Budget 2020-21 should take bold steps to enable private sector participation

The importance of the manufacturing sector, both in terms of generating good quality jobs and contributing to economic activity, cannot be overstated. At this juncture when we seem to be challenged on both of these aspects, the critical question that everyone has is what should be done to revive the manufacturing sector to grow fast not just in the coming year, but for several years to be able to pull a large number of fellow Tanzanians out of poverty.

Given where are they today, they have a great opportunity to reimaging manufacturing and make the sector globally competitive. This is likely to call for imaginative and difficult step the good news is this administration has the mandate in its favour and has shown it has the willingness to take difficult steps.

One of the largest sources of demand for manufacturing products is the government’s investment in infrastructure and building assets. 

However, because of the constant pressure on the government’s financial balance and the falling share of the capital expenditure in the government’s total spending in recent years, the demand for manufactured products can potentially remain muted. 

Given the size of the outlay, it may be time to take bold steps to bring private participation into infrastructure building at levels we have not seen in the past through innovative partnership models that are equitable to all stakeholders. This will likely spur demand and in a more efficient manner. 

The role the government should play here is as a facilitator of the implementation of projects. There are a number of areas only the government can contribute land acquisition, environment approvals, and consensus building with stakeholders. Today, most of the project delays are on account of one or more of the above. Supporting investors with these processes will help achieve infrastructure build- ing goals with greater efficiency. 

Manufacturing competi- tiveness 

Land, power, material and capital costs in Tanzania are high as compared with the countries we seek to compete with. To illustrate this, let us take some sectors of the future like cell phones, computing hard- ware, electric mobility products and solar energy products. 

The extent of value addition in manufacturing is pretty low. It becomes vitally important to substantially increase re- search/innovation capability in the country. To begin with, the country’s best academic in- stitutes must be encouraged to focus far more on research and promote innovation centres 

that benefit the manufacturing sector on a commercial basis. The private sector must be actively supported to create innovation ecosystems in the country. This could include accessing the remarkable research infrastructure the government has created, which may have to be opened up more to operate on a commercial format.