Dar es Salaam — As President-elect Dr John Magufuli is sworn in today, the question that economic pundits are asking is how he will finance his campaign promises and tweak the economy.
The pundits do agree that Tanzania is in a fairly good condition especially if the macroeconomic fundamentals have anything to go by.
However, economists are of the view that the new president will increase the pace of economic growth, maintain stability and create a better investment climate for the country to attain its ambitious middle income economy status come 2025. As they want Dr Magufuli to maintain stability of the inflation rate at current single digit, the economic experts expect him to increase GDP growth from the current 7 per cent to 10 per cent.
Other issues the next government needs to work on include exchange rate stabilization, controlling the swelling national debt and create job opportunities to address unemployment.
Investment climate
The executive director for Policy Research for Development (Repoa) Prof Samwel Wangwe believes that a meaningful development can only be attained if Dr Magufuli works hard to improve Tanzania's deteriorating investment climate.
This, he said, should entail revisiting all the past studies that track the country's business and investment climate.
"He should seriously look at the issues that affect Tanzania's business and investment climate with a view to improving them for the general good of all investors from small-scale to large-scale," says Prof Wangwe.
Tanzania's rankings in the Doing Business Reports that are compiled by the World Bank and its private sector-leaning arm - the International Finance Corporation - have been disappointing.
The last time the country did well was in 2007 when it was ranked among the world's top 10 reformers. Since then, however, it has been falling from the 127th position in 2008 to the 145th position - in terms of ease of doing business - in 2013 before improving slightly to 140th out of 189 surveyed countries in 2015. In a new report released last week, which seems to be welcoming Dr Magufuli into power, Tanzania is ranked 139th.
The most problematic areas include procedures involved in the starting of a business, procedures involved in dealing with construction permits, the difficulty associated with getting electricity as well as registering a property. Getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency (105) are some of the issues that Tanzania is not doing very well.
And according to Prof Wangwe, Dr Magufuli will now be required to make sure that he controls tax evasion so that everyone is able to pay the right dues. Improving the business climate also entails making sure that the government does pay what it owes the private sector.
"Without doing so, the private sector will collapse and people will lose jobs in the process," he said. Civil servants should go back to work and stop doing things in the business as usual approach. This was in apparent reference to information that the government owes members of the Contractors Association of Tanzania (Cata) a whopping Sh800 billion in unpaid cash accumulated over the past three years.
Implement policies
According to a University of Dar es Salaam Economics Professor, Semboja Haji, Dr John Magufuli will do justice to Tanzanians if he leads by following the available policies and laws.
"He should understand that Tanzania is not short of good policies and laws even as his predecessor used to flout them especially when it came to appointments," said Prof Haji.
Understanding the policies and laws, he said, entails getting conversant with existing work structures. Dr Magufuli should be someone who appoints the right people to work in right positions by carefully considering their academic credentials, track record and work experiences.
To grow the economy, Prof Haji will want Dr Magufuli to be the kind of a leader who abides by the existing economic policies so that everyone - investors and wananchi alike - can be able to predict what happens next.
"This should entail a serious respect for budgeting principles... .he should be the type of a leader who will not shift budget funds to fit his preferred development areas at the expense of what the parliament approves it for," he said.
In areas of minerals, oil and gas, Dr Magufuli will need to appoint credible Tanzanians, with relevant qualifications and who are really patriots so that they can stand for the rights of ordinary Tanzanians when it comes to discussing with the private sector.
Macroeconomic issues
Prof Delfin Delphine Rwegasira of the University of Dar es Salaam's economics department says the newly elected head of state should immediately start working on four main issues that will help Tanzania move fast to a middle-income economy and enable the economy to trickle down.
He said Dr Magufuli needs to maintain inflation rate at the single digit rate; improve business climate for both local and foreign investors; increase job creation through industrialization as well as increasing the pace of the GDP growth rate.
"I know he has his political party manifesto that he will implement but these should be the key issues for the health of the economy," says Prof Rwegasira.
According to him, a faster job creation strategy should be industrialization through public-private partnership and not only government-led industrialization. He says, Tanzania needs to grow at a rate of between 8 and 10 per cent from the current 7 per cent per year.
Tanzania is facing fluctuations in the exchange rate as the shilling has been falling in the recent past against the US dollar. The weak currency has been increasing the national debt.
"Dr Magufuli is inheriting a huge national debt and as he starts financing the electoral promises and deliver, the government is likely to borrow more and that may expand the debt," says Prof Honest Ngowi of the Dar es Salaam-based Mzumbe University's Business School.
Finance electoral promises
He says the new head of state should look at alternative sources of revenue to finance his promises considering that Tanzania has a narrow tax-base.
"This is not the right time to depend on donors who are changing their models of partnership," he adds.
"He has been promising free education in secondary schools for instance, that needs more funds. He is also inheriting a high national debt and in financing the promises, he should be very careful because it may increase the debt," says Prof Ngowi.
Jobs needed
Tanzania's unemployment was estimated at 11.7 per cent in 2012 having swelled from 10.7 per cent in 2011.
Prof Damian Gabagambi of the Morogoro-based Sokoine University of Agriculture suggests the new leader to take four steps that will ensure job creation within a short time and also take the economy up.
The steps include creating credit guarantee schemes for youth to come up with sound business plans; make sports and entertainment an opportunity for employment; creating market for farmers; and protecting agricultural land. "Dr Magufuli has been promising to build manufacturing plants country-wide but that sounds unrealistic and will take longer than expected to deliver. Farmers are also very important and what they currently miss is the power to decide prices of their produce," says Prof Gabagambi who is an agricultural economist.
"China managed to empower its farmers, why not us? And for the future of agriculture development and investment, agricultural land should be protected as it is the case with reserve areas for national parks and other investment," he adds.
Agriculture accounts for the largest share of Tanzania's GDP. The sector also employs more than 70 per cent of the country's workforce.
