Politics in Tanzania are now taking a different shape compared to the past five years. Opposition parties in Tanzania, such as CHADEMA and ACT are collaborating with the main leading party CCM to put the nation in the right economic boost trajectory.
Over the past two decades, East Africa has witnessed how political instability has dealt a blow to economic growth. During the 2007/2008 post-election violence in Kenya, the country recorded its worst economic performance. The ripple effects spread to neigbouring countries of Uganda and as far as Rwanda and DRC.
Tanzania had its own political turmoil between 2015 and 2020 where human rights and press freedom were often infringement.
However, Tanzania, which has ambitions of becoming an industry-driven economy, is tuning its economic pro-growth policies in the right way to attract the necessary investors and environment for sustainable development.
This economic vision is now being backed by President Samia Suluhu Hassan who is reversing the hardline stand her predecessor had taken.
In an unprecedented move, President Suluhu is expanding Tanzania’s democratic space by inviting the opposition parties to discuss the future of the nation.
During the World Economic Forum (WEF) in Davos, Switzerland, Suluhu’s message was; ‘hello world, we are here, we are ready, let’s work together.’
This new trajectory by Suluhu’s administration seems to recalibrate the image of Tanzania in the eyes of the international community, although the turn around hasn’t been as fast or drastic as the opposition or human rights crusaders would want. Nevertheless, it is a much welcome change from one of the most repressive regimes in recent history in the country.
READ:Tanzania: President Samia revitalizing a battered economy
Long-term stability?
The World Bank (WB) argues that economic growth and political stability are deeply interconnected.
“On the one hand, the uncertainty associated with an unstable political environment may reduce investment and the pace of economic development. On the other hand, poor economic performance may lead to government collapse and political unrest,” the WB 2014 publication commented.
An analysis of Tanzania’s last five years might not buck The World Bank’s assertion. The country saw a major bump economic growth but paid the price with a slump in diplomacy and international relations which could have slowed down foreign direct investment.
According to the US Department of State, FDI flows to Tanzania increased from USD 938 million in 2017 to USD 1.1 billion in 2018, although they have not recovered to pre-2015 levels. (The Bank of Tanzania reports 2018 FDI as USD 2.82 billion, down from USD 5.07 billion in 2017).
Investors have cited unneccesary obstacles in hiring foreign workers, reduced profits due to unfriendly and opaque tax policies, increased local content requirements and regulatory/policy instability as some of pitfalls of investing in Tanzania. Others are; lack of trust between the Government and the private sector, and mandatory initial public offerings (IPOs) in crucial industries.
Additionally, despite the excellent and essential policies rallied by the fifth government – various political challenges marred the progress, especially international development partners who poked at amendments to the Statistics Act, robbing real chances of providing the public with accurate data.
Further, as industrialization became the beacon of economic direction, a report by the United Nations Conference on Trade and Development (UNCTAD) shows that inflows of foreign direct investment (FDI) decreased by 24 percent between 2015 and 2017
On the same note, the administration faced political backlash from human rights observers and long-time financiers such as International Monetary Fund (IMF).
In 2019, relations between the government and the International Monetary Fund (IMF) deteriorated when the financier criticized the former administration for its unpredictable economic policies and unreliable statistics.
Surprisingly, three years later, President Samia is anchoring a pro-business approach worldwide to send positive messages attracting potential investments in Tanzania.
Tanzania Investment Center(TIC) records show that from July to November 2022, there was an increase of 22.2 percent in investment projects (132 registered projects) compared to 102 projects registered during the same period in July to November 2021.
In October, the American firm Moody’s Investors Service changed its status on Tanzania’s outlook from stable to positive, noting that political risks have declined under President Samia Suluhu Hassan’s administration, which concurrently promotes economic development and strong diplomatic ties.
Tanzania’s current outlook didn’t come by chance. The success is a straightforward strategic plan from President Samia’s administration since she assumed office in March 2021. By complementing various strategies left by her predecessor and adding a little spice (economic diplomacy moves with superpowers USA and China).
READ:Investing in Tanzania: 2023 outlook
Political status in Tanzania
Since March 2021, President Samia promised her political counterparts on the opposition to settle long-hanging issues that have weakened political stability in the nation.
Today, the opposition bloc is changing its tone, impacting the state of political interaction in the country, which is essential for building harmony and strategic economic goals.
READ:Credit to the private sector to spur growth in Tanzania – WB
On January 2023, during a special discussion meeting with political parties, the leaders of two opposition parties, ACT,-Wazalendo ZItto Kabwe and CHADEMA Freeman Mbowe both commended Samia efforts to put Tanzania political affairs in order, especially championing democracy for a better future.
Moody’s argues that the government’s structural reform agenda offers the prospect of delivering lasting improvements to Tanzania’s institutional framework and supporting private sector growth.
“Initial steps to improve the business and investment climate include relaxing regulations for foreign work permits, streamlining VAT refunds, and tabling legislation supporting local businesses,” added Moodys.
At the same time, government officials are speaking Suluhu’s language of stimulating economic growth and cohesion to mitigate external global shocks.
Tanzania is expanding its diplomatic and economic relations with the the East African Community (EAC). Trade conflicts with her neigbours have drastically reduced since Suluhu took over and the country is now an active participant in EAC’s joint focus on pro-growth, planning to develop with fiscal policies that promote businesses.
Currently the ministry of Finance and Planning is collecting views from various stakeholders on tax and taxation as part of the preparations of the 2023/24 budget, an approach that is somewhat new in the country and a sign of what is to come in the near future
With the present trajectory Tanzania is taking, particularly on attracting the right investment and streamlining strategic economic diplomacy, Tanzania economic growth plans stands to revitalize the nation industrialization potential, which ultimately will put the nation on the global map.
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