Tanzania gains economic ground with capitalistic reforms

Four years ago, shelves in many shops here were practically bare. And bus stations were jammed with anxious would-be travelers, as gasoline shortages idled most vehicles. Today, shops are crammed. Buses, trucks, and cars cause city traffic jams. After nearly a decade of economic decline, Tanzania, one of the poorest nations in the world, is gaining ground.

Best known as the champion of African socialism, this east African nation is beginning to see results from capitalistic economic reforms begun in 1986.

Whether these gains will endure, and further progress be made, depends on the willingness of top party officials and government leaders to stay the course, and on continued public support for the reforms, say economists, party officials, and Western banking representatives.

Production of cotton and tobacco, key export crops, went up sharply in 1987. Good weather helped, but so did the fact the government is paying farmers higher prices as part of the reforms. As a result of the agricultural gains, per capita income rose for the first time in the 1980s. Per capita income is about $240 a year.

The prices being paid coffee farmers have risen 200 percent in three years, says Ian Porter, World Bank representative here. That compares with about a 90 percent hike in the prices of goods during the same period. A government study shows coffee farmers are coming out ahead, says finance minister Cleopa Msuya. Cotton farmers are at least breaking even, says Mr. Porter.

Other reforms Tanzania has made within the past four years include slashing the value of its once highly inflated shilling to make its exports less expensive; cutting federal spending to reduce domestic debt; lifting price controls on hundreds of items to encourage greater production; and easing the restrictions on imports to keep shops well stocked. These reforms have not, however, ended Tanzania's economic crisis. And some of the changes have brought new challenges.

Trimming the federal budget could result in cuts in funds for education and health services. Closing some state-run industries - as the government has promised to do - may save money and allow freer competition, but it will add to unemployment. Farmers are being paid more by the government for their crops, but the price of imported fertilizers and pesticides has risen sharply. And increased production on the farm creates a need for more processing and transport facilities that simply are not available.

Urban residents and farmers feel the double pinch of higher food prices and less buying power because of the devalued shilling.

There is little dispute, say Tanzanians interviewed, that the reforms were desperately needed - whether seen as a departure from socialism or as a course correction within the principles of Tanzania's socialism. But there is confusion among some Tanzanians as to where their government is headed ideologically.

``The economy had gotten so bad that there was less debate on a choice between ideologies,'' says Samuel Wangwe, dean of the faculty of economics and social sciences at the university of Dar es Salaam. ``I think Tanzania is moving toward a more pragmatic approach. But whether its moving from its social ideals is not clear.

Political leaders here, however, say the changes do not mark an end to Tanzania's socialism: The state still owns all land, banks, and many essential industries. There are no signs this will change.

Tanzania, under the leadership of former President Julius Nyerere, balked for years at making the kind of economic reforms required by the International Monetary Fund (IMF) and the World Bank to gain access to more loan funds. He attacked both institutions as antisocialist. But about four years ago, with the economy in shambles and key donors holding back aid pending changes, Nyerere initiated some reforms suggested by the IMF. He then convinced the sole political party here to adopt additional reforms worked out with the IMF in 1986.

In the interim, Mr. Nyerere voluntarily stepped down as President, but held on to his post as chairman of the ruling party, Chama Cha Mapinduzi, that sets government policy. As President, Ali Hassan Mwinyi has pushed to carry out the reforms. But Nyerere remains the real driver.

Nyerere is still ``definitely anti-IMF,'' says a member of the CCM's national executive committee. But there is no evidence that he is trying to sabotage or impede the reforms, say finance minister Cleopa Msyua, party members, and foreign diplomats. And there ``definitely is major support by the government, and party, and the public'' for the reforms.

Mr. Msuya and others say some members of the ruling party are calling for the reforms to be slowed down. ``The right wing of the CCM is extremely upset with the reforms,'' says Tanzanian publisher Walter Bgoya. The leftists are not so concerned, he said.

Import licenses, he explains, were once issued by government favor. Now, they are issued more widely without government favor, and this has angered those importers who were once the chosen few. Some hard-core ideologues see the reforms as `straying' from true socialism. And party members who represent urban districts see their wealth being undermined by reforms benefiting farmers at the expense of urban residents.

But average Tanzanian feels the pinch

Sales from his kitchen table-size vegetable stand bring Ellis Kibwere Maya about $3 a day profit. That's keeping him and his family ahead of expenses - but only by about 50 cents a day. At that rate, it would take him nearly four years to save up enough to buy a waist-high refrigerator.

Like many Tanzanians, Mr. Maya has seen few benefits from economic reform. In fact, he and many others are likely to be hurt by the reforms - at least initially. In the cities, people like Maya and his family face higher food prices because farmers are paid more. They have less buying power because the value of the national currency has been slashed. Federal spending cutbacks could reduce funding for education, health, and other public services.

Almost everyone here complains about prices. Several years ago they complained about empty stores. Now, most people say they prefer to see things in the stores, even if they can't afford them.

But for the many people working at minimum wages of $12 a month, even a tin of cooking fat is expensive at $1.70. A Tanzanian journalist says his wife earns the minimum wage, and it barely pays for her bus fare to and from work. The owner of a decrepit taxi says life would be much easier if his taxi ran well. But he can't afford to buy the imported parts it needs for repairs.

Eventually, Western economists say, Tanzania's economic reforms should lead to more local production, more jobs, more foreign exchange, and lower prices as competition brings prices down. But in the meantime, as prices climb and his income falls, urban life is getting ``harder,'' Maya says.

Rural life has also become more expensive for farmers near Morogoro like Nyawenda Ndozo. He has noticed higher prices for the few things he buys. But he's happier being his own boss on a small plot of land granted him by the government than as an underpaid worker on a plantation.