Tanzania – Where President Magufuli’s political and economic strategy meet

This month, Tanzania’s President John Pombe Magufuli marks two years in office. And what a two years it has been.

On the political front, observers have noted a pronounced authoritarian turn. Opposition party rallies have been all but banned.[1] Politicians, musicians and activists have been repeatedly detained and charged with various offenses. A growing number of newspapers have been shut down. One prominent opposition politician survived an assassination attempt. The list goes on.

Politics aside, Magufuli’s presidency has also left its mark on Tanzania’s economy. What defines the new strategy is only gradually emerging. It nevertheless involves a mix of high-profile anti-corruption measures, increased public spending on big infrastructure, an effort to reign in multinationals perceived to be exploiting Tanzania’s natural resources, and the apparent marginalization of Tanzania’s domestic private sector, to name but a few elements.

While analysts have reviewed Magufuli’s political and the economic interventions elsewhere, the aim of this post is to consider how they intersect. To what extent does Magufuli’s economic approach serve his political ends? What could we then infer about how his political aims may inform his economic management?

In what follows, I will point to ways in which Magufuli’s economic strategy supports the consolidation of the President’s own, quite fragile political base, and this by reducing the threat posed by the opposition camp and—perhaps even more dangerous—the threat coming from within CCM.

A note on ideology

First things first, by focusing on the political implications of Magufuli’s economic strategy, I in no way want to suggest that we can reduce his economic thinking to a purely political calculus.

Unpicking what broader ideology drives Magufuli is a tricky business.

Some liken his economic approach to “father of the nation” Julius Nyerere’s Ujamaa brand of socialism with its emphasis on state-led development and its principled commitment to greater socio-economic equality.

Other observers, less charitable in their assessment, refer to Magufuli’s tenure thus far as a “period of grand confusion, deep uncertainty, and incomprehensible eclecticism.”

Building on that last point, we probably won’t get very far by attempting to define Magufuli’s Ideology, capital ‘I’, as a coherent vision or doctrine. There is nevertheless a bundle of ideas, doubtless with its own internal contradictions, that underpins his economic interventions. A well-rounded study would consider these from at least three different angles, namely as a legitimating framework, a development strategy and, finally, a political strategy.

This post focuses more narrowly on the last element, how Magufuli’s ideas about running the economy interact with his political aims.  And here I will argue that, far from an “incomprehensible eclecticism”, there is a fairly consistent logic at work.

The pre-Magufuli political economy of Tanzania’s Chama Cha Mapinduzi

To understand Magufuli and his “fifth phase” government, we must briefly situate it in relation to what came before.

The same ruling party—TANU, later rechristened CCM—has governed mainland Tanzania since Independence. Since 1985 when Nyerere stood down, there has also been a regular succession of presidents every ten years.

Despite this regularity, though, much has changed in Tanzania’s politics in recent decades.

As noted, President Nyerere first set Tanzania on a socialist path, favouring a state-led development strategy. Of particular significance was the relative marginalisation of the private sector, and especially leaders’ efforts to maintain a strict separation between business and politics. This economic approach had knock-on effects for the consolidation of Tanzania’s ruling party, which grew into one of the most highly institutionalized in the region. By limiting private sources of political finance, it helped Tanzania’s leadership ensure a more centralized distribution of patronage and thereby reinforced party cohesion and discipline.[2]

This political balance began to break down with the economic crises of the late 1970s, the liberalizing economic reforms of the 1980s, and ultimately, Nyerere’s retirement as President (1985) and Chairman of CCM (1990). As the private sector expanded, and as CCM lost access to state resources following the 1992 multiparty transition, the Party of erstwhile socialist renown acquired an altogether different reputation. Leaders at all levels grew increasingly entangled with a variety of business interests, resulting in the emergence of competing patronage networks within CCM.

These developments had profound effects both on the government’s economic management and on the internal politics of the ruling party. As factions grew stronger within CCM, they undermined party cohesion and discipline just as they weakened the government’s ability to develop a consistent economic policy and to check corruption. As Cooksey (2011) neatly summarises, ‘Within the ruling party, the use of rent-seeking of all types to advance the interests of groups of rentiers intent on taking control of the party has heightened pressures to loot the public purse and natural resource.’ Gray (2015) clarifies, ‘Neither the President nor any one particular faction could enforce its particular agenda within the ruling party.’

This was the status quo, at least up until CCM’s selection of a presidential candidate to contest in the 2015 general elections. And then something surprising happened.

Two rival factions, one headed by outgoing President Kikwete and another by his political ally turned rival, Edward Lowassa, knocked each other out of the nomination race. This left the path clear for a relatively low profile presidential aspirant to snatch the prize. That was Magufuli the Unexpected, to use the moniker assigned by one sharp-tongued blogger.

President Kikwete at first appeared satisfied with the result, having at least succeeded in marginalising Lowassa, who promptly defected to the opposition. Magufuli soon made it clear, though, that he would not be playing to anyone else’s tune. Rather, in a series of highly mediatised early moves as President, he launched an anti-corruption campaign and announced a series of new investments in infrastructure, health and education.

As he embarked on this new agenda, though, his political base was far from secure. One, he faced a threat from a newly emboldened opposition. More problematic still, he did not have the backing of a strong network within the ruling party itself. Rather, he had to contend with multiple rival factions, none of which were necessarily pleased with his new development zeal, of which there were both good and bad reasons to be critical.[3]

In what follows, I emphasise how Magufuli appears to have incorporated into his overarching economic approach a strategy to shore up his own political strength, and this by shifting the emphasis away from the private sector and back to a state-centred development focus. This shift helps limit the political finance available to the official opposition as well as oppositional factions within CCM whilst reinforcing Magufuli’s centralized control over resources.

Turning back the clock?

The President’s economic interventions have at times appeared to move in many different directions at once, not always with a clear plan behind them nor with consistent follow through.

But the renewed emphasis on privileging the state as a central actor in the economy is one point on which there does seem to be some consistency.

A recent World Bank report observed that Tanzania’s growth is currently supported by substantial government investment, notably in big infrastructure projects including a standard gauge railway, new roads, expanding the Dar port and an oil pipeline from Uganda.

Yet even as public-sector spending has increased, the private sector is getting squeezed.

According to the Bank report, this is due to a mix of government interventions, including cost-cutting measures that have hit the hospitality industry hard and a crackdown on tax evasion combined with various tax hikes.

Business associations and some prominent investors have called on the government to improve the business climate. They cite policy unpredictability, the ‘brutality’ of the Tanzania Revenue Authority, and low government spending as all negatively impacting business.

Another consequence of the overall downward trend has been a spike in the number of non-performing loans, which has in turn prompted banks to increase interest rates, adding a credit crunch to the already difficult conditions confronting business.

A recent report from the Bank of Tanzania helps clarify the extent of the slowdown. Annual growth in credit to the private sector, often used to assess private sector expansion, has plummeted from 25 percent in November 2015, the month Magufuli took office, to 1 percent in July 2017.

The political significance  

It is tempting to think that some of the private sector downturn, and certainly the credit squeeze, could be an unintended consequence. Yet it also serves a political purpose, one that has been pursued through more targeted efforts as well.

First, the limited private sector expansion means that private sources of political finance are growing scarce. As noted earlier, it is this private finance that—up till now—has contributed to the fragmentation of patronage networks within CCM and hence fuelled intra-party tensions. By extension, it is also this private finance that could pose a threat to Magufuli, who—it should be remembered—did not have a strong factional base when he took over the presidency.

Beyond this general observation, though, individuals linked to the opposition or rival factions in CCM have gone through an especially rough period recently. Particular entrepreneurs—notably aligned with Lowassa, among others—now face a range of charges from tax evasion to embezzlement. Although perhaps well-founded, the timing of these charges leaves room to wonder about a possible ulterior motive. The fate of these businessmen can certainly provide a useful signal to other potential political financiers, who one CCM politician described as “scared”, having “taken a position of wait and see.”[4]

Beyond closing the taps on private finance, Magufuli has also tried to build up a more centralized source of revenue within CCM, an attempt that supports his broader aim of ensuring greater party discipline.

Insisting he wants to ensure the Party’s independence from its erstwhile business backers, he has launched an audit of party funds, including a review of party-owned properties, many of which it is alleged had been ‘privatized’ by various CCM officials and politicians.[5]

The President, as party Chairman, has also sought to directly regulate excessive campaign spending and factional politicking within CCM. In the 2017 internal party elections, for instance, this effort included a strict ban on bribery and on the widespread practice known as ‘kupanga safu’, meaning to ‘line up’ in Swahili or, in this case, to assemble an informal slate of candidates within the Party. While it is unclear how successfully these bans were enforced, numerous internal election results were scrapped due to alleged malpractice.

In addition to this focus on CCM, the opposition’s sources of private finance—beyond Lowassa’s factional ties—have come under attack. Freeman Mbowe, Chairman of the leading opposition party CHADEMA, has been a persistent target. Property belonging to his company, Kilimanjaro Veggie Ltd (KVL), which is based in his Hai constituency, was allegedly damaged by the District Commissioner, whom Mbowe has dragged to court. More recently, Mbowe’s newspaper, Tanzania Daima, was banned, thereby cutting off another source of finance. Responding to these government actions, Mbowe has decried how, since the 2015 elections, “The wealth, land and even businesses of opposition leaders have been seized or nationalised.”

Where to from here?

I have argued that, whatever other ends Magufuli’s economic strategy may serve, it appears to be aimed at cutting off the sources of political finance on which his political opponents, both in CCM and the opposition, depend.

In this sense, the President’s economic interventions do not only evoke the Ujamaa era because of their state-centred development focus and more equitable resource distribution; they also harken back to that earlier period in so far as they prevent the consolidation of rival factions and thereby help to reinforce discipline within the ruling party.

These assertions aside, a few concluding caveats are in order.

I reiterate, by focusing on Magufuli’s use of economic tools to achieve his political ends, I am not suggesting these are the only ones at his disposal. He is also, for instance, pursuing a version of a “autocratic legalism”, i.e. “the use, abuse and non-use of the law in the service of the executive branch”.[6]

What’s more, the outcome of Magufuli’s economic gambit remains highly uncertain.

One, there are signs that Tanzania’s economy is struggling, yet the government is unwilling to consider this, instead making use of the Statistics Act (2015) to arrest and charge an opposition politician for questioning official GDP figures. Presumably Magufuli understands the political threat posed by an economic downturn and would prefer this topic stay off the table.

Two, politicians both within and outside of CCM are questioning the government’s current policy orientation. While for the most part these criticisms have remained subdued, last week’s debate in parliament over the proposed National Development Plan 2018/19 was unusually lively. “This Government doesn’t believe in the private sector,” accused one CCM MP, adding, “If we have returned to Ujamaa, tell us.” Other ruling party MPs went further, challenging inconsistencies in the government’s plans, questioning their viability, and accusing the Ministry of Finance of copy-pasting reports from one year to the next. The prospect of a rebellion from within CCM, while seemingly remote, is not altogether unfathomable. Certainly, there is dissatisfaction simmering under the surface.

Three, even as Magufuli pursues his anti-corruption drive, there are some potentially sensitive issues he seems unwilling to address. More generally, this raises questions about the extent to which he is temporarily weakening the “groups of rentiers” within CCM, leaving them to lie low only to re-emerge at a later date. There is also some suggestion that close allies of Magufuli are benefiting from his protection, implying he is simply building up a new network to bolster his own position.

Ultimately, to achieve his stated aims, whether economic or political, Magufuli needs nothing short of an economic transformation in Tanzania. Plenty of surprising things have happened in the first two years of his tenure. We’ll have to wait and see what he can manage in the time remaining.

Notes

[1] MPs can hold rallies in their own constituencies, but other public meetings are not allowed.

[2] See, for instance: Gray, 2015; Gray, forthcoming. This relationship is also explored in my PhD thesis.

[3] The reasons for criticising Magufuli were well-founded in so far as his economic approach appeared to be poorly coordinated, unilaterally imposed and potentially ineffectual in the long-run. These reasons could be seen as bad, by contrast, when they came from vested interests worried about their own poorly justified economic advantages.

[4] Interview with CCM politician, January 2016.

[5] See the speech he delivered when accepting the position of CCM Chairman: “Hotuba ya Mhe. Dkt. John Pombe Magufuli, Rais wa Jamhuri ya Muungano wa Tanzania na Mwenyekiti wa Chama cha Mapinduzi Kwenye Mkutano Mkuu wa Taifa wa CCM,” Dodoma, 23 July 2016.

[6] This “instrumental use of the law” was noted by an analyst of Kenyatta’s politics in neighbouring Kenya.

3 thoughts on “Tanzania – Where President Magufuli’s political and economic strategy meet

  1. ZHAO NGESILE

    what kind of economic we built from past three decades? who benefited? I am 50years old, I never see the president who risk his life to benefit Tanzanians like Magufuli . In short he is man of people.

    Reply

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