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Notes on the Division of Revenue Debate: Five Points to Ponder

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The only human institution that thrives on self-interest is commerce. This should disabuse the Senate and the country at large of the idea that we can tinker with a formula until it pleases everyone.

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Notes on the Division of Revenue Debate: Five Points to Ponder
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The geography of economic potential: Myths from the “White” Highlands

At 67,000 km2, Marsabit County is Kenya’s second largest county after Turkana (71,600 km2). It is just under 12 per cent of Kenya’s land mass. Before the discovery of wind power resources, it was known only as an arid and semi-arid conflict-prone region dominated by pastoralism. But according to the Marsabit Statistical Abstract published by the Kenya National Bureau of Statistics (KNBS), almost a quarter of the county, 16,000 km2 km, is arable land which receives 1000 mm of rainfall per year, high enough for large-scale rain-fed mechanised agriculture. I know of a hi-tech operation in Laikipia that is producing 25 bags per acre of maize with 650 mm of rainfall a year.

Let us do some simple math. If we use maize to benchmark the potential at a price of Sh2,000 a bag, that works out to Sh240 billion a year (16000 km2 is equivalent to 4m acres) This alone would rank as the fifth highest county GDP after Nairobi, Nakuru, Mombasa and Kiambu.

Kitui County (30,430 km2) is one third larger than Israel (22,145 km2), and receives about the same amount of rainfall. Over and above being food self-sufficient in everything other than grain, Israel exports $8 billion (Sh800 billion) worth of agricultural produce a year, 70 per cent more than our total marketed agricultural production on last year (Sh465 billion) and more than our total exports.


Economic potential is not a fixed endowment. It is a variable that is determined by investment. And of course it is dynamic. Before wind technology became technically and economically viable, Marsabit’s strong wind did not count as economic potential. The basic laws of economics don’t change. This assertion was just as true in 1965 when the government adopted the policy of concentrating public investment in the “high potential areas” which were defined as “areas having abundant natural resources, good land and rainfall, transport and power facilities, and people receptive to, and active in development” as it is today.

It is not just the geography of economic potential that the architects of the Sessional Paper got wrong. They also got the economics of investment wrong. Let me illustrate with a numerical example. We grow maize in Kitale but we could also grow maize in Tana River, as we’ve been trying to do lately. The potential yield is 30 bags per acre in both places. In “high potential” Kitale the yield is presently 15 bags per acre. In Tana River it is five bags. Where should we invest to maximise national output? For simplicity, let’s work with one acre of land in each region; investing to maximise yield in Kitale raises national output to 35 bags, investing in Tana River to 45 bags.

Investment is subject to an economic law known as diminishing marginal returns. Think of growing a maize crop, and fertiliser as capital. Let’s say the recommended application is 50kg/acre. The table below shows a hypothetical relationship between different quantities of fertiliser application, yield, and implied return to fertiliser investment (Columns 1 & 2). Column 3 shows incremental yield and Column 4 the additional yield expressed in bags of maize per kilo of fertiliser. The fifth column converts the production into monetary value calculated at Sh2,000 per bag of maize and Sh50 per kilo of fertiliser. A farmer who applies no fertiliser may harvest 5 bags. Applying 10 bags increases yield to 15 bags, which works out to a bag a kilo. But increasing from 40 to 50 kg increases maize yield by only 3 kg. In money terms, this is a loss of Sh10 per kilo of fertiliser. The maximum return on capital is reached somewhere between 40 and 50 kg of fertiliser per acre.

Notes on the Division of Revenue Debate: Five Points to Ponder
Consider a farmer who has five acres of land, and enough money for only 50 kilos of fertiliser. She can apply 50 kilos of fertiliser on one acre as recommended and harvest 30 bags. If she ploughs all five acres and applies 10 bags on each acre, she will harvest 75 bags. Obviously, which is more profitable depends on the other costs such as plowing, weeding, seeds, etc. It is doubtful though, that these costs could offset the 45-bag difference. Returns to capital behaves the same way; the more capital employed, the lower the return.

The first decade of independence witnessed very rapid agriculture-led growth that seemed to validate Sessional Paper No. 10’s “to those who have, more shall be given” public investment strategy. But this growth came primarily from adoption of coffee, tea and dairy farming by African smallholders, hitherto the preserve of white settler farmers and by the late 70s, this “low hanging fruit” was exhausted. Kenya’s agricultural productivity stagnated in the late 80s. With the exception of export horticulture, there has been no new source of agricultural productivity growth since the 60s. Consequently, Kenya’s cost of producing food is now the highest in the region.

The “high potential areas” now cry foul about cheap imports of everything that they produce, pleading to be protected from Ugandan maize and eggs and milk and Tanzanian vegetables. Expensive food translates into poverty and loss of international competitiveness. At Sh3,000 per bag (Sh30/kg), Kenyan maize costs close to double the world price ($160 per ton or Sh16/kg), while the factory gate of sugar ($800/ton is two and half time the world price ($280/ton). When food is expensive, people have less disposable incomes to spend on other things. It also makes the country’s labour expensive vis à vis competitors where food is cheap, for example South Asia where $80 (Sh8.500) is a decent wage for EPZ workers. We keep asking how it is that we fell behind East Asian countries; the flawed trickle-down economics of Sessional Paper No.10 is one of the reasons.

The free loading bogeyman: Who pays what tax?

The inaugural county economic data published by the KNBS last year put the 2017 Gross County Product (GCP) of Nyandarua and Kwale at Sh245 billion and Sh86 billion respectively, that is, Nyandarua’s economy is about three times as big as Kwale’s. But Nyandarua’s economy is one of the country’s least diversified, with agriculture accounting for 86 per cent. Kwale’s on the other hand is quite diversified; agriculture accounts for 47 per cent, the rest being tourism-related services, mining (titanium), quite a bit of manufacturing, construction and real estate services.

The national tax yield is currently in the order of 15 per cent of GDP. If Nyandarua was to pay its fair share, based on an estimated 2019 GCP of Sh296 billion (obtained by adjusting the national nominal GDP growth rate), it would contribute Sh44 billion to the national tax kitty. It is hard to see where this tax would come from. It is doubtful whether there is a single entity which pays Sh500 million in taxes in Nyandarua. I would challenge the Kenya Revenue Authority to show that it raised Sh5 billion in direct taxes in Nyandarua last year.

Base Titanium’s 2019 annual report shows it paid direct taxes to the tune of Sh2.5 billion (Sh1.5 billion in royalties and Sh1 billion in income tax). Including indirect taxation such as payroll tax and taxes paid by suppliers, the total is over Sh3 billion. Tourism generated Sh200 billion last year, and about 40 per cent of that (Sh80 billion) is tax. The Coast accounts for 43 per cent of hotel occupancy. If we apportion Kwale a third of that, we arrive at an estimate of Sh10 billion in tax. Add income taxes paid by other industries (sugar, steel, construction, real estate) and wealthy residents and we are will be approaching Sh15 billion.

Kwale is also more populous, with 867,000 people compared to Nyandarua’s 686,000 as per the 2019 census. Average household expenditure is comparable in both counties, with Kwale at Sh6,470 and Nyandarua at Sh6,690 per person. If we were to factor in indirect consumption taxes paid by households, such as VAT, Kwale still comes out ahead at 25 per cent more. It is thus likely that overall, Kwale, with an economy a third the size of Nyandarua pays three times the taxes.

Central Kenya counties are not owed more money by the rest of the country. They do not contribute more tax, and may even contribute less than their equitable share. If they have evidence to the contrary, they should table it. In addition, the country’s highest economic growth potential lies elsewhere. There is no rational economic or social development criteria that would justify redistributing money to central Kenya.

Where does the National Government money go?

Since coming into being seven years ago, county governments have—excluding last financial year (up to FY18/19)—secured Sh1.66 trillion of nationally raised revenue. County governments are mandated to spend 30 per cent on development projects, which they seldom do (it’s a bad policy but that’s another matter). This means that the maximum they could have spent on development projects is Sh500 billion, an average of Sh11 billion per county. Over the same period, the national government’s development expenditure is Sh2.94 trillion. In effect, the national government has spent at least 11 times more than the counties on development projects (the National government’s total expenditure comes to Sh11.4 trillion).

We should be seeing at least ten times the impact of national government development. Makueni County government’s Sh140 million women and children’s hospital ought not to be the talk of the county, and the country. Makueni people should be seeing the equivalent of 70 projects comparable to this hospital build by the national government. It is doubtful that there is any county that can show more national government projects than county ones, despite the national government spending 10 times the money.

Where are these national government projects? We do not know. What we can say for sure is that northern Kenya is not getting its fair share. If population were used as a criteria as proposed, and north-eastern counties (Mandera, Garissa, Wajir) had received their rightful share based on their share of national population (5 per cent), the national government would have spent Sh147 billion there. How many kilometres has it tarmacked? To the best of my knowledge, zero.

It is often suggested that northern Kenya counties ought to reduce dependency on the more developed south by developing their own revenue base. It is even suggested that pastoralism is an antiquated mode of production and it is time that the region abandoned or modernised it.

Livestock production (cattle, sheep and goats) contributed Sh115 billion to the economy last year—the second largest agricultural sub-sector after export horticulture (Sh145 billion) although ordinarily it would be third after tea, which went down from Sh127 billion to Sh104 billion in 2018. Livestock production was more than three time the value of cereals (Sh36 billion), seven times sugarcane (Sh17 billion) and more than ten times the value of coffee (Sh10 billion). It is also worth noting that northern pastoralists do not receive subsidised inputs or regular bailouts that some of these other high potential producers receive on a regular basis.

The most readily available strategy for northern Kenya to develop its revenue base is to add value to livestock. Few agricultural products can match the value addition potential of livestock —at least eight times the value of a live animal. On current output, this is potentially a Sh800 billion livestock industry. And according to analysis by the government policy think tank KIPPRA (Kenya Institute of Public Policy Research and Analysis), the livestock industry leads in employment generation potential. But to unlock this potential, northern Kenya needs the physical infrastructure linking it to market so that instead of trekking live animals to be slaughtered near the market, they can be slaughtered at source so as to retain the hides for processing.

The Constitution of Kenya established the Equalisation Fund for this purpose, for the national government “to provide basic services including water, roads, health facilities and electricity to marginalised areas to the extent necessary to bring the quality of those services in those areas to the level generally enjoyed by the rest of the nation”. The Constitution stipulates that 0.5 per cent of revenue be put in, and retained in the fund. A decade on, the Fund has not been operationalised, even though a provision is dutifully reflected in the budget every year. If indeed the money is set aside, the fund should have upwards of Sh50 billion.

The evident resolve to take away money from northern Kenya, while at the same time withholding money that is the region’s constitutional entitlement, begs the question whether the true intention of the one-man-one-shilling formula is to increase the money flowing to central Kenya or to keep northern Kenya poor and marginalised.

Land or people? Why money should follow function

Kirinyaga (Pop. 610,000, 1,478 km2) and Nyamira (Pop. 605,000, 913 km2)) have about the same population and are equally small and so, on both population and area, they’d come out about even. In Kirinyaga, 52 per cent of households have piped water in their compounds. In Nyamira only 7.7 percent do, as per the Integrated Household Budget Survey (IHBS) 2015/16. Similarly, Migori (Pop. 1.12 m) and Murang’a (Pop. 1.07m) are in the same population bracket, but 35 per cent of Murang’a households have piped water. In Migori, it is 1.6 per cent. Busia (Pop. 890,000) might feel it has a leg up on Nyeri (Pop. 759,000) population-wise, but the IHBS 2015/16 puts Busia’s poverty incidence at 69 per cent against Nyeri’s 19 per cent. Busia’s interests in terms of how money should be allocated are more aligned with those of their northern Kenya poverty peer group.

Why then would Busia, Migori or Siaya for that matter conclude that their interests are aligned with those of equally populous counties as opposed to those with which they share needs? Residents of these and other counties in a similar situation are owed an answer to this question. Population per se is not a criteria for allocation of revenue. It has been used as a proxy for the cost of providing services. If Kirinyaga County had only one hospital located at Kerugoya, every resident would be able to access it in less than 45 minutes. To provide the same quality of access in Marsabit would require 45 facilities, and roads leading to them. Obviously, it is difficult for Marsabit to equip 45 facilities to match Kirinyaga’s one hospital. Population density also matters. Incidence of poverty matters. Climate (e.g. malaria incidence) matters.

On revenue sharing by formula

Consider a Ward with three villages allocated NGCDF (National Government Constituencies Development Fund) money for one project. One village proposes a secondary school, the second a dispensary and the third a tarmac road. How to choose? An economic axiom known as the Arrow Impossibility Theorem posits that there is no win-win solution for this problem and thus problems of this nature are solved by give and take. Formulas such as rates of return are helpful for illuminating discussion but they are not of themselves a solution. There is no scientific method of adding up and subtracting the continued suffering from lack of healthcare and the income loss on produce that fails to get to market during the rains from the happiness of having a secondary school. The only human institution that thrives on self-interest is commerce. This should disabuse the Senate and the country at large of the idea that we can tinker with a formula until it pleases everyone. This impasse is political, and not politics of the best kind. Put the formulas aside and return to reason.

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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul

Only the Haitian people can decide their own future. The dictatorship imposed by former president Jovenel Moïse and its imperialist enablers need to go – and make space for a people’s transition government.

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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul
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Haiti is once again going through a profound crisis. Central to this is the struggle against the dictatorship imposed by former president Jovenel Moïse. Since last year Mr. Moise, after decreeing the dismissal of Parliament, has been ruling through decrees, permanently violating Haiti’s constitution. He has refused to leave power after his mandate ended on February 7, 2021, claiming that it ends on February 7 of next year, without any legal basis.

This disregard of the constitution is taking place despite multiple statements by the country’s main judicial bodies, such as the CSPJ (Superior Council of Judicial Power) and the Association of Haitian Lawyers. Numerous religious groups and numerous institutions that are representative of society have also spoken. At this time, there is a strike by the judiciary, which leaves the country without any public body of political power.

At the same time, this institutional crisis is framed in the insecurity that affects practically all sectors of Haitian society. An insecurity expressed through savage repressions of popular mobilizations by the PNH (Haitian National Police), which at the service of the executive power. They have attacked journalists and committed various massacres in poor neighborhoods. Throughout the country, there have been assassinations and arbitrary arrests of opponents.

Most recently, a judge of the High Court was detained under the pretext of promoting an alleged plot against the security of the State and to assassinate the president leading to the illegal and arbitrary revocation of three judges of this Court. This last period has also seen the creation of hundreds of armed groups that spread terror over the entire country and that respond to power, transforming kidnapping into a fairly prosperous industry for these criminals.

The 13 years of military occupation by United Nations troops through MINUSTAH and the operations of prolongation of guardianship through MINUJUSTH and BINUH have aggravated the Haitian crisis. They supported retrograde and undemocratic sectors who, along with gangsters, committed serious crimes against the Haitian people and their fundamental rights.

For this, the people of Haiti deserve a process of justice and reparations. They have paid dearly for the intervention of MINUSTAH: 30 THOUSAND DEAD from cholera transmitted by the soldiers, thousands of women raped, who now raise orphaned children. Nothing has changed in 13 years, more social inequality, poverty, more difficulties for the people. The absence of democracy stays the same.

The poor’s living conditions have worsened dramatically as a result of more than 30 years of neoliberal policies imposed by the International Financial Institutions (IFIs), a severe exchange rate crisis, the freezing of the minimum wage, and inflation above 20% during the last three years.

It should be emphasized that, despite this dramatic situation, the Haitian people remain firm and are constantly mobilizing to prevent the consolidation of a dictatorship by demanding the immediate leave of office by former President Jovenel Moïse.

Taking into account the importance of this struggle and that this dictatorial regime still has the support of imperialist governments such as the United States of America, Canada, France, and international organizations such as the UN, the OAS, and the EU, the IPA calls its members to contribute their full and active solidarity to the struggle of the Haitian people, and to sign this Petition that demands the end of the dictatorship as well as respect for the sovereignty and self-determination of the Haitian people, the establishment of a transition government led by Haitians to launch a process of authentic national reconstruction.

In addition to expressing our solidarity with the Haitian people’s resistance, we call for our organisations to demonstrate in front of the embassies of the imperialist countries and before the United Nations. Only the Haitian people can decide their future. Down with Moise and yes to a people’s transition government, until a constituent is democratically elected.

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Deconstructing the Whiteness of Christ

While many African Christians can only imagine a white Jesus, others have actively promoted a vision of a brown or black Jesus, both in art and in ideology.

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Deconstructing the Whiteness of Christ
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When images of a white preacher and actor going around Kenya playing Jesus turned up on social media in July 2019, people were rightly stunned by the white supremacist undertone of the images. They suggested that Africans were prone to seeing Jesus as white, promoting the white saviour narrative in the process. While it is true that the idea of a white Jesus has been prevalent in African Christianity even without a white actor, and many African Christians and churches still entertain images of Jesus as white because of the missionary legacy, many others have actively promoted a vision of Jesus as brown or black both in art an in ideology.

Images of a brown or black Jesus is as old as Christianity in Africa, especially finding a prominent place in Ethiopian Orthodox Church, which has been in existence for over sixteen hundred years. Eyob Derillo, a librarian at the British Library, recently brought up a steady diet of these images on Twitter. The image of Jesus as black has also been popularised through the artistic project known as Vie de Jesus Mafa (Life of Jesus Mafa) that was conducted in Cameroon.

The most radical expression of Jesus as a black person was however put forth by a young Kongolese woman called Kimpa Vita, who lived in the late seventeenth and early eighteenth century. Through the missionary work of the Portuguese, Kimpa Vita, who was a nganga or medicine woman, became a Christian. She taught that Jesus and his apostles were black and were in fact born in São Salvador, which was the capital of the Kongo at the time. Not only was Jesus transposed from Palestine to São Salvador, Jerusalem, which is a holy site for Christians, was also transposed to São Salvador, so that São Salvador became a holy site. Kimpa Vita was accused of preaching heresy by Portuguese missionaries and burnt at the stake in 1706.

It was not until the 20th century that another movement similar to Vita’s emerged in the Kongo. This younger movement was led by Simon Kimbangu, a preacher who went about healing and raising the dead, portraying himself as an emissary of Jesus. His followers sometimes see him as the Holy Spirit who was to come after Jesus, as prophesied in John 14:16. Just as Kimpa Vita saw São Salvador as the new Jerusalem, Kimbangu’s village of Nkamba became, and still is known as, the new Jerusalem. His followers still flock there for pilgrimage. Kimbangu was accused of threatening Belgian colonial rule and thrown in jail, where he died. Some have complained that Kimbangu seems to have eclipsed Jesus in the imagination of his followers for he is said to have been resurrected from the dead, like Jesus.

Kimbangu’s status among his followers is however similar to that of some of the leaders of what has been described as African Independent Churches or African Initiated Churches (AICs). These churches include the Zionist churches of Southern Africa, among which is the amaNazaretha of Isaiah Shembe. Shembe’s followers see him as a divine figure, similar to Jesus, and rather than going to Jerusalem for pilgrimage, his followers go to the holy city of Ekuphakameni in South Africa. The Cameroonian theologian, Fabien Eboussi Boulaga, in his Christianity Without Fetish, see leaders like Kimbangu and Shembe as doing for their people in our own time what Jesus did for his people in their own time—providing means of healing and deliverance in contexts of grinding oppression. Thus, rather than replacing Jesus, as they are often accused of doing, they are making Jesus relevant to their people. For many Christians in Africa, therefore, Jesus is already brown or black. Other Christians still need to catch up with this development if we are to avoid painful spectacles like the one that took place Kenya.

This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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In Magufuli’s Shadow: The Stark Choices Facing Tanzania’s New President

One immediate concern is what steps Hassan will take on the pandemic, and whether she will change direction.

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In Magufuli’s Shadow: The Stark Choices Facing Tanzania’s New President
Photo: Flickr/Gospel Kitaa
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The sudden death of Tanzania’s President John Pombe Magufuli has thrown the East African nation into a period of political uncertainty.

Vice-president, Samia Suluhu Hassan, has been sworn in as his successor, making her Tanzania’s first woman president.

The transition is all the more challenging given the major rupture – both political and economic – caused by Magufuli’s presidency. Magufuli, who won a second term in October 2020, dramatically centralised power and pursued an interventionist economic policy agenda. He courted controversy on a number of fronts, most recently, by claiming that Tanzania – contrary to mounting evidence – was Covid-free.

Hassan has called for unity and counselled that now is not the time to look at what has passed but rather to look at what is to come.

Despite the 61-year-old leader’s forward-looking stance, questions remain about how Magufuli’s legacy will shape her time in office.

The authoritarian turn

Magufuli oversaw the marginalisation of opposition parties and a decline in civil liberties. His first term was defined by heightened intimidation and violence against opposition leaders, including disappearances and physical attacks.

Thanks to five years of repression, the October 2020 general elections saw the opposition all but wiped out of elected office. The ruling Chama Cha Mapinduzi now controls all local government councils. It also holds 97% of directly elected legislative seats, up from 73% in 2015.

In addition, media freedom and civil liberties were also restricted. A law passed in 2018 imposed jail terms for questioning the accuracy of official statistics.

But Magufuli’s authoritarian tendencies were not unprecedented in Tanzania. For instance, the rule of his predecessor Jakaya Kikwete was also marred by human rights abuses as well civil society and media repression. Kikwete also cancelled Zanzibar’s 2015 election due to a likely opposition victory.

It remains to be seen whether Hassan will adopt a more liberal approach, loosening restrictions on opposition parties, the media and civil society. Even if she does, the damage will take time to repair. Opposition parties, for instance, may well struggle to regain their strength. Among other setbacks, they have lost almost all local elected representatives – a core element of their organisational infrastructure built up painstakingly over decades.

Centralising power in the party

Another key pillar to Magufuli’s legacy is the centralisation of power within the Chama Cha Mapinduzi.

In the early years under founding president Julius Nyerere, Tanzania’s ruling party was dominated by the president and a hierarchy of appointed state and party officials. But, following economic liberalisation in the 1980s and Nyerere’s retirement from politics, the party became steeped in factional rivalries. These were spurred by new political alliances and an emerging private sector business elite.

This factionalism reached its height under Kikwete amid accusations of widespread corruption. Magufuli’s nomination as party presidential candidate only occurred because the rivalry among these factions left him as the unexpected compromise candidate.

Once in office, though, Magufuli quickly signalled he would be nobody’s puppet. He used his position as ruling party chairman to create a “new” Chama Cha Mapinduzi. This involved breaking with party heavyweights, including Kikwete, suppressing factional organising, and consolidating his own support base.

Magufuli’s new base was a cohort of freshly appointed party officials as well as civil servants and cabinet ministers. His loyalists likened these changes to a revival of Nyerere’s Chama Cha Mapinduzi. But, in our view, the comparison is misleading.

Like Magufuli before her, Hassan will be taking office – and party leadership – without her own political base. She will also have to contend with revived factional manoeuvring as sidelined groups try to regain an upper hand.

Hassan could align with a loyal Magufuli faction, which includes influential figures within the party. But, early indications suggest she intends to follow the advice of “party elders”, notably Kikwete. The former president reportedly attended the party’s most recent central committee meeting on Hassan’s invitation.

Aligning herself with Kikwete will likely lead to the reemergence of the internal factional rivalries that characterised the former president’s tenure.

Implications for economic policy

If president Hassan does continue to take a political steer from Kikwete, one likely outcome is that there will be a change in economic policy. In particular, a return to growth that’s led by a more business-friendly approach to the private sector.

Calls are already being made for such a course of action..

The danger for Hassan, however, is that under Kikwete this model was associated with high levels of corruption and unproductive rent-seeking.

A careful reassessment of the Magufuli era is needed to guide future policymaking.

Magufuli used his control over the ruling party to pursue an ambitious policy agenda. This was also linked to his political project of centralising power.

Although this trend actually began under Kikwete, Magufuli accelelrated a move towards more state-led investment. Under his leadership, both state-owned and, increasingly, military-owned enterprises were offered strategic contracts.

This ambitious programme initially won him praise. But over time, his authoritarian decision-making, mismanagement, and lack of transparency prompted a more critical response.

Many state enterprises remained cash-starved, relied on government financial support, and registered losses.

When the government’s controller and auditor general called for more scrutiny of public finances, his budget was slashed. And he was ultimately forced to retire and replaced by a Magufuli loyalist.

Alongside state investment, the president also sought to discipline private sector actors. Some observers suggest that this led to more productive investment, notably by domestic investors. But others point to renewed crony capitalist ties.

Magufuli’s most high profile corporate battle was against Canadian-owned Barrick Gold and its former subsidiary, Acacia Mining. From the two, he demanded USD$190 billion in tax arrears and a renegotiation of operating terms.

Many saw this resource-nationalist approach as an inspiration and a model for African countries seeking to take greater control of their mineral wealth. But in the end – partly due to externally imposed legal and economic constraints – Magufuli walked back on some of his demands. Instead he opted for cooperation rather than confrontation.

He negotiated a joint venture in which Barrick took a majority stake of 84% and Tanzania the remaining 16%. Key elements of the nationalistic mining legislation passed in 2017 were also reversed.

On the plus side gold overtook tourism as Tanzania’s biggest foreign-exchange earner. In addition, some small-scale miners saw their livelihoods improve. Results were more mixed elsewhere, especially for Tanzanite miners in the country’s north.

Ultimately, Magufuli leaves behind a mixed economic legacy. It combines misdirected authoritarian decision-making with positive efforts to pursue an active industrial policy. Reining in unproductive domestic investors and renegotiating adverse contracts with foreign investors were part of this agenda.

There is a risk, given this complex mix, that Tanzania’s policymakers may learn the wrong lessons from his presidency, leading back to the flawed model existing before.

Significantly, neither Magufuli nor his predecessors managed to achieve more inclusive growth. For this reason poverty levels have remained stubbornly high.

The pandemic and beyond

One immediate concern is what steps Hassan will take on the pandemic, and whether she will change direction.

Whatever she does, the health emergency and associated economic crisis will likely define her presidency. It could indeed define the economic trajectory of the African region in years to come.

Both Kikwete and Magufuli ruled through an economic boom period. Commodity prices were high and access to international finance was fairly easy. This gave them latitude to choose between various development approaches.

If Tanzania reverts to the status quo of the Kikwete years, the risk is a reemergence of rent-seeking but without the same highly favourable economic growth conditions. Indeed, as external conditions worsen, Hassan may find her options far more limited.The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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