MANUFACTURING sector growth in East African Community (EAC) Region is slowing down as member States fail to utilise their comparative advantage to promote growth, a new regional report on industrial competitiveness shows.
The EAC Industrial Competitiveness Report 2017, launched in Dar es Salaam yesterday, shows that EAC member States are losing their shares in the lucrative regional market to developed countries through imports of what could have been produced locally.
China and India, as EAC top trading partners, are leading the pack of developing countries that are taking advantage of the lucrative EAC market through imports of items that the manufacturing sector has capacity to produce, the report shows.
According to the report, manufacturing sector growth had slowed down in recent years from 5.3 per cent between 2005 and 2010 to 4.6 per cent between 2010 and 2015.
The performance falls short of 10 to 15 per cent annual growth rate mentioned in the EAC Industrialisation Policy and Strategy.
The report shows that the manufacturing sector growth rate in the EAC region is well above the global average which has been 1.1 per cent between 2010 and 2015, but is low compared to similar countries in sub-Saharan Africa and other successful developing countries.
It shows that manufacturing sector growth in Ethiopia was 14 per cent, ECOWAS 11.8 per cent, Vietnam 9.6 per cent and SADC (excluding South Africa and Tanzania) 5.3 per cent annual average growth since 2010.
Due to growth decline, the share of the manufacturing sector to the economy has been contracting from 9.8 per cent in 2000 to 8.5 per cent in 2015, the report shows. The performance is not leading to the desired structural change towards manufacturing and falling short again of the regional target of 25 per cent by 2032.
Growth in manufacturing growth capacity is high on average, but declined from 22.5 per cent between 2000 and 2005 to 1.7 per cent per annum between 2010 and 2015. According to the report, the main weakness is on poor linkages of manufacturing sector with other sectors of the economy.
It argues that an important cause and at the same time consequence of the limited performance of the manufacturing sector lied in the disconnected fabric of the industrial sector of EAC partner States, impressing only weak backward and forward linkages among manufacturing sub sectors as well as non-manufacturing sectors.
In his opening remarks, the Permanent Secretary in the Ministry of Industries, Trade and Investments, Prof Elisante Gabriel, said EAC member States need to focus on making optimal use of comparative advantage and enhance competitiveness of the region instead of competing against each other.