Shortages of goods caused by lowered earnings of foreign exchange permeated virtually every sector of the country’s economy. Scarcities of vital inputs meant that the new industrial framework was at best operating at a small fraction of its installed capacity. This, in turn, meant that the consumer goods these industries produced, ranging from relatively nonessential items, such as beer, soft drinks, and cigarettes, to important goods such as clothing, automobile tires, and construction materials, were perpetually in short supply. As the foreign exchange shortage deepened, the country’s public services deteriorated as well. Tanzania was unable to afford the spare parts and fuel supplies required to operate its fleet of publicly operated buses and trash vehicles, the medications and equipment necessary for its public hospitals and rural clinics, the classroom materials necessary for the school and university system, and practically all the inputs necessary to maintain the country’s infrastructure. Electricity brownouts and water shortages occurred daily; hospitals were so short of anesthetics, antibiotic medication, anti-diarrheal drugs, saline kits, and even ordinary bandages that patients were frequently required to bring their own. University instructors, lacking paper, wrote their syllabi on the chalkboard; their students took notes on the margins of scrap paper. Tanzanians who commuted to work sometimes had to walk for hours each way when bus service became unavailable. Tanzania in the second half of the 1970s was a country in which practically everything was in short supply: even the most basic consumer goods such as batteries, tools, light bulbs, automobile parts, and kitchen utensils became difficult to obtain.
Scarcities of essential goods gave rise to parallel markets; these spread rapidly throughout the country. The parallel marketplace provided any consumer item that was unavailable in the legal marketplace. The difficulty was that parallel markets were prone to spiraling inflation, which reflected both the scarcity of goods and the element of risk associated with their contraband character. The remarkable feature of the parallel marketplace in Tanzania and in other countries where such markets have assumed a large place is the variety of goods they deliver. Tanzania’s parallel markets were brimming not only with core necessities such as clothes, maize meal, cooking oil, and malaria drugs, but with a wide range of luxury goods, including air conditioners, portable generators (popular because of the frequent electricity shortages), and all manner of consumer goods including cameras, watches, music systems, and video players. Tanzania’s economic decline became a leading example of a continent-wide story of a seemingly irreversible downward spiral. Falling producer prices for export crops, which lowered farmers’ incentives, resulted in a rapid falloff in the country’s export earnings, which, in turn, crippled the country’s import capability including industrial and agricultural inputs. Decreasing producer prices combined with intensified efforts at social regimentation, such as the collective villages’ scheme, also resulted in dramatically lowered levels of marketed food staples. Tanzania was not only suffering from a virtual collapse of industrial production, but also experiencing a series of other critical scarcities, including shortages of food staples such as maize and rice.
By the mid-1970s, the country’s leaders found themselves confronted with a painful choice: divert the scarce flow of foreign exchange toward food imports to avert widespread starvation, thereby further hampering the effort to construct an import-substituting industrial sector, or allow foreign exchange earnings to continue to flow to industries, thereby widening the spread of famine. President Nyerere chose the former, allocating several hundred million dollars to food imports between 1974 and 1977. This decision helped to avert a severe famine, but it meant that the government had to withdraw precious financial resources from the industrial and agricultural sectors to finance grain imports. After twenty years of independence, Tanzania’s economic state of affairs was a dramatic reversal from the early 1960s, when it had enjoyed robust agricultural growth. Immediately after independence, Tanzania had enjoyed one of the highest rates of growth in food production of any of the newly independent sub-Saharan nations; it was not only self-sufficient in major food staples but was rapidly becoming a significant maize exporter to nearby countries, such as the Democratic Republic of Congo, Zambia, and Malawi. The export sector of Tanzania’s agricultural economy was also enjoying some success. At independence, Tanzania had been on track to become a significant coffee exporter as well as an important contributor to international markets in cotton, tea, sisal, and cashew nuts. Indeed, aside from the epochal failure of the colonial government’s attempt to introduce groundnut cultivation, Tanzania’s abundant supply of good agricultural land seemed to offer favorable growing conditions for many of the world’s major exportable crops.5
The immediate post-independence economic success was short-lived. Within less than a decade, Tanzania’s production of maize, wheat, and rice fell so far short of self-sufficiency that it was forced to import large volumes of food grains. Imports of various grains during the mid-1970s were averaging more than one hundred thousand metric tons per year, a huge economic cost. During 1974 and 1975 alone, Tanzania imported nearly five hundred thousand metric tons of maize at a cost of almost $100 million. Imports of wheat and rice to supplement the country’s maize needs raised the cost of food imports even higher, adding at least an equivalent sum to the burden on the country’s meager foreign exchange reserves. These were staggering amounts for a poor agricultural country with a population of only about fifteen million. The collapse of the agricultural sector was so severe that even farmers had to receive food assistance. Although drought conditions in some food-producing districts contributed to agrarian difficulties, the basic fact was that Tanzania had failed to translate the president’s vision of agrarian self-sufficiency into economic reality.
The root cause of economic decline was the stagnation of the export sector. Production of virtually every major export crop declined dramatically during that period, diminishing the country’s capacity to generate the foreign exchange required to sustain both food imports and the import of inputs necessary for the country’s fledgling industries. The World Bank captured the broad parameters of this decline in its classic 1981 study, Accelerated Development in Sub-Saharan Africa.
During the last fifteen years, the volume of exports in Tanzania has declined dramatically. In 1980, the total exports of the country’s major commodities (cotton, coffee, cloves, sisal, cashews, tobacco and tea, which account for two-thirds of the country’s export earnings) were 28 percent lower than in 1966 and 34 percent lower than in 1973. As a percentage of GDP, export earnings fell from 25 percent in 1966 to only 11 percent in 1979.6
Since earnings from agricultural exports were the principal source of funds for food imports, export failure was doubly disastrous. Major contributions of foreign assistance were necessary to avert rural starvation and severe depression in the urban economy.
Evidence of the country’s dismal economic performance manifested itself in the deterioration of the roads, schools, and medical facilities and the unreliability of public utilities such as water and electricity. Although members of the political elite managed to live well despite all that was going on, others suffered, especially rural Tanzanians, the designated beneficiaries of the president’s vision. Economic decline widened the material gap between urban citizens and rural farmers, already the poorest citizens. By the end of 1975, Nyerere’s vision of an agriculturally self-sufficient nation able to support itself and, therefore, free to pursue its own independent course in world affairs had given way to the reality of a nation dependent for its economic survival on the generosity of the donor community.
The decline of the export sector had ripple effects that permeated the entire economy. In addition to making Tanzania