From Goatherd to Governor. The Autobiography of Edwin Mtei: The Autobiography of Edwin Mtei

Chapter 18 - Economic and Other Policies of the Nyerere Regime

158 Chapter 18 Economic and Other Policies of the Nyerere Regime The Nyerere Regime lasted for twenty-four years, 1961-85. The brief period when Rashidi Mfaume Kawawa was Prime Minister following Nyerere’s resignation early in 1962 was, for all intents and purposes, under Nyerere’s control. His main task at that time was reorganising TANU which, in any case, prescribed all the policies. I can identify several phases in the evolution of the country’s economy during this quarter-century. The period ending with the promulgation of the Arusha Declaration in February 1967 can be regarded as the first phase. TANU had promised during the independence struggle to rid Tanganyika of poverty, ignorance and disease. The people’s hopes were high. Most people were also ready to apply themselves to hard work in the offices, farms, factories and mines, although as far as Government was concerned, the Adu Commission had prescribed lower salaries in Tanganyika than those commonly obtained in Kenya and Uganda. AtthetimetheBritishleft,therewereonlyahandfuloffactories as most manufacturing had been based in Kenya. Nevertheless, the motto of that period for the people of Tanganyika was uhuru ni kazi (freedom is work) and, in my view, Tanganyikans at this time did work hard. There was a feeling that the leadership was committed and honest, and we accepted there was no cure for our problems except determined application. Regarding development finance, during the independence negotiations, the British had agreed to only modest financial assistance to Tanganyika. Indeed, the bulk of that assistance, as I have remarked elsewhere, was earmarked for compensation to the departing, prematurely retired British civil servants under the so-called “golden handshake”. Most of Tanganyika’s foreign exchange was earned by the exports of sisal, grown mainly on expatriate-owned estates; coffee, mainly from peasants and some estates in Northern and Southern HighlandsProvinces;aswellaspeasantgrowncotton. Inaddition, tea, mainly grown on estates, and tobacco, partly grown on estates 159 supplemented by peasant grown, all made contribution to foreign exchange earnings. The Williamson Diamond Mine at Mwadui in Shinyanga Region, which was already partly Government-owned, was a major source of mineral exports. It was within this context of modest resources that Tanganyika’s First Development Plan of three years was designed. Complaints by Members of Parliament and the public generally that we ought to be more ambitious in state planning for the future prompted the President to coin that famous phrase “kupanga ni kuchagua” (to plan is to choose). We had to be selective in deciding on our projects, and had to choose in accordance with our priorities and the available resources. Under the Plan, Tanganyika embarked on a number of pilot projects to develop villages by integrating communal work with individual private enterprise. As Permanent Secretary to the Treasury, I recall having taken overseas visiting dignitaries, including Mrs Barbara Castle, the then British Minister for Overseas Development in the Labour Government, to Upper Kitete near Lake Manyara. This was our showpiece for what could be done under the “integrated development villages” approach. The modest funds that could be allocated for capital development were used to build schools, training institutes and hospitals. The intensive training for local staff under the Africanisation programme also attracted a relatively large share of available resources, including donor funds. On the industrial side, some consumer goods manufacturing had started to relocate in Tanganyika at this time: these included British American Tobacco, Unga Limited and Aluminium Africa. It was the frustratingly slow pace of economic development caused by the scarcity of long-term financial resources, among other reasons, I guess, that led President Nyerere to take the route via the Arusha Declaration. He expected that this would facilitate a faster and fairer way to development. Steady and uninterrupted external inflow of capital as sine qua non for take-off in small economies did not occur to him. On promulgation of the Arusha Declaration in 1967, the second phase of the economy under the leadership of Nyerere began. The nationalisation of all the banks, insurance companies, major manufacturing and trading firms, and sisal estates immediately followed. Uncertainties on the part of owners of 160 substantial assets in the country caused a massive flight of capital, in spite of the Government’s decision to introduce strict exchange controls. Many techniques to evade controls were used, such as the under-invoicing of exports and over-invoicing of imports. Physical smuggling of currency and precious stones and...