Topic Area: Structural Adjustment
Geographic Area: Tanzania
Focal Question: "Under what conditions will 'sensible'
economic policies have unintended social, economic, and environmental
consequences?"
Sources: (1) "Case Study for Tanzania" in Reed, David, ed.,
Structural Adjustment, the Environment and Sustainable Development
(London: Earthscan, 1996):107 - 127.
Reviewer: Todd Brylinsky, Colby College '97
Review:
Structural adjustment programs attempt to correct economic imbalances
and improve efficiency of developing and transitional economies,
thereby setting the state for further development. David Reed used
nine case studies to research the impacts of such programs in an
attempt to understand their effectiveness and impact. One of those
studies examined Tanzania.
A common problem exists, however, when structural adjustment is
concerned: The environmental impacts of adjustment are "complex,
ill-defined, and difficult to bound." Therefore, the authors used
many techniques to design a model that identifies price and non price
factors which determine responses to structural adjustment. More
simply, what are the micro-level responses to policy implementations
on the macro-level? A given response is likely to have many
environmental consequences.
Tanzania is varied in its physical environment. The contrasts range
from abundant wildlife plains to heavily populated agricultural
areas. Abundant mineral resources exist, but have yet to be
exploited. Tanzania is known for its diversity and magnitude of
wildlife. This is partially due to the fact that 25% of the country
is protected in reserves. The population is primarily rural
agricultural. Farming accounts for 85% of employment and 60% of GDP.
Only one-fifth of the country has consistent annual rainfall causing
heavy concentrations in these areas. Only 5% of the remaining
four-fifths is cultivated land.
During the 1960's and '70's, Tanzania implemented policies of
self-reliance. These included extensive compulsory villigization
(ujamaa), nationalization, and price controls. They experienced
short-run growth, but a long-run economic downturn. By the 1980's
Tanzania was the world's second poorest country in GDP per capita
terms. At the same time, its natural resource base became noticeably
threatened. These problems signaled a movement towards more
market-oriented policies and a change of political leadership.
During the 1970's, Tanzania attempted to ensure food and crop export
production by large-scale production-oriented agricultural
parastatals. This strategy, combined with ujamaa, disrupted
traditional resource uses and accelerated environmental
degradation.
The National Environmental Management Council (NEMC) in Tanzania
pursued strategies of conservation in the 1980's and later modified
them to sustainable development in 1992. Problems existed in this
area. Legislation was geared toward control, rather than proper
incentive structures. Enforcement was also poor because staffing was
limited and fines were continually eroded by inflation. During the
1980's, Tanzania tried its own structural adjustment programs. These
included the National Economic Survival Program in 1981 and the
Structural Adjustment Program in 1983. The details of these programs
were not discussed as Tanzania could not muster enough external
resources to implement them successfully.
So in 1986, a donor-sponsored Economic Recovery Program (ERP) was
decided upon. The aim was to achieve sustainable growth in real
income and output. Better pricing of crop production, improved
product and input marketing, an increase in government outlays for
agriculture, an increase in industrial capacity utilization by
liberalizing raw material imports, a decrease in the balance of
payments deficit through devaluation, export incentive schemes, and
foreign exchange liberalization, and better control of the budget
deficit and money supply were thought to be the key ingredients
necessary to achieve this goal. Although agricultural prices
increased, producers' benefits were reduced by inflation. Also, the
marketing reform failed to improve producer margins. Despite these
problems, agricultural output and exports rose, industrial imports
increased, and per capita income gained 6%.
In 1989, the ERP program was modified to create the Economic and
Social Action Program (ESAP). The goal of the new program was to
restore the physical infrastructure and ease social impacts. While,
industrial capacity and nontraditional exports (other than
agriculture) increased, farmers did not benefit as prices for their
crops did not improve and prices for inputs such as fertilizer rose.
Simultaneously, job creation declined and minimum wages actually
decreased.
So although the ERP and ESAP did produce some positive responses they
also strained Tanzania's resource base even more. Specifically,
structural adjustment greatly impacted Tanzania's already large
problems: deforestation and soil erosion. Each will be discussed in
turn.
In Tanzania, 2% of forest area is lost per year and the data show an
increasing trend. Land clearing accounts for 40% of deforestation.
Clearing continues today because of poorly designed land laws that do
not address encroachment and structural adjustment's impact on input
pricing. The net effect is that farmers cannot expand their
production by intensification, but only by clearing more land.
Extraction of wood products is responsible for the remaining 60% of
deforestation. Most of this is fuelwood, but some is due to tobacco
farming and commercial logging. High population growth and a lack of
energy alternatives are the biggest reasons wood extraction has not
subsided.
Structural adjustment is responsible for a 13% increase in land area
used for tobacco farming. It has also increased construction which
directly increases demand for wood and thus extraction of wood
resources. Furthermore, external market liberalization has caused an
increase in timber exports made possible by logging.
The soil erosion problem is not as "simple" as deforestation. It is
hard to quantify amounts and thus rates of erosion so little data
exist. However, 63% of farmers interviewed for this study indicated
that erosion was a serious problem. The causes of erosion are land
clearing as discussed earlier, poor farming practices, and
cultivation of erosive crops. Farming practices have not improved
because structural adjustment has limited the farmers' access to
better technologies like superior seeds and fertilizer because they
are not affordable due to lower crop prices and higher input prices.
Cropping patterns have also changed due to adjustment. Tanzania
experienced a 17% increase in land planted with cash crops. About 80%
of this increase consists of highly erosive crops. Although several
speculative reasons have been suggested, structural adjustment's
market liberalization facet is a known contributor to the problem. It
has encouraged production for export of cotton and maize, both highly
erosive, and both major cash crops in terms of area cultivated.
Overall, structural adjustment in Tanzania has increased rates of
environmental degradation by increasing input prices, promoting
unsustainability through market liberalization, and reducing
expenditures on "reforestation." In addition, unrelated sectoral
policies have exacerbated degradation problems. The ending of ujamaa,
poor agricultural extension, poor enforcement of land clearing,
ambiguous land tenure, and inappropriate energy pricing have all
reduced incentives to conserve. Structural adjustment has also
differentially hurt the poorer farmers because pricing schemes have
caused cultivation of marginal lands. Thus, a positive feedback loop
has been created causing a downward spiral of economic and
environmental well being.
The authors propose that if the current programs continue,
deforestation and soil erosion will increase causing siltation and
related problems with hydropower and water quality. Also, air
pollution will likely rise, biodiversity will decrease, and per
capita GDP will increase, but accompanying it, growing income
disparity.
The proper pace of any structural adjustment program depends on the
conditions existing at the start of the process. Important conditions
to take into account include degree of local government control,
market and policy distortions, and design and implementation and
capacities. Adjustment moved slowly in Tanzania for these reasons.
The authors contend however, that the sequencing of adjustment may be
the cause of many problems. For example, potential export earnings
were lost because prices were reformed before the institutional
barriers to exports had been removed.
One of the biggest factors restricting Tanzania's implementation of
more sustainable policies is its dependence on foreign aid. By 1996,
when this study was published, development assistance accounted for
75% of GDP. External debt was 285% of GDP. Unfortunately, future
policies must conform with current SAP guidelines so that this
necessary aid is not cut off as it has been in the past.