Identifier
Created
Classification
Origin
05DARESSALAAM1307
2005-07-05 07:48:00
CONFIDENTIAL
Embassy Dar Es Salaam
Cable title:  

WHITHER TANZANIA? CHARGE'S END-OF-TOUR

Tags:  PREL PGOV PHUM EAID ECON TZ 
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C O N F I D E N T I A L SECTION 01 OF 04 DAR ES SALAAM 001307 

SIPDIS

FOR AF AND INR/AA

E.O. 12958: DECL: 6/30/15
TAGS: PREL PGOV PHUM EAID ECON TZ
SUBJECT: WHITHER TANZANIA? CHARGE'S END-OF-TOUR
REFLECTIONS

Classified by Chargi d'Affaires Michael S. Owen for
reasons 1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 04 DAR ES SALAAM 001307

SIPDIS

FOR AF AND INR/AA

E.O. 12958: DECL: 6/30/15
TAGS: PREL PGOV PHUM EAID ECON TZ
SUBJECT: WHITHER TANZANIA? CHARGE'S END-OF-TOUR
REFLECTIONS

Classified by Chargi d'Affaires Michael S. Owen for
reasons 1.4 (b) and (d).


1. (C) Summary: As I prepare to depart from Tanzania
after three very enjoyable years, I see a nation with
much unrealized potential, but with several daunting
challenges ahead. Tanzanians can be justifiably proud of
a vigorous national unity, an impressive record of
democratic transitions, and excellent macroeconomic
numbers. Tanzania's future growth, however, is
jeopardized by an abysmal educational system, rampant
corruption, and heavy donor dependency. A lack of mid-
level management expertise throughout the GOT makes
utilization of much donor assistance slow and
inefficient. Restive Zanzibar remains a festering threat
to national unity that will require strong leadership
from both the GOT and GOZ. Likely President-to-be Jakaya
Kikwete will have the political strength to address many
of these problems, and the next five years will present
excellent opportunities for U.S. engagement on several
fronts. End summary.

--------------
The Good News:
--------------


2. (C) Tanzania's recent macroeconomic record would be
the envy of most countries throughout the world. Since
President Benjamin Mkapa came to power in 1995,
Tanzania's stagnant economy has turned around. Real GDP
growth rates are now averaging between five and six
percent per year, and inflation has dropped to below five
percent. Treasury bill rates are in the six-eight
percent range, export earnings increased by over 20
percent in 2004, and foreign exchange reserves now amount
to over nine months of import cover.


3. (C) Similarly, Tanzania's democratic record would,
at least ostensibly, also be the envy of many countries.
Tanzania has never had a military government, or
experienced even an attempted coup d'etat. Since the
first national elections were held in 1985, nationwide
elections have been held on a regular five-year interval
as prescribed in the national constitution. These
elections have been widely regarded as having been free

and fair. Only in semi-autonomous Zanzibar, where the
opposition CUF party poses a serious challenge to the
ruling CCM, was the experience in 1995 and 2000 far less
successful. Unlike their counterparts in some
neighboring states, Tanzanian Presidents have abided by
the national constitution in stepping down after the
maximum two terms they are allowed to serve: former
President Ali Hassan Mwinyi voluntarily stepped down in
1995, and President Mkapa is set to do so later this
year. Indeed, Tanzanians almost unanimously say it would
be unthinkable for a President to subvert the
constitution and attempt to serve longer than two terms.

--------------
Secondary Education in Crisis
--------------


4. (C) Despite these evident successes, Tanzania faces
many daunting challenges that, left unresolved, will
impede economic growth and potentially disrupt national
unity. Perhaps the most obvious of these challenges is
the dysfunctional national education system. Mkapa's
government has managed some significant success in
widening access to primary education: the primary school
enrollment ratio has increased from 66.8 percent in 1995
when Mkapa took power, to 88.5 in 2004. Secondary
education is in abysmal condition however, and there are
few signs of hope on the horizon.


5. (C) Tanzania's secondary school enrollment ratio is
just below seven percent, one of the lowest figures in
Africa. To make matters worse, all primary education is
in Kiswahili, and all secondary education is in English.
This means that those few students who actually make it
into secondary school face the immediate daunting
prospect of having to learn a new language while at the
same time mastering their coursework. Not surprisingly,
the dropout rate in the first years of secondary school
is quite high. As I have traveled around Tanzania, I
have been repeatedly struck by the crumbling
infrastructure, poorly motivated (or absent) teachers,
and dearth of educational supplies that routinely
characterize Tanzanian public schools. As the East
African Community becomes a reality, Tanzanians will have
to scramble to compete with their far better-educated
neighbors. More troubling still, the lack of quality
public secondary education makes alternatives, including
private and unregulated Islamic schools, attractive to
many parents.


6. (C) Tanzania's educational woes manifest themselves
in the severe lack of capacity in the country's civil
service. Virtually every Ministry with which I've worked
is headed by Permanent Secretaries and Office Directors
who are dedicated, hard-working, and resourceful.
Unfortunately, almost all lack a strong supporting cast.
The lack of skilled mid-level management in virtually
every Ministry means that senior management is
ridiculously overburdened and that efficiency suffers.
The results are all too evident: for example, Tanzania
has received over USD 500 million in Global Fund funding,
but has been able to spend only some USD 20 million thus
far. A 2002 GOT study found that the Health Ministry was
unable to account for almost 50 percent of its budget.

--------------
Corruption: Some Reasons for Optimism
--------------


7. (C) Corruption is also a major problem throughout the
GOT, and one that our business contacts repeatedly
complain about. President Mkapa came into power
promising to "do something" about corruption, but has
thus far made little apparent headway. Transparency
International ranked Tanzania 81st out of 85 countries
with a score of 1.9 on its corruption perception index in
1998, the first year Tanzania was included in its survey.
In 2004 Tanzania was ranked 94th out of 146 countries,
with a score of 2.4, on a scale in which less than 3.0
indicates "rampant corruption." There are some reasons
for optimism on this front however: The GOT has
enthusiastically embraced the possibility of Millennium
Challenge threshold funding to combat corruption, and is
currently finalizing a robust proposal with several
ambitious steps, including active participation by the
private sector. Several of our business contacts have
hailed this as a major step in the right direction, and
have noted that measurable progress on corruption could
be a precursor to increased private investment in
Tanzania.

--------------
Donor Dependency
--------------


8. (C) Due in part to its record of political
stability, Tanzania has long been the darling of
multilateral and bilateral donors. The Scandinavians
have their largest development assistance programs in the
world here, and the UK, Netherlands, Germany, and Japan
also have very large programs. Canada is now set to make
Tanzania one of its largest assistance recipients.
Tanzania was one of the first countries to benefit from
HIPC debt relief, and will receive debt relief of some
USD 3 billion.


9. (C) While this assistance has clearly played a key
role in Tanzania's development, particularly since 1985,
it has also created serious donor dependency. Some 40
percent of the GOT's revenue comes from donors, either
via direct budget support or via specific project
finance, and there is no sign that this number is
declining. It was been widely remarked that Founding
Father Julius Nyerere's "Ujama Socialism" created a
nationwide climate in which personal initiative and
entrepreneurial spirit were anathema. This is applicable
to development assistance as well, and is recognized by
President Mkapa, who has on several occasions exhorted
Tanzanians to "stand on our own two feet," and not to
"expect hand-outs forever."

--------------
The Need for a Viable Opposition
--------------


10. (C) In the long run, I believe Tanzania would be
well-served by the rise of a viable opposition party that
could pose a serious challenge to the CCM throughout the
nation. At the present time, most senior and even mid-
level GOT officials see their primary loyalty as being to
the CCM, and public service takes a back seat. I have
been struck by the extent to which Regional
Commissioners, District Commissioners, and other
officials around the country flaunt their CCM credentials
first and foremost: every public dedication of a project
becomes an occasion for trumpeting the accomplishments of
the CCM, often to the embarrassment of the donors who
actually paid for the project. A viable opposition would
present the Tanzanian electorate with serious choices and
help foster a more accountable and professional civil
service.

--------------
The Biggest Challenge of All: Zanzibar
--------------


11. (C) One of the most pressing problems facing
Tanzania is the ongoing political crisis on volatile
Zanzibar, where the ruling CCM party faces a strong test
from the opposition CUF in elections in October. Unlike
the mainland, Zanzibar's elections in 1995 and 2000 were
marred by fraud and violence, and more of the same is
quite possible later this year. The fact that the CUF
membership is almost exclusively Muslim lends unfortunate
sectarian undertones to the contest. Although the
leaders of both parties are saying the right things at
this stage, it is abundantly clear that emotions are
running high on all sides and there will be a strong
reaction from whichever party loses.


12. (C) The probable next Union President Kikwete is
extremely close to Zanzibari President Karume, and will
almost certainly stand by Karume no matter what happens,
while at the same time trying to evade direct
responsibility for any fraud or violence. Only strong
and mature political leadership can avert problems in
Zanzibar, and sadly, I don't see much evidence of that at
the moment. Zanzibar will continue to be a nagging thorn
in the side of Tanzania until the CCM leadership takes
action to ensure a free and fair election, and then both
sides accept the result. Failure to follow this course
will only create deeper animosities and foster
radicalism.

--------------
What to Expect From a Kikwete Government
--------------


13. (C) Kikwete is certainly aware of all these issues,
and I believe he will act quickly to address at least
some of them. Kikwete has told me on several occasions
that there is a "generation gap" in Tanzania, and only
after "Ujama socialism" old-timers move on and a younger
set of Tanzanians come to the fore will Tanzanian society
become less aid dependent and more dynamic. Kikwete's
popularity among young Tanzanians will probably help
speed up this transition, and I expect to see many new,
and younger, faces in a Kikwete cabinet. He has spoken
to me several times about the importance of secondary
education and the need to improve Tanzania's performance
in this area. Kikwete is also deeply concerned by the
impact of HIV/AIDS, very appreciative of our efforts
under PEPFAR, and eager to work with the U.S. on health
issues. We have had and should continue to have an
excellent working relationship with Kikwete, but as
President we should not lose sight of the fact that he
will be as ruthless as anyone in maintaining the CCM on
top of the heap.

--------------
Opportunities Ahead
--------------


14. (C) Kikwete has the charisma and broad popularity
to enable him to exert bold leadership and make
significant progress in a number of areas. This
transition provides us with the opportunity to engage
with him in a number of key areas:

-- Health: Kikwete is highly appreciative of PEPFAR, as
well as the President's new Malaria Initiative. He is
almost certain to bring in younger and more dynamic
leadership to the lackluster Health Ministry, and
implementation of these programs should improve
dramatically as a result.
-- Education: Given Kikwete's stated interest in
education, we have an opportunity to make significant
strides here if funding is available. Improving
Tanzania's secondary education is key to promoting
economic competitiveness and to stemming the allure of
unregulated Islamic schools, particularly in Zanzibar.

-- Governance: If Tanzania receives Millennium
Challenge threshold funding for anti-corruption, we'll be
in a great position to make a difference in this area,
and should push Kikwete to use his strong position to
move aggressively to show quick and demonstrable results
on corruption.

-- Economic Growth: Mkapa has done a great deal to move
Tanzania's economy away from the old-line socialist model
toward free-market capitalism, and we should urge Kikwete
to stay the course, promote investment, and work toward
lessening Tanzania's debilitating dependence on foreign
aid.

-- Zanzibar: No problem is more important or more
vexatious. Beyond the possibility of electoral fraud and
violence lies a longer term threat of increased
radicalism and separatist sentiments in the isles.
Strong leadership from the union Government will be vital
in heading off this threat, and we and other like-minded
donors will need to continue to push Kikwete to lay the
groundwork for truly democratic elections on Zanzibar,
and to accept an opposition-led government on Zanzibar if
need be.

-- Youth outreach: We should also utilize Kikwete's
focus on the younger generation to continue our highly
successful efforts to reach out to Tanzanian youth,
particularly in predominantly Muslim areas.


15. (C) The USG has achieved a great deal in Tanzania
during the past three years, and I leave at a time when
dramatic changes are on the horizon. Challenges and
opportunities abound, and I am cautiously optimistic that
the years ahead will see significant progress for this
endlessly fascinating country.

OWEN