Thursday, November 18, 2021

TZ@60: Evolution of industrial policy in Tanzania- 3

Inustrial pic

By The Citizen Reporter

Dar es Salaam. Economic liberalisations of the late 1980s and early 1990s put an end to state-led industrialisation. It also marked official abandonment of import substitution industrialisation as all protective trade measures were removed and subsidies to non-performing industries w scrapped.

Multilateral institutions (the IMF and the World Bank) required the government to sell off to private operators all the industries. During this period the contribution of industries to the economy had greatly declined. Statistics show that the share of manufacturing in the gross domestic product (GDP) fell by over 22 percent at the peak of industrialisation in 1975 to about 10 percent in 1990.

Academics call the late 1980s and early 1990s the era of de-industrialisation in Tanzania because opening up the Tanzanian market to cheap consumer goods from outside the country was like the final nail to most of its industries. For example, by 1990, 22 out of 24 textile factories had closed shop, according to a research conducted by Prof Samuel Wangwe and Dr Jamal Msami.


Post-liberalisation policy interventions

The government had to come up with new industrialisation policies and strategies to recapture the ‘lost glory’ and help diversify the economy. In 1996 the government came up with the Sustainable Industrial Development Policy (SIDP 1996-2020) that outlined how the role of the private sector in industrial development would be strengthened.

The policy was adopted to enable orderly shifting of the wheels of the economy engine of growth from the public to the private sector. In policymakers’ mindset, the SIDP 2020 was supposed to take over from the Basic Industry Strategy (BIS 1975-1995) that had been adopted.

At the dawn of the new millennium in 1999, the government launched the Vision 2025 with the aim of achieving transformation from a weather and market dependent agricultural economy to a self-sustaining semi-industrialised economy.

Experts say the Vision 2025 expressed the wish of policymakers to move Tanzania from an agriculture-dominated economy to a diversified one. But the government failed to put in place an implementation framework from the inception of the vision.

The Tanzania Mini-Tiger Plan 2020 was only introduced in 2005 in an effort to fast-track the implementation of the Vision 2025. The Mini-Tiger’s was fashioned to replace the export-oriented economic successes of South East Asian countries.

The Mini-Tiger Plan paved the way for the creation of the manufacturing enclaves (export processing Zones and special economic zones) with the sole aim of boosting industrial product exports. The Export Processing Zones Authority (EPZA) was created in 2002. Then the Tanzania Integrated Industrial Development Strategy (TIIDS 2025) was created in 2010 to provide concrete strategies to the implementation of SIDP 1996-2020 and had a growth target for enabling manufacturing value added of 15 per cent per year.

According to analysts, IIDS highlighted the importance of improving agriculture productivity to support industrialisation, and the need for clustering industries based on the availability of raw materials and energy resources as well as the need to have strategically located industries. TIIDS 2025 was also meant to harmonize the implementation of SIDP 2025 and the Vision 2025.

In 2009 Tanzania created the Agriculture First Initiative (Kilimo Kwanza) to modernise and commercialise agriculture. This was out of a renewed realisation that without sustainable agriculture industrialisation would be doomed. And, in 2003, the government had created and adopted two key policies; the National Trade Policy 2003 and the Small, Medium Enterprise Development Policy.

The Trade Policy emphasized value addition through industrial processing and provided for the creation of The Tanzania Trade Development Authority (TanTRADE) in 2009 while the SMEs Policy acknowledged that the small and medium enterprises had a special role in Tanzania’s industrialisation process. Sector specific strategies (such as Leather, Textiles, Agro-processing) were also introduced). The five-year dconomic development strategies were also introduced to enable implementation of various policies and strategies through national budgets.

To cap it all Tanzania partnered with the Japanese International Cooperation Agency (Jica) in 2013 to implement a project called Strengthening Manufacturing Enterprises through Quality and Productivity Improvement (Kaizen).

A Tanzania Kaizen Unit was then established at the Industry and Trade ministry. Kaizen is a Japanese management methodology meaning “Change for the better,” or “Continuous improvements”.

The policy interventions undertaken after the liberalisation of the economy was a breath of fresh air and raised dashed hopes on Tanzania’s industrialization journey. Statistics indicate some improvement. The United Nations Industrial Development Organisation (UNIDO) shows, for example, that Tanzania recorded very high growth in manufactured exports (about 31 percent per year) in the early 2000s from $129 million in 2000 to $1,904 million in 2010.

However, manufacturing value added as a share of GDP stagnated at around 9.5 percent between 2000 and 2010, and declined to around 6 per cent in 2012 and 2015. On a positive note, however, the share of manufactured exports to total exports increased from 9.3 percent in 2000 to 22.3 percent in 2010 and further to 23.9 percent in 2015.


Current policy standing

In 2018 the government through the Ministry of Industry and Trade launched the Blueprint for Regulatory Reforms to Improve the Business Environment.

The following year, in 2019, the Blueprint Action Plan was introduced to implement the Business Blueprint. Among other things the action plan would facilitate sweeping reforms in the functioning of regulatory agencies.

Again to ensure effective implementation of the Blueprint the government prepared the Support for Business Environment, Growth and Innovation (Begin). In his budget speech for the fiscal year 2021/22 the minister for Industry and Trade, Prof Kitila Mkumbo, said the government had completed a review of the SIDP 2020.

The government has just completed the initial review process of the SMEs Policy and Trade Policy both of 2003.

The aim is to come up with new SMEs and Trade policies. Currently the government is preparing the National Quality Policy (NQP). The policy would deal with various inbuilt challenges in the quality control agencies. The government is also preparing the National Export Strategy (NES) to boost exports.

The government has now created the Framework for Quality and Productivity Improvement (Kaizen) in Manufacturing Sector 2020-2030.

The policy interventions and the notable growth in the sector as evidenced by various indicators have not been able to adequately address competitiveness of the manufacturing sector in the country.

The World Economic Forum’s competitiveness indices have shown this to be true.

Lack of competitiveness has not only resulted into the failure of Tanzania to attain its export-led industrialisation goal envisaged in the Mini-Tiger Plan, it has also necessitated adoption of some protective antics to cover local industries from cheap imports to avert total collapse.

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