In this entry I try to show how one of the unintended consequences of Red Aid has been to create an enabling environment for the Tanzanian elite over broad-based equitable development. I cite authors who contest the assumption embedded within the Paris Declaration on Aid Effectiveness that Tanzania has a developmental leadership. I subsequently describe the behaviour of politicians and State bureaucrats who systematically seek rents, engage in political patronage and exploit national resources for their own ends. I argue that this behaviour results in a failure of the Government to provide public goods and can only result in the Government losing its legitimacy amongst Tanzanian citizens.

Little evidence of broad-based equitable growth in Tanzania

There is evidence that hyper-globalisation and the monolithic ideas that underpin Red Aid put nations at risk of increasing inequality, as elites are advantaged over other segments of the population (Bata & Bergesen, 2002; Rodrik, 2011; Stiglitz, 2007). Certainly, this seems to be occurring in Tanzania where the estimated number of Tanzanians living in poverty increased to 12.9 million in 2007. Significant economic growth since 2000/01 has not translated into income poverty reduction. The target expressed in Tanzania’s National Strategy for Growth and the Reduction of Poverty was to reduce income poverty by half by 2010. This was not achieved. To have done so would have required an annual real consumption growth of 3.2% per capita, which is four times higher than that achieved between 2000/01 and 2007 (United Republic of Tanzania, 2009).

Income inequality is low in Tanzania, even by international standards, and has hardly changed over the past decade, as indicated by a Gini coefficient of 0.35 for urban areas (not including Dar es Salaam). But, there is inequitable access to resources, services and opportunities between rural and urban households and across wealth quintiles. Poverty remains an overwhelmingly agricultural phenomenon. The majority of Tanzanians are still smallholder farmers, but agriculture is the least remunerative sector in the economy. The household poverty rate in rural areas is 38%, compared with 24% in other urban areas and 16% in Dar es Salaam (United Republic of Tanzania, 2009).

The allocation of public servants and funds for local services reflects and perpetuates this inequity. Districts with existing facilities receive greater funds than districts with limited facilities. The top ten Local Government Authorities in the health sector received per capita allocations that are five times greater than the bottom ten and in the education sector the disparity is eight times. The poorest families are effectively subsidizing secondary education. Contributions from all households for the construction of secondary schools are compulsory, but the poorest families cannot afford the fees to send their children to them (United Republic of Tanzania, 2009). The better-off solve their livelihood problems privately, while for the majority, life remains harsh, troubled and short (Booth, 2011b).

Who are the elite?

The elite in Tanzania came into being after the liberalization of the economy in the mid 1980s as money became the only important political means of exchange (Cooksey & Kelsall, 2011; Lange, 2008). These people are educated, often outside of the country. They are members of the ruling party and State bureaucracy. They “straddle the State apparatus: professors become bureaucrats and politicians; bureaucrats become politicians; retired bureaucrats and politicians become businessmen…An entire cadre of politician-bureaucrats was established by Nyerere combining security, military and bureaucratic roles… This cadre continues to straddle the politico-bureaucratic divide… They represent a state that is inherently both a political and a bureaucratic entity” (Cooksey & Kelsall, 2011, p. 96).

These politicians and bureaucrats appear to have enthusiastically allied themselves with a liberal-capitalist development ideology. But Cooksey and Kelsall (2011) argue that they are also motivated by a complex ideology of Ujamaa, nationalism and populism that defies straightforward analysis. They distrust foreigners, including investors. A 2007 national survey found that ‘foreigners’ were the least trusted in a list of 18 different social groups (REPOA, 2007). Members of the elite continue to view Europe and the United States as the source of much of Africa and Tanzania’s problems. Without the World Bank and donor pressure to introduce pro-market reforms, none would have taken place, but now that they have this elite has become skilled at exploiting foreign investment and the loans of International Financial Institutions for their own economic and political ends.

The absence of a “developmental leadership” in Tanzania

The assumption in Paris Declaration on Aid Effectiveness is that most countries already have development-oriented political leaderships for whom national development is a central objective. The Paris Declaration calls upon donors to use country systems, whenever possible, and thereby contribute to strengthening them. But, the Declaration “tells us nothing about what to do if it happens, as it often does, that the country systems are subverted systematically by the political leadership for non or anti-developmental purposes” (Booth, 2011a, p. 9).

Booth (2011a) considers the assumption that Tanzania has a developmental leadership untenable, and provide evidence that public policies are largely driven by short-run political considerations not ones based on performance in the delivery of the public goods. Similarly, Rodrik argues that so few countries have followed the Asian model because “many of these countries have governments with little interest in real development. These governments are unlikely to unleash economic changes that threaten their hold on power” (2011, p. 158). Certainly in Tanzania there is a concentration of power in the hands of a few senior policy makers in the Executive who preside over the entire budget preparation process and allocate public resources to support key interests (Cooksey & Kelsall, 2011).

The behaviour of the elite in Tanzania

Transparency International succinctly defines corruption as the abuse of entrusted power for private gain. The problem with this definition is that it ignores that fact that corrupt behaviour is historically derived and that underlying structures and institutional norms provide actors with powerful incentives to behave in certain ways and not in others (Cooksey & Kelsall, 2011). In Tanzania “the rentier impulse originates at the top [and] extends right down to the bottom. As a result, rent-seeking constitutes systemic, not aberrant, behaviour” (2011, p. 93).

In this section I will describe how this elite group of politicians, bureaucrats and businessmen play a game of espousing an anti-corruption discourse, whilst at the same time engaging in rent-seeking, political patronage and capture of national resources. All of which results in a failure to provide public goods and undermines the legitimacy of the State and private sector in the eyes of Tanzanian citizens.

1. Engagement in rent-seeking

In 1995, the presidential commission into corruption, headed by Justice Joseph Warioba concluded that ‘corruption is rampant in all sectors of the economy, public services and politics in the country’. Warioba handed seventy names to President Mkapa, who had earlier launched a ‘war on corruption’. Mkapa predicted that there would be twenty prosecutions. Six years on, not a single high-ranking official or politician had been convicted of corruption (Kelsall, 2003).

Cooksey and Kelsall (2011) recently conducted a ground-breaking study into the political and business investment climate in Tanzania, where they examined the underlying patterns and motivations behind rent-seeking behaviour. They “define rent-seeking in a narrow sense as the subversion of state policy-making and regulatory functions to particularistic, mostly business, interests” (2011, p. 7). They found two types of rent-seeking in Tanzania. That which is motivated by the imperative to finance Chama Cha Mapinduzi, the long-term political party that has held power since Independence. The other to advance the political interests of individuals and groups within the party. Rent-seeking involves both politicians, and bureaucrats, private and public sectors and once deals get to a certain magnitude of above USD 40 million they tend to be mediated by local Asian middlemen who act as rent brokers.

Economic, political and social struggles in Tanzania are all bound up with struggles over the ownership of rents that can be earned from economic activity or from economic assets controlled by non-market institutions (Kelsall, 2003). Individual motivations cover a spectrum ranging from ‘need’ (petty corruption, rent-scraping) to ‘greed’ (rents used for conspicuous consumption) or ‘accumulation’ (productive investments of various kinds). In practice, much rent-seeking behaviour can be explained by various combinations of these motivations (Cooksey & Kelsall, 2011).

Cooksey and Kelsall did not find any significant evidence of an overarching coordination mechanism within the polity. Rather they cited numerous examples of uncoordinated and collectively dysfunctional rent-seeking. But, because of the way politicians, bureaucrats, academics and businessmen straddle their different worlds, united by party affiliation, they did get a sense that “senior positions in the bureaucracy are increasingly placements by the political leadership, and that to varying degrees, bureaucrats carry out the politicians’ rent-related orders, or allow themselves to be sidelined over major issues of policy, procurement, or regulation” (2011, p. 88).

2. Patronage is at the core of politics 

One of the unintended outcomes of the political competition inherent in multi-party democracy is that short-term considerations dictate political rent-seeking strategies at the expense of the long-term interests of the country. The incentives to engage in short-term clientelistic strategies for gaining votes are overpowering and there has been a scaling-up of politically-motivated rent-seeking in Tanzania. Key appointments are driven by patronage considerations rather than proven competence (Booth, 2011a; Cooksey, 2011; Lange, 2008). “Much public predation and extortion are tolerated by rulers as a means of keeping underpaid government officials happy” (Cooksey, 2011, p. 67).

“Although enhanced political competition is praised by the advocates of democracy and good governance, the costs involved in the ruling coalition’s attempts to stay in power—small bribes to voters, larger bribes to selection committees to secure nomination, war chests to finance campaigns, including advertising, violence and intimidation in close-run competitions—may become excessive” (Cooksey & Kelsall, 2011, p. 78). During the build up to the 2005 elections the ruling party sought funds for the elections and candidates sought to buy votes. President Mkapa is said to have personally authorised the use of the money from the nation’s External Payments Account (EPA) to finance the ruling party’s 2005 election campaign. “What started off as a ‘mradi wa chama’ (CCM-sponsored project) soon became a free-for-all as new actors, including Bank of Tanzania staff, came to claim their entitlement” (Cooksey & Kelsall, 2011, p. 77). The repercussions from the 2005 election continue to rock the political establishment of Tanzania to this day.

3. Resource capture by the elite

Lange (2008) cites the work of Ribot, 2002; the World Bank, 2003; and Chambers, 2005 to make a case that elite capture of resources is a major obstacle to the ability of development resources to reach the poor. “In a context of imperfect market liberalization, privileged access to markets – either to trade in them or to tax them – brings lucrative economic rents” (Kelsall, 2003, p. 25). This provides particular dangers for a country like Tanzania which is increasingly attracting the attention of multi-nationals and Chinese investment seeking access to commodities.

Rodrik backs up the World Systems Analysts who argue that “specialize in commodities and raw materials, and you will get stuck in the periphery of the world economy” because the country will become hostage to fluctuations in world prices (Rodrik, 2011, p. 156). But, he also acknowledges that the commodities trap is advantageous to elites within developing countries, because it stops the formation of a middle class who make demands on them. The National Intelligence Council Report, Global Trends 2025 (2008) is concerned that “despite increased global demand for commodities, increased resource income may not benefit the majority of the population or result in significant economic gains.” Certainly, investors’ track record show that they have been more interested in taking out Africa’s resources (Stiglitz, 2007).

In Tanzania the elite seem to be the last ones to empower the poor (Lange, 2008). As a result of political liberalization, the ruling party has mobilized its strategic control of public resources to protect its hold on power and this has heightened pressures to loot the public purse and natural resources (Cooksey & Kelsall, 2011). Struggles around natural resources and particularly over mineral resources and land were identified in a Presidential Commission in 1992, which identified widespread popular dissatisfaction over land shortage and land grabbing. Its recommendation to vest title to land in villages was largely ignored by the government, which continues to vest ultimate title in the State, maintaining the President’s right to alienate areas for development purposes and allowing government to grant land to foreign investors or for patronage reasons (Kelsall, 2003).

The consequence for the public good

One of the results of the elite’s behaviour is a failure to provide public goods, including social and economic infrastructure and utilities. This means that the Government is failing to uphold its side in the fundamental transaction with citizens that in return for the payment of taxation the Government will provide basic social services and infrastructure.

Although Tanzania has a narrow tax base, collecting only about 15 percent of GDP in taxes. There have been large increases in the national budget from both local and external sources over the last decade. However, these have benefited central more than local government and senior more than junior officials. Tanzania is now classified as a poor to very poor performer in public goods provision. Not enough is being done to provide the elementary public goods that are key preconditions for progress (Booth, 2011b; Cooksey & Kelsall, 2011).

The State seems unable to turn taxes, foreign aid and investment into public goods in an efficient and effective manner. It is “creating only a fraction of the public goods it theoretically could with the available resources” (Cooksey & Kelsall, 2011, p. 9). Systemic rent-seeking and inefficiency particularly affects utility and infrastructural provision, where management and regulation is extremely weak. Poor quality procurement and contracting seriously undermines effectiveness, and politics has entered the bureaucracy at even a local level. Lange (2008) cites the example of the Sustainable Mwanza Project where councillors worked against a project that would have benefited their constituencies greatly. She claims that their concerns about being re-elected were more important to them than the success of the project. Donors and NGOs have responded by initiating parallel structures at a local level, in the form of user, community and volunteer groups, to circumvent inefficient bureaucracies. But, this action serves to contradict the claimed values of good, local governance that donors seek to strengthen. My next blog entry will describe multiple instances of these donor double standards in the political and economic context of Tanzania.

“There have been at least two major negative consequences of the rise of money politics at the political centre. First, the formerly quiescent Tanzanian public no longer has many illusions about the nature of their leaders and the consequences of political corruption. The state has lost much of its legitimacy. Second, the political opposition, though still weak, benefits from the government’s loss of legitimacy, which (the second negative consequence) increases the likelihood of enhanced competitive rent-seeking” (Cooksey & Kelsall, 2011, p. 80). Moving towards the future the divide between elite and non-elite populations is likely to widen and trust deficits widen, which will reinforce conditions that could generate divisive political and religious extremism (Evans, 2011; National Intelligence Council, 2008). The paradox is that Red Aid has unwittingly created the climate in which these non-developmental futures look likely to blossom in.

Bibliography

Bata, M., & Bergesen, A. J. (2002). Global inequality: An introduction. Journal of World Systems Research, 8(1), 2-6.

Booth, D. (2011a). Aid effectiveness: Brining country ownership (and politics) back in: Overseas Development Institute. Africa power and politics programme.

Booth, D. (2011b). Working with the grain? The Africa power and politics programme. IDS Bulletin, 42.

Cooksey, B. (2011). Public goods, rents and business in Tanzania: Overseas Development Institute.

Cooksey, B., & Kelsall, T. (2011). The political economy of the investment climate in Tanzania: Overseas Development Institute.

Evans, A. (2011). 2020 development futures: ActionAid.

Kelsall, T. (2003). Governance, democracy and recent political struggles in Mainland Tanzania. Commonwealth & Comparative Politics, 41(2), 55-82.

Lange, S. (2008). The Depoliticisation of Development and the Democratisation of Politics in Tanzania: Parallel structures as obstacles to delivering services to the poor. Journal of Development Studies, 44(8), 1122-1144.

National Intelligence Council (2008). Global Trends 2025: A transformed world: National Intelligence Council.

REPOA (2007). Views of the people. Dar es Salaam.

Rodrik, D. (2011). The Globalisation Paradox: Why global markets, states, and democracy can’t co-exist. Oxford: Oxford University Press.

Stiglitz, J. (2007). Making Globalization Work. New York: W. W. Norton.

United Republic of Tanzania (2009). Poverty and Human Development Report 2009. Dar es Salaam: Research and Analysis Working Group, MKUKUTA Monitoring System, Ministry of Finance and Economic Affairs.