Why is it Imperative for Tanzania to Industrialize?

Abstract

Tanzania’s average annual growth rate of GDP of 6.4% between 2005 and 2017 has
had limited impact on jobs and poverty reduction. The current government’s mantra,
‘Tanzania ya Viwanda’, is meant to tackle these two problems. The objectives of the
paper are fourfold: first, to gain clear understanding of the Tanzanian context and
why it is imperative to industrialize; second, to examine to what extent Tanzania has
structurally transformed, and how that has been responsible for poverty and growth
without jobs; third, to examine how industrial development could enhance
agricultural production; and fourth, to assess the opportunities and challenges that
exist in Tanzania’s industrialization drive and draw some policy implications. The
paper uses labour market, macro and trade data from secondary sources, and employs
the exploratory analytical approach. It concludes that the imperative to industrialize
in Tanzania cannot be overemphasized due to the following gains: structural
transformation, job creation, higher agricultural productivity, and poverty reduction.
The industrialization drive must focus on Tanzania’s comparative advantage and
ensure that some of the challenges identified—i.e., poor infrastructure, weak business
environment and regional integration hurdles—are well known, addressed, and given
the priority they deserve.
JEL Codes: I30, J60, O55

Keywords: industrialization, unemployment, structural transformation, poverty,
Tanzania