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Industrialisation: From import substitution to export orientation
2008-03-18 09:19:55
By Theo Mushi
Most of Tanzania`s manufacturing enterprises have been producing mainly for the domestic market with a few exceptions.
This is the finding of an industrial survey conducted by the Ministry of Industry Trade and Marketing in collaboration with the National Bureau of Statistics.
The few exceptions are of course the fish processing, instant coffee production, tea blending and cashew-nut processing.
For historical reasons, the priority was given to import substitution by the National Development Corporation (NDC) which was in charge of the industrialisation process before economic liberalisation.
The first state owned enterprises in the manufacturing sector targeted at meeting the basic necessities of like which are food, clothing and shelter.
Hence, the heavy investment in cement factories, roofing sheets (ALAF), textile sector and Morogoro and Bora shoes factories.
Priority was also given to food and beverages and the first big enterprises were the Tanzania Breweries Company (TBC), Tanzania Cigarette Company (TCC), Tanzania Oxygen Limited (TOL), and Tanganyika Packers as well as dairy plants.
The internal market is small and is limited by purchasing power. For the long time, we have been complaining of cheaper imports damped onto the local market.
In the era of globalization, Tanzania like other countries, has to explore regional and global markets in order to survive. This is the rationale of regional integration.
In a regional market like the EAC Tanzania has to move from import substitution which needs protection to export promotion which requires competitiveness in terms of quality, standards, packaging and prices.
It is lack of international competitiveness which has made Tanzanian manufactures to produce mainly for the domestic market as the industries have vastly been protected by tariff and non-tariff barriers.
We need to explore the export market for manufactured goods by intensive export promotion. There is a need to build capacity for the Board of External Trade (BET) to participate more aggressively in regular and global international trade fairs and special product exhibitions.
Manufactures should get technical and financial support to participate in these trade fairs.
The fiscal and monetary policies must address the issue of international competitiveness of our local industries.
The high cost of production is reflected in high prices for Tanzanian exports in the regional and global markets.
Fuel and electrically costs must be reduced in order to reduce the high production costs in the manufacturing sector.
There is a multiplicity of taxes and high tax rates as compared to our neighbouring Kenya and Uganda.
The issue of standards must be addressed in order to penetrate global markets.
A business support programme supported by DANIDA aims at upgrading Tanzania Bureau of Standards (TBS) and Tanzania Industrial Research Development Organisation (TIRDO) laboratories and also set zonal laboratories which will help to get accreditation to assess and certify international standards (ISO) for our products.
The programme also aims to make the small and medium enterprises (SMEs) sector competitive in the domestic and external markets.
The leading export sectors have been trained on the traceability which is a necessary condition to entering the EU market.
These sectors are fish processing, tea blending, coffee processing as well as fruit canning.
There is a need to operationalise the list the duty draw back scheme.
This will enable the industries which are expecting to be refunded duty and other taxes paid for inputs which were used to produce goods for exports.
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