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Magufuli 2.0: A more nuanced approach?

Current Affairs

Magufuli 2.0: A more nuanced approach?

Tanzania’s charismatic and controversial President won his second term in a landslide victory in November. With the majority of the country solidly behind him, will he push through with his policies to transform the country’s economy? Analysis by Helen Jones.

President John Magufuli won 85% of the Presidential vote, and the ruling Chama Cha Mapinduzi (CCM) party won in excess of 95% of the parliamentary seats in Tanzania’s 2020 elections.

As has become de rigueur in African politics, however – and now in the US – the results have been clouded by allegations of vote rigging, coercion and police brutality. After the elections, several key opposition members, including Chadema’s Presidential candidate Tundu Lissu, left the country.

However, with claims for an annulment of results or re-run failing to gain significant traction within Tanzania or among Tanzania’s key donor partners, the next question is what will Magufuli’s second term in office will look like.

Will we get something similar to the highly centralised administration that focused on populist policies that waged a war against corruption, but stifled the growth of the private sector? Or will it be something different?

President Magufuli outlined his plans for his second term in office during a speech in parliament on 13 November.  The President set out the economic reform agenda that will govern his second, and constitutionally final, term in office.

Continuing with his mantra of ‘Hapa Kazi Tu’ (‘Here only work counts’), Magufuli’s speech focused on the need to continue growing Tanzania’s industrial economy.

He aims to create eight million jobs over his next term in office and pledged to improve the country’s key indicators such as currency strength, interest rates and inflation, whilst also continuing to improve the country’s infrastructure network.

This plan is to be executed amid an ongoing campaign to quell corruption in Tanzania’s public and private sectors, with the President committing to continue rooting out corruption and firing any government officials who abuse their power.

Magufuli’s work on fighting corruption to date has been largely successful, with Tanzania climbing from 119th place in 2014 to 96th in 2019 in Transparency International’s Corruption Perception Index ranking.

President Magufuli also committed to creating an environment conducive to investors, something that cannot be said for his first term in office where aggressive, and at times egregious, tax collection was prioritised at the expense of attracting and retaining investment.

In his second term however, Magufuli announced that as a commitment to the private sector, the Tanzania Investment Centre (TIC), which is meant to be a one-stop shop for investors, is set to move from the Prime Minister’s office to the President’s Office, allowing oversight from the President himself and to ensure that investors’ concerns and any bottlenecks are dealt with swiftly.

What will take priority?

While Magufuli’s first term in office was characterised by at times erratic decision making and large-scale overhauls of key sectors, including mining, oil & gas and telecommunications, many predict that Magufuli’s second term in office will be more nuanced.

His socialist leanings and the country’s need for further tax revenues will not change; however, policy predictability and tweaking existing legislative frameworks rather than demolishing existing systems is more likely to be the norm – a change in pace that will no doubt be welcomed by the increasingly nervous private sector.

Within his many mega-projects, Magufuli will now need to prioritise which will move first. The likely outcome is that he will prioritise those projects that can be completed during his time in office. 

Thus, a project like the Uganda-Tanzania crude oil pipeline is likely to gain priority over the highly complex and protracted negotiations required for the LNG project in the south of the country, which is fraught with complex dealings with some of the world’s largest oil companies.

With both of these projects for the export market, the Energy Ministry will have a lot on its hands as the government has also outlined an ambitious plan to electrify all 12,000+ villages in the country by 2025, a task the country is only three quarters of the way through.

Promises made and promises delivered often differ when it comes to commitments by government, so it will be interesting to see how much progress has been made come 2025.

In the mining sector, an uptick in the price of gold is likely to see enthusiasm for the at times contentious sector increase. This may see an easier ride for those gold companies currently in production and hopefully speed up the process for those companies attempting to transition from exploration to production.

The need for the foreign exchange that mining generates will only increase in importance due to the decrease in tourism attributed to Covid-19, typically the country’s largest foreign exchange earner.

Although Tanzania has taken a ‘business as usual approach’ to Covid-19, and a tightly controlled media ensures that a counter-narrative is not published in country, the global tourism sector has slowed significantly and the lack of forex coming in will impact the country’s budget in the short to mid-term.

Mega legacy projects

In addition to a focus on extractives, Magufuli is still working to complete the Standard Gauge Railway (SGR) and the Julius Nyerere Hydropower Project, both of which have relied on significant external debt financing and are clearly being positioned as legacy projects of the Magufuli era, and are therefore likely to be developed with pace.

Potential cost overruns and delays, common in projects of this size, may result in even more government funds being diverted towards them. The focus on completing mega-projects may however see the government fail to pay sufficient attention to growing the country’s SME sector, digital space, and supporting the agriculture sector that typically makes up the backbone of the Tanzanian economy.

Whilst Magufuli made some ambitious announcements in terms of economic development and improving the ease of business, investors anxiously awaited the announcement of his cabinet.

Parliament voted and confirmed that the incumbent Kassim Majaliwa would retain his role as Prime Minister. Magufuli then announced that Professor Palamagamba Kabudi and Philip Mpango would retain their Cabinet roles as Minister for Foreign Affairs and Minister for Finance and Planning respectively. Both are viewed as trusted advisors to the President and were hand-picked by Magufuli to join parliament during his first term in office.

Whilst Magufuli is indicating that the private sector will get more support during his second term in office, the question remains as to how the government will balance its desire to attract and maintain investment with the country’s need for increased domestic revenue.

Magufuli’s increasing reluctance to rely on donor funds to support the country’s budget means that attempts to broaden and deepen the country’s tax base are likely to continue. How well he can balance the two areas will no doubt determine how successful or otherwise his second term in office will turn out to be.

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