Tanzania: Industrialisation Drive Cuts Tanzania Imports From Kenya

President Uhuru Kenyatta PHOTO | FILE 

Tanzania's industrialization programme is sending shock waves to its major trading partners who have been witnessing a fall in their exports to East Africa's second largest economy.

The country is developing its industrial sector to meet its Development Vision 2025 which visualizes creation of a diversified and semi-industrialized economy which will have a substantial industrial sector comparable to typical middle-income countries come the year 2025.

It requires creation of a diversified economy that is based on a dynamic industrialization programme focused on local resource-based industries (agro-industries) and capable of meeting the needs of other sectors whilst continuously developing activities that have dynamic comparative advantages.

And, there sounds to be some progress with official figures showing a rapid growth in exports of manufactured products and a meaningful decrease in imports of the same from countries like Kenya during the past few years.

For instance, Tanzania exported manufactured goods worth $1.267 billion during the year ending September 2015, according to Bank of Tanzania figures.

A large part of the increase in manufactured goods was recorded in sisal products, vegetables, cereals, oil seeds and plastic items.

On the contrary, exports of manufactured goods accounted for just about $172.575 million ten years ago. To put this in the right perspective, exports of manufactured products have increased by over 7 times during the past ten years.

With such an increase, Kenya's exports to Tanzania have been declining, forcing East Africa's largest economy to find other destinations for its products.

This is how the United Kingdom (UK) and Pakistan have overtaken Tanzania among the top buyers of Kenya-made goods after exports to the neighbouring state dropped 31.5 per cent in the nine months to September.

Tanzanian consumers bought Ksh18.6 billion worth of Kenyan (about Tsh372 billion) goods in the period behind the UK's Ksh29.6 billion (about Tsh592 billion) and Pakistan's Ksh21.6 billion (about Tsh432 billion), according to Kenya National Bureau of Statistics (KNBS) data.

Exports to Tanzania have been declining on what experts attribute to a vibrant manufacturing sector in Dar es Salaam and Kenyan firms opening shops in the neighbouring country.

Tanzania was once the second largest buyer of Kenyan goods but was overtaken by the US and Netherlands and has now lost more ground.

"Tanzania, like Uganda, has been developing industries locally over the years, which has resulted in cutting orders for goods previously sourced outside," said Joseph Kosure, an international trade consultant based in Nairobi.

Kenyan companies, like ARM Cement and Bidco, have been setting up plants in Tanzania thereby reducing the flow of goods across the border.

Some of the goods that Kenya sells to Tanzania include medicines, soap, sweets and snacks (sugar confectionery) and construction materials.

Uganda increased its imports from Kenya by Ksh11.5 billion (about Tsh230 billion) to Sh47.5 billion (about Tsh950 billion) in the reviewed period, cementing its position as the largest buyer of Nairobi products