2.1 Political and Economic Development xxv. Since independence, Tanzania has undergone significant political and economic transformations. These transformations stem from a series of socio-economic and political processes spanning the past four decades. Major political shifts have influenced the economic processes at the same time as the economic process has influenced the political shifts. xxvi. Three phases mark the political and economic development of Tanzania. A characteristc of the first phase - from 1961 to 1967 - was the continuation of economic policies inherited from the colonial masters. The economy (industries, plantations, mines and other commercial activities) remained essentially in the hands of British and Asian businemen. According to Kaiser (1996), after Tanganyika independence, “…efforts were made to implement a programme which depended on foreign investment to support massive, capital intensive industrialization and agricultural development projects”. Government continued therefore, the inherited capitalist, market-oriented policies during the first years of independence. However, the expected fruits of independence did not materialise for the majority of the population. xxvii. The second phase of political and economic transformation began in 1967. Facing the enormous challenges of poverty and underdevelopment, President Julius Nyerere sought to build a new nation based on principles of egalitarianism, socialism and self-reliance. The Arusha Declaration - proclaimed in 1967 - dramatically changed Tanzania’s political and economic landscape. Drawing on a wide variety of traditional African values and European philosophies, President Nyerere developed a unique governing philosophy known as ‘Ujamaa’, or ‘familyhood’ in kiSwahili. The capitalist, market-led economy inherited at independence was replaced by a state-owned, centrally planned and controlled economy. All major means of production were nationalised. It is this philosophy that guided Tanzania on a path of peace and stability, and provided the social infrastructure and equitable economic development until the mid-1980s. xxviii. The third epoch is marked by the end of the Ujamaa policy and implementation of World Bank Structural Adjustment programmes in the mid-1980s. Well intentioned as it might have been, the the success of the Ujamaa policy, was rather mitigated. Nationalisation of productive sectors of the economy, the bloated public sector and highly subsidised social services, coupled with the external shocks of the 1970s, plunged the country into an economic crisis in the early 1980s. In 1986, the political leadership finally agreed to the structural adjustment program (SAP) led by the World Bank and the International Monetary Fund (IMF). Tanzania has since experienced a remarkable political and eco­nomic transition from a socialist country, with a centrally planned economy, to a multi-party democracy with a liberal free market economy. Political Transformation xxix. The politics of democracy in Tanzania have undergone considerable changes from the one-party political system in which major groups in society were subordinated to the supremacy of the ruling party to multi-partism, from 1992, to greater freedom for various groups in society to express their interests outside the ambit of the single party. xxx. After independence in 1961, the immediate challenge to TANU, the Party that led the country to independence, was to redefine its role from being in opposition to becoming a ruling party. The TANU Government inherited the very centralised bureaucratic structures of the colonial state that generally restricted civil society involvement and were based on social exclusion politics. In the process of transforming itself into a political party in power, the ruling party did not prioritize certain the basic democratic principles it had been fighting for. xxxi. Democratic institutions were weakened as the ruling party took steps to reduce the power of local councils and cooperatives. Locally-based development initiatives such as self-help schemes were also eroded. In 1972, TANU endorsed a decentralisation exercise replacing district councils with a centrally-controlled administrative apparatus. Certain administrative powers were transferred from the central ministries to regional and district levels as an option towards democratising the decision-making processes. However, this exercise involved abolishing institutions such as town and city councils which were viewed as popularly established. 4