Question

In relation to theory of absolute advantage, comment on opportunities that Tanzania has in relation to other countries in the East Africa.

Answer 1

Sol:

Tanzania’s current engagement with the EAC is best approached from the perspective of the contrasting colonial experiences of the three original EAC countries. Though Tanganyika was the first EAC country to achieve independence from British tutelage, by the early 1960s Kenya was far ahead of Tanganyika in terms of physical infrastructure, economic development, and ‘western’ education, with Uganda somewhere in between. Over 50 years on, Tanzania is only now developing an indigenous capitalist class, and its private schools are forced to recruit Kenyan and Ugandan English teachers.

After the First World War (1914-18), Tanganyika joined East African British colonies Uganda and Kenya as a Trust Territory under a League of Nations Mandate. The list includes the coordination of customs and income tax, currency, postal services, ports and railways, civil aviation, higher education and agricultural and livestock research. These joint institutions were designed to reduce the costs and increase the efficiency of colonial administration and to facilitate the exploitation of colonised peoples and resources.

As a mandated territory, Tanganyika played a secondary role in the British East African colonial project, which was driven largely by the interests of white settlers in the Kenyan highlands and British corporations more generally. The resulting inequalities in levels of infrastructural, economic and social development between Tanganyika and the two other territories is the root cause of some of the key problems encountered by post-colonial governments in their attempts to maintain and deepen regional unity. Colonial policies helped create local ‘ethnic’ identities, particularly in areas without pre-colonial hierarchical societies, and – crucially - introduced an economic division of labour with European settlers and international companies dominating trade, finance, manufacturing and commercial agriculture, ‘Asians’ playing the role of middlemen and junior officials, and the African majority subsisting as small-scale farmers and petty commodity producers. In addition to these racial inequalities, some areas became integrated into international markets for agricultural commodities while others did not.

A key issue, with repercussions for our story, is the uneven impact of western education in the region, with Kenya and Uganda benefiting much more than Tanganyika. A common thread of post-independence nation-building politics was the creation of a centralised, authoritarian state under single-party hegemony as a means of forging national unity in the face of potentially conflictual pre-colonial and colonial identities, interests and ideologies. Of the three countries, Tanzania was the most successful in creating and maintaining legitimate political order, while Kenya struggled to control ethnic/regional rivalries, and Uganda collapsed into failed state status. Rwanda and Burundi were also future failed states. Compared to all its neighbours, the remarkable success of the Tanzanian post-colonial state in assuring national harmony over more than half a century has been variously explained. Nationalisation of foreign and Asian-owned companies, farms and commercial real-estate amounted to Africanisation with a socialist rationale. The rapid replacement of expatriates in the civil service, the judiciary, state-run corporations, the security apparatus, police and armed forces created an enduring ruling politico-bureaucratic elite. Finally, the post-independence state also incorporated pockets of potential opposition to ujamaa policies in the country’s cooperatives, and among proto-capitalist African commercial farmers and traders. The absence of a significant African capitalist class made the ‘move to the left’ both popular and relatively unproblematic. Political stability was achieved and maintained at the expense of economic performance and rural household incomes. The liberation of Portugal’s African colonies, the end of the Cold War, and the demise of apartheid in South Africa undermined external support for Tanzania’s socialist ‘experiment’. The following section charts the rise and fall of the first attempt at an EAC.

The complex co-incidence of race/ethnicity and economic status made nation building the key challenge facing post-independence political leaders, with regional integration a secondary priority. Ideologically, Nyerere was a staunch pan-Africanist: in 1960 he famously offered to postpone Tanganyikan independence until Uganda and Kenya became independent too. Uganda under Obote and Tanganyika under Nyerere turned to the left, leading to growing frictions with capitalist Kenya, and with emerging capitalists in their own countries, including Asian merchant capitalists. After an initial flirtation with ‘African socialism’, Kenya adopted a capitalist development model that has struggled to create and maintain national unity during the first half century of independence in the face of major regional, ethnic and racial inequalities.

One reason explored above is that Tanzanian commitments to the EAC are opposed by specific sectoral interests that feel threatened by competition. In addition, GoT’s unilateral waivers of the CET undermine the integration process, leading to policy incoherence, while poor coordination and governance capacities, including service delivery, add to the above weaknesses. Finally, ideological considerations come into play. We summarise each in turn.

Vested interests. Tanzanian politicians, companies, and professional bodies actively defend their interests in the face of perceived threats from other EAC members, as illustrated in section . Despite pressures over many years to reopen the Bologonja border post to Kenyan tour operators it remains closed as a protective measure for Tanzanian hoteliers and tour operators on the northern circuit. Tanzanian clearing and forwarding agents continue to lobby against the introduction of a Single Customs Territory, already operational in Mombasa port, for fear of Rwandan companies setting up shop in Dar es Salaam.

Policy incoherence. We described the incoherence in agricultural policy, which is unclear on fundamental issues of strategy and focus. This incoherence often reflects contradictory incentives faced by the ruling elite. Booth et al. relate how different agricultural policy strands variously favour small farmers, local capitalist farmers, and foreign capitalist farmers/agribusiness. These elite incentives reflect material self-interest (owning land, farms and businesses), political expediency (controlling urban food prices), commercial lobbying (waiving import tariffs), ideology (mistrust of ‘non-indigenous’ merchants, foreign investors), and vote-seeking (promoting small-scale irrigation, input vouchers). Not surprisingly, the policy incoherence described above is reflected in incoherent policy implementation. Unpredictability undermines the investment climate and business environment, which, according to trend data, seem to be getting worse, not better. Though agriculture is an outlier in terms of policy incoherence, other examples of policy confusion and failure to implement policies abound, as witnessed by the main theme of this report. The loosening of central political authority in a context of competitive clientelism results in indiscipline and coordination failures.