Effects of market liberalization on food security in Tanzania

Abstract

During the past decade, Tanzania has faced an unprecedented economic crisis, characterised by severe balance of payments disequilibrium, high inflation, and large government budget deficits. Population has grown more rapidly than gross domestic product. Shortages of consumer goods were widespread and intermittent food shortage had to be met by food imports. To tackle the economic crisis, government implemented several adjustment and stabilization programmes (Ndulu and Lipumba, 1986). These policies culminated in significant devaluation and the liberalization of imports financed by privately-owned foreign exchange. Restrictions on private trade b food grains were relaxed. In June 1986, the government adopted the World Bank and IMF-supported Economic Recovery Programme (ERP). The policy measures taken included a major devaluation and a crawling peg to correct future overvaluation, control of the growth of government expenditures to reduce and limit government borrowing from the banking system, increases in agricultural producer prices, and further relaxation of restrictions on private trade in major food grains. The policy thrust has been to adopt market-oriented policy instruments and to depend less on state-controlled procedures. Since 1984 government has further liberalized the economy.