ANALYSIS: Governance ethics and economic growth forecasting in crisis period ANIL KIJA THIS DAY Dar es Salaam ACUTE variations have been noted over the past month as to what is likely to be the level of economic growth for the next year in the country, with concerned authorities having made all the effort they could to project a well ordered picture of what was happening, until reality came banging on the door. Finance Minister Mustafa Mkulo and Central Bank Governor Prof. Benno Ndulu initially thought the issue was tied to the banks and regulatory mechanisms made us safe. Then it became clear banks aren't everything. That euphoric position so to speak did not last long, as worries shifted from the financial sector to real economy, in the sense of industry, agriculture, tourism and allied activities, and in that regard no 'regulatory mechanisms' exist to shield Tanzania from crisis. At that moment, the contention shifted from expunging the crisis from our minds, or rather our imagination, to 'damage control' at the psychological level. The Tanzania Tourism Board came up with figures that tourism would decline by 0.2 per cent during the year! Of late, a firefight has been engaged between the Ministry of Finance and the Bank of Tanzania as to what level of economic growth is possible, whereas they are supposed to be operating from the same figures. While the central bank is equally mindful of being positive or upbeat about economic expectations, there is greater concern for credibility at a professional level than at the Treasury, where the forecasting is simply an instrument of political image. The effort was to say 'everything is alright under the CCM government.' It wasn't surprising therefore that the IMF resident representative saw it fit to respond to questions from all quarters to call a press conference to set out matters, meanwhile as it is usually the case that the IMF doesn't wish to overturn the applecart in evaluating the work of public authorities. So even in this case it wasn't likely to be a matter of straight reading of hard data and making projections; that will have to be pursued in a more covert manner, for instance if The Economist Intelligence Unit has compiled such data already, or it is distributing it. Expecting the UN or multilateral agencies to spill the beans will be a little constrained, as they have a duty of helping governments ride storms. That is the framework from which one should look at the IMF projection of growth climbing down from 7.5 per cent per year to anything between 4.0 per cent and 5.0 per cent in the coming year. It would be safe to say that the 4.0 per cent figure is likely to be realistic but figures on the free fall of prices of major cash crops, steep cancellation of tourist visits and plummeting hotel occupancy rates appear to suggest that the climb down shall be even sharper. If one adds the fact that on average African GDP growth is forecast to decline from 5.0 per cent last year to just around 2.0 per cent this year it is evident that the proper figure for Tanzania is 3.5 per cent. What many people will take time to notice is that economic growth forecasting is part of a major governance problem tied to generalized refusal of open market economy in most of Africa, preferring tied land and a bevy of parastatal firms controlling 'commanding heights' of the economy. Since the government in Africa isn't a tax demander and service deliverer but a benevolent provider to the public, it can't afford to say that it is incapable of performing this or that in the coming year. When a competitive ethos doesn't exist in a real sense in an economy or it is superficially accepted in retail trade, lies will dominate. Africa and Tanzanians for that matter will be a communications victim of their own making since they have a far greater sense of trust on governments than it is supposed to be the case for democracy. Africans have far greater faith in state-run parastatal firms despite the whole world having seen how everything run by the state crumbles in the face of competition; the reason is that African nationalism is built on the mistrust of foreign capitalists, as they were once colonialists or their local allies. Getting out of that 'box' in thinking is proving difficult, and thus Africa can't govern economies by a liberal ethos. That is also why predictions aside, Africa will find it hard to come out of the current crisis because it doesn't have the right instruments to bring economies to order. The IMF representative did not appear upbeat or otherwise expectant that some 'new deal' was likely for African economies in the context of the global downturn, and instead it seemed from his remarks that the growth projection is realistic. IMF isn't saying that growth will be marginally affected because IMF and the World Bank shall take exceptional measures. In other words, despite the possibility of heightened budgetary support so that most governments at least succeed in paying salaries and meeting other necessary import needs like petroleum products in the wake of vastly diminished revenues, the core of the issue will remain. The ability to make a turnaround in the current crisis will depend on how far a country's financial and commercial infrastructure is market friendly, how far it can ignite or quicken the credit mechanism. Expectations that a special fund from the World Bank or the IMF can resolve the problem are misplaced; only budgetary support is likely.