To Sustain Growth in Tanzania Private Sector shouldn’t be frustrated


growthOver past few years our Country, Tanzania, has been receiving some positive comments and feedback regarding its macroeconomic stability which has put her among the fastest growing economies in Africa. The optimists and anybody wishing well this country, will be impressed to learn that the country has been averaging 7% GDP growth for the past couple of years now.

The Private Sector, in the form of Foreign Direct Investments (FDI) and Local Investments (LI) has been vital for that achievement of economic growth. Now that the Country major goal is to become a middle income country come 2025, such growth must be sustained, if not, accelerated. In that quest, the role of the Private Sector can be underestimated at our own peril.

Since the 5th government came into power in October 2015, there has been a bitter feeling that some measures which are undertaken by President Magufuli do affect the Private Sector in Tanzania negatively. Prior to this phase, and over the years this Country has been a preferred destination of the Foreign Direct Investment (FDIs) to other East African Countries. I am unsure whether we are still in the same level!

Unpredictability in the policy related decisions by the administration has been constantly shocking the businesses in the country. Of late, we have seen total closure of businesses, the companies and various firms being dissolved.

Also, others are relocating their operations to neighboring countries, major companies undertaking retrenchment, scaling down operations and those planned to invest in the country reverse or delayed their investment decisions.

These are early symptoms of an ailing economy. In short the writings are on the wall in bold letters.

To reverse the trend and for development of robust private sector, the government policies affecting the private sector and investment have to be inclusive. This is not the choice, this how other countries which managed to transform their economies for better had embarked on, from Malaysia, Singapore to South Korea.

After all, we have embraced the market economy, therefore, Tanzania should play by the rules set by the system, and one of the rules is to let the Private Sector drive the economy. And this can only be achieved by the Private Sector playing a role in formulating the key policy decisions. How can this be done?

The current administration can achieve this by embracing well-groomed partnership between the Private and Public Sectors. According to developmental state theory, the most developmental states are characterized by dense ties between the public and the private sector (Hvidt 2006).

This country should work tirelessly to strike a balance between the interests of the Government (which in theory presenting the interests of the society) with that of the Private Sector. The purpose of Governments is to seek growth (efficiency) and a distribution of benefits (equity), both internally and with respect to outsiders (Robert Grosse R. & Behrman J. 1992). Whilst the Private Sector does invest for profit, So there has to be a better way of finding a middle ground.

My humble advise is for the government to spearhead a ‘’shared vision’’ where the local and international investors will take part as partners and not ‘‘victims’’ in this country’s development drive. This can be done through policy innovation manifested by comprehensive Public-Private Sector consultations.

The byproduct of this process could be the improved investment regime, which will replace sporadic decisions with more strategic ones. This will restore investor’s confidence and as a result, the Country will gain more transfer of technology, entrepreneurial opportunities, jobs to our people and sustainable Public revenues through taxes from a vibrant Private Investments.

As a matter of urgency, the established Public-Private dialogue mechanisms should adopt business mindset by becoming effective to resolve the Private Sector challenges.

In an invigorated and enhanced policy environment smart partnership will make formal channels of interaction between the Private Sector and the state bureaucracy meaningful. Consequently, there will be winners in both sides, the Private Sector and the Public Sector. Disengagement will bring losers to both sides, where neither side will benefit.


By Ramadhani Msoma

The writer is the student of International Trade based in Dar es Salaam. He can be reached via twitter @RamaMsoma




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