US embassy cable - 05DARESSALAAM1307

C O N F I D E N T I A L SECTION 01 OF 04 DAR ES SALAAM 001307 
 
SIPDIS 
 
FOR AF AND INR/AA 
 
E.O. 12958:  DECL:  6/30/15 
TAGS: PREL, PGOV, PHUM, EAID, ECON, TZ 
SUBJECT:  WHITHER TANZANIA?  CHARGE'S END-OF-TOUR 
REFLECTIONS 
 
Classified by Chargi d'Affaires Michael S. Owen for 
reasons 1.4 (b) and (d). 
 
1.  (C)  Summary:  As I prepare to depart from Tanzania 
after three very enjoyable years, I see a nation with 
much unrealized potential, but with several daunting 
challenges ahead.  Tanzanians can be justifiably proud of 
a vigorous national unity, an impressive record of 
democratic transitions, and excellent macroeconomic 
numbers.  Tanzania's future growth, however, is 
jeopardized by an abysmal educational system, rampant 
corruption, and heavy donor dependency.  A lack of mid- 
level management expertise throughout the GOT makes 
utilization of much donor assistance slow and 
inefficient.  Restive Zanzibar remains a festering threat 
to national unity that will require strong leadership 
from both the GOT and GOZ.  Likely President-to-be Jakaya 
Kikwete will have the political strength to address many 
of these problems, and the next five years will present 
excellent opportunities for U.S. engagement on several 
fronts.  End summary. 
 
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The Good News: 
-------------- 
 
2.  (C)  Tanzania's recent macroeconomic record would be 
the envy of most countries throughout the world.  Since 
President Benjamin Mkapa came to power in 1995, 
Tanzania's stagnant economy has turned around.  Real GDP 
growth rates are now averaging between five and six 
percent per year, and inflation has dropped to below five 
percent.  Treasury bill rates are in the six-eight 
percent range, export earnings increased by over 20 
percent in 2004, and foreign exchange reserves now amount 
to over nine months of import cover. 
 
3.  (C)  Similarly, Tanzania's democratic record would, 
at least ostensibly, also be the envy of many countries. 
Tanzania has never had a military government, or 
experienced even an attempted coup d'etat.  Since the 
first national elections were held in 1985, nationwide 
elections have been held on a regular five-year interval 
as prescribed in the national constitution.  These 
elections have been widely regarded as having been free 
and fair.  Only in semi-autonomous Zanzibar, where the 
opposition CUF party poses a serious challenge to the 
ruling CCM, was the experience in 1995 and 2000 far less 
successful.  Unlike their counterparts in some 
neighboring states, Tanzanian Presidents have abided by 
the national constitution in stepping down after the 
maximum two terms they are allowed to serve:  former 
President Ali Hassan Mwinyi voluntarily stepped down in 
1995, and President Mkapa is set to do so later this 
year.  Indeed, Tanzanians almost unanimously say it would 
be unthinkable for a President to subvert the 
constitution and attempt to serve longer than two terms. 
 
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Secondary Education in Crisis 
----------------------------- 
 
4.  (C)  Despite these evident successes, Tanzania faces 
many daunting challenges that, left unresolved, will 
impede economic growth and potentially disrupt national 
unity.  Perhaps the most obvious of these challenges is 
the dysfunctional national education system.  Mkapa's 
government has managed some significant success in 
widening access to primary education:  the primary school 
enrollment ratio has increased from 66.8 percent in 1995 
when Mkapa took power, to 88.5 in 2004.  Secondary 
education is in abysmal condition however, and there are 
few signs of hope on the horizon. 
 
5.  (C)  Tanzania's secondary school enrollment ratio is 
just below seven percent, one of the lowest figures in 
Africa.  To make matters worse, all primary education is 
in Kiswahili, and all secondary education is in English. 
This means that those few students who actually make it 
into secondary school face the immediate daunting 
prospect of having to learn a new language while at the 
same time mastering their coursework.  Not surprisingly, 
the dropout rate in the first years of secondary school 
is quite high.  As I have traveled around Tanzania, I 
have been repeatedly struck by the crumbling 
infrastructure, poorly motivated (or absent) teachers, 
and dearth of educational supplies that routinely 
characterize Tanzanian public schools.  As the East 
African Community becomes a reality, Tanzanians will have 
to scramble to compete with their far better-educated 
neighbors.  More troubling still, the lack of quality 
public secondary education makes alternatives, including 
private and unregulated Islamic schools, attractive to 
many parents. 
 
6.  (C)  Tanzania's educational woes manifest themselves 
in the severe lack of capacity in the country's civil 
service.  Virtually every Ministry with which I've worked 
is headed by Permanent Secretaries and Office Directors 
who are dedicated, hard-working, and resourceful. 
Unfortunately, almost all lack a strong supporting cast. 
The lack of skilled mid-level management in virtually 
every Ministry means that senior management is 
ridiculously overburdened and that efficiency suffers. 
The results are all too evident:  for example, Tanzania 
has received over USD 500 million in Global Fund funding, 
but has been able to spend only some USD 20 million thus 
far.  A 2002 GOT study found that the Health Ministry was 
unable to account for almost 50 percent of its budget. 
 
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Corruption:  Some Reasons for Optimism 
-------------------------------------- 
 
7. (C)  Corruption is also a major problem throughout the 
GOT, and one that our business contacts repeatedly 
complain about.  President Mkapa came into power 
promising to "do something" about corruption, but has 
thus far made little apparent headway.  Transparency 
International ranked Tanzania 81st out of 85 countries 
with a score of 1.9 on its corruption perception index in 
1998, the first year Tanzania was included in its survey. 
In 2004 Tanzania was ranked 94th out of 146 countries, 
with a score of 2.4, on a scale in which less than 3.0 
indicates "rampant corruption."  There are some reasons 
for optimism on this front however:  The GOT has 
enthusiastically embraced the possibility of Millennium 
Challenge threshold funding to combat corruption, and is 
currently finalizing a robust proposal with several 
ambitious steps, including active participation by the 
private sector.  Several of our business contacts have 
hailed this as a major step in the right direction, and 
have noted that measurable progress on corruption could 
be a precursor to increased private investment in 
Tanzania. 
 
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Donor Dependency 
---------------- 
 
8.  (C)  Due in part to its record of political 
stability, Tanzania has long been the darling of 
multilateral and bilateral donors.  The Scandinavians 
have their largest development assistance programs in the 
world here, and the UK, Netherlands, Germany, and Japan 
also have very large programs.  Canada is now set to make 
Tanzania one of its largest assistance recipients. 
Tanzania was one of the first countries to benefit from 
HIPC debt relief, and will receive debt relief of some 
USD 3 billion. 
 
9.  (C)  While this assistance has clearly played a key 
role in Tanzania's development, particularly since 1985, 
it has also created serious donor dependency.  Some 40 
percent of the GOT's revenue comes from donors, either 
via direct budget support or via specific project 
finance, and there is no sign that this number is 
declining.  It was been widely remarked that Founding 
Father Julius Nyerere's "Ujama Socialism" created a 
nationwide climate in which personal initiative and 
entrepreneurial spirit were anathema.  This is applicable 
to development assistance as well, and is recognized by 
President Mkapa, who has on several occasions exhorted 
Tanzanians to "stand on our own two feet," and not to 
"expect hand-outs forever." 
 
-------------------------------- 
The Need for a Viable Opposition 
-------------------------------- 
 
10.  (C)  In the long run, I believe Tanzania would be 
well-served by the rise of a viable opposition party that 
could pose a serious challenge to the CCM throughout the 
nation.  At the present time, most senior and even mid- 
level GOT officials see their primary loyalty as being to 
the CCM, and public service takes a back seat.  I have 
been struck by the extent to which Regional 
Commissioners, District Commissioners, and other 
officials around the country flaunt their CCM credentials 
first and foremost:  every public dedication of a project 
becomes an occasion for trumpeting the accomplishments of 
the CCM, often to the embarrassment of the donors who 
actually paid for the project.  A viable opposition would 
present the Tanzanian electorate with serious choices and 
help foster a more accountable and professional civil 
service. 
 
--------------------------------------- 
The Biggest Challenge of All:  Zanzibar 
--------------------------------------- 
 
11.  (C)  One of the most pressing problems facing 
Tanzania is the ongoing political crisis on volatile 
Zanzibar, where the ruling CCM party faces a strong test 
from the opposition CUF in elections in October.  Unlike 
the mainland, Zanzibar's elections in 1995 and 2000 were 
marred by fraud and violence, and more of the same is 
quite possible later this year.  The fact that the CUF 
membership is almost exclusively Muslim lends unfortunate 
sectarian undertones to the contest.  Although the 
leaders of both parties are saying the right things at 
this stage, it is abundantly clear that emotions are 
running high on all sides and there will be a strong 
reaction from whichever party loses. 
 
12.  (C)  The probable next Union President Kikwete is 
extremely close to Zanzibari President Karume, and will 
almost certainly stand by Karume no matter what happens, 
while at the same time trying to evade direct 
responsibility for any fraud or violence.  Only strong 
and mature political leadership can avert problems in 
Zanzibar, and sadly, I don't see much evidence of that at 
the moment.  Zanzibar will continue to be a nagging thorn 
in the side of Tanzania until the CCM leadership takes 
action to ensure a free and fair election, and then both 
sides accept the result.  Failure to follow this course 
will only create deeper animosities and foster 
radicalism. 
 
---------------------------------------- 
What to Expect From a Kikwete Government 
---------------------------------------- 
 
13.  (C)  Kikwete is certainly aware of all these issues, 
and I believe he will act quickly to address at least 
some of them.  Kikwete has told me on several occasions 
that there is a "generation gap" in Tanzania, and only 
after "Ujama socialism" old-timers move on and a younger 
set of Tanzanians come to the fore will Tanzanian society 
become less aid dependent and more dynamic.  Kikwete's 
popularity among young Tanzanians will probably help 
speed up this transition, and I expect to see many new, 
and younger, faces in a Kikwete cabinet.  He has spoken 
to me several times about the importance of secondary 
education and the need to improve Tanzania's performance 
in this area.  Kikwete is also deeply concerned by the 
impact of HIV/AIDS, very appreciative of our efforts 
under PEPFAR, and eager to work with the U.S. on health 
issues.  We have had and should continue to have an 
excellent working relationship with Kikwete, but as 
President we should not lose sight of the fact that he 
will be as ruthless as anyone in maintaining the CCM on 
top of the heap. 
 
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Opportunities Ahead 
------------------- 
 
14.  (C)  Kikwete has the charisma and broad popularity 
to enable him to exert bold leadership and make 
significant progress in a number of areas.  This 
transition provides us with the opportunity to engage 
with him in a number of key areas: 
 
--  Health:  Kikwete is highly appreciative of PEPFAR, as 
well as the President's new Malaria Initiative.  He is 
almost certain to bring in younger and more dynamic 
leadership to the lackluster Health Ministry, and 
implementation of these programs should improve 
dramatically as a result. 
--  Education:  Given Kikwete's stated interest in 
education, we have an opportunity to make significant 
strides here if funding is available.  Improving 
Tanzania's secondary education is key to promoting 
economic competitiveness and to stemming the allure of 
unregulated Islamic schools, particularly in Zanzibar. 
 
--  Governance:  If Tanzania receives Millennium 
Challenge threshold funding for anti-corruption, we'll be 
in a great position to make a difference in this area, 
and should push Kikwete to use his strong position to 
move aggressively to show quick and demonstrable results 
on corruption. 
 
--  Economic Growth:  Mkapa has done a great deal to move 
Tanzania's economy away from the old-line socialist model 
toward free-market capitalism, and we should urge Kikwete 
to stay the course, promote investment, and work toward 
lessening Tanzania's debilitating dependence on foreign 
aid. 
 
--  Zanzibar:  No problem is more important or more 
vexatious.  Beyond the possibility of electoral fraud and 
violence lies a longer term threat of increased 
radicalism and separatist sentiments in the isles. 
Strong leadership from the union Government will be vital 
in heading off this threat, and we and other like-minded 
donors will need to continue to push Kikwete to lay the 
groundwork for truly democratic elections on Zanzibar, 
and to accept an opposition-led government on Zanzibar if 
need be. 
 
--  Youth outreach:  We should also utilize Kikwete's 
focus on the younger generation to continue our highly 
successful efforts to reach out to Tanzanian youth, 
particularly in predominantly Muslim areas. 
 
15.  (C)  The USG has achieved a great deal in Tanzania 
during the past three years, and I leave at a time when 
dramatic changes are on the horizon.  Challenges and 
opportunities abound, and I am cautiously optimistic that 
the years ahead will see significant progress for this 
endlessly fascinating country. 
 
OWEN