Light Manufacturing in Tanzania

2018-05-18 11:17:34

The list of countries that have achieved the highest rates of economic growth in the world over the past 20 years is puzzling. It includes the usual suspects, such as China and India, but also a growing number of African countries. Tanzania is one of them. Yet, few people know that the East African country once considered one of the most rigid experiments in socialism now ranks among the global top performers. Growth has been driven to a large extent by the boom in  telecommunications, financial services, and construction. However, structural transformation has been limited, and the contribution of manufacturing to gross domestic product remains lower today than it was in 1970.

Lessons of history and economic policy show that Tanzania’s remarkable growth performance cannot be sustained without structural transformation that benefits all workers. The main question is whether Tanzania‘s growth model is sufficiently inclusive to generate enough decent jobs to meet the needs of the country’s young and often unskilled workforce, which is still employed mostly in traditional agriculture and informal activities.

The question on the minds of policy makers at the highest levels of government is how exactly to achieve such a goal. Fortunately, Tanzania is a country of abundance, with significant development resources and big dreams. It is richly endowed with minerals and gas. It has a great geographic location, and its people are hardworking and entrepreneurial. It also has a stable polity with well-tested democratic institutions. Tanzania’s long-term vision is to become a middleincome country that is characterized by high-quality livelihoods, peace, stability, unity, good governance, a well-educated and learning society, and a strong and competitive economy.

Light Manufacturing in Tanzania makes the case that, if Tanzania is to remain one of the most rapidly growing economies in Sub-Saharan Africa, it has to make progress in the structural transformation that can lift workers from low- productivity agriculture and the informal sector to high-productivity activities. Manufacturing, which has been the main vehicle throughout the world to achieve this transformation, has been stunted in Tanzania even though some progress has been observed in recent years, notably through the development of regional markets. This book shows that feasible, low-cost, sharply focused policy initiatives aimed at enhancing private investment could launch Tanzania on a path to competitive light manufacturing.

Light Manufacturing in Tanzania has several innovative features. First, it  provides in-depth cost comparisons between Tanzania and four other countries in Africa and Asia at the sectoral and product levels. Second, the book relies on a wide array of quantitative and qualitative techniques to identify the key  constraints on enterprises and to evaluate differences in the performance of firms across countries. Third, it uses a focused approach to identify country- and industry-specific constraints. Fourth, it highlights the interconnectedness of constraints and solutions. For example, solving the manufacturing input problem requires actions in agriculture, education, and infrastructure.

Detailed cross-country analysis has been carried out on four light  manufacturing sectors in Tanzania: textiles and apparel, leather and leather products, wood and wood products, and agroprocessing. Based on this analysis, Light Manufacturing in Tanzania suggests that government policies should be directed toward  removing the constraints in a few of the most promising light manufacturing sectors using practical and innovative solutions inspired by the rapidly growing Asian economies that started from a point 20 years ago that was not so different from the starting point of Tanzania today.

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