the government has no choice but to intervene," Aziz told journalists after talks with President Magufuli yesterday at State House in Dar es Salaam.

"In the future, it is my hope that cashew nut traders and relevant government ministries will be better prepared to avoid a repeat of this problem."

There has been heated debate both inside parliament and in public over the cashew nut business after farmers rejected low prices offered by traders.

Some opposition leaders have criticised Magufuli's decision to deploy the army to tackle a commercial, civilian matter, but Aziz threw his weight behind the president.

"I've come to see my president...I applauded him for the good job that he is doing and wished him well as a businessman," he said.

"President Magufuli is removing distortions in the economy to create a level playing field for business. With any reforms, there are bound to be some painful outcomes, but it’s important to build a sustainable economy."

Aziz said Magufuli's economic reforms will create new business opportunities and urged fellow Tanzanian investors to take advantage of those opportunities.

"Tanzania will be built by Tanzanians themselves, we can't depend on foreign investors to develop our economy," Aziz insisted.

Meanwhile, the newly-appointed Agriculture Minister, Japhet Hasunga, flew to cashew-growing regions in southern Tanzania yesterday to take stock of the actual available stock of the commodity.

Hasunga, who began his visit in Mtwara, the top cashew-producing region in the country, was accompanied by top officials of his ministry.

President Magufuli has already sacked two cabinet ministers - erstwhile agriculture minister Dr Charles Tizeba and industry, trade and investment minister Charles Mwijage - for failing to tackle the cashew nut price problem.

The acting director general of the Cashewnut Board of Tanzania (CBT), Prof Wakuru Magigi, and board chairperson Anna Abdallah, were also sacked, with the entire board of directors dissolved.

Magufuli announced on Monday that his government would buy all the cashew nut yield this season for 3,300/- per kilogramme after accusing traders of colluding with some dishonest officials of the Cashewnut Board of Tanzania to try to cheat farmers by buying the commodity at just 1,500/-.

He said the state-run Tanzania Agriculture Development Bank (TADP) would be financially empowered to purchase all the cashew nut from farmers.

Magufuli said a cashew factory in Lindi Region that was recently repossessed by the Treasury Registrar will be handed over to the military, who have been order to begin processing raw cashew into kernels.

The president also instructed the Tanzania People's Defence Forces (TPDF) to transport and guard all cashew nut consignments across the country.

Tanzanian farmers expect to produce up to 210,000 tonnes of cashew nut this season.

However, some lawmakers from both the ruling Chama Cha Mapinduzi (CCM) and opposition parties advised the government to allow market forces of supply and demand to determine cashew nut prices.

The MPs in favour of market forces as opposed to the country's defence forces solving the cashew nut price crisis include Peter Serukamba, the Kigoma Urban MP (CCM).

Serukamba said it would be ill-advised for Tanzania to become a command economy, where the government fixes the prices of major goods and services.

Hussein Bashe (Nzega Urban, CCM) and Prof Anna Tibaijuka (Muleba South, CCM) have called for the establishment of an agricultural price stabilisation fund to cushion farmers against periodic commodity price fluctuations at the world market.