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BACKGROUND NOTES:  TANZANIA
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
U.S. DEPARTMENT OF STATE

MAY 1994
Official Name:  United Republic of Tanzania

ECONOMY
Tanganyika/Tanzania
Substantial measures have been taken to liberalize the Tanzanian economy along
market lines and encourage both foreign and domestic private investment.

In early 1986, the Government of Tanzania embarked on an adjustment program to
dismantle state economic controls and encourage more active participation of
the private sector in the economy.  The program included a comprehensive
package of policies which reduced the budget deficit and improved monetary
control, substantially depreciated the overvalued exchange rate, liberalized
the trade regime, removed most price controls, eased restrictions on the
marketing of food crops, freed interest rates, and initiated a restructuring
of the financial sector.

With the establishment of an institutional framework for the privatization of
parastatal enterprises, reduction in this costly and inefficient area has also
begun.

The reform program increased external resources, food production, and food and
non- traditional exports.  During the 1986-92 period, both GDP and exports
increased at an average of about 4% per year, after near GDP stagnation in
1993.  The government also launched programs to rehabilitate key
infrastructure (roads, railways, and ports).

However, Tanzania's economy remains overwhelmingly donor dependent, with as
much as 40% of GDP consisting of external aid.  Furthermore, the public sector
still accounts for more than 70% of GDP, and periodic foreign exchange
shortages and an inefficient bureaucracy and legal system hamper business
enterprise.

Agriculture dominates the economy, providing over 60% of GDP and 85% of
employment.  Cash crops, including coffee, tea, cotton, cashews, sisal,
cloves, and pyrethrum make up 48% of export earnings.  The volume of all major
crops, both cash and goods, which have been marketed through official channels
has increased over the past few years, but large amounts of produce never
reach the market.  Poor pricing and unreliable cash flow to farmers continue
to frustrate the agricultural sector.

Accounting for less than 10% of GDP, Tanzania's industrial sector is one of
the smallest in Africa.  It grew 12% during the late 1980s but continues to
show overall signs of decline.  It has been hit hard recently by persistent
power shortages caused by low rainfall in the hydroelectric dam catchment
area, a condition compounded by years of neglect and bad management at the
state-controlled electric company.

Main industrial activities include producing raw materials, import
substitutes, and processed agricultural products.  Foreign exchange shortages
and mismanagement continue to deprive factories of much needed spare parts and
have reduced factory capacity to less than 30%.

Despite Tanzania's past record of political stability, an unattractive
investment climate has discouraged foreign investment.  Government steps to
improve that climate include redrawing tax codes, floating the exchange rate,
licensing foreign banks, and creating an investment promotion center to cut
red tape.  In terms of mineral resources and the largely untapped tourism
sector, Tanzania could become a viable and attractive market for U.S.  goods
and services.

Zanzibar
Zanzibar's economy is based primarily on the production of cloves (90% grown
on the island of Pemba), the principal foreign exchange earner.  Exports have
suffered recently with the downturn in the clove market.  Tourism is an
increasingly promising sector, and a number of proposals are being considered
for new hotels and resorts.

The Government of Zanzibar has been more aggressive than its mainland
counterpart in instituting economic reforms and has legalized foreign exchange
bureaus on the islands.  This has loosened up the economy and dramatically
increased the availability of consumer commodities.  Furthermore, with
external funding, the government plans to make the Port of Zanzibar a free
port.  Rehabilitation of current port facilities and plans to extend these
facilities will be the precursor to the free port.  The island's manufacturing
sector is limited mainly to import substitution industries, such as
cigarettes, shoes, and processed agricultural products.  In 1992, the
government designated two export-producing zones and encouraged the
development of offshore financial services.  Zanzibar still imports much of
its staple requirements, petroleum products, and manufactured articles.


FOREIGN RELATIONS
Along with many other Third World nations, Tanzania based its foreign policy
on the concept of nonalignment with both major power blocs.  Former President
Nyerere defined nonalignment as the right of small nations to determine their
own policies in their own interests and to have an influence in world affairs
that accords with the right of all people to live equally.

Tanzania played an important role in several regional and international
organizations including the Non-Aligned Movement, the front- line states,
Southern Africa Development Coordination Conference, the Organization of
African Unity (OAU), the United Nations, and its specialized and related
agencies.

As one of Africa's best-known elder statesmen, Nyerere has been involved in
many of these organizations, particularly as former chairman of the six
front-line states concerned with southern Africa and as former chairman of the
OAU (1984-85).  Tanzania supports the tenets of majority rule and
self-determination for all of southern Africa and has been a principal
supporter of liberation groups in that part of the continent.

In recent years, Tanzania has joined with many other developing countries to
support a new international economic order.  Tanzania advocates measures to
stabilize international commodity prices and provide balance-of- payments
support for countries facing unfavorable terms of trade.  It acknowledges the
need for structural adjustment in developing economies but also stresses the
importance of developed country cooperation in the transfer of resources and
technology, debt settlement, and increasing access to primary commodity
markets.

Tanzania enjoys particularly close ties with neighboring Uganda, Zambia, and
Mozambique.  In 1977, the Kenyan, Tanzanian, and Ugandan partnership in the
East African Community, established 10 years earlier, was dissolved.  The
breakup resulted in suspension of nearly all trade between Tanzania and Kenya
and closure of the border to most tourist travel.  The border was re-opened in
1984, and relations with Kenya have improved significantly.


U.S.-TANZANIAN RELATIONS
The United States enjoys cordial relations with the United Republic of
Tanzania.  The United States has historically sought to assist Tanzania's
economic and social development through bilateral and regional programs
administered by the U.S.  Agency for International Development (USAID).  From
1953 to 1992, total US economic assistance was $480 million in loans, grants,
and PL 480 Title II (Food for Peace).

In the 1970s, USAID focused on strengthening national institutions in
agriculture and, to a lesser degree, on health.  In agriculture, food crops
and livestock were emphasized.  Health care assistance has supported labor
development, particularly training for maternal and child care health aides.
Training is an important part of the USAID program, and almost 2,000
Tanzanians have received either long- or short-term training, primarily in the
United States.

The AID program of the 1990s, however, is emphasizing improving the rural
transportation network, private enterprise development, and family planning.

The Peace Corps program, revitalized in 1979, provides assistance in wildlife
management, teaching, forestry, and agricultural mechanics on both the
mainland and on Zanzibar.  There are about 80 volunteers.

Principal U.S.  Embassy Officers Ambassador--Peter Jon de Vos Deputy Chief of
Mission--Steven Browning Director, USAID--Dale B.  Pfeiffer Public Affairs
Officer (USIS)--Gregory Lynch Peace Corps Director--James E.  Mayer

The U.S.  embassy in Tanzania is located at 36 Laibon Road, Dar es Salaam.
The consulate in Zanzibar was closed on June 15, 1979.


Travel Notes
Customs:  Visas and inoculations against cholera and yellow fever are required
for entry.

Climate and clothing:  Lightweight, tropical clothing is worn year-round,
although in the cooler season (June-September), a light wrap is useful in the
evenings.  Due to cultural sensitivities, conservative dress is recommended.

Health:  Community sanitation is poor.  Tapwater is not potable.  Boil and
filter water, and prepare fruits and vegetables carefully.

Telecommunications:  Direct-dial telephone and cable services are available to
the United Kingdom, United States, and other parts of the world.  Tanzania is
eight standard time zones ahead of eastern standard time and does not observe
daylight-saving time.

Transportation:  Dar es Salaam is served by several international airlines.
Taxis are available 24 hours at certain locations; fare should be agreed upon
in advance.  Buses and trains generally are overcrowded.  Traffic moves on the
left.


Further Information
Available from the Superintendent of Documents, U.S.  Government Printing
Office, Washington, DC 20402:

American University.  Tanzania:  A Country Study.  Key Officers of Foreign
Service Posts (Guide for Businesses).

For information on economic trends, commercial development, production, trade
regulations, and tariff rates, contact the International Trade Administration,
U.S.  Department of Commerce, Washington, DC 20230.


Published by the United States Department of State -- Bureau of Public Affairs
-- Office of Public Communication -- Washington, DC May 1994 -- Managing
Editor:  Peter Knecht

Department of State Publication 8097 -- Background Notes Series Contents of
this publication are not copyrighted unless indicated.  If not copyrighted,
the material may be reproduced without consent; citation of the publication as
the source is appreciated.  Permission to reproduce any copyrighted material
(including photos and graphics) must be obtained from the original source.

For sale by the Superintendent of Documents -- U.S.  Government Printing
Office, Washington, DC 20402.