Why Tanzania banks on industrial clusters to drive inclusive economy

He also cited Brazil, Mexico, and South Africa’s specialised clusters in footwear and diversified industries, alongside Ethiopia’s agro-processing clusters.

“These examples demonstrate how localised industrial ecosystems can transform economies through specialisation, innovation, and scale,” said Dr Jafo in response to questions.

He explained that the industrial sector plays a pivotal role in adding value to raw materials, increasing government revenue and foreign exchange earnings, generating jobs, driving technological advancement, reducing poverty, and improving livelihoods.

According to him, Tanzania is entering a transformative phase in its industrial development strategy. With a clear commitment to industrialisation as a key driver of growth, the government has put in place robust measures to attract and retain industrial investment.

“To create a conducive environment for investors, we have prioritised infrastructure development across key sectors with the aim of reducing operational costs, enhancing logistics efficiency, and ensuring reliable access to utilities,” he said.

Major trunk and feeder roads connecting production zones are being upgraded to ensure smooth movement of goods, while the revitalisation of the Central (Uhuru) Railway and the development of the Standard Gauge Railway (SGR) are designed to facilitate fast and bulk cargo transportation.

“A modern international airport is under construction in Dar es Salaam to accommodate large aircraft, while regional airports in Kilimanjaro, Mwanza, and Musoma are being upgraded,” he added.

Dr Jafo said the government is also procuring new passenger and cargo aircraft to boost air connectivity, while efforts are underway to enhance port efficiency and reduce cargo handling times to support imports and exports.

“The completion of the Mwalimu Nyerere Hydroelectric Dam, which will generate 2,115 megawatts annually, marks a major step towards energy security. Investments also continue in natural gas, solar, coal, and planned wind power projects to ensure nationwide energy access, particularly in rural areas,” he said.

Industrial clusters, he emphasised, are at the centre of Tanzania’s industrialisation strategy. These are designated zones where businesses co-locate to benefit from shared infrastructure and services, creating robust value chains and ecosystems.

“Clusters integrate core infrastructure—roads, electricity, water, and telecommunications—with support services such as banking, healthcare, security, and hospitality,” said Dr Jafo.

He outlined the strategic benefits of clusters, which include reduced operational costs through shared infrastructure, efficient waste management via centralised treatment facilities, enhanced competitiveness and productivity, value addition and export readiness, job creation, and increased use of local raw materials to support domestic suppliers.

Industries expected to benefit most from clusters include agro-processing, leather and textiles, mining and mineral processing, forestry and fisheries, and light manufacturing.

Under the National Industrial Policy, the government plans to establish 50 industrial clusters by 2030, including 40 value-addition clusters, strategic industry clusters, and research and innovation hubs.

Existing and planned clusters include the Benjamin Mkapa SEZ, Bagamoyo SEZ, Morogoro SEZ (private), Mtwara and Ruvuma SEZs, and private initiatives such as Kamal Steel, Kamaka Industrial Park, Sino Tan, and Kange.

“In 2023, a nationwide assessment identified 40 small industrial clusters focused mainly on agricultural value addition, along with 59 additional locations with high potential for future development,” he said.

By 2025–2030, the government aims to strengthen the current 40 small clusters and establish 60 new ones, bringing the total to 100.

These initiatives, supported by SIDO and local government authorities, are designed to boost the competitiveness of Tanzanian products, expand market access locally, regionally, and internationally, empower SMEs, and strengthen the role of Business Development Service Providers (BDSPs).

Economist Oscar Mkude welcomed the strategy but cautioned that establishing clusters does not automatically guarantee their success.

“Take the dairy sector, for example, with clusters involving offtakers like Asas and Tanga Fresh. These larger players rely on networks of small-scale suppliers. For the system to function effectively, strong linkages must exist, and they don’t develop automatically,” he said.

He stressed that barriers within clusters must be identified and addressed. “Poor milk storage, for instance, can lead to bacterial contamination, which spoils the product before it reaches the processor.

A successful cluster must provide a supportive environment for small suppliers to meet the quality standards required by larger companies,” he added.

The CEO of the Institute of Management and Entrepreneurship Development, Dr Donath Olomi, said clusters make it easier for businesses to access electricity, water, telecommunications, and gas. “When new technologies are introduced, the close proximity of firms makes it easier to train employees and for entrepreneurs to learn collectively.

Operating in the same location also facilitates knowledge sharing and improvement of business practices, from marketing strategies to accessing specialised expertise,” he said.

According to Dr Olomi, this collaboration leads to higher revenues, better tax compliance, more employment opportunities, and a broader range of products.