Peace, stability and high levels of investment set Tanzania apart in
East Africa, but stimulating the vital agricultural sector remains a challenge.
Tanzania is that rare breed in Africa — a country that has a real chance to break away from the stereotype of poverty and instability that often characterizes the continent. It is rich in terms of natural resources, with a wealth of minerals and wildlife; the macroeconomics are strong, with inflation at a 30-year low and interest rates falling, and it has managed to attract major inward investment into strategic sectors such as mining.
But at the highest level of government, it is acknowledged that none of this means anything unless it is effective in reducing poverty. Tanzania needs to hit a growth rate of 8 — 10 percent to have an impact on the mass of the population living at subsistence levels.
"Our task is to translate reforms into tangible economic growth and measurable improvement in the social provision of our people," stresses President Benjamin William Mkapa, now one year into his second term of office.
And it is waking up what the president calls "the sleeping giant" of agriculture, which comprises 50 percent of economic activity and upon which 87 percent of the population depends, that is the key to raising the living standard of Tanzanians. Officials at the Ministry for Agriculture estimate that a 1 percent increase in agricultural production would have a dramatic effect on poverty and indeed on the overall economy.
The government reduced land rents and removed many taxes in the July budget but it is striking how under-utilized the land is. Of an estimated 106 million acres of agricultural land, only 42 million acres is being cultivated.
"We can't go on talking about potential," says Minister for Agriculture Charles Keenja. "We have done that for 40 years, we need to transform the sector."
Agricultural activity is largely commodity-based, with coffee and cashew nuts providing the bulk of the country's export earnings, so the government is driving towards adding value inside the country's borders by focusing on agro-processing. This is especially important given the sharp falls in the international prices of coffee and cashew.
However, strong export earnings could also be feasible from other added-value sectors such as textile and garment manufacturing, especially under the provision of the Africa Growth and Opportunity Act (AGOA), passed into law in May 2000 and designed to support sub-Saharan exports to the U.S. Kenya, Mauritius and Madagascar have all benefited hugely from the textile provisions of the act, and U.S. officials are hopeful that Tanzania will soon meet the requirements on proof of origination. Trade minister Iddi Simba adds that the government is moving on this issue but also emphasizes that the country needs to focus on producing the right quality of goods for export.
Trade and finance ministers from 35 eligible AGOA countries are now in Washington for a two-day trade and economic cooperation forum to try to maximize the opportunities that the act offers.
The thrust of U.S. policy towards Tanzania and other African countries is self-help, to provide the means to improve trade but to minimize direct aid; indeed the U.S. government provides very little support for government budgetary operations, although USAID administers a budget of between $21 million and $24 million, mainly directed towards health and family
planning.
HIV/Aids is a pressing issue for Tanzania although it has not been as affected as nearby countries such as Uganda and South Africa. Infection estimates range in the area of 8 — 12 percent and in a highly conservative country, authorities have in the past found it difficult to encourage people to deal openly with the disease. Yet President Mkapa's determination to confront the issue has been evident by an outspokenness on the international stage and by the creation of dedicated budgets to deal with both education and treatment.
Aid officials comment that there is a widespread consensus that in virtually every area the government is making the right policy reforms, although they say there has not been enough progress on governance and corruption. The Ministry for Finance and the tax authorities have been vigorous in tackling internal graft but abuses can still occur both on a petty and a grand scale.
Yet, in this, as in the rest of the reform agenda, there is a strong sense of mission in government circles. The country is entering a phase in which some grit will be needed to succeed, especially as it enters the difficult phase of utility privatization. With industry screaming about the high cost of power, reform in this area is critical to making the country competitive in the regional and global arenas.
Likewise commentators underline that the government's success in stimulating individual sectors such as mining needs to be duplicated throughout the economy if it is going to succeed in significantly raising the growth rate.
"We need a quantum leap to get up to 8 or 9 percent," says Leonard Mususa at PriceWaterhouseCoopers. "The government has done a lot for mining but we have to be consistent and that has to be rolled forward into tourism and agriculture, where particular investment in infrastructure is needed."
As with many developing countries, the challenges at times seem legion, but Tanzania is one country that by facing those challenges squarely and playing to its strengths is giving itself every chance of succeeding. Just like its national symbol, the giraffe, Tanzania is making great strides forward, and with every step is working towards improving the lot of its people.
www.agoa.gov (Africa Growth and Opportunity Act)
