TANZANIA: Year in Review 2005 - Mkapa's pursuit of economic recovery pays off

[ This report does not necessarily reflect the views of the United Nations]

NAIROBI, 16 Jan 2006 (IRIN) - Tanzanians had a hectic political year in 2005, which saw President Benjamin Mkapa go into retirement after two consecutive five-year terms, handing over to Jakaya Kikwete, a career politician who worked under him as foreign affairs minister for a decade.

Kikwete has vowed to improve the country's economy by consolidating the foundations laid down by his predecessors - Julius Nyerere (1961-1985), Ali Hassan Mwinyi (1985-1995) and Mkapa (1995-2005).

Mkapa's term in office brought significant Tanzania economic progress, although much more needs to be achieved if the nation is to be placed on the same economic footing as some other developing countries.

At the start of his administration, Mkapa vigorously pursued recovery programmes, robust macroeconomic policies and structural reforms, including privatisation initiated by his predecessor.

The results were striking: In 2004, inflation stood at around 4 percent, down from 27.1 percent in 1995, and annual economic growth reached 6.7 percent, up from 3.6 percent when Mkapa took office.

By 2005, foreign reserves had increased to an equivalent of eight months of imports, and revenue collections stood at about US $140 million a month, more than triple the amount for 1995-1996.

On 14 July 2005, Mkapa told parliament that his administration had achieved the economic fundamentals, which in turn boosted investor confidence in the country and in the government - a far cry from the situation when he was elected president.

Mkapa's policies also led the World Bank and the IMF in November 2001 to cancel over $2 billion in debt - representing about half the amount the country owes - a goal he set on coming to power. He privatised several state-run institutions like the floundering National Bank of Commerce.

Mkapa’s critics, however, say the country's economic success is little more than a mirage, since a huge proportion of Tanzania's 36 million people earn less than $1 day.

"The persistence of poverty in Tanzania, especially in the rural areas, is cause for concern," said presidential candidate Ibrahim Lipumba, an economist and chairman of the opposition Civic United Front.

Another presidential hopeful, Freeman Mbowe of Chama Cha Demokrasia na Maendeleo, said that given the poverty of its people, Tanzania had little to be proud of after 44 years of independence. "Look, there are many villages that cannot be accessed throughout the year due to lack of good roads. Many don't have access to good health care, and farmers can't easily reach markets with their produce," he said.

"With poverty all around, we are witnessing politicians and top government officials parading very expensive cars," he said.

But inaugurating the new parliament on December 30, 2005, Kikwete said Tanzanians have to be grateful to President Mkapa for a good record in office. He said Mkapa's legacy includes investment in the expansion and rehabilitation of sectors like education, health, power and water supply. Mkapa’s administration had also invested in roads and bridges.

Kikwete told the house that his government would focus on fulfilling electoral promises, and he identified two central tasks:

"First: To take Tanzanians out of the morass of a still backward and dependent economy, and modernise it.

"Secondly: To include more Tanzanians in the national economy, and empower them to fight poverty."

Kikwete has incorporated what was formerly known as the ministry of planning and privatization, into the ministry of planning, economy and empowerment.

"We have already privatised almost all parastatals. There are few ones that remain. Now the next challenge is to economically empower Tanzanians through different poverty reduction strategies," Kikwete said while announcing his cabinet.

On foreign policy, Kikwete said his government would continue to build on the current foundations, including good neighbourliness, defence of the country's borders, providing succour to refugees and defending the interests of the downtrodden.

"We are also going to give special focus on economic diplomacy to realise the benefits of regional integration through the East African community, Southern African Development Community and Great Lakes initiatives," he said.

At a New Year Party he hosted for diplomats, Kikwete responded to criticism that the ruling Chama Cha Mapinduzi was all out to "kill" the opposition and go back to one party rule, saying that was not true.

"Despite the landslide victory the CCM won in presidential and parliamentary polls, I am going to support political pluralism in the country and facilitate growth of the party. But the parties which lost heavily during the polls must also sit down and do [their] homework as to why the voters rejected them, instead of resorting to witch hunting," he said.