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Underdevelopment and Nationalisation: Banking in Tanzania

Published online by Cambridge University Press:  11 November 2008

James H. Mittelman
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Tanzania differs from many countries in the Third World in that it does not have a fully fledged national bourgeoisie. The class that led the nationalist movement, the petty bourgeoisie, captured the fruits of the drive towards political independence. The upper stratum transformed itself into a bureaucratic bourgeoisie and used the state apparatus against its local rivals, initially the commercial bourgeoisie. But owing to a weak material base rooted outside the local economy, the former has been unable to direct effectively the process of accumulation and economic reproduction. Thus, while the governing class of Tanzania is comprised of African politicians and civil servants, the ruling class is the international bourgeoisie.1

Type
Articles
Information
The Journal of Modern African Studies , Volume 16 , Issue 4 , December 1978 , pp. 597 - 617
Copyright
Copyright © Cambridge University Press 1978

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References

page 597 note 1 This argument is developed by Shivji, Issa, Class Struggles in Tanzania (Dar es Salaam, 1975).Google Scholar

page 597 note 2 Among Shivji's critics are Saul, John, ‘The State in Post-Colonial Societies: Tanzania’, in Miliband, Ralph and Saville, John (eds.), The Socialist Register, 1974 (London, 1974), pp. 349–72;Google ScholarLeys, Colin, ‘The “Overdeveloped” Post-Colonial State: a re-evaluation’, in Review of African Political Economy (London), 5, 01–04 1976, pp. 39–62;Google Scholar Michaela von Freyhold, ‘The Post-Colonial State and its Tanzanian Version’, in ibid. 8, Jaunary–April 1977, pp. 75–89; and Raikes, Philip, ‘Rural Differentiation and Class Formation in Tanzania’, in Journal of Peasant Studies (London), v, 3, 04 1978, pp. 285–325.CrossRefGoogle Scholar

page 598 note 1 For the sake of brevity and clarity of style, I refer to Tanganyika and Zanzibar as Tanzania for the period before and after they formed the United Republic in 1964. But to distinguish between the mainland and the island, the terms Tanganyika and Zanzibar are, of course, retained.

page 598 note 2 On implementation, see my forthcoming Underdevelopment and the Transition to Socialism: Mozambique and Tanzania, chs. 9–11.

page 598 note 3 Lenin, V. I., Can the Bolsheviks Retain State Power? in Collected Works (Moscow, 1964 edn.), XXVI, p. 106;Google Scholar emphasis in original.

page 599 note 1 Binhammer, H. H., The Development of a Financial Infrastructure in Tanzania (Nairobi, 1975), p. 40;Google Scholar and Seidman, Ann, Comparative Development Strategies in East Africa (Nairobi, 1972), p. 41.Google Scholar

page 600 note 1 The foreign banks were Algemene Bank Nederland N.V., Bank of Baroda, Bank of India, Barclays Bank D.C.O., National and Grindlays Bank, National Bank of Pakistan, and the Standard Bank. The two commercial banks incorporated at the time of nationalisation were the Tanzania Bank of Commerce, in which the Government had a 60 per cent share-holding, and the Commercial Bank of Africa, a privately owned enterprise.

page 601 note 1 Following the Bank Act of 1945 in Australia, the Labour Prime Minister announced that the Government would extend war-time banking control by nationalising all non-government banks. But the 1947 legislation was declared unconstitutional by the High Court and, on appeal, by the Privy Council Arndt, H. W. and Harris, C. P., The Australian Trading Banks (Melbourne, 1965 edn.), p. 176;Google Scholar and Butlin, Sydney James, Australia and New zealand Bank: the Bank of Australasia and the Union Bank of Australia Limited, 1828–1951 (London, 1961), pp. 426–32.Google Scholar

page 601 note 2 Interview with Roland Brown, former Attorney-General of Tanzania, and former Legal Consultant on International and Commercial Affairs, in London, 12 May 1975.

page 601 note 3 Tanzania. National Bank of Commerce (Establishment and Vesting of Assets and Liabilities) Act (Dar es Salaam, 1967).Google Scholar

page 601 note 4 Tanzania. Majadiliano ya Bunge [Hansard] (Dar es Salaam), Seventh Session, 14 02 1967.Google Scholar

page 602 note 1 ‘Banks Take-Over Legalised’, in East African Standard (Nairobi), 15 02 1967.Google Scholar

page 603 note 1 Interviews with Amir Jamal, former Minister of Finance, in Dar es Salaam, 26 Jaunary 1976 and 25 May 1978.

page 603 note 2 Ibid.

page 603 note 3 Rweyemamu, Justinian, Underdevelopment and Industrialization in Tanzania: a study of perverse industrial development (Nairobi, 1973), pp. 43–4;Google Scholar and Yaffey, M. J. H., Balance of Payments Problems of a Developing Country: Tanzania (Munich, 1970), pp. 95 and 185.Google Scholar

page 604 note 1 Hsiao, Katherine Huang, Money and Monetary Policy in Communist China (New York, 1971), especially pp. 7Google Scholar and 25–7. Whether China reverted to capitalist banking practices after the death of Mao Tse-tung in 1976 is not at issue here.

page 605 note 1 Rue, Andre de la, ‘Ujamaa on the March’, in Cliffe, Lionel and Saul, John (eds.), Socialism in Tanzania: an interdisciplinary reader, Vol. II, Policies (Dar es Salaam, 1973), p. 46.Google Scholar It is difficult to compute or verify such figures because the annual reports of the banks do not contain country-by-country entries for local branches; the profits remitted from these locally unincorporated banks were unknown in the host country.

page 606 note 1 Standard Bank Review (London), 03 1967, p. 8;Google Scholar and Standard Bank. Reports of the Directors and Accounts for the Year Ended 31 st March 1967 (London, 1967), p. 19.Google Scholar

page 606 note 2 National and Grindlays Bank. Quarterly Review (London), XIII, 2, 04 1967, p. 39.Google Scholar

page 606 note 3 Barclays Bank DCO. Report and Accounts, 1967 (London, 1968).Google Scholar A more caustic statement appears in Overseas Review, 03 1967, p. 1.Google Scholar

page 606 note 4 Interviews with G. E. A. Elliott, former local Director and Chairman of the Tanzania Board of Barclays Bank D.C.O., in Bournemouth, 26 March 1976; Robert Burns, former Assistant Accountant in Tanzania for Standard Bank, in London, 29 March 1976; and Amon Nsekela, former Principal Secretary to the Treasury of Tanzania, in London, 30 July 1976. Also, ‘Tanzanian Banks “Destroyed Record”’, in The Financial Times (London), 5 09 1967.Google Scholar

page 608 note 1 Replies to my questionnaire, R. E. Williams, former General Manager of Standard Bank, 30 June 1976; and interviews with G. E. A. Elliott, and S. G. Mogford, former General Manager, Barclays Bank D.C.O., in London, 31 March 1976.

page 609 note 1 Interview with Reginald Green, former Economic Adviser to the Treasury of Tanzania, in Brighton, 27 March 1976.

page 610 note 1 Interview with Mogford, 31 March 1976.

page 612 note 1 Interview with Nizamuddin Haider, former Manager of the National Bank of Pakistan in Tanzania, in New York, 18 April 1975.

page 613 note 1 ‘£300,000 Bank Compensation Settlement’, in Tanzania Standard (Dar es Salaam), 22 December 1967.

page 614 note 1 Although this section owes much to Green, neither the conclusions drawn nor all of the information introduced are attributable to him.

page 617 note 1 Some of this information is derived from Nwankwo, G. O., ‘Overseas Banks in the Developing Countries: 3–the Future of the Overseas Banks’, in Journal of the Institute of Bankers (London), XCIII, 5, 10 1972, pp. 329–39;Google Scholar and Crossley, Julian and Bland-ford, John, The DCO Story: a history of banking in many countries, 1925–71 (London, 1975), passim.Google Scholar