Researchers of the Economic Development & Institutions (EDI) programme completed a study of institutions and economic development in Tanzania. This ‘institutional diagnostic of Tanzania‘ identified major institutional obstacles that constrain the country’s economic development, their proximate causes and the deep factors behind them.

Led by François Bourguignon and Sam Wangwe, the study was published in September 2018. Together with other ongoing EDI research, the study is also designed to contribute to the development of a set of diagnostic tools and guidelines that could be of standard application to other developing countries. No such instrument is presently available in the literature. In the future, it could equip analysts and policymakers in developing countries with a new and comprehensive framework that should aid in the identification of effective institutional reforms in support of economic growth. This diagnostic instrument goes beyond ‘growth diagnostic’ exercises in revealing a ‘chain of causality’ between basic areas of institutional weakness and their causes on the one hand, and the structure and pace of development on the other. What are the key insights from the institutional diagnostic of Tanzania and how have we disseminated it in support of policy impact?

Insights from the Tanzania institutional diagnostic

The diagnostic tools developed as part of the Tanzania study, our analysis of the country’s development experience and in-depth examination of several key areas led to the identification of five basic institutional weaknesses ubiquitous in the functioning of the Tanzanian economy and society. These are: i) the ambiguous structure of public decision-making, including a centralization bias; ii) the inefficiency of the land allocation process; iii) the underperforming civil service; iv) corruption at all levels; and v) the weak regulation of business and the implicit patronage behind it.

These weaknesses directly constrain – in different ways and at varying degrees – the pace, structure and inclusiveness of growth. But the institutional diagnostic must go beyond this observation and identify the ‘proximate causes’ if it is to facilitate change. These causes include : a) the lack of skills and resources responsible for the under-performance of the administration; b) the ambiguity and complexity of the law; c) the misalignment of incentives, namely the absence or ineffectiveness of ‘sticks and carrots’ at all levels. Some of these causes are inherent to the development process itself, e.g. the lack of skills and resources. Others are related to ‘deep factors’, in particular the political game, social structures, ideological biases, the views of donors and the trust in institutions, which is itself the product of history since independence.

A reflection on the five basic weaknesses above, their proximate causes and deep factors led to several reform or policy recommendations. Many of them rely on two basic principles:

  1. Allow for more competition and market mechanisms within the economy and the way it is managed;
  2. Ensure continuous rigorous and transparent evaluation of the functioning of the public sector at all administrative levels.

Whether some of the deep factors would allow for the application of these principles is another issue that depends crucially on the distribution of political power.

Our approach to dissemination

Institutional change takes time to materialise. Resolution of the most significant institutional barriers to sustained development at the satisfactory pace observed in the past decade would involve intervening on deep factors, which are often of a political nature. Our Tanzania institutional diagnostic, therefore, can only present insights on what a long-term reform agenda should address. Mindful of political realities and sensitivities, especially at a time that some bifurcation seems to take place in Tanzania, we have taken a nuanced approach to disseminating the diagnostic’s insights.

The Tanzania institutional diagnostic involved from the beginning open discussions with senior Tanzanian policymakers, including former Presidents, the Governor of the Central Bank, the Chief Justice, the Comptroller Auditor General and other senior government officials. The study also included a formal country institutional survey of 100 experts and public or private decision-makers on Tanzanian institutions, as well as a detailed statistical analysis of databases of institutional and governance indicators. This process identified five thematic areas that renowned authors investigated in detail: politics and business; the civil service; decentralisation and development; land rights; and the regulation of the power sector.

As part of sustaining engagement and partnerships with policymakers, we hosted a workshop in early 2018 in Arusha that brought together high-level representatives from key organisations in addition to EDI researchers. This allowed comprehensive review of the evidence to ensure that findings are of high quality and policy relevance, such that they could be embedded in use. We launched the final Tanzania institutional diagnostic in September 2018 on the EDI website, incorporating feedback from prior policy engagement activities and academic review processes.

The study leads François Bourguignon and Sam Wangwe have undertaken since then further nuanced dissemination activities that are mindful of political priorities in Tanzania. Within Tanzania, EDI focused dissemination on a series of events in April 2019. This included keynote speeches to ca. 60 delegates and policymakers at REPOA’s 2019 research workshop, which generated comprehensive additional social media coverage. We complemented this with a dedicated EDI institutional diagnostic workshop that brought together 45 attendees, including policymakers and researchers from Tanzania and the region. This event had a particular emphasis on the institutional challenges of land reform – a priority area for the government of Tanzania as well as many other developing countries. Separate presentations to the Tanzania Economist Forum allowed engagement with c. 25 representatives of international donors, who our diagnostic identified as playing a key role in Tanzania’s political economy. Our collaboration with four key Tanzanian economists in the writing of the institutional diagnostic has enabled additional politically sensitive forms of dissemination and engagement in the country.

Beyond Tanzania, we fostered policy impact through keynote speeches at the UK Department for International Development’s (DFID) Economist Conference in October 2018. Evidence from our study has directly informed DFID’s own internal country diagnostic. We also presented to international policymakers at events such as the Bangladesh institutional diagnostic launch in September 2018, the Benin institutional diagnostic workshop in March 2019 and the Mozambique institutional diagnostic launch in June 2019. Dissemination of insights within EDI’s wider network, to our academic contributors and Scientific Committees has expanded outreach, including to the African Development Bank and other actors.

Importantly, the Tanzania diagnostic was only the beginning. It represents the first stage in the development of a country institutional diagnostic toolkit or framework, something that has never been done before. EDI will publish a second study, the Benin institutional diagnostic, in late summer 2019. Subsequent EDI projects will contribute further to an institutional diagnostic framework that can be applied for a better and more practical understanding the relationship between institutions and economic development.