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Workshop unhinges simplistic answers on growth, poverty

7th April 2012
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With the country’s political atmosphere laden with clouds of opposition and bitter turf war in CCM concerning policy and what is generally seen as gaps in ethical direction, an annual research workshop of the Research on Poverty Alleviation brought the issues to the fore.

While it wasn’t supposed to serve as a platform for the various groups engaged in policy debate or simply sitting on the neck of the ruling party urging for decisions that look self-evident to the audiences of such leaders or experts, the forum was a moment of evaluating a few of those ideas. It was unmistakably a salutary exercise in clarification.

What came out of it, in case one makes a sober presentation or reflection on the event, was reflected in the opening remarks by President Jakaya Kikwete, who attended the conference more or less as an economist, the field in which he trained at the University of Dar es Salaam.

The remarks focused on the emphasis that the government pays attention to stakeholders in various areas, is conscious of threats and takes up ideas on the economy or similar aspects like fiscal administration with the attention they deserve. While various thrusts for particular policies put up vivid imagery of necessary
measures so as to  realize key goals of growth and poverty alleviation, it wasn’t evident that simplistic solutions triumphed.

Perhaps the most important simplistic solution that was given room to be aired is that which has for a few months preoccupied top level political forums, ignited by former Prime Minister Edward Lowassa who at some point had blasted the government (the president) for failing to make ‘hard decisions’ to resolve the country’s economic problems.

In the forum there was an idea close to that proposition, but it wasn’t phrased in the same way, but in more technical terms of ‘ruthless prioritization,’ that is, greater rigour and limitation in what the country does with its fiscal resources. It means it directs large amounts of money in several key areas to realize tangible results, and more or less leaves others to ‘own devices.’

This line of thinking has received tremendous representation in media and policy platforms, though in a slightly devious manner where the other side of the coin is left unexamined.

To many people or say the usual impression created by media presentation of issues, limited to one-sided focus on that the specific dignitary would have said, while those who disagree with him remain silent, is that this would scarcely be more than a gesture of responsibility or charity on the part of the government.

They figure out that the problem would be objections of donors and the IMF/World Bank, treated in our economic discussion habits as if they were identical institutions – and the reasons for their objections would just be ideology.

A similar line of thinking came up in the REPOA research workshop, where Dr Phillip Mpango, secretary to the Planning Commission, advocated the ‘ruthless prioritization’ concept, which betrayed awareness of what it would mean, namely squeezing out considerable amounts of funds for other sectors.

This is not usually explained to people, and the prioritization argument takes the image of being self-evident, and the non-said on its ripple effects on other sectors gives it the political warmth it pursuits, that the leader making the demand is strong.

An impression is created that the current residency is weak, it has failed to make ‘hard decisions’ to uplift the economy, without saying the decisions would starve many.

A clear example of application of the ‘ruthless prioritization’ concept is the recent spate of strikes by medical doctors, demanding to be paid like top executives of autonomous authorities – and insisting that they are also striking to push the government to improve the health sector (hospitals) as a whole.

They were implying that the government has failed to exercise ‘ruthless prioritization’ of the health sector, in like manner as ex-premier Cleopa Msuya – or for that matter Dr. Mpango – would scarcely agree that meeting the doctors’ demands or health as such is the top priority.

It was unclear why he made a call at the time of the conference, but central bank governor Prof. Benno Ndulu echoed the doctors in a different event, reiterating an oft quoted phrase that health is the key to productivity, etc.

Veteran women’s emancipation researcher Prof. Marjorie Mbilinyi gave a sort of belated response to that concept, aware that it leaves out cardinal issues as to what it means for budgeting, eroding the little social welfare that there is, in favour of physical expenditure on infrastructure. 

Prof. Mbilinyi pointed out that ‘ruthless prioritization’ of expanding ports, revamping railways and connecting highways or airports at the expense of medical care, education, skills training or empowerment of marginalized groups would be politically untenable and ruinous for social harmony.

What either side did not say is that the problem is their common position of not privatizing, as they believe it would be a greater ill, in which case bureaucrats aren’t satisfied with one trillion shillings for Tanesco but want more as a priority.

Another area where a whole range of simplistic solutions has been in the vogue not for months but years is in policy on natural resources, especially mining – though taxation of use of hunting blocs and lately, visiting historical areas, is proving a headache for the government. Proponents of simplistic solutions are always on their neck screaming that the country is not benefitting from its resources, and at times it is hard to see what that precisely meant.

The definition given or explanation provided thereof is in most cases a fallacy, that there is still poverty in many parts of the country despite the wealth of minerals being exploited by foreigners – and implying that the answer is effective taxation, or sharing.

Most radical groups in the country favor a 50% shareholding by the government in mining companies so that there is equal sharing of benefits, while they realize – and surely don’t pose the question – that the government isn’t in a position of providing 50% of the capital used in mining.

Even if it was capable of doing that, it is analytically more positive for it to receive much less in taxation at negotiated levels in keeping with best practices worldwide, but radicals think of the matter more or less in terms of using sovereignty on the matter, that is, partial nationalisation. In South Africa the ruling party, ANC is being pushed to limits as a section of its cadres join the Communist Party to demand mining nationalization.

This issue came up for discussion within a wider subject area of ‘foreign investment and transformation’ in the country, where comparisons were being made with Botswana, a major diamond producer, that it has gained more from its minerals wealth than Tanzania.

This sentiment was clear in a presentation by Dr Keith Jeffries, director of a consultancy firm in Botswana, having served in a World Bank mission in the country and also exercised top functions in the country’s central bank.

The impression that the local participants seemed to miss out in discussing his presentation was that there is collegiality in Botswana between Debswana (the state-owned diamond sector management firm) and De Beers, the main firm in exploiting the minerals. The latter is a major South African firm controlling the world trade in diamonds.

A point that also tended to be missing in the discussion was that Botswana is a country of roughly 1.7m people, in which case its diamond industry and its ability to stem poverty is close to what would happen to Zanzibar if Williamson Diamonds Ltd at Mwadui, Shinyanga, had been operating in Zanzibar.

And a key requirement so that the model would operate isn’t just in population terms but sociopolitical outlook – in which case having Williamson Diamonds in Zanzibar, without the 1964 Zanzibar Revolution, as there is no enmity whatsoever between De Beers and Botswana political parties and authorities.

In Tanzania, the mining sector (and any foreign direct investment) analysis has to take into account the disruptive effects of 1967, and scars of this outlook impinging on FDI flows since the early 1990s, chiefly.

There was for instance an intervention from Dr Honest Ngowi of Mzumbe University who treated major mining firms’ contributions to local projects under the rubric of ‘corporate social responsibility’ as a  state of giving out ‘peanuts,’ urging that this activity be regulated.

He did not seem to realize that the proper responsibility of the companies was to pay taxes to central government, and that no auxiliary agreement is legally possible with local authorities – which critics and radicals believe is entirely possible or should be pursued as a matter of policy.

In the final analysis the matter boils down as to whether the country wants to have foreign investors, and here the
figures as to ‘benefits,’ often disputed, are clear.

While so many quarters have been expressing the quite exciting sentiment that the country hasn’t quite gained from its mining wealth, it is now clear that 45% of foreign exchange earnings comes from gold exports alone, yet this doesn’t seem to cut the ice with the proto-Arusha Declaration school of thought.

Dr Jonas Kipokola, a veteran permanent secretary, noted similarly that the country imports twice the value of what it exports, all due to foreign direct investment – and one can be sure that a week or two from now, the radicals wouldn’t have heard any of this.

He also cautioned, speaking in a low deliberate tone on those who accuse the government of giving tax holidays to investors and denying the country revenues, saying that waiving aside billions of potential income isn’t done lightly, but without extending such concessions, precisely h ow would the country get foreign investors?

Is it really logical or sensible to repeat what Mwalimu Nyerere said in 1959, that uranium and other minerals remain in the earth until we can exploit them on our own, without permitting investors to cash in into our wealth – up to when?

SOURCE: THE GUARDIAN
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