The manufacturing sector is at its infancy stage with few exploited areas whereby unprocessed agricultural commodities have dominated major exports.
The manufacturing sector has shown steady growth over the years, registering 4% annual growth rate and a small contribution of 8% to the GDP. The sector employs around 140,000 workers mainly in the urban areas, making 48% of monthly paid employees. The sector contributes to the Tanzania economy through revenue collection of import and export sales, corporate tax, and income tax, contributing about 20% foreign exchange to the government, third after agriculture, and tourism.
The activities consist of manufacturing simple consumer goods like food, beverages, textiles, tobacco, wood products, rubber products, iron, steel, and fabricated metal products. This sector offers a wide range of opportunities to both potential local and foreign investors. Even though the Government puts emphasis on few manufacturing areas, which are textile, leather, and food processing, there are plenty of manufacturing area that offers attractive returns on investments.
Investors are advised to acquaint themselves with “ Sustainable Industrial Development Policy” that envisages industrialization of Tanzania during the first quarter of a 21st century to become a semi industrialized country to the tune of contributing 40% of GDP. The potential for investment in this sector is great. Major players in this industry include Tanga (Holcim), Mbeya (Lafarge), and Portland (Heidelberg) cement companies, Tanzania Breweries Ltd (SABMiller), Tanzania Cigarette Company (JTI) and Kilombero Sugar Company (Illovo), etc.
Some areas of investments involve:
• Fruit/Vegetable Processing:
Tanzania is richly endowed with a large variety of fruits and vegetables. Less than 10% of fruits and vegetables produced are processed. There is room for large scale production of a range of tropical as well as temperate fruits and vegetables.
The following are possible areas for investment:
(1) Processing and canning factories in regions with high potential for production of fruits and vegetables
(2) Open fruit and vegetable plantations for domestic and export markets. Potential areas for horticultural crops are Arusha, Kilimanjaro, Tanga, Morogoro, Dar es Salaam, Dodoma, Iringa, Mbeya, Mwanza, and Kagera.
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Cashew nut processing:
Tanzania is Africa’s largest cashew nut grower after Nigeria and Ivory Coast, and the world’s eighth biggest producer. Tanzania exported about 198,000 tons of cashew nuts in the 2013/2042 season. However, although 88% of the crop was harvested in the country, less than 12% was processed locally. The country is actively seeking to export processed cashew nuts. The total installed cashew nut processing capacities for the large firms in Tanzania in 2014 was about 94,000 tons per season. The Cashew nut Board of Tanzania (CBT) and Cashew nut Industry Development Trust Fund (CIDF) has set aside TZS 10 billion ((US$ 6 million) to boost local processing capacity. Opportunities exist for private investors to enter partnerships and joint ventures to boost local processing of cashew nut production.
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Textile and apparel:
Tanzania is Africa’s fourth largest producer of cotton; in 2012 it produced 354,000 tons and had 1.4 million ha. of plantings. The country ranks behind Mali, Burkina Faso and Egypt as Africa’s largest grower of cotton, according to the Food and Agricultural Organization (FAO). Tanzania has more than 40 ginning companies, including S.M. Holdings Ltd., Alliance Ginneries Ltd., Birchand Oil Mill Ltd., Afrisian Ginning Ltd. and Gaki Investment Co. Tanzania’s cotton-planting season begins in October and ends in January, while harvesting takes place from June to December. Opportunities exist in establishing fully-integrated textile mills as well as plants for cotton ginning, cutting, making, and trimming.
The leather sector offers huge investment opportunities for manufacturing. Tanzania produces about 2.6 million pieces of raw hides and skins annually, whereas just 10% are processed locally and a large portion is exported in raw form. Opportunities in this area include putting up modern tanneries and leather finishing production units.
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