These are among of the issues raised at a recent symposium on ‘fast-tracking industrialisation in Tanzania and 23rd Annual General Meeting of the Confederation of Tanzania (CTI) in Dar es Salaam.
CTI is a 25-year-old business membership organisation, which is aimed at ensuring that there is a conducive legal, financial and economic environment within which industry can operate effectively, prosper and contribute to national wealth and development.
Based in Dar es Salaam with subsidiary offices in Arusha, Mwanza and Tanga, the country’s industrialists’ club has 450 members ranging from small, middle and large companies.
“As CTI and private sector, we support the government’s move towards restoring work discipline in the public sector and specifically, the measures being taken against corruption, misuse of government office and funds. And we strongly support the performance of the current government.
We believe that the measures which are being taken will enhance transparency and improve environment, which is needed for fair competition and attraction of more investments,” said Dr Samuel Nyantahe, CTI chairman.
With these measures, he said; “we are optimistic that the National Vision objective of Tanzania becoming the semi-industrialised and a middle income economy by 2025 will be realised.”
He noted that most developed and newly industrialising countries have managed to reach such high levels of economic development through industrialisation; “likewise, Tanzania has no other option except to industrialise.”
According to the industrial census which was carried-out in 2013, Tanzania had 50,656 industries by the end of 2012; out of these 1,769 industries (3.5 percent) were large and medium scale while 48,887 (96.5percent) were small and micro enterprises.
Despite its small size, the industrial sector has had a significant contribution to the economy employing 133,231 people (11 percent of the formal employment) and earning the US$1,239.6million in foreign exchange (23.3 percent of the total foreign exchange earnings) in 2014.
“In our view, this contribution is inadequate. CTI and its members believe that a lot more can be done to raise the profile of the industrial sector in Tanzania and are committed to play their part in developing a vibrant and sustainable industrial sector with the support of the government,” he said.
Nyantahe was also of the view that the key to achieving this ambition is the commitment of the government to create an enabling environment for industrial establishment and growth.
Speaking at the symposium, chairperson of Tanzania Private Sector Foundation (TPSF), Dr. Reginald Mengi suggested the need for entrepreneurs to “think big” in whatever they are doing for them to realize their dreams of industrializing the nation.
He also advised that Tanzanians should produce goods focusing on larger international markets, instead of solely depending on local markets.
“People often consume what they don’t produce. Let us change our mindset through planning and dreaming big. Our products should also focus on international markets,” he told the gathering.
Mengi discouraged the current trend of selling locally produced crops in raw form and instead they should be added value. However sharing a different opinion, Gerald Runyoro, National Program Officer of the United Nations Industrial Development Organization (UNIDO) said Tanzanian industrialists should also explore locally available market; “Tanzania has a population of nearly 50million who can provide enough market for locally produced goods,” he said.
East Coast Oils and Fats Ltd Chief Executive Officer, Vijay Raghavan suggested the need for the country to promote oil palm plantation, an area he said is not heavily invested in.
Prof. Lucian Msambichaka is a senior lecturer from the University of Dar es Salaam (UDSM) who also said the country should identify products and services that Tanzania can produce competitively, starting with what will bring quick results
According to the lecturer-cum-economist, Tanzania should also consider designing a comprehensive industrial plan and strategy, setting clear targets and conducting an awareness and sensitization campaign. “It also needs to identify committed leaders to fully back the ‘Tanzania Viwanda’ policy” he said.
“About four to five decades ago, Tanzania was the same level of development with countries like Malaysia, Brazil, Vietnam and Thailand which are currently in upper global income bracket groups. Tanzania too has the ability and resources to be an industrial country,” he added.
Prof Msambichaka cited mind-set change as one of the stumbling blocks that would thwart the country’s endeavours towards realising its industrialization plan.
“The change of mind-set of the conventional bureaucrats so that they sing and dance to the tunes of the country’s industrialisation plan. This needs concerted efforts of inculcating the spirit of radical change in the government offices and corridors,” he said.
Msambichaka also suggested the need for conducting a ‘Clean –Up Campaign’ in the government to sniff out the corrupt and laggard elements that still remain.
“This is also another challenge that would make Tanzania unable to reach the goal…we need to address these challenges before it’s too late,” he urged.
Commenting on the ‘blue print for guiding industrialization strategy with predictable policy stance’, the economist said: “Industrialization does not entertain ad-hoc measures which would subject the whole endeavour into a costly economic trial.”
He suggested that the industrialization strategy explicitly show what he termed as ‘Presidential Key Performance Indicators’ which the President must demand from the implementers.
Foundations for industrialization include: Human capital, finance, infrastructure such as roads, railways, ports and waterways, electricity, water, ICT, industrial park and security services.
On the issue of capital for the program, it’s strongly advised that the search for capital should not be left in the hands of the private sector alone.
“In order to speed up the process, the search for investment capital should be a joint effort between the government and the private sector. For this, trust between the two parties is key,” Msambichaka said.
Chief Executive Officer of the Export Processing Zone Authority (EPZA), Joseph Simbakalia, said it is difficult for new industries to set up shop in the existing industrial areas across the country and especially in Dar es Salaam.
He also cited the existence of multiple regulatory bodies, inadequate economic and social infrastructure such as electricity, transportation and lack of skills.
“The weak customs administration which enables illicit trade to operate is another challenge which directly relates to the government operations,” said Sinbakalia who represented the Minister of Industry, Trade and Investment, Charles Mwijage.
He assured the country’s industrialists that the government is fully aware of the challenges and has put in place mechanisms to address them.
“The government is committed to ensure that in a few months time, tax evasion by any practice will be history...unscrupulous business people who have been evading taxes must stop now otherwise they will face a force which they cannot withstand,” he warned.
“We are also discussing with financial institutions about offering loans at affordable rates of interest, something that will impress many investors. On top of that, we will avail enough space for establishing industries,” Simbakalia said.
“Again, the government looks forward to eliminate unnecessary taxes to facilitate a renewed industrialization processes,” he summed up.
Challenges facing Tanzania’s industrial sector include: High costs of establishing businesses, multiple regulatory procedures and authorities that are time consuming and costly, poor economic infrastructure such as electricity, railways, roads and ports, unstable and unattractive tax structure for investment and poor tax administration leading to tax evasion through under-declaration, under-valuation, smuggling and counterfeit and sub-standard goods.
Others are inadequate financing facilities and high interest rates on existing loan facilities, shortage of skilled labour, poor and inefficient delivery of public service, and lack of effective local empowerment policies and inadequate facilitation to compete in the regional market.
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