Tanzania Investment
Tanzania: 1990's Privatisation
The privatisation programme continued with the announcement in July that the major exports earner, sisal would be privatised. Plans for electricity privatisation were also announced. Air Tanzania announced that it would start scheduled flights to Johannesburg, South Africa from December. ATC was suffering from financial difficulties. In November it put up for sale its ageing Twin Otter aircraft. By 1993 it had embarked on a major restructuring exercise, reducing management and courting new investment from outside.The IMF delivered a second trance of $253m of the SAF agreed in 1991. At the same time it commended the government for introducing a number of structural reforms. But in December 1992 budget shortfalls were reported forcing government to review its sources of finance. External loans and aid had fallen by over 40%. More revenue would be raised internally.
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A comprehensive privatisation programme of parastatals was announced in May 1993. Ultimately more than 400 loss-making companies were put up for sale. Agricultural marketing had already been opened up to the private sector but the government was resisting controversial plans for land tenure reform. The budget for 1993-94 was introduced in June as part of a three year rolling plan (1993-96). It had the objective of reducing dependence on foreign aid, reducing government involvement in the economic sector generally and improving social services.
The value of the Tanzanian shilling was falling slowly during the whole of 1992-93 reaching the 500 shillings to the dollar mark in May. In August the Bank of Tanzania announced that market forces would determine the exchange rate. Liberalisation brought the influx of private banks with Meridian BIAO and Standard Chartered opening offices in November. Donors meeting in Paris in July expressed dissatisfaction with the slow pace of reform since 1992 and with corruption and financial scandals. But government pointed out that a steady rate of growth of between 4-5% had continued since President Mwinyi took over from Nyerere in 1985. Tourism was firmly established as Tanzania's main Forex earner.
Last Updated on Saturday 12th December 2009Advertisement