Tanzanian privatisation steams ahead

A recent fatal train crash may put off investors

By Daniel Dickinson in Dar es Salaam, Tanzania

Steam locomotive 2927, built in Scotland in 1955 and for many years a reliable workhorse on the Tanzania railway network, may not be the best advertisement for the forthcoming privatisation of the Tanzanian Railway Corporation (TRC).

Billowing black smoke as it labours around the network on a publicity tour, it is however an apt symbol for a railway that is outdated and inefficient.

For sale: One old loco, one owner

The Tanzanian government is hoping that an investor may be interested in buying locomotive 2927 and more importantly leasing the tracks on which it runs.

TRC's marketing manager, Godfrey Mblango, told BBC News Online that despite appearances, the railway does have a future.

"We are seeing more passengers using the service and freight transport is growing steadily as the economy improves, so this is a business worth investing in," he said.

Some would consider that assessment as over optimistic.

Memories of the train crash near Dodoma in June this year in which almost 300 people were killed are still strong and are bound to make investors nervous.

On the block

TRC is just one of around 400 state-owned companies, that have been or are being privatised.

Those companies include everything from handicraft shops to regional trading and transport companies as well as the major industries like electricity, telecoms and the national airline.

Mass privatisation began in Tanzania in 1993 and was part of a worldwide trend towards selling off state-owned businesses.

It has turned out to be a mammoth programme not least because Tanzania's socialist past meant that the country was top heavy with state-owned businesses.

Loosening control

Dr Heavenlight Kavishe, the chief co-ordinator of the Parastatal Sector Reform Commission (PSRC) which is responsible for privatisation said almost every part of the economy was controlled by the state.

"We had a policy which meant that all the means of production were in the hands of the people and by the people we meant the government," he said.

Kavishe is responsible for selling-off the state's assets

"We thought the state would do better, but this did not turn out to be the case."

The privatisation process was undertaken with particular enthusiasm by the Tanzanian authorities as just a handful of the 400 state-owned companies were making a profit.

Dr Kavishe said it was widely accepted that the impact of the loss-making companies on the economy was "colossal" because "the government had to provide huge subsidies to keep them afloat".

Some hitches

Around 80% of the companies have now been sold off however it now looks likely that selling the remainder won't be completed by the December 2003 deadline.

Critics have perhaps unfairly taken that delay as a sign of the failure of privatisation, although they say that is just one of many problems.

Charles Sammang'ombe, the general secretary of the Communication and Transport Workers union said it has been an unfair process which has produced poor results.

"There has been no transparency and the workers have not been involved in discussing the privatisation process," he said.

The process has not been without hitches.

A row has developed between the government and the European consortium which holds a 35% stake in the Tanzania Telecommunications Company over shares which have not been paid for.

And there was only one bidder, South African Airways, to buy Air Tanzania while the PSRC has had to retake control of a number of small companies which have failed in private hands.