In just the last decade, Tanzania’s Manufactured Value Addition (MVA) has grown significantly, well above 8 percent per annum, unfortunately the growth is not reflected in the nation’s industrial base which remains one of the lowest in the world.
“There are negative effects on the economy caused by huge import dependency for manufactured products in the domestic market…it is especially crippling the development of the industrial sector…,” said an economic analysts in the Ministry of Industries and Trade, Falecia Massacky.
Tanzania Industrial Competitiveness Report (TICR) 2012 was under review during the Africa Industrialisation Day (AID) which was observed in Dar es Salaam yesterday and presenting key findings, Massacky conceded that the MVA per capita is only USD44 which is, despite the growth, an extremely low figure.
“The value addition from metals and other extractive industries is still very limited, hence upgrading is necessary for the prosperity of the industrial sector…,” Massacky advised.
The country has however recorded the highest growth rate in manufactured exports which is up by 31 percent per annum from 2000 to 2010.
This figure does not represent growing industrialisation or mushrooming factory plants but rather 70 percent of the country’s manufactured exports in 2010 were resource-based from mostly precious metal ores.
According to the analyst, the industrialisation process in the country should involve structural changes that must occur along two continuums, that is, a shift from primary commodities towards manufactured goods and also a shift from simple manufacturing towards more sophisticated products.
Until then, as the she noted, the industrial sector will not create enough employment, especially since it is not distributed evenly and not preferred as an option of business start-up.
Commenting on international markets, she said, Tanzania is not yet successfully participating in foreign markets because neighbouring countries offer substantial market opportunities for manufactured products than she does.
Also, the Tanzanian workforce does not possess the key technical skills that manufacturing companies demand. Available skilled workers are misallocated, while in particular modern and innovative manufacturing companies require additional high-skilled workers, including STEM graduates, she said.
Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making deductions for depreciation of fabricated assets or depletion and degradation of natural resources.
The origin of value added is determined by the International Standard Industrial Classification (ISIC).
Tanzania has one of the lowest GDP per capita in the world. The manufacturing value added (percent of GDP) in Tanzania was last reported at 9.62 in 2011, according to a World Bank report published in 2012.
The nation has many natural resources including natural gas, gold, diamonds, coal, iron ore, uranium, nickel, chrome, tin, platinum, coltan and niobium.
However, the Tanzanian economy depends heavily on tourism, mining and agriculture, which provide 85 percent of exports, and employs 80 percent of the work force.