Professional Documents
Culture Documents
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Executive Summary
Using Tanzania as a case study, this paper addresses the importance of legal and
judicial reforms in improving the business environment. The paper argues that there is
insufficient focus on the Judiciary and legal profession as central stakeholders of
business environment reforms. The status of commercial dispute resolution and
contract enforcement in Tanzania is currently unsatisfactory. The paper explores how
the Judiciary, the Ministry of Justice and Constitutional Affairs and the Legal
profession form a barrier to an improved business environment in Tanzania.
The paper then briefly analyses the challenges in Tanzania of implementing reform
solutions, specifically the challenges of undertaking such reforms within the
framework of a donor-funded business environment reform programme (the BEST
Programme), rather than a traditional governance or rule of law programme. The
paper briefly lists the ongoing commercial dispute resolution reforms under BEST
and describes how their success so far has been limited.
The paper reasons that the reforms require greater commitment of both executive and
judicial branches of government (the legislature (Bunge) is weak in Tanzania and
does not yet play a significant role in driving reform). The main challenge faced by
the Government of Tanzania has been to accept the need to implement, and so create
the political will to champion such reforms as a priority. The Government has not
therefore provided the political leadership necessary for the effective management of
such reforms by relevant ministries. It has similarly been difficult to focus judicial
priorities on commercial dispute resolution reforms given the greater interest in
criminal justice together with the underlying capacity constraints (manpower,
resources etc) faced by the Judiciary. The paper notes that in addition the Judiciary
often interprets government-led reform as a threat to its independence, but by the
same measure is reluctant to take up policy leadership itself. At the same time, the
legal profession in Tanzania is by its own account in a state of disrepute and in need
of urgent regulation. The paper discusses the challenges faced implementing business
environment friendly reforms within the legal profession.
The paper concludes with lessons learnt from the Tanzania experience, which may be
relevant to similar reform efforts in other developing countries. It makes proposals
for improved reform implementation in the area. A headline conclusion is that
business environment reformers do not focus sufficiently on judicial and legal sector
reform and governance/rule of law reformers not focus sufficiently on commercial
justice/dispute resolution reforms. As a result, commercial justice programmes fall
between two stools and their effectiveness is inevitably reduced.
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Role of Judicial and Legal sector reforms in business environment reform
programmes- a Tanzanian case study
1 Introduction
Efforts to reform commercial justice and dispute resolution have made slow progress
in Tanzania. Although such efforts form part of the mainstream business environment
reforms of the Business Environment Strengthening Programme for Tanzania (BEST
Programme), arguably they have not been prioritised. Nor have they been
sufficiently addressed by the wider governance or rule of law programmes currently
being rolled out by the Government of Tanzania.
This paper will address the importance of legal and judicial reforms in improving the
business environment. Using Tanzania as a case study, this paper will examine why
stakeholders in the legal sector can act as a barrier to a better business environment.
The paper will then go on to analyse briefly the challenges in Tanzania of
implementing reform solutions and more specifically the challenges of undertaking
such reforms within the framework of a donor funded business environment reform
programme, rather than a traditional governance or rule of law programme. The paper
will conclude with lessons learned and proposals for improved reform implementation
in the area.
2 Why courts and lawyers matter: The Judiciary and the legal sector as a
barrier to better business environment in Tanzania
a
In Tanzania, international donors are known as development partners. The phrase will be
used throughout this paper to mean international multilateral and bilateral donors.
1
The Judiciary and the legal profession furthermore have a crucial role to play in the
creation of a better business environment, not least due to the fact that they currently
form a very real barrier to a better business environment in Tanzaniab.
With the creation of a market economy in Tanzania, commercial justice has developed
slowly but surely over the past decade, though it still remains a major constraint to
investment in the country. Tanzania scores very well on the World Banks 2008
Doing Business indicators for contract enforcement where it is placed 35h in the
rankings well before either of its East African Community neighbours Kenya (107th)
and Uganda (119th)1. However, these statistics are based on procedures at the
Commercial Court (where only a fraction of commercial cases in Tanzania are filed)
and on qualitative interviews providing estimates of average days taken to get and
enforce a judgment. The reality on the ground is that as of June 2007 there are 13,227
cases pending in the High Court of Tanzania alone, with an increasing filing rate and
a dispute resolution rate that is increasing too, but at a slower pace2. 52 judges and
just over 400 magistrates service a country with a population of approximately 37
million citizens. Clientelism and corruption are perceived by court users to be
widespread and the Tanganyika Law Society, which represents the private bar, openly
acknowledges that the profession is widely held in disrepute3.
b
This paper does not look in detail at the role of the other branch of government the
Legislature. Parliaments can play a significant role in building public accountability and so
creating ownership for - judicial reforms. In Tanzania, however, the parliament (Bunge) does
not play this role due both to the fact that it is dominated by the ruling CCM party but also
because it lacks the capacity to scrutinise judicial reform.
2
2.2 Legal Profession
In Tanzania, a little over 800 lawyers service the needs of a growing economy, and
these are mostly based in Dar es Salaam, Tanzanias commercial capital. University
law faculties are overcrowded and unlike Kenya and Uganda there are no
requirements to enrol in continuing legal education courses to refresh lawyers on
necessary legal developments, legal skills and ethical and transparent client care. The
legal profession is poorly regulated and as a result, evidence of misconduct- often
dressed up as aggressive adversarial conduct- is well documented7.
These factors contribute to a legal profession, which on the whole, is perceived by the
business community to be a major cause of delay, inefficiency and clientelism in the
court system.
The Ministrys portfolio however is ambitious. It is tasked with reviewing all new
laws drafted by other government departments in Tanzania and as Tanzania is
undergoing a programme of vigorous reform, this is a heavy workload. The Ministry
advises on both private and public sector agreements entered into by the Government
and defends the Government in court. It is unsurprising therefore that the Legal Sector
Reform Programme, the access to justice and rule of law programme that the Ministry
is tasked with rolling out, has been at the design and inception stage since 1993 and is
only now commencing preliminary implementation.
As a result, the Ministry is unable to provide either the necessary quality control over
legislation enacted, or to process legislation fast enough to meet the needs of the
reforming Ministries. State Attorneys are as guilty as their private sector counterparts
3
in the professional misconduct that fuels the culture of delay and clientelism in the
courts. The government itself is one of Tanzanias largest bad debtors- this may not be
its lawyers fault, but the latter certainly play a part in relying on legal technicalities
and adjournments to delay the enforcement of contracts against the government.
3 Why is it so hard to reform the courts and legal sector? The challenges of
undertaking legal and judicial reforms in Tanzania specifically within a
business environment reform programme
4
- Capacity building at the Tanganyika Law Society and the introduction of a code
of conduct and ethics for advocates and of greater professional regulation.
The first joint assessment review of the BEST Programme in September 2006 noted
that progress on the Commercial Dispute Resolution component so far had been
disappointing. This was due to a number of interlinked challenges raised by the
stakeholders managing and implementing the reforms, by the structure of the
programme, by the interventions of development partners, and as a result of the
application of concepts born of a business environment programme to implement
judicial and legal reforms.
5
3.2 Challenges presented by the Judiciary
This is a difficult context in which to roll out judicial reform relating to the business
environment. There are additional constraints:
Firstly, the Judiciary is focussed on the need for manpower and infrastructure reform.
Its main objective is to increase the number of court rooms, judges, magistrates and
increase salaries and personal emoluments. Soft infrastructure reforms to procedural
laws, working practices and training, as proposed under the BEST Programme, are
seen to be of secondary importance.
Secondly, the Judiciary is proud and protective of its independence and is often
suspicious of any government led reform, which many within the Judiciary perceive
as government intervention in judicial independence. This feeling is often exacerbated
by the structure of reform programmes. For example the BEST Programme is
facilitated by two government ministries who both sit on its governing committee on
which the Judiciary has no representation. Furthermore, programmatic responsibility
for the Commercial Dispute Resolution Component lies with the Ministry of Justice
and Ministry of Planning, not the Judiciary.
Thirdly and conversely, although Judges may be suspicious of government led reform
as encroaching into the territory of judicial independence, they are reluctant
themselves to take up policy leadership- this is due to time and resource constraints-
but also to a very conservative interpretation of the concept of judicial independence
to the exclusion of involvement in policy formulation. This kind of attitude can also
be used by various judicial officers as a shield against reform of inefficient practices
and clientelism.
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3.3 Challenges presented by the Legal Profession
However, the bar itself is resistant to reform. It is uncertain about the need for a code
of conduct to regulate legal services- especially to the private sector- as it has not been
properly exposed to the international global market. Its clientele, although unhappy
with non-transparent fee structures and often below-par service, lacks the means to
formulate reform alternatives. A majority of the bar has opposed compulsory legal
education on the basis that it would be expensive and would detract from the benchs
and clients view of the competence of the profession. Unlike many bar associations
around the world, the Tanzanian bar is seldom consulted by the Government,
Judiciary or development partners as a major stakeholder on legal and regulatory
reform. This is mostly because it has not organised itself as an effective advocacy
organisation intent on influencing policy reform.
One of the issues that BEST faced with all its implementing ministries, but especially
within the justice sector, was that this kind of management structure was perceived to
rest outside the ordinary working framework of the ministry and therefore non-core
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business. The ownership of the programme therefore remained in the Better
Regulation Unit at the Ministry of Planning, Economy and Empowerment, whilst the
officers appointed to participate in working groups were often not the ones with the
necessary technical skills and/or decision making ability. As a result progress has
been slow, members have had little institutional incentive to report on the work of the
technical working groups to their parent institution and members have expected
remuneration as a basis of participation. This structure and working modality has
served to strengthen perception within Ministry of Justice and Constitutional Affairs,
that the commercial dispute resolution reforms are not home grown but belong to
economists at the Ministry of Planning, Economy and Empowerment12.
Development Partners have therefore played their part in supporting the design of a
reform programme structure which fails to follow the accountability and decision-
making structures of government. In addition, the concept of a Commercial Dispute
Resolution component spearheading reforms to the legal sector has not proved
workable. This is because, paradoxically, the component is in some respects too
ambitious and in others not ambitious enough. It is too ambitious in the sense that its
objectives are sweeping and comprehensive and inevitably unrealistic given that
commercial dispute resolution has not traditionally been well-funded, well-understood
or prioritised by development partners (and therefore Government). It is not ambitious
enough in the sense that the Commercial Dispute Resolution component reforms
cannot be implemented in isolation from wider reforms to the court system. If
development partners involved in business environment programmes wish to achieve
their objective of efficient, equitable and speedy resolution of commercial disputes in
Tanzania, they need to work closely with their governance counterparts to ensure that
the fundamental reforms necessary to the court system and legal profession are
tackled in tandem. They also need to strengthen dialogue with proposed implementers
of judicial and legal reforms to understand whether reforms conforming to
international best practice are necessary and or capable of being introduced in the
local context.
Economists vs Lawyers
It is difficult to use growth arguments to justify judicial and legal reform within the
Government and Judiciary in Tanzania for a number of reasons. The legacy of a
nation emerging from decades of a controlled, nationalised economy means that the
Ministry of Justice and Constitutional Affairs and the Judiciary often view the private
sector and its demands as purely self-interested and therefore contrary to the greater
good. Reforms that are couched in terms of increased access to finance and better
contract enforcement appear less important than traditional judicial priorities such as
reform of the criminal justice system and penal code, the establishment of more
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courts, the recruitment of more judicial officers and the better remuneration of court
staff. Reform initiatives whose objective is to improve commercial dispute
resolution/commercial justice are perceived in themselves not to be sufficiently well-
designed in their breadth. Typical judicial questions would be: how can you expect
better commercial dispute resolution without wider reforms to the civil justice
system? What is the point of introducing electronic case management when most
courts have sporadic electricity and back-up generators? Why fund law reports when
it is the judicial mindset that needs reform to ensure that the Judiciary prioritises the
publication and use of law reports?
Economists selling these programmes to the legal sector and Judiciary need both to
couch the need for commercial justice reform in the broader poverty alleviation
context of the other Government reforms and also to consider in each individual case
whether commercial justice reforms can truly be rolled out in isolation- as part of a
business environment package-within a judicial and legal sector in need of wider
change. The Better Regulation Unit has done this successfully in relation to the Civil
Justice Review led by the Law Reform Commission of Tanzania under BEST. This
has been done by supporting the broadening of an initial narrow review into court
reform in relation to commercial disputes into a nation-wide, highly publicised
consultation into access to civil justice in Tanzania. This repackaging has succeeded
in building up political will in support of the review and consensus in the Judiciary
and legal profession on the need for reform, without altering its ultimate impact of
enhanced commercial justice in Tanzania.
Related to this, a key lesson from Tanzania is that domestic and international business
environment reformers do not focus sufficiently on judicial and legal sector reform
and by the same token - governance/rule of law reformers focus insufficiently on
commercial justice/dispute resolution reforms. This leaves commercial dispute
resolution/commercial justice programmes between two stools and, inevitably,
curtails their effectiveness. This cleaving through specialisation could easily be
remedied through the use of a greater number of practising lawyers and judges in the
ongoing design and development of commercial dispute resolution reforms. In turn
greater focus needs to be given upfront to persuading the judges, magistrates and
lawyers targeted to implement reforms of the importance of commercial reforms
within the wider economic context but also of the positive knock on effect of the legal
and judicial sector as a whole. Ideally, management of such programmes should be
based at the level of implementation. A commercial dispute resolution programme
should be managed within the relevant judicial or governmental departments, rather
than managed within a central lead ministry. This is especially important where the
implementing agency is the Judiciary, which opposes management by government of
its affairs.
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Political Will
A third key lesson is that the Commercial Dispute Resolution reforms in Tanzania
have progressed slowly due to the lack of political leadership in both the lead
institution- the Ministry of Planning, Economy and Empowerment and the
implementing agencies- the Ministry of Justice and Constitutional Affairs and the
Judiciary. The focus of the Ministry of Planning, Economy and Empowerment has
rested very much on business registration, licensing and land formalisation. These are
the components in which both the Ministry and the development partners supporting
business environment reforms have traditionally more competence and expertise. In
addition, the BEST Programme structure of working groups has meant that the work
of the programme has been placed outside the decision making structures of the
implementing institutions resulting in a lack of accountability and senior level
championing by those institutions. If the political leadership of all involved
institutions had greater commitment to the Commercial Dispute Resolution reforms
then some of the constraints listed in this paper could be overcome. This situation
could be remedied to a large extent if a precondition to funding were to be that
programme activities had to be planned within the Governments Medium Term
Expenditure Framework for each financial year. This would ensure direct
accountability for progress and spending to the Ministry of Finance and therefore
political will to ensure that reforms are rolled out.
End Notes
1
World Bank Doing Business 2008 Publication: http://www.doingbusiness.org/EconomyRankings
2
Appendix to Ministry of Justice and Constitutional Affairs Budget Speech for F/Y 2007/08.
3
Dr Fauz Twaib, Advocate. Presentation on Code of Conduct and Ethics for the Legal Profession, at
Tanganyika Law Society Half Annual AGM, Dar es Salaam, 10 August 2007.
4
Tanzania Bankers Association September 2007.
5
Mr Felix Kibodya, Paper presented to World Bank Workshop on Commercial Dispute Resolution,
Dar es Salaam International Conference Centre, May 2006.
6
Filing thresholds at Commercial Court in Tanzania Tsh 50,000,000 (Approx. $50,000) (immovable
property) and Tsh 30,000,000 (Approx $30,000) (immovable property).
7
Reports of the Ethics Committee of the Tanganyika Law Society 2005, 2006.
8
Review into the Civil Justice System in Tanzania, Position Paper of the Law Reform Commission of
Tanzania December 2006.
9
The BEST Programme was established with the support of four bilateral donors (DANIDA, SIDA,
DFID, and the Royal Netherlands Embassy). The World Bank started contributing to the BEST
Programme under its Private Sector Competitiveness Project through a Development Credit Agreement
that became effective in March 2006, increasing the estimated size of BEST to a total of USD $65
million.
10
Figures extracted from Ministry of Finance Budget speeches delivered to Parliament 2007, 2006.
11
This figure does not reflect the highly uneven distribution of legal services in Tanzania where most
advocates are based in the commercial capital, Dar es Salaam.
10
12
Further evidence of this is that the Legal Sector Reform Programme activities for FY 2007/08 are
streamlined into the Medium Term Expenditure Framework of the Ministry, whilst those of the BEST
Programme remain outside the Framework.
11