State control of industries and the role of transnational corporations: a case study of Tanzania cigarette company limited

With the attainment of political independence, third world countries realized that they had yet to fight even much harder than before to regain their economic independence. Different countries have, at different times, attempted to grapple with this problem differently. Tanzania began this process by encouraging joint industrial ventures with private foreign capital. After a member of years this arrangement did not pay off as handsomely as expected. The Party decided to embark on a “new” strategy altogether Socialism and Self-Reliance in 1967. The policy called on the nationalization of the commanding heights of the economy. By this nationalization the government acquired majority shares in a few selected industrial establishments. After some years of operation, the government acquired all the shares in some of the nationalized firms. The purpose of this study is to investigate the state control in such nationalized industries. The Tanzania Cigarette Company has been chosen as our case study. This was prompted by two reasons: first because TCC was one of the seven industries that were affected by 1967 government act of nationalization and secondly, it was one of the first industries that the government finally wholly acquired after eight years of operation. It is our contention that neither partial nor full ownership guarantee full control. In the first instance, after the 1967 nationalization foreign experts, who normally were minority shareholders, continued to manage the industries. The day-to-day operations of the firms remained in the hands of the managing agents. Even at the level of policy making the influence of the minority share hold remained predominant. The acquisition of all equity shares did not solve the problem entirely. Our industries have continued to be almost entirely dependent on foreign technology, which in turn exerts a certain degree of control. The study begins by examining, at a general level, the development of the tobacco industry in Tanzania. Attention has been paid to the role of finance capital and its exploitative effects on the peasants. Later efforts are made to look particularly at the cigarette making industry and how it has evolved in the country. Before delving deeply into the problem of control a critical discussion is made on the concept of nationalization as applied in capitalist and socialist countries and finally the forms it has taken in Tanzania. It is against this strong background that the problem is situated. It is our strong contention that the 1967 type of nationalization left most of the control in the foreign hands. This we have shown by examining the planning mechanisms of the firm. The study has revealed that the planning processes took place at the level of management which until 1975 was wholly BAT London. At the policy making level we have found out that although the government had majority shares and subsequently more members on the Board of Directors, the minority share holders influenced, in the majority of cases, the policy making mechanism. We have come to such a conclusion after carefully studying the amount of knowledge the government representatives had about the industry, the amount of time at their disposal to sit together and formulate a common stand and above all their technical and business knowledge build up. The study has amply revealed that since the TCC was, prior to 1967, a subsidiary of the BAT London, then all its plans had of necessity to be vertically integrated with, the center. No major decision could have been made without a formal sanctions of the headquarters. Since virtually all decisions were controlled in London until 1975, the government attempts to export cigarettes were curtailed by BAT London. We realized this after examining the technological control that BAT London exerted on the TCC. When that permission was granted, the study has found out, a code of operation was laid down for TCC to abide by. Even after the government had wholly acquired the company, BAT control over TCC did not stop. We have private property and worst of all a patented one, industries like TCC will continue to be technological appendage of the giant capitalist companies. It is because of this fact that we have argued that full ownership does not necessarily mean effective control. The impact that foreign technology impinges on the local industrial policy making is so big that one cannot brush it aside when major decisions are being taken. To ensure effective control of the commanding heights of the economy, we have finally proposed, workers, peasants and all other democratic elements should be mobilized under a vanguard Marxist-Leninist Party to overthrow imperialism and its local lackeys. That done, a new economic organization will be established to ensure genuine ownership and control of the major means of production and comprehensive program will be charted out to ensure a Self-sustaining economy.