manufacturing - · pdf filemanufacturing is nevertheless ... exhibit a diversified structure...

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UNESCO NATIONAL COMMISSION OF THE UNITED REPUBLIC OF TANZANIA

IntroductionAlthough an under-

developed sector in Tanzania,manufacturing is neverthelessan important contributor tothe country’s GDP. But theburdens it struggles underare substantial. Hampered bythe variability of the agricul-tural sector on which it isbased, Tanzania’s industriesmust also contend with highcosts of production, low labourproductivity, high interestrates and increased compe-tition arising out of the policyof trade liberalization.

In this context, the sectoris characterised by a narrowindustrial base dominated byagro-industries, limited diver-

sification, reliance on importedinputs of raw materials andintermediates, relatively under-developed industry linkages,prevalent use of obsoletetechnologies and productionthat is mainly focused on thedomestic market.

Government recognisesthat significant transfor-mation of the sector is vital.In order to achieve this, it isnecessary to promote andstimulate a change processwhich will make the sectorexhibit a diversified structureof production; undertakeprocessing of more of thenatural resources with whichTanzania is endowed; andbecome export-oriented.

Taking into account theabove factors, Government’sgoals for the industrial sectorin the medium term are tooptimize the exploitation ofdomestic natural resources;to strengthen backward andforward linkages within themanufacturing sector andbetween the sector and rest ofthe economy; to ensure thatindustries are competitive inthe domestic and interna-tional markets; to raise levelsof technological capabilities;to create new employmentopportunities; to absorb therapidly growing labour force;to strengthen the SME sectorand put emphasis on sub-regional collaboration andsouth-south cooperation.

Manufacturing:Struggling to compete

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Importance of the sectorand performance

In terms of importance,the manufacturing sector,though not strong as it shouldbe, continues to play a res-pectable role in the economy,contributing to 18.9% ofexport earnings and 8.6% toGDP - but this is still shortof the planned target of 15%by 2020. In the country’sDevelopment Vision-2025, it

is projected that the contribu-tion of the industrial sector tothe economy will reach 25%like the semi-industrializedcountries of South East Asia.

Tanzania’s most impor-tant industries include agro-food processing, beverages,oil refining, and cement.Other industries include theproduction of textiles, apparel,tobacco products, glass, paints,plastics, chemicals and phar-maceuticals, and the pro-cessing of metals and woodproducts.

The sector provides employ-ment for an estimated work-force of over 100,000 people.

Growth rate of the sectordecelerated from 9.9 percentin 2008 to 8.0 percent in 2009.This trend was due to theeffects of the global economicmeltdown.

Export developmentThe export market for

manufactured goods com-prises cotton yarn, manufac-tured coffee, manufacturedtobacco, sisal products, plas-tics, textiles and apparel andiron steel.

During 2009, the exportvalue of manufactured goodsdecline from US$ 662.3 mil-lion recorded in 2008 to US$

497.6 million. The decline ispartly attributable to the dropin demand for the manufac-tured products in the neigh-bouring countries followingthe global financial crisis.

Major production andindustrial units

Food, Beverages and TobaccoThe food manufacturing

in Tanzania include manu-facturing of dairy products,canning and preserving offruits and vegetables, can-ning fish and similar foods,manufacture of animal andvegetable oils, grain millingbaking, sugar and confec-tionery as well as preparedanimal feeds. The beveragesinclude the distilling andblending of spirits; manu-facture of wines, cider andbeer; production of soft drinks

and carbonated waters andthe bottling of natural springand minerals waters. Thetobacco subsector comprisesmanufacturing of cigarettes,tobacco and other tobaccoproduction.

Textiles, Clothing, Leather andFootwear

Activities undertaken inthis category include spinning,weaving and finishing oftextiles as well as garments,knitting and the manufactureof carpets, rugs, cordage, ropeand twines. The leather andfootwear subsector includetanneries; leather finishingand manufacturing of productsfrom leather such as luggage,handbags and purposes.

Wood products activitiesAccounted in the sub-

sector include sawmills, plan-ning and other wood millsmanufacturing goods. Alsoincluded is the manufac-turing of wooden containers,cane products and woodenproducts.

Paper and Paper ProductsThis comprises the man-

ufacturing of pulp, paper,paperboard, fibreboards,light packaging, heavy pack-aging, stationery and otherpaper products.

Chemicals, Petroleum, Rubberand Plastics

The chemical subsectorcomprises the manufactureof basic industrial chemicals,fertilizers, pesticides, plasticmaterials and products, medic-inal and pharmaceuticals,soap, detergents, perfumesand other cosmetics, paintsand other chemical products.While the petroleum subsec-tor comprise of petroleumrefineries, fuel oils, lubri-cating oils and manufactureof asphalt materials.

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Rubber products producedin the country include tyresand tubes conveyors and fanbelts, rubber mats, groves,pipes and tanks, plastic sheets,kitchenware, furniture andfootwear.

Non-metallic Mineral ProductsThis includes manufac-

ture of pottery, china andearthenware, glass and glass-ware products, bricks, tiles,cement, concrete, gypsumand plaster products.

Boosted by robust growthin construction, Tanzania’scement industry has grownrapidly over the years, withthree cement producers and acombined production capacityof 1.9 million tonnes per year.

Basic Metal ProductsThis comprises rolling

mills and foundries to pro-duce products such as slabs,bars, sheets, plates, strips,tubes, pipes and rods.

Fabricated Metals, Machineryand Equipment

These include manufac-ture of cutlery, hand toolsand general hardware, furni-ture and fixtures, doors, metalstaircases and window frames.Others are electrical motorstransformers, electrical controldevices and switchboard appa-ratus as well as radios andtransport equipment, mainlybicycles and animal andauto-pulled carts.

Other ManufacturingIndustries

This covers products suchas jewels and related articles,furniture manufacture, meas-uring and controlling equip-ment and optical goods. Pro-duction in this category hasexperienced an average growthof over 12 percent over thelast decade.

Notable performance ofsome local industries

The goods whose pro-duction skyrocketed includeKonyagi, which increased by151.9 %, from 4,049,000 litresin 2008, up to 10,201,000litres in 2009. Production ofpyrethrum agro-chemicalsalso increased from 73 tonnesin 2008, up to 266 tonnes,equivalent to 264.4 % increase.

Production of wheat flourincreased from 287,925 tonnesin 2008 to 368,885 tonnes in2009, representing 28.1 %increase. Production of Chi-buku brew also increasedsharply from 10,235 litres in2008, up to 16,141 tonnes in2009, equivalent to 57.7 %increase.

Likewise, production ofiron sheets ballooned to50,664 tonnes in 2009, from31,743 tonnes in 2008, equiv-alent to 59.6 % increase.

Production of batteriesalso increased to 78 millionbatteries in 2009, from 53million batteries in 2008,representing 47.2 % increase.

Moreover, production ofcement increased from 1,756

tonnes in 2008 up to 1,941tonnes in 2009. This wascaused by high demand ofthe commodity as consump-tion of cement skyrocketedfrom 1,940,845 tonnes in 2008to 2,399,458 tonnes in 2009,equivalent to 58.5% increase.

However production ofaluminum declined from 105tonnes in 2008 to 58 tonnesin 2009, registering a 44.8 %decrease. Production of gar-ments also declined from7,783,000 square metres in2008 to 7,913,000 squaremetres in 2009, a 34.9 %decrease.

Other goods whose produc-tion declined during the periodunder review include logs(16.6%), biscuits and spaghetti(1.5%), beers (2 %), cigarettes(4.4%) and iron (13%).

Investment opportunitiesThe priority sectors for

investment include the fol-lowing export-oriented manu-facturing operations: Textileand garments; leather pro-cessing and leather products;lapidery, including gold, dia-monds and gemstones; agro-processing; fish processing;wood and wood products; elec-


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trical and electronic appli-ances; and ICT industries.

Policies and RegulatoryFramework

The future discourse forindustrial development inTanzania is elaborated in the“Sustainable Industrial Devel-opment Policy - SIDP”. Themain purpose of SIDP is toset out a path for industri-alizing Tanzania so that bythe turn of the first quarter ofthe 21st Century it becomes asemi industrialized country.

In its approach SIDPembraces the principles ofa market-led economy andcompetitiveness. It points outplainly that industry wouldonly prosper in the handsof increased private sectorparticipation both in decisionmaking and implementa-tion. The government in thisaspect has vowed to increas-ingly provide an environ-ment which is welcoming,attractive, and stable andthat can encourage privatesector investment.

The private sector in itspart should take all nece-sary initiatives to respondand manage challenges ofglobalisation. Firms are chal-lenged to pursue firm strate-gies which are geared towardsbuilding the necessary capa-bilities to enable them com-pete in the world market.

Industrial SupportOrganisations

The government has estab-lished several institutions torender support services to theindustrial sector. Among themare: The National Develop-ment Corporation (NDC), theSmall Industries Develop-ment Organization (SIDO),the Centre for AgriculturalMechanization and RuralTechnology (CARMATEC),the Export Processing ZonesAuthority (EPZA), the Tan-zania Industrial ResearchDevelopment Organisation(TIRDO), the Tanzania Engi-neering and ManufacturingDesign Organisation (TEMDO)and Tanzania Bureau ofStandards (TBS).

Challenges facing themanufacturing sector• Poor technology;• Insufficient industries/factories;• Unreliable market for thefinal processed goods;• High cost of power, unreli-ability of power and under-developed infrastructure;• Unreliable availability ofraw materials;• Small number of trainedmanpower.

ConclusionThe manufacturing sector

holds the key to Tanzania’seconomic growth given thedesire to diversify from agri-culture and tourism to othersectors. Although the sector’scontribution to the nationaleconomy has not significantlyimproved lately, there is everyreason to believe that withproper policies and invest-ment incentives in place,manufacturing sector is agrowth area.

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