ECONOMIC LIBERALISATION IN TANZANIA

1
ECONOMIC LIBERALISATION IN TANZANIA

• JUSTIFICATION
• PROCESS

2
JUSTIFICATION

• DETERIORATION OF ECONOMIC PERFORMANCE ASSOCIATED
  WITH WEAKNESSES OF THE STATE CONTROLLED ECONOMY
• FAILURE OF SOCIALISM AND SELF RELIANCE
• WORSENING OF WORLD MARKET SITUATION
  DETERIORATION OF TERMS OF TRADE
• GIVEN PREVAILING WEAKNESSES, ECONOMIC REFORMS
  WERE INEVITABLE
• CHANGE OF POLITICAL LEADERSHIP 1985 1995
• MORE LIBERAL PRESIDENT ALI HASSAN MWINYI
• MULTI PARTY DEMOCRACY FROM 1995 - 2005
• PRESIDENT BENJAMIN WILLIAM MKAPA

3
JUSTIFICATION (CONTD)

• CUT DOWN RESOURCE WASTE FROM INNEFICIENT
  PARASTATALS (BURDEN TO ECONOMY)
• IMPROVE ECONOMIC EFFICIENCY
• STIMULATE THE PRIVATE SECTOR THROUGH MARKET
  REFORMS
• MOBILIZE FOREIGN AND DOMESTIC INVESTMENT
• RAISING GOVERNMENT REVENUE

4
ECONOMIC LIBERALIZATION PROCESS

• ECONOMIC LIBERALISATION IS PART OF THE STRUCTURAL
  ADJUSTMENT PROGRAMMES (SAPs)
• SEVERAL PROGRAMMES
• NATIONAL ECONOMIC SURVIVAL PROGRAMMES 1981
• STRUCTURAL ADJUSTMENT PROGRAMME (1982 85)
• ECONOMIC RECOVERY PROGRAMME 1986
• ECONOMIC RECOVERY PROGRAMME II (ECONOMIC AND
  SOCIAL ADJUSTMENT PROGRAMME) 1989-1992

5
ECONOMIC LIBERALISATION PROCESS (CONTD)

• POLICY CHANGE WITHDRAWAL OF THE STATE FROM
  DIRECT INVOLVEMENT IN PRODUCTION AND DISTRIBUTION
  
• State takes the role of policy maker, maintenance
  of law and order, provider of basic social
  services and economic growth and facilitator of
  economic growth
• STATE CEASES TO BE THE MAJOR OWNER OF PRODUCTION
  CAPITAL
• LIBERALIZATION
• PRIVATISATION OF STATE OWNERSHIP
• ALLOW MARKET ECONOMY TO OPERATE

6
PRIVATISATION

• PRIVATISATION MEASURE TO REDUCE GOVERNMENT ROLE
  IN THE ECONOMY AND BROADEN THE ROLE OF THE
  PRIVATE SECTOR
• DEFINED AS the transfer of all or any of the
  three kinds of property rights from the state to
  private sector ownership right operating right
  and development right

7
PRIVATISATION (CONTD)

• PRIVATISATION THROUGH
• OUTRIGHT SALE OF GOVERNMENT ASSETS
• PARTIAL SALE OF CONCESSIONS
• MANAGEMENT CONTRACTS
• HIRING OFF
• SALE OF NON CORE BUSINESS ACTIVITIES

8
PRIVATISATION (CONTD)

• PRIVATISATION WAS LAUNCHED IN 1993 410
  PARASTATALS PREVAILED
• 1995 1998 100 PARASTATALS OUT 410 SOLD
• 2001 UP TO 310 HAD BEEN SOLD
• 2003 UP TO 380 PARASTATALS

9
LIBERALISATION

• OPENING FOR MARKET ECONOMY
• REMOVAL OF PUBLIC MONOPOLY
• IN FINANCE BANKING AND INSURANCE
• ALLOWED PRIVATE OPERATIONS IN FINANCE
• CROP MARKETING
• LIBERALISE CREDIT SYSTEM, FOREIGN TRADE AND
  FOREIGN EXCHANGE TRANSACTIONS
• REMOVAL OF PRICE CONTROL
• LIST OF ITEMS SUBJECT TO PRICE CONTROL REDUCED
  FROM 400 TO 2 (PETROLEUM PRODUCTS AND ELECTRICITY)

10
LIBERALISATION (CONTD)

• AGRICULTURAL MARKETING AND EXPORT TRADE OPEN FOR
  PRIVATE SECTOR
• LIBERALISE MARKETING AND PRICING OF FOOD GRAINS
  (ABOLITION OF MARKET CONTROLS / RESTRICTION ON
  MAREKTING AND TRANSPORTATION OF FOOD GRAINS)
• LIBERALIZE THE MAJOR EXPORT CROP MARKETS
• PERMISSION FOR PRIVATE SECTOR TO BUY AND EXPORT
  AGRIC PRODUCE
• LIBERALISE PRODUCER PRICES FOR AGRICULTURAL
  PRODUCE
• PHASE OUT SUBSIDIES ON AGRICULTURAL INPUTS AND
  ALLOW PRIVATE SECTOR TO IMPORT AND DISTRIBUTE
  AGRIC INPUTS

11
LIBERALISATION (CONTD)

• AGRICULTURE (CONTD)
• ABOLISH WEIGHT RESTRICTION ON INTERREGIONAL FOOD
  GRAIN TRADE
• LEGALISE PRIVATE TRADE
• ABOLISH PAN TERRITORIAL PRICING
• 1980- PRIMARY SOCIETIES / COOPERATIVE UNIONS
  ALLOWED TO SELL DIRECT TO PRIVATE TRADERS
• 1990 NATIONAL MILLING CORPORATION ABANDONED
• 1992 ENTIRE GRAIN MARKET UNDER PRIVATE SECTOR

12
LIBERALISATION (CONTD)

• LAND
• 1995 OPENED COMMODITISATION OF LAND
• .. Individuals should be allowed to obtain
  individual titles within an area not designated
  for communal uses, land conservation and other
  specified village or community projects

13
LIBERALISATION (CONTD)

• CREATION OF FAVOURABLE ENVIRONMENT FOR MARKET
  ECONOMY
• CHANGES IN INSTITUTIONAL SETTING
• CHANGES IN POLICY AND LEGAL SYSTEM
• CREATION OF TAX INCENTIVES FOR INVESTORS
• PROMOTING THE COUNTRY TO LOCAL AND FOREIGN
  INVESTORS
• TANZANIA INVESTMENT PROMOTION CENTRE (IPC)

14
IMPACTS OF LIBERALISATION

• SECTORAL RESPONSE TO ECONOMIC LIBERALISATION
  VARIED
• EFFECTS OF LIBERALISATION HAVE IMPLICATIONS ON
  HOW INDIVIDUALS AND GROUPS ACCESS AND MANAGE
  RESOURCES.
• HAS LIBERALISATION ENHANCED OR CONSTRAINED
  MANAGEMENT OF RESOURCES FOR SUSTAINABLE
  DEVELOPMENT?