Why is it Imperative for Tanzania to Industrialize?

Abstract

Tanzania’s average annual growth rate of GDP of 6.4% between 2005 and 2017 has had limited impact on jobs and poverty reduction. The current government’s mantra, ‘Tanzania ya Viwanda’, is meant to tackle these two problems. The objectives of the
paper are fourfold: first, to gain clear understanding of the Tanzanian context and why it is imperative to industrialize; second, to examine to what extent Tanzania has structurally transformed, and how that has been responsible for poverty and growth
without jobs; third, to examine how industrial development could enhance agricultural production; and fourth, to assess the opportunities and challenges that exist in Tanzania’s industrialization drive and draw some policy implications. The paper uses labour market, macro and trade data from secondary sources, and employs the exploratory analytical approach. It concludes that the imperative to industrialize in Tanzania cannot be overemphasized due to the following gains: structural transformation, job creation, higher agricultural productivity, and poverty reduction. The industrialization drive must focus on Tanzania’s comparative advantage and ensure that some of the challenges identified—i.e., poor infrastructure, weak business environment and regional integration hurdles—are well known, addressed, and given the priority they deserve.

JEL Codes: I30, J60, O55