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The effect of macro-economic reform on social and environmental well-being and sustainability was studied, using the case of tourism development in Tanzania. In 1997, Tanzania received 2% of the 23.3 million tourists who visited the African continent and earned about 4.5% of the total earnings. In 1998, the contribution of tourism to GDP rose to 7.4%. In 1999, 35 tourist hunting companies were registered, of which 16 were wholly owned by Tanzanians, while 4 were joint ventures. The contribution of tourism to employment creation is considerable. The main environmental effects include untreated effluent discharges into the sea by tourist installations in beach areas, mangrove destruction, beach erosion, environmental degradation in the parks, and the depletion of ebony resources for "Makonde" carvings. On the one hand, tourism development has renewed the entrepreneurial culture. On the other hand, prostitution, drug abuse, alcoholism, child labour, and truancy are emerging. It is concluded that government tight fiscal policies, including retrenchment of civil servants, has reduced the capacity to stop poaching. Privatization of public tourism facilities could improve tourist services. Investment incentives are likely to benefit more foreign investors than existing small and local investors. Future growth is hampered by the lack of infrastructure