overwhelmingly urban, and they provided their greatest rewards to the white-collar stratum of managers and technocrats and to the owners of small businesses that provided collateral services, such as transportation and catering. The new industries also offered generous benefits to their industrial workers since, according to economic theory, the industrial wage had to be set at a high enough level to induce farmers to migrate to the industrial sector.
To capitalize those industries and to provide them with a steady flow of machinery, raw materials, and other inputs, the Tanzanian government imposed higher and higher levels of taxation and price regimentation in the agricultural sector. Throughout the Nyerere presidency, Tanzania’s rural sector was not treated as the chosen recipient of beneficent transfers from better off segments of the society but, rather, as a source of revenue that could provide capital for the industrial sector. Contrary to much of what Nyerere said and continued to believe, the economic framework that Tanzania implemented during his presidency was perverse with respect to the distribution of wealth. It featured a planned transfer of economic resources away from the poorer elements of the society, the small farmers, to the far better off inhabitants of a new industrial sector, its workers, managers, and civil servants.
If Tanzania has attracted global attention because of the social ideals of its founder-president, it has attracted equal attention for having had one of sub-Saharan Africa’s worst performing economies during the decades following independence. During the period between independence in 1961 and the beginning of economic reforms in the mid-1980s, Tanzania’s economic record was one of persistent decline. According to World Bank figures, Tanzania’s real per capita income stagnated during the forty-year period from 1960 to the turn of this century and actually fell during the 1970s and 1980s.3 Even these dismal numbers do not provide a complete picture, however. Much of the recorded growth took place in the expanding public sector and reflected the massive growth of the central government’s bureaucracy. Most Tanzanians did not benefit from this growth, and many believed that their real standard of living—measured on what they could actually obtain in the way of housing, food, clothing, and other vital amenities—fell during most of that period. The government based its calculations on the official exchange rate, which exaggerated the dollar value of its shilling-based economy. This practice concealed the extent to which living standards had fallen for the ordinary person.
By the early 1970s, it had become painfully apparent that Tanzania was experiencing a broad-gauged and largely self-induced economic decline. The theory that high taxes on agriculture could generate the resources necessary to finance industrial growth always had serious shortcomings. As a few economists had anticipated early on, the burden of heightened taxes on agricultural exports, which steadily reduced the real returns to the farmers of export crops, only resulted in increasingly lower levels of marketed production and, therefore, in a severe deterioration of the country’s ability to generate hard currency on world markets.4 In addition, since hard currency earnings were vitally important to finance the major costs of industrial growth, such as the imported capital goods, spare parts, and raw materials for the new industries, industrial stagnation was a collateral effect of the drop in agricultural earnings.
Shortages of goods caused by lowered earnings of foreign exchange permeated virtually every sector of the country’s economy. Scarcities of vital inputs meant that the new industrial framework was at best operating at a small fraction of its installed capacity. This, in turn, meant that the consumer goods these industries produced, ranging from relatively nonessential items, such as beer, soft drinks, and cigarettes, to important goods such as clothing, automobile tires, and construction materials, were perpetually in short supply. As the foreign exchange shortage deepened, the country’s public services deteriorated as well. Tanzania was unable to afford the spare parts and fuel supplies required to operate its fleet of publicly operated buses and trash vehicles, the medications and equipment necessary for its public hospitals and rural clinics, the classroom materials necessary for the school and university system, and practically all the inputs necessary to maintain the country’s infrastructure. Electricity brownouts and water shortages occurred daily; hospitals were so short of anesthetics, antibiotic medication, anti-diarrheal drugs, saline kits, and even ordinary bandages that patients were frequently required to bring their own. University instructors, lacking paper, wrote their syllabi on the chalkboard; their students took notes on the margins of scrap paper. Tanzanians who commuted to work sometimes had to walk for hours each way when bus service became unavailable. Tanzania in the second half of the 1970s was a country in which practically everything was in short supply: even the most basic consumer goods such as batteries, tools, light bulbs, automobile parts, and kitchen utensils became difficult to obtain.
Scarcities of essential goods gave rise to parallel markets; these spread rapidly throughout the country. The parallel marketplace provided any consumer item that was unavailable in the legal marketplace. The difficulty was that parallel markets were prone to spiraling inflation, which reflected both the scarcity of goods and the element of risk associated with their contraband character. The remarkable feature of the parallel marketplace in Tanzania and in other countries where such markets have assumed a large place is the variety of goods they deliver. Tanzania’s parallel markets were brimming not only with core necessities such as clothes, maize meal, cooking oil, and malaria drugs, but with a wide range of luxury goods, including air conditioners, portable generators (popular because of the frequent electricity shortages), and all manner of consumer goods including cameras, watches, music systems, and video players. Tanzania’s economic decline became a leading example of a continent-wide story of a seemingly irreversible downward spiral. Falling producer prices for export crops, which lowered farmers’ incentives, resulted in a rapid falloff in the country’s export earnings, which, in turn, crippled the country’s import capability including industrial and agricultural inputs. Decreasing producer prices combined with intensified efforts at social regimentation, such as the collective villages’ scheme, also resulted in dramatically lowered levels of marketed food staples. Tanzania was not only suffering from a virtual collapse of industrial production, but also experiencing a series of other critical scarcities, including shortages of food staples such as maize and rice.
By the mid-1970s, the country’s leaders found themselves confronted with a painful choice: divert the scarce flow of foreign exchange toward food imports to avert widespread starvation, thereby further hampering the effort to construct an import-substituting industrial sector, or allow foreign exchange earnings to continue to flow to industries, thereby widening the spread of famine. President Nyerere chose the former, allocating several hundred million dollars to food imports between 1974 and 1977. This decision helped to avert a severe famine, but it meant that the government had to withdraw precious financial resources from the industrial and agricultural sectors to finance grain imports. After twenty years of independence, Tanzania’s economic state of affairs was a dramatic reversal from the early 1960s, when it had enjoyed robust agricultural growth. Immediately after independence, Tanzania had enjoyed one of the highest rates of growth in food production of any of the newly independent sub-Saharan nations; it was not only self-sufficient in major food staples but was rapidly becoming a significant maize exporter to nearby countries, such as the Democratic Republic of Congo, Zambia, and Malawi. The export sector of Tanzania’s agricultural economy was also enjoying some success. At independence, Tanzania had been on track to become a significant coffee exporter as well as an important contributor to international markets in cotton, tea, sisal, and cashew nuts. Indeed, aside from the epochal failure of the colonial government’s attempt to introduce groundnut cultivation, Tanzania’s abundant supply of good agricultural land seemed to offer favorable growing conditions for many of the world’s major exportable crops.5
The immediate post-independence economic success was short-lived. Within less than a decade, Tanzania’s production of maize, wheat, and rice fell so far short of self-sufficiency that it was forced to import large volumes of food grains. Imports of various grains during the mid-1970s were averaging more than one hundred thousand metric tons per year, a huge economic cost. During 1974 and 1975 alone, Tanzania imported nearly five hundred thousand metric tons of maize at a cost of almost $100 million. Imports of wheat and rice to supplement the country’s maize needs raised the cost of food
