CHAPTER SIX SOCIO-ECONOMIC GOVERNANCE 6.1. Overview 845. Sustained Socio-economic Development (SED) implies continuous improvement in the people’s well-being and living standards. It is premised on the principle that, in the context of accelerated economic growth, poverty can be effectively tackled through, (i) the promotion of democracy, good governance, peace and security; (ii) the development of human and material resources; (iii) gender equality; (iv) openness to international trade and investment; (v) allocation of appropriate resources to the social sector; and (vi) building strong partnerships between Government, the private sector and civil society. 846. Tanzania has taken significant steps towards sustained socio-economic development since the formation of the Union between Mainland Tanzania and Zanzibar in 1964. National socio-economic development processes can be classified into three broad distinct phases. The first phase which began at the time of the Arusha Declaration in 1967 was the period of Ujamaa socialism. 847. This policy placed the economy under state entrepreneurship: the blueprint and framework for socio-economic development and self-reliance. The policy implied that the economy would be premised on socialist-oriented political and economic policies. This led to the creation of a one-party system, declared state controls of the economy, and nationalisation of all major enterprise. The capitalist, private sector market-led economy inherited from colonial Britain at independence was replaced by a state-owned, centrally-planned and controlled economy. Private sector entrepreneurs were looked upon as exploiters and enemies of the state. 848. The extensive compulsory “villagesation” programme of the Ujamaa philosophy of development promoted some amount of equity in society. Investments in social services from this phase of national socio-economic development remain fundamental to present economic developments and changes in the country. These include all levels of education and health facilities. 849. Although the period experienced human capital investments, the economy and per capita incomes grew by an annual 0.7 per cent128, propelled by the public administration sector, with some contribution from agriculture and manufacturing. Poor economic growth led to rising poverty. 850. During the second phase of its socio-economic development, Tanzania abandoned the state entrepreneurship policy, embraced a much-resisted World Bank Structural adjustment Programme, and adopted capitalism by introducing market-oriented and private sector-led growth policies as defining characteristics of national socioeconomic development policy. Thus, between 1986 and 1995, partial reforms and liberalisation policies were introduced. These included: liberalisation of formerly state-owned enterprises nationalised during the Ujamaa era; liberalisation of exchange and trade regimes, agricultural marketing systems, and domestic prices; and, the initiation of financial system, parastatal and civil services reforms, and even political reforms with the introduction of multi-party democracy. 851. Despite these reforms, large segments of the economy were still dominated by public monopolies and large fiscal deficits, and low growth rates persisted throughout most of 1986 to 1995. In 1996, macroeconomic stabilisation and full structural reforms were introduced to address these challenges to socioeconomic development. The ensuing socio-economic development framework has focused on re-organising and restructuring economic institutions through well-articulated institutional frameworks, strategies and plans. One of the most significant plans in this regard is Tanzania Vision 2025, which provides the overall policy and strategic framework for long- 128 Honest Prosper Ngowi, Economic Development and Change in Tanzania since Independence: The Political Leadership Factor, African Journal of Political Science and International Relations, p. 263, Vol. 3 (4), May 2009. 171