Industrial drive: Where to from here on this journey?

Monday December 24 2018
INDUSTRY PIC

A section of the Standard Gauge Railway under construction in Dar es Salaam. The SGR is one of the major projects the government is undertaking as part of efforts to improve infrastructure for the envisaged industrial economy

Dar es Salaam. Is it the availability of raw materials? Will it be the adoption of modern technology and financing? Or perhaps, infrastructure and a skilled labour force? What exactly will it take for Tanzania to realise the fifth phase administration’s industrial dream?

These are the questions that themed discussions among economic experts and stakeholders who took part in the 2018 Annual Congress organised two weeks ago in Dar es Salaam by the Economic Society of Tanzania (EST) -- a non-profit organisation promoting economic research and policy advocacy.

By and large, 2018 has been a mix of some smooth stretches and patches of rough roads here and there for the government as it continues the arduos journey towards industrialisation.

Key infrastructure projects

Significant strides have been made in the year -- with the government rolling out some of the key infrastructure projects that will largely determine the success of the ambitious plan to transform Tanzania into a middle-class, industry-based economy by the year 2025.

Among these are the $3 billion Stiegler’s Gorge hydro-electric power plant on the Rufiji River, which is envisaged to double the country’s electricity supply. It is expected to play a critical role in providing power to industry.

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The construction of major roads linking regions, and the country with its neighbours is underway, as the government forges ahead with its agenda.

Dr Tausi Kida, executive director of the Economic and Social Research Foundation (ESRF) and EST vice president, said infrastructure development will play a major role in Tanzania’s bid to industrialise.

“Without adequate infrastructure, this (industrialisation) won’t happen,” she said as she delivered a summary of discussions at the EST annual meeting a fortnight ago.

The theme of the conference was ‘Industrialisation for inclusive development in Tanzania”. Economic experts sought to dig deeper into the major factors on which the success of industriliasation will depend.

Three ‘cross-cutting’ factors

Former Bank of Tanzania (BoT) governor Professor Benno Ndulu, who is the EST president, said discussion on industrialisation in Tanzania should focus on three cross-cutting factors, namely: Competitiveness, Connectedness and Capabilities (3Cs).

Explaining ‘Competitiveness’, Prof Ndulu noted that it does not begin and end with the question of low cost at the factory levels, but also beyond.

“When products leave the factory, when you now have to deal with logistics and transportation, we face a challenge there. That is why we become non-competitive,” he said.

He said Tanzania had to identify key areas where it could enjoy competitive advantage. More so, he said ‘Competitiveness’ also considered the flooding of the local market with cheap imports.

There is also the challenge of rampant trade in counterfeit goods. These are likely to be a stumbling block to local industry if not addressed.

Openness to trade

‘Connectedness’ includes openness to trade, because the Tanzanian market is not large enough for the kind of industrialisation the government wants to achieve, he noted, adding that the country can’t produce goods only for the Tanzanian economy.

On ‘Capabilities’, Professor Ndulu said the most important issues is skills. “This is what has made a difference in other places; capability has to be created or be enabled.”

In his weekly column for The Citizen, Prof Honest Ngowi, professor of economics and principal of Mzumbe University (Dar es Salaam campus), noted that labour is a huge challenge the government is facing in its industrialisation drive.

“Skills that are in short supply relative to the demand for the same are soft skills such as trust, creativity, innovation, team spirit, communication, courage and many others along that line,” he noted, adding that, “There is also scarcity of hard skills especially of some particular kind of industrial experts.”

The deputy minister for Finance and Planning, Dr Ashatu Kijaji, said the Tanzanian economy faced a major challenge in ‘Capabilities’.

According to Dr Ashatu, the 2017 World Bank report on human resources investment, ranked Tanzania 112 out of 130 countries.

“We do invest in human resources, but the challenge is innovation. Most of our graduates fall short when it comes to innovation,” she said.

Dr Ashatu also emphasised on inclusiveness saying that the government was striving to reach the majority of Tanzanians at the village level.

“We need small industries in villages; the government has invested in rural energy projects because industrialisation need energy,” she said.