Best Bitcoin Exchange for Tanzania

The Ujamaa policy founded by Julius Nyerere became the epitome of African socialism. Nyerere’s policy has promoted the national identity and conflict-free coexistence of the many ethnic groups. From an economic point of view, however, the two decades of Ujamaa have acted like a planned-economy general anaesthetic, the after-effects of which can still be felt today. The liberalization program for economic recovery introduced in 1986 under pressure from the IMF and the World Bank (see below) was long overdue. Unfortunately, some actors misunderstood it as a free haven for unbridled self-optimization. The vernacular therefore described this policy of misguided liberalization as a ‘Ruhusa policy’ (Swahili: permission).

Since then, the stronger orientation towards poverty has repeatedly improved the situation and the measures for economic consolidation are embedded in holistic development strategies (‘Poverty Reduction Strategy Papers’, PRSP), which are developed in the country itself – such as the currently valid second ‘National Strategy for Growth and Poverty Reduction’ (abbreviation for Swahili: MKUKUTA). Civil society forms of organisation are still very young in Tanzania, but are taken seriously by the state and are also involved in the development of strategic goals. The “Policy Support Instrument” agreed with the IMF in 2007 marks a shift in focus from financial support for the IMF to pure policy advice.

The IMF and a World Bank report provide a very good overview of structural reforms in Tanzania and their effects. In the World Bank’s Doing Business ranking, Tanzania currently ranks 144th, just above the average for sub-Saharan Africa. The privatization of state-owned enterprises and incentives for foreign direct investment are integral components of economic policy. But there is also talk of selling out the country (including farmland) to foreigners, which has led to resentment towards foreign investors (and naturalized immigrants). Foreigners are not only active as major investors in Tanzania, but also as consultants, employees, small traders and others.

In macroeconomic terms, Tanzania can now look back on many years of continuously high growth, which in the past decade was six to seven percent per year. However, the opposition doubts this. The growth is also reflected in growing tax revenues for the state, although the tax system still needs to be significantly improved in order to cope better with the country’s many challenges. In addition, the electricity supply must become more stable in order to prevent severe economic losses and uncertainties, as the three-month power outage in Zanzibar in 2010 pointed out.

Economic Situation

The low productivity in agriculture correlates with the cost of living, of which 55.9% is used for food. In second place is ‘mobility’ (9.7%), followed by ‘energy and water’ (8.5%) and ‘drinks and tobacco’ (6.9%).

“In Tanzania, a chicken that lays an egg earns more than a teacher,” complains a civil servant. And yet Tanzania’s economic indicators make it look like a rising star of Africa. A positive balance of economic development is not only drawn by the World Bank. The positive economic trends, which have shown high growth rates of 7% for Tanzania over many years, were only moderately affected even by the global financial crisis.

Overall, Tanzania is said to have made considerable economic progress. Nevertheless, Tanzania has missed several of the Millennium Development Goals. There are numerous reasons for this, and analysts have rated them differently. The population’s perception of the progress is quite good, but the urban population is much more positive than the rural population.

Agriculture & Fisheries

Agriculture will continue to account for a large share (30% in 2017) of Tanzania’s gross domestic product for a long time to come. It serves four-fifths of the population for its own subsistence, or is its most important source of income. Up to 65% of the population is employed in this sector. The most important crops (also for export) are rice, wheat, maize and soya. The main food is a thick maize porridge (Ugali), which is often eaten with beans or leafy vegetables and – if available – meat. Although farmers have benefited from market deregulation, the overall level of agricultural production is still very low, leading to famine in some regions. The agricultural sector still needs new investments, financing models and innovations to develop agriculture in Tanzania. As in other African countries, rural areas lag far behind urban developments: while in many rural areas the supply of electricity itself is a vague vision of the future, in cities wireless Internet connections have long been used to communicate worldwide.

Fishing not only plays an important role on the coast, but also on the big lakes, especially Lake Victoria – often associated with high environmental pollution and illegal fishing, which threatens the livelihood of many people. A further problem is dynamite fishing, which is still practiced in Tanzania despite increased searches and causes massive damage to coral reefs.

Industry and Mining

In Tanzania, handicrafts, as well as industrial production, are still poorly developed. Tanzania is one of the least industrialized countries in the world. Only 5% of the labour force is involved in industrial production, which is also concentrated in the cities of Dar es Salaam and Arusha. Nevertheless, studies confirm that Tanzania has basically very good growth prospects. Among the economic sectors, mining in particular is exemplary for this ambivalent development: it is dominated by foreign companies, but has also made a special contribution to the upturn in the economy and is the great hope of the economy. In mining, industrial gold mining in particular, but also micro-gold mining, has played a significant role in this development. Another highly controversial issue is the planned uranium mining in Tanzania, which is intended to boost industrial development in addition to gas and oil production.

Tourism

With its famous national parks, the legendary spice island Zanzibar and the Kilimanjaro, Tanzania is one of the most popular holiday destinations in Africa. UNESCO has recognized seven sites in Tanzania as World Heritage Sites. Every year over a million holidaymakers flock to the East African country to experience Tanzania’s multi-faceted nature and culture. Germany is the third largest visitor to mainland Tanzania after the USA and Great Britain.

With a share of 8.2% of total employment in 2017, the tourism sector is one of the most important employers and directly employed 446,000 Tanzanians. Tourism revenues in the same year amounted to nearly USD 2.7 billion, representing a direct share of 4.7% of Tanzania’s GDP. Tourism has now become the largest source of foreign exchange and, with an expected growth rate of 7.2% per year until 2028, is one of the country’s fastest-growing industries.

A World Bank report confirmed Tanzania’s tourism potential, which to date has only been exploited to a small extent. For example, Tanzania has more tourist attractions than South Africa, but only reaches a tenth of its visitor numbers. The World Bank recommends a number of options for action, such as geographical diversification, greater involvement of local communities and small businesses, and a simplification of state taxation for tourism companies. Tour operators have recently reported a slight decline in visitor numbers, attributed to the high VAT rate of 18%. The World Bank is providing Tanzania with a USD 150 million loan to develop sustainable tourism in the south of the country and more strongly.

Other challenges include the often inadequate training of local staff in the accommodation and transport industries and difficult access to work permits for foreign professionals. The national tourism college should therefore provide more practical training. In addition, tourist guides can complete formal training in order to increase their professional and ethical competence.

Informal Sector

By definition, the informal sector is the part of the economy not covered by official statistics. Official estimates, however, assume that de facto more than half of the national income is generated by ‘flying traders’ (Wamachingas), street kitchens (Mama Lishe) and other activities in the ‘hot sun sector’ (Jua-Kali sector) of Tanzania. The expansion of the microfinance sector should also offer new development opportunities for the informal sector. The development of ‘mobile money’, in which money can be transferred by mobile phone, is particularly important for the rural population, which has hitherto been largely excluded from banking transactions. Almost 50% of Tanzania’s adult population now uses this service.

Foreign Trade & Debt

Export products from mining (precious metals, especially gold) and agriculture (tobacco, coffee, tea, cashew nuts) make a significant contribution to improving the foreign trade balance. The most important customer countries are India and China in Asia and Switzerland and Germany in Europe, but also South Africa and Kenya within Africa. The main imports are machinery and vehicles, petroleum and chemical products, means of production and consumer goods. The most important trading partner here is China, followed by India, South Africa, the United Arab Emirates and Malaysia. The states of the East African Community (Burundi, Kenya, Rwanda, Tanzania, Uganda) have had an unrestricted customs union since 1 January 2010, and a common market since 1 July 2010, which is characterised by the free movement of goods, capital and labour, among other things. GIZ has also been supporting the integration processes of the East African Community since 2004. Export Processing Zones’ have been set up in Tanzania to facilitate access for the private sector to the markets of the surrounding countries. In addition, a monetary union modelled on the euro zone is planned, but has not yet been implemented.

Tanzania is a country with high national debt. However, it is also one of the first and biggest beneficiaries of the Heavily Indepted Poor Countries (HIPC) and Multilateral Dept Relief Initiative (MDRI) initiatives. However, complete debt relief was by no means achieved and the national debt – also in relation to gross national product – has now reached very high levels again. Tanzania remains highly dependent on low-interest loans and donations. It is expected that about 40 % of the national budget will continue to be financed from abroad in the coming years.

Development and Development Policy

Putting Tanzania on its own feet (‘self-reliance’) was one of the goals of Julius Nyerere’s Ujamaa policy. However, the demands and reality are far apart. Although foreign aid also had a positive influence on Tanzania’s political reforms and democratization, Tanzania is still one of the poorest countries in the world.

Hardly any other country has been so flooded with aid as Tanzania – and with so little success. The term ‘donor economy’ describes an economy that is largely leveraged, which applies to Tanzania.

Many Tanzanians try to become employees in one of the international projects. A particularly widespread project car type has become a symbol of professional success in Tanzania’s ‘Pajero culture’. The ‘Nikolaus syndrome’ of the donors on the recipient side has intensified the ‘dependency syndrome’.

The lack of confidence in one’s own abilities, which has a long history due to the slave trade, the colonial period and the autocracy of the CCM, is difficult to overcome. Years ago, Tanzania set itself ambitious national development goals with ‘Vision 2025’ (too ambitious, as political scientist Ernest T. Mallya finds it).

Tanzania was not able to achieve all the Millennium Development Goals by 2015: the proportion of the population living on less than US$ 1 a day is too high, maternal mortality is too high and the proportion of the population having access to clean drinking water is too low. However, there is a general mood among the population that significant progress is being made in the various areas.

Tanzania also strives to implement the Sustainable Development Goals (SDGs). The SDGs are implemented by the government within the framework of the ‘Tanzania Development Vision 2025’ and its five-year development plans. Tanzania is one of eight countries that are part of the Post-2015 Data Test Initiative, which examines the enforceability, priorities and opportunities of SGDs in countries with different income categories.

Tanzania’s civil society (NGOs, associations, self-help groups, etc.) is increasingly involved in development policy processes. It is still comparatively young, but is growing into its role as an effective corrective of the economy and politics. Since political liberalisation, however, more and more people want to have a say and take responsibility for the development of their communities into their own hands. The list of national and international organisations involved in the country’s development process has reached an impressive level. The umbrella organization of Tanzanian non-governmental organizations is the Tanzania Association of Non-Governmental Organizations (TANGO). Unfortunately, not all NGOs that recommend themselves as local partners for development programmes are guided by a sense of citizenship and oriented towards the common good.

But: Those who enrich themselves at the expense of the general public risk being denounced by the free press and some have already resigned from high office. That was still almost unthinkable in the 1980s. Tanzania has lost the image of a ‘bottomless barrel’ and has once again become a bearer of hope.

German-Tanzanian Cooperation

As a stable and politically stable country, Tanzania is one of the central cooperation countries of German Development Cooperation (DC). With the improvement of the political and economic framework conditions since the 1990s, the chances of sustainable success through development cooperation have improved. German development cooperation in Tanzania focuses on water supply and waste disposal, health care, the environment and natural resources. Tanzania ranks 30th on the list of recipients of German development aid over the past 10 years.

The German Society for International Cooperation (GIZ), together with the Kreditanstalt für Wiederaufbau (KfW), are regarded as central actors in German development activities in Tanzania, which are also active in the field of sustainable energy supply.

Many other German actors are involved in international cooperation with Tanzania: such as the Centre for International Migration and Development (CIM), the Goethe-Institut, the two major German churches (EED/Bread for the World, Misereor), Sparkassenstiftung and the political foundations (Friedrich-Ebert-Stiftung, Friedrich-Naumann-Stiftung, Hanns-Seidel-Stiftung, Heinrich-Böll-Stiftung, Konrad-Adenauer-Stiftung).

But also the municipal cooperation of individual federal states and German cities with Tanzania shows numerous projects. Since 2010, Niedersachsen has been specifically supporting projects in Tanzania that tie in with existing structures and expand them further. In terms of content, the focus is on school and vocational education, research (promotion of young talent and research, education and training of specialists in special education, school projects), the supply of renewable energies and agricultural cooperation to strengthen small farmers. The City of Hamburg has also been twinned with Dar es Salaam since 2010. In 2016, the German-African Youth Initiative (DAJ) was launched, in which German and Tanzanian young people can take part in an exchange programme.

Multilateral and other Bilateral Partners

A large part of the international development cooperation in Tanzania concentrates on the health sector with more than one third. Other areas include the expansion of infrastructure and educational facilities. In recent years, however, government services (ODA) have declined somewhat overall.

Bilateral partnerships are to be harmonised as far as possible with the efforts of other actors. To this end, numerous bilateral and multilateral actors have joined forces to form a Development Partners Group. The aim is to involve civil society in the country as much as possible. Besides Germany, Tanzania’s most important bilateral partners are the USA (USAID), Great Britain (DFID), Japan (JICA) and the Scandinavian states, especially Sweden (SIDA).

In addition, China has become a close partner for Tanzania as a stronger player. Numerous investments have been made by the People’s Republic, particularly in the areas of infrastructure, health and education, and military support, and the Tanzanian government therefore values them as business partners. However, China’s role in Tanzania’s development is controversial: accusations of corruption and exploitation of Tanzania’s natural resources are recurring criticisms of China’s Tanzania policy.

The most important multilateral organizations and institutions active in Tanzania are AfDB, EU, IMF, UNDP, World Bank and WFP. Private foundations (such as the Bill and Melinda Gates Foundation) are also increasingly involved in development policy.

Another trend in development cooperation, which can also be found in Tanzania, is the promotion of development by the private sector. Supporters of this approach emphasize the opportunities for mobilizing finance and creating jobs. However, this approach is also met with criticism that such measures are a form of foreign trade promotion.