Economics

What Are The Biggest Industries In Tanzania?

Mining and agricultural processing are important industries in Tanzania.

Tanzania is country found in East Africa that is primarily dependent on agriculture which accounts for almost half of the country's labor force. The country’s economy is the 12th largest in Africa and the 2nd largest in East African community. Approximately 34% of the citizens in the country live below the poverty line and the country has been moving away from the command economy towards a market oriented economy beginning from 1985. Tanzania’s GDP has been on the rise since the economic reforms were adopted, but the GDP per capita has fallen significantly until recently when the figures began rising and is now three times the pre-transition in 2007.

Beginning from 1996, the country has concentrated in liberalizing the economy while encouraging both domestic and foreign private investment. Some of the measures taken by the government include dismantling the socialist or the Ujamaa economic controls and encouraging active participation of the private sector. Other measures adopted by the government included cutting budget deficit and working to improve on monetary controls, removing price controls, and easing the restrictions on the marketing of agricultural crops. Other measures include freeing up the interest rates and initiating structured financial sector. Some of the major industries in the country include agriculture, mining, and manufacturing among others.

Agriculture

The economy of Tanzania is heavily reliant on agriculture which contributes approximately 24.5% of the country's GDP and accounts for 85% of all exports in the country. Agriculture also employs approximately half of all the country's workforce. In 2012 the agriculture grew by 4.3% which was less than half of the projected growth based on millennium development goals which was targeting a growth of 10.8%. Only 16.4% of the country's land is arable and about 2.4% is occupied with permanent crops. The country's reliance on agriculture makes the economy highly vulnerable to fluctuating commodity prices and weather shocks. About 76% of the country's population are engaged in subsistence agriculture. Land is an essential asset in the country because it ensures food security and some of the main agricultural crops grown in the country include bananas, potatoes, cassava, beans, wheat, rice, millet, sorghum, and maize. The main cash crops in the country include tobacco, cotton, tea, cashew nuts, sisal, and coffee. At one time Tanzania was the world’s largest producer of sisal. Efficient farming has been the greatest challenge in the country the majority of farmers lack finances and this has made farming in the country to rely on subsistence farming and farm sizes has consistently remain small having an average plot size of about 2.5 hectares.

Manufacturing

Given that the Tanzanian economy is primarily an agricultural economy, its manufacturing industry is mainly focused on processing of agricultural goods. Manufacturing in the country is made up of wood processing which accounts for 24%, textile and clothing which account for 10%, chemicals which account for a 25%, while others include leather products, plastics, paper products, and publishing and printing. The country's manufactured goods for export include processed coffee, cotton yarn, plastic items, wheat flour, sisal products, tobacco, textile and apparel, and cement. The manufactured goods in the country have expanded over the last few years, which has increased to $21.4 billion in 2015 from $497.25 million in 2010 which accounted for 25% of the country's total export value. Industries in the country contribute approximately 25% of the GDP and have experienced a growth of about 8% annually for the past five years.

The government of Tanzania has conceived the idea of industrialization as the primary catalyst to move the economy and generate sustainable growth while reducing poverty levels. The country in 1996 adopted the sustainable industrial development policy which aims to directly invest in productive activities while encouraging the private sector to take the lead. The policy aims to drive the country to become a semi-industrialized nation by 2025. For the country to reach the level of a semi-industrialized nation, the contribution of the manufacturing industry to the national GDP must reach at least 40% by 2025, and it is expected that foreign direct investment would provide the capital for the industrial growth. In 2002 the country developed its scheme of export processing zones (EPZ) to establish the export-oriented investments in certain designated areas with the aim of creating a competitive export led economic growth. The EPZs creates the required environment that promotes exports of products that utilize local materials such as leather goods, textiles and garments, agro-processing, and the lapidary industry.

Mining

Mining is one of the country's main industries and accounted for 3.3% of the country's GDP in 2013. A substantial quantities of export revenues are derived from gold which accounted for 39% of all minerals exported in 2013. Tanzania also exports significant quantities of gemstones which include tanzanite and diamonds. The country also produces coal which were estimated to be 106,000 tons in 2012 and all were used in the country. Other minerals mined and exported from Tanzania include gypsum, Pozzolana, kaolinite, salt copper, silver ore, phosphate, bauxite, graphite, and tin. Mining of gold in the country began in 1894 during the colonial period when gold was discovered near Lake Victoria and Sekenke was the first gold mine in the country which began mining in 1909. There was a boom of gold mining between 1930 and WWII. In the 1990s foreign companies started investing and exploring of gold deposits in the country and led to opening of new mines like Golden Pride mine which began operations in 1999 and Buzwagi mine which began operations in 2009. In 2012, nickel was discovered with the reserves estimated at 290,000 tons. The company exploring the mining of nickel is the Ngwena Company, which is a subsidiary of the Australian IMX Resources company.

Natural Gas

Tanzania has discovered natural gas which is estimated to be about 25 to 30 trillion cubic feet and the value of gas extracted in 2013 was valued at $52.2 million. The commercial production of gas began in 2004 in the Songo Songo Island field located off the Indian Ocean and this was 30 years after it was first discovered. The probable reserves of the gas is estimated at 1.1 trillion cubic feet and it is transported through a pipeline to the city of Dar es Salaam. Mnazi Bay, which is another gas field produce about 1/7th, of the output from Songo Songo Island as of 2013. The field is thought to have possible reserve of approximately 2.2 trillion cubic feet. Almost all of the gas is used to generate electricity at the Mtwara Power Plant.

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