The performance of the manufacturing sector in Tanzania: Challenges and the way forward

Abstract

Tanzania's industrial sector has evolved through various stages since independence in 1961, from nascent and undiversified to state-led import substitution industrialization, and subsequently to de-industrialization under the structural adjustment programmes and policy reforms. The current development agenda, however, has brought industrial development back to be one of the policy priorities. This paper aims at examining the performance of the manufacturing sector, with particular interest in identifying the emerging manufacturing subsectors, drivers of their success, and challenges for sustained competitiveness. The paper shows that manufacturing growth over the last ten years has helped to sustain GDP growth. The growth in manufacturing notwithstanding, it remains largely undiversified, and vulnerable to variations in agricultural production and commodity prices. The most dynamic subsectors in terms of output growth, export growth, production innovation and product diversity are food products, plastic and rubber, chemicals, basic metal work, and non-metallic mineral products. Nevertheless, the domestic value addition is limited by the dependence of imported intermediate goods, signifying limited inter-industry linkages that are important for promoting domestic manufacturing base and employment. Various technological, financial, policy, and administrative constraints remain unresolved and therefore, limiting faster industrial growth and transformation.

Coping with the African Business Environment: Enterprise Strategy in Response to Institutional Uncertainty in Tanzania

“…Over the last decade, Tanzania has sustained growth rates in excess of 6-7%, fuelled by investments in extractive industries such as gold, coal, nickel and gas, and rapid development of the service sector, especially infrastructure and construction. Tanzania's economy has passed through various development phases ranging from a government controlled socialist economy to market liberalization through policies embracing private sector growth and foreign direct investment (FDI) (Wangwe et al, 2014). To promote industrial development, Tanzania has adopted numerous initiatives aimed at transforming the country's agriculture-based economy into a competitive and dynamic semi-industrial economy by 2025.…”

“…Several studies have pointed to deficiencies of the Tanzanian institutional environment, including: failing financial markets, fragile bureaucratic institutions, lack of enforcement, widespread corruption and rent seeking, poor infrastructures, overlapping regulatory jurisdictions, and inefficient provision of public goods (see e.g. Wangwe et al, 2014;Kessy & Temu, 2010;Kinda & Loening, 2010;Cooksey & Kelsall, 2011). State-business relations are characterized by strong government involvement in business; some argue that this involvement is aimed at extracting rents from business (Cooksey & Kelsall, 2011;Buur et al, 2013) while others emphasize the lack of coordination and/or overregulation of business activities (Wangwe et al, 2014).…”

“…Wangwe et al, 2014;Kessy & Temu, 2010;Kinda & Loening, 2010;Cooksey & Kelsall, 2011). State-business relations are characterized by strong government involvement in business; some argue that this involvement is aimed at extracting rents from business (Cooksey & Kelsall, 2011;Buur et al, 2013) while others emphasize the lack of coordination and/or overregulation of business activities (Wangwe et al, 2014). Moreover, intermediary industries offering financial and business development services are underdeveloped, a factor significantly inhibiting enterprise growth (Wangwe et al, 2014;Ishengoma, 2016).…”

Reducing Edible Oil Import Dependency in Tanzania: A Computable General Equilibrium CGE Approach

“…Tanzania, after a long-standing dependency on imports for major food commodities, such as sugar and edible oils, intends to transform its agriculture sector to a level that meets local demand for food commodities through domestic production [1]. The agriculture transformation is seen as a crucial strategy for poverty reduction in Tanzania, considering that about 65% of the population is engaged in this sector [1,2]. Moreover, in Tanzania, the agricultural sector provides raw materials for the industrial sector [1][2][3].…”

“…The agriculture transformation is seen as a crucial strategy for poverty reduction in Tanzania, considering that about 65% of the population is engaged in this sector [1,2]. Moreover, in Tanzania, the agricultural sector provides raw materials for the industrial sector [1][2][3]. Therefore, any transformation strategy that results in an increase in agricultural output is vital for feeding its growing population and meeting demand from the industrial sector.…”