32 TheEconomistJuly 25th 2020
1A
fter thecold war ended, much of Af-
rica democratised and opened up. Few
countries better embodied the feverish
hope of the 1990s than Tanzania. It had suf-
fered grievously in the 1960s and 1970s un-
der its founding leader, Julius Nyerere. A
nascent democracy was throttled by one-
party rule. An economy with great poten-
tial was wrecked by “African socialism”.
Some 11m peasants were forced into collec-
tive villages, where they went hungry.
Democracy and economic freedom re-
vived Tanzania. In 1995 the country held its
first free elections in 30 years. As state con-
trols were relaxed, investment flowed in.
Steady growth more than doubled income
per person between 1994 and 2010.
But John Magufuli, who was elected
president in 2015, has turned back the clock
on democracy by locking up opposition
mps and journalists. He has also meddled
capriciously in the economy. His govern-
ment has shaken down firms for cash, ar-
resting their executives and holding themwithout bail if they do not pay up. It is “al-
most ransom”, says Peter Leon of Herbert
Smith Freehills, an international law firm.
In 2018, when cashew farmers were unhap-
py with the market price for nuts, Mr Magu-
fuli sent in the army with orders to buy up
the crop for 65% more than private traders
offered. In the finest socialist traditions he
did not pay the farmers for over 18 months.
Since then the harvest has slumped by
30%. Farmers are reluctant to plant if they
don’t expect to be paid.
Supporters of Mr Magufuli, who is run-
ning for re-election in October, argue that
he gets things done—hence his nickname,the “bulldozer”. They also point to Tan-
zania’s startling record of economic
growth. This has been running at close to
7% a year for the past decade. Tanzania has
just crossed the World Bank’s threshold to
become a middle-income country (ie, with
an average income of more than $1,036 a
year). Mr Magufuli boasts of achieving this
goal five years earlier than planned.
Yet the growth numbers do not stack up.
From about 2017 several other indicators,
from tax revenue to lending to the private
sector, have slowed sharply. The imfraised
doubts last year when it said there were
“serious weaknesses” in the growth data. It
pointed out that public-sector wages, lend-
ing to the private sector and imports were
all falling while tax revenue was growing
only weakly. The authors made it clear that
the official 6.8% growth figure for 2017 was
not credible. Publication of the report was
blocked by the Tanzanian authorities. (The
Economisthas seen a copy.)
The fund has since backed down. It now
reports, without caveat, Tanzania’s growth
as 6.8% in 2017, 7% in 2018 and 6.3% in 2019.
Jens Reinke, the imf’s new representative
in Tanzania, says that although the fund
makes its own forecasts, it relies on official
data for historical figures. “We’re not fo-
rensic accountants,” he says. Its latest
health check in February has also not been
published. The press release that usually
accompanies these reports is positive.TanzaniaA Potemkin economy?
Tanzania’s recent economic success may not be what it seemsMiddle East & Africa
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