Focus on agro-processing: WB

Dar es Salaam. Two experts from the World Bank (WB), namely Lisa Kaestner and Maria Miller, have advised the Tanzania government to invest more in agro-processing.

This would enable the country is to firmly launch itself on a surefire path that would lead it to achieving its goal of becoming a semi-industrialised, middle income economy by the year 2025.

The two senior WB officials held a meeting in Dar es Salaam yesterday with the Tanzania minister for Industry Tradeand Investment, Mr Joseph Kakunda, at which they discussed in detail how Tanzania can improve its business climate so as to attract more investments in agro-processing, thus boosting economic growth.

“We discussed a lot of issues with the two World Bank consultants, mostly on how to improve the business environment so as to attract investments in agro-processing – and the agriculture sector in general,” he told journalists shortly after themeeting with the WB officials.

Noting that the WB advice comes in handy at a time when Tanzania still exports most of its cotton and cashew nuts in the raw, MrKakunda stated that the government is already working on strategies to ensure that the bulk of its cotton and cashews are processed locally.

Although reporters were not granted an opportunity to directly talk with the WB officials, their advice – according to MrKakunda– concurs with what several home-grown and international economists have said in the past regarding ways of fine-tuning Tanzania’s economic fortunes. In his book titled Tanzania: The Path to Prosperity, the immediate past governor of the central Bank of Tanzania (BoT), Prof Benno Ndulucounseled that Tanzania must undertake four major reforms if it is to grow the economy, and achieve the middle income status that is in line with its National Development Vision-2025.

In a chapter he co-authored with a senior economist at the International Monetary Fund (IMF), Ms Nkunde Mwase, Prof Ndulu– who completed his ten-year tenure as BoT governor early last year – also calls upon Tanzania to prudently utilize its potential wealth in natural resources to stimulate heavy industrialisation and labor-intensive manufacturing.

At the same time, the country should lay special emphasis on the promotion of services-based industries, as well as investing in infrastructure and in human capital.

Published in October 2017, the book was co-edited by Christopher Adam – a Professor of Development Economics at the University of Oxford and Research Associate at the Centre for the Study of African Economies – and Paul Callier, a Professor of Economics and Public Policy at the Blavatnik School of Government, Oxford University.

One of the key arguments in the book is that focusing on agriculture would have a high positive impact on poverty alleviation.

“Policy intervention in agriculture and agro-processing should focus on improving factory productivity and capital accumulation – particularly in transportation and irrigation infrastructure – to enhance growth, resilience to climate change shocks and increasing access to markets,” the authors say.

“Specifically, special emphasis must be put on disseminating new agricultural techniques, as well as investing in research and development, so as to support the move to more modern and efficient production and storage techniques.”

Similarly, government efforts must be directed at improving incentives for increased production. This, the authors argue, would entail improving rural infrastructure to increase physical access to domestic, regional and international markets.

Establishing viable agro-processing industries is also highlighted as the authors plead for increased agricultural value chain.

Stressing that it is viable agro-processing that will eventually boost returns from agriculture, as well as support entrance into regional and global value chains, the authors say “this will entail an education policy that bolsters human capital – and also an agricultural policy initiative that supports a move up the value chain, including through enhancing linkages with the domestic economy...”

Other economists were quick to concur with the WB experts. For one, Prof Humphrey Moshi, an economist from the University of Dar es Salaam’s Economics Department, expressed similar sentiments.

“We should not export raw agriculturalcrops without first adding value to them. If we put more effort in reviving and investing in agro-processing, Tanzania will be able to attain its envisaged industrialization agenda,” Prof Moshi stated.