Manufacturing boom eases unemployment crisis


TANZANIA is making tremendous success in creating employment for its rapid growing working force thanks to the expanding manufacturing sector that has so far helped the nation to surpass job creation targets.

With contribution of the manufacturing sector to the overall GDP of the country averaging 8 per cent over the last decade, the sector is currently the third most important to the Tanzania economy behind agriculture and tourism. It is currently leading in job creation in the formal sector and it is set to increase its share of employment with the current industrialization drive.

According to the National Bureau of Statistics (NBS) ‘Formal Sector Employment and Earnings Survey (EES), the sector has the highest proportion of the total employees in the formal sector which increased from 1,858,969 in 2013 to 2,141,351 in 2014.

The survey shows the manufacturing sector had the highest proportion of the total employees (19.8 per cent) followed by education which accounted for 17.1 percent, and public administration and defense with 14.6 percent of the total employees in formal sector.

Majority of employees were employed in the private sector (1,432,985 private and 708,366 public). A total of 1,929,938 jobs were created between 2010 and 2015, surpassing the target of one million jobs during the period under review, according to the former Minister for Labour and Employment, Ms Gaudensia Kabaka.

She issued the data when presenting 2015/16 budget estimates of her ministry.

The manufacturing sector has a share of 18.1 percent of total employment in 2015, which decreased from 19.8 percent recorded in 2014. The government targeted to increase 1.0 million jobs in the manufacturing sector by 2025 when the nation will be transformed into a semi-industrial economy.

This will increase from the 231,000 numbers of 2013. By 2025, the economy will have transformed from a low productivity agricultural economy to a semi-industrialised one led by modernized and highly productive agricultural activities which are effectively integrated and buttressed by supportive industrial and service activities in the rural and urban areas.

Regional distribution Employment distribution by regions shows Dar es Salaam, the commercial city of the country, dominates with the largest share of 30.6 per cent in 2015 albeit down from 33.6 per cent in 2014.

It is followed by Morogoro with 11.5 percent in 2015 declining from 12.1 per cent in 2014. Arusha, the northern tourist city, trails behind Dar es Salaam and Morogoro with 6.28 per cent in 2014 and 7.05 per cent in 2015.

The three regions have 48.38 per cent share of total employment in 2015 and 52.75 per cent in 2014. Manufacturing Sector at a glance Tanzania is among five African economies whose manufacturing sector are key success success stories in Africa after outpacing other countries, which started from similar baselines in 2000, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

ICAEW attributes the growth to various reasons, which vary from country to country, including improved infrastructure, a transparent regime to foreign investment, a more business-friendly approach to regulation; and skills investment.

“These economies have substantially outstripped other African economies starting from similar baselines in 2000,” ICAEW said in its latest edition of Economic Insight: Africa, the quarterly economic forecast for the economies of the sub-Saharan Africa region prepared directly for finance professionals whose work focuses on Africa.

The contribution of the manufacturing sector to the overall GDP of the country has averaged 8 per cent over the last decade, however activities within the sector have been registering an annual growth of over 4 per cent and the sector is currently the third most important to the Tanzania economy behind agriculture and tourism.

The share of Manufacturing in GDP remained relatively low, at 5.2 percent, in 2015, with food and beverages accounting for more than 40 percent of the manufacturing output.

Other products dominating the manufacturing sector in Tanzania include furniture, rubber and plastics and nonmetallic mineral products. Nevertheless, the sector has been steadily moving towards product specialization, especially products that provide inputs to other processes (i.e., intermediate technologies relating to machinery, electronics and garments).

The share of manufacturing sector in total exports increased from 17 percent in 2012 to 23 percent in 2014; and declined to 19.1 percent during 2015/16. The First Five Year Development Plan (FYDP I) target for share of manufacturing sector in total exports was 19.1 per cent by 2015, which was largely met.

Growth of manufacturing is mainly attributable to domestic firms taking advantage of the expanding regional market opportunities, particularly EAC and SADC. The share of manufacturing in total employment also rose from 2.6 per cent in 2010 to 3.1 percent in 2014.

In the Second Five Year Development Plan, 2016/17- 2020/21, it is anticipated that the manufacturing sector will grow by over 10 percent per annum with its share in total exports increasing from 24 percent in 2014/15 to 30 per cent in 2020. Prospects for more jobs There is a growing optimism for more job creation due to the on-going industrialization drive.

According to the Permanent Secretary in the Ministry of Industry, Trade and Investment, Dr Adelhelm Meru, new jobs will increase as a results of the ongoing investments on industries countrywide. University of Dar es Salaam (UDSM) economics senior lecturer, Dr Haji Semboja has similar views. He says transformation to semi-industrial economy means more labour would be absorbed into the manufacturing sector.

“Speaking about the manufacturing sector, it’s all about formal employment unlike other sectors like agriculture which is offers general employment. Therefore, the sector is expected to positively change the lives of the people,” he said.

However, he suggested that to help the sector create jobs, the focus should be on labour-intensive industries. The manufacturing sector would also bring blessings to the agriculture sector, only if the Ministry of Agriculture, Fisheries and Cooperatives put in place mechanisms that will prepare the sector to produce raw materials with high demands.

Another economist, Dr Hildebrand Shayo, said the future of the manufacturing sector would remain bright because it would continue to grow and increase job opportunities. “The only thing to look at for envisaged industries is to create more jobs is the type of technology to be used,” said Dr Shayo.

“Should they apply hightech machineries, they would employ few people, but lowtech factories create more jobs,” he explained. When the manufacturing sector depends on raw materials from the agriculture, it is certainly that many employments would be offered.

Food processing industries, according to him, have more chances to create many employment opportunities because of having a long value chain from processing to packaging.

Compiled by;

  • Abduel Elinaza,
  • Bernard Lugongo
  • Henry Lyimo
  • Elias Maluba
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