The manufacturing sector in Tanzania remains relatively small, with most activities concentrating on the creation of simple consumer products such as foods, beverages, tobacco, textiles, furniture and wood allied products.
In spite of its declining size, however, the sector continues to be of considerable importance to the Tanzania economy as is still one of the most reliable sources of government revenue in terms of import sales as well as for both corporate and income taxes, accounting for over half of the annual government revenue collection.
The contribution of the manufacturing sector to the overall GDP of the country has averaged 8% over the last decade, however activities within the sector have been registering an annual growth of over 4% and the sector is currently the third most important to the Tanzania economy behind agriculture and tourism.
In 1986, the Tanzania government made the decision to liberalize trade and investment policies within the country.
As a result of this decision and because they could not stand up to competition from import manufacturers, many firms began to fail.
Therefore, with this in mind, a number of measures were taken to increase both the competitiveness of the local industries and their ability to penetrate the export markets.
In the early 1990s, the government launched a program that was designed to restructure and privatize the publicly owned enterprises.
Between 1990 and the turn of the 21st Century, the general use of the installed industrial capacities rose from an average of 20% to approximately 50% as a result of the launch of this program.
In addition, some of the recently privatized industries have also improved their capital structure, their production technologies and their management and marketing system and, in addition, they have also reduced the amount of employees in order to better match with production levels, and have improved the quality of their products and lowered their production costs.
Further discussion on the industrial development of Tanzania has also been explained in the ‘Sustainable Industrial Development Policy - SIDP,' where the main purpose to design a plan for industrialising Tanzania so that, by 2025, the country has become semi-industrialised in such a way that industry can be said to account for over 40% of the GDP.
The Tanzania SIDP agrees with and encourages the ideas of a market-led economy and, to this end, states that the Tanzania industry sector will be able to succeed with increased private sector participation in the decision making and implementation practices.
In order to comply with these findings, the government of Tanzania has agreed to continue to provide a welcoming, attractive, stable and encouraging environment for investors who are interested in examining the private sector opportunities within the country.