 Private initiative |
Tanzania's industrial base is very weak because many of the former state run enterprises were badly managed and not profit oriented, but some of them are currently being renovated after being privatised.
Very few among the over 390 parastatals were operating when the privatisation exercise started in early 90's and very few so far have started showing progress after being taken over by new private owners. Among the few privatised companies doing a good job are Tanzania Breweries Limited (TBL), owned by over 50 percent by South African Breweries (SAB), and Tanzania Cigarette Company (TCC), owned by Japan International Tobacco Company by over 50 percent too.
Industrial contribution to the country's GDP is said to be in the region of 10 percent of which the manufacturing sector retains a share of 8.4 percent as per 1998/99 Bank of Tanzania report. Successful privatisation of defunct parastatal enterprises, whereby between 1993/99, 191 enterprises were taken over by the private sector, is said to have contributed to the growth of the manufacturing sector from 5.0 to 8.1 percent between 1997/98. Notable improvements have been made in the production of beer, dry gin, wheat flour, pyrethrum extract, cement, aluminium and dry cells all of which seem to be manufactured by privatised parastatals including TBL, Tanzania Distilleries Limited and Tanzania Pyrethrum Processing and Marketing Company. Manufacturers are struggling to improve their production capacity and confront the government so that it should reduce taxes on power, telecommunications and water services. | On its part in order to boost the manufacturing sector's export strategy, the Tanzania government has approved a project to establish export processing zones in the south and along the eastern coastline, which will be undertaken by National Development Corporation (NDC) . The implementation of this initial project by the government sends a clear signal to foreign investors about Tanzania being serious about supporting EPZs and attracting foreign direct investment. Because of having a poor industrial base, Tanzania's exports comprises mainly of unprocessed commodities including the current highest foreign currency earner, cashewnuts, which for 1998/99 recorded a 30.3 percent increase in foreign currency earning to 97.5m dollars compared to 74.8m dollars earned in 1997/98. In all, the share of earnings from traditional exports, which include commodities such as tea, cotton, sisal, tobacco in 1998/99, decreased to 56.9 percent compared to 65.3 percent in 1997/98, leading to a similar decline in the country's total export earnings from 612.6m dollars to 540.5m dollars over the same period of time.
While Tanzania is mainly exporting commodities, it is also importing a lot of intermediate and capital goods as most industries are being renovated and starting production. Tanzania's external sector continued to be under pressure during fiscal year 1998/99 as balance of payment records remained in favour of imports.
On the other hand, exports declined by 11.8 percent from 612.6m to 540.5m dollars between fiscal years 1997/98 and 1998/99. As a result of such magnificent differences in Tanzania's import/export bills, balance of payments deficit increased by 10.4 percent from 518.9m dollars in 1997/98 to 572.8m dollars in 1998/99. The deficit was offset by balance of payment support and debt relief, which together amounted to 494.6m dollars of which 348.4m dollars was contributed by Paris Club V Arrangement and 146.5m dollars was received as balance of payment support from bilateral donors.
Tanzania's trading partners remained unchanged as European Union members such as Britain and German remained dominant, Japan, India have also shown increasing interest in capturing Dar es Salaam market, while neighbouring Kenya and South Africa are also making immeasurable progress.
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