A man of the people? Tanzania's President Kikwete has now been in power for two years, during which his country has continued to show robust growth. What has been his personal impact on the nation? Analysis by Neil Ford

African Business, Feb, 2008 by Neil Ford

Prior to his election as president, Jakaya Kikwete had a solid reputation as Tanzanian foreign minister and as a member of the ruling Chama Cha Mapinduzi (CCM) party. After two years in power, the time is perhaps ripe to consider Kikwete's performance to date. The Tanzanian economy continues to make considerable progress, but how great a contribution has the man in charge made towards achieving that success?

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In many ways, it is difficult to separate Kikwete's record from that of his predecessors. The political and economic condition of Tanzania prior to economic liberalisation is well known. The African socialism of Julius Nyerere depressed economic growth and deterred investment by Tanzanians and foreign investors alike, but his role in binding 200 different ethnic groups into a Tanzanian nation means that he is still generally regarded fondly as the father of the nation. Yet, since the mid-1980s, his successors have gradually adopted a more market driven approach.

This approach has begun to pay dividends in terms of increased investment and higher levels of growth since the turn of the millennium, under the leadership of Benjamin Mkapa, who served as president for the decade up to 2005.

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Rather than introducing a whole new set of economic policies, Kikwete has largely continued to implement Mkapa's strategy. Social spending has been boosted by the deep-seated debt cancellation that was achieved under the enhanced Heavily Indebted Poor Countries (HIPC) initiative. Overall, however, the programme of selective privatisation has been sustained and while the country continues to rely heavily on donor support, expenditure and revenues have largely been balanced.

As ever in Tanzania, Kikwete's political position seems secure. The CCM controls about 90% of all seats in the Bunge or parliament and Kikwete's popularity within the party does not seem to have suffered since he was elected with 80% of the vote in 2005.

Unlike in many African states, the CCM tolerates a reasonable level of internal discussion, debate and even dissent without threatening the position of the president. At this stage, it seems highly unlikely that the party will not retain the incumbent as its candidate for the 2010 election. Given that Tanzanians were prepared to vote for CCM when the economy was stagnating, the ruling party is almost certain to maintain its parliamentary dominance now that the benefits of reform are finally being felt.

GDP grew by an estimated 6.2% in 2007 and the government predicts that this rate will rise to 7.3% in 2008, partly because the country will recover from the impact of the 2006-07 drought that hit agricultural output and reduced power generating capacity in hydroelectric plants.

However, national power company Tanesco has increased its 2007 tariffs by up to 22%, while the very high oil price continues to climb, so the energy shocks may not quite be over. In addition, there is no guarantee that rainfall will be both plentiful and timely this year.

Tourism, mining remain robust

Nevertheless, employment in the tourist sector should continue to rise and the mining sector is expected to maintain strong growth. A strike at the Bulyanhulu gold mine that began in October was resolved in mid-December, so production should return to normal. Canadian firm Barrick Gold Corporation, which operates the mine, initially sacked about 1,000 workers in what it described as an illegal strike, but many were later rehired.

The strikers had complained about the disparity between the wages and benefits of Tanzanian and foreign workers. Barrick is currently developing another gold mine and a nickel mine in Tanzania.

However, the living standards of the bulk of the Tanzanian population have yet to see the benefits of strong economic growth. Mining sector investment may look good in the GDP figures, and has the potential to boost government revenues, but it creates relatively little employment.

The tourist industry may be more labour intensive but again tends to be limited to particular areas and many of the largest businesses are owned by foreign interests. Nevertheless, the government appears to be well managed so higher revenues should eventually feed through to all regions in the form of improved health and education services. The pace of new school construction already appears to have picked up and the emphasis on education for girls has been increased.

In the meantime, however, Tanzania has to cope with many of the more negative side effects of economic liberalisation. Millions of Tanzanians have moved to the cities in search of work over the past 20 years and huge suburbs have built up around Dares Salaam.

The incomers may be closer to the centres of wealth and employment but the living standards of most are no better than in the rural areas they left and in many ways are a great deal worse. Greater differences in wealth have certainly generated more crime, while migration also appears to be fuelling the spread of HIV/Aids.