Economic development Tanzania since Independence

Tanganyika was under colonial rule by two different European powers. Initially, it was colonized by Germany from 1885 to 1918 and later by Britain from 1919 until its independence in 1961. During these periods, colonial policies significantly impacted the economy.

Under colonial rule, a money economy was introduced, and Tanganyika became a producer of raw materials. These raw materials included agricultural products, minerals, and forest resources, while the colony also served as a market for European manufactured goods. The economic structure created by European powers hindered the development of Tanganyika and other African regions, as the benefits of this system largely flowed to Europe, especially Britain.

Upon independence on December 9, 1961, Tanganyika inherited an economy heavily reliant on the capitalist world. At that time, the country faced a shortage of skilled labor and trained professionals. The economy remained dependent on the export of cash crops and restricted foreign investment. Key industries like agriculture, banking, plantations, and mining were still controlled by foreign interests, particularly the British, Arabs, and Indians.

Additionally, Tanganyika inherited an underdeveloped transport network designed to serve colonial interests. While certain regions like Moshi and Arusha had better access to infrastructure, other areas lacked sufficient transport, leading to regional disparities.

Between 1961 and 1981, Tanganyika, now part of the United Republic of Tanzania after uniting with Zanzibar in 1964, focused on improving its economy through a series of development plans. These plans aimed to address the economic challenges faced by the country after independence. The government implemented four major development plans during this period: the Three-Year Development Plan (1961-1964), the First Five-Year Development Plan (1964-1969), the Second Five-Year Development Plan (1969-1974), and the Third Five-Year Development Plan (1974-1981).

Achievements of development plans (1961-1981)

Several achievements were made. One of the achievements was development of the agricultural sector. For example, at independence, the annual agricultural production stood at 140,000 tonnes, but after the implementation of the First Five-Year Plan, production rose to 500,000 tonnes. This increase was the result of improvements in agricultural production methods and the use of tractors and fertilizers.

• Agricultural sector development — One of the major successes was the development of agriculture. At the time of independence, Tanzania's annual agricultural production stood at 140,000 tonnes. However, after the implementation of the First Five-Year Plan, production increased to 500,000 tonnes. This significant improvement was achieved through better farming techniques, the introduction of tractors, and the use of fertilizers, which enhanced productivity across the agricultural sector.

• Education sector improvements — The education sector experienced notable advancements, particularly in reducing illiteracy rates. Government efforts to improve education included the construction of schools, expansion of pupil enrolment, and enhancing adult education programs. These reforms led to an increase in the number of educated Tanzanians, contributing to a greater presence of Tanzanian experts in both the civil service and private sector. As a result, the country was better equipped with skilled professionals to drive its development.

• Improvements in health services — The health sector also saw growth through the expansion of medical facilities. The number of dispensaries, health centers, and hospitals increased, improving access to healthcare in both rural and urban areas. As a result, people's living standards improved, and life expectancy rose from 35-40 years in 1964 to 40-41 years in 1967. The Gross Domestic Product (GDP) also grew by 5% during the First Five-Year Plan, although the growth fell short of the projected 6.7%.

• Challenges in economic growth — The Second Five-Year Plan saw a lower GDP growth of 4.8%, which was also below expectations. Several factors contributed to this shortfall, including a decline in crop production due to drought, insufficient investment in key sectors, poorly prepared projects, and the global rise in oil prices since 1971. These factors hindered the projected economic growth despite efforts to increase industrial output and agriculture.

• Industrial development — During the development plans, the number of industries in Tanzania increased, reducing the country's reliance on imports. This industrial growth created employment opportunities for Tanzanians. In 1975, a Basic Industrial Strategy was implemented and continued during the Third Five-Year Plan. Notable industries established during this time included the Tanzania Petroleum Refinery, Musoma Textile Mills, and Friendship Textile Mills (Urafiki).

• Infrastructure development — Infrastructure development also made significant progress, especially with the construction of all-weather roads connecting various regions. These roads enhanced the transportation of goods and services across the country, facilitating economic activities. The Arusha Declaration and changes to education policies were also influenced by the development plans, marking further steps towards social and economic reform.

• Inadequate skilled manpower — One of the main challenges was the lack of skilled manpower and experts. Many development projects were run by Tanzanians who, at the time, did not possess the necessary experience to manage or implement large-scale initiatives. For instance, there was a shortage of engineers to supervise road construction projects and a lack of skilled workers to operate industrial machinery. As a result, Tanzania was heavily reliant on foreign experts, whose contributions were limited, as they did not fully integrate into the long-term development of the country.

• Low productivity due to traditional farming methods — The agricultural sector faced significant difficulties due to the use of outdated farming techniques. Most farmers were still using basic tools like hand hoes, which resulted in low production levels. This not only led to insufficient domestic food production but also contributed to a lack of foreign exchange. Additionally, the mining sector also underperformed due to the use of inefficient technology, limiting the country's ability to extract valuable resources and generate wealth.

• Limited financial resources — Another major challenge was the inadequate funding for the ambitious development plans. The shortage of funds was primarily caused by a decline in foreign aid, which was critical for financing the various projects. This reduction in aid was partly a result of Tanzania's diplomatic actions, particularly the break in relations with Britain and West Germany. In 1965, Tanzania cut ties with Britain following the Unilateral Declaration of Independence (UDI) by the Southern Rhodesian government. This decision further isolated Tanzania and contributed to financial constraints, making it more difficult to execute development plans effectively.

On 5th February 1967, the government of the United Republic of Tanzania adopted the Arusha Declaration. The Declaration was adopted during the First Five-Year Development Plan, but was implemented during the Second Five-Year Development Plan. The Declaration was a special proclamation propagated by the president of the United Republic of Tanzania, Julius Kambarage Nyerere, in Arusha through the National Executive Committee of TANU. The Declaration stated that Tanzania was building a socialist society. It was a response to the growing neo-colonial influence that hindered Tanzanians from enjoying the fruits of independence and achieving socio-economic development.

• Commitment to socialism and self-reliance — The Arusha Declaration declared that Tanzania would build a socialist society. This was in response to the growing neo-colonial influence that was seen as a barrier to the country's development and economic independence. The Declaration emphasized the importance of self-reliance, focusing on ensuring that Tanzanians could enjoy the benefits of independence through collective efforts.

• Principles of equality, justice, and democracy — The Declaration promoted a society based on the principles of equality, justice, democracy, and human dignity. These principles were intended to guide the nation's social and economic development, ensuring that all citizens had equal opportunities and that no one was exploited.

• Education for self-reliance and rural development — One of the central objectives of the Declaration was to prioritize education for self-reliance. This aimed to equip Tanzanians with the necessary skills to contribute to the nation's economic independence. Rural development was also a key focus, as the majority of Tanzanians lived in rural areas. The goal was to improve agricultural productivity, build infrastructure, and enhance the quality of life in rural communities.

• Eradication of exploitation and nationalisation — The Declaration sought to eliminate all forms of exploitation in Tanzania. This included the nationalization of key sectors of the economy, such as land, forests, water resources, transport, communications, and industries like steel, cement, and textile factories. The aim was to bring these industries under public ownership, so they could serve the interests of the workers and peasants.

• Leadership ethics — The Arusha Declaration also instituted a code of leadership ethics. This code set standards for leadership behavior and prohibited practices such as leaders holding more than one salary, leaders owning houses for rent, and leaders being involved in private business ventures (e.g., being board members or directors of private companies). These ethical rules aimed to ensure that leaders remained dedicated to public service and did not abuse their positions for personal gain.

• Promotion of Ujamaa (collectivism) — The Ujamaa philosophy, which became central to Tanzanian socialism, was introduced as part of the Arusha Declaration. Ujamaa focused on communal living and collective agriculture. The aim was to create Ujamaa villages where Tanzanians would work together to increase agricultural productivity and share resources for mutual benefit. This was seen as a way to foster solidarity and self-sufficiency in rural areas.

• Public ownership and cooperative development — The Declaration called for the nationalization of major industries and resources, putting them under public ownership. The goal was to ensure that these resources were managed by the state, on behalf of the people. Cooperatives were to be encouraged, and workers and peasants were to play a key role in managing the means of production through their representative government and cooperatives.

After the Arusha Declaration, the government nationalised all the major means of production which were privately owned by compensating the former owners. Some of the nationalised foreign assets were Standard Bank, Barclays Bank, British-American Tobacco Company and Bata Shoes Industry. The government also entered into partnerships with companies as the country had no capital and technology to run them. In so doing, the government ensured that all the major means of production were collectively owned by the people of Tanzania. The natural and human resources were utilised for the benefit of all, regardless of their social-economic status.

• In implementing the Arusha Declaration, the government set up various public corporations. The public corporations included the National Bank of Commerce (1967), the National Textile Corporation (1968), Tanzania Tobacco Authority (1970), the State Mining Corporation (1972) and Tanzania Cotton Authority (1973). These public enterprises employed Tanzanians and thus increased their purchasing power. The government owned the cooperatives and authorities by 100 per cent.

• Between 1967 and 1973 Tanzania experienced a remarkable rate of industrial growth. It was during this time that import-substitution manufacturing industries expanded. Some of the import-substitution industries that did well in the mid-1960s were textile, beer, cement, cigarette and soap industries. Furthermore, the government established other industries, which could produce basic tools for farmers. For example, in 1970, the Ubungo Farmers' Implements (UFI) was established for this purpose.

• This industry could produce 2,500,000 hand hoes a year. During the 1970s, plans were made to explore the Liganga iron ore and the Kiwira coal fields. The government also established bicycle, radio and battery assembling factories in Dar es Salaam and Arusha. However, the industrial boom of 1967-1973 dropped in the subsequent years.

• Tanzania experienced a sharp decline in the industrial sector between 1973 and 1983. Some of the reasons for the decline were the deterioration in commercial agriculture, particularly cash crop production. Other factors were poor planning, maladministration and overstaffing. By 1975, Tanzania had eight textile industries that were performing poorly. The most famous industries were Urafiki Textile, Sungura Textile, Musoma Textile and Mwanza Textile Industries.