a tripartite report - Unctad
a tripartite report - Unctad
a tripartite report - Unctad
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38 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE<br />
amongst the settler-community and excluded the<br />
majority Africans who resided in the countryside.<br />
There was thus no “fair” competition that existed<br />
between the dominant economic community and<br />
the African majority. Sentiments of nationalization<br />
thus became prevalent, with the SOE recognized<br />
as the only channel through which the new Government<br />
could create fair access to employment,<br />
market opportunities and ultimately, wealth.<br />
This invariably leads to the second issue of the<br />
Arusha Declaration. Arusha Declaration propagated<br />
the ownership of the factors of production<br />
alization<br />
and expropriation were non-negotiable<br />
as the State created monopoly SOEs in key industrial<br />
sectors. The Declaration further put collective<br />
agricultural schemes at the centre of the<br />
national economy (rightly so) and introduced a<br />
programme of ‘villagization’, that is, the moving<br />
of peasant families into cooperative villages, the<br />
so-called “ujamaa” where they could supposedly<br />
be self-reliant by working together more productively<br />
and economically through common usage<br />
of agricultural inputs and machinery, such as fer-<br />
<br />
initial objectives due to certain implementational<br />
features. 25 Ujamaa removed all forms of innovativeness<br />
in the agriculture sector, while the State<br />
imposed itself as a monopsony buyer, distributor<br />
and seller of agricultural produce.<br />
Thirdly, State ownership in most of the key industrial<br />
sectors brought about mismanagement and<br />
lack of innovation, including lack of recapitalization,<br />
thereby affected economic development.<br />
Economic stagnation, oil price shocks of the 1970s<br />
and falling prices of the country’s main commodity<br />
exports contributed to economic decline in the<br />
1980s. When President Ali Hassan Mwinyi became<br />
president in 1985 (following President Nyerere’s<br />
resignation), an economic reform programme was<br />
introduced to revamp the economic fortunes of<br />
the country. However, economic transformation<br />
required an overhaul of the whole political and legal<br />
system, which was eventually embarked upon.<br />
Fourthly, industrial structures were highly concentrated<br />
through SOEs while the private sector was<br />
largely relegated to the agricultural sector, micro<br />
retailing/convenience stores, unregulated commuter<br />
transport, small restaurants, etc. Competition<br />
was a suspicious capitalist tool as hinted in<br />
the Arusha Declaration. It was not considered a<br />
developmental tool of the then centrally planned<br />
system where the Government played the role of<br />
policy implementer and big business operator. As<br />
wealth creation at macro level was the preserve<br />
of the State, competition against the State in this<br />
context was not encouraged and where a private<br />
enterprise had grown to dominant proportions,<br />
the State had the legal grounds and a strong political<br />
will to expropriate and nationalize such companies.<br />
This was however not sustainable as by the<br />
mid-1980s, the economy needed an exposure to<br />
competition through the privatization process and<br />
the introduction of competition rules and principles.<br />
A consumer activist 26 rightly observed that the<br />
motivations in which the United Republic of Tanzania<br />
adopted its current competition laws was due<br />
to the failure of socialism and its restrictive policies<br />
to achieve the desired objectives in the United<br />
Republic of Tanzania. Infant Tanzanian industries<br />
failed to meet even the local demand due to limited<br />
internal capacity, series of oil price increments,<br />
<br />
allocation of resources.<br />
Consequently, the United Republic of Tanzania<br />
experienced severe macroeconomic hardship in-<br />
sential<br />
goods and services, falling real GDP growth<br />
<br />
Republic of Tanzania had no other option than to<br />
resort to IMF and adopt its structural adjustment<br />
programmes, including the introduction of cost<br />
sharing on all social services, staff retrenchment,<br />
liberalization of imports, interest rates and exchange<br />
controls, devaluation of the shilling, price<br />
decontrol, privatization and restructuring of SOEs<br />
27 As<br />
part of this process, national distributional agencies,<br />
such as National Milling Corporation (NMC)<br />
and Regional Trading Company (RTC), were replaced<br />
by private companies, the former Price<br />
Commission during the controlled economy was<br />
abolished and replaced by the sector regulators<br />
and the competition authority.<br />
In August 1990, the United Republic of Tanzania<br />
promulgated the National Investment Promotion<br />
and Protection Act (NIPPA), which established<br />
the Investment Promotion Centre (IPC). The IPC<br />
was designed to seek out and assist foreign di-