Money in politics in Africa – insights from Tanzania

Democratisation and economic liberalisation since the 1990s have amplified the importance of money in politics in many African countries. In a new article Ane Karoline Bak and Ole Therkildsen analyse the growing use of tax exemptions to channel money into politics in Tanzania during the 2000s.

The link between tax exemptions and buying political influence is simple: the state provides tax exemptions and other rents to help rich people and larger companies to succeed in business during economic liberalisation. In turn, they donate funds to the ruling party and its candidates to run their parliamentary or presidential election campaigns.

Such transactions have risen in Tanzania and in several other African countries and are driven by the demand and supply of political finance: 

Tanzania’s abolition of one-party rule in 1992 meant reduced state subsidies to parties and growing inter- and intra-party competition for political power through the ballot box. This increased the costs of election campaigns and of keeping together an increasingly fragmented ruling coalition. Demand increased.

This was met in part by a supply of campaign donations from companies and rich individuals, who in exchange could receive tax exemptions and other rents (e.g., business permits, access to land, import privileges).

Thus, the authors find that, around election years when demands for campaign funding are particularly high, tax levels decrease while tax exemptions to private companies and individuals increase. These indicative findings are supported by qualitative observations on the supply and demand of campaign financing in Tanzania.

The research is part of the research programme Political Settlements and Revenue Bargains in Africa.