Tanzania: Manufacturing Sector Among Most Successful in Africa

Tanzania: Manufacturing Sector Among Most Successful in Africa

Posted on :Saturday , 18th June 2016

Tanzania is among five African economies whose manufacturing sector are key success stories in Africa after outpacing other countries, which started from similar baselines in 2000, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

 
ICAEW attributes the growth to various reasons, which vary from country to country, including improved infrastructure, a transparent regime to foreign investment, a more business-friendly approach to regulation; and skills investment.
 
"These economies have substantially outstripped other African economies starting from similar baselines in 2000," ICAEW said in its latest edition of Economic Insight: Africa, the quarterly economic forecast for the economies of the sub-Saharan Africa region prepared directly for finance professionals whose work focuses on Africa.
 
It said Ethiopia and Congo were among key success stories where the output of the manufacturing sector has grown by close to 10 per cent per annum or more since 2000.
 
Tanzania, Rwanda and Angola have seen growth of eight per cent or so per annum and Malawi and Zambia have achieved manufacturing growth of around six per cent, it said noting these economies were effectively, exploiting 'catch-up' more effectively than other economies.
 
"Growth in manufacturing has been particularly encouraging in Ethiopia, Republic of Congo and Tanzania, as have productivity improvements in agricultural sectors in Rwanda, Botswana and Ghana."
 
"The reasons behind this more rapid rate of manufacturing growth are multi-faceted and likely to vary across countries. Possible reasons for a faster switch to higher value-added industries in some economies than others are likely to include an improved infrastructure, an openness to foreign investment, a more businessfriendly approach to regulation, and skills investment."
 
The report said Africa's economic performance over the past 15 years somewhat obscures a disappointing productivity performance.
 
Excluding extractive economies, average productivity growth in sub-Saharan Africa averaged just 1.7 per cent, which is 1 percentage point (pp) slower than in ASEAN, despite much greater scope for economic 'catch-up', and a substantial increase in capital investment across most economies.
 
"Yet, there are areas where much has been achieved in increasing output per worker. Growth in manufacturing has been particularly encouraging in Ethiopia, Republic of Congo and Tanzania, as have productivity improvements in agricultural sectors in Rwanda, Botswana and Ghana."
 
Increased manufacturing sector output in Tanzania has pushed out export portfolio improving balance of payment significantly.
 
The exports continued to surge in 2015 while imports maintained a steady decline buoyed by rising local manufacturing output that is improving the balance of trade. Exports to India, Japan, East African Community and SADC regions recorded a significant increase while imports recorded a decline thanks to efforts to promote the manufacturing sector and increased motivation by Tanzanians to use local products.
 
The Minister for Industry, Trade and Investments, Charles Mwijage, told Parliament last Friday that exports to EAC increased in 2015 to reach 1.06 billion US dollars up from 598.1 million US dollars in 2014.
 
Tanzania's increased exports in the region included vegetable, tea, fruits and various food items, as well as sisal sacks, plastic bags, cotton and coal, the minister said in his presentation of budget estimates for his ministry for the 2016/2017 financial year.
 
Meanwhile, HILDA MHAGAMA reports that as Tanzania Communications Regulatory Authority (TCRA) switched off counterfeit mobile phones yesterday, the government has incurred annual loss of more than six billion/- because of fake goods.
 
Presenting the research findings on the state of counterfeit goods in Tanzania, Compol Associates Limited Managing Director, Ms Ellis De Bruijn, said they conducted in depth case study on two different manufacturers and found that they have suffered loss of market share to counterfeiters.
 
"Measures taken by the government do not appear to be curtailing the increase of counterfeits in the economy resulting to loss between five to ten per cent in tax revenues," she noted in her presentations during the Confederation of Tanzania Industries (CTI) stakeholders' meeting.
 
She said the effects of the counterfeit trade on the government of Tanzania lead to a loss of tax revenue, employment and a loss of foreign direct investment.
 
Ms Bruijin pointed out that if the companies would not have suffered from the counterfeiting of their brand they would have been able to invest further and develop their business by building bigger factories and create direct employment.
 
Expounding further, she noted that due to the related health and safety risks connected to counterfeit products, there has been a growing disappointment amongst Tanzanians as the government did not do more to curb the illicit trade.
 
According to CTI, counterfeiting in Tanzania has grown by at least 32 per cent as an educated estimate in 2008 would put counterfeit products at 18 per cent of Tanzania's merchandise trade.
 
On the recommendations she said consumer education through a nationwide awareness campaign explaining the difference between a counterfeit and a substandard product should be prepared as through the research they have found that many consumers cannot differentiate the two.
 
She said the campaign should also focus on effects counterfeit trade has on consumers which creates false economy and the Tanzanian economy as a whole. An economist from Mzumbe University, Professor Honest Ngowi, commented that counterfeit products were a big and growing challenge in the country in which about 50 per cent of goods in the market were likely to be counterfeits.
 
Prof Ngowi said counterfeit goods posed a major setback in the country's economy, including less investments and related benefits, which led to loss of faith in the investment climate. "The effects are many and closely related as some genuine dealers are becoming uncompetitive and enterprises may reduce or stop production, sales volume," he said.
 
The economist further said in fighting counterfeit products, the Fair Competition Commission (FCC) still has a small workforce and they have no regional offices. He said FCC only has eight staff instead of 50 who cannot contain the problem which seems to increase each day.
 
Prof Ngowi said brand owners must be more involved and should cooperate in fighting counterfeits by investigating where their products are counterfeited. On long-term recommendations regarding the situation in the country, he said the fight against the counterfeit trade should remain within the criminal law.
 
The laws and fines were not sufficiently punitive; courts should be able to impose sanctions with strong deterrent measures. "Continuous efforts should be directed within the East African Community (EAC) towards the inception of an APEX Law for the Community," he said.
 
As of March, this year, TCRA statistics showed that there were approximately 39.5 million mobile phone subscribers, with 13 per cent owning counterfeit phones.

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