Cover Image
close this bookAid and Entrepreneurship in Tanzania (Dar Es Salaam University Press, 1993, 165 p.)
View the document(introduction...)
View the documentAbbreviations
View the documentForeword
View the documentMobilization of entrepreneurial capacity
View the documentState and modernization
View the documentThe colonial state
View the documentThe Nyerere regime
View the documentEffects of aid in Tanzania
View the documentOrganization
View the documentOrganizational cultures
View the documentThe dilemma between control and mobilization in NORAD
View the documentMaterials and methods
View the documentOverview of the analysis
View the documentNORAD's organization
View the documentThe NORAD organization in Tanzania
View the documentThe structure of the Tanzanian state
View the document(introduction...)
View the documentThe Civil Service Department in the President's Office (IDM)
View the documentMinistry of Communication and Works (RRM and Tacoshili)
View the documentThe holding company TWICO (SHS)
View the document(introduction...)
View the documentIndustry: The Sao Hill Sawmill
View the documentTransport: The Coastal Shipping Company
View the documentInfrastructure: Rural Roads Maintenance
View the documentEducation: The Institute of Development Management
View the documentNORAD's qualifications and efficiency
View the documentNORAD's responsiveness to Tanzanian demands
View the documentReceiver orientation
View the documentReceiver orientation evaluated across institutional arenas
View the documentNORAD's influence on the Tanzanian government
View the documentNORAD: control-oriented
View the documentTanzania's dependence on aid
View the documentAid and government autonomy
View the documentTwo bureaucracies in a deadlock
View the document(introduction...)
View the documentDefinitions of functional organization
View the documentDistribution of initiatives
View the documentRelations between Tanzanians and Norwegians
View the documentProject variations on mobilization capacity
View the documentRole definitions
View the documentDecision-making structures
View the documentCorruption and favouritism
View the documentNORAD: isolated from local communities and the state
View the documentNORAD's impact on state formation in Tanzania
View the documentTanzanian and Norwegian administrative cultures
View the documentNORAD's mobilization capacity
View the documentAid as development of culture-specific professional administration
close this folderSUMMARY IN NORWEGIAN
View the documentProblemstilling
View the documentMetoder
View the documentBegrepsapparat
View the documentFunnene
View the documentNORADs kjerneteknologi
View the documentKonklusjon
View the documentAppendix 1: NORAD's Organization
View the documentAppendix 2: The questionnaire
View the documentAppendix 3: The respondents
close this folderAppendix 4: Reform ideas on the NORAD - government relationship
View the document(introduction...)
View the documentWho answered?
View the documentWhat kind of reforms were suggested?
View the documentCompetence
View the documentCosts to Tanzania
View the documentAppendix 5: Roads Administration System, 1987
View the documentAppendix 6: Expenditure at IDM
View the documentBibliography
View the documentBack Cover

Industry: The Sao Hill Sawmill

Tanzanianization of management

By 1980 SHS was producing at maximum capacity, producing some 27000 m3 of sawn timber with a work force of about 400 (some 74m3 pr. employee)9. As demonstrated in Gran (1990), the choice of the sawmill project in the early 1970's as a priority assistance was to a large degree a Norwegian initiative. The construction of the Mill was organized by the Norwegian consultant NORCONSULT. FORINDECO had control of the technical planning and the recruitment of Norwegian managers to the Mill. The management up to about 1982 was wholly Norwegian. It was oriented towards organizing an efficient and profitable mill (local rationality). All extra-mill goals like training of Tanzanian managers, supporting other companies within Tanzanian wood industries and helping TWICO become an efficient holding company (regional rationality) were beyond the focus of the Norwegian management. From 1982, with a new Norwegian general manager, a Tanzanianization process was started. The status of the Norwegian managers was changed from being responsible for operations to advisors. Secondly, training of Tanzanian managers was initiated and gradually the Norwegian advisors were phased out. By 1990 only one FORINDECO recruited Norwegian advisor was at the Mill. Table 7 summarizes the Tanzanianization process within the Mill management.

Table 7. Tanzanians and Norwegians in SHS management

(Executive (E) and Counterpart (C))































Total Management




alance Norw.-Tanz







Source: Havnevik (1988:249)

These data hide the fact that the 1977 structure was quite permanent up to 1980. They do not clarify the transition from Norwegian dominance in 1977 to the situation in 1983 with a 7-11 balance between Norwegians and Tanzanians. The materials behind the table also indicate that the change from 1983 to 1988 is small, the difference in numbers explained mainly by new positions. The change from a conscious strategy of Norwegian domination to a concept of Norwegians as advisors and assistants was instigated by a change of regimes, a change from one manager to the next. The consultants engaged in the construction of the Mill (NORCONSULT and FORINDECO) clearly gave priority to a technically efficient mill run mainly by Norwegians. Their understanding of the Mill as a mobilizing project, as a pedagogical project, was scant (Gran 1990). The data on Tanzanianization do not weaken that conclusion.

However, when the lack of success of the Mill is taken into consideration, both as a commercial undertaking (no accumulation of funds for investments and renewals of machinery) and as a school (only very slow and not very efficient Tanzanian take-over of Mill management) one can ask if it is reasonable to fuse two so different goals into one and the same organization: running a commercially viable sawmill and managing a school for training of Tanzanian wood industry managers and workers.

Two management cultures

In 1990 there was one Norwegian advisor at the Mill, assisting the General Manager in planning and decision-making. From the interviews with the management we were informed that the advisor played an important role as intermediary between the General Manager and the section managements and as liaison to NORAD and to Norwegian firms and consultants. The Tanzanian managers said that aid from NORAD was clearly dependent upon the presence of a Norwegian advisor. NORAD did not expect that Tanzanian managers and Tanzanian institutions, like TWICO, Juwata, the labour union, and CCM, could manage aid inputs with the interests of the firm in mind. Norwegian controllers had to be present.

The advisor defined training of Tanzanian personnel, getting top and lower level managers into internal and external training programmes as his main task. He meant that such training had not been given priority earlier, although many had received some training. He was in the process of engaging colleges like ESAMI (Eastern and Southern African Management Institute, Arusha), IDM (Institute of Development Management) and an Irish management institute in training programmes. The advisor said lower level managers at Sao Hill wanted extended training after a concentrated course in or outside Tanzania.

The advisor described two management cultures at SHS. Both Norwegian and Tanzanian managers had high-level theoretical training, but their relations to problem solving and practical administration differed. The Tanzanian professionals were capable of diagnosing a problem in theoretical terms but incapable of finding and implementing operational solutions. The advisor pointed to the general lack of concepts for operational intervention among Tanzanian professionals, as if practical problem-solving are tasks in another world, a non-professional world.

This "outlook", this action-model might have some of its background in a non-empirical academic tradition, a training that lacks practice in the movement from theoretical to operational concepts and empirical testing of hypotheses (management science, for example, seen primarily as a normative exercise, clarifying principles for good management against management science as an empirical discipline, investigating how managements work and function).

The advisor had registered different concepts of organization and administration. He suggested that Tanzanians, when building organizations, seemed to focus on conflict representation rather than conflict resolution. Conflict representation means building organs within organizations where all positions and interests are represented. Focussing conflict resolution means building organs that are good at producing solutions to problems and conflicts. For example, a Tanzanian personnel department would typically allow all existing member groups to recruit new members to the organization, while a conflict resolution type personnel department would recruit on professional merits needed for a specific task, relatively independent of group interests. Tanzanian managers at Sao Hill, according to the advisor, lacked the ability, the power and the autonomy to fire personnel even when the organization obviously was too large or when employees openly broke rules and contracts. He meant the representation model also lead to an involvement of too many persons and organs in making even simple decisions, often with the consequence that decisions were just not made or came much too late. As an aspect of this difference, the representational management model made managers dependent on trade union organizations, while conflict-resolution management would give independence to management and to trade unions and other non-operational power groups within the organization.

From our interviews with Tanzanians at the Mill the advisor's views on the management cultures seemed realistic. Many understood that a change of management culture from representation to conflict resolution probably was necessary if the Sawmill was to survive as a profit producing firm in a competitive market.

Top management

The advisor described the top management of the Mill in the following terms:

The interests of the Mill as a production unit is not in focus, is not the primary interest for top management decision-making and organizing.

The exchange of important and relevant information between top, middle and lower levels of the organization is very deficient and often distorted.

Top management can easily and often hide important information.

Top management veers away from all areas of real conflict.

Deliveries of sawn timber and furniture to "politicians and members of favoured religious groups" is given priority.

Top management uses much time for non-company matters.

The Tanzanian manager of the Mill informed us of the Tanzanianization of the Sao Hill management, initiated by Mr. Turkerud. He said that cooperation with expatriates had been smooth and efficient and that the Mill gradually had moved into production of furniture and prefabricated houses and recently had taken up production of transmission and fencing poles in addition to sawn, planed and impregnated timber. The Mill had in the 1980's created sales departments in Dar es Salaam, Dodoma and Morogoro. SHS covered about 60% of total demand for sawn timber in Tanzania. Exports were so far minimal, but he saw export potentials in eastern and southern Africa. Forward and backward linkages of the Mill were positive and transfer of technology from Norway to SHS had been successful. On the internal organization and management of the Mill the manager gave information on the formal structure, the departments and their leaders.

The head of the personnel department had training from IDM and practice from the Ministry of Manpower and National Culture and from TWICO. He first defined three management problems within the TWICO organization: (1) Inefficient recruitment and firing systems; (2) Lack of a real internal auditing; (3) Lack of intervention into/administration of the Norwegian professional assistance to Tanzanian wood industry.

The Norwegian assistance to SHS had an effect on management culture. The Norwegians introduced a business way of thinking, a form of cost-consciousness that the Tanzanian management culture lacked. They also broke with "bureaucratic individualism", inducing team-work for solving specific problems and dissolving them when the job was done. They introduced training in group decision-making. When compared with Norwegian management, the personnel manager saw that Tanzanian professionals did not distinguish between types of organizations, like political parties, trade unions, ministries and firms. Tanzanians viewed all organizations as service organizations, organizations having resources to be distributed (cf. the welfare state perspective of management, referred to earlier). Perhaps for this reason, communications in the organization were always distorted, arranged so that the communicator should maximize his/her possibility of retrieving maximum benefits from the organization. This conception skewed and distorted information. It was skewed both from the top downwards and from the bottom upwards.

The personnel manager refered to the same conceptual problem, that distinguishing between distribution and production of values was also present in the party and the trade union at SHS. Both of them (CCM and Juwata) created problems for SHS. Neither entered into a constructive cooperation with the Mill. Both saw SHS as a resource to be tapped and both considered themselves superior on policy matters of the Mill, leaving little or no room for SHS professional competence in decision-making. This resulted in a destructive relation, forcing the Mill management either to succumb or to try to isolate both CCM- and Juwata leaders.

From the interviews we could draw the following list of problems confronting the Mill.

(a) the problems of professionalization of Tanzanian management, developing an understanding for how the solution of functional and economic problems at the Mill are a sine qua non for the well-being of all the SHS employees;

(b) the problems of maintenance and renewals of machinery. This was another aspect of the existing action models, related to the understanding of the organization as a service- and not a production unit. Neither personnel nor money was directed towards maintenance and renewals. The functions were not conceptualized;

(c) the problems of diversification, developing competence and groups within the Mill for more innovation, more interest for production-related activities like training, sales, advertisement, transport, investments, maintenance etc.;

(d) the lack of focus on product diversification, adding new products to the sawn timber, in addition to the furniture, the work huts/small houses and electrical poles that were being produced;

(e) the problems of financial accounting, which were aggravated by the service understanding of the organization, tempting persons in positions of power to take personal economic advantages, for example "fees" for the allotment of transport to privately owned trucks;

(f) the problem of continued Norwegian aid into machine investments and training. Most of our interviewees said that the SHS connection to FORINDECO and NORAD was crucial in the years to come, even if the Norwegian personnel at the Mill were phased out.

The Sao Hill Sawmill, aid or commercial undertaking?

The Havnevik study concludes that the SHS project "...from a perspective of growth is one of the most successful major projects assisted by NORAD in Tanzania" (Havnevik 1988:25(1). Gran (1990) is of the opinion that the SHS is a successful production firm, constructed for producing timber under exceptionally favourable conditions. Those conditions were a large, highly productive state owned plantation with major investments and wage payments to managers and consultants paid as grants from the Norwegian government. The study demonstrates that developing Tanzanian competence to run the Mill was not given priority up to 1982. Sao Hill might have been a development project if it, in addition to a profitable mill, had been defined as a pedagogical and an experiment-oriented project, for example a parallel to the publicly owned demonstration farms that, for example, were important for agricultural modernization in Norway. However, with the massive financial gifts to the company the likelihood of creating a viable commercial undertaking was scant. With the economic buffer supplied by NORAD (the 'slack' to use a term from March and Simon 1958), the chances of a "laid back" administration on both the FORINDECO and the Tanzanian side would be large. Success was in a sense guaranteed.

In a combination between the goals of efficient production and demonstration/extension services for other potential producers of sawn timber, the grants may have had larger positive effects on development of Tanzanian competence and entrepreneurship.

For that reason the project has fallen between two chairs: Neither has it become a viable economic unit, nor has it functioned efficiently as a pedagogical and supportive enterprise for developing entrepreneurial capacity in Tanzanian wood industry. On the first chair there was too much aid, too much 'free' capital and consultancy support, blocking economic rationality and economically relevant innovation. Tanzanians were not involved in the management (and were perhaps not very eager to get in either, because of the formidable flow of "free" resources to the Mill, limiting their decision-making autonomy). Tanzanian professionals have only to a limited degree participated in planning, running and financing of the firm. On the second chair no one was seated, because NORAD's success criteria in the project were not pedagogical. NORAD did not in practice give priority to the mobilization of Tanzanian entrepreneurs and the organization of an extension service. NORAD's goal was a profitable sawmill as quickly as possible.

An alternative strategy could have been to support a Tanzanian planning process where a long term plan for the utilization of the Sao Hill plantation had been developed, a plan which could have specified a utilization along four dimensions: (1) care and development of the plantation area (with the Tanzanian Forest Administration, responsible for the plantation); (2) planned private and public exploitation of the plantation; (3) One, two or three mills in the plantation run commercially with modern technology that could be sustained by a combined Norwegian Tanzanian management; and (4) a pedagogical, scientific, social and educational extension service, focussed on development of competence in wood industry in the different regions of Tanzania.