CAN TANZANIA SURVIVE WITHOUT AGRICULTURE?

Tanzania as a country that depends on agriculture as the main contributor to the Gross Domestic Product (GDP), and the main source of International trade, may need to rethink her economic future in the wake of 2008 oil crisis, in which a barrel of oil reached an historic high of $147 just to slide back to $36.2, a barrel in less than six months. Sending shockwave of fear to countries that relied on this commodity as their main source of economic vitality.

Oil producing countries such as Venezuela, and Iran just to name a few whose economies relies heavily on this single commodity, ripped massive profits and used their earnings not to diversify their economies, but to further their ideological beliefs. Both countries neglected their potential economic vulnerability based on oil dependence despite decades of huge profits.

They are now not only in the same financial debacle, but also in potential social quandary of a different magnitude; they relied heavily on now devalued oil as their main source of economic lifeline.

Energy prices have tumbled across the board; with oil plummeting to its historical low of $36.2, a barrel at the New-York Mercantile Exchange (NYMEX) as of January 16th; A figure far below budget projections of $60 a barrel in the cases of Iran, and Venezuela. Countries whose leaders ascended to power, based on promises of ambitious, social programs transformation .

The two countries must shelve some of their ambitious social projects for the time being, due to the impending budget deficits, and perhaps social problems, when some of the already existing services will have to be curtailed.

Oil accounts for more than 90% of Venezuela exports, while Iran depends on oil to account for 85% of the government’s revenues. Whilst this is the reality, Hugo Chavez of Venezuela, has used oil money to make thumb his nose towards the west; he has used the petrodollars to further his socialist and revolutionary causes of being a defender of the Latin America, against the American Empire Influence.

His Iranian counterpart Mohamoud Ahmadinejad, on the other hand, has used oil profits to wag his finger, and heralding his determination to wipe Israel off the map. Iran, spent millions of her petrodollars promoting itself as the sole defender of Islam across the Islamic world; She is fighting for hegemony on geopolitical and economic fronts across the Middle East. Not only that, Iran, has used her oil wealth to fend off the western efforts to block her nuclear drive, and this is still going on in the face of rising unemployment, and sky high inflation. The bottom line is that, both Iran and Venezuela failed to look at the broader picture, which is Iran, and Venezuela without oil.

Thanks to speculation in the financial markets, the countries racked-in massive profits, but then their leaders ignored the laws of economics, and called the $147 a barrel an insult. Iranian leader arrogantly suggested that, $200 a barrel would not be a fair price either. Even after the financial crisis started, they forgot that mere speculation was not sufficient to reverse Economic Law of Elasticity.

Gasoline being one of the modern day necessities, many believed it was not going to undergo a price shock ; the economic boom in India and China, and increasing demand in the United States, led many to perceive oil as insensitive to price changes (inelastic), because consumers would continue to demand it despite price increases.

Economic theories have disapproved those who were convinced that, oil prices would never fall. Prices have plunged sharply globally, except in Tanzania; one of the few countries where merchants can impose upon the people their own prices. Sadly enough, In the United States, some are currently paying equivalent of $.55cents a liter, whereby many paid roughly $1.50 a liter, less than six months ago.

In the face of economic hardship, characterized by the rise of unemployment, and declining earning power, oil become less of a necessity; need for food and shelter precedes the need for oil. However, availability of alternative forms of transportation, amount of income to spend on gasoline, and time factors have driven oil prices to their current low levels.

Just like Iran and Venezuela cannot breathe without oil, Tanzania has no economic vitality without agriculture. Agriculture accounts for 42.5% of the Gross Domestic Product (GDP) and more than 80% of the exports, and this puts our country in the same line of vulnerability, and insecurity as that of the oil producing countries which are now facing economic uncertainty because they did not properly plan for economic continuity without oil (reduced oil demand characterized by lower revenues).

An economy without agricultural dependence should be Tanzania’s motto. This ambition should take into consideration country’s massive wealth of natural resources. Just like Dubai, a tiny U.A.E country which solely relies on maritime and tourism for her survival, Tanzania should think 100 years from now by laying plans in place on how to exploit her massive wealth, such as the inexhaustible, and price insensitive Indian Ocean; making maritime services through port of Dar es salaam easily accessible, efficient and inexpensive for both domestic and to foreign customers such as Zambians, Congolese, Ugandans etc who are using Kenyan ports for the most part.

Massive advertisement campaign of our beaches as a focal point for attraction, for both domestic and foreign tourists would yield unprecedented positive results, just like it has in the cases of Mauritius and Morocco. Our historical wealth such as the famous Zanzibar, Bagamoyo and Mafia Islands are enough to shift the economic pendulum from agricultural dependence to a more balanced economy. Aggressive marketing of Mt. Kilimanjaro and other tourist attractions as parts of Tanzania and not Kenya, will definitely provide Tanzania with the missing link to full economic diversification.

Economists, financial experts, and scholars both in public and private sectors, should study the feasibility of balancing the economy from agricultural dependence to agricultural independence considering the country’s untapped wealth. In the face of climatic uncertainty of prolonged droughts, tsunamis, unfair agricultural subsidization by wealthy countries, Tanzania’s may find her competitive ability in the international commodity markets hampered by these factors. And possibly, chocking the economic lifeline out of the country.

There is no question, such ambitious move would be time consuming, expensive, complicated and very hard to accomplish. But in today’s dynamic and less predictable global economy, there is no other alternative. Tanzania MUST have economic diversification strategy. Massive wealth in the hands of a few could be channeled towards the feasible study of economic diversification for the good of the country’s majority riddled with poverty.

Tanzania, government must strengthen the country’s infrastructure, and use foreign resources in the form of investment to support the transformation. The law for attracting and protecting foreign investments must be enforced diligently, and foreign investors must be given assurances regarding the safety of their investments. Red tape and bureaucracy at government agencies MUST be ended.

The focus must be on the qualitative aspect of manpower by streamlining the government in such a way that quality becomes the highest priority, at the same time recognizing human talent and capability within the workforce. Rewarding employees to enable them release their full potential must be a common practice, and also retaining already developed talents to encourage innovation, which will in turn curb the current wave of brain drain.

With a young energetic population, Tanzania will enjoy an inexpensive labor force, should it adopt a broader industrialization project, which will reduce dependence on importation of unnecessary products, some of which are substandard and hazardous to the population. Domestic production of Industrial goods will translate into cheaper prices, as well as employment to the currently idle young population. These goods will not only be consumed domestically, but will also find demand in the Southern, Central, and East African economic blocs in which Tanzania’s influence is growing.

To fully diversify Tanzanian economy, the current government expenditure must be shifted to major development and construction projects to guarantee that in the future, the country’s infrastructure; will be able to sustain growth in all sectors of the economy, which will in turn shift the economic pendulum from agricultural dependence to agricultural independence.

We cannot wait until a crisis emerges for us to be able to start preparedness, the current economic and energy crisis are perhaps some of the best lessons we can learn in our generation. We do not want to go the Iranian or Venezuela routes. Now is the time to shove aside politics, rhetoric, and rattling, and think deeply on where the country is going to be hundred years from today. The question is, can we see our country surviving without agriculture?

Mungu Ibariki Tanzania

John Mashaka,
Mashaka.john@yahoo.com
The Writer is a US based Banker, & Social Activist