FT REPORT - TANZANIA 2007 - FRONT PAGE: Search is on for some fresh successes By Tom Burgis, Barney Jopson and William Wallis, Financial Times Published: Nov 07, 2007 Long a favourite of donors in Africa, Tanzania is accustomed to receiving the plaudits and aid dollars of the international community. Rich in farm land, mineral resources and wildlife, it is free of tribal tensions and has experienced a series of peaceful transitions of power, thanks to a sense of unity forged by Julius Nyerere, its founding father. It also has a stable macro-economic environment and its administration is relatively well-organised: the principal achievements of Benjamin Mkapa, who ruled from 1995 to 2005. Jakaya Kikwete, who was elected president at the end of 2005, has yet to prove that he can build significant new successes on those foundations. Less than two years into a five-year mandate, even some of Tanzania's friends are worried that the country is losing direction and momentum. His most obvious challenges are to further invigorate the economy - which has been growing at a healthy annual average of 6.2 per cent in the past five years - and to make inroads into poverty and transform rural lives. Yet while his government has released several policy frameworks and programmes, it has not set clear priorities. "We are swaying in the wind," says John Ulunga, executive director of the Foundation for Civil Society, a donor-funded non-governmental organisation. "We don't have a clearly defined set of steps that will take us to the promised land. We don't see the direction." Tanzania was among the top 10 reformers in the World Bank's Doing Business survey last year, but slipped back a place this year to 130 of a total of 178. Mr Kikwete's government's biggest achievement has probably been the introduction of universal primary education: more schools have been built in the past 18 months than in the previous 20 to 30 years, say officials, although there are now not enough teachers. But in the United Nations' human development index, which measures standards of living and health as well as education, Tanzania has barely moved. Andrew McAlister, the outgoing Canadian high commissioner, who first lived in the country in 1977, told a local newspaper: "After years of struggle and effort, Tanzania is still 164th out of 177 on the [index] and hasn't moved much. Tanzania simply doesn't belong there...I do wonder why things have not progressed much, much further." In rural areas, home to 70 to 80 per cent of the population, life has not changed a great deal since Mr Nyerere's experiment with socialist collectivisation was abandoned. Most of the population are cashless peasants who produce enough food with their hand hoes to feed themselves, but no more, and are isolated by bad roads and poor public transport. According to the last national household survey, conducted in 2000-01, almost one in five people was receiving less than the minimum calorie requirements. More recent government research showed two-thirds of mainland households did not have access to piped water and 89 per cent were without electricity. The country's adult HIV/Aids infection rate is 6.5 per cent and in some regions hits 15 to 20 per cent. In a few business sectors, the trends are more encouraging. The Kikwete government has maintained foreign investment flows that began under his predecessor in the mining, tourism and telecoms sectors, taking advantage of Tanzania's reserves of gold and precious stones, its wildlife and natural beauty, and the universal appeal of the mobile phone. Overall, foreign direct investment flows into Tanzania have been at least 20 per cent greater than those into Uganda in each of the past three years and at least seven times higher than those going into Kenya, east Africa's most important economy, according to statistics from the United Nations. But to achieve meaningful poverty reduction, economic growth needs to be more broad-based. David Stanton, head of the UK's Department for International Development in Tanzania and chairman of the committee of donors and development agencies, says: "Added value, technology and access to regional markets are critical. But no one is saying that's going to happen, even in a generation. The growth is going to be coastal and urban and will expand the income gap." "You don't see great industrialisation," says Paul Kunert, who until August was head of Songas, a privately-owned electricity generator. "Why do people set up industrial activity? They do it to be closer to a market or because there's something about a nation that makes it good to be there: a workforce or resources. So mines and tourism are here. But you don't get people clamouring to build cars because the workforce, while cheap, is not very productive." Aid, meanwhile, keeps flooding in. Tanzania has received more overseas assistance since independence than any other country south of the Sahara: it accounts for 42 per cent of this year's national budget. Last month, the US's Millennium Challenge Corporation approved a $698m, five-year grant for the country. The government faces a dilemma. It is reluctant to become more dependent and is increasing domestic revenue by collecting taxes more effectively, yet ministers say budgetary constraints are still holding the country back. In her 2007-08 budget speech, Zakia Hamdani, the finance minister, said the resources needed for the implementation of the previous administration's growth and poverty reduction strategy - known as Mkukuta - "were immensely large compared with the resources available". Tanzanians and foreign observers suggest several reasons why Tanzania is not making more determined progress. Helen Kijo-Bisimba, executive director of the Legal and Human Rights Centre, another donor-funded NGO, complains that Mr Kikwete, a former foreign minister, has been on too many overseas trips. "The president has not had time to sit down and think: what do I need to do?" she says. Other explanations conflict: some say Mr Kikwete is a micro-manager and that nothing happens unless he is involved; or that ministers imposed on the president by elders in the ruling Chapa Cha Mapinduzi (CCM) party are dragging him down; or that the money men behind the party are blocking reform. A deeper explanation, critics contend, is that Tanzania lacks political accountability, which means people in power are isolated from the masses. One manifestation of the problem is corruption. Suspicions of high-level graft were stoked by several multimillion-dollar projects that pre-dated the Kikwete era: the acquisition of a presidential jet; the building of a new Bank of Tanzania headquarters; and the purchase of a military radar system from BAE Systems. No wrongdoing, however, has been proved. In other cases several high-ranking members of CCM have been arrested on corruption charges and Mr Kikwete says: "If people want to get into leadership through corrupt practices, through corrupt means, I think that's detestable. We have to take action." A second sign of the accountability deficit is that Tanzania, while notionally a multi-party democracy, has many of the characteristics of a one-party state. The political scene is dominated by the CCM, Mr Nyerere's party, and in the only region where it faces serious opposition - Zanzibar - its past three election victories have been in polls deemed flawed by independent observers. Ismail Jussa, head of foreign affairs and international relations for the Civic United Front, the main sition party, says: "Everywhere there is a serious challenge to the ruling party, it resorts to intimidation and threats." The opposition is increasingly vocal in its criticism But as 82 per cent of MPs are from the CCM, parliament still functions primarily as a rubber-stamp institution One bright spot is the newspapers, which have become increasingly aggressive in their reporting, if sometimes off-target. The number and prominence of civil society organisations is growing. Mr Jussa argues that political accountability is a two-way street that requires the engagement of the people, and most Tanzanians are not in the habit of challenging power. He links this to the impact of the Nyerere era, when the party and the state become one. "Because of that legacy of indoctrination, even when multi-partyism was allowed, people viewed the opposition in a negative way. They equated it with opposing the state." Some donors are beginning to acknowledge that they bear some responsibility for a weak political culture. The government's dependence on aid makes the donors the most important check and balance the country has, yet they have focused on economic and administrative issues rather than politics. "We believe in strong government and channelling the bulk of our development assistance through the government structure, but we have probably been too soft in the past," says Kristin Sverdrup, minister counsellor at the Norwegian embassy.