Tanzania has seen remarkable economic growth since the turn of the millennium. It has become one of the fastest growing economies in the world and continues on this path despite the persistent global economic slowdown. Notwithstanding this remarkable level of growth, there has bee ...Click here to read more

Tanzania has seen remarkable economic growth since the turn of the millennium. It has become one of the fastest growing economies in the world and continues on this path despite the persistent global economic slowdown. Notwithstanding this remarkable level of growth, there has been little change in terms of structural and economic transformation—according to the National Bureau of Statistics, the basic needs poverty in Tanzania has significantly declined from 34.4 percent in 2006 to 28.2 percent in 2011/12. There is consensus among most policy practitioners that in order to reduce poverty and to achieve equitable and sustainable development, Tanzania must develop industries that provide increased employment opportunities for the poor and the second Five-Year Development Plan (FYDP II) is themed “Nurturing Industrialization for Economic Transformation and Human Development.”

Focus of discussion

The objective of this topic is to provide all development stakeholders, practitioners, and policy markers with the space to share and exchange ideas on what needs to be done to ensure that Tanzania industrializes, and that the form of industrialization allows for human development. Specifically, we invite everyone to reflect on the following topics:

• The private sector is recognized as the main vehicle for making direct investments in the sector while the government will provide an enabling environment. What more should be done to improve business environment?
• In the FYDP II, industrialization is a tool for human development. To achieve human development, industries in Tanzania must create employment opportunities and especially for youth and women. Tanzania faces many challenges in this regard. For instance, according to Brookings Institution, Tanzania’s special economic zones (SEZs), which are export-oriented industrial clusters, contain about 40 firms, employing around 10,000 people. Vietnam has 3,500 firms in its export processing and industrial zones, employing 1.2 million workers. What is needed to ensure that industries create the urgently needed jobs?
• Most Tanzanians are still employed in the agricultural sector. As Tanzania pursues industrialization, what role, if any, must the agricultural sector play?

Moderators Mr. Desmond Mushi; Mr. Abel Songole and Mr. Abdallah Hassan

Thank you for the questions you raised. There are many answers concerning what can be done to create 1 million decent jobs in one year and what should be changed. Let me begin by suggesting what should change. Realistically, Tanzanian economy is agrarian. We should all accept this and from there we should begin by improving production in the agricultural sector specifically raise productivity there. Let change from relying on rain-fed agriculture to irrigation. It is possible even withing one year with determination and appropriate mobilization. This will automatically attract different forward and backward linkages. If this is done successfully, we will create more than a million jobs in less than five years. Slowly our economy will move to secondary level and this will further call for appropriate services specifically education and health.

safari

Realistically, agriculture is a dominant sector in the economy and borrowing from Venance's advise, that is the basis of industrialization in Tanzania. This may raise different interpretations but as a matter of fact agricultural sector in Tanzania has to be improved and productivity raised so that the generated additional household incomes will strengthen above subsistence life which will play a decisive role in secondary sector development. In addition, since industrialization involves cultural change also, we have to rethink about our education system and make long term adjustments that will be inline with our industrialization plans.

It was mentioned that "according to the Brookings Institution, Tanzania’s special economic zones (SEZs), which are export-oriented industrial clusters, contain about 40 firms, employing around 10,000 people. Vietnam has 3,500 firms in its export processing and industrial zones, employing 1.2 million workers".

What do you think can be done to create 1 million decent jobs for youth in the next five years? What must change?

I just think I am not actually replying on anything rather share my sorrows in echoing Gabor's concerns. What I should advice us, ourselves and our policy makers if any, is LETS THINK FRANKLY WIDE & LOUD.

1. Tanzanians are very resourceful and imbued with a lot of potentials. All they need is a thought out coordination and committed leadership in policy designing.

2. Tanzania have a lot of potentials of which given a stable political will coupled with right and timely policy implementation, only scarce time to be the limit.

3. Everybody (if well translated) knows that 'Macro' will be always is stabilised and enhance on the pedestal of mature and sustained 'Micro's'. Can we think back or rather revisit the Basic Industrial Strategy (BIS) or simply put can we recount the genesis and what transpired with SIDO to date? Is there a way Tanzanians can blame the Structural reforms with a reformed thinking for our way forward as a Nation.

4. Its good to bring to you my colleagues and Garbo in particular that we have had a lot of studies currently acquiring gold colours in the ministries' archives on all you have stated above. The launch of Kapunga Madibira rice farms, Tanzania became one of the highest per acreage producer of rice in the world - where is Kapunga today?

5. During the fist phase government Tanzania established under the support of FAO, IFAD, JICA, etc. all needed capacity building infrastructures (Research Institutes by crop type) Agric University, Colleges, Courses, to mention but a few. This was supposed to be the continents beehive producing technicians, engineers for developing and middle income economies - whats is join on.

6. We are importing and mostly on donor funded support, fertilisers while Tanzania Fertilizer Company was eaten away by the Tanga shore see waters and the Minjingu Phosphates looking for market? Can any ones conscience deny the pains small call them petty farmers of the pains that seasonal and all season vegetables, fruits, etc are writing in their hands instead of having the same processed, packed even for short-short terms and enable Tanzanians get these supplies all year out!

7. Can our policy maker-cum-Government steer the people by enacting or implementing simple policies say re-establishing strong Cooperatives (we use to know), re-enact BIS, allow innovative ideas be implemented in our Micro as well as coordinating all our planning's in a stakeholders/participatory approach. Allow Tanzanians to spell out their needs and the way they think they will get there. I think we do have all it takes to become who we want. Lets be smart by planning out with priorities and planning step by step utilising the human and material resources endowed in this blessed country. Lets plan strategically the launch out informed: Identifying our needs, Whats needed to extract our needs, Who does what, Where and when, Hows and for who, etc.

Mangimana, G. J.

Kigali.

The area that needs greater attention in my opinion is the issue of financing. For example, Manufacturing, which is the driver of industrialization is estimated to require about Tanzanian Shillings 24 trillion over the five year implementation period of Second Five Year Development Plan (2016/2017-2020/2021). The government is expected to contribute about TShs 2.4 trillion (equivalent to 10% of total); private sector about TShs 21 trillion equivalent to 87.5% and Development Partners (donors) about TShs 0.6 trillion equivalent to 2.5%. As you can discern from these figures, the private sector (both domestic and foreign) is the main implementer.

What is most desired is for the domestic private sector to take lead. How realistic is this? Innovative ways of financing need to be explored including exploring possibility of government guarantees for private sector when sourcing such financing.

In order to promote industrialization in the country, the following should be done between the government, investors and producers or Tanzanian population:-

Restructuring of industrialization policy, this policy is among the large crosscutting with different sectors in the country. Working on the policy helps to evaluate the existing one on where are the problems are existing and what to be done. The government should structure it in collaboration with stakeholders to come up with a policy which addresses issues in industrialization and foster growth of industrial sectors. The Proper policy will help to come up with solutions facing industrial sector and producers of raw material current and in the future.

Government plan and prioritisation of programs, through proper planning of which to be done in what interval will help producers and investors to know, where to invest at what time. so proper preparation will help proper productions and avoid problems in the future.

The government should work under clear and transparent way. this helps both parts benefiting from the industrial sector to have wider information on how things are operating like how to start and register a business. in addition, the government should reduce bureaucracy in operation.

All in all to promote industrialization in our country will be more effectively if there is proper policy prepared and implemented to both parts involved in the industrial sector.

First of all, we normally think in Macro-economic terms: power grids, government policy, entire industries. Very daunting indeed!

I'd like to suggest that Tz think in Micro-economic terms: How to develop micro-industries that address the needs and wants of the immediate people in a certain geographical area. What if, efforts were made to address the immediate needs of Food, Water, Health, and then consider going to scale?

What if, a village is trained to specialize in labor on certain things that would impact the rest of the region: For instance, what if agricultural training was provided for a key group of people on all the technology for Drip Irrigation and then those people were hired by other villagers to train and install systems in the region? What if a group of people were trained on chicken farming for instance, on going to a Micro-economic scale that would provide meat and eggs for people in a certain small manageable geographical area.

Going SMALL at first positions for LARGE Scaled growth later.

Yes, Government SHOULD absolutely put their efforts into building Roads, Bridges, and expanding the Electric grid.

The Government should make it easy for industries to come and produce--yes, with all the protections in place to preserve the beauty of the nation.

There should be less bureaucracy and incentives in the way of low taxes to help draw industry where they can make a profit and provide a benefit.

Then let the innovation and initiative of the hard working Tanzanian population take it from there and take advantage of opportunities available.

What if! A large scale industry that needed resources, would go to small geographical areas and train key people to provide their product? Yes, it may be more expensive by the unit, but it would spark growth that would eventually go to scale.

I think we sometimes get overloaded thinking that the solution is so very large, when we can actually expedite scaled growth if we build small with the intention of going to scale built into the system and intentionally designed to go to scale. If people know that if they produce a surplus of any thing yet the purchase of it is guaranteed, they will certainly take initiative to supply their own needs and then sell the surplus. Brave industries need to risk going to the small producers for their needed products and play their part in leveraging their scale, resources, and size on behalf of those who need it most. Then everyone wins.

Thank you.

1. As a country we have first to identify our needs and requirements so as to be able to point out what type of industries we need and for what purposes.

The father of the nation embalked on industries to solve internal requirements and looking at the availability of raw materials to service those industries, for example textile - at that time cotton was plenty, meat factories - livestock, shoes factory, radio, dry batteris, electric fans, motor vehicle tires, fruit factory in Lushoto, just to mention a few.

2. The availability of raw materials to service the industries. The government has to support the peasant farmers who are the majority and seriously change them from old method of farming to modern farming that will change the life of the majority.

Here comes a big problem of climatic changes that is sweeping the whole earth planet and it is affecting peasant farmers and livestock keepers in our country. I am trying to look at the availability of food and raw materials like cotton and livestock to service textile and food product industries. The government has to look into this by probably try to study the availability of undergound water.

3. After looking on how to address our internal problems thats when we can look into other needs like exports and where probably we cannot manage because of our merger resources thats when we can ask for help.

We have to be very careful to choose the type of industries or investors that will pollute our land and bring much health problems to our people. Some investors are smart, they can transfer factories from their countries to Tanzania because of strick pollution laws in their country. We should not turn ourselve into an industry dumping country for sake of industrialization.

4.Monetary services has to be made available to the majority not just a small group of people if we really aim to make this country into "uchumi wa kati".

5.The government must seriously look into infrastructure development come up with a plan that will run parallel with the industrialization plan. Electric power,roads and availability of water, health services and schools.

6.Education has already been touched by my colleagues but I would like to contribute something on education. The education plan should look into the present and the future.Present, let us first identify the industries we need and plan our how to address our needs and the future we have to look into what we have underground-natural resources.We have iron and other natural rsources. I liked Mr.Museveni, first he trained the manpower before drilling the oil.How do we want to do with what God gave us freely.Technology is dynamic, we should not welcome industries with obsolute technologies.In looking into the future we can select brains to educate abroad. The government must prepare better working conditions to make them come back to their motherland. The selection must really be a selection for developing the country and not to select sons and daughters of big shots in the goverment.

The education should not forget the majority in villages."Kisomo cha watu wazima'. This will assist in training the majority not only feeding them with speeches.

I would like to end here so that we can share ideas.

Thank you

Thank you for rethinking on deliberate changes to our education system as suggested by 2025, meanwhile the fifth phase government has embarked on massive industrialization promotion for sound economic development. Taking into consideration this neo-liberal thinking towards industrialization, how can changes in education system shape such government efforts?

You had very constructive ideas. Let us sum to just a need to change our education system. Once we decide on what we need Tanzania to be like, say in 2025, then our education system should be restructured to focus toward that.

Safari

Thank you for your elaborative contribution and for sharing your experience as a consultant. As you have highlighted, financing seems to be amongst the great roadblock and you have suggested that credit availability is important for Entrepreneurial projects.

I would like to know from your experience, to what extent can 'capital markets' helps to resolve the issue of financing? As I understand most of the times the banks offer credit to finance working capital (short-term capital) while the entrepreneurs require long-term capital to finance their ventures. In my view stock markets can be one of the key avenues for sourcing long term financing in form of equity financing or bonds. In Tanzania, we have Enterprise Growth Market (EGM) window for small and startup companies at the Dar es Salaam Stock Exchange (DSE). A typical example is Mwalimu Commercial Bank (bank in formation), managed to raise TZS 32 billion through Initial Public Offer in EGM window. Can you share your experience (if any) how stock markets have assisted industrialization process in Brazil?

Thanks and kind regards

What I learned is this, all spheres of the economy are involved.

1. All paper mills had to produce enough power to sustain their power consumption and sell it the government/TANESCO at a higher price and then buy it from the government/TANESCO at reduced tariff. This meant stable power supply and a profit from power production

2. Whole tree utilization - stumps, unsuitable branches, saw dust after peletization were used for power generation. Suitable tree part used for paper making

3. Trees with wide diameters used for furniture making

4. When moving from one region to another we learned that the soft drinks available in region A might not be available in region B. The bottled water, juices, TV channels, radios, etc kept changing. There was no monopoly of business

5. Each region enjoyed a full development plan according to the availability of resources.

6. It is the regions that prefer what its people to be trained in order to exploit their resources

7. Develop a culture of preserving their handcrafty. Hand made materialise are bought at a higher price because it js a source of new innovation

8. Associations of a particular craftyctrade are highly valued and supported by government, eg, paper makers association, forest products association, textile manufacturers, etc

Well what I think and believe is on the issue of human resource particular the human capital that is required to make the industrialization we're talking about to be a reality. The fact on the ground, from my personal perspective is that we still have a good homework to do, we have a fragmented system that is not helping us to produce well-grounded human capital. Wish to urge our researchers to undertake a simple survey in the industries that are in Dar (Mikocheni, Mbagala, Tabata, Nyerere Road including Kipawa and along Mandela), astonishingly you find foreign experts not in the real sense of professional 'experts' but rather the equivalent of our vocational education trades working in this industries the reason being that we're not producing such kind of people but are highly needed in the industries.

We have seen the investment which has gone into higher education but again the reality is that we're training and producing more accountants and procurement professionals than the personnel we need to be in the envisaged industries. In some areas (professions) there are more degree holders than certificate and diploma combined while we all know that our country has not reached a stage of having degree holders operating machines, we expect them to be supervisors and managers.

My point here and suggestion is that while we are discussing the industrialization, one important aspect is to have a critical look at our education and the way it is delivered at all levels and most importantly the tertiary non-university education.

Thanks

1. Natural resources /raw materials

2. Local government

3. Human resources

On natural resources, these must be available somewhere in a local government. Who owns it, what is

the contribution of the owner on utilizing the resource, does he/she has any say on it, does he benefit, can he/she guard it, etc.

On local government, is it inclusive or the winner takes it all? Is there a mechanism to oversee the resource utilization, does it have a say on it, or the investor does what he wants at free will such as carrying away gold sand, etc.

On human resources, does the local government has human resources to develop / utilize the resource? Does the human resource has the technical capability, financial resource, etc. Does the local or central governments support local investors technically and financially?

Why we have to look at these because Tanzania is endowed by many natural resources, we already have a literate human resource, what we lack is government will. I strongly believe Tanzanians have the capability to utilize the resource but need government support. I remmember when Prof Mwalyosi as a Ludewa MP was pushing forward the Mchuchuma coal mine and Liganga iron ore project, we said, let us start with our local iron smiths who smelt iron and make hoes, spears, iron rods, etc. We wanted to enlist all such doers, attach them to a technical college and utilize students during their field trainings to improve the smiths foundries and machineries

My point of view is that industrialization is the basis of any economy. If you analyze China development, it was based in creating industries and becoming the manufacturers of the world. I do not think that Tanzania has to follow the same model, each country must design its own model, but, industrialization is the way to substitute imports that supplies the needs of population that are demanding all types of articles, till now considered as needless. A import model only create a gap between the rich that earn in the logistical sector, and poor that suffer the deficiencies of a economy that loose resources used to pay imports instead of investing in the country.

Private sector must lead the industrialization process and government should help them giving ease in credits and financing at reduced cost. I am a Consultant specialized in industrial organization and, during my last ten years, working in strategic design of internationalization. This is the reason that made me visit Tanzania twice (2013-2014) with some projects that, after analyzing the market demand, I had selected as suitable for your economy and with an investment level affordable for SME entrepreneurs. But, I identified that financing is a great problem. Entrepreneurs liked the projects and would be interested in them if credit was available. But it was not. One of my contacts in the Dar Es Salaam Chamber of Commerce is asking me to return, but without a project it is impossible to plan a visit.

Agricultural is a very important sector nowadays and agroindustries are very demanding as food is a great problem around the world. Tanzania can use its reality to take advantage of it creating jobs in this sector, that needs more organization and proficiency.

Training of the work force is basic. Again, during my visits, a very remarked problem was lack of training of the workforce. Government must invest in schools, in basic and technical schools. It is a vicious circle: without credit, industries cannot be created, but when this is solved, without workforce trained it will be impossible to achieve objectives. If government gives the tools, population will do its part in favor of its own development.

I am Brazilian and worked nineteen years in the BNDES – Brazilian Development Bank before moving to Spain. In these years, Brazil was developing a “Import Substitution Program” and BNDES, that worked as the BID, BIRD or BAD, was the Agency that financed quite all private investment entered the program. We had different credit lines to different strategic sectors, with subsidized interest rates and long payment terms. We also financed universities with zero interest, and supported R+D projects, developed by institutions and private companies, with special lines. I think that this is a good model to follow, provide facilities to private sector to invest, that means, identify strategic sectors that will allow Tanzania to develop, taking advantage of the country reality and promoting human development in their already known environment.

This process could lead Tanzania to follows the model of concessions currently used, model created by developed countries, but must have in mind that this model will not change the economy. This model only gives advantages to foreign companies that negotiate pts contracts. If Tanzania needs help in its way to industrialization, is better to give preference to direct investments, joint-ventures, technology transfer than giving concessions to foreign investors that are not interest in Tanzania development, only in their profits.

I have a good professional network in Tanzania, and my experience is that they have a good proficiency and will to work, give them opportunity and Tanzania will reach the goal of industrialization.

Thank you for giving me the opportunity to expound my thoughts about your economy.

Kind Regards

Mónica E. Stender, Ph D, MBA

STENDER ASESORES, S.L.U., CBA Associate Spain (https://cba.associates/)

Av. Madrid, 102 Entº 3ª, 08028, Barcelona - España

Tel: (34) 610 792450 Fax: (34) 93 229 6934

mstender@stender.biz Skype: monicastender Linkedin: stender@stender.biz

ESRF THANK YOU FOR YOUR SUPPORT IN 2016 AND WISHES YOU A HAPPY AND PROSPEROUS 2017!

We invite you to the new discussion topic on Industrialization.

Tanzania has seen remarkable economic growth since the turn of the millennium. It has become one of the fastest growing economies in the world and continues on this path despite the persistent global economic slowdown. Notwithstanding this remarkable level of growth, there has been little change in terms of structural and economic transformation—according to the National Bureau of Statistics, the basic needs poverty in Tanzania has significantly declined from 34.4 percent in 2006 to 28.2 percent in 2011/12. There is consensus among most policy practitioners that in order to reduce poverty and to achieve equitable and sustainable development, Tanzania must develop industries that provide increased employment opportunities for the poor and the second Five-Year Development Plan (FYDP II) is themed “Nurturing Industrialization for Economic Transformation and Human Development.”

The objective of this topic is to provide all development stakeholders, practitioners, and policy markers with the space to share and exchange ideas on what needs to be done to ensure that Tanzania industrializes, and that the form of industrialization allows for human development. Specifically, we invite everyone to reflect on the following topics:

- The private sector is recognized as the main vehicle for making direct investments in the sector while the government will provide an enabling environment. What more should be done to improve business environment?

- In the FYDP II, industrialization is a tool for human development. To achieve human development, industries in Tanzania must create employment opportunities and especially for youth and women. Tanzania faces many challenges in this regard. For instance, according to Brookings Institution, Tanzania’s special economic zones (SEZs), which are export-oriented industrial clusters, contain about 40 firms, employing around 10,000 people. Vietnam has 3,500 firms in its export processing and industrial zones, employing 1.2 million workers.

- What is needed to ensure that industries create the urgently needed jobs?

- Most Tanzanians are still employed in the agricultural sector. As Tanzania pursues industrialization, what role, if any, must the agricultural sector play?

Moderators are Mr. Desmond Mushi; Mr. Abel Songole and Mr. Abdallah Hassan