28 December 2012

Tanzania: 10 Subsectors Account for Half of Exports

TEN subsectors -- gold, cashews, fish processing, coffee, tobacco, tea, flour, steel, palm oil and cut flowers -- account for half of the country's exports.

Prof John Sutton, the Sir John Hicks Professor of Economics at the London School of Economics, made the remark in reference to his findings in the new enterprise map of Tanzania, noting that some 22 firms account for over half of exports in seven of the 10 sub sectors.

"Tanzania's economy has had really strong growth performance over the past decade. The good news is that this growth has been broadly based across sectors," he said, adding that "If this continues, Tanzania can become a middle income country in a decade or so."

Prof Sutton also notes that if the gas and oil industry supply chains can be fully integrated with Tanzania's domestic industrial sector, the payoff to medium term growth will be huge. He said that 36 per cent of exports in 2011 came from Gold, noting that oil and gas will be key in sustaining growth.

South Africa, Canada and UK account for half the Foreign Direct Investment stock to Tanzania, with a quarter of FDI going to manufacturing. "The UK, US and Kenya are the leading sources of manufacturing FDI," he said. He noted that it is seen as disappointing in Tanzania that so few local start-ups grow to become mid-size industrial companies. He said the oil and gas sector can help in the integration of local firms into international supply chains.

"The key to success lies in having a deep understanding of existing industrial capabilities... it's crucial to focus on narrowly defined sectors which offer long term viability," he said.

Dr Donath Olomi, Chairman of the Institute of Management and Entrepreneurship Development, said that in the first decade of the new millennium, Tanzania's gross domestic product doubled in real terms, making it one of the handful of sub-Saharan economies that have shown strong and sustained growth in recent years.

"This growth was, moreover, broad based, with manufacturing output growing slightly faster than the economy as a whole," said Dr Olomi. The research was supported by the International Growth Centre, which aims at promoting sustainable growth in developing countries by providing demandled policy advice.

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