Thursday, December 24, 2015

Dr. Mpango and the Fiduciary Future of Tanzania

New Finance Minister and the Fiduciary Future of Tanzania

Chambi Chachage

At last we have a new minister of finance. He is none other than Dr. Philip Mpango. After a stint as the acting Commissioner of the Tanzania Revenue Authority (TRA) that has collected nearly 1.3 trillion shillings within a month, he seems fit to handle the treasury.

The media and the market must be excited. Why shouldn't they after what transpired in South Africa in the wake of the firing, hiring and rehiring of finance ministers within a week. No wonder Reuters has promptly posted an update entitled 'Former World Bank Economist Mpango named Tanzanian Finance Minister.' 

Probably reminiscing on their encounters at the World Bank and via the then hailed Public Expenditure Review (PER), Rakesh Rajani tweets: "Philip Mpango is a serious, technically sound, no-nonsense choice as Minister of Finance. Huge juggernaut to manage!"
If the Minister of Finance is indeed the 'financial face' of a country then we should expect the 'fiduciary future' of Tanzania to reflect what has been his vision and mission. One can hardly expect that to drastically change given that President Magufuli has reiterated, in his meeting with the 'business community', that the country will continue with its 'ideology-cum-policy' of a "market economy."

What Mpango - which literarily means 'Plan' - is bringing to the table, it seems, would be akin to what happened when President Mkapa was in power. It is more about 'tightening the rope' as far as revenue collection is concerned. But in terms of the underlying ideology/policy, it would be business as usual i.e. 'neoliberalism'.

Unless some mysterious changes occurs, we should expect Dr. Mpango to adhere as close as possible to this brief that captures his vision: "Socio-Economic Transformation for Poverty Reduction: Eight Key Messages for Unlocking Tanzania’s Potential." It is important to note that at that time, i.e. 2012/2013, he was the 'Executive Secretary, President’s Office – Planning Commission'.
On "Message No. 5 – A strong developmental state", he writes:

"The Government of Tanzania will need to maintain a consistent focus on long-term national aspirations, undertake SMART [= Specific, Measurable, Attainable, Relevant and Timely] interventions in areas that are not sexy to the private sector, leverage private sector investment and forge joint ventures. Government support is required to create an enabling environment for business and offer incentives for local entrepreneurs to lead growth. One of the important elements in the successful socio-economic transformation of the countries examined has been the central and strategic role of the state in economic growth and structural transformation. The respective states were able to govern and guide development with a decisive ideological orientation, effective institutions and policies underpinned by adequate bureaucratic and organizational capacity and political will. Optimal policy measures related to economic as well as social development were fast-tracked and a lot of effort went into nurturing, encouraging and facilitating private sector participation."
It would thus be foolhardy, especially for our 'new breed' of democratic socialists, to think that the 'neoliberal state' will stop regarding the private sector as the 'engine of development'. When one sees the state house hosting the Tanzania National Business Council (TNBC) or the Tanzania Private Sector Foundation (TPSF), he/she should know that the future does not belong to the erstwhile 'parastatal' (public company) of the Ujamaa era. To stress this point, let us digress by 'crosschecking' the statement below:

"The Tanzanian Government has recently announced that six private companies will replace the current state-owned Tanzania Electric Supply Company (TANESCO) in power generation and transmission by 2022, to reduce the financeable risk in power purchase agreements and improve tariffs’ structures. The six companies would be established in Tanzania’s Eastern, Northeastern, Northwestern, Central, Southeastern, and South Highland regions to strategically deliver electricity across the country and support development objectives. The transition process from the current integrated model with one parastatal organization alone, to six private companies is part of the electricity generation sub sector unbundling process, which aims at separating the power transmission and distribution segments to ensure competition and cost efficiency" - [December 10, 2015]
Such a 'somewhat privatization' process should not come as a surprise given that one of the 'presidential promises' had to do with 'industrializing Tanzania'. But, as far as the 'post-socialist state' is concerned, this time the 'captains of industry' are mainly expected to come from the private sector. And who else is qualified to assist the president towards that direction more than Dr. Mpango who penned "Message No. 4 – Industrialisation strategies" below?
"Experience from East Asia and Brazil indicate that home-grown, export-oriented industrialisation led by private entrepreneurs (local and foreign) opens up broader opportunities for sustainable growth. In this context, it would seem most logical that Tanzania embarks on industrial development based on specific industries and sectors where Tanzania has latent comparative advantage such as availability of raw materials (crops, livestock and fisheries, forestry resources and minerals) and on promoting industry clustering through Special Economic Zones (SEZs) and Export Processing Zones (EPZs) to produce electronic and electrical goods as well as other manufactured goods that are in high demand in the region. Drawing upon lessons from Southeast Asia, an industrialisation strategy for Tanzania will have to include industry-clustering preceded by a frontal attack on business-unfriendly and inefficient practices and cultures, minimising the frequency and intensity of policy reversals, reviewing labour laws for flexibility, securing land for mass production activities, improving logistics and supply chains for intermediate inputs, and upgrading infrastructure. These are necessary to unlock or attract FDIs and sunset industries from countries like China where firms are in the process of upgrading their business models and processes to move up the value chain and are willing to relocate their labour-intensive activities to countries and regions where labour costs are much lower."
And to do so, Dr. Mpango would surely attempt to implement his "Message No. 6 – A stable and predictable political and macroeconomic framework", which succinctly states that:

"In all countries surveyed, it is crystal clear that successful socio-economic transformation relies on the prudent implementation and adjustment of fiscal (tax and non-tax revenues, domestic and foreign debt, expenditure) and monetary policies (money supply, exchange rates, foreign reserves) as they affect a country’s competitiveness."
Both the World Bank's country representative and the governor of the Bank of Tanzania (BOT) - a former World Bank lead  economist - must be very happy. Yet there are those who feel a sense of déjà vu. As they compare, by way of 'back to the future', Mkapa's 1995-2000 and Magufuli's 2015-2020, they may warily wonder: Can anything good come out of the World Bank?

For me the question would be: After Dr. Mpango applies his "Tanzania Public Expenditure and Financial Accountability Review: Some Insights" (from the World Bank) to fill the government coffers, will our dear country "graduate to middle-income status"? In other words, can money end poverty? Or is 'making poverty history' primarily a matter of policy/ideology? 


lunogelo December 24, 2015 at 8:43 AM  

An interesting and correct reflection of dr. Mpango I know after working for him as a consultant and team leader at ESRF to review Tanzania's Vision 2025 in 2011. In that review report there was consensus that what was grossly lacking in Tanzania was transformational leadership and the political will to lead reforms from the frontline. I recall dr Mpango in one of the workshops attended by President JMK boldly lamenting that Tanzania badly needed political and technocratic champions backed by patriotically motivated political will to oversee socio-economic transformation. He recalled how Prime Ministers of Malaysia and Singapore were personally engaged in overseeing reforms. It would appear that Dr Mpango has now gotten what he was praying for under the leadership of Dr. Magufuli.

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