$Unique_ID{COW03652} $Pretitle{262} $Title{Tanzania Chapter 4C. Industrial Productivity} $Subtitle{} $Author{Donald P. Whitaker} $Affiliation{HQ, Department of the Army} $Subject{tanzania dar percent salaam es government lake private system domestic} $Date{1978} $Log{} Country: Tanzania Book: Tanzania, A Country Study Author: Donald P. Whitaker Affiliation: HQ, Department of the Army Date: 1978 Chapter 4C. Industrial Productivity The dominant position of the parastatal companies in manufacturing lent a special significance to their performance. Both government representatives and foreign observers noted in the mid-and late 1970s a relative inefficiency in management, a gradual decline in productivity, and a wide underutilization of productive capacity, which appeared to have increased from about the mid-1970s. Management problems were due in considerable part to a shortage of capable individuals for a wide range of positions, especially at the middle level. Largely responsible for the decline in productivity were the lack of incentives both for managerial staff and for the production work force. The prices of parastatal products were set by the National Price Commission and included a cost-plus factor. Coupled with product import and wage controls, the result was a general disassociation of parastatal activities from market forces and an accompanying lack of incentive for management to strive for improved output. Productivity appears to have been seriously affected also by widespread overmanning among the parastatals, which persisted despite government action taken on occasion to reduce the work force. An example was the reduction in 1976 of the work force at the Wazo Hill cement plant. External factors, including power outages and water shortages (accented in 1973 and 1974 by droughts) as well as parts and materials shortages due to lack of foreign exchange, have also affected plant utilization and overall production. Efforts to raise productivity through a bonus system for laborers, of several years standing, appeared to have been relatively ineffective because of a lack of established production norms, and in the late 1970s the system was in disuse. One result of the comparatively poor parastatal performance was the shortfall in internally generated investment funds. President Nyerere noted in early 1977 that between 1967 and 1974 only one-fifth of new investment was financed from the resources of the public corporations. That is, four-fifths of the funds for parastatal investment programs came from foreign and domestic borrowing, with concomitant added strain on the national treasury. Internal Trade In early 1978 the institutions responsible for carrying on wholesale trading were largely in the public sector, but much of the country's retail trading activities remained in private hands. Government and TANU-sponsored efforts had been under way since early 1976, however, to increase public participation in the retail field. Wholesale distribution was chiefly carried out by twenty parastatal regional trading companies, one in each of the mainland's twenty regions. These companies obtained their merchandise either from a group of parastatal importing companies that specialized in particular commodity areas-the importers also engaged in the domestic distribution of their imports and of similar local products-or directly from domestic manufacturers (see The Handling of Foreign Trade, this ch.). Certain parastatal corporations marketed their manufactures through their own distribution systems. Others sold their products directly to regional farmers' cooperative unions until the unions were dissolved in 1976. Changes and disruptions in the mechanism of retail trade that began in early 1976 precluded a clear-cut depiction of the actual situation in this sector at the end of 1977. Until 1976 retail trade throughout most of the country was carried on by a large number of small, mostly privately owned shops (maduka; sing., duka) that provided the neighborhood or locality with essentials such as soap, cooking oil, salt, sugar, and the like. In February 1976 Prime Minister Rashidi Kawawa suddenly announced that all private shops-in villages, on plantations, or operating in industrial or parastatal establishments-were to close, and their place was to be taken by cooperative stores. The move was declared to be another step toward ending all forms of domestic exploitation. Within a short time "Operation Maduka," as it was labeled, had resulted not only in shortages of essential items but also had created great inconvenience for many people, as numerous shops closed and were replaced by a much smaller number of cooperative stores. In May President Nyerere called for a slowdown in the operation, blaming the excessive zeal of government and TANU officials for the hardships caused. He cited as an example the official closing of 100 stores in some areas where there was only one cooperative shop to take their place. He stated that the movement was not a competition and that the aim was to establish cooperative stores, not shutdown private ones. Private shops, he said, would eventually close on their own when enough well-run cooperative shops were in operation. The number of privately owned shops at the start of "Operation Maduka" was unknown. In August the Office of the Prime Minister announced that as a result of the movement general cooperative shops had increased from 300 to 879 and that similar shops run by villages had risen from 600 to 2,191. The prime minister's office stated that there was still a long way to go because each of the country's over 6,000 villages had need of its own cooperative store. At the same time it was noted that the performance of the village shops was unsatisfactory because of inexperience, shortage of capital, and inadequate facilities to transport and store stock. Although the government appeared committed to eventual nationalization of the retail trade, the pragmatic approach of President Nyerere was an evidence in the denationalization of the retail meat business in Dar es Salaam in August 1977. Private butcher shops in the city had been taken over in 1971 by the parastatal Dar er Salaam Development Corporation. During the next two years the corporation earned a profit but thereafter regularly showed losses. The losses were explained in part as due to fixed selling prices for meat, but there were also reports of theft, corruption, and general inefficiency of operation. Whatever the cause, the continuing loss, accentuated by the local shortage of meat, resulted in a government order to return the retail meat trade to private operation. Mining The decade from 1966 through 1975 was characterized in the mining sector by a general stagnation in development and a gradual decline in the sector's contribution to GDP-from 2.9 percent in 1966 to 1.3 percent in 1970 and to about 0.6 percent in 1975, the latest year for which information was available. The country has a variety of known mineral deposits or occurrences that range from precious metals-diamonds (of both gem and industrial quality) and colored gemstones-to iron, tin, copper, and other metallic mineral ores and limestone, gypsum, kaolin, salt, soda ash, mica, coal, and natural gas. Production, however, by world standards was small except for diamonds, in which Tanzania was in either eighth or ninth place in the mid-1970s-diamonds made up from 85 to 90 percent of the value of the country's mineral exports. Almost all diamonds came from the Mwadui deposit in Shinyanga Region. The deposit has been worked since 1940 and is approaching the end of its estimated resources; however, steps have been taken to delay the eventual closing of the mine until the 1990s, as an economic measure, by including the processing of lower grade ores that ordinarily would be passed over. The mine is operated by Williamson Diamonds, associated with De Beers of London, which owns 50 percent, while the remaining 50 percent is owned by the government. Exploration for other diamond sources has been going on but without success through the end of 1977. Gemstones and salt constituted the other chief minerals exported in the late 1970s. The government has stated that considerable export revenue was lost through smuggling these two items, particularly of gemstones, which occur in small scattered deposits not easily subject to security measures. Gemstone mining is under the control of the Tanzania Gemstone Industries, a subsidiary of the parastatal State Mining Corporation. Salt is obtained from mineralized springs at Uvinza in western Tanzania, mined by a private firm having government majority participation, and from solar evaporation along the coast, in operations carried on by private outfits. About two-thirds of the salt produced, averaging about 40,000 tons a year, is consumed domestically. Gold mining was a major industry before and after World War II and a principal earner of foreign exchange until the mid-1960s when mine closings, as deposits were worked out, brought a drastic reduction in output. Soviet and UN teams carried out prospecting in two older fields in the early to mid-1970s as preliminaries to possible renewed mining operations. The country's reported production of gold was still negligible in 1976, however. An unknown quantity of gold, mined illegally by individuals and small groups, is smuggled out of the country causing, according to government sources, a considerable loss of foreign exchange. In September 1977 the government banned all private prospecting in goldfields in the Lake Victoria area after a reported influx of thousands of illegal gold hunters including individuals from Zaire, Rwanda, and Kenya. Several large deposits of coal and iron ore have been found in southwestern Tanzania. With the completion of the Uhuru (freedom) Railway in 1976, making the region more easily accessible, there appeared some possibility for the development of a local iron and steel industry, provided adequate financing could be obtained (see Transportation, this ch.). The PRC was reported to have carried out an investigation of the potential for the new industry, as part of an interest-free loan of TSh525 million made to Tanzania in 1974 for development activities, but further information was unavailable in 1977. Opening up the coalfields would offer the possibility of reducing the country's dependence on oil imports to some extent by supplying certain industries with an alternative fuel. Natural gas was discovered in shallow coastal waters near Songo Songo Island, north of Kilwa, in 1974. A test well has been drilled, but little further information on the full extent of the find was available in late 1977. The gas is almost entirely methane and, depending on the size of proved quantities, offered the possibility for domestic industrial conversion into such products as fertilizers and plastics. Another alternative was use as a fuel to reduce the country's dependence on energy imports. Power The substantial potential for generation of hydroelectric power by the several major river systems emptying into the Indian Ocean constituted the principal domestic energy resource in the late 1970s. Smaller river basins in the Lake Victoria and Lake Tanganyika areas also had some potential. The resource had been tapped to some extent on the Pangani River in northeastern Tanzania and on the Great Ruaha River in Morogoro Region. Further development was under way in 1977 through a major addition to facilities at Kidatu on the Great Ruaha River. An unknown potential for possible thermal generation of power existed in the large unexploited coal deposits in the southwestern part of the country (see Mining, this ch.). The parastatal Tanzania Electric Supply Company (TANESCO) generates, transmits, and distributes power on the mainland. The company, founded in 1931 by private interests but completely government-owned since 1964, had an installed generating capacity in the late-1970s of 151,000 kilowatts of hydroelectric power and 100,000 kilowatts of thermal power (diesel and steam); 15,000 kilowatts were gas-turbine generated. Fuel for the nonhydro units was imported oil. The expansion of the Kidatu facility, financed by the World Bank, the Swedish International Development Agency (SIDA), and the Federal Republic of Germany (West Germany), will increase TANESCO's installed hydroelectric capacity to over 250,000 kilowatts in about 1980. Between 85 and 90 percent of all power sold is distributed through an interconnected system extending from Dar es Salaam westward through Morogoro to Kilosa and northward to Tanga, Moshi, and Arusha. This conforms generally to the principal distribution of the urban population and the concentration of industrial activity. Separate generating units had been established in some fifteen other population centers in various parts of the country by 1977; this service was being gradually extended to additional towns. Electric power sales totaled 486 million kilowatt-hours in 1975 (more than double 1966 sales) to almost 76,000 listed consumers (about 1 million people had access to electricity). Approximately 70 percent of sales was for industrial use, and another roughly 12 percent was consumed by commercial establishments. Home use accounted for approximately 18 percent of the total. Transportation The country's transportation system in the late 1970s consisted of about 3,600 kilometers (2,230 miles) of railroads, some 33,500 kilometers (20,770 miles) of roads, three major and several minor ports on the Indian Ocean, several inland ports on Lake Victoria and Lake Tanganyika, and air facilities, including two international airports and more than fifty domestic airfields (see fig. 6). There was also an oil pipeline running from Dar es Salaam to Ndala in the Zambian copperbelt. Railroads The basic rail transportation network inherited at independence was developed during the colonial period to meet the needs of an economy geared to the production and export of agricultural raw materials. This system (in 1976 2,600 kilometers-1,610 miles-in length) included the northern Tanga line, constructed from the port of Tanga to serve the sisal producing region and on to the Mount Kilimanjaro and Mount Meru areas where coffee developed as a major crop, and the Central line, built from the port of Dar es Salaam westward to Kigoma on Lake Tanganyika, with a branch to Mwanza on Lake Victoria, the major cotton-growing area. Another branch of the Central line ran to the eastern part of the Southern Highlands; this branch has been extended since independence. In 1963 an interconnecting link was opened between these two lines thereby permitting not only direct movement of freight and passengers throughout the system but, perhaps more important, permitting the shifting of surplus rolling stock from one section to the other to meet peak seasonal requirements. In 1970 construction of a new major rail line, running from Dar es Salaam to the Zambian border west of Mbeya, was begun, and the line commenced initial operations in late 1975. This line, roughly 1,000 kilometers (about 620 miles) in length, was built largely with financial and technical aid from the PRC. In the late 1970s the line's principal purpose was to furnish a main transportation route for Zambian exports and imports, but in time it could also be expected to spur development in mineral-rich southwestern Tanzania (see Mining, this ch.). The Uhuru Railway, as it was known in Tanzania and Zambia (a considerable stretch of the line was also built in Zambia), offered substitute facilities to the outside world for Zambia, replacing a rail link through Southern Rhodesia that was closed for political reasons by Zambia in 1973, and another link through Angola that was severed in 1975 by internal Angolan military action. In 1977 Zaire, which had been shipping copper out through Southern Rhodesia also began using the new line for some export and imports. In late 1977 the railroads were operated as two separate systems. Until mid-1977 the Tanga and Central lines were part of the three-country (Kenya, Tanzania, and Uganda) railroad network operated jointly by the East African Community (EAC) through the East African Railways Corporation (EARC). The Tanzanian lines were linked directly to the Kenyan and Ugandan systems by a connection between the Tanga line and the Kenyan main line. There was also a railroad ferry between Mwanza and Kisumu, Kenya, on Lake Victoria. Disagreements among the three countries finally resulted during 1977 in the effective breakup of the EAC (see ch. 2). As a result Tanzania in mid-1977 established its own Tanzania Railways Corporation (TRC) to control and operate the Tanga and Central systems. The rail line between Dar es Salaam and the Zambian border is operated by the Tanzania-Zambia Railway Authority (TAZARA), jointly owned by the governments of the two countries. Although tracks of both systems run into Dar es Salaam, rolling stock is not interchangeable, TAZARA having 1.067 meter (3' feet, 6 inches) track, while the TRC system has 1 meter (3 feet, 3.37 inches) track. Road Transportation The road network built during colonial times was designed primarily as a feeder system for the railroads and ports. In the railroadless southeastern region roads were built to carry produce to the port of Mtwara and the smaller port of Lindi. The newly independent government adopted the long-range goal of establishing an east-west, north-south grid of trunk roads that would traverse corridors of economic activity and link economic population centers. During the 1960s, however, the main emphasis was on expansion of the feeder system, and in the early 1970s efforts were made to upgrade existing primary roads through asphalting rather than the construction of new roads. By the mid-1970s the improved road network included only about 2,600 kilometers (1,610 miles) of hard-surfaced roads and 1,100 kilometers (about 680 miles) of engineered gravel roads. The remaining roughly 30,000 kilometers (some 18,600 miles) in the road system were dry-weather roads, many of them tracks or little better. A major road improvement and construction undertaking carried out during the Second Five-Year Plan was the design and engineering upgrading and asphalting of a highway running from Dar es Salaam to the Zambian border near Mbeya. Known as the TanZam Highway, the project was undertaken by Tanzania primarily to provide Zambia with a reliable route for its exports and imports in view of frictions that had arisen following Southern Rhodesia's unilateral declaration of independence in 1965 and the possibility of a Zambian-Rhodesian border closing. Assistance in the undertaking, which was completed in 1972, was received from the SIDA, the United States Agency for International Development (USAID), and the World Bank. The country's Third Five-Year Plan (1977-81) calls for considerable amounts to be spent on upgrading and extending the primary road system, which includes 6,000 kilometers (3,720 miles) of trunk roads and close to 1,200 kilometers (745 miles) of other main roads. This system interconnects the regional capitals and also the Tanzanian system with those of adjacent states. The motor vehicle fleet in 1975 totaled about 105,000 and was approximately double the number of vehicles in 1964. In 1972 privately owned vehicles of all kinds made up 91 percent of the total. Trucks and buses and light commercial vehicles constituted close to two-fifths of all vehicles, and private passenger cars made up another 36 percent. The remainder included more than 10,000 motorcycles and some 8,000 other motorized vehicles of various kinds. Truck transport was vital to the economy, handling about three-fifths of all domestic freight moved. The industry was privately operated until 1973, when the government entered the field of public transport as part of its expanding program of direct participation in economic activities. This was followed by a drop in private trucking operations and the withdrawal of service from some problem regions; a greater concentration by private interests on more profitable long-distance hauling also occurred. Government services reportedly have since proved less efficient than private ones. This, together with inadequate supplies of spare parts for the sector as a whole and deterioration of the fleet because of road conditions, had introduced important constraints on general economic activity by the late 1970s. Ports and Shipping The principal port, Dar es Salaam, was greatly overcongested in 1977, and foreign shipping lines were imposing surcharges because of delays in cargo handling. Increased Tanzanian economic activity was partly responsible for the congestion, but the chief cause was the greatly augmented volume of imports and exports for Zambia occasioned by the opening of the Uhuru Railway in 1975; in 1976 Zambian cargo totaled under 1.3 million tons, roughly 29 percent of the under 4.4 million tons that passed through the port. The problem was further compounded by increasing, although still comparatively small, imports and exports for Zaire, which began using the railroad in 1976. The two other main ports, Tanga and Mtwara, handled a much smaller tonnage than Dar es Salaam; between them they accounted for under 9 percent of total imports and exports in 1976. Mtwara had deepwater berthing facilities, and about 70 percent of the country's cashew nut exports passed through the port. Tanga lacked deepwater berthing, and cargo movement required lighterage. The two ports, like Dar es Salaam, were under the EAC's East African Harbours Corporation (EAHC)-although they operated relatively independently-until mid-1977 when effective dissolution of the EAC led to formation of a separate Tanzanian harbors corporation. A relatively smaller but important link in the general transport system in the late 1970s was the coastal passenger and domestic cargo service between Dar es Salaam, the ports of Lindi and Mtwara, and other small coastal and island ports. This was provided by vessels of the Tanzania Coastal Shipping Line (TCSL), an operating subsidiary of the National Transport Corporation. TCSL services were especially valuable to southeastern Tanzania during the rainy period when sections of the coastal road connection with Dar es Salaam were frequently impassable, and the major ferry crossing over the Rufiji River was interrupted by flooding. Ferry transport facilities to Tanzanian ports on Lake Victoria and Lake Tanganyika were operated by the EARC until 1977 when Tanzania took direct control. Services on Lake Victoria, however, had actually stopped in 1976 as a result of a dispute within the EAC and Kenya's impoundment of the ferries. The loss of the ferries had seriously affected communications between the Tanzanian ports of Bukoba, Mwanza, and Musoma, and Tanzania ordered three lake steamers from Belgium to reopen service on the lake; the first prefabricated parts arrived in mid-1977. The principal operation on Lake Tanganyika involved the movement, on Burundi-owned vessels, of exports and imports between Bujumbura and Kigoma. Air Services Domestic air service had special significance because of distances within the country, unsatisfactory road conditions between various towns, and lack of rail service to a number of these. Tanzania in 1977 had two international airports, at Dar es Salaam and Kilimanjaro. There were also about fifty other government-designated domestic airfields, many of which were little more than landing strips. Some eighteen of these airfields had been provided with regular service by East African Airways Corporation, an agency of EAC, until February 1977, when the airline halted operations because of long-standing financial problems. Tanzania then continued limited internal operations itself to the two international airports and to major airports at Mtwara and Mwanza. In April 1977 a new national airline, Air Tanzania Corporation (ATC), was established to furnish regular domestic flights, which began in May. Later in 1977 the ATC initiated international flights to several other African states.