ECONOMICS MADE SIMPLE: Linking agricultural growth with industrialisation

On the 4th of June 2018, the Agriculture Sector Development Programme II (ASDPII) was launched by President John Magufuli. The programme is very important for Tanzania’s economy in general and agriculture and related sectors in particular. Among the sectors that have very close inter-sectoral linkages with the agriculture sector is the industrial sector. Therefore, ASDP II is very important in its own right and for the desired industrialisation. Among other things, ASDP II aims at improving the country’s agriculture sector in its very broad sense and correctly so.

Agriculture Sector

In its broad definition, the agriculture sector covers crops, livestock and fisheries. About 90 per cent of the country’s land is cultivated by small holder farmers mainly for subsistence.

The sector employs 65.5 per cent of Tanzanians, contributes about 29.1 per cent of national income and about 30 per cent of exports as well as 65 of industrial raw materials. The sector is however facing a number of challenges. They include slow growth of about three percent against the policy goal of posting about six per cent growth. It has been receiving relatively small budgetary allocation compared to the Maputo Agreement of African Union Heads of State resolution of setting aside at least ten percent of national budgets for agriculture.

On ASDP II

ASPD II is a continuation of its predecessor which is ASDP I which was implemented from fiscal year 2006/2007 to 2013/2014. It is a ten years program that will be implemented from fiscal year 2017/18 to 2018/2028 in two phases of five years each starting from 2017/2018 to 2022/2023. The program aims at reforming the agriculture sector in order to increase production and productivity, to commercialize agriculture and increase smallholder farmers’ incomes.

According to the ASDP II document, its preparation has taken into account various national development guidelines. They include the Development Vision 2025, Long Range Development Plan 2012-2021; Five Years Development Plan 2016-2021; Agriculture Sector Development Program (2015) and Agriculture Sector Investment Plan.

Industrialisation

Industrialization is among the key goals of the fifth phase government in Tanzania. This is seen in several places including in the Second Five Years Development Plan, annual plans and budgets following them including the 2018/19 one. There are three main typologies of industries that the fifth phase government desires to attain. These are mass employment-creating industries, industries for domestic mass consumption goods and industries for export goods. The country aims also at using industrialization as among the vehicles that will implement the third phase of Sustainable Industrial Development Plan (SIDP) 2010–2020. It also aims at attaining industrial sector contribution in Vision 2025 and construction of agro-processing, middle, large and basic industries.

ASDP II and Industrialisation

Given the central position of agriculture in the country, Tanzania’s industrialisation should largely be agro-based. The country has comparative advantage in focusing on agro-processing by way of value addition in agricultural products. This can be value addition of crops such as grains, fruits and vegetables as well as livestock products such as meat, milk and several by products such as skin, blood and horns. Given the goals of ASDP II, which revolve around improving the agriculture sector, there is direct linkage between the program and industrialisation. This is partly because agriculture in Tanzania has not been in good shape. There is low production and productivity, high post harvest loss, rain-dependent, inadequate inputs, inadequate extension services, inadequate markets and financing and much more along that line. If ASDP II fixes what is broken in the agriculture space therefore, the sector will be uplifted and by extension increase its possibility of more positive contribution in the industrialization project of the fifth phase government.

Ways Forward

Launching of a program as good as ASDP II is a very big milestone in the development of the sector and by extension of development of industrialization. This is much more so when it is launched by someone no less than the President. This is very important in the context of the very much needed political will and support.

Ways forward will include among others implementing the program to the letter. This implies a number of things such as disseminating it widely to make it very well known among stakeholders. Dissemination may include production of simple and population versions of the about 30 paged ASDP II document.

The other key way forward is providing the needed resources in the needed quantity and quality. Furthermore, frequent monitoring and periodical evaluation including midterm after the first half of the first five years and end evaluation after the first five years are very important.