On September 20, 2022, Finance and Planning Minister Mwigulu Nchemba announced that following a directive by the ruling Chama cha Mapinduzi (CCM), the government decided to review the levies it had previously imposed on all electronic transactions.

Dr Nchemba told lawmakers in the capital Dodoma that the move to review the levies that have caused public outcry was influenced by the need to encourage the use of electronic transactions among the people and consequently prevent the cash economy from proliferating.

Following the reviews, effective from October 1, 2022, no levy will be imposed on all wire transfers. 

There is also going to be no levy charged on internal bank transfers and no levy on transferring money from banks to mobile networks. Also, no levy will be charged on bank withdrawal through ATMs for all transactions below Sh30,000.

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The move is commendable given how the levies were making the already high cost of living among Tanzanians even more biting and how telcos have started reporting dwindling revenues as more and more people began to avoid the transactions.

However, this whole saga reveals an underlying, and historic, weakness on the part of CCM: its apparent lack of sensitivity to the economy. While I cannot dismiss other explanations behind the introduction of the levies, it is my view that the party’s recklessness in the handling of the economy could be one of the explanations.

I said historic weakness because this malady goes way back to the years immediately after independence in 1961. During this period, the CCM-led government implemented policies that had severe unintended consequences on the economy. It was the period, one would rightly observe, that the end justified the means. 

And the end was, as it was explained, building a stable, unified and equitable nation, where the gap between the rich and the poor was minimized with no socioeconomic classes, hence the socialist policy.

READ MORE: Public Outcry on Electronic Levies Explains the Fiscal Legitimacy Crisis TZ Faces

The rationale for the policy was that the colonial power had left the country divided along racial, tribal, economic and even religious lines. If left unattended, these fissures were dangerous to the young nation and could stand in the way of forging a stable, viable state.

And so steps had to be taken to rectify the colonial wrongs even if these steps led to negative consequences on the economy.

This reasoning was somehow accepted by the whole society, but it led to the destruction of the economy alright, which prompted the decision to abandon the socialist policies in the early 1990s.

Sadly enough, even as the government started building a market-led economy it didn’t learn to respect (and abide by) intrinsic laws of economic nature. In fact, the only constant in the CCM-led government since the market liberalization of the early 1990s is economic policy unpredictability.

One administration would enact economic friendly laws, say, to attract more investors in a certain sector, only for the next administration to rescind them, causing losses and uncertainty in the economy.

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President Samia Suluhu Hassan promised policy predictability but her administration’s imposition of the levies on all electronic transactions shows a worrying trend. It is high time CCM developed enough sensitivity on the intangible intricacies of the economy. 

Things have changed. 

Now, even for Tanzania, it is the economy that determines the viability of a nation. People can’t eat democracy, as President Samia said in her public letter to mark 30 years of the re-introduction of multiparty democracy in Tanzania. 

Neither can they eat ‘good’ politics. When the economy is good, bad politics can be fixed. But when the economy is bad, the country can go to the dogs no matter how ‘good’ its politics.

Damas Kanyabwoya is a veteran journalist and a political analyst based in Dar es Salaam. He’s available at dkanyabwoya@gmail.com. His Twitter handle is @DKanyabwoya. These are the writer’s own opinions and it does not necessarily reflect the viewpoint of The Chanzo Initiative. Want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.