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To create employment more investment is needed
2005-08-10 07:25:17
By Theo Mushi
All political parties which are contesting the October General elections are promising to solve the problem of unemployment which is estimated to be over 20 percent of the working population of 17.5 million.
This means people who are willing and ready to get jobs, are actively seeking for them, but not finding them.
This large group of people includes both skilled and unskilled labour in both rural and urban areas but does not include those who are categorized as unemployable.
Employment statistics in Tanzania include those who are estimated to be self-employed in the formal sector of the economy, and those who are said to be in formal employment in the public and private sectors, which is only slightly above 1 million.
To create jobs, and at the same time to increase income generating opportunities, more investment is required both from local and foreign sources.
Foreign direct investment has increased from $9.0 million per annum in the 1990s to nearly $ 250 million in 2004.
Most of this investment went to the mining sector, which only contributes 30 percent of the gross domestic product although it is growing at 15 percent per annum.
Investment should go to those sectors of the economy, which have a growth potential and have the ability to crate jobs.
These sectors include the manufacturing, agriculture, tourism, fishing, woodworking, and forestry industries.
Last year agriculture grew at a rate of 6 percent and was mainly responsible for pushing up the overall GDP growth rate to 5.7 percent.
This shows that a big increase in the growth rate of the agricultural sector will increase the overall GDP growth rate. Agriculture contributes nearly 50 percent of GDP, employs 80 percent of the rural population and generates 40 percent of foreign exchange earnings.
There is need to end seasonal unemployment in the rural areas and this can be attained by promoting SMEs, and agro-processing, especially of food in order to diversify the rural economy and create more income generating opportunities.
The long term solution to the problem of under-employment in the rural areas is to attract investors in large scale commercial farms as these will absorb idle labour from small scale farming where the law of diminishing returns has already set in.
TIC compilation of data of idle land that can be used by local and foreign investors in commercial farms will go a long way to sustain employment in that sector.
Amendments to the Land Act (1999) to enable it to be used as collateral for loans will also attract investors in large scale commercial farms which will create jobs, because by nature, farming operations are also labour intensive.
Foreign investors in large sale commercial farms will also bring better technology and agricultural mechanization which will increase productivity per workers and total production of both food and cash crops.
These investors will also introduce large and small irrigation schemes which are required to reduce dependence on rain fed agriculture.
The manufacturing sector contributed 8 percent of GDP in 2004, and has been growing at the same rate.
If more investment is required, especially in agro-processing, there is a potential for increasing employment in the textiles, leather, and food processing sub-sectors.
Proper administration of Export Processing Zones, and Special Economic Zones will attract export–oriented investment and create jobs in the EPZ clusters.
The labour food has to be trainable for it to be absorbed in the new economy like HITECH industries which include assembly of electronic equipment like computers, TVs and mobile phones.
There is a need to invest more in vocational training centres in the rural areas, and folk training colleges to producers carpenters, masons, mechanics, electricians and others with those skills needed by people in the rural areas.
What they will require is access to credit from community banks and micro-finance institutions.
There is also a need to deal will structural unemployment which has affected Tanga and Kilimanjaro regions which were dependent on mono-crops like sisal in the case of Tanga and coffee in the case of Kilimanjaro.
Dependency on coffee and sisal led to the collapse of the economies of these regions because of falling world market prices and output.
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