a tripartite report - Unctad
a tripartite report - Unctad
a tripartite report - Unctad
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34 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE<br />
Arising from the Vision, the United Republic of Tanzania’s<br />
developmental path has revolved around<br />
<br />
as Chama Cha Mapinduzi (CCM) Election Manifesto<br />
of 2005 whose main objective is to improve<br />
the quality of life for every Tanzanian; National<br />
Strategy for Growth and Reduction of Poverty;<br />
Sustainable Industrial Development Plan; National<br />
Trade Policy; Tanzania Mini Tiger Plan 2020; and<br />
the Millennium Development Goals. All these are<br />
meant to quicken the attainment of the country’s<br />
Vision 2025 10 .<br />
Three key issues in a political context stand out<br />
today to affect competition policy in the United<br />
Republic of Tanzania. Firstly, traditionally, the<br />
State has been an active participant in economic<br />
activity and took direct control of all the means of<br />
production for almost 20 years. This State control<br />
was eventually relinquished through the structural<br />
reform but there remains a strong regula-<br />
<br />
Government departments and Ministries on how<br />
business is conducted in the country. Successful<br />
business growth and development is still linked<br />
to favourable political support. For instance, in<br />
2000, the Government recorded that cashew nuts<br />
were at the time the leading foreign exchange<br />
earning crop for the country. Then President<br />
Benjamin Mkapa directed Government authorities<br />
to give incentives to investors, particularly for<br />
cashew nut processing plants. Arising from this,<br />
only processed cashew nuts, and not raw seeds,<br />
were to be exported. 11 This was a commendable<br />
directive as it facilitated the creation of locally<br />
based processing plants. The only drawback was<br />
that the incentives were given to the processors,<br />
but not the farmers, thereby creating a distortion<br />
in bargaining power and wealth creation as<br />
the processors exercised greater market power in<br />
their vertical relationship with the farmers. Other<br />
industrial sectors such as coffee and tea have<br />
faced similar challenges.<br />
Secondly, there have been criticisms about the<br />
varying investment incentives and other terms<br />
that tend to favour foreign investors to local ones.<br />
While most Tanzanians are operating micro and<br />
SMEs, the blue-chip enterprises are operated by<br />
foreigners, more particularly Kenyans and South<br />
Africans stand out. 12 Where subcontracting with<br />
the big businesses are made, such contracts, if<br />
<br />
and well-connected Tanzanians. This again creates<br />
barriers to accessing big business and most probably<br />
has led to a stagnant domestic industrialization<br />
in the face of stagnant and/or perpetual<br />
SMEs. It has been noted that despite recent gains<br />
in economic development, the United Republic of<br />
Tanzania may still have a certain strong political<br />
inclination to State intervention in the economy,<br />
particularly the agricultural sector where the crop<br />
marketing boards (CMBs) have control over key<br />
cash crops. The CMBs are set up by Government<br />
action, with broad responsibilities and powers of<br />
compulsion over producers and handlers of de-<br />
<br />
cotton and tobacco. They come in the form of<br />
boards stabilizing prices by trading alongside<br />
other enterprises, export monopoly marketing<br />
boards, and domestic monopoly marketing<br />
boards as. 13<br />
Institutional reforms have well been underway<br />
and observers are optimistic that the country will<br />
continue on this path as it is essential to the development<br />
of a strong private sector. 14 There is a<br />
large informal sector that needs to be incentivized<br />
to be innovative and graduate to the formal<br />
sector. Sanya and Gaertner (2012) study 15 shows<br />
that the United Republic of Tanzania, owing to<br />
its large informal and rural community, has the<br />
highest unbanked community in the EAC, as<br />
shown below:<br />
Formal Informal<br />
Excluded<br />
Entirely<br />
Kenya 40 per cent 27 per cent 33 per cent<br />
Rwanda 21 per cent 26 per cent 52 per cent<br />
United Republic<br />
of Tanzania<br />
17 per cent 27 per cent 56 per cent<br />
Uganda 28 per cent 42 per cent 30 per cent<br />
South Africa 64 per cent 10 per cent 27 per cent<br />
Source: Finscope 2010<br />
Part of the proposed solution was that bank regulations<br />
should continue to promote contestable<br />
<br />
different types of banks and the products they offer.<br />
One way of doing this was to address market<br />
segmentation due to large State and foreign<br />
bank presence by privatizing the few remaining<br />
Government-owned banks in favour of domestic<br />
participation.