Thursday, November 16, 2017

Tanzania beats regional peers in value addition

Tanzania Tooku Garment workers sew clothes for

Tanzania Tooku Garment workers sew clothes for export at the Benjamin Mkapa Special Economic Zone in Dar es Salaam. PHOTO|FILE 

By Alex Malanga @hiefMalanga

Dar es Salaam. Tanzania tops the list of East African (EAC) countries with the highest manufacturing value addition (MVA) growth rate at 7.7 per cent, a new report shows.

Rwanda, Uganda and Kenya came next after Tanzania by 6.9 per cent, 5.7 per cent and 3.4 per cent.

Things were not good to Burundi which saw a decline of 1.2 per cent.

The performance is good news for Tanzania, as the achievements came at a time when the country has set an ambitious industrialisation plan to transform the economy to attain a middle income status.

Some analysts say the trend indicates that Tanzania is on a sustained and sold path of structural change towards manufacturing.

The United Nations Industrial Development (Unido)-funded report dubbed ‘EAC Industrial Competitiveness Report 2017’, launched last week here in the city, to meet industrialisation target and undergo structural change, significantly higher MVA growth rate is required.

During the period under reference, Kenya had the highest MVA in the region at $5.4 billion (Sh12 trillion).

Tanzania, Uganda, Rwanda and Burundi followed at $3 billion (Sh6.7 trillion), $2.1 billion (Sh4.7 trillion), $402 million (Sh896.5 billion) and $204 million (Sh454.9 billion) respectively.

Tanzania, Uganda and Rwanda’s growth rates provided a room for them to bridge the gap with Kenya’s level of production, indicating some convergence in manufacturing performance between partner states.

Confederation of Tanzania Industries policy and advocacy acting director Akida Mnyenyelwa said the performance was attributed to tight control of dumping goods.

The government had in a recent past increased import duty to 25 per cent, well above the previous 10 per cent, to discourage imports.

“We convinced the government that we have sufficient goods to meet both local and international markets

“The improvement in Tanzania’s MVA growth rate is commendable as it results to increase in share of manufacturing sector in economic output.” “This indicates movement to the desired structural change towards manufacturing and may positively impact the overall economic growth of the country,”

He said it can also impact positively on employment in other sectors and contribute to boosting productivity.

In Tanzania, metal products, and food beverages top the list of manufactured top the list of the exported manufactured sectors, with textiles, petroleum and chemicals sector joining the list. The report suggests for the improvement of the Shares of the country’s manufacturing in total exports which dropped to 42 per cent in 2015.

“There is an urgent need to increase manufactured products in the export basket, the move of which will also boost MVA per capital, which measures the role of manufacturing in the economy,” said Mr Valency Mutakyamirwa, the head of industrial intelligency unit at the ministry of Industry, Trade and Investment.

Historically, industry and manufacturing have been pathways to economic development in several regions of the world, but, in East Africa, industry’s share of GDP has, on average, been small due to low level of exportation.

The manufactured export capacity of the region, whose growth significantly went down since over the past seven years, is half that of its production. This indicates that it is not sufficiently competitive on the international market, according to the report.

“With awareness of the country’s current industrial development trajectory, it is high time the government assessed which sector development strategies best suit its objective,” he opined.

The report was of the view that EAC countries should increase their industrial presence in domestic and international markets while developing industrial structures in sectors and activities with higher value added and technological content.

“We need to position Tanzania’s industry in the international scene by benchmarking its performance and capability against other competitors,” noted Mr Mutakyamirwa.

This can be influenced by providing a compass to policy makers, private sector, manufacturing association in particular, and other stakeholders interested or involved in industry on the broad direction of the industrial development trajectory.