Already before the 19th century, the coast and some hinterland parts of mainland Tanzania had been influenced by the trade in enslaved people, ivory, and spaces and therefore connected to Arab, Chinese, Persian, and Indian merchant capital. In the 1830s, it became the focus of organized merchant capital and colonial state violence from the Deutsche Kaiserreich. In the 1880s, the Society for German Colonization (Gesellschaft für deutsche Kolonisation) pushed the project of colonizing what was then known as Tanganyika, supported by the German state, industrial and finance capital (their various shareholders), all of them betting on the colonial venture. Being renamed as German East Africa Company in 1887, the organization set up plantations in the Northern and Northeastern parts of the country and rented out land to settlers.
However, it turned out that a settler-colonial project of the like of Aotearoa New Zealand was impossible due to local resistance and climatic conditions, which led the German colonial state to seek to extract wealth from smallholder farmers (via taxation and/or forcing them into an expanding cash crop production). During this time, local farmers had extremely limited access to credit. The local economy was meant to serve the extractive needs of the colonial economy. Local people were thus locked out of colonial credit markets, but – in contrast to the situation in Aotearoa New Zealand – they largely kept their de facto power over the land.
After Germany’s loss in the First World War, the British took over Tanganyika as part of a League of Nations mandate in 1922. The British promoted African cash crop production, espoused by various Colonial Acts in the 1930s and 1940s. After the Second World War, a more transformative approach was initialized, promoting “modern farming” to serve the growing needs of the empire, but also extending private credit to large-scale farming settlers. Tanganyika became independent in 1961 and was united with Zanzibar to become Tanzania in 1964.
The country would soon follow a socialist development path, culminating in the famous Arusha Declaration of 1967. Among many other things, Tanzanian socialism promoted a dual agricultural strategy: It promoted large, mechanized state farms (a Leninist strategy deployed in many other socialist countries, which itself was inspired by US industrial agriculture), but at the same time sought to promote the development of the “the peasantry” by concentrating the rural population in villages (ujamaa villages), where “modern” services would be delivered economically, and collective forms of agriculture could be practiced. Large export-oriented estates, plantations, and other businesses were nationalized. The influence of foreign capital on agriculture was curtailed, although it still backed some farming projects.
The socialist era ended in the 1980s. The structural adjustment plans of the World Bank and International Monetary Fund (IMF) in 1986 led to a liberalization of virtually all domains of the Tanzanian economy. In the 1990s, former state assets were privatized. The privatization of former state farms, and the rise of associated market-oriented agricultural policies in the new millennium as an apex to the neoliberalization of the Tanzanian economy, would provide a window of opportunity for the entry of large-scale overseas investments. At the same time, the rural population’s overall access to credit did not improve and sometimes even got worse compared to the era of state-backed credit provision. The historically limited expansion of credit in earlier periods paired with the restrictions put on large-scale private farming during the socialist period (other than state farms and a few other plantations) would provide opportunities for the entry of global finance in the 2000s. On the one hand, “friends of the market” (including both Western and Tanzanian economists!) could argue that smallholders – still the majority of the country’s population – did not produce enough to feed the nation and posed no viable development future. On the other hand, the country, despite the fact that it still presented significant barriers to foreign investment in agriculture (e.g., a quite restrictive land tenure system), inherited a number of large-scale farming pockets that had the scale that institutional investment needed.
(Ouma 2020: 33-36)