5 December 2012

Tanzania: Nation Lags Behind On Quality of Industrial Products

Dar es Salaam — Tanzania is still lagging behind the region both in terms of quantity and quality of industrial goods produced and exported.

According to the Tanzania Industrial Competitiveness Report (TICR) 2012, that was produced by the government of Tanzania and the United Nations Industrial Development Organization (UNIDO) in the context of the United Nations Development Assistance Plan 2011/15 (UNDAP).

The TICR report launched in Dar es Salaam show that the country continues to rely heavily on an unproductive agricultural and the extractive sectors as well as low value-added manufacturing.The UNIDO's Competitive Industrial Performance (CIP) index positions Tanzania at 110 places in the Industrial Development Report, benchmarking 118 countries in the world.

Nevertheless, the fact that Tanzania moved up four ranks between 2005 and 2009 indicates that a catch-up process has been initiated in the last years.

"The Manufacturing Value Added (MVA) as a share of the Gross Domestic Product (GDP) has mostly stagnated at roughly 9.5% between 2000 and 2010, which is still below the average for the region, making Tanzania one of the least industrialized countries in the world," disclosed the report.

During this period, the MVA increased from $894m to $1,992m. The growth rates in the first and second half of the decade were above 8% per year, outpaced only by China and Mozambique.

According to the report, Tanzania, Uganda, China and Mozambique had the highest GDP growth rates for the period in the past decade 7.0%, 7.4%, 10.5% and 7.8% respectively, implying that there is indeed a strong link between industrialization and economic development.Despite this performance, the relevant question is whether Tanzania can sustain this growth trend, especially if it continues to focus on natural resource based activities.

Accordingly, one sensible strategic option that the report suggests for the country is to upgrade within this important sector and to thus move into higher value added activities.

"This is in line with the idea that the structural change necessary for improving a country's economic development has to take into account the comparative and competitive advantages of the country," stated the report.

The MVA, states the report, was highly concentrated in a few low-tech sectors, making country's industry vulnerable to international competition and limiting its ability to improve through learning and innovation.

Food and beverages alone account for nearly half of the total MVA, followed by nonmetallic mineral products by 11%, tobacco 7% and textiles 5%.

Industrial activities, according to the report, are unevenly distributed where more than half of all large manufacturing establishments are concentrated in Dar es Salaam with a lesser extent in Arusha.

The remaining 14% is spread out between Mwanza, Singida, Tanga, Kagera and Kilimanjaro.

The private-owned companies that dominate the manufacturing segment by 91%, has ultimately seen the large public-owned enterprises dwindling to 56, which corresponds to around 8% of all manufacturing ventures, with the remaining enterprises being mixed.

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