The Impact of Liberalization and Privatization Policy

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TOPIC: THE IMPACT OF LIBERALIZATION AND PRIVATIZATION POLICY IN TANZANIA.

INNOVATION AND DEVELOPMENT

NAME: SENGELA, PHILIPO

SEMESTER: SUMMER II, 2012

1:0 INTRODUCTIONS.
1:1 Country Overview.
Tanzania is one of developing countries in Sub-Saharan Africa located in the eastern part of Africa continent. Likewise, other developing countries, the Tanzanian economy are characterized by a large traditional rural sector and a small modern urban sector. It is heavily depends on agriculture, which accounts for about 35% of GDP, provides 85% of exports and employs about 75% of the work force. The industrial and construction sector is still contributing less than 20% of GDP and mainly produces consumer goods such as beverages, food stuffs, detergents, home appliances, and building materials. Tourism sector is a leading source of foreign currencies, accounts for about 45%. Other service sectors are banking, insurance, social security funds, hotels, business and entrepreneurship. For the long time now, Tanzania has been experiences imbalance of trade mainly caused by relied upon traditional exports which has less value in the world market. The main exports are coffee, tea, tobacco, cotton, cloves, and mineral (gold, tanzanite, diamond). According to national census conducted in 2002 Tanzania population was 34.57 million including 98,625 in Zanzibar and an estimate of 2010 was approximately to reach 40 million. (NBS, 2010) Local people are native Africans 99% (of which 95% are Bantu consisting of more than 120 tribes). The remaining 1% is Arabs, Asians, Americans, and Europeans. Tanzania located in Eastern Africa within longitudes 29° and 41° East and Latitude 1° and 12° South. It shares its borders with Burundi, Rwanda, Kenya, Uganda, Zambia, Malawi, Mozambique, Democratic Republic of Congo, and Indian Oceans with a coastline length of 1,424 km. Tanzania is the largest country in East Africa in terms of size of land and population. The Land area is about 945,087 sq km, land coverage is 886,037sq km and water covers 59,050 sq km, this includes Lake Victoria (largest in Africa and 2nd worldwide), Lake Tanganyika (deepest), Lake Nyasa and Lake Rukwa. Table 1: Business Environment and Key Indicators for Tanzania

1:2 Economic and Political Backgrounds.
It got its independence in 1961 from British colonial rule under the leadership of the Mwalimu Julius K. Nyerere and become one of the few countries which struggled and gained independence without bloodshed. In 1964 Tanganyika (by then) united with Zanzibar and formed the United Republic of Tanzania, one of unique kind of union between two countries which still existing today in the world. In 1967 Tanzania underwent the major political and economic changes after announcement of Arusha Declaration which stated that Tanzania’s economy has to be attaining under self-reliant socialist state follows the socialism and self-reliance policy. The key objectives were to create an egalitarian society focusing on poverty alleviation and provision of welfare and social services to the majority of the population as well as promoting heavy industries and achieving self-sufficiency in food production. The announcement of Arusha declaration goes along with nationalization of all private-owned companies, industries, estate properties, businesses. Banks, insurances companies, buildings, large farms were nationalized and put under the state control. The government controls all means of productions; and created 395 public companies for industry, agriculture and services. In agricultural sector the government inherits the cash crops from the colonial rule such as sisal, cotton, cloves, tobacco, coffee where production was mainly done collectively by small-scale farmers in ujamaa villages and benefits shared equally among the community members. The government was solely buyer of produces from the farmers through cooperative associations which was established across the country. Farmers were...
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