Tanzania should do more to scale down imports of its products

28May 2016
The Guardian Reporter
The Guardian
Tanzania should do more to scale down imports of its products

Tanzania pays dearly in importing what it could otherwise produce, keeping its population in the verge starvation, local experts say.

It uses only 23 per cent of its 44 million hectares of estimated arable land for cultivation despite being blessed with suitable environment for agriculture, says Donath Olomi of the Institute of Management and Entrepreneurship Development (IMED)

He says the country’s potential remain untapped as the nation consumes what it does not produce despite having suitable environment for cultivation.

“You might be surprised that edible oil stands at number two when it comes to imports values to this country. As if that is not enough, 90 per cent of wheat being processed here is imported,” he told the Guardian recently.

Tanzania is the world’s 102nd largest export economy in the world and the 114th most complex economy according to the Economic Complexity Index (ECI). In 2014, it exported $6.4bn against $13.5bn worth imports, resulting in a negative trade balance of $7.07bn in a country with $48.1bn and $2.54 per capita income.

Overall, as of 2014, Tanzania’s top exports are gold ($1.37 billion), raw tobacco ($402m), precious metal ore ($366m), other oily seeds ($280m) and copper ore ($244m), using the 1992 revision of the Harmonized System classification.

Its top imports are refined petroleum ($3.42bn), palm oil ($354m), packaged medicaments ($339m), cars ($310m) and wheat ($247m).

The top export destinations of Tanzania are India ($1.09bn), South Africa ($754m), China ($530m), Kenya ($445m) and Japan ($392m). The top import origins are India ($2.55bn), China ($2.32bn), the United Arab Emirates ($1.12bnB), Switzerland ($839m) and Kenya ($646m).

But Dr Olomi faulted Tanzania for consuming what it does not produce in the prevalence of potentials to improve its agribusiness sector through empowerment of its farmers for the output that would lead to reduction of imports of raw products such as grains, cereals and cooking oils.

He said at least 90 per cent of wheat and almost 80 per cent of cooking oil processed by local manufacturers is imported, implying a huge demand of the products that if sourced locally would have a significant social-economic impact.

Demand for edible oil in Tanzania stands at between 200,000 and 300,000 tonnes per year, portraying a wide domestic market and an apparent potential development of the cooking oil industry from groundnuts, sunflowers, palm oil, sesame, coconut and cotton.

Though the latest figures on wheat consumption were not available, Tanzania imported wheat worth $10m from the United States alone in 2013, not to mention Australia and Canada, other major wheat exporters to Tanzania.

This scenario is against the background of agribusiness’ infancy in Tanzania where commercial ventures are found mostly in traditional export crops such as coffee, tea, cotton, cashews, tobacco, sisal and cloves.

According to Denise Wolter study report on “Tanzania – Why a Potential Food Exporter is Still Importing Food”, higher food prices, driven by higher energy costs and rising consumption in developing countries could provide the country with ample opportunities to develop its agro-industry to tap into regional markets.

The report acknowledges that the country’s average food crop productivity is 1.7 tonnes per hectare, while good management and optimal use of fertiliser could result into maximum yields of 4 tonnes per hectare.
Currently, only 15 per cent of Tanzania’s farmers use fertilizers, says the report.

“The use of primitive farming gear, traditional animal husbandry and total reliance on rains hamper productivity,” says the report, adding; “So at present Tanzania does not appear fit to take advantage of its agribusiness opportunities, thus from becoming major food exporter.”

This is against the increase in agricultural imports, with foods including wheat, rice and dairy products taking 80 per cent of total merchandise imports.

But Dr Bashir Ally, a political scientist from Uiversity of Dar es Salaam (UDSM) says Tanzania could become major food exporter amid its daring struggles to meet its own food requirements despite low productivity and the predominantly subsistence farming.

“As a nation we are running a disabled economy,” Dr Ally says, adding; “This is because we have failed to produce what we consume and therefore consuming what we have not produced, turning ourselves into total import-dependents.”

We have fallen into discussing outcomes of our failures to produce as we rely on importation and that importation has led to business manipulations which include syndicates as we have seen this on sugar sector.”

However, Dr Olomi says the government and other stakeholders can still work to reduce imports of produces that could otherwise be produced in the country, citing some organizations are helping farmers get the best out of hard work.

One of such organizations is Farm Africa, which has been helping farmers to grow bigger and better sesame crops, and to market them better to earn higher prices.

“We train farmers in sorting, cleaning and packaging sesame, as well as measuring oil and moisture content to enable better marketing and higher prices,” says Farm Africa in its website. “We support individual farmers to store their harvest in the co-operative warehouse before selling the harvest in bulk. Selling collectively ensures higher prices.”

However, a recent move by the World Bank (WB) could make a huge relief for Tanzania to take vigorous measures on improving its agribusiness. Earlier in March, WB Board of Executive Directors approved $70m in new financing to support Tanzania’s agricultural sector and strengthen it by linking smallholder farmers to agribusinesses.

This will go along the national development strategy the country is currently implementing in the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) Program which seeks to promote agribusiness partnerships to tackle low farm productivity and limited market access that are impeding development of the country’s agricultural sector.

“Smallholder farmers play a central role in Tanzania’s agricultural sector” Bella Bird, WB Country Director for Tanzania, Burundi, Malawi and Somalia was quoted as saying.

“The SAGCOT Investment Project has the potential to be transformational as it will provide them with crucial access to capital and new technology needed to invest in higher value production, promote their livelihoods and meet their nutritional needs.”

Once implemented, the project will directly benefit over half a million people and engage 40 agribusiness operators, with emphasis on involving women in the successful commercial value chains.

Over 80 per cent of Tanzania’s poor live in the rural areas with limited opportunities to establish links with productive value chains and higher value crops despite the reportedly remarkable economic growth rate of 7 per cent over the past decade.

“Tanzania has achieved demonstrable successes in boosting productivity in the horticulture, rice, sugar and tea sectors,” says Mark Cackler, WB’s Manager for the Agriculture Global Practice. “The challenge is to extend the reach of existing efforts and expand poor farmers’ access to lucrative market opportunities, which are the goals of the project.”

The WB-financed project will achieve its objectives by channeling support through those two entities as well as improving the operations of the Tanzania Investment Center (TIC) which is tasked with preparing and promoting investment projects and attracting private sector investments.

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