This empirical study attempts to contribute to existing knowledge on policy choice and employs historical and case study approaches in addressing Tanzania’s liberalisation and privatisation policy choice. The thesis focuses on four specific questions: why Tanzania’s liberalisation and privatisation policy was chosen; what considerations were taken into account; the theory that explains the choice; and lessons to be drawn from Tanzania’s experience.

In liberalising and privatising its economic sectors, Tanzania was influenced by three main factors: compliance with the IMF and the World Bank conditionality for accessing loans from the two international financial institutions; lobbying and manipulation by a coalition of external institutions interested in controlling and exploiting the Tanzanian economy; and political corruption whereby state officials saw in liberalisation and privatisation an opportunity to benefit financially and enrich themselves.

This research has also revealed that, contrary to the belief by the IMF and World Bank, the private sector is in fact not more efficient than the public sector, there is also rent seeking behaviour in the private sector, and ‘off-the-shelf’ policies do not work in all situations. The thesis concludes that in order for policy to achieve desired outcomes, government should adopt appropriate measures including matching policy objectives with the prevailing needs and circumstances in the country; and applying good governance in terms of transparency, accountability and civil society participation in policy making.