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THE UNITED REPUBLIC OF TANZANIA

Tanzania Mini-Tiger Plan 2020

December 2004

Table of ContentsMap of Tanzania............................................................................................................................................ vi

Tanzania Special Economic Zones by 2020　 Type and Location Map........................................................vii

List of Tables................................................................................................................................................ viii

TANZANIA MINI-TIGER PLAN 2020: EXECUTIVE SUMMARY...................................................................xii

Tanzania Development Strategy.................................................................................................................xvii

Tanzania Mini-Tiger Plan 2020: GDP / Export Target.................................................................................xviii

1. BACKGROUND OF TANZANIA MINI-TIGER PLAN 2020.........................................................................1

1.1 Background and Introduction...............................................................................................................1

1.2 Objective of the Tanzania Mini-Tiger Plan 2020...................................................................................1

1.3 The Existing Tanzania Development Vision 2025 (launched in 1999).....................................................1

2 PRELIMINARY ASSESSMENT OF TANZANIAN ECONOMY....................................................................4

2.1 Basic Resources and Profiles..............................................................................................................4

2.2 Political History.....................................................................................................................................4

2.3 Economic Trend and Performance.......................................................................................................5

2.3.1 Economic Structure.......................................................................................................................5

2.3.2 Economic Performance.................................................................................................................5

2.4 Key Economic Sectors.........................................................................................................................6

2.4.1 Agriculture.....................................................................................................................................6

2.4.2 Livestock.....................................................................................................................................11

2.4.3 Forestry.......................................................................................................................................13

2.4.4 Fishery........................................................................................................................................16

2.4.5 Mining.........................................................................................................................................18

2.4.6 Manufacturing.............................................................................................................................19

2.4.7 Financial Services.......................................................................................................................22

2.5 Tourism Sector:- Existing Condition and Strategy in Tanzania...........................................................22

2.5.1 Tourism Demands and Supply....................................................................................................22

2.5.2 Dar es Salaam / Urban Tourism..................................................................................................25

2.5.3 Southern Circuit..........................................................................................................................26

2.5.4 Northern Circuit...........................................................................................................................28

2.5.5 Zanzibar......................................................................................................................................29

2.5.6 Tourism Development Plan.........................................................................................................31

2.5.7 Development Strategy................................................................................................................40

2.6 Transport Sector: Existing Condition and Strategy for Tanzania........................................................42

2.6.1 Present Situation and Main Issues of Transport Sector..............................................................42

2.6.2 Development Strategy................................................................................................................48

2.6.3 Possible Transport Projects Study for the short-term (5 years)..................................................50

2.7 Regional Aspect.................................................................................................................................53

2.7.1 Dar es Salaam............................................................................................................................53

2.7.2 Arusha / Kilimanjaro Regions......................................................................................................54

2.7.3 Mwanza Region..........................................................................................................................57

2.7.4 Kigoma Region...........................................................................................................................59

2.7.5 Tanga Region..............................................................................................................................61

2.7.6 Morogoro Region........................................................................................................................63

2.7.7 Iringa Region...............................................................................................................................64

2.7.8 Mbeya Region.............................................................................................................................66

2.7.9 Mtwara / Lindi Regions...............................................................................................................67

2.7.10 Zanzibar....................................................................................................................................69

3. EXTERNAL SECTOR...............................................................................................................................71

Overview.................................................................................................................................................. 71

3.1 Trade: Exports and Imports................................................................................................................72

3.1.1 Exports........................................................................................................................................72

3.1.2 Export partners...........................................................................................................................73

3.1.3 Imports........................................................................................................................................74

3.1.4 Import partners............................................................................................................................75

3.1.5 International trade arrangements................................................................................................76

3.2 Foreign Direct Investment: FDI..........................................................................................................77

3.2.1 Investment promotion institution and arrangements...................................................................77

3.2.2 Investment incentives.................................................................................................................78

3.2.3 Recent trends..............................................................................................................................78

3.2.4 Outlook for FDI trend..................................................................................................................78

3.3 External Debt.....................................................................................................................................79

3.4 ODA Trend.........................................................................................................................................80

3.5 Recommendations for further steps...................................................................................................82

3.5.1 Export competitiveness enhancement study..............................................................................82

3.5.2 Export industry development strategy: Agriculture......................................................................83

3.5.3 Export industry development strategy: Fishery...........................................................................84

3.5.4 Export industry development strategy: Manufacturing................................................................85

3.5.5 Export goods portfolio management...........................................................................................85

4. KEY BOTTLENECKS AND PROBLEMS.................................................................................................87

5. ADVANTAGES AND OPPORTUNITIES...................................................................................................89

6. THE TANZANIA MINI-TIGER PLAN 2020 STRATEGY............................................................................90

6.2 Practical Approach and Methodology for Getting out of the Vicious Circle of Poverty for Tanzania......92

6.3 Specific Plans and Projects...........................................................................................................93

6.4 Possible ODA Technical Assistance Projects................................................................................96

6.5 Immediate Action Needed in 2005-2006........................................................................................97

Appendix I: Promising On-going Projects in Tanzania :( Case Study).......................................................100

List of TablesTable 2-1 Key Economic Indicators for Tanzania: 2003.........................................................................5

Table 2-2 Recent GDP Growth: 1998-2003...........................................................................................5

Table 2-3 Cash crops production (Units: 1,000 tons).............................................................................7

Table 2-4 Food crops production (Units: 1000tons)...............................................................................7

Table 2-5 Fertilizer consumption, (Units: metric tons)............................................................................8

Table 2-6 Tree Planting – Seedlings Planted.......................................................................................14

Table 2-7 Export of Fish products 2000-2002 (Units: US$).................................................................17

Table 2-8 Estimated number of workers in Industrial sector by Regions (2001-2003)........................20

Table 2-9 Earnings in Manufacturing Activities....................................................................................21

Table 2-10 Tourist Arrival......................................................................................................................23

Table 2-11 Major Nationalities of Arrivals.............................................................................................23

Table 2-12 Purposes of visit of the Arrivals..........................................................................................23

Table2-13 Accommodation in Tanzania...............................................................................................25

Table 2-14 Present Length and Surface Condition of Road Network (km)..........................................42

Table 2-15 Corridors............................................................................................................................43

Table 2-16 TRC Freight Performance: 1993 – 2002 (1,000 tons)........................................................44

Table 2-17 TAZARA Freight Performance: 1993-2002 (1,000 tons)....................................................44

Table 2-18 Cargo Traffic at Major Ports (1,000DWT)...........................................................................45

Table 2-19 Transit traffic Carried by MSC through Mwanza Port (1,000Tons).....................................45

Table 2-20 Main Airport Passengers Carried.......................................................................................46

Table 2-21 Main Airport Freight Movement (in tons)............................................................................46

Table 3-1 Visible export per commodities............................................................................................73

Table 3-2 Tanzania’s major export partners.........................................................................................74

Table 3-3Tanzania’s major import partners..........................................................................................76

Table 3-4 WTO Accession and Preferential Trade Arrangements........................................................77

Table 3-5 Tax Incentive Example (priority sectors).............................................................................78

Table 3-6 External debt statistics –selected series..............................................................................80

List of Figures

Figure 2-1 Cattle population by Region in 1999...................................................................................12

Figure 2-2 Tree Planting – Seedlings Planted by Regions in 2001/02 (Units: %)................................15

Figure 2-3 Urban Based Tourism Areas...............................................................................................32

Figure 2-4 Tourist Base Selous Game Reserve...................................................................................35

Figure 3-1 Exports and FDI per GDP...................................................................................................72

Figure 3-2 Composition of Imports (million TZS).................................................................................75

Figure 3-3 Growth of Foreign Direct Investment (FDI) flows (1997-2003)...........................................79

Figure 3-4 Official Development Assistance at a glance......................................................................81

Abbreviations

AGOA : African Growth and Opportunity Act

AIDS : Acquired Immune [immunological] Deficiency Syndrome

ASDS : Agriculture Sector Development Strategy

ASEAN : Association of Southeast Asian Nations

BA : British Airways

BOO : Built Own and Operate

BOT : Built Own and Transfer

BRELA : Business Registration and Licensing Agency

CA : Conservation Area

CBT : Community Based Tourism

CDC : Common Development Corporation

CDD : Community Development Department

CDO : Community Development Office

C.I.F : Cost, Insurance and Freight

CPI : Consumer Price Index

DDI : Domestic Direct Investment

DOLA : Department of Local Administration

DRC : Democratic Republic of Congo

DSE : Dar es Salaam Stock Exchange

DSM : Dar es Salaam

EAC : East African Community

EAFB : East Africa Machinery Bazaar

EBA : Everything But Arms

EPZ : Export Processing Zone

EU : European Union

FAO : Food and Agriculture Organisation (United Nations)

FDI : Foreign Direct Investment

f.o.b : free on board

FTZ : Free Trade Zone

GBP : British [Great Britain] Pound

GDP : Gross Domestic Product

GIS : Geographical Information System

GNI : Gross National Income

GR : Game Reserve

HACCP : Hazard Analysis and Critical Control Point

HIPC : Heavily Indebted Poor Countries

HIV : Human Immunodeficiency Virus

IBP : International Best Practice

ICT : Information and Communication Technology

IDA : International Development Association

IMF : International Monetary Fund

IT : Information Technology

JBIC : Japan Bank of International Cooperation

JDI : Japan Development Institute

JICA : Japan International Cooperation Agency

JV : Joint Venture

KIA : Kilimanjaro International Airport

KLM : KLM-Royal Dutch Airlines

LDC : Least Developed Countries

MAFS : Ministry of Agriculture and Food Security

MDSDP : Market Driven Skill Development Program

MICE : meetings, incentives, conferences and exhibitions

MIGA : Multilateral Insurance Guarantee Agency

MoU : Memorandum of Understanding

MRI : Mitsubishi Research Institute

MSC : Marine Service Company

NOAC : National OTOP (One Tambon [Village] One Product: OTOP)

Administrative Committee

NBC : National Bureau of Statistics

NDC : National Development Corporation

NGO : None Governmental Organization

NP : National Park

ODA : Official Development Assistance

OECD : Organisation for Economic Co-operation and Development

OTOP : One Tampon One Product

OVOP : One Village One Product

PC : Personal Computer

POPP : President’s Office, Planning and Privatization

R&D : Research and Development

ROI : Return on Investment

RSCP : Road Side Corridor Program

PRSP : Poverty Reduction Strategy Paper

RSHIP : Rural Self Help Infrastructure Program

SADC : South African Development Community

SEZ : Special Economic Zone

SME : Small and Medium Enterprises

TAZARA : Tanzania-Zambia Railways

TCCIA : Tanzania Chamber of Commerce, Industry and Agriculture

TFC : Tanzania Fertilizer Company

TIC : Tanzania Investment Centre

TICAD : Tokyo International Conference on African Development

TRA : Tanzania Revenue Authority

TRC : Tanzania Railways Corporation

TZS : Tanzania Shilling

UK : United Kingdom

UN : United Nations

USA : United State of America

USD : United State Dollar

USSR : Union of Soviet Socialist Republics

UNIDO : United Nations Industrial Development Organization

VAT : Value Added Tax

WB : World Bank

WTO : World Trade Organisation

TANZANIA MINI-TIGER PLAN 2020: EXECUTIVE SUMMARY

1. Mini-Tiger Plan 2020 gives Tanzania a Golden Opportunity to accelerate her

economic growth to 8-10% from the current 5-6% by adopting the Asian Economic

Development Model. The Model is focusing on employment creation by attracting Foreign

Direct Investment (FDI) and promoting exports by developing Special Economic Zone

(SEZ). Economic Miracle of Asian Economy is basically creating “Ponds” (SEZ) and

attracting “Migrating Birds” (Investment especially FDI) - “Ponds and Birds” theory.

2. Tanzania is still faced with many bottlenecks and problems for attracting FDI due to

shortcomings such as underdeveloped infrastructure, weak banking system, weak

entrepreneurships/venture sprit and weak manpower skills for developing modern

industry. In order to overcome these problems and bottlenecks, “Ponds and Birds” theory

offers a solution which has been successfully applied in the Asian countries including

ASEAN, China, India and more recently Vietnam.

3. “Ponds and Birds” theory should work for Tanzania as well if Tanzania works

diligently and quickly with the utmost efforts and enthusiasm from the President to

Villagers. Tanzania Mini-Tiger Plan 2020 is to follow the success path of Asian Miracle by

starting developing “Ponds” (SEZ) in the most promising areas and promising sectors.

4. Basic Three Stage Strategy: Accelerating to 8-10% annual growth.

1)Build SEZs and Aggressively Promoting Most promising Industries (Primary, Light

Industry and Tourism) by use of well proven SEZ Concept (Ponds and Birds Theory)

2)Quickly improve the National Balance Sheet by expanding exports from $1.0 billion to

$2-3 billion within 3-4 years by the using “Ponds and Birds” theory and then, expand

badly needed public projects in power/energy/water/transport sector by long-term

borrowing from Multilateral and Bilateral development banks.

3)Solving as many bottlenecks by additional borrowing and foreign currency earning plus

FDI, Expand Investment activities further into more high value-added sectors and

moving into larger investment projects not only in the export-oriented industries but

also moving into import-substitution industries and processing industries as more

domestic and foreign capital become available.

5. Expected Results and Targets of the Tanzania Mini-Tiger Plan 2020

The Tanzania Mini-Tiger Plan 2020 is setting the following targets for 2020:

1) GDP to be growing at an average of 8-10% and reach $40 billion.

2) Exports to be expanded from $1.1 billion to $20 billion

3) Per-Capita Income (PCI) to be increased from $280 to at least $1,000

4) Creating 2-3 million new jobs by 2020

5) Develop at least 25-30 SEZs in the country and attracting FDI aggressively

6. Recommended Specific Programs and Projects for the Tanzania Mini-Tiger Plan

2020

1)Light Industry SEZ Program( 4 by 2006 and 25 -30 by 2020): Fast Track SEZ in DSM by

July 2005

2)East Africa Machinery Bazaar in DSM (Start by March 2005, Operational within 2005:

reaching 100,000 machinery transaction per year by 2008)

3)Out-board Ship engine project for fishing fleets (Appropriate technology from Asia):

Feasibility Study in 2005 and implementation by 2006

4)ICT Data/Call Center Project (1 by 2006 and 5 by 2020) Feasibility Study in 2005

5)Cash Crop Based SEZs (Cut-flower, High Value Vegetable, Sugar/Ethanol, Palm oil,

Sunflower oil, Rubber, Bamboo Shoot, Soya Beans, Un-grading traditional crops) (3 by

2006 and 50 by 2020)

6)Tourism Based SEZs (Arusha/Kilimanjaro, Zanzibar, and DSM Region): One by 2006

and 5 by 2020.

7)Jewellery Cutting and Polishing Center in Arusha: one by 2006

8)Biomass Energy Program (Ethanol for Gasoline and Palm Oil and Sun-Flower Oil for

diesel fuel substitute: 20% of oil import to be substituted by 2010). First the national

Biomass Energy Program to be adopted within 2006.

9)Ship-Breaking Project in Tanga (0.5 million tons steel): Operational by 2008

10) Road-Side Station (Michino-Eki) and Corridor Development Project: 1 by 2008 and 4

by 2020

11) National Heritage/Cultural Park in DSM: Preparation and Implementation immediately

and operating by 2006

12) Nation-Wide Program starting from 2006/7

(1) “One Village One Product: OVOP” Program

(2) Scholarship Tree Planting by Village: One Million Hector Commercial Forest Project

(3) Self Help Infrastructure Development Project

(4) Mini SEZs for SME program

More projects/programs will be explored in the future. The target being starting 200

Projects/Programs by 2020.

7. Fast Track Urgent Projects (To be started immediately within 2005 : 2 projects for

implementation and 10 projects for Preparation)

1)East African Machinery Bazaar at DSM starting by March 2005

2)Light Industry SEZ at DSM (3) and Tanga (1): completing at least one SEZ in DSM in

July 2005

3)Out-Board Engine for ships at Tanga: Feasibility study should be carried out in 2005

4)ICT Data Processing/Call Center at DSM: completing feasibility study in 2005

5)Cash crop SEZs Program: at least 3 pilot projects to be started in 2005.

6)Tourism Based SEZs: at least 1 pilot project to be initiated in 2005

7)Jewellery Cutting/Polishing: Feasibility study be initiated in 2005

8)Bio Mass Energy Program (Ethanol and Sunflower / Palm oil): Legislation and feasibility

study/experimentation be carried out in 2005

9)Ship-Breaking Project: Feasibility study be carried out in 2005

10) Road-Side Station Project: Pre-Feasibility study should be carried out in 2005

11) National Heritage/Cultural Park in DSM: Preparation and Implementation and

operating by 2006

12) Four Nation-Wide Programs: Planning and Legislation to be prepared and some

programs may start from 2006/2007 fiscal year.

(1) “One Village One Product”

(2) One Million Hector Afforestation Program

(3) Self Help Infrastructure Program

(4) Mini-SEZ for SME

8. Priority ODA Projects for Mini-Tiger Plan (10 Priority)

In order to accelerate the Mini-Tiger Plan 2020, Tanzanian will need increased technical

and financial assistances. Some of priority projects are shown below:

1)SEZ Nation-Wide Master Plan and Feasibility Study.

2)DSM Urban Transport Improvement Project.

3)FDI and Export Promotion Plan.

4)East Africa Marine Training Center Improvement Project.

5)East Africa Corridors Improvement Project.

6)Mtwara Corridor Development Study.

7)Port Improvement /Ship Breaking Projects.

8)Market Driven Skill Development Program.

9)GIS Application Program for Land use and allocation.

10) SME Promotion Program.

More projects will be added as the Tanzania Mini-Tiger Plan 2020 progress.

9. 2005 Action Plan and Required Budget for Tanzania Mini-Tiger Plan 2020

1)Adopting the Tanzania Mini-Tiger Plan 2020 focusing on the SEZs Program and few

Nation-wide Programs as the National Priority Plan and projects.

2)Pass necessary legislations including the SEZs Act and Strengthen SEZs Authority

based on the Asian model with a powerful SEZs board headed by either the President

or Prime Minister.

3)Implementing a pilot SEZ Project (1 in DSM by July 2005)

4)Active Promotion of FDI especially in Garment, Toy, agro-processing and Textile as

soon as the SEZ decision will be made.

5)Implementing East Africa Machinery Bazaar as the First SEZ by March 2005

6)Initiate and start Implementing some of Nation-Wide Program such as:

(1) “One Village One Product :OVOP”

(2) One Million Hector Afforestation Program

(3) Self Help Infrastructure Program

(4) Mini-SEZ for SME

7)Implementation of Pilot Agriculture, forestry, tourism projects such as:

(1) Biomass Energy: Sugar/Ethanol: Investment of about $180 Million with a potential

of about 15,000 Jobs

(2) Sunflower/Biomass Fuel: Investment of about $50 million Million with a potential

of about 5,000 Jobs

(3) Cut Flower/Vegetable at Arusha/Kilimanjaro: : Investment of about $15 Million

and a potential of 1500 Jobs

(4) Agro Processing Project at Tanga: Investment of about $20 million and a potential

of 1000 Jobs

(5) Wood Chips in Mtwara/Tanga: Investment of about $200 million and a potential

of 100,000 Jobs

(6) Soya beans: Investment of about $20 million and a potential of 10000 Jobs

(7) Integrated Med Club Type Tourism Development in DSM region: Investment of

about $50 million and a potential of 3000 Jobs

(8) National Heritage/Cultural Park in DSM: Preparation and Implementation

immediately and operating by 2006

At least initiating one project in each sector within 2005.

10. Estimated Budget for the 2005 for the Mini-Tiger Plan 2020: $21 million

1)Project/Program preparation budget: 10 projects X $0.3 million= $3.0 million

2)Fast Track SEZ development budget: $15 million for 25 hector SEZ. This investment is

likely to be recovered within 2 to 3 years with a profit to invest in other SEZ.

3)Investment Promotion activities: 5 promotion tours and 2 seminars: $2.0 million

4)Coordination and management of Mini-Tiger Plan 2020: $ 1.0 million

11. Expected Results and Targets for FDI

1)Attracting FDI from the current $ 250 million to $ 350 million within 2005/6 and

accelerate to $500 by 2007/8 by developing “Ponds” and attracting “Birds”

continuously. The target is $2 billion by 2020

2)Employment Creation from the First 25 hectors SEZ: 18 Birds with average of 1,500

employments = 27,000 new direct jobs and indirect jobs of 54,000. Total new job

creation is expected 82,000. Expected FDI/DDI is $360 Million.

3)Value Addition by 82,000 workers: average value addition to Tanzanian economy will be

around $246 million ($3,000 value addition per year per person).

12. Conclusion

In order to achieve the goal set by the Mini-Tiger plan 2020, Tanzania needs to change

her approaches in several areas:

1) “Can’t Do” Mentality to “Can Do” Mentality.

2) Shifting “Aid Dependency” to “Creating Own Jobs and Income” by attracting FDI

and DDI”.

3) Follow Z to A Market Driven Approach instead of A-Z Approach,

4) Start one Pilot Project Successfully in Each Sector by SEZ approach and expand the

success to nation-wide,

5) Eliminate all hindering problems during project implementation by Shooting

Problems at Once (by Trouble Shooting Committee),

6) Act Immediately instead of walking slowly: “Fly now to catch the birds instead of

Walking Slowly”.

1. BACKGROUND OF TANZANIA MINI-TIGER PLAN 2020

1.1 Background and Introduction

Unfortunately Africa has been left out of the dynamic global economic growth achieved by

Asian and some of the Latin American countries in the past few decades. Africa missed the

Fast Track Globalization Bus which has been operating especially in the past 30 years.

Nearly all African countries are faced with the high debts due to the economic development

failure. In order to rescue the African countries, the OECD countries and multilateral

development agencies agreed to forgive most of African debts amounting to over $20

billion.

(1) From the middle of 1990’s, new economic development strategies and models for Africa

have been discussed by UN, IMF, World Bank and independent experts. One important

approach recommended for African development is the model based on the Asian

experience. Hence, the Tanzania Mini-Tiger Plan 2020.

1.2 Objective of the Tanzania Mini-Tiger Plan 2020

Tanzania has in place the Development Vision 2025 launched in 1999 which encompasses

the Poverty Reduction Strategy and various sectoral plans. The Mini-Tiger Plan 2020 is a

practical development strategy and tool for the Vision 2025 and other plans to make

Tanzania a fast growing economy in Africa (to be a Mini Tiger economy by 2020).

1.3 The Existing Tanzania Development Vision 2025 (launched in 1999)

The Vision 2025 aim is to develop to a middle level economy by 2025. The following is a

summary of “Vision 2025” attributes:-

(1) Five Visions:

High Quality Livelihood.

Peace, Stability and Unity.

Good Governance.

A Well Educated and Learning Society.

A Competitive Economy Capable of Producing Sustainable Growth.

(2) Three Historical Developments:

Political Independence of the Nation (1961).

Socio-economic management based on Socialism and Self-reliant (Arusha

Declaration of 1967).

Tanzania Development Vision of 2025 (Formulated under H.E the President Mkapa

in 1999).

(3) Impediments (Problems) facing Tanzania:

A Donor Dependency Syndrome and a Dependent and Defeatist Development Mind

set.

Young institutions of Good Governance and weakness in the Organization of

Production.

(4) Specific Major Targets for Vision 2025:

1)High Quality Livelihood;

Food Self-sufficiency and Food Security.

Universal Primary Education.

Gender Equality and Empowerment of Women in all spheres.

Access to Quality Health Services for all Citizens.

Reduction in Infant and Maternity Mortality rates by three quarters of current levels.

Universal Access to Safety Water.

Life Expectancy Comparable to the Level Attained by Typical Middle

Income Countries.

Absence of abject Poverty

2)Good Governance:

Desirable Moral and Cultural Uprightness.

Strong Adherence to and Respect for the Rule of Law.

Absence of Corruption and Other Vices.

A Learning Society which is confident learns from its own development experience

and that of others.

3)A Strong and Competitive Economy:

A diversified and Semi-Industrialized Economy with a Substantial Industrial Sector

Comparable to Typical Middle-income countries.

Macroeconomic Stability Manifested by a low inflation economy and basic

macroeconomic balance.

A Growth rate of 8% per annum or more.

An Adequate Level of Physical Infrastructure needed to cope with the requirement

of the Vision in all sectors.

An Active and Competitive player in the regional and World Markets and Capacity to

Adjust to the Global market shifts.

4)Driving Forces for the Realization of Vision 2025:

Development Mindset and Empowering Culture.

Competence and Competitiveness.

Good Governance and the Rule of Law.

5)Implementation of Vision 2025:

Developmental Mindset and Competitiveness.

Democratization and Popular Participation.

Monitoring Evaluation and Review.

Governance and the Rule of Law.

2 PRELIMINARY ASSESSMENT OF TANZANIAN ECONOMY

2.1 Basic Resources and Profiles

Population: 34.2 million in 2003 with the current population growth of 2.9%

Land Area: 945,000 Sq Km (about 2.5 times of Japan) with an average rainfall of 1,000

- 1,200 mm per year.

People: over 120 ethnical groups but no dominant group. Thus, a stable and good

relationship among various ethnical groups is being maintained.

Mineral Resources: Gold, diamond, iron and coal, nickel, gemstones and natural gas:

Currently Gold, Diamond, Tanzanite and natural gas are the main minerals being

excavated.

Weather and Land formation: Tropical but Kilimanjaro Mountain (5895 m) and other

highlands create cooler climate that allow growing of various agricultural crops.

Tanzania is well endowed with fertile land, reasonably abundant rainfall and several mineral

resources. The population of 34.2 million is relatively small for the land area of nearly 1

million Sq Km. Tanzania must therefore develop her economy based on available land,

natural resources and people. As a non-oil producing country, Tanzania must fully utilize her

people to embark on processing industries just as most of the Asian countries. Therefore,

the application of the Asian Model is suitable.

2.2 Political History

Tanzania (Mainland) was colonised by Germany from 1884 first and later put under Britain

by the United Nations as a Protectorate Territory. It became an independent country in

1961. Tanzania developed her economy based on socialistic economic development model

from the middle of 1960s and shifted to market oriented reforms since mid 1980s. The

political and economic reforms have been aggressively carried out especially under the

leadership of the current President, H.E Benjamin W. Mkapa in the past 10 years. During

this period Tanzania has been transformed into one of the best governed and politically

stable countries in Africa. The brief history of Tanzania is shown below:

1884 under Germany Colonial Rule.

1920 under British Protectorate.

1961: Obtained political independence (Tanzania Mainland).

1964: Union between Tanganyika and Zanzibar was formed.

1967: Arusha Declaration starting the African Socialism.

1980-90: Several economic imbalances.

1995-2004: Rapid market oriented economic reforms in all aspects.

2.3 Economic Trend and Performance

2.3.1 Economic Structure

The Tanzanian economy is heavily dependent on agriculture, which account for about 50%

of GDP and employ about 75% of people. GDP is still very small (only $ 9.8 billion in 2003).

The per capita income is less than $1 per day or $286 in 2003 placing Tanzania in the group

of the Least Developed poor Countries LDCs). Exportable products are limited to tradition

crops such as coffee, cashew nuts, sugar and cotton, keeping the export earnings less than

$1billion. Manufacturing sector is still very small (7.4% of GDP) which is well below the

average industry share of 25% to 30% in Asia.

Recently, due to discovery of productive gold mines, the mining sector has been growing

rapidly and become an important export earner (1.8% of GDP in 2001 and export value

reached to $383.8 million in 2002 and $548.3 million in 2003).

Economy is dependent on primary commodity (subsistence agriculture): 75% of people

are engaged in the primary sectors.

Exports only cover about half of the needed imports.

Per capita GDP is still only $286 which is one of the poorest countries in the world and

not growing much for the past two decades due to high population growth and slow

economic growth.

External Debt is already reaching relatively high level of $7.9 billion, which means debt-

service ratio of 16.2 %.

In order to shift away from the slow economic growth, Tanzania must adopt a new non-

traditional development strategy.

2.3.2 Economic Performance

Table 2-1 Recent GDP Growth: 1998-2003

Source: President’s Office, Planning and Privatization (POPP)

Year 1998 1999 2000 2001 2002 2003GDP Growth (%) 4.0 4.7 4.9 5.7 6.2 5.6

CPI (%) 12.9 7.8 6.0 5.2 4.5 4.4

2.4 Key Economic Sectors

2.4.1 Agriculture

Agricultural sector is highly labour-intensive, employing an estimated 75 percent of the

country’s workforce and accounts for 46.8% of GDP (2003)1. Its export generates over half

of the total nation’s foreign exchange earnings. Undoubtedly, the agricultural sector has

been the nation’s backbone and the priority sector of the country. However, actual

performance of the sector development has been slow and limited. Namely, yields are low

and fluctuate year by year, as food crops are mainly grown by smallholders without applying

modern agricultural technologies and inputs (high yield seeds, fertilizer and pesticides etc.).

At the same time post-harvest loss/waste is large (around 30%). In this sense, profitability is

lower and farmers are confined to the self-subsistence based agriculture. Furthermore,

reportedly, the actual cultivated land is currently only 10 million hectares out of the abundant

total agricultural land of 95 million hectares in the country; that is only about 20% of the

arable land in Tanzania.2

The characteristic constraining features of Tanzanian agriculture are firstly, inadequate use

of arable land. Secondly, the situation of not using or using very limited agricultural inputs

and extension services, poor crop and animal husbandry practices, continued use of hand

tools for cultivation and little use of machinery3, and thirdly the continued dependence on

natural rainfall. The constraints have made the sector vulnerable to natural disasters and

fluctuations of international commodity prices. Furthermore, the market role in Tanzania is

weak in that most of the agricultural crops and products are just consumed by producers

themselves and not systematically distributed, if any, marketed locally. Only few products

such as coffee, cashew nuts, sesame seed, cotton and sugar are partially exported to the

international market. Furthermore, poor logistical infrastructures and limited access to the

marketing infrastructure, such as market information have hampered local producers from

acquiring competitive advantages over other international producers. Considering all the

various factors together, the nation’s potentially high agricultural productivity and profitability

is not fully exploited.

Table 2-2 Cash crops production (Units: 1,000 tons)

Table 2-3 Food crops production (Units: 1000tons)

1 Source: National Bureau of Statistics2 Source: URT, 20003 Reported proportion of people’s use for cultivation: Hand tools 80-85%, tractors 5%, and plough 10-15%. Source:

FAO Land and Water Development Division (2002) ‘Gateway to Land and Water Information: Tanzania National Report, land, water, plant nutrition resources.

Data on crop productions indicate no clear trend in the past twenty years in that production

is largely fluctuating in each year (Table. 3-3 and Table. 3-4). This fluctuation is caused by

both physical and socio-economic factors, with rainfall having the most significant impact on

the annual productions.

Like in other sectors, during the central planning period, the agricultural sector had

employed government-owned farming enterprises, abolition of most taxes on small farmers,

subsidization of inputs such as fertilizer, pesticides and improved seeds, and pan-territorial

pricing for agricultural products with monopolised channel through government-marketing

boards or cooperatives. Now the Tanzanian agricultural system has been reformed through

structural adjustment policy. Technically, the price of agricultural products and inputs prices

have been decontrolled, subsidies removed, and monopolies of cooperatives and marketing

boards eliminated. Moreover, processing and marketing functions have been assigned to

the private sector while the government has retained responsibility for monitoring service

provision, formulating policy and regulatory framework and maintaining law and order.

Table 2-4 Fertilizer consumption, (Units: metric tons)

However, just adapting the simple market economy concept into the still fragile economic

base will not achieve satisfactory records of economic performance in Tanzania. For

instance, the data on fertilizer consumption after the privatisation of the national fertiliser

factory shows gradual decline (Table. 3-5). A possible explanation for this is the high

transportation cost and broker's commission reflected on the final market price of fertilizer

and weak purchasing power of farmers which should be addressed. Some reports indicate

the final price of fertiliser is more than double the C.I.F cost. Moreover, there is a persistent

phenomenon within the country that people are still thinking that services will be provided by

the government. Tackling people’s dependency on the public sector requires fostering

people’s own initiatives through gradual empowerments.

To achieve targets for economic growth and poverty reduction while reacting to the global

trend in favour of the concept of market-driven economy and democracy, the Government of

Tanzania formulated the Poverty Reduction Strategy Paper (PRSP). In accordance with this

strategy, Agriculture Sector Development Strategy (ASDS) and Agriculture Sector

Development Programme (ASDP) were prepared to set the plan into practise. The primary

objective of ASDS is to create an environment that is conducive for the improvement of

agriculture productivity in order to improve farmer’s incomes, reduce rural poverty and

attract investment to the sector. ASDS targets subsistence small-scale farmers and aims at

making their agricultural style gradually transformed into commercially profitable one, and

integrating them into the market economy.

Also, to enhance the local communities’ leverage over their property, Rural Development

Strategy (RDS) was formulated to promote actual projects to be proposed and implemented

by local stakeholders. It is this decentralization approach that is emphasised in the sector

policy together with the adoption of new technologies and skills (entrepreneurial skill, etc.),

diversification of products, production based on market demand and better environment for

attracting investment in the sector, and those measures are endorsed to be carried out

through the hands of local stakeholders. The Government of Tanzania has been working on

realizing this Economic Empowerment Policy through introduction of various public funding

and the Marketing Development Centres, which were established to give advice on prices,

packaging, quality control and standards and availability of markets; a progressing sign of

the empowerment scheme.

As it has been indicated, constrains in the development of agriculture sector are generally

identified in underdeveloped cultivated lands, lack of extension services, inadequate use of

technology, poor infrastructure and dependency on natural rainfall. Moreover, lack of access

to credits for agricultural inputs has posed a critical impact on the sector’s further

development. For local farmers, availability of credit and funding is essential to ensure

productive capacity of their land by facilitating the use of agricultural inputs and machinery.

The importance of providing more incentives that would induce the medium-scale and large

investments from either domestic or foreign sources are indispensable and must be

considered as the top priority. However, supporting environment for small-scale farmers to

intensify their agro-business and further involvement into the market must be enhanced. In

this case, the introduction of low interest rate loans or provision of agricultural training

workshops would surely motivate farmer’s participation and should be implemented.

Generally speaking, one of the problems in agriculture (may be in African nations in general)

has been the failure to plan strategically. Instead of looking at market, farmers begin with

production in the hope of finding the market later, the result being poor performance in

exploiting limited resources. Farmers are abandoning growing cash crops in reaction to low

market prices compared to production costs: following temporal fluctuation of supply and

demand volumes in global market. Even if the farmers are looking for a substitute crops,

without the market information, their choice of crops is likely to be uncertain. Therefore, the

establishment of market-sensitive organization is particularly important and should be

pursued with government support.

The eight agricultural commodity boards established by Acts of Parliament for cashew nut,

coffee, cotton, pyrethrum, sisal, sugar, tea and tobacco should be involved in the task of

finding markets and providing farmers with information on what specifications of products

are required in the market.

In order to remove the identified logistic constraints and increase profitability of agricultural

crops other important issues are;

Development of delivery systems and new technologies.

Transportation cost and road, air and seaport carriage capacity with prioritised road

connections linked with the national and regional agro-business scheme.

Creation of backward and forward linkages with domestic industries and commerce.

Agricultural products can be used as raw materials for local industries and, on the

other hands, local industries can produce agricultural inputs like fertilizer or machinery

for local farmers.

Financial resources for Research and Development (R&D) and agricultural inputs.

Linkage between R&D agents and potential users.

In terms of agricultural engineering, soil acidification with excessive use of sulphur and

nitrogenous fertilizer has been the problem in some areas, like in cashew nuts plantations in

Mtwara region. Soil erosion from livestock overgrazing and encroachment of forest with

unplanned development of new farming land, and scarcity of soil moisture availability have

all aggravated the nation’s agricultural productivity. As a possible remedy, the practise of

irrigation and use of improved seeds have featured in the national plans.

In order to focus on increasing productivity of cultivated land, the promotion for using more

agricultural inputs has received considerable attention and the supportive environment has

actually been put into place in Tanzania. For example, concessional credit is now available

for the purchase of inputs from the newly created Agricultural Input Trust Fund and

agricultural implements and inputs such as tractors, pesticides and fertilizers can be

purchased without customs duties. In addition, no VAT is imposed on agricultural inputs and

equipment. As a result, amounts of agricultural inputs to be used are expected to increase

with those incentives. However, since information on how to effectively utilise these inputs is

equally important, training workshops and community mobilisation must be promoted at the

same time.

In order for local companies to produce and provide the above-mentioned agricultural

inputs, the Tanzania government initiated investment-promoting taxes. For instance, 100%

capital deduction is allowed on industries producing agricultural inputs (including irrigation

system and machinery) in the year the capital is put into operation. Likewise, agricultural

and livestock raw products are exempted from VAT, and raw material processing at

domestic industry is encouraged by imposing tax on raw material exports.

Irrigation is the strong remedy to hedge off the risk of inadequate, seasonal and unreliable

rainfall as well as periodic droughts and the government is promoting private sector

irrigation systems. While ground water and drip irrigation in Dodoma, Arusha and Iringa are

kind of advanced, they are costly and demand appropriate large amount of capital

investments. The traditional irrigation could be an alternative approach calling for

involvement of local people through self-help infrastructure development programme.

Since, women do most of the agricultural activities in rural areas, it is also important to

motivate this economically vulnerable group through one-village-one-product approach and

provision of low interest rate credit. Their active participation is the definite sign of a healthy

national economy and could bring innovative ideas for diversifying agricultural and

processed products.

2.4.2 Livestock

In year 2003 the livestock sector contributed 9.5% of the total agro-sector GDP and counted

as the second largest contributor4. The main sources of livestock industries are sales of

meat, hides/skins and dairy products. Generally speaking, the sales value of livestock is on

increasing trend. Production of meat has steadily improved with increased livestock

population and expansion of the domestic market. Milk production rose substantially

between 2001 and 2002, from 814 million to 900.5 million litres/year, and reached 980.5

million litres in 2003. The following figure illustrates cattle population by region in 1999. The

highest cattle population is in Shinyanga region, with 3.7 million, and followed by Mwanza

with 2.1 million. For other livestock, sheep keeping is still small number in comparison with

goats, yet getting popular in recent year. Pig keeping is not commonly practiced. On the

other hand, breeding of chicken and dairy cattle has been increasing substantially within

4 Source: The Economic Survey 2003

recent years.

Figure 2-1 Cattle population by Region in 1999

Source: District Integrated Agricultural Survey 1998-99 – National Report

Leather industry has been contracting in that the total hides and skins production decreased

by 3.9% from 2001 to 2002 yet showed renewed vitality of 8.6% increase in 2003, thanks to

the increase of sheep products. There is a tendency of local hides/skin dealers buying the

raw products at relatively cheap prices and sending them to neighbouring countries where

they fetch high prices with value added processing like tanning. Therefore the domestic

leather producers and processing industries are being bypassed by not sharing the value

added process and have lost the position of a leading manufacture of leather goods in the

region. To tackle this issue, the government has attempted to impose additional rate of

export tax on raw hides. However, the intention of promoting domestic leather processing

industries with this measure is yet to be realised as leather production has been actually

decreasing. Livestock keepers need attractive and reliable outlets for their products to

domestic manufacturers and market.

Moreover, there is another concern of poor management of livestock grazing with negative

impacts on natural environment. Increased overgrazing due to livestock population puts

pressure on land, especially in dry season, which invites serious soil erosion and eventually

desertification.

Practices of the livestock disease control, vaccination and installation of facilities and

infrastructure such as dips and health centreare also poor. The continuation of current poor

practices may pose drastic problems in livestock production on an occasion of major

outbreak of epidemic diseases, and would result in catastrophic disruption of the sector

economy. Extension services for managing tsetse fly contamination are also of major

concern. Otherwise livestock production would not be restricted to particular tsetse fly free

areas and make extensive use of animal plough in agriculture impossible.

2.4.3 Forestry

According to the National Reconnaissance Level Land Use and Natural Resource Project

(1997), the forest coverage (consisted of Forest: 2.9% and Woodland: 39.6% of the total

land) is estimated at 40.1 million hectares. In Tanzania, exclusively, the forest is considered

and actually used as the source of fire wood collection, charcoal making and brick burning

activities. Charcoal and firewood use cover 90% of the national energy consumption and

the annual domestic use of these fuelwood is estimated to account for nearly 81% of the

total energy consumption. Certainly, every villager relies on the energy source from

woodland and this trend has been imposing a serious problem of deforestation. Moreover,

forest clearing5 for expansion of agricultural land and cattle farming, and the associated

cleaning campaign for tsetse fly eradication have cast threatening pressure on natural forest

as well. Combined with accelerated pressure from fuel wood consumption and forest

clearing for agricultural expansion, conclusively, the speed of deforestation has been

accelerated with the country’s increasing population pressure.

Concurrently, however, Tanzania national policy emphasises the importance of practising

the forest reservation and afforestation programmes. The aim of setting certain forests as

reservation area is a preventive measure for soil erosion, land degradation, and natural

disasters like floods and landslides. Securing the water resources and catchments areas

with setting forest reservation and protection of wildlife and biodiversity are also

emphasised.　

5 Reportedly, the natural woodland is logged with the pace of 300~400 thousands hectares per year.

Table 2-5 Tree Planting – Seedlings Planted

Source: Economic Survey 2003, President’s Office, Planning and Privatisation.

In the afforestation practise, various environment-concerned agencies establish tree seedlings

distribution programmes. Given the present capacities, it is obvious that there is a gap between the

planned number of seedlings and the actual number of seedlings (Table 3.6). Accordingly,

Morogoro and Iringa regions recorded higher amounts of total actual seedlings between 1999 and

2002. However, the gap between the targets and the actual planted increased less than half of the

regions achieved the target of seedling planting in 2001/2002. Only three regions of Iringa, Lindi and

Rukwa performed relatively well and had surpassed the planned target of seedlings planting.

Singida, Dodoma and Dar es Salaam regions contributed least (Figure 3-2).

Region

1999/2000 2000/2001 2001/2002

No. of Seedlings (Target)

No. of Seedlings (Planted)

(Planted/Target)

%



(Planted/Target)

%



(Planted/Target)

%Arusha 10,000,000 5,116,214 51% 6,985,440 4,241,354 61% 5,330,000 4,832,982 91%

Dar es Salaam 2,581,587 634,006 25% 1,550,000 1,255,806 81% 1,100,000 511,027 46%Dodoma 5,000,000 2,508,685 50% 5,000,000 1,317,483 26% 4,200,000 1,508,578 36%

Iringa 9,724,675 10,325,535 106% 9,921,340 11,553,107 116% 10,020,000 12,767,606 127%Kagera 6,654,436 4,949,436 74% 6,050,000 4,934,373 82% 4,414,000 3,377,322 77%

Kilimanjaro 4,538,184 4,607,879 102% 3,482,350 2,931,149 84% 5,400,000 3,357,986 62%Kigoma 4,500,000 3,543,367 79% 3,959,000 3,165,000 80% 2,650,000 2,496,720 94%

Lindi 5,864,086 3,913,864 67% - - - 2,500,000 3,509,791 140%Mara 4,000,000 4,454,595 111% 4,248,400 5,030,886 118% 6,048,400 5,030,886 83%

Mbeya 8,734,151 10,452,024 120% 4,380,900 8,271,100 189% 5,108,580 4,197,379 82%Mtwara 5,200,000 9,112,771 175% 4,615,000 3,952,365 86% 2,525,600 2,343,130 93%Mwanza 5,500,000 12,236,990 222% 2,850,000 3,688,178 129% 14,506,080 13,405,640 92%Morogoro 30,738,280 44,546,442 145% 18,521,000 15,002,733 81% 6,357,500 5,165,570 81%

Coast 4,873,525 1,996,392 41% 4,178,650 2,125,184 51% 2,775,000 2,331,700 84%Rukwa 8,937,205 8,589,962 96% 4,300,000 4,790,921 111% 4,300,000 4,900,000 114%

Ruvuma 4,745,952 1,819,952 38% 3,875,000 3,543,845 91% 3,875,000 2,814,276 73%Singida 11,434,309 5,020,585 44% 3,785,000 1,391,452 37% 2,357,560 1,151,927 49%

Shinyanga 4,805,340 4,466,557 93% 2,889,750 1,822,307 63% 3,653,941 1,951,848 53%Tabora 6,000,000 4,546,400 76% 6,000,000 1,403,333 23% 5,100,000 1,720,000 34%Tanga 14,400,000 10,383,639 72% - 1,660,241 - 7,500,000 5,296,482 71%Total 158,231,730 153,225,295 97% 96,591,830 82,080,817 85% 99,721,661 82,670,850 83%

Figure 2-2 Tree Planting – Seedlings Planted by Regions in 2001/02 (Units: %)

Source: Department of Forestry and Beekeeping statistics

Based on the statistics of the Forestry and Beekeeping Department, the total exports of

forestry products (including Timber, Wood sculptures and Beeswax) amounted to US$ 6.5m

in 2000, but dropped into US$ 2.1m and US$1.4m in 2001 and 2002 respectively and again

jumped up to US$ 4.1m in 20036. The timber/timber products exported from Tanzania are

mainly the logs of Paurosa (msekeseke) Teak and Ebony, which are currently regulated for

export. Woodcarvings and sculpture are also contributing to exports to a large extent.

Furthermore, it is particularly worth noting that the beekeeping industry like beeswax export

seems to have much promising potentials. With the exploitation of the nation’s broad land

and its various vegetation, and even with utilising National parks field, the sector’s total

earning can be enhanced with higher productivity and profitability of the agricultural

products.

Paper manufacturing is practised with major plantations located in Iringa region and

followed by Arusha and Kilimanjaro regions. At the plantations, mainly Pines, Eucalyptus,

Cypress and Teak are grown as raw materials for paper products.

As an alternative sector potential, on the occasion of CO2 emission having got a lot of

concerns in global scale, it is important for Tanzania to avail herself of the opportunity to

promote the carbon fixation-based business, accommodating afforestation projects as

6 Source: Forestry and Beekeeping Dept. in The Economic Survey 2003

advanced by internationally operating energy corporations or other plantation promoting

corporations. Moreover, the potential use of organic residue sources for improving soil

fertility and fuelling biomass power plant can be a sustainable alternative means of

exploiting forest resources. However, to implement such measures, understanding of the

actual figure and state of national forestry, including the location, kinds of forest planting and

amount of annually available for cutting will be of importance. These data will be utilised to

determine the criteria for prioritizing areas where planting and cutting operations are

initiated. In this sense, the technologies like remote sensing and geographical information

system (GIS) could play a key role for monitoring forestry activities.

2.4.4 Fishery

The fishery sector is another important category. The total exports of fish and processed fish

products amounted to US$ 60.6 million and US$ 91.2 million in 2000 and 2002 respectively,

and then dramatically increased to US$ 130.3 million in 2003. The sector’s economic trend

is increasingly significant and it is an important source of the government revenue, from

issuing fishing license and fish landing tax. The number of people engaged in fisheries

activities has dramatically increased. In Lake Victoria region, large number of communities

are dependent on commercial fishing. In the region, it is Nile perch that enjoys large sales in

the global market, and its export earning accounts for over 80% of the sector’s income

(Table 3-7).

Table 2-6 Export of Fish products 2000-2002 (Units: US$)

Source: Economic Survey 2003, President’s Office, Planning and Privatisation.

The second most promising and time-tested product is prawn which earned US$ 6.62m in

2002 and US$ 5.98m in 2003 mainly from Rufiji basin (where the rich mangroves vegetation

and extensive inter-tidal fishery provide nursery grounds for nationally important prawn

industry). Octopus export value have also shown outstanding quintuplet increase between

2002 and 2003.

The total freshwater catch was 301,855 tones in 2003 while the maritime catch accounted

only for 49,270 tones7.Since, there are plenty of potentials in maritime fishery in Tanzania,

and the annual maritime catch can be increased while maintaining the sustainable level of

fisheries potential as compared to the existing stock by employing modern fishing

equipment. However, the problem lies in securing of a long-term stability in quantity and

quality of supply chain of the products. To achieve this major challenge, there is need to

address the weak state of basic infrastructure like logistic system and storage capacity.

However, the physical condition of fishery field in the rim of Indian Ocean that holds

relatively warm sea water temperature and poor nutrition, is deemed to hamper nursing the

dramatic expansion of commercially valuable fish products. Nonetheless the role of this

7 Fisheries Dept. in The Economic Survey 2003

Products 2000 2001 2002 2003Prawns

Mar

ine

Pro

duct

s

5,644,876 5,850,876 6,618,047 5,979,555Lobsters 365,455 804,425 1,189,357 1,443,442

Live Lobsters 186,581 - 852,366 2,050,997Crabs 144,373 294,864 182,227 1118,736

Live crabs 134,623 - 806,503 925,585Octopus 1,177,630 667,788 1,023,762 5,044,536Squids 66,194 282,993 182,524 1,239,705

Sea shells 105,501 120 113,736 380,010Beche de mer 463,883 185 5,409 40,330

Fish maws - - 2,919,410 5,774,464Fish offals 717,666 286,497 - 172,666

Dried Nile PerchA

quar

ium

Fis

h P

rodu

cts

43,570 38,390 3,274 -Dried Sardines 430.747.50 456,640 172.959 78,951Nile Perch fillet 45,903,213 77,212,251 76,314,520 102,374,745

Nile Perch carcass 85,120 2,324,091 45,502 -Nile Perch chips - 13,315 169,522 -Nile Perch offials 37,935 4,688,581 232,690 -Nile Perch skins 17 28,600 - 359,925

Nile Perch belly flaps 491,520 915,626 - 919,710Shark belly flaps 65,130 44,957 - -

Nile Perch fish meal 232,490 67,964 - -Fish Powder 4,089,549 603,272 261,248 -

maritime fishery can be increasingly significant, targeting the local and regional markets and

subsequently alleviating poverty of the fisherman through additional income and contributing

to food security within the country.

Concerning the future of the fishery industry, it is reported that the size of the captured Nile

perch is getting smaller and the proportion of adult fish is also shrinking. Consequently if

high productivity of Nile perch cannot be sustained, the exploration of an appropriate

amount of fish resources will be a challenge. Therefore a guideline is required to shift fish

industries from just exporting fish fillet to more process-focused industry like producing fried

or seasoned fish products. Prepared for the occasion, the quality and quantity control will

play a key role, so the improvement of sanitary condition in fish markets and processing

factory is a pressing need. Moreover, at the same time, Research and Development (R&D)

activities focusing on fish farming is of particular importance. How to deal with the

environment-dependent and resource limited fishery business is also a key for the

sustainability of the sector. A strategy aiming at hedging the risks of losing the expected

catch due to unexpected factors and securing prosperous fishery resources should be

undertaken including installation of advanced technologies and know-how for aquaculture

practice. Furthermore the promotion of mutually cooperative law and regulation in East

African Community (EAC), which borders the fishery field of Lake Victoria is required so as

to achieve sustainable fisheries practices in the lake regions.

2.4.5 Mining

This sector belongs to the fast-growing industrial category8, and now the sector supports the

nation’s development through foreign investments, subsequent job creation and acquisition

of foreign currency. Reforms of the mining law adopted by the government in 1997,

stimulated investment from foreign sources in this sector and Tanzania is now ahead of Mali

in terms of gold production in Africa. If this trend continues, Tanzania is likely to be the third

largest gold producer in Africa, behind South Africa and Ghana in two years ahead. The

mineral exports led by gold, have risen significantly from US$ 27.6m in 1997 to US$ 471m

in 2002 and US$ 553m in 2003. Contribution of the sector to GDP rose to 3% in 2003,

compared to only 1.7% in 1997.

Furthermore, remaining potentials in this sector are also found in other numerous mineral

deposits in the country. Variety of minerals including gemstones like unique tanzanite,

nickel, iron and coal are largely unexploited in Tanzania. Currently some coal is mined in the

southeast of the country, and large soda ash deposits in Lake Natron are used for the

8　Annual sector growth rate is 13.5% and 15% in 2001 and 2002 respectively.

production of caustic soda. However, the trend shows that the mainstream of investment

inflow is much promoted into the gold and diamond mining. Although the export of gold and

diamonds (rough) together accounted for 63.9% of mineral exports, with gemstones

contributing 36% in 1998, the composition has significantly changed in that gold and

diamonds accounted for over 90%, with gemstones’ export of only about 4.45% in 20029.

The exploration of these mineral deposits needs substantial amount of investment to make

the state of operations more systematic, legally transparent and legitimate. In this case the

unavailability of modern excavation technologies, inadequacy of mine development funds

and poor basic utilities like electricity must be taken as serious constraints and

counteracting measures must be addressed. The legal framework is also important and

illegal mining and smuggling must be tackled with strict law enforcement, otherwise the

sector will fall into a hotbed of crime and social insecurity. In a meantime, the measures to

nurse domestic gemstone industries are also of particular importance. The government

should cooperate with the forerunner countries of gemstone industries such as Thailand and

India.

The survey on Tanzania’s oil and gas reserve expected to be found in offshore field is likely

to unveil whether the reserve is commercially viable. There have been a number of

international oil companies showing interests in exploring the field. The exploration of oil

and gas is going on in off shore fields and gas reserves have been found to be

commercially viable. Its reserves are proven to have 33bn cu meters and its development

has commenced with the construction of pipelines and a processing plant for a gas-to-

electricity scheme linking the field with a power generation plant in Dar es Salaam. The

processing plant, situated on the island of Kilwa, has a capacity of 70m cubic ft/day.

Meanwhile, oil related products in Tanzania are less developed and the earnings from

petroleum refining activity amounted to 57 billion Tshs in 2002, which was a decline from 90

billion Tshs in 2001.

2.4.6 Manufacturing

The sector’s contribution to GDP hovered around 8.3% in the past decade. Although the

main constraints of this sector’s growth have been the repeated cut of water-supply,

irregular power-supply and high price of electricity and communications, the situation is now

improving to some extent accompanied with increased private investment from foreign

sources. Recent trend of the sector shows the production in such products as wheat flour,

alcoholic products, textile, cement, paints and iron sheets are growing while pyrethrum

9 Source: Ministry of Minerals and Energy, Tanzania (2003)

products, wood products and fishnet have been declining10.

The breakdown of workforce in the manufacturing sector indicates that over 55% of workers

are estimated to be engaged in the food processing and textile manufacturing sub-sectors 11.

In terms of the regional comparison, the industrial sector is excessively concentrated in Dar

es Salaam and nearly 30% of the industrial-sector workers are offered their workplace in the

capital city.

Table 2-7 Estimated number of workers in Industrial sector by Regions (2001-2003)

Source: The Economic Survey 2003 President’s Office, Planning and Privatisation

The most promising industrial sub-sectors for attracting Foreign Direct Investment (FDI) with

a view to promoting export earnings and local employment are envisaged in the garment

and textile manufacturing, timber processing, agricultural food products processing, and

second-hand agro-machinery and car repairing industries. The production of textile industry

increased by 26% and its earnings grew by 23% from 2001 to 2002; following among others

a positive response from foreign investors.

Table 2-8 Earnings in Manufacturing Activities

10 Source: National Bureau of statistics11 ditto.

YearRegion 2001 2002 2003

Dar es Salaam 23,445 24,258 23,445Mwanza 11,396 18,693 11,396Tanga 9,459 9,895 9,459Morogoro 8,805 7,525 8,805Mara 8,240 29,520 8,240Iringa 7,369 5,551 7,369Kilimanjaro 6,339 6,106 6,339Arusha 5,520 5,270 5,520Mbeya 3,282 3,406 3,282Shinyanga 2,790 2,972 2,790

Source: National Bureau of Statistics

Paper products associated with the growth of timber production have been increasing its

earnings. With the expansion of economic activities, the demand of wood products and

especially paper will be increasung, and the trend is already being manifested in the

international market. Rubber production shows remarkable increase in its earnings between

2001 and 2002, and its market will most likely follow the trend of paper market.

However, in contrast to the above-referenced products, repair of machinery and transport

equipment dropped substantially. As a possible underlying factor, unavailability of spare

parts required for fixing cars can be named. The domestic car market is dominated by

second-hand cars and the spare parts required might be available only from the

manufacturing country of the car. Moreover more maintenance and repairing service should

be provided in such second-hand car market to ensure safety. If the domestic manufacturing

of spare parts is not possible, the parts have to be imported. However the repairing service

and maintenance can be offered by domestic mechanic workers with training and technical

knowledge. Therefore the connection between spare parts provision and repairing service

staff training is ideal and important to enhance this sub-sector’s development. In this sense,

the setting of second-hand machinery bazaar which is combined with sales and repairing of

second-hand machinery and training provision should be put in practise. The sector’s

potential is significantly large and market scale can be extended to neighbouring countries.

Consequently, the manufacturing sector should play a key role to boost development of the

country, especially as people’s movement from rural areas to urban areas has accelerated.

The sector can become a buffer by offering employment opportunities for the youth and as a

means of acquiring foreign currency. In this sense, the successful development of

manufacturing sector is the formula that all economically thriving Asian countries followed

and it is not an exaggeration to say that the sector’s success holds the key of the nation’s

further development. This challenge cannot be resolved effectively by isolated actions but

by whole nation collective programmes. The government must act aggressively not only for

courting the large-scale foreign investment, but also supporting the domestic small and

medium size industries, which is also important for the national economy. The sense of the

private sector’s entrepreneurship and that of ownership brought Asian countries

competitiveness against other industrialized countries markets. Since, eventually foreign

investors might leave the country for their own convenience, Tanzanian people must be able

to run the manufacturing sector of their own. Given the current financial state, the majority of

people lack initial capitals to run their enterprises; hence funding mechanisms for promoting

local industries need to be started as an initial step for further development of the sector.

2.4.7 Financial Services

There are about 20 banks operating in Tanzania. The trend of privatization has increased

competitive atmosphere among financial institutions. However, the spread between saving

deposits and lending interest rates are still unacceptably large for normal private business

to borrow. The banking sector needs to modernized and improve competitiveness. As for

the stock exchange operations, since October 1st 2002 foreigners are allowed to invest in

the Dar es Salaam Stock Exchange (DSE). However, the low number of stocks and low

liquidity are limiting the performance of the market.

2.5 Tourism Sector:- Existing Condition and Strategy in Tanzania

2.5.1 Tourism Demands and Supply

2.5.1.1 Tourism Demands

As a result of the terrorist attacks of September 11, 2001, Tanzania tourism was affected

adversely. However, the number of tourist arrivals has began to pick up gradually from

0.575 million in 2002 to 0.576 million in 2003, though they are yet to reach the peak of

0.627 million of 1999.

Table 2-9 Tourist Arrival

1999 2000 2001 2002 2003

Tourist Arrival 627,325 501,669 525,000 575,000 576,000

Increase Rate - - 20.0% 5.0% 9.5% 0.2%

Arrived by Air 364,575 311,612 315,073 316,000 320,000

Road 220,300 155,116 173,290 214,000 215,000

Rail 36,008 19,860 15,754 25,000 16,000

Sea 6,442 15,081 21,005 20,000 25,000

Source : Ministry of Natural Resources and Tourism

Table 2-10 Major Nationalities of Arrivals

1999 2000 2001 2002 2003

Africa 262,559 201,934 231,013 249,601 267,940

Kenya 106,297 84,993 102,235 112,036 119,406

Uganda 26,307 21,035 25,330 28618 34,664

South Africa 18,732 14,997 17,568 22,916 35,071

Americas 61,908 49,001 45,544 59,077 49,781

Canada 11,702 9,357 6,782 12,042 10,354

USA 41,348 33,060 30,806 38,159 36,419

Asia/Pacific 47,898 38,299 46,605 30,087 27,208

China 7,084 5,664 5,002 3,163 4,007

Japan 7,529 6,020 7,822 5,574 5,936

Australia/NZ 20,594 16,467 19,672 13,748 11,989

Europe 186,311 154,470 162,183 191,946 190,965

UK 43,161 34,511 34,125 43,269 43,656

Italy 7,213 5,768 8,035 23,459 24,675

Spain 10,055 8,040 8,296 16,054 9,565

France 21,493 17,186 16,990 22,059 22,103

Germany 28,272 22,606 21,190 17,855 19,222

Netherlands 564 8,451 10,514 15,891 15,272

Switzerland 10,647 8,513 6,092 5,969 6,983

South Asia 30,797 24,626 28,060 27,867 26,502

India 23,5676 18,844 24,068 21,973 22,215

　　　　　　　Source: Ministry of Natural Resources and Tourism

Table 2-11 Purposes of visit of the Arrivals

1999 2000 2001 2002 2003

Tourist Arrival 627,325 501,669 525,000 575,000 576,000

Leisure and Holiday 383,155 338,596 341,329 358,000 337,000

Business 132,802 132,201 155,285 115,000 133,000

(Holiday + Business) (515,957) (470,797) (496,614) (473,000) (470,000)

Others 111,368 31,872 31,507 102,000 106,000

Source: Ministry of Natural Resources and Tourism

Average Length of stay was 8 days in 2000 and 2001, and 11 days in 2002 and 2003.

2.5.1.2 Tourism Supply

Tourism Products

1) Safari Tours in the National Parks and Game Reserves

Nature tourism is the most popular tourism product of Tanzania, whereby safari tours,

trekking, bird watching and mountaineering at the Mount Kilimanjaro are the most popular

and marketable tourism products. There is one nature conservation area, 12 National Parks

and 17 Game reserves.

2) Beach Resorts

Development of the Beach Resorts has recently been emphasized by the Government of

Tanzanian, especially in Zanzibar. However, the beach resorts are not a major attraction for

European, American and Asian tourists who visit Tanzania mainland and Zanzibar. They

have rather abundant opportunities in other beach resort destinations, such as

Mediterranean Sea, Hawaii, Caribbean Islands, Pacific Islands and South East Asia where

the tourists can enjoy more pleasant, comfortable and safe beach resorts with reasonable

price. Beach resorts are just used as accommodation during Safari and historic tourism.

3) Visiting Cultural and Historical Monuments

Cultural tourism is among the important tourist products of Tanzania. The history of

Livingstone and Stanley, slave trade, colonialism, cultural remains of Arabs and Indians, art

and crafts, ancient Silk Road on the sea and archaeological interests are important tourism

resources for cultural tourism. However, cultural characteristics and resources are not yet

well emphasized in Tanzania. Cultural remains and historical sites are poorly preserved in

Zanzibar. Most of the tourists expect to visit historic remains of slave trade, ancient spice

trade and history of the ancient trade base of Silk Road on the sea.

4) Accommodation

Accommodation market in Tanzania is relatively limited and is still a sellers market.

Although the number of hotels and rooms has been increasing in the past four years from

about 10,000 rooms in 1999 to 30,000 rooms in 2003 (about 3 times), the number of hotel

rooms is still small compared to other major tourist favoured countries. In addition

investment on access roads, self-electricity generation in hotels and lodges push the price

relatively high even far from money-worth quality. It is an essential task to balance supply

and demands of accommodation and decrease the price levels to match with the

international standards.

Table2-12 Accommodation in Tanzania

1999 2000 2001 2002 2003

Number of Hotels 321 326 329 465 469

Number of Rooms 9,575 10,025 10,325 25,300 30,600

Number of Beds 17,235 17,303 18,248 45,500 55,500

Bed/nights 1,695,000 1,888,000 1,955,000 na na

Average

Occupancy (%)63.7 54.02 58.6 51.0 47.0

Source : National Bureau of Statistics, and Tourism Department

2.5.2 Dar es Salaam / Urban Tourism

2.5.2.1 Present Conditions

There is no tourist arrival data to Dar es Salaam. However as the international tourist

gateway city of Tanzania, it is supposed that most tourists arriving in Tanzania visit Dar es

Salaam. Although Dar es Salaam is not regarded as the main tourist destination at present,

it is a transit base for safari tours, cultural tourism and beach resort destinations. The

reason why the city cannot be the main tourist destination is because of insufficient

attractions of urban tourism in the city.

The main tourist attractions in Dar es Salaam are historic colonial buildings in the old town

and handicraft village of Mwenge in the suburbs of the city. However, all of the historic

colonial buildings are used as offices of the government and not opened for tourists. In

addition, absence of useful public tourist transport prevents tourists, especially those on

short stay business trips, to visit tourist sites in the suburbs such as handicraft village in

Mwenge and Nyerere Cultural Centre. Present tourism resources are still inadequate to

promote urban tourism in Dar es Salaam.

At present a mini game reserve park is being constructed in the suburbs to develop a mini

safari park and reinforce tourism attractions in Dar es Salaam urban area. The park is

targeted at weekend pleasures for the domestic and expatriate family tourists living in Dar

es Salaam and short stay business trippers. Most of the earth works are nearing

completion, and financing mechanism to fence off the dangerous wild animals, are being

sought.

2.5.2.2 Development Constraints

Although Dar es Salaam is the capital city of the country and business and urban

accumulation are concentrated in the city, it is not yet prepared as a tourist gateway to

attract tourists despite several potential tourism attractions. However those urban tourism

resources are still not properly exhibited to invite tourists.

The most serious constraints of development of urban tourism in Dar es Salaam are:

1) Insufficient exhibition of the historic sites, colonial buildings and monuments,

2) Insufficient capacity of accommodation resulting to relatively expensive room rates.

3) Absence of safe and comfortable tourist transport.

4) Heavy traffic in the historical zone of the urban areas,

5) Poor security for the tourists, due to pickpockets, snatching and robbery.

2.5.2.3 Development Tasks

1) To create urban tourism resources such as to open historic colonial buildings for

tourists and promote cultural attraction around the city area.

2) To develop urban tourism products, such as various city tours, short distance

excursion and one-day beach resort tourism for short stay business trippers, local

families and expatriate residing in Dar es Salaam.

3) To invite foreign and domestic investments for hotels and management companies.

4) To develop tourist shuttle bus to major tourist destinations for the FIT (Free

Independent Tourism) tourists. And reinforce the transport to surrounding historical

sites and resort areas such as Bagamoyo, Tanga, Mafia Island, Zanzibar and Kilwa.

5) To reduce traffic congestion in the city centre for saving of time, and

6) To improve public safety for tourists by addressing the problems of pickpockets

snatching and robbery in the city.

2.5.3 Southern Circuit


Southern Circuit tourism is composed of Mikumi National Park (NP), Selous Game Reserve

(GR), Udzungwa Mountain NP, Kilwa village and Mafia Island. Kisigo Game Reserve,

Rungwa Game Reserve and Ruaha National Park are at present still untouched areas.

Among them Mikumi NP and Selous GR are located approximately 350 Km from Dar es

Salaam and have development potential for the suburban tourism destinations of the

capital.

Mikumi NP, Selous GR and Mafia Island are the highlights of the Southern regions. Mikumi

NP and Selous GR are considered as one area of safari tourism because they are close to

each other and the wild animals move from one area to another. Mikumi NP has an area of

3,000km² and has more than 300 species of animals and plants. It is easily accessed by car

using the National Route No.11 from the Capital City of Dar es Salaam via Morogoro which

is the tourist base of the region.

Selous Game Reserve is the biggest Game Reserve in Tanzania, with 55,000km² and

connected to Mikumi NP. There are also more than 300 species of wildlife. Population of

animals is not exactly known, but it is estimated to be more than 300,000. In 2003 there

were 5,000 visitors, most of them arrived by 4-5 hours train ride on Great Uhuru Railway

from Dar es Salaam, which passes through this Game Reserve area and operates 3 times a

day or by charter local based small aircrafts. There is also a secondary road extending from

Morogoro to Kisaki station which is located at the edge of the Selous GR. The mentioned

infrastructural developments are potential for providing accessibility for tourism

development.

Mafia Island is a recently developed marine resort destination where under water marine

environment and marine life with more than 400 species are a new tourism attraction.


Development constraints are:-

1) Difficult accessibility

Mikumi NP is along the National Route No.11 and has a good accessibility. However,

the first phase of construction of Selous GR is still not yet completed and absence of

frequent and convenient access transportation mode is at present the most serious

constraints for Selous GR, although it is relatively near to the capital. There are three

possible access transportation modes to Selous, which are secondary road from

Morogoro, train and charter flights.

2) Insufficient accommodation of reasonable size and price.

There is no international style hotel in the southern region. Most of the accommodation

is African styled safari lodges. They are very good in design and appreciated by the

foreign tourists. However, the number of lodges is insufficient to accommodate all the

visitors and most of them are extremely expensive because of self-contained

infrastructure and difficult logistics of food, drinks and materials.

3) Absence of amenity services facilities such as restaurants and safari travel lodges.

There is no service facility, such as restaurants and travel lodge in the walking safari

area and the activities of the tourists are limited within the half-day walking distance.

4) Absence of the comfortable resort facilities to accommodate the tourists on the beach

area as a tourist base to Selous GR and Mafia Island.


1) To improve the coaches and speed up the operation of the train.

It is required to refurbish the coaches and operate the tourist train between Dar es

Salaam and Kisaki. It will offer the pleasure of train safari tour to tourists through the

windows of the train. At the same time, adjustment of alignment of track, installation of

safety devices, construction of the waiting tracks and station building are the minimum

requirements to ensure safety and comfortable operation.

2) To ensure reliable operation timetable of the train, especially the train to and from Dar

es Salaam.

It is a basic requirement to operate punctual and safe operation to ensure reliable

operation of the train.

3) To develop simple accommodation with reasonable size and price in Selous GR.

In order to increase tourists visit to Selous GR, it is necessary to provide more

accommodation with reasonable prices. Provision of public infrastructure and

convenient logistics for operation will also be required.

4) To develop comfortable and attractive beach resorts on the beach areas of Kilwa

Kivinje. This is a historical town located at approximately 300 km south of Dar es

Salaam and it is 80 km from Selous GR, thus it is a good tourism base for the safari

tourists.

5) To develop amenity services and facilities for tourists, such as information centre,

restaurants and safari tourist hotels in the tourist complex in the station area of Kisaki.

6) To strengthen air traffic between major tourism zones.

7) To develop reasonable size of runways for aircrafts of 100 passengers in Selous, Mafia

Island and operate flights between Selous, Dar es Salaam, Arusha, Mafia Island and

Zanzibar.

2.5.4 Northern Circuit


The Northern Circuit is at present the most advanced tourism area in Tanzania. It is

composed of Ngorongoro Conservation Area, Serengeti National Park (NP), Maswa Game

Reserve, Manyara NP, Tarangire NP, Arusha NP and Mt Kilimanjaro NP. The tourist base of

the Northern Circuit is Arusha which is approximately 500 km north of the Capital, Dar es

Salaam. Most of the tour operators currently are concentrated in Arusha and specialized in

Safari Tours.

The tourism attractions of the Northern Circuit are nature tourism, such as safari tours

trekking, mountaineering, bird and botany watching, and eco-tourism. The safari tours and

bird watching in Ngorongoro Conservation Area and Manyara NP, extension of the tours in

Serengeti are the main tourist attractions for foreign tourists. Mountaineering and trekking at

Kilimanjaro Mt. are the traditional popular tour products and the guiding signs for trekking

are well organized. The guides and rescue operation are well-organized for the security of

tourists

At present, the access road from Arusha to Ngorongoro, National Route 117, is being

constructed by a grant cooperation project of JICA and it is expected to be completed by the

end of 2004.

The spread of Green Tourism in Europe, which is getting popular also in Tanzania, provides

tourists with opportunities to stay at homes of the local people and experience the life of the

local residents.


1) Half of the safari tourists who visit Ngorongoro Conservation Area (CA) are arriving

from Nairobi, Kenya and Ngorongoro is being regarded as one of the destination of

Kenyan tourism network. This is due to shortage of accommodation in Arusha and

many international direct flights from Asia and Europe arrive via Nairobi than

Kilimanjaro and Dar es Salaam.

2) Accommodation near the Conservation Area is very expensive. This is because of

shortage of hotels, self contained infrastructure and difficult logistic system.

3) Over-crowding by the safari vehicles is harmful for the natural environment in the

craters. There are nearly 100 safari cars in the Ngorongoro crater during the peak of

the tourism season, which generates pollution and dust in the crater.

4) Three access roads to the crater are not paved and dangerous at this moment.

5) Insufficient tourist facilities in the Conservation Areas, National Parks and Game

Reserves, such as toilets and safe guardhouses.


1) To increase International direct flights to Dar es Salaam and Kilimanjaro international

airports and increase tourism revenue for Tanzania.

2) To develop more hotels and lodges and satisfy the demands for accommodation.

3) To decrease the number of cars entering the crater and improve natural environment.

4) To improve access roads to the crater.

5) To provide necessary tourist facilities, such as toilets and rest houses.

6) To promote the local economy with the promotion of tourism.

2.5.5 Zanzibar


Zanzibar is well known as the intermediate trade port of ancient spice trade on the “ Silk

Road on the Sea” and slave trade in 19 th century.　However, historical and cultural tourism

have not been developed. Until now the promotion of historical and cultural tourism are not

playing important roles on the tourism development policy. The historical and cultural

monuments are not emphasized in the tour guide information and the tropical forests are

without sufficient care.

Since political and social unrest emerged in Mombasa, Kenya, some European investors

have shifted their investments to Zanzibar; nowadays the beach resorts have become one

of the major tourism attractions. An Italian tour company which has relocated from

Mombasa, is very active in operation of a resort hotel and holiday tourism to bring tourists

from Italy to Zanzibar. There are at present 40 resort hotels along the beaches, 75 km, of

the Eastern Coast.

The current tourism areas in Zanzibar are Stone Town, Jozani Forest Park, Kichwele

National Forest and Mangrove forest in Uzu Island. There are abundant historical remains

around the West Coast of the Island. However, they are only visited by special tourist

guided by the local small tour operators. One of the most famous features of Zanzibar is

spice production which has brought big amount of wealth to traders in the past. Nowadays,

there is a national spice experiment farm located in the middle of the Island. However, it is

not shown in the tourist map at all. At present the historical and cultural tourism is still not a

main tourist attraction although most of the foreign tourists visit Zanzibar because of the

ancient history and unique culture.


1) Absence of Emphasis on Historic and Cultural Tourism

The most serious problem is the absence of development policy to emphasize historical

and cultural attractions which are the most desired by all visitors, though emphasis is on

beach resort development only.

2) Dangers in the Tourist sites in Stone Town

The Stone Town area is the main tourist centre of Zanzibar where Souvenir shops,

restaurants and café attract tourists to walk in the Stone Town. However, the main street

of Stone Town, Kenyatta Street is used at the same time for car traffic and the heavy car

traffic which disturbs the tourists at times. If the Zanzibar government wants to really

promote tourism as an important industry of the Island, traffic control ought to be

seriously considered from the viewpoint of tourists.

3) Reconstruction of the Public Safety

According to discussions carried out with some tourism investors and operators,

security of tourists was pointed out as a serious negative factor for the investment and

development of the sector. The government should take serious measures to eliminate

harassment of foreign women, robbery and other crimes if tourism is to thrive in

Zanzibar.

4) Other serious problem of the tourists as well as the public is traffic safety.

The drunk and drugged drivers are a cause of the severe car accidents.


1) To Revitalize Historical and Cultural Tourism.

In order to revitalize and diversify the tourism attraction of Zanzibar, it is essential to

emphasize the unique history and culture of Zanzibar, Silk Road trade, spice trade and

slave trade. Rehabilitation of the remaining monuments of the history and culture

should be undertaken to satisfy the needs of tourists visiting Zanzibar.

2) To ensure Safety of the Tourists.

Public safety measures should be formulated to ensure safety at tourist places such as

Stone Town and beach resort areas where most tourists spend their holidays.

3) To Educate Local Residents.

Education should be provided to promote cooperation of local residents with tourists

and tourism industry in order to promote tourism, protect tourists and generate

sustainable revenue from tourism for the local community.

2.5.6 Tourism Development Plan

2.5.6.1 Dar es Salaam Urban Tourism Development Plan

1) Rehabilitation of the historic buildings:

The tourist-visiting courses can be undertaken in these buildings. Moreover, guides,

signs and explanation boards in which history of the buildings are presented will be

required. Entrance fee will be appropriate incomes for maintenance and conservation of

historic and cultural buildings.

2) Rehabilitation and upgrade exhibition of the historical and cultural sites:

It is essential to upgrade exhibition of historical and cultural sites in and around Dar es

Salaam Area, such as Bagamoyo, Zanzibar and Kilwa and operate historical tour

programs by the tourist buses from Dar es Salaam to the surrounding areas.

3) Development of various tour programs:

In order to strengthen city tourism it is proposed to develop city tours by bus and

walking visits. Tourist attractions such as arts, history, markets, fish market, local

restaurants, performing arts, handicrafts and shopping are the important elements of

the urban tourism. In addition, it is necessary to develop alternative tour programs for

short stay business trippers, local family tourists and expatriate residents, such as mini-

game reserve tours, one day excursion to Bagamoyo, Zanzibar, Pemba and Mafia

islands.

4) Promotion of Foreign and Domestic Investments:

Establishment of incentive measures for promoting private investments for the hotels,

shops and restaurants in order to increase economic impact by the urban tourism.

5) Improvement of Tourist Transport:

Operation of the tourist shuttle bus by the day ticket. The bus companies should issue

one-three day ticket and route map for the tourists. The tourists will then buy the tickets

and travel freely using route map and visit tourist sites and attractions in the city and

suburbs, such as handicrafts village.

6) Strengthen Public Security:

Allocation of police officers and collection of firearms and dangerous weapons from the

citizens is necessary for tourists and public safety generally.

Figure 2-3 Urban Based Tourism Areas

Action Program

1) Development of Income generating Tourism Attractions:

▬ Churches

▬ Prisons

▬ Caravan safari

▬ Remains of the ancient slave trade,

2) Restoration of Historical Monuments:

▬ Rehabilitation and Exhibition of Colonial Buildings

▬ Restoration of the building elements, such as roofs, walls and floors,

▬ Installation of guiding signs and explanation boards.

3) Development of New Urban Tourism Products:

▬ National Cultural/Heritage Park

▬ Bus tours

▬ Walking tours

▬ Cultural attractions, such as handicrafts, fish market and shopping centres.

4) Operation of Tourist Transport:

▬ Establishment of Tourist Transport company

▬ Operation of Tourist Shuttle buses

▬ Bus stations and Information offices

5) Qualification and promotion of Tourism Related Industries:

▬ Promotion of Tourism operators and Agencies

▬ Establishment of Tourism Related Business Associations

Such as operators, agencies, hotels and restaurants

6) Establishment of Legal Incentive Measures to Investors:

▬ Tax exemption

▬ Custom duty exemption

▬ Free currency transfer

▬ Legal protection of investments and property.

7) Others:

▬ Education of the citizens to cooperate with tourism industries

▬ Retraining of public safety for police officers

▬ Upgrade maintenance and management of infrastructure

Expected Effects and Impacts

1) Promotion of the Tourism Related Industries:

Promotion of the direct and indirect commercial and industrial activities, such as tour

operators, agencies, hotels, restaurants, agriculture, fishery, mining, light industry, gem

industry, construction, service and commerce, for logistic and support for tourism and

create employment in Dar es Salaam.

2) Promotion of Employment:

The promotion of above tourism related industries will generate big employment and

absorb big number of job opportunities in the great Dar es Salaam urban area.

3) Increase of Tourism Revenue:

The incomes of the gateway city is the biggest in every country. Business activities,

such as meetings, incentives, conferences and exhibition (MICE) tourism, sales of

services, goods and souvenir industry and tax revenues will be the major tourism

incomes.

4) Accumulation of Urban Functions:

Urban functions of Dar es Salaam should be up-graded aiming the city to be one of the

major gateways in East Africa by adding more tourism attractions and hotels, improving

urban planning and up-grading infrastructures. The plan to attract new business and

service such as East Africa Machinery Bazaar (EAMB) and new beach resorts in

outskirt of Dar es Salaam and Zanzibar Island is likely to attract more long haul tourists

to Dar es Salaam directly, instead of most of the tourists arriving via Nairobi.

5) Upgrade the Tourist Transport:

Frequent operation of tourist shuttle buses will expand the activity area of tourists and

bring more incomes not only in the city centre but also in the suburban tourist sites.

6) Improvement of Urban Transport System:

Development of urban traffic plan and implementation will reduce traffic congestion and

improve safety on the road traffic.

2.5.6.2. Southern Circuit Tourism Development Plans

1) To upgrade accessibility to Selous GR and Mikumi NP, by car, train and airline.

Southern circuit has sufficient arterial access such as National Road, Route 11 and 17,

and Great Uhuru railway. Mikumi National Park has a good access way of Route No.11

which passes through middle of the NP. Access ways to Selous Game reserve from the

Route 11 is a secondary road however another access way from Kilwa Kivinje is still

unpaved. According to the development proposal for establishing a tourist base in

Kilwa, the access road from Kilwa Kivinje needs upgrading to at least secondary paved

road up to the border with the Selous GR.

2) To develop tourism bases and provide visitor centres, accommodation, restaurants and

souvenir shops.

Development of a tourist base in Kisaki is essential to promote safari tourism in Selous

Game reserve. The tourism base provides the services to the tourists, preparations for

safari, accommodation and waiting for the train to Dar es Salaam. To upgrade the Great

Uhuru railway and trains in order to emphasize its significance as the most important

traffic mode to Mikumi NP and Selous GR.

Train ride is safe and the most convenient tourist transport for access to the NP and

GR. In order to attract the use of tourist, rehabilitation of the coaches, trucks and safety

operation system are the most essential requirements.

3) To upgrade airport facilities.

Air transport is important to encourage short time visitors to GR and for flying sick and

injured tourists for treatment in the Capital.

4) To develop comfortable beach resorts in Mafia Island and Kilwa Kivinje as a tourist base

for safari tourism in Selous GR.

Both resort areas will be attracting marine resorts and safari tourists. They are also

good locations as bases for safari tourism in GR, when the access road to GR is

upgraded.

5) To promote green tourism and eco-tourism with the cooperation of landowners in

Selous GR.

The green tourism will need the safety and certain standard of hygiene. Management of

Community Based Tourism (CBT) should be incubated as a local industry using

abundant natural tourism resources and local culture.

Figure 2-4 Tourist Base Selous Game Reserve

Action Program

1) Upgrade access road to Selous GR:

▬ National secondary road from Morogoro to Kisaki station.

▬ Upgrade of the access road from Kilwa Kivinje to the GR.

2) Develop National Cultural/heritage park:

▬ Building major cultural and national heritage facilities.

▬ Showing their living culture and artefacts.

3) Construct facilities for the tourist base in Kisaki:

▬ Station building

▬ Station square

▬ Visitors centre

▬ Tourist lodges

▬ Restaurants, café,

▬ Tour operators

3) Improve railway systems,

▬ Improvement of rail alignment,

▬ Upgrade of coaches and locomotives,

▬ Upgrade safety operation systems, such as signal, radio communications and signs

▬ Construction of side truck for tourist train.

4) Upgrade of local airport

▬ Extension and upgrade of runway

▬ Construction of terminal building

▬ Safe landing equipment

5) Develop beach resorts

▬ Mafia Island

▬ Kilwa Kivinje

6) To designate green tourism development area to protect natural environment.


1) Upgrade of Selous GR and Mikumi NP as one of the major tourism area of Tanzania.

2) Upgrade the accessibility of tourism and logistics to Mikumi NP and Selous GR.

3) Promote Tanzania as one of the major Safari tour destination in Africa.

4) Emphasize the urban and suburban tourism network of Dar es Salaam, triangle with Dar

es Salaam, Selous GR and Kilwa beach resorts.

5) Enlighten the eco-tourism and Green tourism in Tanzania.

2.5.6.3 Northern Circuit Tourism Development Plan

1) To increase goods and passengers for air transport.

In order to invite direct flights from the international tourist markets, it is essential to

expand market needs of operation. Increasing international passengers and cargo

goods are the most important aspects for attracting flights from Europe, the Americas

and Asia.

2) Upgrade standard of Kilimanjaro International Airport (KIA).

Equipment for navigation, landing and land operation systems is the minimum

requirements to invite international flights at KIA.

3) To develop more hotels and lodges with reasonable price range.

Accommodation Facilities are the basic need for inviting tourists. The present shortage

of accommodation capacity limits the number of visitors.

4) To control the entrance of the safari vehicles.

In order to conserve the natural environment in the Conservation Area, NP and GR, it is

essential to decrease the number of vehicles for wild life watching tourism. It is

recommended to operate public minibuses with 15-25 passengers to reduce

overcrowding in the CA, NP and GR.

5) To expand the width and pave the surface of the access roads to the Ngorongoro

Crater.

The present access roads to the Crater are roughly constructed, narrow earth roads

which are dangerous especially in wet seasons. They require to be upgraded for the

safety of tourists.

6) To develop tourist station in each CA, NP and GR.

Toilets and rest houses will be required to meet tourists’ demands.

7) To strengthen the publicity of cultural tourism attractions such as Cultural Heritage in

Arusha, visit to Masai Village and Botanical Garden.

8) To promote local agriculture, mining, manufacturing and service industries in linkage

with the promotion of tourism.

Hotels and restaurants are good markets for the farmers around the tourist sites, and

the proceeds of sale of local products, fruits and souvenir will contribute to improvement

of family incomes of the local residents.

Action Programs

1) To promote horticulture and increase production of cut flowers,

2) Upgrade of navigation and safe landing installation at Kilimanjaro International Airport

(KIA).

3) To provide public safari cars with 15 to 20 passengers and control the entrance of safari

tour vehicles.

4) Increase width and decrease inclination of the access roads and provide safe non slip

asphalt pavement.

5) To construct tourist area including toilets, rest houses, small shops and information

centre.

6) To establish cooperative systems between hotels and local farmers concerning

procurement of local agricultural products and employment opportunities in the hotels.

7) Production of cut flowers, tanzanite, local handicrafts and arts will attract international

direct flights and tourism revenue to the local communities.


1) Increase local revenue by the promotion of tourist related industries.

2) Increase direct access from the major tourist markets such as Europe, America and

Asia.

3) Improvement of the natural environment in the Ngorongoro Crater and other NP and

GR.

4) Upgrade the safety for the tourists.

5) Upgrade services that improve the convenience for the tourists.

6) Increase international trade, local revenue and international flights and arrival of

tourists.

2.5.6.4 Zanzibar Tourism developments Plan

Zanzibar Development Plans

1) To Formulate Integrated Tourism Develop Master Plan:

The historical cultural tourism is not emphasized in Zanzibar although visits to ancient

spice trade, Silk Road on the Sea and slave trade of 19th century are the most important

tourism attractions for the majority of international tourists. On the other hand, poor

safety management and absence of cooperation and support of the local residents are

putting negative picture to the reputation of the Zanzibar tourism. The Zanzibar

government should prepare and implement clear and appropriate development plans

and strategies.

2) To emphasize the historical and cultural tourism:

It should be understood that the first motivation of the tourists who visit Zanzibar is not

beach resort but cultural tourism.

3) To upgrade the exhibition of historical and cultural remains:

The cultural remains and historical sites should be nicely exhibited to attract tourists.

Signboards to explain the history and cultural values should be prepared and well

designed.

4) To create unique products for souvenir and exports:

The souvenir goods sold at present in Zanzibar are not the characteristic goods of

Zanzibar but Arusha and other regions. The tourist will not buy the souvenir goods

because the tourists are able to buy at the final destination. Zanzibar producers should

create really characteristic goods which tourists can purchase only in Zanzibar. The

creation of unique souvenirs should be discussed by the stakeholders of tourism related

associations, shops, artists and producers.

5) To formulate integrated Traffic Plan of the Zanzibar Town: eliminate

In order to secure the safety, avoid disturbance by the traffic and create pleasant tourist

area in Zanzibar Town, it is essential to revise the traffic system and formulate the most

appropriate traffic management plan.

6) Upgrade Public Safety:

Tourism prospers only with the assurance of safety at the destination. Innovation of

police system, education of the local residents, and upgrade of police officers is

essential for tourism development.　

Action programs

1) To Formulate Integrated Tourism Develop Master Plan:

To review:-

▬ existing development trends and development potentials.

▬ Tourist demands and markets.

▬ Tourism supply, development capacity and trends.

▬ Tourism Related industries and promotion.

▬Economic development by tourism industry.

2) To emphasize the historical and cultural tourism:

▬Analysis of future development policy

▬Rehabilitation of the historical remains

▬Strengthen the study of local history and culture

▬Upgrade the exhibition of the historical sites and cultural remains

▬ Improve the accessibility to the historical remains and sites

3) To create unique souvenir and export products:

▬ Discussion with stakeholders of tourism related industries, artists and historians

▬ Study of the characteristic souvenir and export products of Zanzibar

▬ Study of the packaging of the souvenir products

▬ Upgrade of production skills

4) To formulate integrated Traffic Plan of the Zanzibar Town:

▬ Formulation of appropriate urban traffic plan

▬ Implement necessary improvements recommended in the traffic plan,

▬ Strengthen control and guiding measures

▬Mobilisation of the traffic police in the streets

5) Upgrade the Public Safety:

▬Upgrade Public Safety Crime prevention measures

▬Establishment of crime prevention systems

▬Civil education to the children in the schools

▬Reform and strengthen the criminal law

▬ Frequent patrol in the resort areas

▬Re-training of police officers

▬Education for prevention of corruption

▬Establishment of Tourist Police Force


1) The most appropriate tourism development direction for Zanzibar is built up.

2) The historical and cultural tourism to satisfy international tourists and make them

come back, which is the most important requirement for the resort tourism marketing.

It also contributes to increase in beach resort tourists.

3) Attractive exhibition of the historical and cultural tourism to satisfy the international

tourists and the fame of Zanzibar Island to become one of the most unique tourist

destinations in the world.

4) Unique souvenir and local products enhance the reputation of cultural and historic

characteristics of Zanzibar. Increasing the sale and exports of the products contribute

to generation of incomes and fame of unique Zanzibar tourism.

5) The traffic management and safety in Zanzibar Island and urban area of Zanzibar

Town are improved.

6) Safety of Zanzibar tourism, especially in the beach resorts is improved.

7) Tourism education to local residents generates respect to the tourists who bring

revenue to Zanzibar and create pleasant environment for the tourists.

2.5.7 Development Strategy

2.5.7.1 Development Priority

In order to effectively implement the tourism development plan, it is recommended to

implement it in compliance with the following priority:

1) Zanzibar Tourism development

The Mini Tiger Plan recommends implementing Zanzibar Tourism as the first priority

development area in accordance with the following reasons:

(1) Tourism is the major revenue generating industry of Zanzibar,

(2) The Zanzibar government has no effective master plan of tourism development to

incubate tourism to become the most important industry.

(3) The present tourism focus to promote beach resorts does not match with the needs of

the international markets. Cultural tourism is the most appropriate tourism attraction of

Zanzibar.

(4) There are many problems to be resolved for the development of safe, pleasant and

comfortable tourism destination and to attract diversified tourist markets.

(5) The tourism sector will promote many local industries such as spice, fruits, fishing, ,

transport, and construction and generate a number of employments in the hotels and

tourism related industries.

2) Southern Circuit Tourism Development

(1) Selous GR has the favourable development potential in terms of wild life resources,

accessibility and potential for community based tourism by the local residents.

(2) There is no problem for development of Kisaki station. Land acquisition and transport

of building material and logistics of the goods are immediately possible.

(3) It is relatively easy to develop access roads from Route 11.

(4) It is relatively short distance from the Capital Dar es Salaam which is a big tourist

market.

3) Dar es Salaam Urban Tourism

(1) Economic activities are active in the city and it is relatively easy to implement the

plan.

(2) It is easy to procure the necessary material and information.

(3) It is important to develop the hotels in order to balance the supply and demand in

order to set the price within the range of international standards.

(4) Northern Circuit Tourism Development

Northern circuit is mostly built up area of the safari tourism and the minimum

requirements for the international tourism are being satisfied by the historical

development sector.

2.5.7.2 Implementation Plan

1)Formulation of the Development Plan of Zanzibar should start in 2005; implementation

of the plan should be expected to start in 2007.

2)Development of Selous GR has already started. The development of tourism base in

Kisaki should start in 2005 and be completed in 2007.

3)Development of Dar es Salaam area should be started as soon as possible, 2004 -

2005.

4)Improvement of access roads of Ngorongoro Crater should start immediately.

3.5.7.3 Market Promotion

Tanzania established National parks since 1959 and since then they have increased to 12

National Parks and 31 Game Reserves which received 576,000 tourists in 2003. Although

Kilimanjaro Mt. and Ngorongoro Crater need increased promotion, they are the most

important and famous safari tourism destinations of region.

Advertising the safari tourism, historical, cultural and beach resort tourism in mass media

and cooperation with the international airlines in the market generating areas, such as

Europe, America and Asia, is essential to increase tourist visits.

2.6 Transport Sector: Existing Condition and Strategy for Tanzania

The Ministry of Communications and Transport published the “National Transport Sector

Strategic Plan and Transport Infrastructure Master Plan Study for Tanzania Mainland”,

which was prepared by the Louis Berger Group in association with M-Konsult in April 2002.

The Master Plan report comprehensively covers the entire transport sector.

2.6.1 Present Situation and Main Issues of Transport Sector

2.6.1.1 Road

(1) Roads conditions

The road network in Tanzania has approximately 85,000km length of roads and is classified

into the following five categories:

Table 2-13 Present Length and Surface Condition of Road Network (km)

Category Paved Unpaved Total

Trunk road 3,830 6,470 10,300

Regional road 100 24,600 24,700

District road 30 19,970 20,000

Feeder road 0 27,550 27,550

Urban road 470 1,980 2,450

Total 4,430 80,570 85,000

Source: Ministry of Communications and Transport, National Transport Sector Strategic Plan and Transport

Infrastructure Master Plan Study for Tanzania Mainland, 2002

The Tanzania road network is much less developed than in neighbouring countries. The

density of the Tanzania network is 96.5m/km2 (5.0m/km2 for paved roads). These densities

are much lower than in other Member States of the East African Community and low even

when compared with some SADC countries like Zimbabwe and Malawi. In Kenya and

Uganda the densities are 261.9m/km2 (15.2m/km2 for paved roads) and 330.8m/km2

(14.5m/km2 for paved roads) respectively about three times what they are in Tanzania.

(2) Trunk Roads

The trunk road system is organized in nine Corridors as follows:

Table 2-14 Corridors

Corridor Length

(km)

Start-Intermediate- End

Tanzam 1,330 Dar es Salaam- Iringa- Mbeya- Tunduma

Central 1,500 Morogoro- Dodoma- Nzega

Lake Circuit 1,015 Musoma- Mwanza- Mutukula

North East 805 Chalinze- Arusha

Great North 1,030 Iringa- Dodoma- Namanga

Southern 1,250 Mtwara- Songea- Mbamba Bay

Western 1,190 Nyakanazi- Kanyani- Kigoma- Tunduma

Southern Coastal 490 Dar es Salaam- Lindi- Mingoyo

Mid West 1,100 Mbeya- Ipole- Mpanda- Rungwe

Dar es Salaam Access Roads 73

Source:　Ministry of Communications and Transport, National Transport Sector Strategic Plan

and Transport Infrastructure Master Plan Study for Tanzania Mainland, 2002

(3) Road traffic

Traffic on Tanzanian roads rarely exceeds 1,000vehicles a day even on trunk roads.

Average volumes on paved trunk roads are between 200-500 vehicles per day. However

traffic has been growing fast during the last few years at a 6% to 7.5% annually. Road

transport represents 70% of freight and 90% of passenger transport in Tanzania.

2.6.1.2 Railway

(1) Tanzania Railways Corporation (TRC)

TRC is owned by Tanzania Government. Efforts are underway to bring in the private sector

to put in capital and skills in the operation. TRC was constructed in early 1900s as part of

the East African Railways Network and has 1.0m gauge and 58-80 lb yard rail. About 400

km of track has been replaced in recent years with 80 lb yard rails. TRC has major

workshops in Dar es Salaam, Morogoro and Tabora. TRC has a fleet of 95 main line

locomotives (75 serviceable) plus 10 on hire from India Railways, 1,600 operational

wagons, but only 160 container wagons, and 100 passenger coaches. TRC presently

employs 9,220 regular staff, down from 17,000 in 1989.

Table 2-15 TRC Freight Performance: 1993 – 2002 (1,000 tons)

Year ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02

Freight 1,205 1,234 1,342 1,244 1,073 955 1,127 1,165 1,351 1,446



The total freight by TRC has stagnated for the past 10 years and even declined during 1996

to 1998. Since 1999, the freight by TRC started to pick-up gradually from 0.955 million tons

to 1.45 million tons by 2002 reflecting relatively faster economic growth of Tanzania in the

past decade.

(2) Tanzania-Zambia Railways Authority (TAZARA)

TAZARA is owned jointly by Tanzania and Zambia on 50/50 basis. TAZARA manages a

single track (1,850km) built between 1970 and 1975 from Dar es Salaam, Tanzania to New

Kapiri Mposhi in Zambia, with 970km in Tanzania. This SADC standard 1.067m gauge

railway has major workshops at Dar es Salaam and Mpika and depots at Mbeya, Mlimba,

Chozi and New Kapiri Mposhi. TAZARA has 89 locomotives, 2,225 good wagons and 128

passenger coaches. TAZARA has never performed satisfactorily since its inception and in

recent years cargo handling has declined to less than a half from 1.23 million tons in 1993

to 0.55 million tons in 2002.

Table 2-16 TAZARA Freight Performance: 1993-2002 (1,000 tons)

Year ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02

Freight 1,238 643 633 663 555 631 614 633 594 551



The freight handling for TAZARA depends on the economic activity of Zambia and on

several regions in Tanzania along the TAZARA railway line. In order to increase the freight

volume, it is essential to promote economic development of the regions along the TAZARA

line within Tanzania and Zambia.

2.6.1.3 Port

(1) Seaport

There are three major seaports in Tanzania: Dar es Salaam, Mtwara and Tanga for deep-

sea and coastal transport. Smaller seaport facilities exist in Kilwa, Lindi, Mafia, Pangani and

Bagamoyo.

Table 2-17 Cargo Traffic at Major Ports (1,000DWT)

Port 97/98 98/99 99/00 00/01 01/02

Dar es Salaam 3,902 4,100 4,013 3,843 4,147

Tanga 165 176 174 201 250

Mtwara 161 185 200 184 137

Total 4,228 4,461 4,387 4,228 4,534



Total cargo handling at the major ports has been almost constant since 1997 to 2002. Cargo

handling volume at Tanga and Dar es Salaam ports have slightly been increasing in recent

years but that of Mtwara port is declining.

(2) Inland Waterways

Inland waterways shipping is currently undertaken on lakes Victoria, Tanganyika and Nyasa.

Major ports are Mwanza, Bukoba, and Musoma on Lake Victoria, Kigoma on Lake

Tanganyika and Itungi on Lake Nyasa. They are operated by Marine Services Company

(MSC), a Parastatal. On Lake Victoria, international services are provided only by ferry.

There is also significant, but informal coastal shipping around the lake.

Table 2-18 Transit traffic Carried by MSC through Mwanza Port12 (1,000Tons)

Country Import/Export 1999 2000 2001 2002

Uganda Import 178 183 201 177

Export 31 49 53 76

Burundi Import 137 140 171 131

Export 21 31 26 17

Total Exp & Imp 367 403 451 401

12 ditto



Inland shipping has been stagnating at between 0.4 to 0.45 million tons per year from 1999

to 2002. Shipping between Burundi and Tanzania has declined in the recent years probably

due to internal conflicts in Burundi.

2.6.1.4 Airport

(1) Airport transport

In 1999, the airport systems served approximately 1.1 million passengers that were carried

on approximately 88,000 aircraft movements. Aircraft and passenger traffic is concentrated

at three international airports, Dar es Salaam, Kilimanjaro and Zanzibar, with about 76% of

the country’s passengers and about 54% of the aircraft movements. The other three busiest

airports of Arusha, Mtwara and Mwanza, account for additional 16% of the passengers and

an additional 24% of the total aircraft movements. Two airports, Bukoba and Shinyanga

handled more than 10,000 passengers in 1999.

Table 3-20 gives the main traffic statistics for the five Tanzania mainland airports. Total traffic

at major international airport, Dar es Salaam reached 660,000 passengers in 2000. This is

low in comparison with the 3 million passengers a year handled by Nairobi airport. Airfreight

traffic is quite low at all the airports. In Dar es Salaam the maximum annual volume during

the last six years was about 13,500 tones. This is much lower than in Nairobi airport where

the volume exceeds 65,000 tones.

Table 2-19 Main Airport Passengers Carried13

Airport 1997 1998 1999 2000 2001 2002

Dar es Salaam 532 560 586 622 652 703

Kilimanjaro 276 211 187 n.a. n.a. n.a.

Mwanza 93 99 88 101 120 101

Arusha 26 51 64 73 81 95

Mtwara 21 26 25 22 23 21

Total 948

672*

947

735*

950

763*818* 876* 920*

13 Source: The Louis Berger Group, Inc and M - Konsult, Ltd (2002) National Transport Sector Strategic Plan and Transport Infrastructure Master Plan Study for Tanzania Mainland Phase II



Note: * is without Kilimanjaro

Passengers at the major airports gradually increased to 0.92 million by 2002 from 0.67

million in 1997.

Table 2-20 Main Airport Freight Movement14 (in tons)

Airport 1997 1998 1999 2000 2001 2002

Dar es Salaam 13,507 12,305 10,705 13,503 13,294 11,326

Kilimanjaro 3,024 1,785 2,320 n.a. n.a. n.a.

Mwanza 10,056 11,283 43,333 19,562 21,063 17,420

Arusha 0 0 0 0 0 194

Mtwara 364 323 189 150 177 123

Total 26,951

23,927*

25,696

23,911*

56,547

54,227*23,215* 34,534*

29,063*



Note: * is without Kilimanjaro

Air flight cargo has stagnated in the recent years ranging from 23,000 tons to 30,000 tons

without Kilimanjaro airport in the recent years.

(2) Air port infrastructure

The Master Plan described, “The state of airports infrastructure is poor and detracts from

the growth of the aviation sub-sector in Tanzania. It is faced by a number of critical problems

including inadequately maintained runways, aprons, terminal buildings and facilities; poor

state of navigation facilities and fire fighting equipment; poor planning and management;

and lack of funds for acquiring necessary equipment.”

(3) Privatization

According to the Master Plan, the privatization of airports is described as follows: the

preliminary results of the recently conducted Tanzania airport privatization strategy study

seem to show that the present level of traffic and other revenues generated by Dar Es

14　Source: The Louis Berger Group, Inc and M - Konsult, Ltd (2002) National Transport Sector Strategic Plan and Transport Infrastructure Master Plan Study for Tanzania Mainland Phase II

Salaam International Airport would not allow to cover the capital and operation costs of the

airport by a private operator. And on other airports the master plan pointed out that no other

airport could presently generate enough revenue to cover its own operation costs. Since the

year 2000, Kilimanjaro airport was privatized and operated by a JV company and it is hoped

that JV Company will be able to attract enough flights to the airport. Besides KLM flights,

British Airline (BA) is expected to start new international flights to the Kilimanjaro Airport

soon.

2.6.1.5 Main Issues

The Master Plan pointed out issues as follows:

Continuing the upgrading work on primary road network.

Improving rural access roads.

Rationally integrating the railways into the transport sector modes.

Developing an appropriate set of international and domestic airports.

A rational and efficient re-distribution of responsibilities and activities between the

Government, the executive agencies and the private sector within the on-going

institutional reforms in the transport sector is a difficult task.

The decision to assign transport related investments to the Government or to the private

sector is complex, requiring specific agreements between public and private institutions.

The management and proper co-ordination of the various donor aid programs are also a

task of major importance.

2.6.2 Development Strategy

(1) Inter-Regional Transport

Tanzania has neighbouring land-locked countries such as Uganda, Zambia, Burundi,

Rwanda, Democratic Republic of Congo, Zambia and Malawi. Tanzania seaports can be

entrances and exits of these countries providing gateways for them. Therefore inter-regional

transport system and infrastructure should be developed further to efficiently serve the

needs of seven landlocked countries. If Tanzania efficiently develops regional corridors

connecting these seven landlocked countries, Tanzanian users of these transport corridors

will benefit significantly from lower transport cost and more frequent flights.

(2) Integrated Transport Development

Dar es Salaam port has been renovated extensively in recent years and is being operated

more efficiently, especially on handling of containers, but the improvement on the railway

side is not sufficient. If the railway system is improved and able to attract more cargo, the

port can be expanded and operate more economically. In the same way, the road system

should be further improved in all major corridors and integrated with railways and ports.

(3) Strategic Priority

Resources such as funds, manpower and technology although limited should be allocated

to priority transport corridors. Once development zones for Mini-Tiger Plan are identified,

priority corridors with clusters of development zones should be defined and developed in

shortest term.

(4) Air flights

Air flights are essential for tourism, cut-flower industry and manufacturing sector as well.

Without frequent and economical direct flights to Tanzania, developing competitive tourism

and cut-flower industry is not possible. It is therefore recommended to develop industries

which will use regularly air flights at the Kilimanjaro/Arusha and Dar es Salaam regions.

For the Kilimanjaro/Arusha region, safari and mountain climbing based tourism, cut-flower

and jewellery cutting/polishing industry need to be promoted together in order to create a

critical mass for air flight demand.

For Dar es Salaam and surrounding areas, it is recommended to develop tourism at Selous

Game Reserve, Wildlife Park, coastal beach resorts, Zanzibar Cultural and Beach resort,

and development of tourism-related manufacturing light industry SEZs. Developing these

aspects of tourism, manufacturing industry and related supporting service industries will

create sufficient air flight demands and attract more frequent international flights.

(5) Urban Transport

Big cities and middle-sized cities have begun to generate traffic problems. Since these cities

are origins of industries and employment, urban transport system should be developed

carefully. Public transport improvement should be well developed, particularly in Dar es

Salaam area where traffic jams and now traffic congestion is one of the major transportation

problems. If the Mini-Tiger Plan 2020 is successfully implemented, it is expected to

generate large volumes of urban passenger and cargo traffic. Therefore, it is recommended

to start improvement of the Dar es Salaam urban transport network immediately. At a

glance, Dar es Salaam area needs one or two ring roads, widening of major corridors and

construction of flyovers at several major crossings.

(6) Community Based Transport

In rural areas, transport for accessing the markets is the most important requirement,

because it is one of the lifelines for the people. Transport in rural areas is normally

developed by people themselves with cooperation of Local Governments and with technical

and financial assistance from the Central Government. In order to improve the rural roads

and transport system in the rural communities, the following actions are recommended:

1) Rural Self Help Infrastructure Program (RSHIP)

Tanzania is able to use this approach for improving the rural infrastructure especially

rural roads. The RSHIP system is basically mobilizing rural villagers for paving and

maintaining rural community roads. The Central Government can provide small in kind

inputs such as machinery, fuel and materials like cement and asphalt. This approach

has been used with success in several Asian countries.

2) Introduction of affordable transport means in the rural area

Since income of rural area is still small and is not enough to enable buying of cars and

trucks, introduction of more economical and cheaper transport means such as used

pick-ups and motorbikes with efficient spare parts supply and repair system is

recommended. The process of establishing “East Africa Machinery Bazaar (EAMB)” at

Dar es Salaam and a nation-wide system of branches is at an advanced stage.

2.6.3 Possible Transport Projects Study for the short-term (5 years)

(a) East African Community Transport Corridor Development Study

(1) Aim

Inter-Regional transport should be rationalized with the cooperation of three

countries.

(2) Contents

Collection of data on transport sector in East Africa and overall analysis of actual

situation.

Traffic survey.

Future demand forecast with several development scenarios.

Development strategy alternatives.

Transport development master plan.

Sector development plan.

Short term action plan.

(b) Study on East West Corridor in SADC countries

(1) Aim

To recover and strengthen East- West axis in SADC countries.

Transport should be developed together with agriculture, forestry, fishery,

manufacturing industry and tourism. Regional development is necessary.

(2) Contents

Collection of data on transport sector in SADC countries and overall analysis of

actual situation.

Site survey.


Development strategy alternatives

East West Corridor development master plan.

Sector plan.

Short-term action plan.

(c) Distribution System Innovation Study

(1) Aim

Distribution system in Tanzania should be innovated from grass roots level in rural

areas to international freight movement level.

Rationalization of distribution system is a key factor to be competitive.

(2) Contents

Collection of data on distribution system.

Survey on distribution system and its analysis.

Pilot project for the implementation of distribution system.


Distribution system innovation master plan.


(d) Tourism Supporting Infrastructure Development Study

(1) Aim

Tourism development is necessary for earning foreign exchange and incomes.

Infrastructure development is essential to attract tourists and investors.

(2) Contents

Analysis of tourism demands. Collection of data on tourism sector and overall

analysis of actual situation.

Analysis of tourism supply and site survey.


Formulation of development master plan and strategy.

Formulation of action plans.

Implementation of the pilot projects.


Master plan.


(e) Port Improvement and Up-grading Study

(1) Aim

Formulate a Port development Master Plan for the coming 10-15 years.

Identify major improvement and up-grading projects.

Prioritize port project for the first 5-years.

(2) Content

Review the on-going projects and previous study reports.

Site survey.

Formulation of a Port Master Plan for the coming 15 years.

Identify priority projects for the short-term.

Carryout feasibility study for urgent port projects for implementation.

(f) Mtwara Corridor Development Study

(1) Aim

Identification of promising economic development projects such as forestry,

agriculture and agro-processing industries.

Identification of infrastructure projects within the Corridor in Tanzania, Mozambique

and Malawi including Friendship Bridge proposed between Tanzania and

Mozambique border.

Prioritisation of major projects indicating responsibility of each project.

(2) Contents

Review of various previous studies and available data.

Coordination with three participating countries to obtain consensus on the program.

Alternative development strategies for the corridor development and selection of the

best alternative.

Selection of priority projects.

(g) Study on Urban Public Transport Development in Dar es Salaam

(1) Aim

One of the necessary conditions to be a modern international city is to provide

modern urban transport services to urban people.

For major urban dwellings in the metropolitan areas, the improvement of public

transport system is urgent and essential.

Public transport priority policy should be established as soon as possible.

(2) Contents

Collection of data on urban transport system and overall analysis of actual situation.

Bus survey and traffic survey.

Future transport demand forecast.

Pilot project implementation in public transport system.


Urban public transport master plan.


2.7 Regional Aspect

2.7.1 Dar es Salaam

Dar es Salaam is the largest city in Tanzania in terms of both economic and demographic

terms, and now is becoming the commercial centre of East Africa. Urbanization is a

prominent phenomenon which has caused a rapid population growth rate of 4.3% recorded

between 1998 and 200215. The urban population in Dar es Salaam is nearly four times

larger than the next biggest urban centre, Mwanza. The trend shows that migrants are

young and single whereby nearly 30% of youth are unemployed and involved in informal

socio-economic activities in the city. The unavailability of employment opportunities in

comparison to the growing population will in future become the root cause of crime, and

stimulate more informal economic sector activities.

Traffic control is another emerging issue. The road network is congested and there is

persistent traffic jam in the city centre, especially during the rush hour. The road traffic is

stuck due to massive commuters coming from the suburb with packed mini-buses. Water

shortage is also a persistence issue with the rapid population growth. Poor rains combined

with poor maintenance of the rusted and leaking water distribution pipes cause serious

water shortage in the city. Moreover the shortage of water for domestic use and sanitation

could bring environmental hazards where cholera and other diseases could easily become

rampant.

The industrial sector remains overwhelmingly concentrated in Dar es Salaam. However,

what cannot be overlooked is the fact that there is progressive yet still slow pace of

employment creation in the region’s manufacturing sector. The region’s total employment

15 The Economist Intelligence Unit (2003) Country Profile 2003 - Tanzania

increased to about 23,445 in 2003 at most, compared with 22,660 in 200016. Even

compared with the working age population (age group 15-64) of the region whose size is

about 1,618,54417, the industrial sector, especially manufacturing sector should deliver more

working opportunities for inner-city workers. Although the contribution of the sector to GDP

increased from 8.4% in 2002 to 8.7% in 200318 and GDP of the sector increased to US$ 620

million from US$ 482 million between 2001 and 199719, the pace is not satisfactory and

sustainable when compared with the population growth rate.

EPZ scheme is practiced in Dar es Salaam as other African countries commonly do. This

scheme applies EPZ regulations to each individual corporation by authorising the

corporation site as EPZ site. Technically speaking, the EPZ development followed by the

Asian SEZ model has not been employed in Tanzania, if any, it is at relatively small scale.

The Asian SEZ model accommodates various corporations within a broad area of

specifically designated industrial park with globally competitive infrastructure facilities. The

majority of the existing EPZs in the city are garment industries.

As an alternative industrial form, the import substitution industries can be thought of, and

they could procure a bulk of raw materials from domestic producers and distribute the

finished products to the domestic market thereby saving resources which could otherwise

be used to purchase imported goods. However they are still relatively small in number in the

country. Dar es Salaam offers great market potential for import substitution industries if

products are delivered with competitive quality and price compared to imported products.

Dar es Salaam has also a very important function as a gateway of East African region in the

airline and shipping services. Unfortunately this function is still very limited due to

insufficient demands for both passengers and cargo. In order to promote manufacturing,

trade, and tourism; the gateway function of Dar es Salaam must be expanded and must

increase frequency of airlines and shipping lines coming to Dar es Salaam. The demand for

both passenger and cargo will be expanded by establishing several SEZs, tourism

attractions such as National Cultural/Heritage Park, the East Africa Machinery Bazaar and

expanding banking and other services in the surrounding area of Dar es Salaam. Direct

flights and shipping lines to Dar es Salaam will increase substantially within several years

following the above actions.

16 Source: National Bureau of Statistics in The Economic Survey 2003 17 Source: The United Republic of Tanzania, 2002 Population and Housing Census18　Source: The Economic Survey 200319 Source: UN Statistics

2.7.2 Arusha / Kilimanjaro Regions

These regions have good moderate climate and their geographical position facilitates social

and economic linkage with Kenya. The mean annual rainfall varies from 250mm in the

lowlands to over 2,000mm in the mountainous area (over 1,600 meters above sea level).

Temperature goes up to 400C in the hot season yet in most of the regional mountainous

area it ranges from about 150C to 300C which suites growing of coffee, cut-flowers and

vegetables. Road network is comprehensive and linkage between Nairobi, Mombasa and a

domestic seaport of Tanga has contributed to the region’s development. Moreover

Kilimanjaro International Airport (KIA), which is located along the road between Moshi and

Arusha has the potential for broadening export-oriented agro-business and tourism

channels for the regions.

Because of the good agricultural background, the hillside of Kilimanjaro where most of the

regional farming takes place raises several issues caused by high population density and

scarcity of land. Quite large number of people has been migrating20 from the area to either

lower land or other region’s urban cities. Another problem is related to limited environmental

resources and employment opportunities. Consequently, a good number of youth (from

primary to high education graduates) are unable to find gainful employment in the lower

parts of Kilimanjaro and Arusha regions.

Dysfunction of market is also a hindering point for getting out of the subsisting level of the

region’s agro-based economy. Generally, under the condition of which access to market is

limited, some people are reluctant to change or adjust their traditional livelihood in

accordance with the demand from markets. Due to lack of market information among

different producers, trade and production remains stereotyped, and, therefore,

diversification to production of non-traditional cash crops has stagnated. Of course

technology is highly required in the area for agricultural development. However, unless this

market-oriented agro-business concept is crystallized, even the provision of enough

fertilizer, improved seed and agricultural technical training would not be fruitful, since the

products harvested would not conform to what market wants. In other words, these cannot

be sold in the market. Consequently, the provision of inputs, techniques and trainings

should be based on market requirements.

Because of the regions’ advantages in climate and logistics, there has been on increase in

20 Kilimanjaro Region Socio-Economic Profile (2003) National Bureau of Statistics (NBS) and Kilimanjaro Regional Commissioner’s Office

the number of foreign investors operating in the region to vitalise and maximise the use of

regional potentials. Having introduced new cash crop species and technologies and with

better use of Kilimanjaro International Airport, they are promoting the air borne based agro-

products exportation to Europe, Middle East and even Far East Asia. Those foreign-origin

operators have to introduce advanced husbandry practice as well as appropriate

technologies and, if necessary, machinery, which are based on market demands.

Modernization of traditional crops (Coffee, Banana and Maize) and introduction of new cash

crops and new agricultural techniques through foreign investment is the key for the regional

development. A good example is seen in a foreign investor’s coffee plantations in which new

technology (drip irrigation and husbandry know-how) is used. Other potentials can be found

not only in new crops farming like cut-flower, corn, bamboo shoots or soya beans but also

processed materials from those crops (food processing: corn syrup, rice snacks, corn

snacks, dry fruit etc.). In particular, vegetable oil for both food and industrial use is

particularly recommended. Actually, there are 3 oil mills (corn, vegetable, sunflower and

soya beans) producing semi-refined edible oils in the regions, and these production

ventures are to be expanded. As long as a good chance arises to utilize existing facilities,

there's no sense for not taking it.

In addition, while fertilizer consumption is very low even in the nation-wide scale as a result

of decrease in subsidized fertilizers from Tanzania Fertilizer Company (TFC) and application

of costly imported fertilizer, there are deposits of rock phosphates in Arusha, which can

provide good nutritional effects on soil. Utilization of this fertilizer source should enhance the

current low agricultural productivity of land. However, low input rate of fertiliser cannot be

improved unless the transportation cost and brokerage charges for fertilizer are reduced,

and limited purchasing power of small-scale farmers is improved.

As other regional potentials, Arusha and Kilimanjaro regions have many tourist attractions

and are regarded as the starting point for many safaris to the north-eastern national parks:

Serengeti, Ngorongoro and Lake Manyara. Rich cultural heritage is also an attractive

feature so that the establishment of cultural tourism centre may bring additional tourism

revenue for the regions.

Gemstone industry is of particular interest. Specifically, the unique gemstone; tanzanite,

must be promoted for local processing with cutting and polishing. Moreover the production

of locally used agricultural tools, light machinery like tiller and service for hiring/leasing of

road construction and maintenance equipments should be practised. Additionally, taking the

advantage of the cool climate, dairy processing industries are also to be promoted.

Consequently, in order to ensure high productivity and growing high value products,

introduction of agro-mechanisation, improved and market-oriented agricultural products,

and appropriate technologies are all required in the regions. As the region’s development

model, Arusha/Kilimanjaro regions have an advantage in having the Kilimanjaro

International Airport (KIA), which is big enough to accommodate Boeing 747 jumbo airlines.

Promotion of tourism, horticulture, jewellery industry and agro-processing industries all

together may increase demands for both passengers and cargo, which would result in more

frequent direct flights to KIA, and which, in turn, would provide cheap transportation cost for

the region’s agro-products.

2.7.3 Mwanza Region

Mwanza is situated in the south side of Lake Victoria and regarded as the most important

port city in the region. Its positional importance for economic activities is non-comparable in

this region. Mwanza region is the fourth-largest contributor to nation’s GDP, 65% coming

from agricultural sector21. The food crops of the region are maize, cassava and sweat

potatoes, while cotton22 and paddy are the major cash crops of the region. Geographically,

eastern side of the region is suitable for food crops and cotton production. The rest of

region, which is without adequate and reliable rainfall, grows small amount of the above-

mentioned crops and cultivates alternative drought resistant crops like sorghum and millet.

The harvest of maize, cassava and sweet potatoes, which consist over 70% of regional

agricultural production, were 266,306, 235,264 and 155,245 tons in 2001, 2002 and 2003

respectively23. Even so, the regional output is still not enough to feed its population, which is

second largest in Tanzania24. As a result, the region is importing food from other regions.

While the cotton farming has been the region’s key agricultural activity, the trend shows that

cotton production has tended to fluctuate and largely dependent on the rise and fall of the

price in international market. The region’s production decreased from 46.5 thousand tones

to 30.9 thousand tones between 2001 and 2002, and, even in the nation as a whole, its

export earnings dropped drastically from US$130.4m in 1997 to US$28.5m in 1999,

21 Mwanza Region Socio-Economic Profile (2003) National Bureau of Statistics (NBS) and Mwanza Regional Commissioner’s Office

22 17% of the total agricultural crop production in the region.23 Mwanza Region Socio-Economic Profile (2003) National Bureau of Statistics (NBS) and Mwanza Regional

Commissioner’s Office24 2,942,148 in 2002, Source: Population and Housing Census, General Report (2002)

followed by a slight increase to US$36.8m in 2001, before falling back to US$28.2m in

200225.

Fishery sector is performing well given the physical condition of Lake Victoria with its

shallow water basement which is providing sufficient nutrition for good fishery grounds. In

the year 2000 alone, 38,676,978 tons of fish products were exported from Mwanza region to

the European Union (EU), Japan and Australia. Fish products are exported either by direct

flight or ship transit through land transportation by truck. Nile perch fillet formed the large

portion of the export and generated US$ 97 million in 200026. The fishery sector is among

the largest contributors to the region’s GDP and probably now leads in the region’s export

earnings followed by cotton. Actions for follow-up would be fishing activity monitoring and

initiation of trilateral treaty among EAC member countries for fish catch and aquaculture.

Gold mining has been a quick growing industry in the region. The production increased

dramatically by nearly 10 times within 10 years (5,760,549 U.S Dollar in 1991 up to

52,775,230 U.S Dollar in 2000)27. Yet one of the problems reported is the lack of channels

for small-scale miners to access markets. For the small-scale miners, because of the limited

number of commercial dealers operating in the region, they have no choice except to sell

products at depressed prices. Moreover, despite the provision of mining technologies

brought by large international mining corporations, the situation is still not performing

optimally for the small miners. Environmental degradation like water pollution remains an

issue of concern. Measures must be taken in this sector’s development strategy.

Livestock for leather and meat products for exporting to neighbouring countries seems

promising. Even though cattle population has been declining in the region (due to

insufficient provision of livestock facilities and disease vaccination), yet still a large number

of livestock is available. Tanning industry is, however, deadlocked due to lack of resources

in finance, personnel training and technological inputs, since this area requires quality

management and environmental management.

In the field of forestry, since cleaning of forests for agricultural use without considering

replenishment has long been practised in this region, the remaining lump of forest area is

situated only in the western side of the region. Afforestation has not been well practised.

Afforestation, education and training on commercial tree plantation should be widely

25 The Economist Intelligence Unit (2003) Country Profile 2003 - Tanzania26 Mwanza Region Socio-Economic Profile (2003) National Bureau of Statistics (NBS) and Mwanza Regional

Commissioner’s Office27 Regional Commissioner’s office (2002)

practised while looking at the market of pulp or other commercially viable forestry products.

Moreover, East African Community (EAC) has moved further from a regional cooperation

concerning proportionate sharing of benefits and resources towards more free-trade

approach. Thus, the EAC poses both advantageous and disadvantageous impacts on the

regional economy. Marine transport in the water of Lake Victoria connects, not only the

other domestic regional ports, but also to the neighbouring countries of Kenya and Uganda

providing prosperous commercial opportunities. Benefits from EAC motivate the region to

export the products to neighbouring countries, however it cannot be denied that the

manufactured goods produced in Kenya are swept in from the same route. So, the domestic

manufacturing sector is facing big competition from import of the Kenyan products, which

were previously charged between 10 and 20 per cent of tariffs before the reestablishment of

EAC. Moreover, Mwanza’s economic success in goods transit business is also impacted by

the competition from Kisumu, Kenyan third largest city. While Mwanza’s connection to the

gateway of Dar es Salaam by TRC provides important overseas outlet for Uganda and other

hinterland countries, Kisumu also has railway system linking with Mombasa at the Indian

Ocean.

Unavailability of agricultural machinery, the lack of access to markets and advanced

technologies are the most important hindering factors for the region’s small-scale farmers’

efforts for maximizing their existing potentials. To overcome this state, artisan support

industries like making agriculture and fishery related implements, machinery and repairing

need to be promoted. Moreover, food processing is not well practised in the region. It needs

to be put in practise with combination of local made food processing machinery. Mwanza

seems to have natured entrepreneurship, which are good for artisan tool and machinery

making, repairing and reconditioning. Possibly, technical assistance might be suitable to

provide support for local artisan activities in training.

2.7.4 Kigoma Region

Kigoma region is located in the western zone of Tanzania and is a transport hub for

neighbouring countries, Democratic Republic of Congo (DRC), Burundi and Zambia. Since

the arrival of the railway line from Dar es Salaam via Dodoma and Tabora around 1915,

historically, Kigoma took over as the main trading base alongside the main port of Lake

Tanganyika.

The region’s potential comparative advantages to be exploited are: rich physical

environment, tourist attractions (national parks famous for Chimpanzee habitats and the

location of the renowned meeting between explorers Stanley and Livingstone) and lake

Tanganyika. Meanwhile main regional obstacles are two folds: poorly maintained road

network, which makes the region relatively isolated from the rest of Tanzania and non-

connection of electricity transmission line with the national power grid. The study for an

installation of hydropower station has been conducted for the region’s electricity supply, but

un-availability of finance constrains its implementation.

Geographically, the region’s unique standpoint along the border between DRC, Burundi,

and Zambia brings both negative and positive impacts on its socio-economic features. As it

is situated on the border, Kigoma has an influx of refugee from neighbouring civil-war-torn

countries of DRC and Burundi, and as a result the region’s recent census indicates the

highest population growth rate. Consequently that phenomenon is presumed to be causing

socio-political instability. Whereas transit trade for goods to and from neighbouring countries

has been widely established, and currently the trade transaction volume have reached

60,000 tones per year, yet this volume still has a room for expansion. With the improvement

and rehabilitation of port facilities, the port could accommodate an ideal capacity of 150,000

tones of goods movement per year.

Main agricultural products produced in the region are cassava, maize, legumes, sweet

potatoes and banana. As cash crops, palm oil, coffee, tobacco and cotton farming are

practiced, though, due to low inputs of agricultural materials combined with poor extension

services, yields are very low, despite being endowed with fertile soil and plenty water

resources28. For example, palm oil, which is often cited as a promising product, yields only

about 1,000 kg / ha / year (3,000 tones / year)29. This volume is very low compared to other

palm oil exporting countries like Malaysia, Nigeria and Ghana which produce red palm oil of

4 to 4.5 tons / ha / year30. Main reason lies in seed species in that majority species planted

in Kigoma region are inferior to what other producers are planting. The species in Kigoma

are inferior in terms of maturing speed and amount of yield. Also lack of efficient extraction

technique/methods (currently 20-25% extraction efficiency)31 is a major obstacle to

competitive quantity and quality which in turn is an obstacle to accessing the external

markets. Production of other crops is in similar state, in that technologies and agro-practises

are poorly employed and production depends on natural conditions making agricultural

vulnerability to climatic changes very high.

28 Annual rainfall ranges 1,000 – 1,400 mm29 TCCIA “Kigoma Unfolding its potential – Investment and Trade Brochure30 President’s office Regional Administration and Local Government (2004) “Tanzania Mini-Tiger Plan 2020 Kigoma

Region”31 TCCIA “Kigoma Unfolding its potential – Investment and Trade Brochure

In order to hedge the yield from depending on weather conditions and to sustain the volume

and quality of products, modernization and mechanization of regional agriculture is a must.

Yet it is only technically achievable through investments, which are stimulated by concrete

incentives given and underlining economic viability. These never come without taking

initiatives in creating economic viability and showing availability of markets and assurance

of durable and equitable business operation within the region. Therefore, the sector which is

more attractive and promising to investors is to be identified, and then followed by offering

attractive concessional conditions and environment to the sector’s operation. Consequently

Kigoma must utilize its unique strategic location and focus on cross-border business with

DRC and Burundi. Additionally, since the neighbouring region like Mwanza is a net importer

of food products, a prospective approach is to be a food supply centre of neighbouring

regions and countries. Ideally, cross-border trade and regional food supply business can be

worked out in the operation of Free Trade Zone (FTZ).

Although Mwanza is much more economically advanced and could play a central role as an

economic facilitator among land-locked neighbouring countries, the exclusive advantage of

Kigoma in having a direct linkage with the east shore of those countries must be utilised

through port-based goods transaction. For the future prospects, if and when the

neighbouring countries’ socio-political situation is stabilised, goods transaction would be

expanded dramatically. Additionally, in order to be a regional food centre, the region’s

potential may lie in irrigation farming and livestock keeping because of an ample land with

plenty water resources like inland lakes and rivers running through the regions.

2.7.5 Tanga Region

Tanga is the third populous region with 1,642,015 inhabitants (2002 census). The regional

economic activities are largely confined to agriculture in which 75% of the residents are

engaged. The cultivated land is only 20% of the total arable land and productivity is

relatively low32. Given the background that the region is endowed with temperate climate

and rich water resources (rainfall 1,200 to 1,400 mm per year), which is undoubtedly good

for agricultural activities, the region’s potentials for expanding crops, tropical fruits

production and tree plantation could be exploited if sufficient investments are made

available.

Moreover, it should be mentioned that Tanga is the second largest seaport of Tanzania,

functioning as the northeast traffic gateway for exports and imports. Through the port,

32 Regional commissioner’s office in Tanga ‘Brief on Tanga Region’

coffee, seed beans, sisal, tea, rubber and forest products are exported, and chemicals,

machinery, motor fuel, oil, vehicle materials, consumer goods and food grains are

imported33. Good road connection to Dar es Salaam and other regions is also enhancing

Tanga’s economic activities.

Furthermore, Tanga is recognised as a manufacturing centre and there are many factories

and processing plants in Tanga, including food products, leather goods, cotton textiles,

handicrafts, and construction materials. Even though these local manufacturers are

currently not generating sufficient revenue for the region, by utilising its position as a centre

with comprehensive traffic network, Tanga is still performing as the accumulation and

delivery base for various goods. In this respect, essentially, the region’s manufacturing

sector can be propped up and synergised to both the region’s potential agricultural sector

(which could provide raw materials for the manufacturing industries) and its reasonably well-

linked logistics leading to the region’s manufacturing sector development. Consequently, the

combination of those three components, namely agriculture, logistics and manufacturing, is

the key development factor for the region. Therefore, it is recommended that the region

should crystallise these factors into agro-processing and manufacturing industries in a

holistic manner.

The recommended model for the region’s economic development is as follows;

1. Firstly, considering the physical capacity of port functions, even with Mombasa’s

facilities for handling cargo, Tanga could utilise its opportunities for expanding transit

goods transactions by instituting speedy and reliable procedures of custom duty and

custom clearance. The key to compete with Mombasa is the adoption of “one stop

window” administration in which every port claims are handled within one single office

and all related procedures are processed within shorter periods.

2. Secondly, besides the improvement of port functions, more resources and study should

be directed in marketing collaborations with Arusha and Kilimanjaro regions where most

of the export goods are coming from. Although a single region’s capacity is limited and

weak, if each concerned region plays its role in maximising the synergic effects, it will

generate much strong comparative advantages over a single strong player. Therefore, it

is necessary to select agricultural products, which can reasonably be processed and

shipped from Tanga rather than from Mombasa and via the local Kilimanjaro

International Airport and promote them for growing in the region. Also the possible

industrial model for Tanga must link with the agricultural crops produced in the region

33 Tanzania Harbours Authority http://www.tanzaniaports.com/Tanga.html

and hinterland in that the agricultural products are grown in hinterland, and then

processed in Tanga and exported from the port.

3. In addition, effective distribution system of agricultural inputs and outputs to and from

interior areas must be introduced. Although there is a plan to expand the road network

along the northern and southern coastline of Tanga to improve accessibility to Kenyan

border and to attract tourists for undeveloped southern coastline, given the current

condition of Tanga region great potentials are in further strengthening the linkage with

the hinterland of Arusha and Kilimanjaro regions. Development of a new road network

should be associated with the integration purpose for regional agricultural and

manufacturing activities, and rehabilitation of the railway line linkages.

2.7.6 Morogoro Region

The regional economy is predominantly based on agriculture. Major crops cultivated are

cotton, oil seeds (sunflower, simsim and soya beans), sugarcane, maize, paddy, cassava

and sorghum. As for land usage, the region utilises only 20% of its total arable land despite

being the second largest region in Tanzania. The region’s advantages are based on

physical settings in which the region is endowed with relatively good rainfall amount of

600mm-1800mm annually, rich soil system and irrigation capability. However, the negative

impacts of natural environment reflect local farming exposing to drastic harvest loss with no

preventive measures. The vulnerability is a cause for the conflicts between farmers and

pastoralists over the land usage, which is indirectly as a result also of the unstable weather

conditions of the past years.

With rising awareness of the problem, the regional government and business community

have recognized the need for mechanisation of farming and subsequent value-added food

processing industries. In order to exploit the region’s physical potentials, there is a need of

increasing productivity and profitability through mechanisation, although, there are various

challenges ahead.

These challenges and constraints are as follows;

1. Firstly, poor business management and technical skill of the region’s farmers, who are

confined to small-scale farming except for sugarcane, sisal and paddy farming,

2. Secondly, the purchasing power, which is proportionally weak together with high

interest rate financing, is making very difficult for farmers to install new machinery for

their agricultural operations. And also, the option of acquiring the machinery on

cooperative arrangements can be undermined by the weak farmer’s communities and

associations.

3. Thirdly, it is cost and benefits issue whether the mechanisation process could ensure

benefits, which match the investment costs. Even if the use of machinery could be

realised, existing small-scale farm varying from 0.25 to 3 ha would require a form of

putting them together for effective and efficient utilisation of machinery.

4. Fourthly, poor machinery maintenance scheme and lack of repairing system is a

bottleneck.

Therefore, these factors need to be considered and tackled in order to realise the

mechanisation in the region.

In terms of market access, Morogoro is advantageously located along the corridor

connecting Dar es Salaam and Dodoma, and other connections to Iringa, Mbeya and

ultimately central African countries of Zambia and Malawi. In this sense, the region has at

least the proximity and access advantage to the potential markets including the short

distance to the country’s largest market, Dar es Salaam. Therefore, combined measures to

utilise the large idle land for agriculture cultivation and delivery of its agricultural outputs

could be an ideal business model for the region.

Given the regional geographic features, the recommendable economic activity is food-

processing industries that link with tourism. Since the region is surrounded by attractive

tourist destinations, namely Mikumi, Udzungwa and another world heritage site, Selous

Game Reserve, if service provision of one-day travel to Mikumi or Selous is provided by bus

tours or train services, the region could attract more and more short-stay tourists from Dar

es Salaam. Given the locational advantage as a highland region, dairy, vegetables and fruits

farming linked with tourism industries are also promising. Linkage between tourist industries

and local agro-based farming in accordance with market demand from tourism-related

business must be promoted. Moreover the installation of roadside station or transport cafe

would be worth considering for catching the long-distance truck drivers along the country’s

west to east via transportation line, T-1 corridor.

2.7.7 Iringa Region

Iringa is about 500 km away from Dar es Salaam in the Southwest and serves as a way

station for moving to South-western region, Mbeya and further to Malawi and Zambia. The

census data shows that Iringa holds about 1.5 million people with annual growth rate of

1.5%. The climatic features of the region are semi-arid tropical type to cool tropical type.

The regional landscape has features with various ranges that include the southern plateau

which rises up to 3,000m above sea level. Over two thirds of the region receives reliable

seasonal rainfall (from 500mm in relatively dry region to 2000mm in 1200-2000m altitude

mountainous area during rain season; November to June). As a whole, the region is

relatively cool and moderate throughout the year and is endowed with seasonal but

sufficient rainfall due to its various geographic conditions which are suitable for growing

diversified agricultural crops

Endowed with this rich climate pattern together with its large arable land34, the region should

enjoy considerable benefits from agricultural production. It is producing maize, wheat,

coffee, tea, pyrethrum, vegetables and fruits, although they are cultivated with low yield

agricultural technologies and expertise. They are largely grown for subsistence purpose

and, if any, marketed without processing (fruit and vegetable juices and all forms of canning

is limited). Productivity is not satisfactorily high.

One of the reasons for the farmers sticking to traditional farming is security. People are

generally reluctant to change their habit and prefer routine methods, yet the surrounding

environment is dramatically changing calling for adjustment to avoid being left out and

getting isolated. People are now living in a globalised society and cannot live without relying

on each other. It is therefore important to access market information, and it is critical to

understand various business opportunities as useful tools for sound communication and

trade with other marketing communities. Market information communicates data on what is

demanded by other communities and what should be produced for them. Consequently, one

could have options to start to introduce new local cash crops based on the market demand.

In the process of introducing new products, speed is important. Slow change is always

preferred as sudden changes always cause big disruptions. Although slow change also

generates some disturbances, time for trial and error is available to make adjustments.

However, too slow pace is also problematic since market demand is constantly changing. In

this sense, for the farmers, some sense of fast familiarity to the newly introduced crops is

useful.

Taking these into consideration, as a potential additional cash crop in the region,

introduction of edible bamboo shoots is recommendable since the region is already famous

and ideal habitat for bamboo. At the same time, it is also important to note that there is big

demand in East Asian countries for edible bamboo shoot. The approach should be to start

with experimental farming in small scales and evaluate suitable species in accordance with

34 The region’s 73% is an arable land and the rest is grazing, game reserves, forest reserves and wasteland

market demands.

As an encouraging example, dried paprika is now exported to Spain and this is a good

example for experimenting new products in the region. Additionally, taking advantage of the

region’s cool climate, particular cash crops like herb or tea, labelled as “health and beauty”

products, could be encouraged. Furthermore in that process of evaluation, reliable

transportation and establishment of constant supply chain channel with local farmers must

be formed and examined as well. Micro-credit schemes are quite useful financial systems

for small-scale farmers at initial experimental stages. Establishment of information centres

for producers and test-marketing shop (antenna shop) of the region’s products in Europe or

Middle East are also worth implementing.

Iringa region is among the top 5 with high GDP regions in the country. Yet the regional GDP

merely accrues from the operation of big tea making plantation (which accounts for 70% of

tea production in Tanzania35) and forestry industries (timber, paper, wood chip) in the region.

As for the forestry, paper from SPM Mgololo transported through TAZARA railway has

mostly been for domestic use, yet there is large potential for overseas export. The region

has an area covered by thick forest as well as woodlands estimated to be about 840

thousand ha. Iringa region has the biggest forest plantation in the country in SAO HILL with

an area of 44,000 ha. which comprises Red Pine and Eucalyptus species.

Although challenging tasks for large-scale forestry operations exist in obtaining experienced

manpower, operating funds and reliable means of transport, it is recognised that the region

is one of the best-suited sites for forestry industry in the country. As forestry business

requires monitoring system for growth evaluation and disease control, measures like

installation of GIS or Remote Sensing technologies might need to be taken. In addition, as

forestry-related derived activities, beekeeping, carpentry and furniture making would be

suitable for the region’s woodland conditions.

2.7.8 Mbeya Region

Mbeya region is situated on the fertile southwest land of the country. Moreover the region is

a gateway to the land-locked hinterland countries of Malawi and Zambia. From those

perspectives and being endowed with potentially rich cropland and located in a strategic

location, it is expected that the region enjoys the riches of agricultural harvest and strong

economic ties with neighbouring countries. However, in reality there is room for further

improvement since interregional trade is relatively underdeveloped and, consequently, the

35 Regional Commissioner’s Office Iringa (2004) Tanzania Mini-Tiger Plan 2020 Discussion Paper

regional per capita income, which is largely generated from agricultural sector, is lower than

the national average36.

Geographically, Mbeya region is comprised of hot humid basins and cooler highlands.

Temperature of the region is much cooler than coastal regions and average annual

temperature is 16oC in the highlands and 25oC in the lowlands, while annual rainfall varies

between 650mm in lowlands to 2600mm in highlands. The region enjoys food adequacy

comprised of 460,000 tons of maize and 120,000 tons of paddy annually. Dairy cattle

grazing in the highland zone is also an important economic activity.

As the first challenge for the agriculture sector, the region needs to expand the cultivated

land area. Even though the region’s 62% of total land is arable, actual cultivation is minimal

since only one third of the total arable land is under cultivation. There is also another

constraint relating to poor provision of extension services and agricultural inputs like

improved species and fertiliser. Hence, the creation and provision of business-friendly policy

and environment is an important task to be taken by local and central governments,

including collaborative measures to overcome the lack of entrepreneurship together with

scarce credit availability and high interest rate in the region.

Utilising locational advantage, the ideal business model for the region’s development could

be the establishment and operation of bonded and transit business with hinterland

countries. The region’s industrial model needs gradual development given the long distance

from the seaports from which raw materials for manufactured products will be imported.

Mbeya location is very strategic for exchange of various goods and services (including

storage, retail, distribution or insurance business) with neighbouring countries. So, by

utilising these advantages, the region is ideal location for transit and bonded warehousing

businesses and the establishment of a dry port or interregional Free Trade Zone as

successfully done in Chinese border provinces with neighbouring countries (Suifenhe city:

on Russian border). In this sense, establishing antenna shops, workshops and trade fairs

are useful tools and provide occasions to acquire the market information on products

demanded in neighbouring countries.

Another critical regional problem is HIV/AIDS. According to HIV/AIDS/STI Surveillance

Report of March 2003, Mbeya region is reported to be highly infected with 16%37 of 2 million

36 National per capita income is currently US$ 250, on the other hand Mbeya region’s per capita income is US175.37 Other highly infected regions are Dar es Salaam (12.8%), Mtwara (7.1%), Kilimanjaro (6.3%), Dodoma (6.2%) and

people, total regional population affected. The more economic ties and human contacts are

intensified with neighbouring countries, the more this persistent problem become significant.

Proactive and preventive measures must be undertaken before it is too late.

2.7.9 Mtwara / Lindi Regions

Topographic features of the two regions are quite similar with broad plains and common

economic activities. In particular, Mtwara provides a major sea outlet of the southern

corridor for trade and Lindi situated in the broad fertile hinterland is suitable for agricultural

products. Hence collaborative programmes between the two regions are ideal and

necessary to maximise their comparative advantages and potentials.

The region’s climatic features are characterized by average temperature ranging 240C to

270C and rain season bringing between 980mm and 1200mm annually. Although historically

this southern region was for a long time economically isolated from the rest of the country,

now Mtwara region receives considerable attention in the proposed Mtwara Development

Corridor projects to be embarked on in the future.

Major items of the project are development of comprehensive traffic network in the southern

regions, expansion of Mtwara port including the establishment of Export Processing Zone

(2646 ha) adjacent to the port area and construction of Unity Bridge between Tanzania and

Mozambique. Mtwara port is a natural deep-water port and there must be potentials to

accommodate much big transit demand to be generated, if properly marketed and cultivated

products are introduced in the regions. The following are recommended economic action

plans for the regions’ business opportunities:

1. Heavy industry: Introducing new ship breaking yard beside Mtwara port. The port

based heavy industries can be a combined with two other region’s potential

industrial sectors; electricity generation from coal/natural gas exploration and

steel mill industries. The concept is that acceleration of exploring deposits of

natural gas (at Songosongo) and coal for electricity generation would be

enhanced as the nation’s economic activities are intensified, and at the same

time, demand for construction materials like steel would be dramatically

increased. This tendency has been seen in most Asian developing countries at

the initial phases of boosting their economies. Consequently how to acquire steel

becomes important. The process of making steel from iron ore is costly and need

advanced technologies, whereas the steel acquired from ship breaking requires

less technology and low investment capital. To utilise abandoned ships as raw

materials for steel industry for domestic construction industry, or for trading with

Kagera (8.6%).

neighbouring countries is ideal business option for regions with seaports. As the

ship breaking business takes off, the electricity generated from natural deposits

can be used for the operation of steel mill industry in which the scrap made from

ship breaking yard are processed.

2. Agriculture: The region’s agricultural products are mainly cassava, maize,

sorghum, rice, cashew nuts, coconut, simsim, and groundnuts. Major cash crops

are cashew nuts, simsim (sesame), and as a derived product from those and

sunflower, edible oil production is also flourishing. As a newly introduced product,

Macadamia, which has been implanted in Kenya and proved to be commercially

successful, and soya beans could be promising.

3. Commercial forestry: The region has a vast forest area where potential

commercial forestry in hard and soft timber production is found. Forest vegetation

includes valuable hard wood such as Mahogany, Ebony varieties of Acacia and

Giant baobabs. Utilising Mtwara port, the forestry products like timber, lumber,

and wood chip can be exported overseas. However, the transport means in the

inland need to be improved. In addition, these same forests are good home

ground for beekeeping so that honey, beeswax and other agricultural products

can be exploited simultaneously.

4. Fishery: Coastal fishing, which accounts for 90% of the region’s catch, is carried

out on subsistence basis using traditional vessels and gears. Present obstacles to

the region’s fishery development are shortage of trained staff, repairs of engines

and cold storage vessels. An option of installing the outboard engine for fishing

boats and fish breeding should be taken into consideration.

5. Tourism: Coast beach resort and hotel development in the regions have much

rooms for expansion. To maximise the region’s tourist attractions, however, the

improvement of social and physical infrastructure is limited. So at the initial stage,

targeting the provision of tourist accommodations by local people’s initiatives like

Old Boma’s rehabilitation is prominent example for successful tourism

development in Mtwara.

Mtwara corridor

In March 2002, Tanzania and Mozambique signed a Memorandum of Understanding (MoU)

to develop the Unity Bridge over the Ruvuma River to link the regions of Mtwara, Lindi and

Ruvuma in Tanzania to the provinces of Cabo Delgado and Niassa in Mozambique.

Construction of comprehensive road network in southern region is also proposed and the

creation of coastal corridor from Dar es Salaam to Mtwara is also an integrated plan.

Southern region’s economical integration is quite beneficial for making sound relationship

with neighbouring countries. The benefit of improving infrastructure and integration should

be embodied in the actual increase of trade whereby the linkage between existing demand

and supply channel in the regions should be enhanced.

2.7.10 Zanzibar

Zanzibar Island is 35km off the shore of the mainland Tanzania. The island was formally

ruled by Omani Sultan. The 2002 census shows that the population of the isle is about 1

million with an annual growth rate of 3.1%.

Zanzibar has formulated its own Poverty Reduction Strategy Paper (PRSP) and in addition,

the government has also produced a long-term and market-led economic growth plan,

Zanzibar Vision 2020 whereby it has abandoned the plan to promote Export Processing

Zones (EPZs), in favour of promoting a Free Trade Zone (FTZ).

The Isle’s economic structure mainly consists of agricultural and tourism sectors. The trade

deficit is high, and the economy is largely dependent on imported commodities owing to

weak standing in local manufacturing and agriculture sectors. Agriculture sector accounts

for around 25% of the Isle’s GDP, mainly cultivating subsistence food crops (millet, maize,

sweet potatoes, bananas, cassava, peas, rice, groundnuts and sorghum). As for the cash

crops, clove, tobacco, rubber, vanilla and peppermints are cultivated, but the trade of

cloves, which account for almost the whole of the Isles’ export earnings, is exposed to fierce

competition from Brazil, and increased production in the main export market, Indonesia.

Consequently, the contribution of cloves in Zanzibar trade is shrinking in size and its status

prompting shift to other new cash crops. Additionally, fishery should have large room for

improvement in the island, yet the actual performance of the sector is poor and does not

contribute to the isle’s economy as expected.　

On the other hand, tourism sector accounted for 23% of GDP in 2000. With Beach resorts

and cultural attractions, Zanzibar received nearly 90 thousands tourists in 1999, mainly from

Europe and Asian countries. However the present status cannot be improved unless much-

needed infrastructure and accommodation service are provided, and moreover provision of

security and qualified tourist service staff need to be enhanced. In the light of this, the

government should formulate a proper Zanzibar Tourism Development Master Plan aimed

at improving the Isle’s tourism industry and tourism-related human resource, focussing on

the attraction of foreign investments in the sector.

3. EXTERNAL SECTOR

Overview

Tanzania’s main source of foreign currency is through export of traditional and non-

traditional commodities. Its central planning economic regime up to the 1980s, faced by the

oil shock, the Iddi Amin war of Uganda, and persisting drought, failed to modernize

Tanzania’s economy and to make it debt-free.

The Structural Adjustment Programmes initiated in consultations with the World Bank and

IMF in 1986 have been successful in turning the balance of payment into fairly healthy

condition and in restoration of macroeconomic fundamentals. However, Tanzanian external

sector still remains vulnerable to the world economic environmental changes, especially

fluctuations in export commodity prices.

Exports of goods and services have been contributing to the GDP growth. Although its peak

was in 1995 it is estimated that its share will steadily rise due to recent trends of fairly rapid

export growth.

FDI, with limited opportunities for large-scale investment so far, has been maintained at

modest level, contributing to the GDP growth at about 2%.

Figure 3-5 Exports and FDI per GDP

0

5

10

15

20

25

91 93 95 97 99 01 03

Year

% o

f GD

P

0

1

2

3

4

5

6

Ann

ual %

Exports of goodsand services (%of GDP)

Gross foreigndirect investment(% of GDP)

GDP growth(annual %)

1999 2000 2001 2002 2003Population, total (millions) 32.92 33.70 34.45 35.18 35.89GNI, Atlas method (current US$ billions) 8.29 8.97 9.41 9.67 10.2GNI per capita, Atlas method (current US$) 250 270 270 280 290GDP (current US$ billions) 8.64 9.08 9.34 9.38 9.87GDP growth (annual %) 3.48 5.15 5.69 6.32 5.56Exports of goods and services (% of GDP) 13.78 14.65 15.58 16.67 17.59Gross foreign direct investment (% of GDP) 2.12 2.13 N/A N/A N/A

Source: The World Bank, World Development Indicators Database, 2004

3.1 Trade: Exports and Imports

3.1.1 Exports

Exports have played an important role in Tanzania’s economic growth, and the ratio of

exports of goods and services to GDP has averaged about 15% throughout the late 1990s,

and is on constant increase. An important characteristic of Tanzania’s export is that

composition of export commodities have been changing drastically from time to time,

reflecting the commodity prices and the world demand.

The value of Tanzania’s total export to the world in year 2003 was 1,142.4 USD million,

having nearly doubled, i.e., grown at 14% annually, from the figure in 1998, which was

588.53 USD million. The highest-share was contributed by non-traditional commodity

export, rising sharply in the recent years. Exports of minerals have increased rapidly

overtaking traditional exports and becoming Tanzania’s top export commodity since 2001.38

The major factor of growth being the contribution of minerals exports, (mostly composed of

gold) which accounted for 48% of the total exports in 2003. Exports of minerals have grown

38 Economic Survey, 2003; President’s Office, Planning and Privatisation.

from 22.59 million USD in 1998, to US$ 548.30 million in 2003.

On the other hand traditional exports declined substantially during the same period. Coffee

export, for example, decreased from 108.7 million USD in 1998 to 35.2 million USD in 2002.

Similar trend can be seen with other traditional commodity exports such as cashew nuts.

Table 3-21 Visible export per commodities

CommodityValue ( million USD)

1996 1997 1998 1999 2000 2001 2002 2003

Traditional:

Coffee 136.11 119.28 108.74 76.60 83.70 57.10 35.22 50.00

Cotton 125.33 130.38 47.63 28.50 38.00 33.70 28.63 46.60

Sisal 5.32 9.12 6.78 7.30 5.60 6.70 6.55 6.60

Tea 22.54 31.83 30.43 24.60 32.70 29.00 29.6 24.80

Tobacco 49.24 53.64 55.39 43.40 38.40 35.70 55.52 42.20

Cashew 97.77 91.08 107.32 100.90 84.40 56.60 46.59 42.20

Cloves - - - 19.90 10.00 12.30 3.96 10.30

Sub-total 436.31 435.33 356.29 301.20 292.80 231.10 206.07 222.70

Non-traditional:

Petroleum products 15.79 7.12 0.1 0.40 0.00 0.00 0.00 0.00

Minerals products 55.85 51.08 26.37 73.26 178.20 302.23 383.80 548.30

Manufactured Goods 122.8 111.33 35.69 30.10 43.40 56.16 65.90 99.90

Other Exports 133.01 147.7 170.08 138.37 148.90 186.88 246.73 271.50

Sub-total 327.45 317.23 232.24 242.13 370.50 545.27 696.43 919.70

GRAND TOTAL 763.76 752.56 588.53 543.33 663.30 776.37 902.50 1142.40

Source: Bank of Tanzania,: The Economic Survey 2003; President’s Office, Planning and Privatisation.

3.1.2 Export partners

Tanzania’s top export partner, in the recent years, has been the UK. Tanzania exported

161.8 million USD to the UK in 2002, accounting for 18% of the total export. Gold consists

of a large portion of Tanzania’s export to the UK. There are also emerging export partners

like Japan and the Netherlands, both becoming among the top partners in the most recent

years.

Before the boom in gold exports the general tendency was that India was the top export

partner, and is still Tanzania’s principal export destination, while Germany, which used to be

the top export partner, is now in decline. France, which had no significant trade relations

with Tanzania in the late 1990s was the second to the UK for its import of gold from

Tanzania in 2002.

In terms of the World regions Tanzania’s top export partner is Europe. The EU accounts for

a 55% share, and Asia comes second, accounting for as much as 25% of total exports.

African countries are also important destinations for Tanzania exports as they account for

about 12% of its total exports. Among these destinations, the EU is the only destination for

which exports increased throughout 1997-2001. All other trade partner groups experienced

declines in their share of total exports.

Table 3-22 Tanzania’s major export partners

1996 1997 1998 1999 2000 2001 2002 2003

Japan 58.99 40.59 44.14 44.39 35.43 68.54 96.29 89.80

India 88.05 73.86 116.79 113.16 98.82 82.20 64.24 81.31

Netherlands 38.11 32.11 45.61 32.81 46.19 51.71 53.95 76.60

United Kingdom 41.03 52.63 60.97 95.47 148.17 140.44 161.80 50.45

Germany 64.97 67.38 49.11 36.32 66.85 38.28 27.59 50.06

Kenya 13.04 25.22 28.49 28.37 38.03 38.41 35.34 44.73

Italy 8.88 4.94 7.63 7.36 9.39 7.82 24.44 11.58

France 12.01 6.19 4.20 2.76 36.84 138.39 154.45 6.05

World Total 763.5 619.4 588.4 621.5 734.9 774.4 948.6 944.3

Source: IMF Direction of Trade 2004 Yearbook

3.1.3 Imports

Visible import (c.i.f.) in 2003 was 2,168.2 million USD. Its composition was 852.4 million

USD of capital goods, 679.7 million USD of intermediate goods and 636 million USD of

consumer goods. All three categories of import increased compared with 2002.

The increase in the importation of capital goods is attributable to an increase in the

importation of transport and construction equipments as well as machinery due to the

expansion of transport, construction and manufacturing sectors.

Importation of intermediate goods increased owing to an increase in importation of

petroleum products, fertilisers and industrial raw materials. Likewise, the increased

importation of consumer goods was due to an increase in imports of food and foodstuff,

pharmaceuticals, clothes and other domestic appliances.

　　Figure 3-6 Composition of Imports (million TZS)

Year Consumer Goods Intermediate Goods Capital Goods TOTAL

1990 18,783 116,277 96,223 231,283

1991 62,000 69,710 139,668 271,378

1992 101,641 94,233 196,791 392,665

1993 194,604 107,481 229,657 531,742

1994 247,076 128,544 290,638 666,258

1995 201,347 294,224 275,207 770,778

1996 182,340 267,600 252,501 702,441

1997 301,018 203,418 198,670 703,106

1998 441,025 155,225 311,244 907,494

1999 503,868 197,271 360,225 1,061,364

2000 401,612 222,399 444,427 1,068,438

2001 405,139 336,252 565,740 1,307,131

2002 456,176 375,241 640,118 1,471,535

2003 601,100 663,580 780,107 2,044,787

Source: Bank of Tanzania,: The Economic Survey, 2003; President’s Office, Planning and Privatisation.

It is worth noting that the import of consumer goods jumped in 1997, 1998 and in 1999. This

is due to trade liberalization. If this trend were to continue the trade deficit of Tanzania will

worsen drastically. The consumer goods import remains at modest level, and this could be a

sign of competitiveness of import substitute industries becoming stronger.

3.1.4 Import partners

Traditionally Tanzania’s import partner has been the UK, while South Africa has emerged as

an important exporter to Tanzania in the mid-1990s. Imports from South Africa are mainly

mining related capital goods and consumer goods. Although the imports from South Africa

declined slightly since year 2001, it is still on the top of the partner list.

Next to South Africa the second import partner for Tanzania is China. Import from China is

notably represented by capital goods, i.e. industrial machineries. The similar trend can be

seen with the UK, from which machineries are imported. Further, import from the United

Arab Emirates consists of refined oil as well as some negligible amount of transit trade of

miscellaneous items.

Table 3-23Tanzania’s major import partners

1996 1997 1998 1999 2000 2001 2002 2003

South Africa 141.82 105.55 129.38 170.84 174.41 203.43 188.78 228.86

China, P.R.: Mainland 70.58 27.37 48.33 58.02 68.03 70.55 78.97 210.60

India 77.88 171.68 89.00 94.57 88.77 87.47 106.84 129.53

United Arab Emirates 62.89 110.34 59.14 51.25 56.83 108.97 97.08 122.87

Kenya 262.91 89.30 105.14 96.15 93.10 96.08 95.21 115.43

United Kingdom 140.53 132.34 121.53 128.30 106.48 110.62 94.91 101.63

Japan 84.97 97.01 129.58 178.09 142.12 150.70 138.72 85.17

United States 55.22 66.22 80.31 99.31 58.93 65.31 91.38 72.71

World Total 1,787.3 1,408.8 1,571.3 1,660.3 1,520.5 1,780.2 1,749.4 2,258.7

Source: IMF Direction of Trade 2004 Yearbook

3.1.5 International trade arrangements

Tanzania is a member of the WTO as well as regional economic frameworks such as the

Southern African Development Community (SADC) and East African Community (EAC).

These regional arrangements have created close economic ties with Eastern as well as

Southern African countries, presumably contributing to the relatively high share of intra-

African trade in Tanzania’s imports whereby South Africa being Tanzania’s major trade

partner. However concerning export data it does not show signs for preferential

arrangement for regional export, as Tanzania’s export to the neighbouring countries are still

at minimal level.

As a Least Developed Countries (LDC), Tanzania is eligible for LDC initiatives such as the

Everything But Arms (EBA) of the EU or LDC preferential tariffs of Japan as well as with

other developed countries. Furthermore, Tanzania is in African Growth and Opportunity Act

(AGOA) and eligible for its apparel and textile exports to the USA.

In spite of all these preferential initiatives of developed countries, it is difficult to observe

their direct correlation with export growth from Tanzania to respective developed countries.

For exports of manufactured goods such as garments to take advantage of these

preferential arrangements industrial activation for export promotion is required. Other than

the garments there can also be items such as leather goods and processed food that might

take advantage of quota-free exports especially to Europe.

Table 3-24 WTO Accession and Preferential Trade Arrangements

3.2 Foreign Direct Investment: FDI

3.2.1 Investment promotion institution and arrangements

Tanzania has been striving to attract Foreign Direct Investment (FDI) by means of

facilitating the information gathering and simplification of application procedures for the

investors. Its flagship project was to set up a “one-stop shop” for the investors.

Tanzania Investment Centre (TIC) was established in 1997 by the Tanzania Investment Act

No. 26 of 1997 to be “the primary agency of Government to coordinate, encourage, promote

and facilitate investment in Tanzania and to advise the Government on investment related

matters”. All Government departments and agencies are required by law to cooperate fully

with TIC in facilitating investors.

In order to strengthen and expedite facilitation services, 7 senior officers from Government

WTO　 Africa EU US Asia Othersmember SADC,　EAC Cotonou,　EBA AGOA* J apan-LDC -

Acronyms: AGOA*=African　Growth　and　Opportunity　Act　(including　Apparel　and　Textile　Benefits)Cotonou=the　Cotonou　Agreement,　EAC=East　African　Community,　EBA=Everything　But　ArmsSADC=Southern　African　Development　CommunityJ apan-LDC=preferential　trade　treatments　for　Least　Developed　Countries　by　J apan

or its executive agencies have been permanently stationed at TIC to serve investors under

the general direction of the TIC Executive Director. Presently these officers include those

from Lands Department, Revenue Authority (TRA), Immigration Department, Labour

Division, Directorate of Trade, and Business Registration and Licensing Agency (BRELA).

Between September 1990 and September 2000, TIC was able to register 1,588 projects.

The number of projects per sector are as follows; Agriculture and Livestock (123), Natural

Resources (93), Tourism (226), Manufacturing (746), Petroleum and Mining (74),

Construction (94), Transportation (86), Telecommunication (15), Financial Institutions (31),

others (100).39

3.2.2 Investment incentives

The Government of Tanzania gives tax incentives to foreign investors in two structured

sectors; lead sectors (agricultural, mining, economic infrastructure, tourism, and petroleum

and gas) and priority sectors (manufacturing, natural resources such as fishing and forestry,

aviation, commercial buildings, financial services, transport, broadcasting, human resource

development and export oriented projects).

Table 3-25 Tax Incentive Example (priority sectors)

3.2.3 Recent trends

Recent improvement in the economic environment in Tanzania has led to increased

opportunities for business investment. The successful privatization program has generated

interest from foreign companies, in particular in the telecommunications and water sectors.

The UK has traditionally been Tanzania's leading trading partner but their position has come

under threat from Japan and India’s presence in terms of total bilateral trade. The leading

exporters to Tanzania are South Africa, Japan, UK, Kenya and India.

The UK is also currently the largest foreign direct investor in Tanzania. UK Companies have

39 UNIDO

invested approximately 229.5 million GBP in Tanzania over the last 11 years, mainly in the

agricultural and tourism sectors. Leading UK investors are CDC, BP, Standard Chartered,

Barclays and Unilever. Other large UK companies include Glaxo SmithKline and British

Airways40. The surge of opportunities in the mining sector has attracted new investors from

Ghana, Australia, Canada and USA.

3.2.4 Outlook for FDI trend

The peak annual FDI value was attained in 1999 at 516.7 million USD, and has been

declining since then. The peak was on the account of substantial investments in the mining

sector. It is estimated that the annual value of FDI will stabilize at approximately 200 million

USD for the coming years unless major industrial projects are undertaken. However, this is

only a negligible level compared with Official Development Assistance that flows into

Tanzania, and therefore the FDI will essentially have to be revitalized for Tanzania’s

economy to take-off from aid-dependent situation.

Figure 3-7 Growth of Foreign Direct Investment (FDI) flows (1997-2003)

Source: The Economic Survey 2003; President’s Office, Planning and Privatisation.

The government of Tanzania regards FDI as an essential and probably the most sustainable

factor in compensating foreign aid dependency for its balance of payments support. The

government is now in position to work out plans to boost private sector economic

performances, as investment promotion effort itself is only an environment and cannot

attract businesses all by itself.

40 UK Trade & Investments, Export information: Country profile

0

100

200

300

400

500

600

FDI　value　in　m

illion　USD

FDI 157.8 172.2 516.7 463.4 327.4 240.4 247.8

1997 1998 1999 2000 2001 2002 2003

　

Given that Tanzania is now eligible for debt relief initiatives, it can be said to have sufficient

resourcesand institutional capacity to begin to fund its own national development.

Partnership with the private sector, can well provide opportunities for increasing FDI inflow.

3.3 External Debt

According to the OECD statistics, Tanzania is indebted with external debt of 5.6 billion

USD.41 　 Among Tanzania’s external debt the official credits, which are multilateral and

bilateral concessional loans, amounted up to 4.5 billion USD in 2002, and consist the

majority of external debt. Commercial and other private loans as identified from BIS data

reporting summed up to 380 million USD in 2002. The fact that more than 90% of the

external debt comprise of official debt reflects Tanzania’s continuing heavy reliance on

external debt for public finance. Tanzania has already reached completion point under the

Heavily Indebted Poor Countries (HIPCs) initiative. The country, therefore, is eligible for

HIPCs debt relief and substantial amount of external loans have now been written-off under

Paris Club initiative, thus relieving Tanzania’s external debt position.

However, such debt relieving effort can not be enough if Tanzania’s external debt owed to ,

non-Paris Club members in particular China, Iran, and Libya, are not treated equally.

Otherwise these creditors are likely to continue to require Tanzania to reimburse their

lending.

Furthermore, from the macro point of view such debt relief is unlikely to change Tanzania’s

structural indebtness and heavy reliance on external assistance. The amount of debt due

each year is on steady increase since 1998, and has risen to 467 million USD in 2002,

which equals to approximately 5% of GDP at current prices. It can be pointed out that

Tanzania’s current situation of high dependence on external loans is not sustainable.

Tanzania’s public sector needs to further strengthen its fiscal policies and at the same time,

activate private sector international transactions.

Table 3-26 External debt statistics –selected series

41 The World Bank’s Global Development Finance estimates Tanzania’s debt stock in 2001 at 6.7 billion USD, while the Bank of Tanzania claims the total external debt in end 2002 to be 7.4 billion USD in its Quarterly bulletin.

3.4 ODA Trend

Tanzania is dependent on Official Development Assistance (ODA) for its balance of

payments support. Its net ODA per Gross National Income (GNI) in 2002 was 13.2%, and

is maintained at high levels.

Major sources for Tanzania are UK, Japan and the Netherlands on bilateral basis whereby

their bilateral share in gross ODA is 68%. Among these major sources, UK has been

maintaining its position as the leading source of assistance for the recent years, while ODA

from Japan has been fluctuating from year to year. In relation to the multilateral sources

Tanzania relies heavily on IDA of the World Bank Group.

About one-third of total ODA to Tanzania is spent on social sectors, which are the principal

target for development. ODA to economic competitiveness sector takes about 10% of the

total assistance. As with other Heavily Indebted Poor Countries (HIPCs) a large portion

(approximately 30%) of ODA goes to debt relief efforts.

Figure 3-8 Official Development Assistance at a glance

3.5 Recommendations for further steps

The findings from analysis of the external sector of Tanzania clarify the need for the country

to boost its export competitiveness. The present situation in which the country’s foreign

currency earnings are dependent on development assistance and on export of limited

minerals is not sufficient to support the country’s sustainable development. Therefore, an

export enhancement drive is urgently required.

Tanzania has been experiencing favourable environment that attracts Foreign Direct

Investment so far, and this trend should be sustained. Among various possible export

enhancement scenarios should be on taking advantage of this trend in successfully

attracting foreign direct investment, which is the main objective of the “Tanzania Mini-Tiger

Plan 2020”.

Within this framework, the export enhancement drive can be drawn out from managing the

“portfolio” of potential export goods, stemming from the industrial development strategies. A

comprehensive management of policies will be dealt with after several promising scenarios

and options are drawn.

Some studies, as well as pilot projects will form the foundation for the country’s

comprehensive strategy. The followings are recommended studies and projects that are

essential for Tanzania’s exporting industries to be developed:

3.5.1 Export competitiveness enhancement study

Tanzania, rich in primary export commodity can take advantage of its endowed resources by

strategically allocating investment into sectors that may become competitive in the world

market. In today’s world market, good quality and modest pricing does not guarantee entry

into the market. Right quantity and stabilized supply, free from fluctuations and other

uncertainty is the essential condition for the goods to be recognized as attractive.

Moreover, quality and quantity is not what the producer decides; it is determined by what the

market requires. This is what International Best Practice (IBP) is, in which Tanzania’s

exporting industry must stand on.

For Tanzania to fulfil the condition to access to the global market and to become

competitive, a study to analyze the impediments and exploit potential strengths is useful for

building up the foundation for export boosting strategy. The export competitiveness study

will require detailed analysis of the two main components:

1. Quality component

- Description of the present situation.

- Review of international best practices and market expectations.

- Needs analysis – the gap between reality and best practice. This part would make

policy options for eliminating obstacles to exports, keeping in mind the potential for

diversification through greater value added, processing or branching into related

products and services.

- Detailed specification of requirements, this will include options on quality systems and

institutional arrangements.

2. Market Access

- Description of the present situation. This would involve not only an assessment of the

institutional set up for export market access, but also mechanisms for export financing

and trade logistics.

- Review of key potential markets together with analysis of key impediments to market

entry.

- Review of international best practices in terms of mechanisms to enhance market

access.

- Review the potential role of Tanzania’s and international business associations.

- Detailed specification of requirements to strengthen market access.

3.5.2 Export industry development strategy: Agriculture

Sector developments are usually aimed at developing efficient domestic production.

However, exporting industries must be developed with a totally different purpose by not

focusing on what can be produced, but by producing what the market needs.

In developing agricultural exports, the starting point is not the existing domestic production

but the world market. The study will then proceed with the following steps:

- Assessment of the world commodity market and analyzing various estimation

scenarios.

- Assessment of the institutional (such as agricultural cooperatives aimed at export) set

up for export market access and mechanisms for export financing and trade logistics.

- Reviewing existing regime for industrial agriculture, in particular, investment scheme,

land ownership and labour regulations.

- Drawing possible scenarios for investment-driven agricultural production and

marketing.

- Possible pilot plantation projects

3.5.3 Export industry development strategy: Fishery

Fishing is critically different from agriculture due to the fact that the resource is highly

depletable. Tanzania is rich in marine fishery resources but is not getting economic benefit

from its efficient use. Moreover, better resource management policy is required to ensure

sustainability of Tanzania’s maritime resource, and this has to be in tandem with the

economic aspect of export promotion strategy.

Fishery in the Indian Ocean by developing countries tends to excessively incline on easy-to-

cash products such as prawns, tuna and cuttlefish. However, such species are generally

overfished, endangering their sustainable existence. Fishing industry in developing

countries is required to shift to more common species (i.e most of the demersal species),

thus ensuring easier catch with less worry on excessive fishing. However, for such common

species of fish to be able to sell to the world market, production and marketing has to be

systematically organized according to the international business practice, and therefore

institutionalization of the existing artisanal fishery and its infrastructure is essential.

Further, fishery products, being delicate in quality in terms of hygiene and freshness, must

comply with high standard of controlling system. The sector development should also focus

on the requirement for international standard of quality control. The main components of

the study, together with the possible pilot projects are as follows:

1. Economic Aspect

- Assessing various technologies for controlling industrial fleet

- Assessment of demersal species and their possible utilization. This will focus on how

artisan fishery can be organized to make communities collaborate on collecting and

distributing demersal fish to form sufficient quantity for export.

- Assessment of institutional set up (such as fishery cooperatives) for export market

access and mechanisms for export financing and trade logistics.

2. Quality Control

- Assessing the present capacity in quality control in terms of freshness and sanitary

condition.

- Consideration of promoting fishery-processing plant to be certified for HACCP

standard.

- Gap analysis between the present capacity and international business practice in

quality control.

- Possible equipment grant pilot projects.

3.5.4 Export industry development strategy: Manufacturing

Needless to say primary industrial sector, no matter how big it grows, is unlikely to be

sufficiently productive to supply all of the country’s foreign currency earnings. Tanzania

should develop its manufacturing sector based on its advantageous status of cheap labour

force and abundant resources. Development of textiles, garment, leather, food processing

and other light industries will be the first priority for Tanzania to create a leading export-

oriented manufacturing industry.

For Tanzania’s export manufacturing to become competitive the cost element must be

seriously analyzed in order to defy disadvantage in logistical cost of manufacturing

compared with China, India, Bangladesh and other countries currently becoming aggressive

exporters of such goods. The government should design favourable industrial policies to

incubate the industries and to give advantageous environment. The study need therefore

go through the following assessments and analyses:

- Assessing the present situation of Tanzania’s export manufacturing industry

especially in comparison with its rival countries’ industries,

- Gap analysis between the present capacity and international business practice in

management, quality control and marketing,

- Analysis on potential market entry: requisite conditions, chances and risk assessment

- Benchmarking analysis with the existing rival foreign industries,

- Market access assessment: logistical impediments, cost structure, and other possible

obstacles,

- Identification of strength in Tanzania’s manufacturing industry, and

- Possible financial support (loan, incentives) pilot projects.

3.5.5 Export goods portfolio management

As the resource for investment is limited, Tanzania will have to focus on some of the

promising strategies for its export enhancement, taking into account the “portfolio” of its

available resources and opportunities. Portfolio must be based on dynamic analysis so that

the optimum distribution of resource is given even as the global economic climate changes.

The portfolio can, but not necessarily, be based on econometric equilibrium model, or input-

output analysis.

Another important aspect in portfolio management of several investment options is the risk

management factor. The portfolio must become a useful tool in managing failures in each

business so as to minimize the losses. The study, therefore, can proceed in the following

manner:

- Assessing the potentiality of each export enhancement strategy in return on investment

(ROI) terms,

- Analyzing and drawing out the outlook for global economic climate in terms of several

options,

- Risk analysis taking into account international competition and possible management

and marketing options,

- Building of econometric portfolio model, and

- Assessment of the capacity for capital resource management and assessment for

institutional building requirement.

4. KEY BOTTLENECKS AND PROBLEMS

Despite recent progress, Tanzania is still faced with many serious bottlenecks for attaining

the accelerated economic growth of 7% to 10% which was experienced in Asia led by the

private investment policy and strategy. Based on observations, field visits and discussions

with various government and private people, the following are considered to be the major

bottlenecks and problems.

1) Poor productivity and limited economic activities in nearly all sectors, except in modern

gold mines. Almost all sectors producing at subsistent economy level.

2) Limited volumes of marketable products for domestic and international markets,

3) Dependency on primary commodities: limited volume of exportable products (coffee,

cashew nuts, cotton, sugar and fish) while traditional exportable products are loosing

competitiveness in the global market.

4) Limited availability of machinery, energy and power for all sectors. Use of machinery

and energy and power is very limited in all sectors.

5) Weak infrastructure and associated poor services: Transport, telecommunications and

energy. Although basic infrastructure such as roads and airport has been improved in

recent years, infrastructure and services in general are still in weak condition and

further improvement is needed.

6) Limited air flights to Tanzania are limiting opportunities to attract tourists and investors.

Currently only KLM and BA are flying directly to Tanzania from Europe and none from

Asia. It is important to increase direct flights from as many countries as possible for

promoting tourism, investments and exports.

7) Poor human resources and skills for the modern market economy. Further and proper

training and practical skill development are needed together with meaningful job

creation.

8) Insufficient export earnings: the export earnings were only $1.14 billion in year in 2003,

which is too little for the 35 million people to meet their minimum imports of $1.97 billion.

This has led to big export-import imbalance.

9) High population growth of 2.9%: compared with the job creation capacity. The

population growth is relatively high leading to high unemployment and under

employment.

10) High HIV/AIDS infection rate (8%): 140,000 people died in 2001 due to AIDS. It is

important to stop and reduce the infection, thus reducing the economic loss and human

suffering as much as and as soon as possible.

11) The trap of the “Vicious Circle of Poverty” which requires special aggressive efforts.

12) Aid dependency mentality inherited from the colonial period; dependent on ODA grants

and NGO gifts.

13) Under developed financial and capital markets resulting to high interest rates and

limited risk taking investments, which are one of the major problems for promoting

private investments.

14) Limited nation-wide programmes for mobilising citizens in nation-building efforts like

One Village One Product.

15) Weak government institutions for promoting investments and exports by eliminating

obstacles and problems as they arise.

Based on the experiences of Asian countries in the past 30 years, these bottlenecks and

problems are not peculiar to Tanzania. All Asian countries including China had similar

bottlenecks and problems in the early periods. What is important is for Tanzania to

recognize these problems and decide to reduce and/or eliminate them one by one with a

strong will so as to be able to get out of the poverty trap in the near future.

5. ADVANTAGES AND OPPORTUNITIES

Despite the bottlenecks identified in section 5, there are many advantages and new

opportunities for accelerated growth including the following:

1) Stable Political and Social Environment; Tanzania is one of the most stable countries in

Africa.

2) Strong political will shown by H.E the President and other leaders for guiding Tanzania

to a new modern economy.

3) One of the best governed relatively transparent government in Africa: Based on IMF/WB

rating, Tanzania is number one in Africa having carried out drastic reforms in the past

several years.

4) Favourable Climates and abundant agricultural land area with relatively good rain fall.

5) Unique Tourism Attractions: Safari and Zanzibar Beach Resorts plus possible

development of beach resorts on the long coastline and historic/archaeological sites.

6) International Transits Opportunity in a long costal area with several ports and seven

hinterland countries in the Western border regions.

7) East African Community (EAC) with Kenya and Uganda has been formed to create a

common and larger market. This may make some of import-substitution type of

manufacturing projects to feasible.

8) In order to attract investors, Government has already started Export Processing Zones

(EPZ) with the EPZ Act and its institutional framework from 2003. The Government is

expanding to Special Economic Zones (SEZ).

9) Economic restructuring/reform and privatization process have been successfully

conducted in the past several years and as a result, economic performance has been

improved significantly. The Government is to continue its reform policy as a challenge to

change Tanzania to a new modern country.

10) Tanzania has duty free access to major global markets of USA (AGOA), EU (EBA) and

Japan. Such free access of her products is one of the advantages especially for

manufacturing industries.

11) Due to rapid economic growth of several developing countries such as China, ASEAN

countries, India plus recovery of former USSR and East European countries, demand

for some of the commodities have been increasing rapidly and shortages of these

commodities are likely to open an opportunity for Tanzania. Among these commodities,

it is considered that Tanzania may be able to capture the expanding global market in the

following products: (1) Paper Pulp/woodchip, (2) Rubber, (3) Grains: maize, cassava,

and soya beans and other beans, (4) Ethanol from maize and sugar and (5) Meat: such

as chicken, pork and beef.

6. THE TANZANIA MINI-TIGER PLAN 2020 STRATEGY

6.1 Key Strategies and Plans

Based on the bottlenecks and problems plus new advantages and opportunities for

Tanzania, the following Mini-Tiger Plan 2020 strategy is recommended. The basic strategy

for Tanzania is to make use of new opportunities and advantages by eliminating or reducing

problems as much and as soon as possible. More specifically, Tanzania should use two key

development tools which are well proven in the Asian Economic Miracle to get out of the

Poverty trap: (1) Well Proven SEZ Method and (2) Nation-wide stimulating programs such

as “One Village-One Product Program” and “Self Help Infrastructure Program”. In order to

accelerate the Tanzanian economy to reach the Asian level of GDP growth rate of 8% to

10%, all possible actions must be taken and all weaknesses and problems mentioned in the

previous chapter must be either reduced or eliminated as soon as possible. Based on the

analysis of Tanzanian economy the following strategy and plans are recommended:

1) First formulate the “Tanzania Mini-Tiger Plan 2020” based on the Private Investment led

economic growth model with a clear future vision and targets. The target for Tanzania

should be to achieve the Level of Mini-Tiger economy of the average ASEAN Level of

2000 in terms of GDP, export capacity, per capita income and other social indicators

(say $ 40 billion GDP, Per Capita Income of $1,000 and $20 billion worth of exports by

the year 2020).

2) Select most promising sectors for aggressive development for the first 5 years: (i)

Primary Sector: Agriculture / fishery / forestry / mining especially export-oriented cash

crops, (ii) Tourism and (iii) Export Oriented Light industry (Garment and Textile and

agro-processing industry). Tanzania must select industries which are competitive and

sustainable under the competitive global market economy.

3) In order to promote the key promising sectors aggressively, establish several types of

Special Economic Zones (SEZ) for attracting private investments aggressively both in

FDI and DDI: (Possible SEZs are Garment and Shoes based SEZ, Tanzanite Jewellery

Based SEZ, Tourism Based SEZ, Agro-processing Based SEZ, Commercial Forestry

Based SEZ, Import-substitution industry based SEZ, ICT Based SEZ, Second-hand

machinery sales based SEZ etc.). Investing own funds in several pilot SEZs and

improving infrastructure, legal frameworks, and supporting business services should be

given a high priority. SEZs will attract export-oriented and/or import-substitution

industries in order to earn badly needed hard currency or save hard currency

respectively.

4) Expand and enhance export and investment promotion agencies and promote both

private investments and exports as a top priority headed by H.E the President. This

initiative should cover the whole country, including villages.

5) In order to encourage the new export products, new cash crops and new manufacturing

products, a pro-active program for introducing new business/services shall be

introduced moving away from a passive policy of just depending on the ODA assistance

and the export of traditional products such as maize, coffee, sugar and cashew nuts.

6) Introduce new nation-wide movement for mobilizing the entire population towards a

Modern Tanzania by 2020.

1) “One Village- One Product (OVOP)” concept.

2) Market Driven Skill Development Plan

3) Innovative Self-help Infrastructure Development Plan at the village level by

providing in-kind materials for rural roads and other rural infrastructure

development plans.

4) Development of Mini-SEZ for cottage industry and Small and Medium Enterprise

(SME) in all possible regions with incubator/technical support program.

5) Nation-wide commercial afforestration program of 1% of land area (about 1 million

hectares) in order to utilize fully the forest areas for producing pulps/woodchip and

lumber just as South Africa has successfully developed to capture the global

market.

7) In order to improve productivity of Tanzanian people and neighbouring countries of East

Africa, Tanzania targets should include to open one SEZ for Used Machinery Centre

(East Africa Machinery Bazaar) in Dar es Salaam area immediately. If this Machinery

Centre is successfully introduced, this SEZ is likely to attract many buyers of machinery

from neighbouring countries just as Dubai is functioning now.

8) In order to supply necessary steel and earn foreign currency, explore the possibility of

establishing a ship-breaking operation at Mtwara or Tanga area by constructing new

docks capable of handling large oil tankers of up to 300,000 tons. This type of business

so far operates in Asia (China, Vietnam, India, Pakistan and Bangladesh).

9) Foreign Aid priority be re-focused for improving the investment environment in every

aspect: Legal, education, training, infrastructure (Port/Road/Power/Water), business

supporting services and administrative system.

10) The specific innovative plans and projects for the “Mini-Tiger Plan 2020” shall be

introduced focusing on the period of 2005-2010 (5 Years Plan) first and reviewed from

time to time and adjusted to reflect the rapidly changing conditions. The long-term

Vision and Targets will focus on the year 2020.

11) Plans and projects under the Tanzania Mini-Tiger Plan 2020 shall be implemented with

the utmost keenness, efforts and enthusiasm under the leadership of H.E the President

and other leaders with strong political will. All successful results in Asia have been

achieved due to strong political will and leadership (for example, Communist Party

Leader, Deng Xiao Ping of China)

12) A new high-level Policy Making and Operational Trouble Shooting Committees at the

highest levels of the Tanzanian Government be established for the purpose of smooth

planning, implementation and management of the Tanzania Mini-Tiger Plan 2020.

Normally, any developing country would face various and serious troubles when the

private investment led economic development plan is executed. But if the Trouble

Shooting Committee will take care of these troubles immediately, they can be solved

amicably and in a short time, guaranteeing smooth and successful implementation of

the Tanzania Mini-Tiger Plan 2020.

13) In order to implement the proposed Tanzania Mini-Tiger Plan 2020 successfully,

improvement of institutions and creation of new laws are necessary.

6.2 Practical Approach and Methodology for Getting out of the Vicious Circle of

Poverty for Tanzania

1) Firstly, it is important to understand the basic principle of Economic Development:

Private Investment is the utmost important factor and only new private investment will

create new jobs, produce new products and increase income. This principle must be

the driving factor for the Tanzania Mini-Tiger Plan 2020.

2) Role of Government is to improve the investment environment by developing

infrastructure, legal frameworks and human skills through making them attractive for

both domestic and foreign investors.

3) For developing countries, improving the investment environments in a short time is

nearly impossible due to limited knowledge/skills and financial resources. However, by

focusing on limited Special Economic Zones (SEZs), it is possible to improve the

investment environment for just the SEZ sites sufficiently to attract investors. The SEZ

approach has been used in Asian countries very successfully in the past three

decades. It should be used properly in Tanzania as a tool to attract investors in a

shortest time under the limited resources.

4) For the first few SEZs, Tanzania Government may have to use its own funding

(including borrowing outside by government) instead of waiting for help because

waiting for help will be wasting time. Asian countries started with a pilot SEZ through

Government funding in the beginning. Once the investment environment is improved

and several SEZs are successfully implemented, development of SEZs can be done by

private investment as experienced by Asian countries.

5) For the first few years, focus be on light industry SEZ in Dar es Salaam and perhaps

Tanga area mainly attracting garments/textiles and agro-processing industries. First

pilot SEZ project be started immediately (hopefully completing the first SEZ by end of

2005).

6) Aggressive promotion for attracting investors must be carried out for the SEZs. The

tentative target is attracting 200 to 300 new investors to SEZs with average

employment of 1,500 workers thus creating 300,000 to 450,000 new meaningful jobs

and foreign currency earnings of about $ 0.75 billion to $1.0 billion in 5 years.

7) Besides the SEZ program, implementing all other suggested projects and Programs in

all sectors as much as and as soon as possible. These other new projects and

programs are likely to bring additional 200,000 jobs and foreign currency earnings of $

0.5 billion within 5 years.

8) Once the SEZ and other projects and programs start generating new jobs and earning

foreign currency, Tanzania should request ODA funding agencies such as WB, ADB

and JBIC to finance key public oriented projects aggressively. Also other commercial

banks should be encouraged to participate in large long-term loans for many badly

needed infrastructure, manpower skills development, electric power and energy sector

projects independently or jointly with development banks. It is normally agreed by these

ODA funding agencies to provide additional long-term loans once the national financial

balance sheet is improved significantly by additional foreign currency earnings.

9) Additional SEZs and other projects should be aggressively developed to continuously

attract FDI, DDI plus attracting more ODA and commercial bank loans for public

investments in various sectors. Once this development pattern is successfully

implemented Tanzania will be able to get out of the “Vicious Circle of Poverty Trap” and

shift to “Virtuous Circle” as most of Asian Tiger Economies have been experiencing in

the past 20 years. Learning from the Asian experiences one new job created in

manufacturing sector will normally create additional 2 jobs in various service sectors

thus creating the required momentum in Tanzanian economy within a few years once

the Tanzania Mini-Tiger Plan 2020 is initiated successfully.

10) Mobilizing every one to participate in the nation-building process by introducing several

nation-wide programs. The Leaders of Tanzania, from H.E the President downwards,

should be encouraged to participate and share the clear national vision and goals

shown in the Mini-Tiger Plan 2020. Getting out of the Poverty trap will require both

special tools such as SEZ Program and nation-wide “One Village-One Product”

program and also strong political will and motivation for building a new modern nation

where everyone participates and is needed.

6.3 Specific Plans and Projects

Based on field visits and discussions with many leaders and officials, the following specific

plans and projects are recommended to be pursued under the Mini-Tiger Plan 2020. Private

sector investments in the coming five years of 2005-2010:

1) Light Industry SEZs: SEZs for Export-oriented and Import-Substitution industry based

on processing of local materials (start with two to three SEZs in Dar es Salaam and a

few other promising regions: Total of about 7 to 8 SEZs size of 100 to 150 hectare each)

in Phase-1: 2005-2010.

2) East Africa Machinery Centre SEZ (Used Agricultural and construction machinery, track,

buses and passenger automobile) as a centre for East Africa be established as one of

SEZ as soon as possible for providing machinery for Tanzania at reasonable cost and

creating a new business capable of attracting many East African people to Tanzania to

buy the machinery instead of sourcing from Dubai as is the case now.

3) IT Call-Centre SEZ: learning from India, Philippines and Ghana, Tanzania may

implement one IT Call-Centre SEZ. This type of IT Call Centre SEZ has been

implemented in various countries recently especially in English speaking countries such

as Ireland, India, Philippines and Ghana. Since Tanzania is an English speaking

country, she have a chance to attract such industry if proper preparation of the physical

facility and manpower training are carried out.

4) Tourism SEZ: Tourism is one of key promising sectors and an aggressive promotion is

necessary. National Heritage/Cultural Park project, possible new coastal resort and

game tourism site in the south using Dar es Salaam as a gateway should be developed.

Making Dar es Salaam one of the gateways to East Africa will benefit not only tourism

but also manufacturing industries and other service industries. Northwestern regions of

Kilimanjaro and Arusha should develop tourism further by attracting tourists directly to

the Region at the Kilimanjaro International Airport (KIA) jointly with the cut-flower

industry and jewellery cutting and polishing business. It is important to increase direct

flights to KIA so that more frequent and economical air flights can be available, turning it

into a key gateway to East Africa.

5) Agriculture cash crops SEZ focusing on strategic commodities which will be demanded

globally in the coming years; that is soya beans, bamboo shoots, cut flowers, high value

vegetables, maize, cassava, rubber, palm oil and macadamia nuts. Some temperate

zone vegetable and fruits such as persimmon, apple, pear, chest nut, and plum may be

introduced in the highland regions as niche products for domestic and where possible

for exports.

6) Once these strategic commodities are promoted in Tanzania, Agro-food processing and

service industry should be promoted aggressively picking first from promising projects

which are already operating in Tanzania and encouraging private investors to other new

commodities using the Z-A Market Approach. Cotton processing into spinning and

weaving can be started soon and processing of maize, cassava, fruits, vegetable, fish

and various beans and nuts can follow.

7) Nation-wide Program: besides the SEZ program and agriculture cash crops projects, it

is recommended to start the Nation-wide Program in various fields: such as “One

Village-One Product Movement” and “Rural Infrastructure Self-Help Program” as

national programmes for mobilizing everyone for nation building activities.

8) Another Nation-wide Program is the 1 million hectare Commercial Forestry

Development Program for Wood chips and Pulps, Rubber tree plantation, Carbon

dioxide (CO2) reduction. Forestry plantations can be promoted as SEZ as well. The

target for commercial forests should be about 1% of total land (about 1 million hectare)

in the long run.

9) Mining: gold, diamond, gemstone (tanzanite), coal, phosphate, gypsum and limestone

etc., can be expanded based on private investment as much as possible. Especially

tanzanite needs a special plan to encourage cut/polishing industry in Tanzania using the

stick and carrot policy properly. Just passing a law to prohibit export of raw tanzanite is

not sufficient to bring the jewellery cutting/polishing industry to Tanzania. Tanzania

needs more positive actions to invite investors by formulating a holistic plan and

establishing jewellery SEZ in Arusha and/or Dar es Salaam which will successfully

attract and develop jewellery cutting and polishing industry.

10) Energy and Power: gas, coal, solar, wind power and other renewable bio-mass energy

projects including a new refinery together with Kenya and Uganda should be carefully

examined and developed to meet the needs of the Mini-Tiger economy in future. A new

energy and power strategic plan may be needed. Possible biomass energy project of

sunflower/palm oil to diesel fuel substitute and ethanol from sugar for gasoline

substitute projects can be started as an experiment.

11) Infrastructure Development Projects (Ports, roads, improvement of railways, airports,

water system and telecommunications) should be planned ahead of needs and

implemented timely to support the Mini-Tiger Plan 2020. The BOT and BOO by the

private sector be used where feasible and the public sector must undertake necessary

projects where the private sector is not ready to invest.

12) Up-Grading of Education System: In order to support the Mini-Tiger Plan, up-grading of

the entire education system from primary school to higher education are needed in both

quantity and quality of education in Tanzania. The Asian Tiger Economies have been

improving the education system continuously in the past few decades.

13) Market-driven Skills Development Program (MDSDP) should be considered for

preparing the Mini-Tiger Plan 2020 in various fields. Once the Mini-Tiger Plan 2020

starts and successfully creates new jobs, Tanzania will require variety of new skills

which must be specially trained and the MDSDP will provide such necessary skills for

Tanzanians.

14) Ship-Breaking Project: Currently ship-Breaking operations are conducted by China,

Vietnam, India, Bangladesh and Pakistan (All of them are Asian countries.). However, a

shortage of ship-breaking docks especially large scale ships of up to 300,000 tons is

expected and Tanzania may take this advantage to start Ship-Breaking Business.

Mtwara and /or Tanga may be possible candidates for such business. Ship-Breaking

Business will create large number of jobs, able to obtain valuable steel products which

are still usable and earn foreign currency as well.

15) Road Stations for Corridor Program (RSCP): In many Asian countries, the RSCP is

successfully implemented and is creating many new jobs along the corridors.

Nowadays, road transport has become a major transport mode for most people and the

RSCP is providing necessary marketing sites for producers of various products in each

region. RSCP is able to assist the “One Village One Product” movement as well by

providing marketing sites for producers.

6.4 Possible ODA Technical Assistance Projects

In order to support the Mini-Tiger Plan 2020, various technical assistance projects by ODA

are needed and the following are possible projects for assistance by both multilateral and

bilateral aid agencies.

1) SEZ Nation-Wide Development Master Plan and feasibility study: Nation-wide SEZ

Master Plan may be carried out by an ODA study or own funding.

2) Tanzania Export Promotion and Expansion Program (Focusing on primary commodities

and processing products).

3) Tanzania Investment Promotion Project (Identifying investors to SEZ and other

promising sectors).

4) Tanzania Machinery Centre Development Project (Technical Assistance for expert

dispatch and training of local staff)

5) Tanzania Private Sector Development Project: Formulation of a Strategy and specific

private sector development projects including SME.

6) Tourism Development Project: Focusing on the Southern Game Reserves, Tourists

Resort in Dar es Salaam region, Arusha/Kilimanjaro regions and Zanzibar Islands. This

may include tourism promotion especially in Asia.

7) East African Maritime Training Centre Improvement Project for Seaman.

8) Tanzania Sea Ports Expansion Plan: Master Plan and Feasibility study for urgent

projects.

9) Tanzania Energy and Power Master Plan (Formulation of a strategy for the 2005-2030)

and identification of urgent projects.

10) Tanzania Renewable Energy Development Plan (Solar, biomass, geothermal and wind

power).

11) Market Driven Skills Development Program for preparing skilled workers needed for the

Mini-Tiger Plan.

12) Dar es Salaam Urban Area Transport Study for urgent improvement projects.

13) Mtwara Corridor Development Study jointly with Mozambique and Malawi.

14) Study on East West Corridor in SADC countries (Three Major corridors).

15) East African Community (EAC) Transport and Distribution System improvement Project.

16) SME and Cottage Industry Development Program focusing on “One Village One

Product: OVOP”.

17) “Michino-Eki”, Road side stations implementation Feasibility Study focusing on the three

major corridors.

6.5 Immediate Action Needed in 2005-2006

In order to speed up the Mini-Tiger Plan 2020, several immediate actions are

recommended.

1) Implementation of the First Track Light Industry SEZ in DSM (1-3 SEZ) as pilot project

immediately.

2) “One Village-One Product (OVOP)” Program as one of nation-wide programs.

3) Self-help infrastructure development program (SHIDP).

4) The East Africa Machinery Bazaar at Dar es Salaam and assist NDC and JV Partner of

Tsubasa Group.

5) Outboard Engine for fishing boats: This project is based on Asian appropriate

technology, which has been used in the past thirty years. In Asia, old car engines are

used to propel fishing boats by converting them to outboard engine.

6) Implementation Plan for the nation-wide commercial afforestration development

program in two levels: (1) Large scale forest plantation for pulp/woodchip and (2) Village

level afforestration program for lumber, charcoal and woodchip. As a first step, tree-

planting experiments should be carried out by planting several fast growing trees jointly

with investors in several locations.

7) Experimentation of sunflower and palm oil for diesel fuel, and sugar for ethanol

substitute in a few locations with new seeds in 2005.

8) Ship-Breaking Project investigation for possible implementation jointly with NDC and

other agencies.

9) Dar es Salaam region tourism development plan: DSM region may have three sub-

tourism areas: (1) Northern Coastal Area, (2) Southern Coastal Area and (3) Zanzibar

Island as candidates for tourism SEZ based on Mediterranean Club (Club Med) type of

integrated tourism development.

10) National heritage and cultural centre: This type of centres is very popular tourism

attraction in many countries and regions. Tourists are able to experience all well-known

national heritage and culture at one place shown by authentic tribes such as houses,

tools and artefacts plus live shows of dance and daily life.

11) Cut flower, jewellery cutting and polishing, ICT related business (Data processing/Call

centre), agro-processing and introduction of new cash crops.

12) Strengthening the SEZ and Export promotion agencies and undertake aggressive

promotion of FDI, DDI and exports. Once the first SEZ is ready, an aggressive FDI and

Export Promotion will be required within 2005.

Appendix I : Promising On-going Projects in Tanzania : (Case Study)

Appendix I: Promising On-going Projects in Tanzania :( Case Study)

Improved Coffee Farming in Kilimanjaro regionGerman Coffee Plantation is large-scale coffee-

producing Corporation in Kilimanjaro region. It currently exports coffee to European and Far East Asian markets. The unique approach the company takes is its application of the drip irrigation technology. The water distribution network is buried under the ground and the operation of the lock gate is remotely controlled by radio transmission. Since the coffee tree is quite sensitive to climate changes like scarcity of rainfall and inadequacy of nutrition as these affect productivity of coffee easily, installation of irrigation system is a necessary buffer against these unpredictable external elements. Additional efforts to create a more productive environment include applying the planned replacement of coffee trees method. Generally, speaking, coffee tree becomes productive in 3 years and commercially unproductive in around 8 years. Therefore, replacement is an important husbandry practice to sustain established quality and quantity for market demand.

Kilimanjaro coffee farming is mainly conducted by small-scale farmers and this sort of farming method requires relatively broad area of land. In order for investments on modern farming to be remunerative, unification of coffee farming land might be required. The company employs neighboring farmers in harvest season, and at this process, farmers are given an opportunity to learn the know-how of modern coffee farming. Two important lessons from the pilot coffee farming are:(1) Modernization of coffee farming by new technology with new investment ($4 million) will can

make coffee farming competitive in both quality and productivity.(2) Z-A marketing with a good quality coffee allows the coffee farmers, a long-term contract with

stable buyers.The operation of this company surely enlightens on the way of coffee harvesting in region and is

giving us a hint that re-organizing coffee farmers and improving cultivation & marketing methods may revive the coffee sector in Tanzania even under lower coffee price.

Successful Cut-Flower Estate in Kilimanjaro regionMkufi Flower Estate is one of the flower-cutting

corporations based in Kilimanjaro region, and employing 150 people at normal time (on the full utilisation of land, it normally employ nearly 350 people). There are many reasons for the company in selecting the region as the base of the business. First, the climate is well suited for growing

flowers; especially scarcity of frost is merit. Second is the access to the market through

Kilimanjaro International Airport. 　 Kilimanjaro International Airport links the cut-flower-producing centre and markets. Currently the company is exporting the products through Kilimanjaro International Airport (KIA) to EU and Japan via Amsterdam and London. However, the business is facing constraints of limited space of containers and infrequent schedule of flights.

Third, land is available and offered to the company in 20 years lease from locals. Land use has changed from maize field to a more value adding crop.

Again this project has given us the following lessons:(1) Modern technology and seeds are essential with a bit of new investment ($ 3million) for

successful development of modern cut-flower business.(2) Producing unique flowers and marketing to industrialized market was another important

factor for the success.

pendix II : Nation-Wide Movement

Fish Processing Industry in Mwanza & TangaSea Products Ltd is a Tanga based sea products

processing company. The main products are Octopus, Crab, Tuna, Prawn and Squid. Once the iced sea fish is brought to the company, they are washed, cut, packed and frozen in accordance with EU quality control standard of HACCP and ISO9000s. Destination of the products is mainly to EU countries. They export four containers per month worth $2 million.

Mwanza Fishing Industries Ltd is a Nile perch processing company in Mwanza. The product is mainly fillet and its export destinations are dominantly Europe (Netherlands, Italy and Spain) and Japan. Fresh fillet without skin is exported to EU, frozen fillet with skin is exported to Japan. The mode of transport is mainly truck and air. The frozen products are transported to Mombasa via Nairobi and exported by ship through Mombasa Port. Fresh products are exported by air.

The main reasons for the successful development of these fish processing factories are:(1) Both companies are equipped with modern

processing facilities and frozen refrigeratorspassing the strict HACCP and ISO9000s regulations.

(2) They have good steady markets in EU and Japan.

Again marketing and modern equipments are the key for the success.

F i rst EPZ and Successful Export-Oriented Garment & Textile(a) Millennium Business Park started in 2001 with initial

development cost of US$12 million. The park was the first EPZ in Tanzania. Currently 35% of estate is rented at a fee of $3 per sq meter per month.

Among the operating corporations, the fish-net making company is now producing 6% of domestic demand. It is targeting to acquire 15-20% of the domestic market share, competing with foreign products from China and Thailand.

Electric Appliance Repair Company imports defect and used home electric appliances and resells repaired products to the domestic and neighboring countries’ market.

(b) Star Apparels Limited started its operation in February 2004 and is now employing 900 workers. Within two months from its operation, the company stated exporting girls short and pants to the 　 Wall Mart, USA. Working environment of workers is quite conducive. As a further development, the establishment of the supply chain from domestic cotton producer may be encouraging. Star Apparels

Company became the first Tanzanian company to export apparel products to Wall Mart within 6 months period which is very short time (Normally it requires 2 years to supply to Wall Mark).

The lessons learned from the Millennium Business Park, Star Apparels Limited and other operating companies are:

(1) EPZ is able to attract a few export-oriented manufacturing industry in Tanzania(2) Tanzanian companies with Tanzanian workers are competitive in the global market in terms

of cost, quality and delivering time. Apparels made in Tanzania are selling at the most competitive outlet of Wall Mart in USA.

The above results are very promising for the Tanzania Mini-Tiger Plan 2020: showing that if Tanzania develop attractive investor friendly SEZs (Ponds), Investors (Birds) will be attracted.

Other Textile Industries (1)Sunflag is the transcontinental corporation operating in Kenya, Uganda, Thailand, U.K and India. The whole processes relating to garment industry (ginning, yarn, fabric, textile and clothes) can be done within their factory. Raw materials are supplied from domestic cotton farmers, and according to the director, the company is still realizing profits. Exports take 55% of the products and 45% are marketed domestically.The advantage for operating corporation in Arusha is geographical; availability of adequate water resources, which is used for ginning or dying, and locational advantages for accessing the Kenyan market. Constraints facing the factories operations are high cost of power, transportation and telecommunication. Duty draw back scheme or export incentives like tax allowance can be boosting factors for this kind of industry.

Other Textile Industries ( 2) NIDA Textiles is Pakistan originated company and was the first EPZ factory employing 500 workers. It is planning to expand the number to 1,600. Cotton and synthetic cotton fabrics are largely imported and bed sheets, table and curtains are produced through mechanized printing and finishing processes in the factory. The export destinations are Europe, neighboring countries and South Africa. The targeted sale is set on US$25-30 million. This factory is so far successfully exporting their textile products to EU and they are trying to integrate vertically in the future, moving towards cotton processing. This is also a good example of the export-oriented manufacturing in Tanzania.

Date post:	09-Sep-2020
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