Industrialization
Tanzania’s industrial sector comprises construction (50%), manufacturing (31%), mining (15%), electricity supply (3%), water supply, sewerage, and waste management (2%).
Since agriculture is the mainstay of the Tanzanian economy, the manufacturing industry is centered around turning raw agricultural products into finished goods.
Currently, the majority of crops in Tanzania are marketed in their raw forms, while value-addition to agricultural products is mostly done on small-scale secondary level.
Still, the Tanzanian agriculture value-added net output increased by 46% during the period 2012–2017, from USD 10.5 billion to USD 15.3 billion.
Currently, value-added products in Tanzania include cotton yarn, manufactured coffee, and tobacco, sisal products (yarn and twine), wheat flour, biscuits and pasta, beer, textiles, rolled steel, refined sugar, etc.
Tanzania 2025 Vision: Industrialization with FDI
Tanzania aims to become a semi-industrialized country by 2025, for which the contribution of manufacturing to the national economy must reach a minimum of 40% of the GDP.
To achieve this, Tanzania aims to transform from being dominated by natural resource exploitation activities and extractive industries (agriculture, tourism, and mining) to become an economy with a broad and diverse base of manufacturing, processing and packaging industries that will lead both the productive as well as the export trade sector.
Foreign Direct Investments (FDIs) are expected to provide the capital for the desired industrial development.
In 2019, FDIs to Tanzania reached USD 1.1 billion. However, the funds were drawn mostly to non-manufacturing sectors such as mining, the oil and gas industry, and the primary agricultural products sector (coffee, cashew nuts, and tobacco).
Tanzania Government’s Priority: Industrialization
According to President John Magufuli’s speech during the inauguration of the new Parliament at the end of 2015, industrialization is a key priority to the government.
Industries, producing goods for mass consumption, such as clothes, textiles, and edibles, will be encouraged.
Other priority industries that are being promoted by the Government for investments in value-addition include cashew processing, dairy products, meat processing and packaging.
The Government is also focusing on electricity development, which is a necessary step for achieving industrialization.
In 2019, Geoffrey Mwambe, executive director of the Tanzania Investment Center (TIC), claimed that during the first four years of Magufuli’s administration, manufacturing accounted for 53% of the total number of projects during the period amounting to USD 15.75 billion.
The total number of projects was 1,174 creating 159,833 direct jobs.
Last Update: 6 October 2020
Sources: Bank of Tanzania (BoT), Tanzania Investment Center (TIC), World Bank (WB)
