Why Mwinyi embarked on economic reform

Dar es Salaam. It is an open secret that former President Ali Hassan Mwinyi, who died yesterday at the age of 98, inherited a challenging economy.

It was during his time in office (1985–1995) that Tanzania took steps to reverse its socialist policies and adopt a market-led economy.

Popularly referred to as Ujamaa, the socialist ideology introduced by founding President Julius Nyerere drew inspiration from Karl Marx's development theory.

Read: How economic reforms by Mwinyi government improved lives

This ideology emphasised the principle that individuals should contribute according to their abilities and receive according to their needs. It was, essentially, a vision of societal organisation deeply rooted in equitable distribution and communal cooperation.

And it was not a walk in the park for Mwinyi to reverse the ideology.

With Julius Nyerere still alive and still commanding respect among Tanzanians and beyond, Mwinyi had to work extra hard to convince some government and ruling party stalwarts that there was indeed a need for change.

He admits in his memoir titled: ‘Mzee Rukhsa: Safari ya Maisha Yangu (Mzee Rukhsa: Journey of My Life) that at first, the entire government had supported Ujamaa, primarily because the approach promoted inclusive growth.

“But it is also true that, due to a number of reasons, the Ujamaa development model did not translate into the best economic outcomes that we had all anticipated,” writes former President Mwinyi in the memoir.

Read: Mwinyi Senior's memoir: He has charmed his way into history

Nyerere's Ujamaa ideology was designed to foster unity among communities, promoting cooperation and collective effort to facilitate access to essential resources. It enabled localities to establish and sustain communal initiatives, including cooperative shops, while fostering a culture of shared prosperity by distributing profits among community members.

To achieve the goal, the government had to ensure that people lived together in what came to be known as Ujamaa villages. These people had to shop in cooperative shops. At certain junctures, regional leaders went as far as prohibiting individuals from owning private shops.

Some urban dwellers, who did not have specific jobs to do, were being compelled to relocate to villages.

In his autobiography, Mwinyi's depiction of the shortcomings within the Ujamaa ideology appears unequivocal.

He writes that the relocation of some ‘jobless’ urban residents back to villages so they could become members of an Ujamaa Village was counterproductive for certain products.

The relocation of unemployed youths resulted in a decrease in street hawkers, who otherwise might have been vending goods like cigarettes on the streets.

The villagization programme meant that some people were relocated from areas with rich soils so they could live communally with others at Ujamaa Villages, irrespective of the quality of soil at the new location.

“Moreover, some individuals were relocated at a critical juncture, just as they were on the brink of harvesting their crops. Additionally, they were required to allocate significant time and resources towards constructing new homes post-relocation, diverting valuable energy and productivity from their agricultural endeavours,” writes Mwinyi.

Similarly, there were individuals who opposed the relocation initiative, as it was observed in regions renowned for cashew nut production. This resistance consequently led to a decline in the crop's yield, leaving processing factories dormant.

Restricting ownership of shops to cooperatives in a country as huge as Tanzania, Mwinyi writes in his memoir, resulted in the scarcity of some vital consumer goods in a number of locations, while the issuance of business licences became yet another big deal for corrupt officials.

The government’s effort to set up state-owned enterprises, writes Mwinyi, was affected by widespread mismanagement of the factories.

Efforts to protect local industries by raising import duties on imported products did not help matters; instead, they only deprived the local industries of the benefits of competing with other industries locally and globally.

The result of all these, Mwinyi says, was a drop in exports. Productivity in local factories also went down. The country thus did not have enough money to import machinery and boost industrial production. In an effort to keep them running, the industries ended up contributing to a rising national debt.

“During the ten years prior to the late Mwinyi's coming into office, Tanzania’s economy was facing a number of challenges that were later identified to be mostly a result of our economic model, thus giving a boost to the need for reforming the model,” he writes.

He says that with a multitude of challenges, it was actually before he had become President of Tanzania that there was a heated debate over the need to reform state-owned industries.