What Magufuli presidency means for Uhuru’s reign

I gave a talk on the economy to a youthful management team of a Kenyan company recently that elicited an unexpected reaction to what I thought was an obvious matter of fact, this being that Tanzania is on course to overtake Kenya’s economy in size — in five years at most — and if the current growth differential is maintained, Tanzania’s economy will be at 20 per cent larger than ours in a decade.

The observation surprised these young “digital” Kenyans and left their nationalist egos deflated.

From an economic perspective, this reaction is irrational.

The prosperity of our neighbours and East Africa Community (EAC) partners is in our interest since they are our most important markets, and the bigger the EAC economy as a whole, the more attractive it is as an investment destination.

The Kenya-Tanzania economic rivalry has its origins in the 1967 Arusha Declaration in which Tanzania adopted its “Socialism and Self Reliance” ideology popularly known as “Ujamaa.”

This set Tanzania on an ideological collision course with Kenya’s capitalistic orientation.

As Tanzania’s economy faltered, it provided a useful counterpoint for Jomo Kenyatta’s government against criticism of brazen crony capitalism.

Similarly, Nyerere’s Government used Kenya’s growing inequality to ward off criticism of Ujamaa.

The rivalry was aptly captured by Radio Tanzania’s epithet of Kenya as a ‘‘man-eat-man” society and the retort from Kenya, attributed to Charles Njonjo, that Tanzania was a “man-eat-nothing” society.

The bad blood culminated in the collapse of the first East African Community.

In 1985, Nyerere made history by acknowledging the failure of Ujamaa and retiring himself voluntarily, only the third African president to do so (after Leopold Senghor of Senegal (1980) and Amadou Ahidjo of Cameroon (1982) and one of only four to date — the venerable Nelson Mandela is the fourth.

While the capitalism-socialism dichotomy has dominated discourse on the divergent paths that Kenya and Tanzania took after independence, it is one of three, and in my view the less salient one.

The other two dichotomies are political vis-à-vis economic development and moral-ethical leadership dichotomy.

DEVELOPMENT AND FREEDOM

Kwame Nkrumah famously advised newly independent African countries to seek first the political kingdom and all else would follow. Nyerere quite evidently shared Nkrumah’s view.

His enduring legacy was to meld Tanzania’s ethnic groups into a nation. Tanzania is without doubt East Africa’s most socio-politically cohesive country.

The successful promotion of Kiswahili into a universally spoken language contributed to this nationhood.

But perhaps more significant was Nyerere’s leadership by example— he was “tribe blind.”

Nyerere’s prioritization of political development seems to be rooted in his belief that freedom and development are inextricable, a view that predates 1998 economics Nobel Laureate Amartya Sen’s popularization of the idea of “development as freedom.”

In “Freedom and Development” Nyerere writes: “Freedom and development are as completely linked together as are chickens and eggs. Without chickens you get no eggs; and without eggs you soon have no chickens. Similarly without freedom there is no development and without development you soon lose your freedom.”

He elaborates freedom as consisting of three freedoms namely national freedom (i.e. independence), freedom from “ignorance, poverty and disease” (i.e. from material deprivation), and personal freedom, specifically an individual’s “right to freedom of speech, freedom to participate in all decisions that affect his life, and freedom from arbitrary arrest because he annoys someone in authority and so on”.

By contrast, Jomo Kenyatta’s administration elevated material progress above personal freedom and civil liberties.

In his introduction to Sessional Paper No. 10 of 1965 Kenyatta declared the development debate closed.

This was a paper that justified favouring the development of high potential areas in the name of maximising economic growth, setting the country on the path of distributional grievances and criminalisation of dissent.

By the turn of the decade, Jomo Kenyatta’s State had morphed into an intolerant tribal oligarchy. Moi followed suit.

ECONOMIC GROWTH
This weak political foundation was laid bare by multiparty politics.

The ethnic cleavages that had fuelled violence in the run-up to independence had only been suppressed not resolved.

The Rift Valley exploded. In 1997, the violence spread to the Coast. A decade later, the world watched in consternation and horror as Kenya tottered on the brink.

The myth of Kenya’s exceptionalism, an island of peace in a troubled region, exploded.

The man-eat-man society epithet took on an ominous meaning.

With her solid political foundation, Tanzania had no trouble transitioning to multiparty politics.

As Kenya was convulsing in ethnic conflagrations, Tanzania was forging ahead economically.

As the chart above shows, Kenya’s economy was a third bigger than Tanzania’s in the early 90s.

This obtained until Kenya’s economy crashed in the aftermath of the 1997 elections, just as Tanzania’s was taking off. By 2003, the gap had reduced to a fifth.

Tanzania’s economy has grown by 6.1 per cent per year since 1997, Kenya’s by 3.7 per cent.

If our economy had kept pace, it would be almost 50 per cent larger than Tanzania’s.

Instead, the Kenya’s economy took another political hit in 2008, narrowing the gap to less than 10 per cent.

Instead of a $55 billion economy, we’d be a $80 billion economy. This is the economic cost of tribalism.

But it is in the moral-ethical realm that the Kenya-Tanzania dichotomy is at its most uncomfortable, which brings me to President Magufuli.

I recently introduced the Magufuli debate in a conversation with some of the President’s sidekicks.

ASSAULT ON GRAFT

The reaction was as swift as it was predictable — they changed the subject.

It is the misfortune of Uhuru Kenyatta that his presidency is now to be benchmarked against a Tanzanian President who is rekindling Nyerere’s leadership ethos — humility, modesty, integrity, the personal discipline and public service ethic.

President Magufuli’s assault on corruption has exposed the soft underbelly of Uhuru Kenyatta’s presidency.

For all his hee-haw, President Kenyatta is a reluctant graft buster.

Tethered as he still is to the Kanu kleptocracy that nurtured him, his tolerance for corruption has to be significantly greater than zero.

He is surrounded by instant millionaires.

His fallen Devolution CS Anne Waiguru evidently bought an outlandish house in a development associated with one of his close associates, what other lifestyle audit did he need?

I have read in the newspapers that Sh1.5 million of NYS money was wired to a member of Deputy President William Ruto’s staff who is still in office.

In addition to the questionable source of his largesse, the Deputy President trashes the law against public officers’ involvement in harambees with impunity week in week out.

There are of course those who have been quick to dismiss President Magufuli’s crusade as an unsustainable political stunt.

They are missing an important point.

In economics, we call what Magufuli is doing signalling.

Signalling is motivated by information market failure.

Academic credentialism is a signalling device to potential employers who cannot tell competent and incompetent job applicants apart.

CORRUPTION INTOLERANCE
The information market failure at issue here is the difficulty of honest genuine investors telling apart leaders who are serious about combating corruption from pretenders. Let me illustrate.

I wrote recently about potential investors who were asked for an eye-popping US$ 300 million bribe.

These investors had been led to believe that they were dealing with a leadership that is serious about attracting investment.

They had spent a lot of money and valuable time preparing their project, which they would not have lost if they had prior knowledge of the people they would be dealing with.

Whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance.

What’s more, his signalling is credible, as it is backed by his record of integrity and performance.

Investors can come to Tanzania with the confidence that when they encounter the corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it.

What is less remarked, and is in my view more significant, is the fact that President Magufuli’s arrival is not a historical accident.

The CCM shunned President Kikwete’s heir apparent, the wealthy scandal-prone Edward Lowassa after he was caught up in yet another corruption scandal.

Lowassa left in a huff and leveraged his dubiously acquired money to become the opposition’s flagbearer.

The CCM settled for Magufuli, a rank outsider of modest means, who went on to beat Lowassa in the election.

By ejecting Lowassa and nominating Magufuli, the CCM raised the ethical bar. By electing him, Tanzanians endorsed it.

In 2010, we congratulated ourselves for setting a high moral-ethical bar in the Constitution. When elections came, we removed the bar.

FEEDING THE BEAST OR ANGEL?
We are now hurtling to another high voltage election.

The prognosis is not great— as I observed in a previous column, every one of our elections with a defending incumbent has been violent.

And as is now customary, the economy will go into hibernation.

This will be another half a percentage point shaved off our average growth rate for the next five years.

What if we go down half a percentage point and Tanzania goes up half a percentage point?

We are looking at a Tanzania economy 20 percent larger by 2020. Tribalism is costly.

This being the season of goodwill, I end by sharing a pearl of Native American wisdom.

An old Cherokee is teaching his grandson about life.

“A fight is going on inside me,” he told the boy. “It is a terrible fight and it is between two wolves. One is Evil— he is anger, envy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority and ego”.

He continued, “The other is Good— he is joy, peace, love, hope, humility, kindness, benevolence, empathy, truth, compassion and faith. The same fight is going on inside you—and inside every other person too”.

The young boy thought about for a minute and asked his grandfather, “Which wolf will win?”

The old Cherokee simply replied, “The one you feed.”