Tanzania's Privatization Draws Skeptics

The Dar es Salaam port can be seen with the St. Joseph's cathedral in the foreground ,Tuesday, May 22, 2006. Tanzania is working on plans to privatize the container terminal at its Dar es Salaam port as part of its privatization program that began in 1993. (AP Photo/Khalfan Said) (Khalfan Said - AP)

DAR ES SALAAM, Tanzania -- There was a time in Tanzania, having a beer with friends meant standing in line for hours. And even then you weren't guaranteed a drink.

Then the government began to remove decades-old state controls on the economy and privatize state-owned companies. Beer and other goods became more readily available and the government saved the $100 million it spent each year subsidizing state-owned companies.

Officials of the government's privatization body, the Parastatal Sector Reform Commission, see the regular and consistent supply of essential commodities as one more success of the privatization program launched in the early 1990s. Government officials acknowledge the switch to free enterprise has not been completely smooth, but disagree with critics who say there have been serious problems.

"Before 1993, the country was facing severe shortages of essential commodities. People used to queue for their supplies, but now nobody is doing that and prices have stabilized," said Joseph Mapunda, the commission's spokesman. He added once dormant companies have been turned into viable enterprises.

Chris Maina Peter, a professor of law at the University of Dar es Salaam, agrees shortages have ended, but said Tanzania's privatization program has had more failures than successes.

"The only company where one can say there was a turnaround was Tanzania Breweries," Peter said. "I remember in the old days it was impossible to get beer in Dar. But with the new management, you get beer."

The East African country was a one-party state from independence from Britain in 1961 into the 1980s. It has since undertaken political and economic reforms, turning away from socialism that many African countries embraced after independence and embracing multiparty democracy.

Entrenched state control over the economy that saw close to 400 state-owned companies on government books by the time it changed direction.

In some cases, potentially viable businesses remained closed for years, but the government continued to pay them subsidies.

An example was a state-owned paper mill that did not produce for 10 years because its management had failed. But Tanzania's treasury continued to pay a staff of about 800, said Mapunda. Since privatization, the new owners got the mill producing paper again within two years of buying it in January 2004 for $1 million.

Mapunda said that to date, the Parastatal Sector Reform Commission formed to handle the transition has privatized 322 state-owned companies by selling some government shares or entire companies or negotiating management agreements. Only 35 companies remain to be privatized and the commission is scheduled to complete its work in December 2007, Mapunda said.

The privatization program also catalyzed the setting up of the Dar es Salaam Stock Exchange that began trading in April 1998. Through it, some formerly state-owned companies have sold their shares to the Tanzanian public. Seven of the nine companies listed on it are former state-owned companies, including Tanzania Breweries.