Dar es Salaam. Trade among African nations is low because of unnecessary barriers and failure to make effective use of core competencies, President John Magufuli said yesterday.
Despite the continent’s huge potential and natural resource endowment, available data shows that intra-African trade stands at only about 20 per cent of the continent’s total trade with the rest of the world.
This compares poorly with Europe, North America and the Association of Southeast Asian Nations, where intra trade is estimated at 60, 40 and 30 per cent, respectively.
Opening the 4th Southern African Development Community (Sadc) Industrialisation Week and Exhibition in Dar es Salaam yesterday, President Magufuli – who will assume the regional bloc’s chairmanship during next week’s Sadc summit – said there was an urgent need to do away with hurdles hampering trade among Sadc countries.
“An enabling business environment would create confidence among investors in manufacturing and eventually boost the value of intra-African trade,” said Dr Magufuli, whose government has taken a raft of measures with regard to Tanzania’s business environment since he took office in November 2015. He said 62 per cent of exports from Africa are primary goods, whose prices are unpredictable, adding that this is what makes farmers poor.
Citing the US, Japan, France and most Asian countries as examples, Dr Magufuli said these nations have strong economies largely due to massive investment in industry.
“This shows that there are no shortcuts to economic development...industrialisation is the way to go.”
The contribution of the manufacturing sector to African and Sadc GDP stood at only 10 per cent and 11 per cent, respectively, the Head of State said, adding that this called for the removal of barriers hindering industrialisation.
This, in turn, would encourage the private sector to capitalise on the existing potential within the Sadc bloc and the continent at large.
“We must face challenges instead of lamenting. That is why Tanzania is doing all in its power to address energy and transport challenges,” Dr Magufuli said, and mentioned the construction of the standard gauge railway and Stiegler’s Gorge power station as examples of major projects the country is currently undertaking.
The Tanzania Private Sector Foundation (TPSF) said the potential of the private sector within the Sadc bloc was not being well utilised due to cross-border barriers.
TPSF chairperson Salum Shamte called for the private and public sectors to work together to address the bottlenecks.
“If we are to create economies of scale, we need to remove cross-border trade barriers,” he said.
“We need to ask ourselves why we are spending billions to import food while we have 60 per cent of all arable land globally.”
Mr Shamte commended the government for investing in air and rail transport, saying this would lower transport costs.
He called for partnership with other Sadc member states through a win-win approach.
“Let us work together through public-private partnership (PPP).”
Sadc executive secretary Stergomena Tax said member states should promote their manufacturing sectors to boost intra-African trade.
This, she added, was possible through putting in place an enabling environment in terms of both soft and hard infrastructure.
Dr Tax also called for favourable policies and legal frameworks.
“All this can happen by embracing PPP, considering the fact that capital from the private sector is highly required.
“Sadc recognises the role of the private sector. Let us continue to be partners. Let us work together,” she said.
Dr Tax urged member countries to capitalise on the available market within the Sadc bloc, which has a combined population of about 350 million.
The outgoing chairperson of the Sadc Business Council, Ms Charity Mwiya, said industrialisation requires the combined efforts of the public and private sectors.
“A good business climate would fuel inclusive sustainable development and eventually intra-regional trade,” she said.
Ms Amina Salum Ali, the Zanzibar Trade and Industry minister, said industrialisation is a cross-cutting issue, and the government is investing heavily in other sectors.
She commended President Magufuli for spearheading investment in education and infrastructure. “It’s now the turn of the private sector to identify various opportunities within the Sadc bloc and utilise them effectively,” Ms Ali said.
Industry and Trade minister Innocent Bashungwa said the potential within the bloc was not being utilised to the maximum.
Tanzania exports minerals such as tanzanite and gold, as well as tea, coffee, cigarettes, cement and tiles to other Sadc member states.
Its imports include vehicles, seeds, lubricants and sugar from countries such as South Africa, Zambia, Mauritius and Malawi.
Mr Bashungwa said the value of Tanzania’s exports to Sadc countries jumped to $999 million (Sh2.2 trillion) in 2018 compared to $877 million (Sh1.93 trillion) in 2017. The value of imports rose marginally to $604.32 million (Sh1.33 trillion) from $600.32 million (Sh1.32 trillion) during the period.
“We can do even better. Tanzania is endowed with an abundance of natural resources, and we thus have a competitive advantage over our regional peers,” Mr Bashungwa said.
“We need to make Tanzania an attractive hub for services and products.”
Mr Bashungwa asserted that no progressive country could afford to ignore industrialisation, given its impact on economic growth.
“Industrialisation is the most effective driver of structural poverty reduction, owing to its capacity to expand employment opportunities.”
The minister urged the private sector to utilise the 4th Sadc Industrialisation Week and Exhibition to market its products and exchange meaningful ideas with investors from other countries.
He said 3,001 people were participating in the event ahead of the Sadc Heads of State and Government Summit scheduled for August 17 and 18 in Dar es Salaam.
Of the total number of participants, 1,576 are exhibitors, of whom 1,404 are Tanzanians.