27 November 2012

Africa: Industrial Sector Shows Bright Future

INDUSTRIAL and intratrade development is among the most fundamental elements for developing countries attaining sustainable, inclusive and equitable economic growth for fighting poverty.

African countries have so far depended heavily on agriculture for its fortunes with industrialisation being at its initial stages having little progress over the years except in emerging economies. Structural transformation from agriculture to industry and services is one of the key aspects which could provide employment and decent incomes to most impoverished people who have for years been engaged in subsistence farming.

"Building productive capacities to promote industrialisation and trade in high value products will be a big contribution towards alleviating poverty and maintaining economic sustainability," said Mr Alberic Kacou, the UN Resident Coordinator of Tanzania during the Africa Industrialisation Day held in Dar es Salaam last week.

Although Tanzania is likely to achieve the MDGs on education and gender equality, but it is, however lagging considerably in attaining goal one on reducing the proportion of population below basic needs poverty line below 19.5 per cent for the mainland and 30 per cent in the Isles.

One of the UN Secretary General's messages for the Africa industrialisation Day states, "African economies are among the fastest growing in the world, yet intra-regional trade accounts only 10 per cent of the continent's commerce, significantly less than in other regions."

It continues to say, "Many constraints impede trade expansion in Africa: obsolete infrastructure, fragmented economic space, low production capacities, limited investment financing and high transaction costs," Eliminating these obstacles emphasized the UN Secretary General, is a prerequisite to fully realizing Africa's economic potential and helping to address the continent's socioeconomic and development challenges.

Healthy intra-African trade can free the Africa from reliance on international aid and improve resilience to macroeconomic and other external shocks. Tanzania on its part marked the 23rd Africa Industrialization Day with a strong message for both state and non-state actors to change mindset and work closely to unearth trade barriers to boost the industrial sector's contribution on the economy.

The event which was also used to launch the 'Tanzania Industrial Competitiveness Report (TICR) - 2012' that highlighted among others the present country's industrial status in relation to the rest in the East, Southern Africa and Asian region.

"The TICR report is a significant input and would inspire the current government efforts to help the industrial sector grow competitively and enhance its contribution to the Gross Domestic Product (GDP) as well as poverty alleviation," remarked Dr Abdallah Kigoda, the Minister of Industry and Trade.

The government has a strong political will to continue improving conducive and predictable investment climate to attract capital intensively into the industrial sector to bolster productivity as a way of ending supply constraint factor. Industrial sector has been contributing enormously to job creation where about 23.7 per cent was generated by Small Medium Enterprises (SMEs) development, the rate that is estimated to grow to between 30 and 40 per cent by 2015.

In 2011, the industrial sector contribution on the country's exports was 19 per cent and 9.7 per cent for GDP. Some of the TICR key findings show that 97 per cent of the country's manufacturing sector is based on small scale enterprises, with little emphasis put in value addition, thus making 70 per cent of its exports being raw materials.

In his opening remarks, the Confederation of Tanzania Industries (CTI) Chairman, Mr Felix Mosha, underscored for a swift need to address trade barriers which have been increasing the cost of doing business in the country. He called upon the government to take stern measures to control the influx of substandard and counterfeit goods, saying that the malpractice would discourage potential investors in the industrial sector.

The United Nations Industrial Development Organization (UNIDO) Country Representative, Mr Emmanuel Kalenzi, said Africa deserves to fetch better value from the market, get premium returns to investment and transform lives from poverty to prosperity.

The UN Assembly adopted the Africa industrialization day, to be celebrated today, in 1989 as a unique occasion to dialogue with partners on how to domesticate industrialization in African countries. Africa is celebrating the industrial day under the theme, 'Celebrating Industrialization for Boosting Intra-Africa trade' while the continent's participation in globe trade has remained very low.

"Africa is good at exporting raw materials and importing end consumer goods," said Mr Kalenzi, adding that, "the practice will never foster efforts to realise the dream of alleviating abject poverty, unless the dialogue to boost intra-trade is bolstered." He cited an example that Tanzania is third largest livestock producer in Africa and exports hides and skins to India, Italy and China.

In Tanzania, a consumer buys a finished product like shoes and jacket by paying all production costs such as transport, labour and electricity to the foreign manufacturers. "How can the continent develop under such deals where a consumer pays for every cost?" he queried.


