Tanzania: drifting back to capitalism? Donor nations hope new leader will turn economy around

As Tanzanian President Julius Nyerere prepares to relinquish power, a key question is being asked in international circles: Will fresh leadership of this East African country mark a turning away from what many analysts call the third world's longest and most spectacular failure in exercising socialist doctrines?

Nations that have been providing aid to Tanzania are quietly hoping the next president will somehow manage to reverse the country's economic downslide.

A spate of recent policy adjustments may indicate a drift back toward the capitalist fold. In May, for example, President Nyerere appeared to have some doubts about past economic philosophy when he offered a dozen sisal farms to the private sector.

``If I called back the British to look at their estates, they would laugh at us because we've ruined them,'' he confessed.

At the same time the nation's vast bureaucracy was given a jolt when the parastatals (companies partially owned by the government) that administer every aspect of the economy were told they would be allowed to collapse rather than to run at a loss.

Nyerere also called for private investment to revitalize the stagnant export sector. In early July exporters were told they would soon be allowed to retain 15 percent of their foreign exchange earnings for expenditures abroad. The same day producer prices on eight cash crops were hiked in a bid to boost output.

Nyerere encouraged Tanzanians to construct houses for sale on the property market, despite a law that nationalized private property.

The problem, experts say, is that Nyerere's past efforts to introduce a socialistic doctrine ran contrary to what is an essentially entrepreneurial electorate. For the past 20 years agrarian reforms supposed to bring national self-reliance and economic equality instead annoyed the country's 20 million people, 90 percent of whom are peasant farmers.

In some areas most of the maize and rice crop is sold on the black market at prices that outstrip official prices.

``The peasants are squeezing the state after the state has been squeezing the peasants for 15 years. It's working the other way around now,'' said David Throup, an East African historian from Cambridge University.

Ironically, Nyerere's vision of prosperity through collectivization has been supported by the West.

Because he is considered to be such an eloquent and persuasive speaker, whose principles are questioned by no one, his ideology became a model for third-world development.

For the same reasons he also became a symbol of hope for those contributing aid such as the Scandinavians and Canadians, as well as the World Bank. They staunchly supported him. The World Bank alone has poured more than $2 billion into Tanzania since 1970.

One leading contender for the presidency is Prime Minister Salim Ahmed Salim.

``Many people want Mr. Salim as he has capitalist leanings. Socialism hasn't worked, so the people want something else now,'' explained one aid expert.

Rashidi Kawawa, the other likely contender, is a seasoned hard-liner who has the support of the party's old guard and of parastatal managers. If voted in, he is unlikely to tamper with the system. His decision last June not to stand for reelection to Parliament has fueled speculation that he may be a candidate.

The IOUs Mr. Kawawa has collected over the years make him a formidable contender. But the choice will almost certainly require the endorsement of Nyerere himself, who has ruled this nation since independence in 1961 and still commands the party's respect.

If Salim wins the nomination, he is expected to sharpen the cutting edge of change. Many Tanzanians acknowledge they will be forced to reassess national policies in the face of overwhelming circumstances that make their country one of the world's poorest nations.

Even so, a telling indicator of which way the nominations will go was to be found in Nyerere's July 8 speech to mark Peasant's Day: He reminded voters -- whose ballot is essentially a rubber stamp -- that socialism and self-sufficiency remained the watchwords of Tanzanian policy.

Even if Tanzania's new leadership bows to the wishes of the electorate, the road to recovery is a long one. Analysts predict that, at best, Tanzania will not regain its economic balance until the next century.