The manufacturing sector in Tanzania is still relatively small but has a significant contribution to the country’s overall GDP. Over the past decade the sector has averaged 8% of GDP and 4% annual growth rate. Most of the manufacturing activities is centered on simple consumer products such as foods, beverages, tobacco, textiles, chemicals, plastic, wood and steel allied products.
The recent development agenda in the country has brought industrial development back as one of the country’s policy priorities. Policy makers have made it a point to lead the process of transforming the country’s economy from low productivity and low growth to high productivity and dynamic economy, associated with structural change and sustained income growth.
Currently the domestic value addition is limited by the dependence of imported intermediate goods, signifying limited inter-industry linkages that are important for promoting domestic manufacturing base and employment. Various technological, financial, policy, and administrative constraints remain unresolved and therefore, limiting faster industrial growth and transformation. This could also serve as an opportunity for U.S companies to supply services and technologies to fill this gap.
Leading Sub-sector
Food Processing
This is the leading manufacturing sub-sector in the country since Tanzania’s economy is heavily dependent on agriculture.
Tanzania’s agribusiness sector shows great potential as it has an abundance of land and water resources and a favorable climate. But crop yields are still low and affected by inadequate storage facilities, poor or non-existent transport infrastructure, weak value chains and limited affordable financial services. This could be an opportunity for U.S companies to offer products and services to address these challenges.
Textile
Tanzania textile industry has evolved tremendously since independence to date from a time when the industries were owned by the government to when they are privately owned by companies.
Textiles and garments remain a compelling opportunity, with output and exports rising (including to the demanding US and EU markets) despite the number of active firms falling to 9 from 12 in 2016. Industries in the sector are involved in dyeing, spinning, wearing, printing khanga and Kitenge, bed sheets, garments, knitting woven blankets and socks.
The textile industry in the country does face some challenges, one being competition from international markets. The trade liberalization policy allowed for influx of clothes from other countries that produce superior quality and at an affordable price.
Another serious challenge is the use of old machines and equipment. Outdated machines and equipment and the inability to access timely new technology are revealed by many textile firms as a serious hindrance. Obsolete machinery needs constant, costly maintenance and repair has detrimental effects on the competitiveness of manufactured goods.
Investment in science and technology would be a remedy to revive the sector. Allocation of more funds to specialized manufacturing programs in colleges such as textile and research should be a priority.
Opportunities
- Supply of machinery and equipment for food processing
- Supply of chemicals for textile & food industry
- Technical training on new methods of production