Why industry is now investor's favourite sector

What you need to know:

  • This comes at a time when the President John Magufuli government has embarked in earnest upon an industrialisation drive intended to propel Tanzania to a semi-industrialised, middle-income economy by the country’s National Development Vision 2025.

Dar es Salaam. Tanzania’s manufacturing sector is increasingly becoming attractive to prospective investors as they seek to dance to the government’s industrialisation tune.

This comes at a time when the President John Magufuli government has embarked in earnest upon an industrialisation drive intended to propel Tanzania to a semi-industrialised, middle-income economy by the country’s National Development Vision 2025.

Latest figures show that investor preference was shifting more and more in favour of the manufacturing sector vis-à-vis other sectors of the economy

In 2017, the sector attracted project investments worth $2.55 billion, thus accounting for 50.3 per cent of the total value of all projects that were registered by the Tanzania Investment Centre (TIC). To put that in perspective, the $2.55 billion invested in 2017 was a 311 per cent improvement over the $620 million that went into the manufacturing sector the previous year, 2016.

Also, it is noteworthy that manufacturing attracted investments worth only $780 million in 2015.

Commenting on the matter, the permanent secretary in the ministry of Industry, Trade and Investments, Prof Joseph Buchweishaija, said the government’s concentrated focus on industrialization is the main reason behind the jump in investments in the sector.

“This is attributed to the country’s focus that attracts more investors in the industrial sector than in other sectors that were already at the implementation stage,” he said.

The new chairman of the Confederation of Tanzania Industries (CTI), Mr Subhash Patel, said that the relevant authorities are working on surmounting the hurdles that have been hampering manufacturing activities.

Indeed, the efforts have already resulted in an upsurge in the numbers and value of new investment projects.

“The nation’s industrial policy has to some extent been implemented by the current government, hence prompting investors into action on the ground,” he said.

Mr Patel also stated that industrial products today have a larger market-share compared to the products of many other sectors like mining which mostly depend on international market performance, with stiffer competition.

“Investing in Tanzania’s industrial sector is no longer that difficult – as is the case with the mining sector,” he said, adding that “the former (manufacturing) readily accommodates both small and large scale investors, attractive as it now is.”

Some analysts are of the view that the shift in investments into the industrial sector was also due to the fact that the other sectors underwent economic shock caused by the government’s change of investment rules during 2016 and 2017.

“We cannot attribute the (good) performance of the industrial sector in terms of the government’s Development Vision 2025. For instance, amendments (to regulatory frameworks, etc.) since 2016 – such as in the mining sector – sparked an economic shock to investors in such sectors,” a senior researcher at the Policy Research for Development (Repoa), Dr Abel Kinyondo, told The Citizen.

Also, investing in industries is currently not as complex as it is in other sectors where most of the regulatory frameworks and processes have lately become more difficult in one way or another.

“The registration process that was initiated recently by the government has seen to companies like Acacia Mining reducing their investments, while others do not want to risk their resources in investment projects with no tangible returns,” Mr Kinyondo explained.

The researcher was also quick to point out that, while other sectors of the economy went through challenging times, the industrial sector has not had to undergo such challenges.

And, if nothing else, this helped single it out as the most attractive investment area.