a tripartite report - Unctad

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