- The Washington Times - Wednesday, March 10, 2004

DAR ES SALAAM, Tanzania — From the lowliest street peddlers to the largest state-owned companies, the winds of free enterprise are blowing through Tanzania, as the country slowly erases the legacy of what was once Africa’s biggest experiment in socialism.

But the country’s new orientation is also testing President Benjamin Mkapa’s ability to deliver tangible improvements to his people.

For near 30 years after the union of Tanganyika and the Sultanate of Zanzibar created the United Republic of Tanzania in 1964, the country pursued the collectivist vision of its founding father, Julius Nyerere. Known as “ujamaa” — a Swahili word describing close familial relations — the system emphasized public education, self-reliance and communal ownership of property.

Tanzanians credit “ujamaa” with having welded the country’s 130-some tribes into a coherent, Swahili-speaking nation of 36 million people, free of the ethnic divisions and violence that plagued neighboring countries like Uganda, Burundi and Rwanda. The people speak reverently of Mr. Nyerere, who died in 1999, simply as “Mwalimu” — teacher.

But most Tanzanians also concede that his economic policies failed utterly, driving living standards steadily downward through the 1970s and 1980s. In retrospect, even older citizens concede that Mr. Nyerere helped smother the individual initiative their country now needs to boost its per-capita annual income from what the World Bank estimated to be an appalling $280 in 2002.

“We grew up expecting a lot from the state,” said Cranmer Rutihinda, an economist in Dar es Salaam. “The entrepreneurial spirit was dead.”

These days, a growing band of pro-globalization free-marketers, most notably Mr. Mkapa, spend their days trying to resuscitate entrepreneurship while preserving the positive spirit of “ujamaa” that has kept Tanzania whole.

Mr. Rutihinda oversees the research division of the Tanzania Investment Center, an institution whose existence would have been unthinkable a decade ago. The organization, which answers directly to Mr. Mkapa, aggressively courts foreign investors with promises of limited regulation and a level playing field.

It has been instrumental, for example, in helping the mining industry recover, where international companies are now exploiting rich deposits of gold, diamonds and tanzanite, a light-bluish stone unique to this East African region.

As Tanzania’s leading evangelist of free enterprise, Mr. Mkapa shows a fervor seldom seen in Africa. He was once a protege of Mr. Nyerere, and the elder statesman made him president by ensuring his nomination as the candidate of the ruling party — the Chama Cha Mapinduzi (CCM) — in 1995. Though opposition parties exist, the CCM is the de facto power center of Tanzania, dominating both the executive branch and the parliament.

While Mr. Nyerere was still alive, the president established the groundwork for reform with some early privatizations and reforms of restrictive land-ownership laws. In the last few years, other, more dramatic changes followed.

Now, with less than two years to go before the constitution requires him to step aside, Mr. Mkapa is exhorting his compatriots to pick up the pace, hoping to leave a solid legacy of reform.

“Frankly, I am sick and tired of always hearing Tanzania being referred to as ‘one of the most poor countries,’” Mr. Mkapa said in his Feb. 12 state of the union address to parliament. “It is possible to shed this obnoxious epithet, but not at our present speed.”

So far, Mr. Mkapa’s main achievement has been to make peace with the International Monetary Fund, and by extension, with the Western donors whose aid still makes up roughly half of Tanzania’s national budget, through solid macroeconomic policies.

Inflation, which stood at 27.4 percent in 1995, sank to 4.5 percent in 2002 (though it is expected to rise slightly for 2003), thanks to tough-minded fiscal and monetary policies. Economic growth reached 6.2 percent in 2002, a level it will likely maintain for a few years.

“Overall, I am optimistic that Tanzania, with sustained implementation of its economic reforms, can succeed in achieving its ambitious development goals,” the IMF’s deputy managing director, Agustin Carstens, said after a Feb. 4 visit to Tanzania.

Mr. Mkapa has also doggedly pushed privatization of his country’s public sector.

A presidential commission set up in 1996 to modernize state-owned industries concluded after a few years of fruitless efforts that Tanzania had no chance of tackling the task on its own, and so began selling off what the state had acquired during the Nyerere era — 330 companies so far.

Hotels, paper mills, sugar factories, breweries, rubber plantations and port terminals have gone under the auctioneer’s gavel, and the commission has hired foreign companies to manage other properties.

A slick Web site for the commission offers a “privatization song” to woo Tanzanians who were weaned on the notion that the state knows best. On Oct. 25, the commission led a celebration of “privatization day.”

One sign of Tanzania’s turn away from socialist economics has been the changing mind-set of its intelligentsia. Dar es Salaam’s universities used to be a hotbed of socialist thought, where capitalism was held responsible for what ailed Tanzania.

“Now, my models are the European Nordic countries,” said Michael Okema, a political scientist with the Open University of Tanzania. “Twenty years ago, I was an African socialist.”

But as Mr. Okema’s interest in Scandinavian-style welfare states suggests, many Tanzanians still regard the market with considerable suspicion, and for good reason. A decade of solid growth and low inflation have failed to create broad-based improvements in the lives of ordinary citizens, economists and government officials note.

The reasons for this, said Mr. Rutihinda, the economist, is that the Tanzanian state is still rather inefficient and not good at turning tax revenues into public services like education and health care. In addition, booms in sectors like mining tend not to employ large numbers of people, and privatization often leads to layoffs, meaning profits rise as jobs are lost.

Nowhere is the challenge of reform more apparent than on the streets of Dar es Salaam, Tanzania’s commercial capital of 3 million people on the Indian Ocean coast.

The city’s streets are often clogged with peddlers that Tanzanians refer to as “machingas.” Though the word originated from the name of a southern tribe, it has come to refer to street vendors, mostly young men, who sell everything from T-shirts to cashews to rat poison.

They are a large part of what economists call “the informal sector,” which the World Bank believes accounts for 60 percent of Tanzania’s economy. These people pay no taxes, nor can they obtain loans from banks, but they are essential to the city’s economy.

“What would happen if the entire informal sector in Dar es Salaam were to go on strike?” Mr. Mkapa asked in a September speech. “The truth is that if that were to happen, God forbid, much in this city could grind to a halt.”

The machingas include people like Dickson Vincent, 22, who sells ballpoint pens from a small blanket on the sidewalk in Kariakoo, one of the city’s poorer districts. He has plenty of competitors nearby, but says it’s the only work he can find.

In December, the regional commissioner of Dar es Salaam, Yusef Makamba, decided to take action. He proposed that the machingas gather in designated marketplaces — covered areas of corrugated metal held up by rough timber — to sell their wares, and to issue them identification cards that would put them in the formal economy.

He also sent military police to round up stragglers who disbelieved that their customers would bother to visit the new marketplaces.

The police began confiscating goods from unlicensed machingas, but the salesmen strongly suspected the authorities were simply stealing their merchandise for resale. On Dec. 14, a group of them stormed a warehouse where their merchandise was being held and fatally stoned a policeman.

Now, the informal sector conducts a constant game of cat-and-mouse with the authorities.

The machingas post lookouts, who warn them to pick up and move to another spot if the police come near. Mr. Vincent has strings attached to the four corners of his blanket, so that he can pull it and run at a moment’s notice.

“We feel like we’re not treated as citizens, and it makes us angry,” Mr. Vincent said.

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