Foreign aid undermines Tanzania's drive to solve its own problems. `Nation has very little to show,' says resident

Foreign aid. It's often a valuable help to foundering nations. But it can also be a hindrance. Take Tanzania, for example. ``The Tanzanians no longer look to themselves to solve their problems,'' a senior Western diplomat says. ``They expect the donor countries to do it all for them. It's a very unhealthy situation.''

According to Western observers, some $600 million of foreign aid has poured into Tanzania annually over the past 20 years. This represents one of the largest per capita aid programs in the world.

``But when you get down to the nitty- gritty, Tanzania has very little to show in the way of effective projects,'' comments one longtime resident.

Observers here say the Tanzanian government's policies are largely to blame. Former President Julius Nyerere's version of African socialism, critics say, stifled initiative and encouraged a debilitating degree of dependence on outside aid.

But the donors, these critics say, also bear a heavy responsibility. Anxious to see Mr. Nyerere's experiment succeed as a model for other African nations, they acquiesced to his demands of ``aid without strings.'' They often backed large-scale development programs based on political rather than economic considerations, and not designed to foster self-reliance.

The Southern Paper Mills pulp and paper mill, one of Tanzania's largest and most prestigious development projects, is an example. A gleaming complex of concrete and steel at the base of the Mufindi escarpment in the Mgololo Valley, it uses some of the latest technology. But, say international aid sources involved in the project, the mill may prove to be Tanzania's most expensive white elephant.

When Nyerere opened the mill last October it had already cost nearly $600 million, more than twice the initial estimate. Aid sources believe the state-owned plant has little hope of becoming a viable commercial enterprise. It will not be able to repay its debts or achieve more than a fraction of its annual 60,000-ton production capacity, they say. It is totally reliant on imported spare parts, fuel, and chemicals, which must be purchased with hard currency. Its paper costs three to four times as much as imported paper, which, to ensure local sales, is banned.

Poor site planning is another problem. Brooke Bond, the British tea firm that is one of Tanzania's largest hard-currency earners, fears that sulfur-dioxide emissions (acid rain), carried up the escarpment from the mill could seriously affect their estates at nearby Mufindi. Mill officials say this is unlikely, but Brooke Bond Chairman Malcolm Keeley says even slight gaseous odors ``could ruin the flavor of the tea and render the crop useless, and worsen Tanzania's already poor balance of payments.''

The Mgololo Valley mill is indicative of much that is at fault with Tanzania's development policies. Because 90 percent of the country's population lives off the land, the export potential lies overwhelmingly in agriculture. But all too many aid projects have ignored the country's real needs -- expanding crop production, encouraging small, competitive enterprises, and raising the standard of living.

A major factor in the collapse of donor projects is the donors' failure to ensure basic maintenance once foreign experts have pulled out. Multimillion dollar schemes ranging from roads to factories have simply rotted, rusted, or crumbled because Tanzanians lack the skills, means, or interest to maintain them.

Excessive aid, observers point out, has undermined Tanzania's goal of self-reliance. Many donor nations have reevaluated or reduced their aid programs. United States aid to Tanzania -- over $336 million since 1962 -- has been written out of the last two US budgets. The $10 million that remain in the pipeline will run out in 1987. Britain also expects to cut its roughly $30 million aid program by 75 percent in 1986.

The emphasis, aid experts say, should be on quality rather than quantity -- with Tanzanians encouraged to live within their means and to concentrate on less ambitious, more practical programs.

There is a need for a coordinated development policy among donors. The thousands of foreign advisers in this country are often helpless because they lack the power to make decisions. Tanzanians, too, need to be given more individual powers of decision rather than always being required to consult with party committees, analysts here say.

With advisers given greater decisionmaking power, donors could reduce their advisory ranks by 90 percent and still prove more effective.

Reforms of this sort are beginning to take place. In a number of cases, the government has quietly handed over to expatriate advisers the right to hire and fire, control purse strings, and skirt red tape. But for a country still trying to shake off its colonial past, it is a difficult political decision. In any case, until Tanzania alters its policies, and can develop a qualified cadre of administrators, it may have no alternative but a shaky preservation of the status quo.