The "Spirit of Kigali!"

SUMMIT CHAIR CONVENES HISTORIC MEETING TO USHER “NEW LOOK” EAC

- High Level Retreat adopts “Kigali Spirit” towards a more efficient and effective regional organization -

EAC Headquarters, Arusha, 14 February 2009: A Strategy Retreat for Key Organs and Institutions of the East African Community was held in Kigali, Rwanda at the Serena Hotel on 9-10 February 2009. The Retreat, the first of its kind brought together the top leadership, Ministers, Permanent Secretaries, Heads and Senior Officials of Government, EAC Organs and Institutions; and representatives of the business community and civil society. The Retreat was convened by H.E. President Paul Kagame of Rwanda and Chairman of the Summit of Heads of State of the East African Community who officially opened the Retreat on 9 February.

The Retreat was held against the background of deepening EAC integration with the ongoing operation of the Customs Union, which was established in 2005, and the advanced progress towards the establishment of the Common Market, which is expected to be in place by January 2010. The EAC recognizes the need to constantly keep a step ahead in maintaining harmonious working relations among its organs and institutions to meet the new challenges and expectations of regional integration within the fast evolving world economic and social order.

Over 100 participants attended the Retreat, including Ministers, Members of the EAC Council of Ministers, the Speaker and Members of the East African Legislative Assembly, Judge President, Principal Judge, Registrar and Senior Officers of the East African Court of Justice; the Secretary General and Deputies Secretary General of the East African Community, Heads of the EAC Institutions ( Inter-University Council for East Africa, Lake Victoria Basin Commission, East African Development Bank, Lake Victoria Fisheries Organization and the Civil Aviation Safety and Security Oversight Agency) , Senior Government and EAC officials; representatives of the business community and civil society; and the Deputy Secretary General of the Commonwealth.

The Strategy Retreat with the theme “Collaborative Work Culture in the EAC organs and institutions for a Stronger East Africa”, focused on a review of the current operations of the EAC organs and institutions, sharing of views and insights on their effectiveness against their mandates under the EAC Treaty, which was signed in 1999; and drawing of lessons from other regional efforts in terms of collaborative work ethic among the EAC organs and institutions and between them and the Partner States.

In his Keynote Address to the Retreat, H.E. President Kagame said the vision of regional integration was a voluntary and dedicated political partnership based on pragmatic building blocks and time-bound milestones and targets. He said the organs and institutions of the Community should strive to improve their collaboration and strengthen their sense of shared purpose to perform better, individually and collectively, in order to realize the benefits of regional integration. He said that among the benefits of regional integration were larger markets, economies of scale, larger pools of human, financial, and physical capital. East Africa, he said, had the advantages of a rich legacy of socioeconomic, political and cultural interactions. He said these advantages should be consolidated by strong, first rate formal institutions embracing a learning attitude, continuously internalizing new knowledge, innovation and good practices to drive the East African integration process.

At the conclusion of the Retreat, the delegates made far reaching observations and recommendations under what they dubbed the “Kigali Spirit” that would guide the operations of the EAC organs and institutions to a more rapidly achieving regional organization in the new era.

In their recommendations, the delegates emphasized the need for a re-affirmation of commitment to the spirit of regional integration requiring deliberate efforts by the EAC Partner States, organs and institutions as well as civil society and business community to prioritize the regional integration agenda within their respective national agendas.

The delegates called for a professional and ethical re-orientation of the EAC establishment to build an East African spirit among the staff of the East African Community. The delegates proposed the establishment of an EAC Public Service Commission, EAC Parliamentary Service Commission and EAC Judicial Service Commission. They proposed the introduction of standard terms of service for staff of all the organs and institutions of the Community and institution of a system of motivation and rigorous performance evaluation of staff on the basis of undivided loyalty to the Community and contribution to the realization of its vision and mission.

The delegates called for streamlining and strengthening of internal and external communications of the EAC to involve systematic, continuous consultations among the Heads of the organs and institutions of the Community and structured regular meetings to plan, review, monitor, and coordinate their programmes and exchange views on the implementation of the regional projects and programmes. They proposed the establishment of a strengthened central public information and communications office at the EAC Secretariat that would coordinate dynamic public information flow from the organs and institutions of the Community, utilizing advanced communication media, including print and electronic media and the Internet.

The delegates proposed measures to ensure effective implementation of EAC decisions and to this extent the need to set up regional mechanism for monitoring and evaluation of the implementation of EAC Council of Ministers decisions at the regional and national levels; monitoring and evaluation of implementation of EAC Acts passed by EALA at the national levels; and establishment of clear political leadership and responsibility for regional projects and programmes by clarifying the role of the Council of Ministers , including assigning specific portfolios to the Members of the EAC Council of Ministers.

On Budget issues, the delegates proposed urgent review from the current system whereby of equal contribution by Partner States and over-reliance on external funding of regional projects to a more sustainable and self reliant sourcing of funds for regional projects and programmes.

The delegates resolved to sustain the “Spirit of Kigali” and, to this extent, proposed that the EAC Strategy Retreat be institutionalized into an annual event and include holding of quarterly meetings of the Heads of EAC organs and institutions, biannual meetings of the Heads of the organs and institutions of the Community with the Chairperson of the Summit; and establishment of a Task Force to follow up the implementation of the recommendations of the Kigali Retreat. The full report and recommendations of the Kigali Retreat will be submitted to the Council of Ministers and Summit of Heads of State for consideration and decisions.

With all this I am more puzzled and engulfed with questions and doubts as to the implications of the meeting. It seems more observations, recommendations, and propositions were made with no counterweight in substance to really address the nature of the meeting. While this was honorable gesture of having solidarity for common goals and a show of some level of commitment, I wonder when will we be able to come to grips with the peripheral issues that need to be at the forefront before all this can really be full scale and operational!

How can we have integration without uniformity of just the basic methods of governance? What can be implemented without the proper authority with effective power to actually execute those implementation since each country is more or less looking to it's own benefits and not responsibilities? And I also wonder if there's a misplaced commitment to the things that even though are important to the whole idea, are being neglected by other member states for the sake of appeasement and coexistance, for example Rwanda and Uganda involvement in DRC?

Geopolitical Intelligence Report

Sorry people, I was cut off from GIRs (si mnajua "global credit crunch"). Now I am back.

Internal Divisions and the Chinese Stimulus Plan

Due in large part to fears of dire consequences if nothing were done to tackle the economic crisis, China rushed through a 4 trillion yuan (US$586 billion) economic stimulus package in November 2008. The plan cobbled together existing and new initiatives focused on massive infrastructure development projects (designed, among other things, to soak up surplus steel, cement and labor capacity), tax cuts, green energy programs, and rural development.

Ever since the package was passed in November, Beijing has recited the mantra of the need to shift China’s economy from its heavy dependence on exports to one more driven by domestic consumption. But now that the sense of immediate crisis has passed, the stimulus policies are being rethought — and in an unusual development for China, they are being vigorously debated in the Chinese media.

Debating the Stimulus Package

In a country where media restrictions are tightening and private commentary on government officials and actions in blogs and online forums is being curtailed, it is quite remarkable that major Chinese newspaper editorials are taking the lead in questioning aspects of the stimulus package.

The question of stimulating rural consumption versus focusing the stimulus on the more economically active coastal regions has been the subject of particularly fierce debate. Some editorials have argued that encouraging rural consumption at a time of higher unemployment is building a bigger problem for the future. This argument maintains that rural laborers — particularly migrant workers — earn only a small amount of money, and that while having them spend their meager savings now might keep gross domestic product up in the short term, it will drain the laborers’ reserves and create a bigger social problem down the road. Others argue that the migrant and rural populations are underdeveloped and incapable of sustained spending, and that pumping stimulus yuan into the countryside is a misallocation of mo ney that could be better spent supporting the urban middle class, in theory creating jobs through increased middle-class consumption of services.

The lack of restrictions on these types of discussions suggests that the debate is occurring with government approval, in a reflection of debates within the Communist Party of China (CPC) and the government itself. Despite debate in the Chinese press, Beijing continues to present a unified public face on the handling of the economic crisis, regardless of internal factional debates. Maintaining Party control remains the primary goal of Party officials; even if they disagree over policies, they recognize the importance of showing that the Party remains in charge.

But, as the dueling editorial pages reveal, the Party is not unified in its assessment of the economic crisis or the recovery program. The show of unity masks a power struggle raging between competing interests within the Party. In many ways, this is not a new struggle; there are always officials jockeying for power for themselves and for their protégés. But the depth of the economic crisis in China and the rising fears of social unrest — not only from the migrant laborers, but also from militants or separatists in Tibet and Xinjiang and from “hostile forces” like the Falun Gong, pro-Democracy advocates and foreign intelligence services — have added urgency to long-standing debates over economic and social policies.

In China, decision-making falls to the president and the premier, currently Hu Jintao and Wen Jiabao respectively. They do not wield the power of past leaders like Mao Zedong or Deng Xiaoping, however, and instead are much more reliant on balancing competing interests than on dictating policy.

Party and Government Factions

Hu and Wen face numerous factions among the Chinese elite. Many officials are considered parts of several different factional affiliations based on age, background, education or family heritage. Boiled down, the struggle over the stimulus plan pits two competing views of the core of the Chinese economy. One sees economic strength and social stability centered on China’s massive rural population, while another sees China’s strength and future in the coastal urban areas, in manufacturing and global trade.

Two key figures in the Standing Committee of the Politburo (the center of political power in China), Vice President Xi Jinping and Vice Premier Li Keqiang, highlight this struggle. These two are considered the core of the fifth-generation leadership, and have been tapped to succeed Hu and Wen as China’s next leaders. They also represent radically different backgrounds.

Li is a protege of Hu and rose from the China Youth League, where Hu has built a strong support base. Li represents a newer generation of Chinese leaders, educated in economics and trained in less-developed provinces. (Li held key positions in Henan and Liaoning provinces.) Xi, on the other hand, is a “princeling.” The son of a former vice premier, he trained as an engineer and served primarily in the coastal export-oriented areas, including Hebei, Fujian and Zhejiang provinces and Shanghai.

In a way, Li and Xi represent different proposals for China’s economic recovery and future. Li is a stronger supporter of the recentralization of economic control sought by Hu, a weakening of the regional economic power bases, and a focus on consolidating Chinese industry in a centrally planned manner while spending government money on rural development and urbanization of China’s interior. Xi represents the view followed by former President Jiang Zemin and descended from the policies of Deng. Under that view, economic activity and growth should be encouraged and largely freed from central direction, and if the coastal provinces grow first and faster, that is just fine; eventually the money, technology and employment will move inland.

Inland vs. the Coast

In many ways, these two views reflect long-standing economic arguments in China — namely, the constant struggle to balance the coastal trade-based economy and the interior agriculture-dominated economy. The former is smaller but wealthier, with stronger ties abroad — and therefore more political power to lobby for preferential treatment. The latter is much larger, but more isolated from the international community — and in Chinese history, frequently the source of instability and revolt in times of stress. These tensions have contributed to the decline of dynasties in centuries past, opening the space for foreign interference in Chinese internal politics. China’s leaders are well aware of the constant stresses between rural and coastal China, but maintaining a balance has been an ongoing struggle.

Throughout Chinese history, there is a repeating pattern of dynastic rise and decline. Dynasties start strong and powerful, usually through conquest. They then consolidate power and exert strong control from the center. But due to the sheer size of China’s territory and population, maintaining central control requires the steady expansion of a bureaucracy that spreads from the center through the various administrative divisions down to the local villages. Over time, the bureaucracy itself begins to usurp power, as its serves as the collector of taxes, distributor of government funds and local arbiter of policy and rights. And as the bureaucracy grows stronger, the center weakens.

Regional differences in population, tax base and economic models start to fragment the bureaucracy, leading to economic (and at times military) fiefdoms. This triggers a strong response from the center as it tries to regain control. Following a period of instability, which often involves foreign interference and/or intervention, a new center is formed, once again exerting strong centralized authority.

This cycle played out in the mid-1600s, as the Ming Dynasty fell into decline and the Manchus (who took on the moniker Qing) swept in to create a new centralized authority. It played out again as the Qing Dynasty declined in the latter half of the 1800s and ultimately was replaced — after an extended period of instability — by the CPC in 1949, ushering in another period of strong centralized control. Once again, a more powerful regional bureaucracy is testing that centralized control.

The economic reforms initiated by Deng Xiaoping at the end of the 1970s led to a three-decade decline of central authority, as economic decision-making and power devolved to the regional and local leadership and the export-oriented coastal provinces became the center of economic activity and power in China. Attempts by the central government to regain some authority over the direction of coastal authorities were repeatedly ignored (or worse), but so long as there was growth in China and relative social stability, this was tolerated.

With Hu’s rise to power, however, there was a new push from the center to rein in the worst of excesses by the coastal leaders and business interests and refocus attention on China’s rural population, which was growing increasingly disenfranchised due to the widening urban-rural economic gap. In 2007 and early 2008, Hu finally gained traction with his economic policies. The Chinese government subsequently sought to slow an overheating economy while focusing on the consolidation of industry and the establishment of “superministries” at the center to coordinate economic activity. It also intended to put inland rural interests on par with — if not above — coastal urban interests. When the superministries were formed in 2008, however, it became apparent that Hu was not omnipotent. Resistance to his plans was abundantly evident, illustrating the power of the entrenched bureaucratic interests.

Economic Crisis and the Stimulus Plan

The economic program of recentralization and the attempt to slow the overheating economy came to a screeching halt in July 2008, as skyrocketing commodity prices fueled inflation and strained government budgets. The first victim was China’s yuan policy. The steady, relatively predictable appreciation of the yuan came to a stop. Its value stagnated, and there is now pressure for a slight depreciation to encourage exports. But as Beijing began shaping its economic stimulus package, it became clear that the program would be a mix of policies, representing differing factions seeking to secure their own interests in the recovery plan.

The emerging program, then, revealed conflicting interests and policies. Money and incentives were offered to feed the low-skill export industry (located primarily in the southeastern coastal provinces) as well as to encourage a shift in production from the coast to the interior. A drive was initiated to reduce redundancies, particularly in heavy industries, and at the same time funding was increased to keep those often-bloated industrial sectors afloat. Overall, the stimulus represents a collection of competing initiatives, reflecting the differences among the factions. Entrenched princelings simply want to keep money moving and employment levels up in anticipation of a resurgence in global consumption and the revitalization of the export-based economic growth path. Meanwhile, the rur al faction seeks to accelerate economic restructuring, reduce dependence on the export-oriented coastal provinces, and move economic activity and attention to the vastly underdeveloped interior.

Higher unemployment among the rural labor force is “proving” each faction’s case. To the princelings, it shows the importance of the export sector in maintaining social stability and economic growth. To the rural faction, it emphasizes the dangers of overreliance on a thin coastal strip of cheap, low-skill labor and a widening wealth gap.

Fighting it Out in the Media

With conflicting paths now running in tandem, competing Party officials are seeking traction and support for their programs without showing division within the core Party apparatus by turning to a traditional method: the media and editorials. During the Cultural Revolution, which itself was a violent debate about the fundamental economic policies of the People’s Republic of China, the Party core appeared united, despite major divisions. The debate played out not in the halls of the National People’s Congress or in press statements, but instead in big-character posters plastered around Beijing and other cities, promoting competing policies and criticizing others.

In modern China, big posters are a thing of the past, replaced by newspaper editorials. While the Party center appears united in this time of economic crisis, the divisions are seen more acutely in the competing editorials published in state and local newspapers and on influential blogs and Web discussion forums. It is here that the depth of competition and debate so well hidden among the members of the Politburo can be seen, and it is here that it becomes clear the Chinese are no more united in their policy approach than the leaders of more democratic countries, where policy debates are more public.

The current political crisis has certainly not reached the levels of the Cultural Revolution, and China no longer has a Mao — or even a Deng — to serve as a single pole around which to wage factional struggles. The current leadership is much more attuned to the need to cooperate and compromise — and even Mao’s methods would often include opportunities for “wayward” officials to come around and cooperate with Mao’s plans. But a recognition of the need to cooperate, and an agreement that the first priority is maintenance of the Party as the sole core of Chinese power (followed closely by the need to maintain social stability to ensure the primary goal), doesn’t guarantee that things can’t get out of control.

The sudden halt to various economic initiatives in July 2008 showed just how critical the emerging crisis was. If commodity prices had not started slacking off a month later, the political crisis in Beijing might have gotten much more intense. Despite competition, the various factions want the Party to remain in power as the sole authority, but their disagreements on how to do this become much clearer during a crisis. Currently, it is the question of China’s migrant labor force and the potential for social unrest that is both keeping the Party center united and causing the most confrontation over the best-path policies to be pur sued. If the economic stimulus package fails to do its job, or if external factors leave China lagging and social problems rising, the internal party fighting could once again grow intense.

At present, there is a sense among China’s leaders that this crisis is manageable. If their attitude once again shifts to abject fear, the question may be less about how to compromise on economic strategy than how to stop a competing faction from bringing ruin to Party and country through ill-thought-out policies. Compromise is acceptable when it means the survival of the Party, but if one faction views the actions of another as fundamentally detrimental to the authority and strength of the Party, then a more active and decisive struggle becomes the ideal choice. After all, it is better to remove a gangrenous limb than to allow the infection to spread and kill the whole organism.

That crisis is not now upon China’s leaders, but things nearly reached that level last summer. There were numerous rumors from Beijing that Wen, who is responsible for China’s economic policies, was going to be sacked — an extreme move given his popularity with the common Chinese. This was staved off or delayed by the fortuitous timing of the rest of the global economic contraction, which brought commodity prices down. For now, China’s leaders will continue issuing competing and occasionally contradictory policies, and just as vigorously debating them through the nation’s editorials. The government is struggling with resolving the current economic crisis, as well as with the fundamental question of just what a new Chinese economy will look like. And that question goes deeper than money: It goes to the very role of the CPC in China’s system.

Changing the Paradigm

Last week, I was challenged to conclude that the current neo-liberal paradigm, that is the basis of organisation of our polities and pursuit of development, has failed and that we ought to think of other way of running our countries and economies.

What has been the result of more than 30 years of neo-liberalism? The failure of markets to deliver, jembe la mkono hadi sasa, wealth concentrated in the hands of the few despite general increase in prosperity, democratic deficit in many aspects, violence, creation of a welfare state, incapacity to reign in curable diseases, moral decadence, etc - you name it.

Even in developed countries, it is all the same. Without even mentioning the current wave of market failure, whether it is a Reagan or a Clinton or a Thatcher or a Blair in office, you have an underclass caught between welfare and low wages, a heavily indebted middle class increasingly subject to job and pension insecurity and a new class of the super rich who escape all rules of taxation and community.

The challenge is whether we will be able to organise a society in a manner that will enable us to escape this trap. Or, there is simply no alternative - that things are somehow "meant" to be the way they are (in fact, to emphasize the supremacy of neo-liberalism, Margret Thatcher coined the acronym TINA - There is No Alternative [to neoliberalism).

Some, including Prime Minister Meles Zenawi, say that actually there is an alternative, and for us in Africa, it is what they call a "Developmental State" (others say a 'Democratic Developmental State' but that is a debate for another day). The idea here is to dump what has held sway since mid-80s...that markets are everything, a "weak state" is the most facilitative of liberty and freedoms, that democracy as an ideal and an end should be pursued at any cost, that contentious politics have to institutionalized (in that the state ought to be challenged by strong media, strong labour unions, and NGOs) - this irrespective of the society's institutional and "sociological" capacity to handle contentious politics).

Anyway, what has happened since we adopted this model: more newspapers in newsstands (but not necessarily advancing the cause of free expression), the plague of the political-economy of disorder (everything goes in Bongo despite the elaborate superstructures of governing politics and social transactions), bigger but weak state (in that it is always not able to enforce laws and create order), rent-seeking tendencies by the private sector and the state. Of course, there has been improvement in the quality and delivery of social services and there has been growth in the economy but there has not been sustained and rapid growth and transformation of the economy. It may be too early to say that we have reached a "dead end", but others, including Prime Minister Zenawi have concluded so.

Now...what is needed: (i) A new focus on managerialism in public service....in that the state, rather public affairs, has to be managed competently. To this end, for a start, a culture of meritocracy has to be inculcated. The pull for entry into public service...in politics or in civil service...and the basis of which we assess our public servants has to change.

(ii) We need to rethink our overemphasis on crafting these elaborate participatory processes, or elabotate modes of inclusiveness, representation and accountability...basically a new look at the whole "hassle of democracy". While all these are important, they are not a panacea for deep-rooted deficiencies in the philosophical underpinnings of the pursuit of our development. Fine, it may be important that people participate in deciding their priorities but getting people to say what they want is different from availing the resources for actualising those needs or ensuring the quality of delivery and perfomance of public service...


(iii) Also, I think it is critical that, before we think of "economic development", basically, as currently popularly defined, assurance of material wellbeing for majority of the people, we should think, first and foremost, of the acquisition of "social development", in that there has to be a consensus on the values and norms that the society hold dear, and to use those values to reaffirm our identity and underpin our collective effort. Others call this the development of "social capital"....the creation of a blend of norms, values and rules to govern the society, ensure stability, reduce uncertainty and cost of "social transactions". What are those values and norms, as far as Tanzania is concerned?

Anyway, I am digressing. I will continue with this later.

Foreign Direct Investment (FDI) Helps too Little to Boost Tanzania Economic Development

During late 1980s economist came with the argument that Foreign Direct Investment (FDI) is one of the way of developing African stagnate economy. They argued that FDI represented about 60% of foreign exchange raised in all developing countries. FDI represents combination of capital, stock, know-how and technology (Della 1997). Majority of FDI orthodoxy continue to believe FDI is the only potential source of bridging the gaps in capability development, exploitation of resources and participation in the international markets. However, the argument is inconclusive. To be fair through FDI there is potential direct contribution to economic growth and technological improvements. However, such potential contribution depends on the type of FDI. For developing countries such as Tanzania, FDI suppose to be a means of acquiring a new technology, however there is more evidence that in Tanzania FDI is not an essential element for industrial and technological improvement.

The cheerleaders of FDI once argued that through privatizations (acquisition) of local firms to the foreigners, we will be able to rehabilitates those firms to be productive again. They argued that FDI will inject new technology and spillovers the know-how knowledge which will resuscitate stagnant industry. However, they missed the point when it comes to upgrading of local industries; it can only happen into two ways. First, by knowledge transfer to acquired firm, and second, by creation or upgrading of linkages with domestic economy. Research shows that FDI tend to increase out put/ productivity through introduction of new technology. However, that is not the case to majority of the foreign firms which acquired our local firms. We saw in TTCL, the company which acquired it didn’t upgrade TTCL into more advanced technology, instead it layoff massive amount of people; bring the so called management guru from Canada and that was the end of the story. When it comes to Tanzania majority of FDI came for the purpose of Natural Resources. They’re extracting these resources and ship them to their countries as raw materials, and that disprove the whole theory of FDI link to development of domestic economy. If Barrick cares a lot about Tanzania, why they’re not processing gold to a finished product in Tanzania?

FDI suppose to boost domestic economy through job creations or creation of supporting industry such as supplier and etc. However, the case is difference in Tanzania. For instance, Vodacom is one of the giant cell phone providers in Tanzania; however it employed less 800 employees (according to Vodacom Investor Newsletter of 2008). Also most of Vodacom suppliers are from South Africa and that kills the all idea of FDI. Apart from that most of their employees are located in the urban area such as Dar es Salaam. So, that raises the question how will FDI transform Tanzania economy while majority of the population located in the rural area?

The core center of Tanzania economy is agriculture which composite about 40% of Tanzania GDP, however there is less foreign investor who are eager to invest on that sector, and that bothered me so much. I asked my self over and over if FDI is so important then why not agriculture sector?

The FDI orthodox will always take you through the income statements of different companies which accepted FDI, and show you how profit improved. However, they will not discus about how human capital has improved. FDI is not supposed to be a new way of imperialism, or a new slave trade era. The notion that desperate Tanzania citizen are better off earning a dollar a day than no dollar at all, will not transform us to a better economy.
In conclusion, we need to stop thinking that foreigner will transform our economy to a more advance one. There is a need of renewing our patriotism toward our country, we were better off in 1970s than today. I don’t mean through looking at skyscrapers or more choices in the menu. But I mean through education standard, healthcare and economic growth.

The Challenge of Leadership

It has been a while since I posted here but I am happy that others have kept this thing going.

One of the things I have spent time during the past few weeks contemplating about, and discussing with friends and colleagues, is the whole leadership thing. It seems to me that, in situations such as ours, the kind of leadership we have, or at least we build, will make or break for us. I have spent a few weeks researching and thinking about this matter, particularly the challenges for the next generation of leaders in Tanzania. So, I will do a couple of posts on this matter. But for today, I am posting what the Washington Post posted few days ago as The 10 Best Leadership Books of All Time. Enjoy:

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The task here at the Leadership Playlist -- to share must-reads from the world of leadership -- just got easier, thanks to The 100 Best Business Books of All Time, out this month from Portfolio. The authors, Jack Covert and Todd Sattersten, who run the business book publisher and website 800 CEO Read, list and review the 10 best leadership books.

And how did they choose them? "We had three litmus tests," Sattersten told me in a phone interview. "Was the book accessible and well written? Are its lessons applicable today? And, third, would we apply the insights in our own business?"

Of the 10 leadership books that made the cut, four were authored by On Leadership panelists. Authors Covert and Sattersten gave me a quick, Twitter-style run down on each.

1. On Becoming a Leader, by Warren Bennis. "His message is, you can't be a leader until you know who you are. It's that simple," said Sattersten. "Once you know, you have amazing ability to lead successfully."

2. The Leadership Moment, by Michael Useem. "It's a book you read for the stories, not because you're looking for a solution," Covert told me. "I think the stories sit in the back of your mind, and when you reach a crisis situation -- which so many people are right now -- you can call on them." (And yes, I am related the author, he's my dad.)

3. The Leadership Challenge, by Jim Kouzes and Barry Posner. "It's the first book your read on leadership because it offers such a compelling model for thinking about leadership," said Sattersten. "You can use it as a basis for looking at everything else you encounter."

4. Control Your Destiny or Someone Else Will, by Noel Tichy and Stratford Sherman. The book, about Jack Welch's leadership at GE, is the story of "the great corporate turn-around story of the 20th century," said Sattersten. And not because GE was faltering when Welch took charge -- on the contrary, said Sattersten, GE at the time was running "an acceptably profitable business," and yet still Welch was able to implement major changes. "It's like Tiger Woods changing up his golf swing at the top of his game," added Covert.

The other books on their list are:
Leadership is an Art, by Max De Pree
The Radical Leap, by Steve Farber
Leading Change, by John Kotter
Questions of Character, by Joe Badaracco
The Story Factor, by Annette Simmons, and
Never Give In! Speeches by Winston Churchill.

Covert and Sattersten also said they'd add recently published Tribes by Seth Godin to this list if they could update it.

With many saying Wall Street has witnessed a massive failure of leadership, I asked Sattersten and Covert if they'd like today's leaders to read these books. Answered Sattersten: "Yes, I'd like them to read the books. But what I'd love more is for someone to actually lead us."

Ready for Change?

A post by John Mashaka

ARE WE READY TO COPE WITH THE IMPENDING AND INEVITABLE ECONOMIC CHANGE?

It is no longer a question of when, but question of how deep the current global economic meltdown will entrench itself. The meltdown is rooting itself deeper on the global economies, and the impact is unequivocally spreading amongst the economically elite, while hitting harder amongst the economically disadvantaged.

Not an American or the Western mantra anymore, it is global. Central Banks across all continents have pumped enormous amounts of money to stimulate their economies in vain; there is a slow growth across the board, and there is little a common man can do to avert or reverse the trend, except being able to adjust to this inevitable and unwanted change. Economic CHANGE, that is.

Multinationals are laying-off massively, across all sectors. Announcement of retrenchments have become a routine, as companies are no longer able to maintain expensive payrolls, which have in turn affected consumer spending (consumption) and battered economies around the globe. Basically, people are holding tight their savings to counter any eventualities, if at all they have anything to hold on to

Healthcare sector which is normally resilient to most recessions has finally been infected by this economic virus. Merck, a global pharmaceuticals giant for example, is laying-off 15% of her workforce in order to adapt to the economic CHANGE -consumer reduction of non- essential spending must bear the blame- and this could just be the beginning of a long trend in the sector, caused by the shaken labor market which is tightening even more

Around the month of October, 2008 a client and a friend, who ran a two generation family business he inherited 25 years ago from his father, had to shut the company doors, and letting go of his 56 loyal employees. 35million dollars, of the company that was invested through a hedge fund firm melted away.

The man could not live to reconcile with a reality of orchestrating the demise of once, a healthy and prosperous company. He shouldered the responsibilities and regarded himself as a traitor to his predecessors who handed him a growing company, and to his children who were the future heirs to the multimillion dollar company. He decided to take his own life this past weekend, becoming one of the casualties of the current economic crisis

Recently, a Tanzanian living in West Virginia, wrote me a very convincing letter, in which he claimed to have known me and my family back in Tanzania, and was requesting a small help of $300 he needed –his two month portion- to pitch into the monthly pool of $750 shared amongst five roommates. I made an effort and visited him; and his story could not be more painful.

His family in Tanzania including his mother who is ailing from diabetes, kissed goodbye the monthly allowance of $500 he has been sending for the past 4 years, 3 months ago. The Youngman is now worried not only for his mother who may die at any time, but also for his own future.

With his four other roommates hailing from West African nation of Gambia, they are bonded and supporting each other under the umbrella of African brotherhood, in the middle of racially sensitive town of Kay moor. These five African immigrants share something in common; they are all jobless, and none has a prospect of securing a job any time soon, despite the fact that, they are able, and ready to do any kind of work.

They were laid-off 5 months ago, from a coal plant where they met and worked. They have now depleted their savings, and neither one is in position to send money back to Tanzania or Gambia. All they are doing at this point is finding how to survive, and adapting to the new CHANGE of economic hardship.

Similar stories are everywhere. In Mumbai India, once lucrative American service centers that employed hundreds of thousands are closing. In New-York, and elsewhere within the US, joblessness, and homelessness among undocumented immigrants and Americans is Intimidating; some of the once highly paid professionals in different sectors are also in the jobless pack. In Japan, the so called economic elites are struggling to pay their bills, in South Africa, the poor are sinking deeper into economic quandary, even in Dar es Salaam, I believe millions are experiencing the pain, and things are not getting any better.

There is no need to panic; things are going to turn around in not too distant future, but in the meantime, we need to make adjustments necessary to cope with this inevitable and unprecedented economic CHANGE. Tanzanians in Diaspora remits millions of dollars a year back home to support their families, and at this time when some of their Western employers are worried about themselves too, cloud of uncertainty hangs over their employment future. As such, need to prepare psychologically for the inevitable is a matter of urgency.

Negative effects of either reduction or a complete halt to the remittance, may have some undesirable consequences to the people of Tanzania and the economy as a whole. In reality, I tend to see a dwindling and perhaps economic hardship of different proportion both to our fellow citizens abroad and those at home. Lifestyles across all social divides are going to be affected, because we all depend on each other for one reason or another.

I am therefore, counseling my people to adjust to the impending economic CHANGE by re-aligning their spending habits. Unnecessary spending must be avoided. Extreme extravagancy and flashy lifestyles must be controlled or put be put on hold for the time being. Nonetheless, we must not stop from going about our daily business while holding tight whatever little we may have. This should be the time for our national motto of brotherhood to shine by holding each other wherever we are, especially the economically vulnerable.

Although the current hardships bear hallmarks of a 1930 great depression, it will be farfetched to describe the current economic debacle as a depression, because there are some elements missing to call it a full blown depression. However, should the matter continue in the same pace, we will soon enter into a depression, whose effects will be tragic and devastating.

The 1930’s, great depression shook both rich and poor, it wiped savings, trimmed earning power of millions, and shut down well established businesses. Government agencies across the world suffered acute revenue shortages. The depression brought about horror and hopelessness amongst millions of pensioners in different nations, while thousands committed suicide because they could not bear the brunt, and never prepared themselves psychologically to deal with the harsh economic CHANGE.

Naturally, change is received with mixed feelings; in normal circumstances, some will resist it, while some will embrace it, depending on whose interest is at stake. But in extreme “situations” such as now, everybody willingly or unwillingly, MUST accept it. No one can resist it.

While I remain optimistic on the economic recovery, I am at the same time, cautioning those who believe that Tanzania is immune to these challenges to think twice; it is a matter of time before every single person directly or indirectly, feels the pain of the economic dilemma we are in. We must also be mindful of the fact that, whatever affects one directly, for some reasons, affects all of us indirectly, especially economically.

Even though I categorically acknowledge, and respect the existence of legitimate, ideological and philosophical differences, I am rather, urging prudence and rational reasoning from all us while debating this issue based on its substance and national importance, as opposed to personal differences that may exist.

Are we ready to face the coming economic CHANGE, and how?

Mungu Ibariki Tanzania

By John Mashaka

Winners and Losers

A post by our own Salama Cooper.....

WINNERS AND LOOSERS!

So, the week ended with some competitions and games were played. Some rough and dirty, some smooth and clean, some just ugly!, yes, there's really ugly games out there which plays with human lives. Happens in Zimbabwe.

But first, I would like to congratulate the Liverpool fans (for those who like soccer) and Pittsburgh Steelers fans (those who're into American Football). Pole sana Chelsea and the Cardinals. And that's all I know, please don't ask me more.

I couldn't believe it when I read that, Morgan Tsvangirai is giving in and is joining a coalition gov. as a prime minister with President Robert moron. When is this giving in going to stop?, Is it really the true spirit of wanting to save our people or is it just a wish for the prominent position? According to him (M.Tsvang) he said that it's for cognizant of the poverty and the suffering of the people of Zimbabwe. Yea! but, there's completely no way, none, whatsoever, to remove that antediluvian? Democracy has failed but there's some other ways right? The freaking thing is 84 yrs old for heaven sake!, he also once declared that Zimbabwe was his?? (oh! puh leez, give me a f..king break) what in theWorld does he still want? he probably want to be like Benjamin Button. But, geez!, dude, that's a disease, it's not like it's fun!. He definetely need to disappear somewhere out of this planet and rest his old ass. Or may be he wants to die in the middle of the cabinet meeting to be known as a hero. However, that will just give people extra work of putting together his old skeletons instead of making important decisions for the country and the downtrodden.

The Cholera epidemic is spreading from cities to rural areas, more than 60,000 people have gotten the disease and more that 3,100 have died. The country's economic crisis has worsened so sharply that the number of people needing food aid will raise by next two months from 5million to 7million of the country's 12 million people. Unbelivable!

Some political analysts doubt that a coalition between unlikely partners can last. According to NY Times, a senior analyst with the International Crisis Group, Sydney Masamvu said that, "It's a question of when, not if, this thing will collapse" It also reported that, some African leaders think this behavior of allowing leaders to keep power through negotiated deals after fraud-ridden elections set a terrible precedent.

It was Dec 2007, when Kenya slid into chaos. As poll results favored the challenger Raila Odinga, an official from the pro democracy group that administered the poll, later explained in the media that, he believed that the results would promptly be made public as a check against election fraud by either side. But then his superiors said the poll numbers would be kept secret, apparently, his institution succembed to political pressure from the western super powers. Little we knew that poor Raila Odinga was viewed differently as not one of them. He was educated in East Germany and named his son after Fidel Castro. Now, if it wasn't for pressure from those who decides what kind of lifestyle Africa should lead, and if polls were released in Kenya, a huge difference would've made and even lives would've saved.

This power sharing aren't the way to go. Does this mean that everytime the ruling party senses the loss in election, it should manipulate the outcome so that they can stay on power?

This makes me asking myself, when I we going to stop bending over?

What's your solution?

I spent a better part of last week discussing the questions of leadership with a group of ambitious young politicians. One of the persistent questions I put across to some of these guys is that...why do you want to lead? Is it just an urge to be upfront or you want to do something with the position that you are seeking? And, thinking through our challenges as a country, what is it that you are offering as solutions?

I want to put across some very real [immediate] challenges that would require creative leadership to overcome. Think of Dar es Salaam. And think of the combination of the following challenges:

1. Ruvu river, which is the main water source for Dar es Salaam, is decreasing in flow at the rate of 6-9 per cent per year. The next big crisis in Dar will be over water (actually we are starting to see it already)

2. At the same time, Dar es Salaam adds more than 200 new inhabitants per day. Slums are expanding, and rents in slums are skyrocketing. At the moment, Kariakoo day labourers and other unemployed pay 300 shillings to sleep overnight in someone's corridor in Kariakoo.(Fact: in all the cities in the world, Dar es Salaam is the 18th fastest growing. The first in the world is Kigali - but these guys in Rwanda have deliberately decided to urbanise the country. For us, it just happens)

3. 60 percent of Dar es Salaam dwellers are under-30, majority of them with high aspirations but no work.

4. 70 - 80 percent of Dar dwellers use charcoal as a source of cooking energy. At the same time, over the last 15 years, we have cut down 20 million acres of forests and therefore charcoal is becoming expensive (30,000 - 35,000 shillings per bag now), with no energy alternative for the urban poor. (Our energy crisis will be over the unavailability of charcoal).

5. A civilised society is determined by the manner in which it disposes its garbage. Every piece of land in Dar is now expensive, and since we are going to be churning out hundreds of thousands of tons of garbage per day, we are going to be hard pressed for spaces for "dampos". Incineration is costly because of the cost of power per kilowatt. Where and how do we dispose our garbage?

6. We can [structurally] sort out the transportation issues in Dar (with rapid transit buses, over-passes, better traffic policing, etc), but our city has no "soul" (perhaps because of its "balkanisation"), and therefore we cannot act as a community to tackle common challenges as other cities in the world do. Creative leadership is needed to "bring the city together" and make its dwellers feel as one. How do you do that?

....anyway, we could go on...but the point I was making to these guys (most of them Dar es Salaam dwellers) is that if you are thinking about being a leader, you should at least (minimally) reflect on the challenges of the community in which you reside (which is Dar es Salaam) and think through the solutions to those challenges. Other things (Buzwagi, etc) that our MPs fret about are important: but you start with the problems of your community. So, what are your solutions?

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

Sex and War!

Comes from our own Salama Cooper. Enjoy!

Hi guys!

So, some of us have been blessed to see the New Year. Thank God.
As I mentioned in my new years's eve post when reflecting last year, that, Gaza was already in flames, and it's still is. We discussed about it here in this blog, and I'm so glad that I've been able to share opinions with some of the most brilliant Tanzanian's brains.

During the holidays, I read this interesting book. The timing, kind of lined up itself with some of the current events happening around the World. It's about War, Terrorism, Violence and yes, Sex. Me and my POLLUTED MIND!, jumped into it when I first learned about it but, it wasn't what I thought it was. (lol)

SEX AND WAR, by Malcom Potts and Thomas Hayden, is about how biology explains WARFARE and TERRORISM and Offers a path to a safer World. In their foreword they say, "As news of war and terror dominates the headlines, scientist Malcom Potts and veteran journalis Thomas Hayden take a step back to expain it all. In the spirit of Guns, Germs, and Steel," ( which is another great book by the way) "SEX AND WAR asks the basic questions: Why is war so fundamental to our species? And what can we do about it?"

In sex and violence, they explained that killing other members of our own species is a male behaviour that evolved early in our history because, " those individuals who manifested such a predisposition were more likely to transmit their genes to the next generation than those who didn't. War and Violence then, are indelibly linked to sex and reproduction...small groups of men who were prepared to attack their neighbors and steal their resources, and who could seduce or coerce women for sex, ended up having more offspring. Women meanwhile, were more likely to improve their reproductive success and have more children by aligning themselves with successful violent men rather than joining raids and risking death themselves..." (page 2)

They gave the example of some rich and powerful men throughout history and across cultures, typically had more sexual partners and thus more offspring than those lower in the social hierarchy. e.g, King Solomon, 700 wives and 300 concubines (Damn! 1000 women!), Idi Amin, four wives and thirty children. Harems were the order of the day for Egyptian Pharaohs, the Turkish Sultans, the African Kings and the Chinese Emperors to name a few. And even in our days, with some of our leaders, we've seen how power has been used to allocate sexual opportunities for men.

Women, on their part have a very significant role in the battle among the sexes, in the history of War and Terrorism. According to the book, If women are given the freedom they need and choices to decide what to do with their own reproduction systems, they can change this World to be a safe and better place to live. It's bizarre that some societies are still denying women freedom on what to do with their own production systems. In page 322, they explained that, "Family planning provides a key that can open the door to better health, well-being, and security. it's basic autonomy and contributes to the health of women and their children, also, it improves access to education and accelerates economic proggress."

I was able to come across this NEWSWEEK MAGAZINE extract about the book, by Matthew Philips

"Sex and Violence seem like polar opposites. Humans seem capable of keeping them apart. Or may be not. The big Idea. In the book M. Potts and T. Hayden, probe the biological basis for the two acts and argue that, in fact, they're more closely connected than we might think...violent behaviour grew indelibly linked with sex and reproduction. Simply put: those who did lots of the former got to have more of the latter. It's why even today, football players (or athletes generally) tend to get more dates than math nerds. The Evidence. Humans are the rare mammals that kill their own kind. A behavior traced by scientists back to our closest relatives, chimpanzees, which have been observed in the wild killing of the rival families. Understanding the competition for resources-reason, in other words- turns out to be our Achilles' heels. It's why pigs and dogs, which are just as interested in sex as we are, don't kill each other for it. The Conclusion. How does the circle end? Women are the key. In the cultures where women have power over how many children to have, Potts and Hayden note, the birth rate always falls. Overtime, as the competition to survive goes down, our prospects for peace go up."

Have a nice weekend everybody.

Why We Need Commodity Markets.

In the mid 1980s Tanzania changed the way it organize its politics and economy. On the political side the change was skillfully accomplished under the leadership of Mzee Mwinyi, with guidance from Mwalimu. As a result, Tanzania is one of the few countries on the continent that was able to move to a multi-party system without major social upheaval. The current assertive Bunge, which includes opposition parties, has created one of the few dynamic and progressive governments in Africa. Freedom of speech, political accountability, voter parity, etc, is largely a result of Mwinyi’s changes. More reforms are yet to be executed in the political arena but nobody can deny our progress. To the contrary, we can not say the same thing about our economy. The transition from our centrally planned economy to the free market economy has produced lukewarm economic growth.

The main reason for this lackluster economic growth, in my opinion, is that the reforms implemented over the past 25 years to introduce the elusive free market – introduction of the stock market, the push to private property, aggressive tax collection, halting of agriculture subsidies, etc – unlike the political ones, were not driven by Tanzanians. Rather we gave the international fairies (IMF and WB) the authority to restructure our national economy. Since foreign “experts” do not bother to understand our local economic structure and comparative advantage they gave us standard textbook reforms. Therefore, most of these reforms missed the “epicenter” of the economy which is in the informal sector: the agriculture industry. Our recent history traces reforms from the IMF’s structural adjustments to the current UN Millennium Development Goals (MDG). Most of the time, the internationally “peddled” reforms are based on sound theoretical models but look at our country as a generic economic canvas. This canvas is supposed to be restructured and given goals to achieve, independent of what is on that canvas.

The result is the creation of institutions and systems that do not serve the majority of the citizenry. In Tanzania these reforms have resulted in a waste of the collective wealth and in some cases pure wealth-destruction. We can look at our stock market with all of its eight stocks and ask ourselves: does the Dar-es-salaam bourse represent the country’s capital accumulation? And the companies that raised capital through this market; are they the ones which need it most? Are these companies the best purveyors of the country’s wealth?

If the answers to the above questions (and many other questions) are “no,” then why did we start our transition to the free markets with the stock market and not another market like the commodities market to serve our agriculture industry? Or municipal (or equivalent of) bond markets to rebuild our infrastructure? Or introducing ways of measuring consumer purchasing power (like credit scoring, i.e. FICO) in order to give power to credit markets and therefore allow consumer products – such as mortgages, car loans, credit cards, equipment leasing, etc – to transform the economy? There are many different markets that would have benefited the country and the majority of Tanzanians.

We have now spent twenty five years in this lackluster zone. Time to rethink the whole premise: who has the capital? Who will best utilize that capital and therefore create more wealth? And most critical: how can we, efficiently, link those who have capital to those who will best utilize that capital?

Don’t get me wrong. I’m not against the stock market. In general we know these markets are essential for a country to achieve a meaningful level of economic growth. I just don’t think that our economy is best served by the stock market when 80% of the population is employed in the agriculture industry; an industry that is dominated by small-holder farmers with not much industrial agricultural processors.

The Tanzanian GDP is $16.18 billion (Official, 2007) with the GDP measured by a Purchasing Power Parity of $51.07 billion (2007); Agriculture contributes 42.5%, Industry 18.9%, and Services 38.5% (2007). Agriculture also dominates Trade: it provides 85% of exports. In the mean time, there are only two agricultural companies listed in our stock market: TATEPA and TCC.

The government is right to give priority to Agriculture for the 2009 economic agenda as sighted in JK’s speech for the New Year. JK stated that the government has set aside ten billion shillings to be given as loans to farmers through the Tanzanian Investment Bank (TIB). But in my opinion, this is the wrong way of organizing credit availability to farmers.

The current banking system is staying away from giving loans to the agriculture sector, not because the industry is not profitable but because it is too risky. The agricultural industry is opaque to the banking sector because almost all small-holder farmers function in the informal economy. Therefore giving farmers government loans one-by-one will not solve the problem of credit availability. The solution will have to be systemic and agriculture-focused.

The government should use this ten billion instead to create a COMMODITIES MARKET. The commodities market would have the advantage of formalizing the contribution of the agricultural sector and creating positive externalities to the economy. At the same time infusing capital into the agricultural industry would increase productivity of both land and labor.

In conclusion, our poverty problem exists, not because we don’t have wealth, or we are less intelligent or even as many suggest, lazy. Rather, we simply need a system that does not see us as a generic canvas, but draws on our endogenous national strengths.

SENSE OF URGENCY

It is an absolute necessity. Sense of urgency says, "Ido not have time". Let me burn the candles at bothends. The sense of urgency is felt precisely likecutting off your air supply.

If someone comes up behind you right now and grabsyour nose and shuts your mouth. First minute you willsay someone is playing a game with me, who is thisperson…trying to figure it out etc. You hit your next30 seconds and start wanting to breathe, the persongrips harder.

Now you start pushing harder, becauseyou want to breathe, and if it continues for 30 moreseconds, you are into desperation. You scratch, youbite, you claw, you don't care who the hell it isholding you. At that moment in time, you will kill tobreathe.

And that is burning desire.

It is a lot morethan just survival. It is basically recognizing thatnothing can hold you back. Nothing should get in yourway. Survival would have been there in the first 10seconds. But at the last 10 seconds, it was not eventhe issue of survival. It came down to the simplefact: "I WANT to breathe".

Total focus becomes tinierand tinier until it reaches the point that "I want tobreathe".
Look at Thomas Alva Edison. He is there, workingaway, continuously for 96 hours in his lab, not havinggone home or out at all. He is so focused on his work.Literally, his housekeeper has to force-feed him.Nothing can irritate him, nothing can take him out ofthe lab if he is burning after an idea.

Tagore would look himself up in the middle of thenight, when he was writing his masterpiece Gitanjali.Nothing could touch him. Until it came out of him(Gitanjali), nothing could get in the way. What drivesthese people like that?

Picasso locked himself in the attic until he finishedhis painting. They all have that, where their focusboils down to that particular thing being achieved andnothing else. But you do have it too. Every single oneof us does. Almost invariably, usually, when we fall in love.

Be it puppy love at the childhood phase ormore serious mature things in adulthood, it comes at apoint where those that you love deeply, your parents,your best friends, who before this thing happened hadthe greatest influence over you, the people for whom you had great respect and admiration, all of them flushed down the toilet because of someone you don'tknow, have not really understood, not got to know verywell yet, and yet who took over your entire existence.So the capacity is there.

The sense of urgency is not something that one can seek, it cannot be contrived, it has to be derived. Itcomes from within us
-by Dato Vijay Eswaran

A Different Perspective.

I would like to thank January for creating this nice forum for average wananchi like us to pitch in our ideas on “politics, society & things” tena without being worried about character assassinations that are norms in other peer forums.

Anyhow, I am going to make a quick post on a moment I was a part of this past Friday. I live in metropolitan city in Mid West here in US. And I am a moderate Muslim. Actually my iman is not as deep as an average Muslim. I try my best not to miss a Friday prayer and most mosque goers are the diversity of Blacks (mostly Somali), few white folks, and Middle Easterners as well. The Imam is a Somali scholar and does not seem to be radical at all-most of his sermons are about social issues, importance of prayers and what not. Basic stuff.

However this Friday, Imam had a different tone, he had that Rev Wright-esque kind of delivery. He was talking about current Gaza Crisis, injustices, and killing of civilians Palestines (understandably he chose to ignore the Israeli side of the story) quoting The Prophet and invoking Quran verses. It was a powerful 40 minutes sermon and the anger was palpable amongst all of us in the building. Folks started to shout with God is Great chants and am thinking to myself if there was a sign up sheet to go to Gaza after a prayer, half of the masjid would somehow consider signing up or supporting it financially. Now this is in United States, imagine similar sermons delivered in Amman, Cairo, Islamabad, Yemen and the entire Arab world. You think how many terrorist were recruited just this last Friday?

My point is-there has to be a smarter way to fight against terrorist groups like Hamas or Hezbollah. The current methodologies are definitely counter productive. We have read how Al-Qaeda is now stronger than ever since 9/11 and Iraq invasion had a lot to do with it. Offering just sticks without carrots won’t do it, and Israeli obviously never understood the lessons of Iraq. Invading Gaza would create a lot of new terrorists that would have to be put to work after the operation. It would be interesting to see what Israel will gain from this invasion.

Happy New Year!

Our good friend in this blog, Salama, sends her New Year wishes, and reflections:

5...4...3...2...1...1...HAPPY NEW YEAAAAAAAAR!

So, we have like what, two or three days till 2008 slips away. Man, what a Year has been!, I call it the Bang! Year. It surely sealed itself in history books.

Why is it that, in most difficult and unusual circumstances, Time seems to go slowly?

Yep!, 2008, with all that happened it's gonna be a little bit longer. Not much, only a sec but, yeah! We still have time in our hands. According to NY Times, on New year's Eve, the International Authorities charged with keeping precise time will add a single second to our lives, "leap second" The first since 2005. (Considering that every second counts!).

Looking back, there's been some goodies too regardless of the Economy and the whole Planet being in Peril. We have a couple of few more days to go. Fingers crossed, please, NO MORE DRAMA. Just yesterday Pakistan remembered the death of Benazir Bhutto. It was Dec 28 of last year. Tsunami happened on Dec 26, to name a few. And for this year, It's not that I want to predict but, Gaza is already in flames and almost 300 people are not going to see 2009. And that Moron in Zimbabwe doesn't want to give people a chance to start a New Year Peacefully. There's Congo and Darfur and so on and so forth.

Looking back is not a fun thing to do but, 2008 has been quite interesting. In Bongo, those on high level with high levels of cupidity were taken down. 'For the first time in my adult life, am proud of my country' (and I quoted, am not plagiarizing).

The global economy is in bad shape. Some of the developed countries were trying to avoid the R word but, eventually they admitted that their economy was in recession. And, as you know if they sneeze we all catch the cold. There's been bail outs, unemployment, wars.

Of course as we know history has been made too. For the first time we have a black person who's going to be a leader of the free world. November was a month people!, and you know what else happened in November?...guess...This blog started!... yeeeeah!
Seriously, I feel home here, I feel in place, (mchangiaji upo mzee? mbona kimya kingi? as you can see najitahidi kutaja jina maramoja kutwa, lakini, mwezi wenyewe waja!, sheikh, I'll definately need your advise, ntapata kigugumizi cha vidole. Hopefully I'll be able to handle it, am a big girl.

Any New year resolutions folks? Mine is the same one like last year's. You know the usual one, loose weight, eat right and exercise. Which is going to be dropped on jan 5th. (lol! hopefully not) Since we have the extra second this year, I'll be well prepared for next year!

So, WHERE IS THE PARTY AT??!!!

I just don't want to end up in my couch watching the New Year on T.V. But, I might as well. Through past experiences I will trade a spacious, peacefully, warm New Year for any price. Last year I celebrated with a CROWD! and I mean it, like, a couple of million people and it was so fun. But, the aftermath, unspoken. All I was able to say was, next time I decide to do the same thing, I'll go there with 'kopo' (yea, in case I'll have too much to drink)

Well, ladies and gentlemen, If you can excuse me, Am gonna grab myself a martini.

HAPPY NEW YEAR EVERYBODY!

CHEERS!

Salama

What are we about?

We read in Mwalimu Nyerere’s book, Uhuru na Umoja, that during the 28th June 1962 Parliamentary Debate on the Government’s Motion on the Proposal for the Republic of Tanganyika, Mwalimu argued that it was impossible to create a foolproof constitution, and that the only real protection against tyranny is a national ethic. This is what he said:

"Mr. Speaker, Sir, the point must be made that ultimately the safeguard of a people’s right, the people’s freedom and those things which they value, ultimately the safeguard is the ethic of the nation.

When the nation does not have the ethic which will enable the Government to say: “We cannot do this,that is un-Tanganyikan.” Or the people to say: “That we cannot tolerate, that is un-Tanganyikan”. If the people do not have that kind of ethic, it does not matter what kind of constitution you frame. They can always be victims of tyranny…. What we must continue to do all the time, is to build an ethic of this nation, all the time to build an ethic of this nation, which makes the Head of State whoever he is to say, “I have the power to do this under the Constitution, but I cannot do it, it is un-Tanganyikan.” Or for the people of Tanganyika, if they have made a mistake and elected an insane individual as their Head of State, who has the power under the Constitution to do XYZ if he tried to do it, the people of Tanganyika would say, “We won’t have it from anybody, President or President squared, we won’t have it.”

I believe, sir, that is the way we ought to look at this constitution. We have got to have a little amount of faith, although I know that some Members have been questioning the idea of faith. But, sir, democracy is a declaration of faith in human nature, the very thing we are struggling to safeguard here, the very idea of democracy is a declaration of faith in mankind. And every enemy of democracy is some person who somewhere has no faith in human beings. He doubts. He thinks he is all right, but other human beings are not all right".

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Now, ladies and gentlemen: what is our national ethic? What are our core principles as a people and as a nation. Can one say that the main reason for some of our problems is not so much the imperfections of the architecture of our laws and institutions but the lack of a national ethic which makes it difficult to organise our society?

Getting them done...

I had an interesting debate with one fella recently at a party: whether, if you have minimal resources and really have to prioritize, you would go for education or for roads. I wouldn't want to say here where I stood.

Anyway, education and roads are all important. We talked about education here earlier in the month. Let us now talks roads. The image you see is a little outdated but give a near accurate picture of the state of our roads.

If you take a look at the 2007/2008 Global Competitiveness Report published by the World Economic Forum, Tanzania ranks 94th out of 131 countries in overall quality of infrastructure. Specifically, in the quality of road infrastructure, we ranked 87th out of 131 countries.

Consider these other facts:

•With an area of 364,900 sq m (945,000 sq km), we have a total road network of 53,655.7 miles (85,849 km), of which only 7.4 per cent (3960 miles) is paved. And only 70 per cent of the paved roads are in good condition.

•11.7 per cent of our road network consists of trunk roads (6299 miles) that are also used by six landlocked countries for their international trade. Only 49 per cent of these trunk roads are paved. How can we be competitive in international trade with such roads? The cost of transporting a container from Kigali in Rwanda to the port in Dar es Salaam is almost $1.9 per mile compared to $0.03 per mile in the more efficient railway line between Durban in South Africa and Maseru in Lesotho.

•22.3 per cent of our road network (11,966 miles) consists of regional roads that would normally link and interconnect the country into a functioning national market. Only 3.26 per cent of such roads (391 miles) are paved. And of those that are paved only 85 per cent are in good condition. How can we create a functioning and efficient national market with such roads?

•66 per cent of our road network (35,391 miles) consists of district, urban and rural roads. These are the ones linking the productive areas of a predominantly agricultural economy to the national, regional and international market. Besides market access, such roads are necessary if farmers are to diversify into higher-value economic activities to augment incomes. But only 1.4 per cent of these roads (494 miles) are paved. Overall, only 14 per cent of this category of roads is considered in good condition and only 41 per cent in fair condition. Only 38 per cent of the rural population lives within 1.25 miles (2km) of an all-season road. How are we going to efficiently and cost-effectively link the producers with the market with these kinds of roads?

Now, like with all major public investments, the question eventually comes to funding. I am told that for US $1 billion, you can build up to 700 kilometers. We probably need $3-4 billion to sort out all of our major roads. There was a point where we wanted to go to the markets, just like Ghana and Gabon did, and do a sovereign bond and rake at least $2bn. But the market, as you all know, went bust. You can't get that kind of money at 6, or 7, or 8 percent. In fact, Ghana got I think a billion for 7 percent, but now they have to pay 13 percent. And Gabon's rate has gone up too. Now, how do you raise $3 billion at the current environment?

Why are they still here?

The World Bank and IMF, that is. Our good friend, Iddi Mwanyoka aka Rash, sent us an original piece he wrote on the irrelevance of the World Bank and IMF, and how they have kept Africa poor. Interesting point given their timid response in the wake of the global financial crisis. I have always thought that the relevance for at the least the IMF's existence is to prevent the kind of mess that took place. Here is Rash's piece. Enjoy!

HOW IMF & WORLD BANK FAILED IN AFRICA

Call them 400 pounds Gorilla in the room, and they sure know how to suck the air. For many years IMF and World Bank held custody African nations. These two agents control almost every action that we’re trying to take. They force us to maintain old economical development strategy which based on “export led-growth” or “export led-development”. While most of developed nations moved away from such strategy.

In the man kind history no nation has ever taken the step from being poor to being wealthy exporting raw material in absence of domestic manufacture sector. Although history suggests no body get rich by exporting low value agricultural commodities, the WB and IMF seems to be encouraging or forcing Africa nations to pursue such a strategy, with disastrous results.

Take the international coffee trade as a case in point. In coffee producing countries, IMF and World Bank has been requiring government to liberalize. These have involved measures such as eradicating price model, disbanding trading board and actively encourage increase in production and exports. For instance in 1993 World Bank advised Ugandan government to increase coffee production to five million bags; however World Bank didn’t focus on the other side of the coin which is oversupply of Robusta coffee in world market which led to price crash.

Ironically, the kind of policies that now help majority of African nations to qualify for debt relief under Heavily Indebted Poor Countries (HIPC) has contributed to trap these nations in the worse economical standard ever. IMF and World Bank expertise ignore simple Economics 101 knowledge which says an increase in supply, without an increase in demand, will lower price. Those expertises only care about increasing in production and exports and reducing state intervention across the global.

In the 1990s IMF and World Bank took a new approached which focused on privatization. They forced poor nation to step aside when it come to industrial management. Yet the United Nation Conference and Development (UNCTAD) has found that the rapid and extensive trade liberalization undertaken by developing countries during the 1990 failed to benefit the poor. According to UNCTAD trade liberalization has cost sub-Sahara nation more than $272Billion for the past 20 years.

In 2003 Ghanaian Parliament passed the law to increase the import duty on poultry products to protect Ghanaian farmers who were fight uphill battle with subsided European poultry producer. However, after a phone call from IMF, the legislated increased import duty was removed by the Ghanaian government after just few weeks.

Leaders of the West have pressurized IMF and World Bank to recommend agricultural liberalization to the third world nations, while they’re maintaining massive subsidies for their own farmers. The ‘one size fits all’ liberalization policies have failed to lead economic growth in developing nations.

Trade liberalization has also created problems for sustainable government income. Research has show that cutting import tariffs has reduced tax revenue resulting in fiscal squeeze, exacerbating the debt problem and causing cutback in infrastructure investment. Although the theory is that governments can replace tariffs with other taxes, this is easy said than done in a real world.

Majority of the IMF and World Bank economist graduated from North America and European universities, and they care about how the policies will benefit their nations. They’re pushing free trade and less regulations without even conduct any studies. We need golden rule when it comes to trading, if a multi million dollar farmer in Idaho received subsidy from US government, then why can’t we even subsidies fertilization for our little guy?

Clipped wings, shattered pride...

Every country wants to have its airline, even when it does not make sense. It is a matter of pride. And, unfortunately, in most old cases, it is the politicians who gets to decide the [internal] routes of a national airliner.

We have had so many false starts with the Air Tanzania. It looks like we are going to have yet another restart. As you have read, earlier this month, the Tanzanian Civil Aviation Authority (TCAA), withdrew the airworthiness certificates for all Air Tanzania aircraft and grounded the airline for unspecified safety and maintainance violations. In the same month IATA canceled Air Tanzania's membership in the organization, citing the same safety and maintainance violations. But, there are lessons to getting a struggling airline off the ground. My friend Peter Serukamba, MP for Kigoma Urban, shared with us this article. Enjoy!

Turning around a struggling airline: An interview with the CEO of Malaysia Airlines.


Idris Jala led the state-controlled carrier from the brink of bankruptcy to record-breaking profits. Now he wants it to become what he calls a "five-star value carrier."

NOVEMBER 2008 • Alex Dichter, Fredrik Lind, and Seelan Singham

When Idris Jala became CEO at Malaysia Airlines, his goal was to keep the carrier flying. Now he wants to create a new breed of air service. Much has happened in the intervening three years.

Malaysia Airlines, the Southeast Asian country's national carrier, was less than four months away from running out of cash when Jala took charge, in December 2005. The state-controlled airline had been struggling for some time, but inadequate yield management, an inefficient network, and poor cost control finally brought it to its knees that year, when it posted a 1.7 billion ringgit ($500 million) loss.

Yet in 2007, the airline earned record annual profits of 851 million ringgit. Such a swing would be remarkable for any company, much less one facing the hurdles common with state ownership: a large number of stakeholders, intense public scrutiny, competing priorities, insufficient freedom to operate commercially, and a host of legacy personnel challenges. Now Jala aspires to turn Malaysia Airlines into a "five-star value carrier."

Jala came to Malaysia Airlines with no experience in the aviation industry or state-run companies. But he had won a reputation for engineering business turnarounds during his 23 years at the oil giant Shell, whose Sri Lankan and Malaysian units he rescued from years of chronic losses. In Sri Lanka, he says, "The Shell leadership told me if I couldn't fix it in two years, just tell them and they would shut it down. I'd be the last person to switch off the lights."

In this interview at his office, at Sultan Abdul Aziz Shah Airport, near Kuala Lumpur, Jala discussed the lessons he brought from Shell and how he met the urgent need for change when he arrived at Malaysia Airline.

The Quarterly: What were your first impressions when you took over Malaysia Airlines, in 2005?

Idris Jala: The company was in a financial crisis—the worst in its entire 50-year history. At the time, we just had enough cash to last three-and-a-half months.

Before I joined, I looked at ten years of financial data. When you're brought into a problem, you should first ask what's wrong with the profit-and-loss statement. It's crucially important to frame the problem in the context of the P&L rather than something nebulous, like the culture, the structure, the processes, and all these other things. You must anchor everything on the profit and loss. I'm boringly consistent on that point.

Here, it was clear that there were three problems with the P&L statement. The first was a very low yield. Average fares were unable to cover the cost of running the airline. The second problem was a very inefficient network. For a long time, we were asked to fly routes that didn't make any commercial sense. The government wanted those routes, and we flew them. The third problem was high costs linked to low productivity—too many people. In the year when I joined, costs went up by more than 50 percent.

But I didn't need to tell anyone that there were these three problems. Every analyst report about Malaysia Airlines talked about the same problems. The question was what would we do about them.

The Quarterly: How did you begin?

Idris Jala: When most CEOs try to turn around a business, they will say let's change the organization or the structure. Or they'll say let's change the culture. Or let's change the systems and processes. They do business-process mapping or make organizational changes that take a few years to finish.

But we had three-and-a-half months to fix the problem, and if we didn't fix it by then we'd be bankrupt—we'd have no money for salaries, no money for fuel. So I told everyone we had no time to reorganize, to rearrange the deck chairs on the Titanic.

At a board meeting on my first day, I announced our business-turnaround blueprint. I'd never worked a single day at an airline before, but looking at the P&L it didn't take more than an hour to figure out the solution. If you have to control costs, you just go and cut the costs. If your network's inefficient, get rid of the routes that are bleeding cash. And if you have a problem with low yield, fix the yield. What else are you going to say?

The Quarterly: Were you given free rein to tackle these problems?

Idris Jala: When the government approached me about this job, I said I would need freedom to act. Of course, they promised I would have it, but I discounted 50 percent of what they said. I wouldn't say I have 100 percent freedom to act, but I have more than 50 percent. And, more importantly, the freedom was granted in areas really relevant to fixing the business.

For example, nobody disturbed us as we improved the yield, which often meant increasing fares. We could change flight frequencies, get rid of routes, cut costs. These were things that were virtually impossible for my predecessors to do, because they didn't have such freedom. When I started, our headquarters was in downtown Kuala Lumpur. We sold it for 130 million ringgit, which gave us enough cash to operate for 20 more days. A lot of people, especially a few politicians and long serving Malaysia Airlines employees, said the building's an icon—it's our brand in the city—but we were given the freedom to act.

The Quarterly: Were there other factors that helped you push your plans forward?

Idris Jala: Once the government agreed on what needed to be done, we made our business turnaround plan available publicly. At Shell, I never needed to do that. But Malaysia Airlines is a government-linked company and the national flagship. Publishing helped us build a winning coalition not only with the government but also with other stakeholders, like the unions, the staff, and the public. Being upfront about the P&L and making it all transparent were very important to bringing the coalition together.

The Quarterly: How did this translate into action?

Idris Jala: In a business turnaround plan, you need to identify the key business activities that impact the P&L. These activities are candidates for transitional vehicles that I call laboratories. Essentially, we'd create groups of 10 to 15 people from various functions and backgrounds—all people who had a direct stake in a given activity—and tell them they had to tell us how to fix the problem or else. The people inside the labs were fully accountable. The motto behind the labs is "big results fast." We had no interest in slow and incremental results. We focused these laboratories on routes and many other parts of the business but never, never on minor activities. If you run a lab on something that has nothing to do with key business activities, don't be surprised when there are no results. And when you put people in labs, you had better put the best and the brightest.

It is also important to think of the laboratories as a nursery for ideas. We grow the seedlings of innovation in the nursery, and once they are big enough they are implemented. But we really keep control over them—and the CEO has to protect them—so that nobody can kill them when they are transplanted into the operating jungle of the organization.

The one item with the biggest P&L impact was yield, so we set up laboratories to examine the profitability of various routes, with a focus on yield. The members of these labs knew that if they didn't fix a route, we'd close it and they'd have no jobs. It was as simple as that. We had a team looking at the Kuala Lumpur–Manchester route. The team couldn't fix it. To be profitable, we needed 40 percent more passengers than we had capacity for. What would we do? Tie the passengers on the wings? After we went through a full analysis, everyone on the team knew that the route couldn't be fixed. They all knew that they were out of a job.

In the first three months, we got rid of a lot of routes that were bleeding cash and not contributing to the P&L. Within another six months or so, we got rid of most of the ones that were unsalvageable. But we rescued a lot of routes, too. The thing that really catalyzed the new way we did these things was that there was real accountability.

Today, we have individual P&Ls for each route—by day, by month, and by flight number. Altogether 160,000 P&Ls. These are grouped into regional P&Ls, and every day at 5 pm sharp I get all these on my Blackberry. So do all the route managers.

The Quarterly: Did transplanting and protecting these innovations require organizational changes?

Idris Jala: I prefer to keep the current setup and change the responsibilities. For instance, our laboratories developed a new job—route profitability manager—that didn't exist in our structure. Instead of adding a new player, we told people to double up on their responsibilities. The person taking on the responsibility might not be a regional manager; it could be a subordinate. But someone was now responsible for profitability on that route. The structure remained the same, but we gave people a new vocabulary, new responsibilities. Once we were sure that the new thinking works, we got rid of the transitional role. With route profitability managers, we did that after one year.

The Quarterly: Looking back, you make your effort sound very straightforward. How confident were you when you started?

Idris Jala: I gave myself a 50/50 chance of success. First, I had never worked in an airline before, and, second, I had never worked in a company that's government linked. So there was a tremendous chance of failure, and it was very important for me to conquer that fear. My wife and I had a lot of discussions about that. If I hadn't conquered the fear of failure, I would never have stepped out of Shell to take this job.

To conquer that kind of fear, it is important to have serious conversations with the people who matter. First of all, I'd share with them targets that are seemingly impossible, such as turning around the company within a year and making huge profits within three. Everyone said it couldn't be done. The conversation must end with the stakeholders saying, "It's OK to fail." That takes out a lot of the fear before the journey begins.

But the key word is seemingly impossible. You must believe deep inside that it can be done. If the leader doesn't believe in the journey, then it cannot begin. The leader is like someone who cuts a clearing in a very dense tropical jungle. Everyone else is under the canopy, where they can't see the sky and it's very depressing. The leader has to bring people over to that clearing, into the space where innovation begins. The single biggest thing a leader brings to a turnaround is hope.

The Quarterly: With the initial turnaround complete, you've begun a transformation program. What does that entail?

Idris Jala: We originally wanted to do the business turnaround in three years, but we completed it in two. We targeted profits of 500 million ringgit in 2008, but in 2007 our profits had already reached a record 851 million ringgit.

We've already talked about some of the principles embedded in any change program: the game of the impossible, anchoring everything on the P&L, and building a winning coalition. Two others that I brought from my time with Shell are discipline of action—which means that when we commit to doing something, we monitor results relentlessly and make sure it's done—and situational leadership. At the start of a turnaround journey, a company is not a democracy. You can't empower people or ask everybody what they think. You have to be directive, brave enough to set the course. How many generals do you need to win a battle? One. But once results begin to appear and new leaders begin to learn, you must be ready to let go and empower them.

The corporate graveyard is full of people who thought they were indispensable. After every turnaround I've done, my successors have gone on to earn even higher profits and greater achievements. These leaders have been developed by putting individuals in the right situations when they're ready to take control.

The final principle is a subject people don't talk about in the corporate world: divine intervention. More than 50 percent of what happens to you in life, and in my case probably more than 60 percent, is outside your control. It is important for everyone in an organization, particularly the top leaders, to understand that. I can't, for example, control oil prices—the single largest thing that impacts our industry—or SARS,1 or other things like that.

If you are a spiritual person, you'd better pray. If you believe in feng shui, go consult a feng shui master. Everyone must come to realize that we only control a small component, so you do the best you can with that and relax about the rest. It gives you peace of mind. You know, when you run a really hard race, like what we did here, you put yourself under tremendous pressure—and others around you, too. You want to go home every single day knowing you've done your best, and if you fail it's OK because we all recognize that you can fail. It has a calming effect on the organization.

The Quarterly: Does talking about divine intervention give people a handy excuse to fail?

Idris Jala: No, because the other five principles provide balance. When you look at our plans, there are reams and reams of detailed activities that must be completed. For example, we have a service campaign called Malaysian Hospitality—MH—which is also our airline code. We have 500 initiatives underpinning it. These are spread throughout the organization, and you can't run away from them, because of the principle of discipline of action. If you follow all six principles, there's no way you can run away.

The Quarterly: Have you set new impossible goals for the current phase of your transformation?

Idris Jala: Our new target is to reach profits of 2 billion to 3 billion ringgit within three years, but the more exciting aspiration is that we want to become the world's five-star value carrier. Such a thing doesn't exist in today's vocabulary; what we mean is an airline that provides top-quality products and services at the most affordable prices. We want to be the Toyota of the airline industry.

Is it impossible? Yes. Can it be done? It can. The key is to find the sweet spots. There will always be trade-offs between the quality of products and services and their costs, but there are many, many sweet spots.

One example: for a time, we were serving lamb biryani on our flights to China. But customers didn't really like it, and it was very expensive. We looked at different meals. When we starting serving fried rice with some satay chicken, which is half the cost, the customers loved it. Why were we giving them something that was expensive and that they didn't like? But customers flying to Delhi would love lamb biryani.

You have to customize to find the sweet spot, and this is painful. The mantra for bringing down costs says you have to standardize, but standardization really requires you to migrate to the highest common cost denominator, and that's expensive. Instead, by finding these sweet spots, we can continue playing the game of the impossible and reach our goal.

The Quarterly: In the initial transformation and this ongoing effort, how have you handled talent?

Idris Jala: I believe that everybody can contribute more than they are currently. In my old job at Shell, we turned around Shell MDS, a gas-to-liquids plant in Malaysia, and not a single person was employed from the outside. The people in the company were the same guys who had been losing money for ten years. Help is abundantly available from within, but you must channel the energy to the right business activities.

How do you do that? You make sure people have the right priorities. You say, "I know you like to do this or that, but that's not what we are going to do now." When you reward people for doing things differently, like linking pay increases and bonuses to their performance and contribution to the P&L, you find that they deliver results that impact the P&L. They get out from the complacency of not delivering. They discover that they can do a lot more than they ever dreamed possible.

The Quarterly: Beyond the financials, what changes have you noticed at Malaysia Airlines since your program began?

Idris Jala: Number one, this organization is now very good at rigorous analysis. When I joined, that was sadly missing. People did cursory analysis, and I mean cursory. Today, people really get into the analysis and bring back fact-based work.

Second, a cultural change has taken place. This is no longer a culture where if you don't agree with someone, you keep quiet about it. We now have a culture where people will speak up and disagree.

Also, people are more prepared to step up. Recently, one of my general managers who is in charge of strategic procurement held a session with the top management team to generate cost-cutting ideas for next year. I didn't even know about it. He asked me at the last minute to speak briefly at the meeting. He gave me five minutes.

The Quarterly: What would you like your legacy to be at Malaysia Airlines?

Idris Jala: I would like to see us achieve our vision of becoming a five-star value carrier. I'm inspired by creating a kind of airline that doesn't exist today. If we can do it, it will be fascinating. This will be one of the most attractive places to work in Malaysia. In fact, we have the chance to make this one of the best places to work not just in Malaysia but in the world. That's the legacy I hope for.