Tanzania Daily News (Dar es Salaam)

28 November 2012

Tanzania: Study - Industrial Sector Still Lags Behind

TANZANIA lags behind other countries in the region in terms of quantity and quality of industrial goods produced and exported, the Tanzania Industrial Competitiveness Report (TICR) 2012 has revealed.

The TICR report launched last week in Dar es Salaam shows that the country continues to rely heavily on an unproductive agricultural and the extractive sectors as well as low value-added manufacturing.

"The Manufacturing Value Added (MVA) as a share of the Gross Domestic Product (GDP) has mostly stagnated at roughly 9.5 per cent between 2000 and 2010, which is still below the average for the region.

This makes Tanzania one of the least industrialized countries in the world," disclosed the report. The MVA, states the report, was highly concentrated in a few low-tech sectors, making the country's industries vulnerable to international competition and limiting its ability to improve through learning and innovation.

Food and beverages alone accounts for nearly half of the total MVA, followed by nonmetallic mineral products (11 per cent), tobacco (7) and textiles (5). Industrial activities, according to the report, are unevenly distributed whereas more than half of all large manufacturing establishments are concentrated in Dar es Salaam with a lesser extent in Arusha.

The remaining 14 per cent is spread out between Mwanza, Singida, Tanga, Kagera and Kilimanjaro. The private-owned companies that dominate the manufacturing segment by 91 per cent, has ultimately seen the large public-owned enterprises dwindling to 56, which corresponds to around 8 per cent of all manufacturing ventures, with the remaining enterprises being mixed.

Enterprises with fewer than ten employees account for 97 per cent of all manufacturing enterprises. According to the National Bureau of Statistics (NBS) Business Survey 2007/08, most of them are family-owned firms with less than five employees.

"Yet manufacturing is not the preferred option of business start-ups which usually seek to engage in commercial activities that generate petty income," says the TICR report. Furthermore, manufacturing has also failed to create formal employment for Tanzanians, particularly in the Small Medium Enterprises (SME) sector.

Employment in the manufacturing sector accounts for less than 5 per cent of the total labour force, with the largest 40 companies employing 36 per cent of all labour in this sector. This is equivalent to the employment generated by 24,000 micro enterprises.

Only 11 per cent of industrial employment has been generated by firms which began operations in 2005 or later. "Clearly, new investments in manufacturing have not yet resulted in significantly more jobs.

This may be attributed to the current focus on capital-intensive, resource-based sectors including extractive industries at the expense of traditional labour-intensive manufacturing like textiles and clothing," stated the report.

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