Friday, September 21, 2018

As Tanzania’s industrialization agenda unfolds…



Workers in a garment factory. Photo |File

Workers in a garment factory. Photo |File 

By Karl Lyimo

Tanzania is on the threshold of becoming a semi-industrialized, middle-income economy as envisaged in its National Development Vision-2025.

The envisaged status will be attained on the back of several social and economic development agenda and related programmes initiated by successor State Administrations down the years and decades.

These go back to the Mwalimu Julius Nyerere Presidency (1962-85) and the Arusha Declaration and Tanu Policy on Socialism and Self-reliance proclaimed on February 5, 1967.

The Declaration sought to put the commanding heights of the economy – including industries in general and manufacturing in particular – under Tanzanian control.

‘Industrialization’ encompasses the processes by which an economy is transformed from primarily agricultural to one based on manufacturing.

‘Manufacturing’ is, of course, the processing of raw materials into finished goods through the use of tools and related processes. Manufacturing involves value-adding processes that result in finished products ready for the market. At the end of it all, manufacturers sell the products at a premium, compared to the value of the raw materials used.

In industrial manufacturing, individual manual labour is replaced as a matter of course by mechanized mass production, with craftsmen being replaced by production assembly lines.

Different studies have invariably shown that the characteristics of industrialization include more efficient division of labour and the use of technological innovation to solve problems – as opposed to dependency on conditions outside human control.

In due course of time and events, therefore, functional industrialisation leads to economic growth that easily translates into all-round social development.

We all have read or heard how the Industrial Revolution vastly transformed for the better the living conditions of the people.

Analysts are agreed that the Revolution – which occurred roughly from 1760 to 1820-40 – was pivotal in British history, leading to far-reaching transformations of not only British society, but also of other societies as the industrialization phenomenon spread to other countries.

‘Other countries’ to which the Industrial Revolution did spread include Tanzania – albeit doing so somewhat belatedly nearly two centuries later.

What with one thing leading to another, the Arusha Declaration was buried in the deep blue sea across the Zanzibar Channel. It was then somewhat lamely replaced by the February 1991 Zanzibar Declaration which over-generously watered down its predecessor’s Leadership Code, permitting public leaders to indulge in private business with gay abandon.

Leaders were thenceforth allowed to ‘earn’ more than one salary, acquire shares in business enterprises, take up directorships in private companies, own premises to let – activities that were ‘verboten’ under the Arusha Declaration.

Under the Zanzibar Declaration, public leaders could also establish manufactories – if only because doing so would help relaunch the country on the industrialization path.

But, when current President John Magufuli, clambered aboard the Ship of State and took a-hold of the helm in the wheelhouse (read ‘State House’) in 2015, he set upon relaunching the country’s industrialization agenda.

In his inauguration speech the President categorically stated that industrialization would be a key priority of his Administration – come rain or shine; hell or high water!

A little more than two years down the presidential road, a survey showed that – among other things – industrialization under Dr Magufuli has already produced tangible results in terms of investments and new manufactories, especially in the value-addition stakes.

According to the National Bureau of Statistics (NBS), Tanzania had some 49,243 industrial establishments, 98.4 per cent of them (48,474) in the manufacturing/value-addition subsector.

Perhaps more intriguing is the fact that the number of “large industrial establishments increased from 729 in 2008 to 1,322 in 2016…” These included steel milling, vehicles assembly, cement production and agro-processing.

Value-addition is crucial in the industrialization drive. The ‘value-added’ concept describes the enhancement in value that’s given to an item before the resulting product or service is sold to prospective customers.

With this in mind, it is most heartening that Tanzania has in recent times been making considerable progress in the industrial value-addition stakes. For example, a 2016 Unido study showed that the country had “the fastest-growing manufactured value-added performance” among the four surveyed member countries of the East African Community (EAC).

In that regard, Tanzania’s value-added activities were growing by 7.7 per cent per year. Growth in the other EAC countries surveyed was 6.9 per cent for Rwanda; Uganda (5.7 per cent); Kenya (3.4 per cent).

But, even as the country’s industrialization agenda unfolds, that’s no reason for Tanzanians to complacently rest on laurels that are yet to mature and consolidate. This is especially taking into account the myriad challenges that lie in the way of the industrialization drive.

In Tanzania’s case, the biggest challenge is that of poor or lack of economic infrastructure.

Briefly put, ‘economic infrastructure’ describes all the internal facilities that make a country’s business activities possible, functional. These include – but aren’t limited to – communication/telecommunication systems; transportation; distribution/logistics networks; financial/credit institutions, reliable markets, energy and water supply systems…

These are high-cost investments that are nonetheless vital to a country’s socio-economic development and, therefore, all-inclusive prosperity.

Apart from appropriate economic infrastructure, meaningful, sustainable industrialization also calls for a functional ‘administrative infrastructure’ – if you like!

Arguably, the most important of these is a business climate that’s seen to be friendly to investors and investments.

This includes, for example, avoiding multiple taxes whose rates are inordinately high; embracing speedy clearance of applications for visas, work permits and business licences; security of investments through such factors as political stability, certainty and sustainability of regulatory frameworks, win-win situational equations, impartial arbitration mechanisms.

For economic infrastructure, the government cannot go it alone, and should seek participation of development partners – both multilateral and bilateral, including Public/Private Partnerships (P/PPs)…

However, in the case of ‘administrative infrastructure,’ the government would best go it alone as the supreme authority in the country.

Comprehensively constituted of the Legislature, the Judiciary and the Executive, the government surely doesn’t need extraneous help to create an investment-and-business-friendly environment.

Cheers!

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