‘Economic freedom vital’

DAR ES SALAAM: TANZANIA’S ambition to build a competitive economy under Vision 2050 will depend heavily on expanding economic freedom and creating greater space for the private sector to drive investment, innovation, production and employment.

The Vision 2050 (Dira 2050) assigns the private sector a major role, expecting it to drive roughly 70 per cent of the country’s economic transformation and implementation over the next 25 years. The public sector will handle the remaining 30 per cent as Tanzania targets a 1 trillion US dollar economy.

Economic analysts and policy researchers have stressed that the State should concentrate on areas where it has a clear public interest role while allowing private businesses greater room to compete.

Dr Rosemary Mnongya, a lecturer and researcher from Ardhi University, said countries with lower government involvement in commercial activities and lower tax burdens generally provided greater room for private economic decisions.

Speaking in Dar es Salaam during a recent discussion on the size of government and economic freedom, Dr Mnongya said economic freedom was closely linked to the extent to which individuals, households and businesses were free to make their own economic decisions, rather than having resources and economic activity determined by government taxation, spending and ownership.

However, she stressed that economic freedom did not mean eliminating government. Government investment remained essential in sectors such as education, health, security, infrastructure and the rule of law, particularly where private provision could not adequately meet public needs.

Dr Rosemary said government expenditure could also complement private sector development by providing infrastructure, human capital and essential public services.

Founder and Executive Director of Liberty Sparks, Mr Evans Exaud, said the central question should not simply be whether government should invest, but whether public resources are being used in ways that generate sufficient longterm economic and social returns.

“The question should be what we get from every shilling used through government,” Mr Exaud said, stressing the need for greater efficiency, transparency and accountability in public spending.

He said government investment in infrastructure, electricity, technology and other strategic areas remained important, but decisions should be based on their ability to generate sustainable economic and social benefits.

He also called for public institutions and state-owned enterprises to be assessed on their productivity, financial sustainability and contribution to the public interest.

“The goal should not simply be more employees or fewer employees. The question is whether the structure produces better services and outcomes,” he said.

Commenting, Mr Prudence Lugendo, policy specialist from Agricultural Growth Corridors of Tanzania (AGCOT) said increasing private sector participation would broaden Tanzania’s tax base because a growing number of businesses and taxpayers would enable the government to collect more revenue without necessarily imposing higher tax rates.

“If you expand the private sector, you increase the number of taxpayers. Rather than imposing high taxes on a few people, the government can apply lower taxes and collect revenue from a broader tax base,” he said.

He added that economic freedom required a business environment in which entrepreneurs could establish and expand businesses without unnecessary regulatory barriers.

Policy Forum Programme Officer Samuel Mkwatwa said the government should focus on creating laws, policies and regulations while allowing the private sector to undertake most commercial activities.

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He argued that government involvement in businesses could increase operational costs and expose the State to financial burdens, particularly where public enterprises performed poorly.

“If these activities were given to the private sector, the government would collect more taxes while carrying a smaller operational burden,” he said.

Mr Mkwatwa said greater competition could also benefit consumers through lower prices, improved services and innovation, citing telecommunications as an example of how competition could transform service delivery.

He said Vision 2050 provides hope because it recognises the need for a competitive economy, largely driven by the private sector. However, he cautioned that achieving the vision would require effective implementation.

He said the government should progressively create space for private investment in commercial sectors while retaining strong oversight to ensure fair competition and protect public interests.

The shift towards a private-sector-led economy, they argued, would not mean a weaker government, but a more focused and efficient one capable of concentrating scarce public resources on areas where State intervention is most needed.