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Mfyvsq the ANNUAL PLAN MfyvsQ (^} THE UNITED REPUBLIC OF TANZANIA z3 MARS lã/ê THE ANNUAL PLAN FOR 1971/1972 JUNE 1971 Price Shs. 7/50 Mt ( ' « THE ANNUAL PLAN FOR 1971/1972 Roçu la,3' 3- ')£ Cote Exempl. _____ N° En'réa THE ANNUAL PLAN 1971/72 TABLE OF CONTENTS Page Preface I.—Introduction: General Economic Policy: (a) The State of the Economy 1 (b) Main Implications for the Annual Plan 2 II.—Plan Implementation 1970/71: (a) Summary of Performance 4 (b) Public Finance 5 (c) The Pattern of Development Expenditure 6 (d) Development in Institutions, Planning and Control 8 III.—The Plan Framework 1971/72: (a) The outlook for 1971/72 11 (b) The Finance and Credit Plan 14 (c) The Foreign Exchange Plan 18 (d) Summary of the Capital Programme, with summary tables 21 IV.—Sectoral Objectives, Programmes and Issues: (a) Agriculture 31 (b) Natural Resources 35 (c) Transport and Communications 35 (d) Water and Power 36 (e) Trade and Commerce 40 (f) Manufacturing Industry 42 (g) Housing and Construction 45 (h) Mining 46 (i) Tourism 47 (f) Health 48 (k) Education and Manpower 49 (1) Urban Development 51 (m) Information and Broadcasting 53 V.—Regional and Rural Objectives, Programmes and Issues: (a) Main Objectives and Programmes 55 (b) Main elements of the Regions' Priorities and Programmes 60 (c) Regional and Rural Planning; Main new issues 71 VI.—Conclusion : (a) Main planning issues 74 (b) Summary of main features and outlook for 1972/73 75 VII.—Tables: Development Projects by Ministry 78 Parastatal Projects and Sources of finance 94 Glossary 99 PREFACF This is the Second Annual Plan to be prepared in Tanzania. The first, for fiscal year 1970/71, was incorporated in the Annual Economic Survey of 1969, published in June, 1970. This year, for the first time, the Annual Plan for 1971/72 is being published as a separate document. Readers are, however, invited to use it in conjuction with the Economic Survey for 1970, since the latter contains much of the detailed analysis of past trends, and statistics, on which this Annual Plan is based. A number of features are incorporated in this Plan for the first time. A compre¬ hensive finance and credit plan for the public sector, and a foreign exchange plan, comprise the main tools of short-run economic management. They are introduced also to help ensure that scarce financial resources are put to priority uses. In addition to the usual presentation of the capital expenditure programme of the government and parastatals, this Plan also sets out some of the major development issues to be tackled during the coming year, and a programme for future planning work. In all these matters this document presents the government's views and decisions. A further innovation in connection with the Annual Plan for 1971/72 has been the publication, in early March, 1971, of the "Guidelines" to the Annual Plan. These put forward the basic proposed elements of the plan for public discussion, which ensued in various forums. These discussions successfully brought out a number of points which have been incorporated in this Annual Plan. However, the broad scope of the "Guidelines" document, the lack of specified concrete issues for meaning¬ ful debate, and the short, 6-week, period available in which to react, made this public discussion less fruitful than it could have been. Next year, the timetable for production of the Plan will be advanced to help remedy these defects. The Annual Plan which follows is divided into six chapters. Chapter I describes the state of the economy today, and the broad implications for the 1971/72 Plan. Chapter II reviews the main features of Plan implementation in 1970/71. Chapter III sets out the main framework and objectives for the Annual Plan 1971/72 and puts forward the financial plan, the foreign exchange plan and the main features of the expenditure programme for the coming year. Chapter IV describes, for each major sector in the economy, the major expenditure plans and agreed objectives for the coming year, plus new issues which must be considered. Chapter V sets out the main rural development objectives and the Plans for each of the eighteen Regions, plus further new issues to be considered. Chapter VI, in conclusion summarises the planning work that will comprise the essence of the mid-Plan review, and the discusses the outlook for 1972/73. Considerable emphasis will have to be put on those export crops with sound price prospects—meat, timber, cotton, tea, tobacco, vegetables and fruit, nuts, etc., and on import substitution as in wheat, sugar and dairy products. Real growth can also be achieved by reducing the cost to the consumer of basic foodstuffs—rice, maize, fish, vegetables, poultry and dairy products etc. This can be achieved in part by better marketing arrangements, price policies, and by concentrating production in lowest cost areas. In the field of manufacturing industry, there is still scope for import substitution in a number of fields, as well as scope for reducing production costs in existing plant and passing the savings to the consumer. In the short run, the basic policy must be to avoid high import-content, high capital cost plants, and projects that require high effective protection. To achieve this, careful project appraisal must be maintained so as also to avoid the cost escalation that has plagued most industrial projects to date. Given the financial constraints the second main objective in 1971/72 must be to improve the efficiency of existing organisations. In many cases, as in the wholesale trade, the parastatals acquired existing operations. The real challenge of socialisation, though, is notjust to operate ongoing concerns, but to improve their efficiency, because only in this way will the people benefit in the long run. Only in this way, too, will the economy benefit from the stream of savings that in the past accumulated mainly in the private sector, but which now must be sought in part from the parastatals. The third area in which planning work must be concentrated over the coming year is that of rectifying the urban/rural balance of the development effort. So far, it has been heavily weighted towards urban areas; a deliberate attempt will have to be made to change this, a change that will also require that more planning resources, and exter¬ nal finance, are put into the rural sector. The recurrent expenditure pattern and credit policies must also be aimed at the rural areas. The three broad areas defined above comprise the basic framework of policy planning for 1971/72 and beyond, There are, however, a large number of specific issues to be resolved, and investigations undertaken, during the coming year. These follow from the analysis contained in the Economic Survey, and are put forward in detail in parts IV and V below. These issues will be studied within the context of the mid-plan review which will be carried out this year. This is discussed further in Part VI below. 3 PART n PLAN IMPLEMENTATION 1970 - 1971 (a) Summary of Performance The performance of the economy as a whole is reviewed in the Economic Survey. The main conclusion was that 1970, and fiscal 1970/71, were periods of progress, but that progress had brought various strains that required, and received, corrective action. The main tools used too implement the Plan as set out in last year's Annual Plan were expenditure through the government and parastatal budgets and the manpower plan. This chapter reviews implementation trends to the extent that information exists, and identifies some of the main implementation problems. In aggregate terms, there is no doubt that 1970/71 saw the breaking of remaining implementation bottlenecks for large infrastructure and capital-intensive projects. Actual development expenditure through the budget will probably rise to Shs. 850 million in 1970/71 or 37 per cent over 1969/70, following a rise of 32 per cent in 1969/70 and 34 per cent in 1967/69. Had not financial ceilings been imposed during 1970/71, expenditure could have exceeded Shs. 900 million. Around 4 per cent of the increase is caused by expenditures that now pass through the budget but which used to be disbursed direct to parastatals and perhaps 5 per cent of the increase is due to price increases, but the rest is for various, mainly large projects. Most of these projects are also vehicles for external finance, so 1970/71 also saw a sharp improvement in the external borrowing situation—external borrowing having been below Plan targets for many years. However, the improvement in implementation performance is not universal In many rural areas, which in any case receive a disproprotionately small amount of development funds, implementation progress is worse than average and finance is often not the constraint. Recurrent expenditures in rural areas have however steadily increased, and have had an important developmental impact. This is particularly true of programmes of Kilimo, Elimu, Maji, Comworks and Health. Also, even in projects that proceed fast, in expenditure terms, physical progress lags behind, reflecting cost over-runs. The cost increases can be traced to two main sources, increased cost of buildings materials and construction costs due to pressure on the capacity of the building industry, and poor project preparation, involving only notional costing in the original projects, e.g. Kilimanjaro International Airport plan estimate was Shs. 70 million while the present estimate is approximately Shs. 100 million. In some cases these changes have been brought about by changing circumstances, but in most cases are due to under-estimating the actual facilities required. In other cases projects completed on time and within cost limits, remain underutilised because of defective planning of complementary activities.
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