60bn/- needed to revive defunct General Tyre factory - PS

28Mar 2016
The Guardian Reporter
The Guardian
60bn/- needed to revive defunct General Tyre factory - PS

THE government is aiming to breathe new life into the long defunct General Tyre East Africa factory in Arusha with an investment of around 60 billion/-, it has been learnt.

Minister of Industry, Trade and Investment,Charles Mwijage

According to the permanent secretary in the Ministry of Industry, Trade and Investment, Adelhelm Meru, the idea is to restart production at the once thriving national tire maker within the next two years as part of a wider program aimed at resuscitating the country's ailing manufacturing base.

"It will cost around 60bn/- to revive the factory by buying modern equipment for the production of today’s standard tube-less tires because the factory has old technology which can only be used to manufacture old-fashioned tires with tubes," Meru told The Guardian.

He said the funds would be sourced domestically in the form of a loan from the state-run TIB Development Bank.
Part of the capital investment would be used to rehabilitate derelict buildings and other infrastructure at the factory’s Njiro Hill, Arusha premises, the PS explained.

The General Tyre factory serves as a poignant symbol of how far state-owned factories have fallen in the country over the past four decades.

In its heyday after its commissioning in the 1970s, General Tyre produced around 1,200 tires a day and employed hundreds of people. But it has been reduced to a ghost factory, having closed down operations in 2009.

The enterprise collapsed due to a cocktail of reasons including mismanagement, under-investment and the flooding of cheap tire imports into the local market.

Asked how the factory can avoid falling into the same pitfalls that led to its current state of demise, Meru said the government would do things differently this time around.

"General Tyre is now 100 per cent owned by the Tanzanian government ... our thinking is that we could sub-contract the management of the factory to a private company with proven global experience in running a successful tire manufacturing operation," he explained.

He said the government was looking into the possibility of contracting a private firm for the purpose for a certain period of time “while under-studying how the factory is run before the state takes over the responsibility."
General Tyre was previously a joint venture project between the government and a German-based company, Continental AG.

According to Meru, a newly-revived General Tyre is expected to directly employ between 300 and 500 people, with its “multiplier effect” providing another 1,500 or so jobs in rubber farming and the transport sector.

The General Tyre relaunch plan is seen as a key test for the viability of President Magufuli's much-touted ‘Made in Tanzania’ industrialisation campaign to cut a dangerously high youth unemployment rate in the country and diversify the largely agrarian economy.

A common complaint among investors who are currently running privately-owned factories in the country has been that problems like large-scale smuggling and high production costs caused by unreliable electricity are stifling the growth of the sector.

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