Are we ready to face the coming economic CHANGE, and how?

It is no longer a question of when, but question of how deep the current global economic meltdown will entrench itself. The meltdown is rooting itself deeper on the global economies, and the impact is unequivocally spreading amongst the economically elite, while hitting harder amongst the economically disadvantaged.

Not an American or the Western mantra anymore, it is global. Central Banks across all continents have pumped enormous amounts of money to stimulate their economies in vain; there is a slow growth across the board, and there is little a common man can do to avert or reverse the trend, except being able to adjust to this inevitable and unwanted change. Economic CHANGE, that is.

Multinationals are laying-off massively, across all sectors. Announcement of retrenchments have become a routine, as companies are no longer able to maintain expensive payrolls, which have in turn affected consumer spending (consumption) and battered economies around the globe. Basically, people are holding tight their savings to counter any eventualities, if at all they have anything to hold on to.

Healthcare sector which is normally resilient to most recessions has finally been infected by this economic virus. Merck, a global pharmaceuticals giant for example, is laying-off 15% of her workforce in order to adapt to the economic CHANGE -consumer reduction of non- essential spending must bear the blame- and this could just be the beginning of a long trend in the sector, caused by the shaken labor market which is tightening even more.

Around the month of October, 2008 a client and a friend, who ran a two generation family business he inherited 25 years ago from his father, had to shut the company doors, and letting go of his 56 loyal employees. 35million dollars, of the company that was invested through a hedge fund firm melted away.

The man could not live to reconcile with a reality of orchestrating the demise of once, a healthy and prosperous company. He shouldered the responsibilities and regarded himself as a traitor to his predecessors who handed him a growing company, and to his children who were the future heirs to the multimillion dollar company. He decided to take his own life this past weekend, becoming one of the casualties of the current economic crisis.

Recently, a Tanzanian living in West Virginia, wrote me a very convincing letter, in which he claimed to have known me and my family back in Tanzania, and was requesting a small help of $300 he needed –his two month portion- to pitch into the monthly pool of $750 shared amongst five roommates. I made an effort and visited him; and his story could not be more painful.

His family in Tanzania including his mother who is ailing from diabetes, kissed goodbye the monthly allowance of $500 he has been sending for the past 4 years, 3 months ago. The Youngman is now worried not only for his mother who may die at any time, but also for his own future.

With his four other roommates hailing from West African nation of Gambia, they are bonded and supporting each other under the umbrella of African brotherhood, in the middle of racially sensitive town of Kay moor. These five African immigrants share something in common; they are all jobless, and none has a prospect of securing a job any time soon, despite the fact that, they are able, and ready to do any kind of work.

They were laid-off 5 months ago, from a coal plant where they met and worked. They have now depleted their savings, and neither one is in position to send money back to Tanzania or Gambia. All they are doing at this point is finding how to survive, and adapting to the new CHANGE of economic hardship.

Similar stories are everywhere. In Mumbai India, once lucrative American service centers that employed hundreds of thousands are closing. In New-York, and elsewhere within the US, joblessness, and homelessness among undocumented immigrants and Americans is Intimidating; some of the once highly paid professionals in different sectors are also in the jobless pack.

In Japan, the so called economic elites are struggling to pay their bills, in South Africa, the poor are sinking deeper into economic quandary, even in Dar es Salaam, I believe millions are experiencing the pain, and things are not getting any better.

There is no need to panic; things are going to turn around in not too distant future, but in the meantime, we need to make adjustments necessary to cope with this inevitable and unprecedented economic CHANGE.

Tanzanians in Diaspora remits millions of dollars a year back home to support their families, and at this time when some of their Western employers are worried about themselves too, cloud of uncertainty hangs over their employment future. As such, need to prepare psychologically for the inevitable is a matter of urgency.

Negative effects of either reduction or a complete halt to the remittance, may have some undesirable consequences to the people of Tanzania and the economy as a whole. In reality, I tend to see a dwindling and perhaps economic hardship of different proportion both to our fellow citizens abroad and those at home. Lifestyles across all social divides are going to be affected, because we all depend on each other for one reason or another.

I am therefore, counseling my people to adjust to the impending economic CHANGE by re-aligning their spending habits. Unnecessary spending must be avoided. Extreme extravagancy and flashy lifestyles must be controlled or put be put on hold for the time being. Nonetheless, we must not stop from going about our daily business while holding tight whatever little we may have. This should be the time for our national motto of brotherhood to shine by holding each other wherever we are, especially the economically vulnerable.

Although the current hardship bear hallmarks of a 1930 great depression, it will be far fetched to describe the current economic debacle as a depression, because there are some elements missing to call it a full blown depression. However, should the matter continue in the same pace, we will soon enter into a depression, whose effects will be tragic and devastating.

The 1930’s, great depression shook both rich and poor, it wiped savings, trimmed earning power of millions, and shut down well established businesses. Government agencies across the world suffered acute revenue shortages. The depression brought about horror and hopelessness amongst millions of pensioners in different nations, while thousands committed suicide because they could not bear the brunt, and never prepared themselves psychologically to deal with the harsh economic CHANGE.

Naturally, change is received with mixed feelings; in normal circumstances, some will resist it, while some will embrace it, depending on whose interest is at stake. But in extreme “situations” such as now, everybody willingly or unwillingly, MUST accept it. No one can resist it.

While I remain optimistic on the economic recovery, I am at the same time, cautioning those who believe that Tanzania is immune to these challenges to think twice; it is a matter of time before every single person directly or indirectly, feels the pain of the economic dilemma we are in. We must also be mindful of the fact that, whatever affects one directly, for some reasons, affects all of us indirectly, especially economically.

Even though I categorically acknowledge, and respect the existence of legitimate, ideological and philosophical differences, I am rather, urging prudence and rational reasoning from all us while debating this issue based on its substance and national importance, as opposed to personal differences that may exist.


Mungu Ibariki Tanzania
By John Mashaka
Mashaka.john@yahoo.com

CAN TANZANIA SURVIVE WITHOUT AGRICULTURE?

Tanzania as a country that depends on agriculture as the main contributor to the Gross Domestic Product (GDP), and the main source of International trade, may need to rethink her economic future in the wake of 2008 oil crisis, in which a barrel of oil reached an historic high of $147 just to slide back to $36.2, a barrel in less than six months. Sending shockwave of fear to countries that relied on this commodity as their main source of economic vitality.

Oil producing countries such as Venezuela, and Iran just to name a few whose economies relies heavily on this single commodity, ripped massive profits and used their earnings not to diversify their economies, but to further their ideological beliefs. Both countries neglected their potential economic vulnerability based on oil dependence despite decades of huge profits. They are now not only in the same financial debacle, but also in potential social quandary of a different magnitude; they relied heavily on now devalued oil as their main source of economic lifeline.

Energy prices have tumbled across the board; with oil plummeting to its historical low of $36.2, a barrel at the New-York Mercantile Exchange (NYMEX) as of January 16th; A figure far below budget projections of $60 a barrel in the cases of Iran, and Venezuela. Countries whose leaders ascended to power, based on promises of ambitious, social programs transformation .The two countries must shelve some of their ambitious social projects for the time being, due to the impending budget deficits, and perhaps social problems, when some of the already existing services will have to be curtailed.

Oil accounts for more than 90% of Venezuela exports, while Iran depends on oil to account for 85% of the government’s revenues. Whilst this is the reality, Hugo Chavez of Venezuela, has used oil money to make thumb his nose towards the west; he has used the petrodollars to further his socialist and revolutionary causes of being a defender of the Latin America, against the American Empire Influence.

His Iranian counterpart Mohamoud Ahmadinejad, on the other hand, has used oil profits to wag his finger, and heralding his determination to wipe Israel off the map. Iran, spent millions of her petrodollars promoting itself as the sole defender of Islam across the Islamic world; She is fighting for hegemony on geopolitical and economic fronts across the Middle East. Not only that, Iran, has used her oil wealth to fend off the western efforts to block her nuclear drive, and this is still going on in the face of rising unemployment, and sky high inflation. The bottom line is that, both Iran and Venezuela failed to look at the broader picture, which is Iran, and Venezuela without oil.

Thanks to speculation in the financial markets, the countries racked-in massive profits, but then their leaders ignored the laws of economics, and called the $147 a barrel an insult. Iranian leader arrogantly suggested that, $200 a barrel would not be a fair price either. Even after the financial crisis started, they forgot that mere speculation was not sufficient to reverse Economic Law of Elasticity.

Gasoline being one of the modern day necessities, many believed it was not going to undergo a price shock ; the economic boom in India and China, and increasing demand in the United States, led many to perceive oil as insensitive to price changes (inelastic), because consumers would continue to demand it despite price increases.

Economic theories have disapproved those who were convinced that, oil prices would never fall. Prices have plunged sharply globally, except in Tanzania; one of the few countries where merchants can impose upon the people their own prices. Sadly enough, In the United States, some are currently paying equivalent of $.55cents a liter, whereby many paid roughly $1.50 a liter, less than six months ago.

In the face of economic hardship, characterized by the rise of unemployment, and declining earning power, oil become less of a necessity; need for food and shelter precedes the need for oil. However, availability of alternative forms of transportation, amount of income to spend on gasoline, and time factors have driven oil prices to their current low levels.

Just like Iran and Venezuela cannot breathe without oil, Tanzania has no economic vitality without agriculture. Agriculture accounts for 42.5% of the Gross Domestic Product (GDP) and more than 80% of the exports, and this puts our country in the same line of vulnerability, and insecurity as that of the oil producing countries which are now facing economic uncertainty because they did not properly plan for economic continuity without oil (reduced oil demand characterized by lower revenues).

An economy without agricultural dependence should be Tanzania’s motto. This ambition should take into consideration country’s massive wealth of natural resources. Just like Dubai, a tiny U.A.E country which solely relies on maritime and tourism for her survival, Tanzania should think 100 years from now by laying plans in place on how to exploit her massive wealth, such as the inexhaustible, and price insensitive Indian Ocean; making maritime services through port of Dar es salaam easily accessible, efficient and inexpensive for both domestic and to foreign customers such as Zambians, Congolese, Ugandans etc who are using Kenyan ports for the most part.

Massive advertisement campaign of our beaches as a focal point for attraction, for both domestic and foreign tourists would yield unprecedented positive results, just like it has in the cases of Mauritius and Morocco. Our historical wealth such as the famous Zanzibar, Bagamoyo and Mafia Islands are enough to shift the economic pendulum from agricultural dependence to a more balanced economy. Aggressive marketing of Mt. Kilimanjaro and other tourist attractions as parts of Tanzania and not Kenya, will definitely provide Tanzania with the missing link to full economic diversification.

Economists, financial experts, and scholars both in public and private sectors, should study the feasibility of balancing the economy from agricultural dependence to agricultural independence considering the country’s untapped wealth. In the face of climatic uncertainty of prolonged droughts, tsunamis, unfair agricultural subsidization by wealthy countries, Tanzania’s may find her competitive ability in the international commodity markets hampered by these factors. And possibly, chocking the economic lifeline out of the country.

There is no question, such ambitious move would be time consuming, expensive, complicated and very hard to accomplish. But in today’s dynamic and less predictable global economy, there is no other alternative. Tanzania MUST have economic diversification strategy. Massive wealth in the hands of a few could be channeled towards the feasible study of economic diversification for the good of the country’s majority riddled with poverty.

Tanzania, government must strengthen the country’s infrastructure, and use foreign resources in the form of investment to support the transformation. The law for attracting and protecting foreign investments must be enforced diligently, and foreign investors must be given assurances regarding the safety of their investments. Red tape and bureaucracy at government agencies MUST be ended.

The focus must be on the qualitative aspect of manpower by streamlining the government in such a way that quality becomes the highest priority, at the same time recognizing human talent and capability within the workforce. Rewarding employees to enable them release their full potential must be a common practice, and also retaining already developed talents to encourage innovation, which will in turn curb the current wave of brain drain.

With a young energetic population, Tanzania will enjoy an inexpensive labor force, should it adopt a broader industrialization project, which will reduce dependence on importation of unnecessary products, some of which are substandard and hazardous to the population. Domestic production of Industrial goods will translate into cheaper prices, as well as employment to the currently idle young population. These goods will not only be consumed domestically, but will also find demand in the Southern, Central, and East African economic blocs in which Tanzania’s influence is growing.

To fully diversify Tanzanian economy, the current government expenditure must be shifted to major development and construction projects to guarantee that in the future, the country’s infrastructure; will be able to sustain growth in all sectors of the economy, which will in turn shift the economic pendulum from agricultural dependence to agricultural independence.

We cannot wait until a crisis emerges for us to be able to start preparedness, the current economic and energy crisis are perhaps some of the best lessons we can learn in our generation. We do not want to go the Iranian or Venezuela routes. Now is the time to shove aside politics, rhetoric, and rattling, and think deeply on where the country is going to be hundred years from today.

The question is, can we see our country surviving without agriculture?

Mungu Ibariki Tanzania

John Mashaka,
Mashaka.john@yahoo.com
The Writer is a US based Banker, & Social Activist