Lack of Foreign Capital; Not a factor

Ask most politicians and government officials about lurk of development in Tanzania, the first answer, almost unrehearsed will be lack of foreign capital. However, whoever is well informed in these issues, knows that is the least of the problem, if at all. In fact there is so much foreign capital to go around entire Africa and then some.  The question should then be why Tanzania is not attracting a lot of it, there you are guaranteed to get lot of funny answers. Capital is very sensitive component of the economy, it only goes where there absolutely certainty of return. Meaning what attracts capital is the environment, which has established rule of laws, good governance, and large quantity of intellectual capital and regulated but free market.

Now for Tanzania and other African countries to attract capital, they ought to start look outward. Meaning all that is taking place domestic politically, economically, socially is well analyzed outside, well since we expect the capital from outside. Good governance of the economy implies that there are check and balances within the government as a measure of balance of power; as well as in budgetary and fiscal spending, with clear audit trail, financial controls, and processes that are open to review by the public and parliament. Every time this issue comes up, for more open government those in power repudiate. Why? Obviously they are hiding something, but they fail to recognize that it’s a far sign of dishonest government that even capital investors understand it fully, let alone the machinga’s or as they call them now wagagagigikoko.

True, Tanzania CCM leadership is a democratically elected, but a dishonest government where few who in power are there to benefit themselves. Hence those sentiments are well understood abroad, by the owners of capital. The ineptitude of the government also brings others sets of problems, corruption, embezzlement, bureaucracy, nepotism and abuse of power.  The extent of such problem is that, the government and its finances go relatively unchecked. Even the private media, opposition parties and the parliament that should have counterbalance the power of the government is effectively useless.  In the end the result is that capital cannot flow into this type of environment. Therefore unless those issues are clearly resolved, do not expect capital investors to flow to Tanzania.

Kenya has done very well; with recent government as a result expect more capital investment to flow into Kenya. The evidence can be seen by the visits of Germany leaders to Kenya and visit of Kenyan president to the Bush White house. In the United States reports, Kenya and Uganda are highly regarded democratically prosperous growing economies.  Therefore, the presumptions are economically East Africa is a one market, and more due to close proximity geographically as is culturally due to similarity of languages. This says then, if the capital flows to Kenya, relatively investors do not need to invest any more capital in Tanzania or Uganda. Where does this leave us? Well, tilling our soil for food with hoes, that guarantee us not enough food but then we can always buy more maize from the Kenyans, as we have always done.  

It is always easy to pass the problem of the economy to the people you are leading, while remain ineffectual. But in the long run, it hurts the entire country and the economy. If the government had taken all necessary steps to stamp out bureaucracy, embezzlement, fraud, and nepotism so that people in their position are based on their merits, our capital pull would be much higher. Now, can we learn to govern with the view of the long run and on the interest of the entire nation?  Simply, because these will push us further economically, socially and culturally. What has worked so well for the United States, is the fact that any person can rise from relatively obscurity to obscene wealthy. The system provides opportunity for all, and not based on your background, education race, religion or political affiliation. Serving in the US government is viewed as relatively gesture of goodwill and volunteerism. The wages in US government are relatively very low than in any other US economic sectors. Most of those who decide to serve in the US government have had a relatively very good and proven career in the private sectors and very wealthy individuals.

Our chances for success as country depend on us as a nation and as individuals. The government needs to enforce a system of legal, financial, ethical and moral responsibility that will guide our nation for a lifetime.  In the end none of us will be in power forever, therefore it is very important to create a good system that will sustain our children and our grand children. A system in reference here is a constitution