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DAR ES SALAAM, April 12 (Reuters) - President Jakaya Kikwete plans to kickstart political reforms in the east African country, but some in his ruling party want to keep the status quo that has helped them stay in power since independence from Britain in 1961.
Kikwete is under pressure to change the constitution before the next presidential and parliamentary polls in 2015 from the opposition who say the basic law, adopted in 1977 under one-party rule, favours the ruling Chama Cha Mapinduzi (CCM) party.
Kikwete, who is serving his second and final term in office, has pledged to have a new constitution in place by 2014. He said a constitutional review team would start its work on April 13.
Opposition leaders want to limit presidential powers, introduce electoral reforms and allow independent candidates to stand for parliament as well as president.
They also want the law to allow presidential results to be challenged in court, which currently is prohibited.
Joseph Warioba, a former prime minister, heads the team to review the basic law. The team has equal representation of delegates from Tanzania and the semi-autonomous Zanzibar archipelago, which formed a union with mainland Tanzania in 1964.
The government said it plans to call for a referendum after the final document is approved by a constituent assembly.
What to watch:
- Zanzibar autonomy. Some analysts say members of the constitutional review team from Zanzibar might attempt to seek greater autonomy for the archipelago, where some politicians want to exit from the union with mainland Tanzania.
- Constitutional stalemate. Will rival politicians in CCM and opposition parties work together on a new constitution?
- Anti-government protests. Opposition leaders have threatened to call for nationwide protests if the government fails to keep its promises on political reforms.
Kikwete is yet to name a successor in line with his party's tradition, sparking a race to succeed him among senior party officials ahead of internal elections this year.
What to watch:
- Will political infighting to succeed Kikwete, who has three years left in office, weaken the party? Several politicians, including cabinet ministers, want the top job.
- The resurgent opposition CHADEMA party emerged from the 2010 election as the main rival to CCM's 50-year grip on power in Tanzania despite its loss. CHADEMA won a parliamentary by-election in the north this month, making inroads in a former CCM stronghold.
- Corruption. Two businessmen were jailed last year for defrauding the central bank of more than $1 million. The case was one in a series of bank scams that cost the central bank $87 million in 2005. Will more cases come to light?
The government faces demands for higher public sector salaries as the rising cost of living threatens to fan social tensions in east Africa's second-biggest economy.
Economic growth could rebound to 7 percent in 2011/12, helped by recovery of the global economy, but strong growth over the past decade has failed to end poverty in Africa's fourth-biggest gold producer.
Hundreds of doctors at public hospitals went on strike in March and agreed to temporarily suspend their action after the government promised to hike their salaries.
The high cost of living has stoked anti-government sentiment, with trade union leaders repeatedly threatening nationwide strikes to push for salary increases for workers.
Some government officials have warned that social unrest could escalate to broader protests, with nurses and teachers expected to join demands for higher salaries.
The International Monetary Fund said in November that Tanzania's economy might grow by 6 percent in 2011, but this would be below its initial estimated growth of 7.2 percent, largely due to frequent power outages.
Tanzania's year-on-year inflation rate eased slightly but remained in double-digit territory in February to 19.4 percent from 19.7 percent a month ago, with a 40 percent rise in power prices in January seen fuelling consumer prices further.
What to watch:
- Poverty and unemployment. Lack of job opportunities, especially among youths, is seen fuelling discontent over the cost of living.
- Major gas discoveries. Tanzania has emerged as a key player in Africa's energy sector, with Norwegian oil firm, Statoil last month announcing new gas discovery, but how will Tanzania manage its gas revenues?
- Mining firms are worried about the tax reform plan. Africa's biggest gold miner, AngloGold Ashanti started paying 30 percent corporate tax to the government last year for its Geita mine, but companies are resistant to higher royalties which were raised to 4 percent in 2010 from 3 percent. (Editing by James Macharia and Alison Williams)