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Economy of Tanzania

After independence, Tanzania adopted socialist economic policies, resulting in severe economic decline. The state controlled the economy and owned all of the major enterprises. The exchange rate and pricing policies were based on non-market mechanisms, creating low export and real GDP growth, high inflation, and widespread shortages. Agricultural production, the mainstay of the economy, declined steadily.

In 1986, Tanzania began to liberalize its economy and make partial market-oriented economic reforms. Although the government liberalized the agricultural marketing system and domestic prices and initiated financial system reform, economic growth was slow between 1986 and 1995.

Since 1996, Tanzania has taken aggressive steps toward macroeconomic stabilization and structural reforms. The emergence of a strong Ministry of Finance, supported by the International Monetary Fund (IMF) and other development partners, was instrumental in accelerating fiscal reforms and fostering a turnaround in fiscal performance. Overall, real GDP growth has averaged about 6% a year over the past 7 years, which was higher than the annual average growth of less than 5% in the late 1990s. Total debt service payments for 2010 were $85 million. The IMF’s most recent Debt Sustainability Analysis indicates that debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative combined with sound macroeconomic policies place it at low risk of debt distress. Public external debt service was approximately 1% of GDP in 2009 and is expected to remain so for 2010 and 2011.

However, economic growth has not translated to significantly improving the lives of average Tanzanians. The economy remains overwhelmingly donor-dependent; 30% of the budget is dependent upon donor assistance. The global financial crisis significantly affected the tourism industry, one of Tanzania's top foreign-exchange earners; however, Tanzania was able to maintain relatively strong growth in 2010. Continued high food prices since a spike in 2008 have contributed to a rise in inflation to over 10%, a substantial increase from more moderate inflation earlier in the decade.

Agriculture constitutes the most important sector of the economy, providing about 27% of GDP and 80% of employment. Cash crops--including coffee, tea, cotton, cashews, sisal, cloves, and pyrethrum--account for the vast majority of export earnings. While the volume of major crops--both cash and goods marketed through official channels--have increased in recent years, large amounts of produce never reach the market. Poor pricing and unreliable cash flow to farmers continue to frustrate the growth of the agricultural sector.

Accounting for about 22.6% of GDP, Tanzania's industrial sector is one of the smallest in Africa. The main industrial activities are dominated by small and medium sized enterprises (SMEs) specializing in food processing including dairy products, meat packing, preserving fruits and vegetables, production of textile and apparel, leather tanning, and plastics. A few larger factories manufacture cement, rolled steel, corrugated iron, aluminum sheets, cigarettes, beer and bottling beverages, fruit juices, and mineral water. Other factories produce raw materials, import substitutes, and processed agricultural products. Poor water and electricity infrastructure systems continue to hinder manufacturing. In general, Tanzania's manufacturing sector targets primarily the domestic market with limited exports of manufactured goods. Most of the industry is concentrated in Dar es Salaam.

Generally, Tanzania has a favorable attitude toward foreign direct investment (FDI) and has made efforts to encourage foreign investment. Government steps to improve the business climate include redrawing tax codes, floating the exchange rate, licensing foreign banks, and creating an investment promotion center to cut red tape. However, Tanzania still must overcome the legacy of socialism. The most common complaint of investors, foreign and domestic, is the hostile bureaucracy and the weak judiciary system.

Zanzibar's economy is based primarily on the production of cloves (90% grown on the island of Pemba), the principal foreign exchange earner. Exports have suffered with the downturn in the clove market. Tourism is a promising sector with a number of new hotels and resorts having been built in recent years. A prolonged electricity shortage from December 2009 to March 2010 delivered a blow to Zanzibar’s economy, severely affecting tourism and causing a rapid increase in commodity prices.

The island's manufacturing sector is limited mainly to import substitution industries, such as cigarettes, shoes, and processed agricultural products. In 1992, the government designated two export-producing zones and encouraged the development of offshore financial services. Zanzibar still imports much of its staple requirements, petroleum products, and manufactured articles.

GDP (2010 est.): $23.2 billion.
Real GDP growth annual percentage (2010 est.): 6.4%.
GDP per capita (2009): $509.
Natural resources: Hydroelectric potential, coal, iron, gemstones, gold, natural gas, nickel, diamonds, crude oil potential, forest products, wildlife, fisheries.
Agriculture (2009 est.): 26.6% of GDP. Products--coffee, cotton, tea, tobacco, cloves, sisal, cashew nuts, maize, livestock, sugar cane, paddy, wheat, pyrethrum.
Industry/manufacturing (2009 est.): 22.6% of GDP. Types--textiles, agro-processing, light manufacturing, construction, steel, aluminum, paints, cement, cooking oil, beer, mineral water and soft drinks.
Trade (2009 est.): Exports--$2.74 billion (merchandise exports): coffee, cotton, tea, sisal, cashew nuts, tobacco, cut flowers, seaweed, cloves, fish and fish products, minerals (diamonds, gold, and gemstones), manufactured goods, horticultural products; services (tourism services, communication, construction, insurance, financial, computer, information, government, royalties, personal and other businesses). Major markets--U.K., Germany, India, Japan, Italy, China, Bahrain, Malaysia, South Korea, Thailand, Pakistan, Indonesia. Primary imports--petroleum, consumer goods, machinery and transport equipment, used clothing, chemicals, pharmaceuticals. Major suppliers--U.K., Germany, Japan, India, Italy, U.S., United Arab Emirates, Hong Kong, Singapore, South Africa, Kenya.

Geography of Tanzania

Area: Mainland--945,000 sq. km. (378,000 sq. mi.); slightly smaller than New Mexico and Texas combined. Zanzibar--1,658 sq. km. (640 sq. mi.).
Cities: Capital--Dar es Salaam. Major metropolises--Arusha; Mwanza, Dodoma, Mbeya, Mtwara, Stonetown, Zanzibar.
Terrain: Varied.
Climate: Varies from tropical to arid to temperate.

Government of Tanzania

Tanzania's president and Parliament members are elected concurrently by direct popular vote for 5-year terms. The president appoints a prime minister who serves as the government's leader in the Parliament. The president selects his cabinet from among Parliament members. The constitution also empowers the president to nominate 10 non-elected members of Parliament, who also are eligible to become cabinet members. Elections for president and all parliamentary seats were last held in October 2010. The next presidential and parliamentary elections will be in 2015.

The unicameral Parliament has up to 357 members: the Attorney General; the Speaker; five members elected from and by the Zanzibar House of Representatives; 102 special women's seats apportioned among the political parties based on their election results; 239 constituent seats (including 50 from Zanzibar); and 10 members nominated by the president. Although Zanzibar accounts for only 3% of Tanzania's population, it is guaranteed over 15% of seats in the Union Parliament. The ruling party, CCM, holds almost 80% of the seats in the Parliament. The Tanzanian Union Parliament legislates on all union matters (foreign affairs, defense, police, etc.) and non-union matters for the mainland. Laws passed by the Parliament are valid for Zanzibar only in specifically designated union matters.

Under the Union Agreement, Zanzibar has extensive autonomy within Tanzania. Zanzibar has its own President, legislature and bureaucracy ("the Revolutionary Government of Zanzibar" led by "the Revolutionary Council") that presides over all non-union matters. The constitutional changes endorsed in the July 31, 2010 referendum provide for a government of national unity which establishes the positions of the first and second vice presidents, the former to be selected from the lead opposition party and the latter from the ruling party. Ministers must be selected from among the members of Zanzibar's House of Representatives. The cabinet must reflect the proportion of seats held by each political party.

There are currently 81 members in the House of Representatives in Zanzibar: 50 elected by the people; 10 appointed by the president of Zanzibar, two of whom must be from the opposition; five ex officio members; an attorney general appointed by the president; and 20 special seats allocated to women. Zanzibar's House of Representatives can make laws for Zanzibar without the approval of the union government as long as it does not involve union-designated matters. The terms of office for Zanzibar's president and House of Representatives are 5 years. The semi-autonomous status of Zanzibar under the Union is frequently debated, both by mainlanders and by Zanzibaris.

Tanzania has a five-level judiciary combining the jurisdictions of tribal, Islamic, and British common law. Appeal is from the primary courts through the district courts, resident magistrate courts, to the high courts, and from the high courts to the Court of Appeals. District and resident court magistrates are appointed by the Chief Justice, except for judges of the High Court and Court of Appeals, who are appointed by the president. The Zanzibari court system parallels the legal system of the union. All cases tried in Zanzibari courts, except for those involving constitutional issues and Islamic law, can be appealed to the Court of Appeals of the union. A commercial court was established on the mainland in September 1999 as a division of the High Court.

For administrative purposes, Tanzania is divided into 30 regions--25 on the mainland, three on Unguja (Zanzibar), and two on Pemba (Zanzibar's second isle). District councils (also referred to as local government authorities) act at the most local level. There are 114 councils operating in 99 districts; 22 urban, 92 rural. The 22 urban units are classified further as city (Dar es Salaam and Mwanza), municipal (Arusha, Dodoma, Iringa, Kilimanjaro, Mbeya, Morogoro, Shinyanga, Tabora, and Tanga), and town councils (the remaining 11 communities).

Principal Government Officials
President--Jakaya Kikwete
Vice President--Mohamed Gharib Bilal
Prime Minister--Mizengo Kayanza Peter Pinda
President of Zanzibar--Ali Mohamed Shein
Minister of Foreign Affairs--Bernard Membe
Ambassador to the United States--Liberata Mulamula

Tanzania maintains an embassy in the United States at 1232 22nd St NW, Washington, DC 20037 (tel. 202-939-6125).

POLITICAL CONDITIONS
Tanzania held its fourth multi-party general elections on October 31, 2010. The ruling CCM party faced its most serious competition in the multi-party era. President Kikwete was re-elected with 61.7% of the vote, reduced from 80% in 2005. The Chadema party was for the first time the recipient of the most opposition votes. Chadema's presidential candidate, Willibrod Slaa, took 27% of the vote, while CUF's Ibrahim Lipumba received 8%. Voter turnout, at 42%, was by far the lowest in Tanzanian history; previously, at least 70% of registered voters had cast ballots. Although the elections were conducted without major disturbances or irregularities, Chadema officials raised concerns about voting and tabulation procedures and about the constitutional prohibition on challenging presidential election results following their formal announcement.

CCM retained its absolute majority in Parliament, with nearly 80% of the seats. With a total of 47 seats--24 elected and 23 "special seats" for women--Chadema for the first time displaced CUF as the official opposition and selected its Chairman, Freeman Mbowe, as opposition leader. The new Parliament selected Anne Makinda as Tanzania’s first woman Speaker of Parliament. Makinda, a member of Parliament since 1975 and former minister, had served as Deputy Speaker since 2005.

Self-governing Zanzibar (3% of Tanzania’s population) has long been the tempestuous exception to mainland Tanzania's peaceful politics. Serious irregularities and sporadic violence have marred every election in Zanzibar since 1964. However, after years of abortive negotiations the main opposition party, Civic United Front (CUF), and the ruling party were able to reach a power-sharing agreement. The outcome of the July 31, 2010 referendum set the stage for peaceful general elections on October 31 in Zanzibar. The power-sharing deal eliminated the winner-take-all system, giving the losing side one of two vice president slots and ministerial positions in proportion to the seats it holds in the House of Representatives. On October 31, Zanzibar CCM presidential candidate Ali Mohamed Shein won with 50.1% of the vote, while runner-up Civic United Front (CUF) presidential candidate Seif Sharif Hamad received 49.1%. Shein selected Hamad as his First Vice President and Seif Ali, the former Union Deputy Foreign Minister, as his Second Vice President.

Type: Republic.
Independence: Tanganyika 1961, Zanzibar 1963. Union formed in April 1964.
Constitution: 1982.
Branches: Executive--president (chief of state and commander in chief), vice president, and prime minister. Legislative--unicameral National Assembly (for the Union), House of Representatives (for Zanzibar only). Judicial--Mainland: Court of Appeals, High Courts, Resident Magistrate Courts, district courts, and primary courts; Zanzibar: High Court, people's district courts, kadhis court (Islamic courts).
Political parties: 1. Chama cha Mapinduzi (CCM), 2. The Civic United Front (CUF), 3. Chama cha Demokrasia na Maendeleo (CHADEMA), 4. Union for Multiparty Democracy (UMD), 5. National Convention for Construction and Reform (NCCR-Mageuzi), 6. National League for Democracy (NLD), 7. National Reconstruction for Alliance (NRA), 8. Tanzania Democratic Alliance Party (TADEA), 9. Tanzania Labour Party (TLP), 10. United Democratic Party (UDP), 11. Demokrasia Makini (MAKINI), 12. United Peoples' Democratic Party (UPDP), 13. Chama cha Haki na Ustawi (CHAUSTA), 14. The Forum for Restoration of Democracy (FORD), 15. Democratic Party (DP), 16. Progressive Party of Tanzania (PPT-Maendeleo), 17. Jahazi Asilia.
Suffrage: Universal at 18.
Administrative subdivisions: 26 regions (21 on mainland, 3 on Zanzibar, 2 on Pemba).

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History of Tanzania

Tanganyika/Tanzania
Northern Tanganyika's famed Olduvai Gorge has provided rich evidence of the area's prehistory, including fossil remains of some of humanity's earliest ancestors. Discoveries suggest that East Africa may have been the site of human origin.

Little is known of the history of Tanganyika's interior during the early centuries of the Christian era. The area is believed to have been inhabited originally by ethnic groups using a click-tongue language similar to that of Southern Africa's Bushmen and Hottentots. Although remnants of these early tribes still exist, most were gradually displaced by Bantu farmers migrating from the west and south and by Nilotes and related northern peoples. Some of these groups had well-organized societies and controlled extensive areas by the time the Arab slavers, European explorers, and missionaries penetrated the interior in the first half of the 19th century.

The coastal area first felt the impact of foreign influence as early as the 8th century, when Arab traders arrived. By the 12th century, traders and immigrants came from as far away as Persia (now Iran) and India. They built a series of highly developed city and trading states along the coast, the principal one being Kilwa, a settlement of Persian origin that held ascendancy until the Portuguese destroyed it in the early 1500s.

The Portuguese navigator Vasco da Gama explored the East African coast in 1498 on his voyage to India. By 1506, the Portuguese claimed control over the entire coast. This control was nominal, however, because the Portuguese did not colonize the area or explore the interior. Assisted by Omani Arabs, the indigenous coastal dwellers succeeded in driving the Portuguese from the area north of the Ruvuma River by the early 18th century. Claiming the coastal strip, Omani Sultan Seyyid Said (1804-1856) moved his capital to Zanzibar in 1841.

European exploration of the interior began in the mid-19th century. Two German missionaries reached Mt. Kilimanjaro in the 1840s. British explorers Richard Burton and John Speke crossed the interior to Lake Tanganyika in 1857. David Livingstone, the Scottish missionary-explorer who crusaded against the slave trade, established his last mission at Ujiji, where he was "found" by Henry Morton Stanley, an Anglo- American journalist-explorer, who had been commissioned by the New York Herald to locate him.

German colonial interests were first advanced in 1884. Karl Peters, who formed the Society for German Colonization, concluded a series of treaties by which tribal chiefs in the interior accepted German "protection." Prince Otto von Bismarck's government backed Peters in the subsequent establishment of the German East Africa Company.

In 1886 and 1890, Anglo-German agreements were negotiated that delineated the British and German spheres of influence in the interior of East Africa and along the coastal strip previously claimed by the Omani sultan of Zanzibar. In 1891, the German Government took over direct administration of the territory from the German East Africa Company and appointed a governor with headquarters at Dar es Salaam.

Although the German colonial administration brought cash crops, railroads, and roads to Tanganyika, European rule provoked African resistance, culminating in the Maji Maji rebellion of 1905-07. The rebellion, which temporarily united a number of southern tribes and ended only after an estimated 120,000 Africans had died from fighting or starvation, is considered by most Tanzanians to have been one of the first stirrings of nationalism.

German colonial domination of Tanganyika ended after World War I when control of most of the territory passed to the United Kingdom under a League of Nations mandate. After World War II, Tanganyika became a UN trust territory under British control. Subsequent years witnessed Tanganyika moving gradually toward self-government and independence.

In 1954, Julius K. Nyerere, a schoolteacher who was then one of only two Tanganyikans educated abroad at the university level, organized a political party--the Tanganyika African National Union (TANU). TANU-supported candidates were victorious in the Legislative Council elections of September 1958 and February 1959. In December 1959, the United Kingdom agreed to the establishment of internal self-government following general elections to be held in August 1960. Nyerere was named chief minister of the subsequent government.

In May 1961, Tanganyika became autonomous, and Nyerere became prime minister under a new constitution. Full independence was achieved on December 9, 1961. Mr. Nyerere was elected President when Tanganyika became a republic within the Commonwealth a year after independence.

Zanzibar
An early Arab/Persian trading center, Zanzibar fell under Portuguese domination in the 16th and early 17th centuries but was retaken by Omani Arabs in the early 18th century. The height of Arab rule came during the reign of Sultan Seyyid Said, who encouraged the development of clove plantations, using the island's slave labor.

The Arabs established their own garrisons at Zanzibar, Pemba, and Kilwa and carried on a lucrative trade in slaves and ivory. By 1840, Said had transferred his capital from Muscat to Zanzibar and established a ruling Arab elite. The island's commerce fell increasingly into the hands of traders from the Indian subcontinent, who Said encouraged to settle on the island.

Zanzibar's spices attracted ships from as far away as the United States. A U.S. consulate was established on the island in 1837. The United Kingdom's early interest in Zanzibar was motivated by both commerce and the determination to end the slave trade. In 1822, the British signed the first of a series of treaties with Sultan Said to curb this trade, but not until 1876 was the sale of slaves finally prohibited.

The Anglo-German agreement of 1890 made Zanzibar and Pemba a British protectorate. British rule through a sultan remained largely unchanged from the late 19th century until after World War II.

Zanzibar's political development began in earnest after 1956, when provision was first made for the election of six non-government members to the Legislative Council. Two parties were formed: the Zanzibar Nationalist Party (ZNP), representing the dominant Arab and Arabized minority, and the Afro-Shirazi Party (ASP), led by Abeid Karume and representing the Shirazis and the African majority.

The first elections were held in July 1957, and the ASP won three of the six elected seats, with the remainder going to independents. Following the election, the ASP split; some of its Shirazi supporters left to form the Zanzibar and Pemba People's Party (ZPPP). The January 1961 election resulted in a deadlock between the ASP and a ZNP-ZPPP coalition.

United Republic of Tanzania
Zanzibar received its independence from the United Kingdom on December 19, 1963, as a constitutional monarchy under the sultan. On January 12, 1964, the African majority revolted against the sultan and a new government was formed with the ASP leader, Abeid Karume, as President of Zanzibar and Chairman of the Revolutionary Council. Under the terms of its political union with Tanganyika in April 1964, the Zanzibar Government retained considerable local autonomy.

On April 26, 1964, Tanganyika united with Zanzibar to form the United Republic of Tanganyika and Zanzibar. The country was renamed the United Republic of Tanzania on October 29, 1964.

To form a sole ruling party in both parts of the union Nyerere merged TANU with the Zanzibar ruling party, the Afro-Shirazi Party (ASP) of Zanzibar to form the CCM (Chama cha Mapinduzi-CCM Revolutionary Party), on February 5, 1977. The CCM was to be the sole instrument for mobilizing and controlling the population in all significant political or economic activities. He envisioned the party as a "two-way street" for the flow of ideas and policy directives between the village level and the government. On April 26, 1977, the union of the two parties was ratified in a new constitution. The merger was reinforced by principles enunciated in the 1982 union constitution and reaffirmed in the constitution of 1984.

President Nyerere stepped down from office and was succeeded as President by Ali Hassan Mwinyi in 1985. Nyerere retained his position as Chairman of the ruling CCM party for 5 more years and was influential in Tanzanian politics until his death in October 1999. The current President, Jakaya Kikwete, was elected in December 2005. Zanzibar President Amani Abeid Karume, the son of Zanzibar’s first president, was elected in 2000, in general elections that were marked by widespread irregularities throughout the Isles. His predecessor, Salmin Amour, was first elected in single-party elections in 1990, then re-elected in 1995 in Zanzibar’s first multi-party elections. These elections also were tainted by violence and serious irregularities in the voting process.

People of Tanzania

Tanzania’s population is concentrated along the coast and isles, the fertile northern and southern highlands, and the lands bordering Lake Victoria. The relatively arid and less fertile central region is sparsely inhabited. So too is much of the fertile and well watered far west, including the shores of Lake Tanganyika and Lake Nyasa (Malawi). About 80% of Tanzanians live in rural communities.

Zanzibar, population about 1.3 million (3% of Tanzania’s population), consists of two main islands and several small ones just off the Tanzanian coast. The two largest islands are Unguja (often referred to simply as Zanzibar) and Pemba. Zanzibaris, together with their socio-linguistic cousins in the Comoros Islands and the East Africa coast from modern-day southern Somalia to northern Mozambique, created Swahili culture and language, which reflect long and close associations with other parts of Africa and with the Arab world, Persia, and South Asia.

Tanzanians are proud of their strong sense of national identity and commitment to Swahili as the national language. There are roughly 120 ethnic communities in the country representing several of Africa’s main socio-linguistic groups.

Nationality: Noun and adjective--Tanzanian(s); Zanzibari(s).
Population: Mainland--41.8 million (2010 est.). Zanzibar--1.3 million (est.).
Religions: Muslim 35.0%, Christian 63.0%, other (traditional, Sikh, Hindu, Baha'i) 2.0%.
Language: Official--Kiswahili and English; national--Kiswahili.
Education: Attendance--73.2% mainland (primary), 71.4% Zanzibar. Literacy--females 67.0% mainland, 76.8% Zanzibar; males 79.9% mainland, 86.0% Zanzibar.
Health: Infant mortality rate--68/1,000. Life expectancy--52.4 years (2010 est.).
Work force: Agriculture--80.0%; industry, commerce, government--20.0%.

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