While the fiscal policy thrust is to place explicit conditions in which anyone can move into the field with an investment idea, face few bottlenecks in relation to infrastructure and a lessened burden in terms of tax liabilities, there are strategic issues remaining to be resolved. One is the whole problem of industrial support and inclusiveness, which essentially means channeling public support to certain ventures, on merit…
There are reasons to believe that the setting elucidated by Finance Minister Dr Philip Mpango in fiscal policy innovations in the current Budget Plan is the most appropriate approach, as it gives room for access and fosters competition among those who venture into industries. That means an element of compelling those moving into industry to be mindful of local market requirements as well as export markets, which instills efficiency in their operational strategies. When a company is inserted into that kind of psychological outlook, modeled to rely on itself except for wider tax issues which are collective in character, it stands a greater chance to succeed than with subsidies.
This isn’t the kind of sentiment that is frequently noticed in media reports on what takes place in this or that academic forum or conventions of stakeholders discussing industrial sector strategies, as many are inserted in the traditional state industry sort of outlook. They have shifted from pure state reliance for capital and markets, to a situation where they want guarantees for their products – that this is the only feasible situation for them to succeed in their undertakings. This lobby is as powerful as it can be, as it appeals to the sense of nationalism or ‘patriotism’ that still informs a section of analysts or opinion makers, trying to recover from liberalisation, market logic injuries.
Glancing at media reports on a day-to-day basis, it is evident that these two outlooks have evident presence in the work of the government, from sector policies with various ministries and in the coordinating work of the Ministry of Finance and Planning. Most importantly these outlooks are visible in directives issued by President John Magufuli from time to time, and it is unquestioned who is working harder to take over policymaking and anchor it in an appropriate manner. It isn’t the realistic outlook that the minister laid out in the Budget Plan but ideologists in the centre of communication structures of political life as a whole, as their vision is treated as common sense.
To identify these outlooks and take note of what this or that expert is saying in strategic terms, the core issue is how they explain past failures, and then this provides light into how policy ought to be designed at present. The old fashioned and socialist outlook which held sway for years in academic special programmes like Development Studies focuses on the much hyped theme that industries collapsed in the second phase government owing to liberalisation, and others seek to fine tune that narrative, that first the industries were privatised and liberalisation followed, so they failed. All this is imaginary; they first failed before liberalisation came, and were then sold, in which case they were sold at throwaway prices as few of them were working. They were not sold at low prices because of state laxity, bribes or friendships but they had few takers anyway.
The more rational approach is the liberal outlook which however is a minority in the number of those who espouse it, and in many ways they do not go far enough, but compared to the sort of atmosphere one used to observe in earlier phases, there is a sea change in that realism is creeping into the discussion, if timidly. This school at least admits that there were serious shortages of raw materials for most industries relying on imported raw materials (for instance assembling plants), and this sort of state owned industry dominated the scene along Nyerere Road for instance, apart from General Tyre EA Ltd, cotton industries, etc. Liberalisation permitted the country to make use of funds from abroad - from expatriate investors with roots in Tanzania, to increase imports.
Unavoidably the sort of business itinerary of these investors has remained the mirror image of what local investors of the same ethnic origin aspire to, that is, having one leg in Tanzania and another outside, which translates as ‘illegal’ transfer of funds abroad. This sort of thinking is tied to the idea that funds which go outside arise from state coffers, were stolen, etc whereas the point is that there is no channel of safe purchasing of property, save with intention to operate business from that place. Property purchases of land, houses for long term purpose outside residence and subsistence renting, especially in retirement, isn’t advisable; property rights are weak, unreliable.
In that case current discussions on industrial ‘inclusion and sustainability’ lack a premise in realistic economic projection, and thus reinvent the old problem of protected industries using the market as a state-assured outlet. They did not have control over their costing or responsibility for results, as when a specific industry failed it wasn’t the management or board which failed but the government, leadership or political party in subsequent estimation of opposition parties. This is the manner in which critics of policy became even more radically socialist than the government that they ostensibly were criticising, which chocked off policy discussion altogether, as it has closed visions of a rather realistic state explanation, and outlandish criticism of sabotage, theft…
What the minister and ipso facto the rest of the government must do is to refuse to listen to those who ‘have learnt nothing and forgotten nothing’ but their ideological narrative on departing from socialism in the mid 1980s. For the main part they have been preying on sensibilities of younger people, many of them just arriving to their late 40s, still in school when the second phase was taking office, fed radical criticism by academic institutions used to teaching that ‘socialism is always right, capitalism is always wrong’ whereas in reality the opposite was true. That is what was demonstrated by the collapse of the Berlin Wall in 1989; socialism failed the sustenance test.