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Industrial Manufacturing andTrade Development in Tanzania＊

Emmanuel A. MWAIGOMOLE
Introduction

The paper addresses the performance of manufacturing and trade sector and thefactors that inhibit sustainable growth of the sector. It is organized around six sections.
Section Ⅰ presents the features of industrial manufacturing sub-sector in Tanzania.
Section Ⅱ provides an overview of the aggregate performance of industrial
manufacturing. Section Ⅲ examines employment and investment trends. Section Ⅳ
dwells on trade performance and development. Section Ⅴ underlines briefly, theeducational system and tertiary training of Tanzania as a source of industrial
manpower. Section Ⅵ recapitulates the paper and charts out the way forward.

Ⅰ
In the 1970s and 1980s Tanzania developed a manufacturing industrial structurethat was characterized by two features: first, industries that were intended to
manufacture basic commodities to cater for the needs of the majority of the people;
second, industries that were to produce intermediate goods to form a linkage between
basic and capital goods（large-scale）industries.
Large-scale industries were to be implemented at the Central Government level
while industries（small-scale and medium enterprises）for the basic needs were to be
implemented at regional and district levels. The mandate to initiate industrial projects
at regional and district levels fell directly on the district development corporations（DDCs）, co-operative groups and on individuals. The small and medium enterprises
were supported by the Small Industrial Development Organization（SIDO）which
was formed in 1973 for that purpose.
＊Visiting Scholar, Graduate School of International Cooperation Studies, Kobe University.
Senior Lecturer in Development Economics, Institute of Development Studies, University of Dar es
Salaam, Tanzania.

Journal of International Cooperation Studies, Vol.16, No.3（2009.3）

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The organization（SIDO）was formed to encourage the local people to establish
small-scale and medium enterprises. It was charged with the functions of consultancy,
training, production management and imparting marketing skills. Through SIDO,
industrial estates were established in almost all regional centres in the country. The
centres were planned to become a nucleus from where manufacturing industries
would expand in the regions. They manufactured a variety of products such as
castings, forgings, spare parts, hand tools, nails, bolts and nuts.
However, the small-scale and medium enterprises could not fare well due toregulatory bottlenecks that prevailed during the era of administrative allocation of
resources that favored large-scale firms. The financial institutions also tended to avoid
extending credits to small-scale enterprises due to apparently high incidences ofdefault.
On the other hand, large-scale enterprises continued to have access to resources offinancial institutions. The large-scale enterprises were intended to raise efficiency byenhancing inter-and intra-sectoral linkages in the economy. They were expected toincrease the share of investment and generate employment opportunities leading tostructural change in the economy in general. The succeeding section provides anaggregate overview of the performance of industrial manufacturing.

Ⅱ
The aggregate performance of industrial manufacturing grew rapidly between the
mid-1970s and on the on-set of economic crisis in the early 1980s. Firms appeared
generally unresponsive to market signals. Capital goods prices remained constant interms of final products although real wages dropped. Nevertheless the fall in relative
prices of labour did not encourage more labour-intensive industrial investments nor
did firms reduce the number of workers. Table 1 shows an aggregate overview of theindustrial performance（1987−1995）.

Industrial Manufacturing and Trade Development in Tanzania

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Table 1: An Aggregate Overview of The Performance of Industrial Manufacturing
Increases 1987-1995
Absoulute ShareTotal（%）
Amount
59.7
414.1
18.5
128.1
41.3
286.0
25.4
175.9

Absolute Amount
1987
1991
1995

Share Total（%）
1991
1995
1987

Ⅰ Value Added（T.shs. Million）
a Consumer Goods
Food and Food Products
Non-food Products
Textile and Clothing ＊

124.3
80.4
43.9
18.5

281.6
125.7
155.9
88.3

538.4
208.5
329.9
194.4

56.3
36.4
19.9
8.4

59.2
26.4
32.8
18.6

58.9
22.8
36.1
21.3

b Intermediate Goods
Basic Chemicals, non-edibe oils
Petroleum Products

87.6
4.8
n.a.

142.7
30.6
n.a.

302.8
58.0
n.a.

39.6
37.4
2.2

30.0
8.6
21.4

33.1
26.8
6.3

215.2
53.2
n.a.

31.0
7.7
n.a.

c Capital Goods
Other Manufacturing
Total Manufacturing（Value Added）

6.0
3.1
221.0

48.2
2.9
475.4

63.3
9.8
914.3

4.1
n.a.
100.0

10.8
n.a.
100.0

8.0
n.a.
100.0

57.3
2.2
693.3

8.3
0.3
100.0

Ⅱ Employment（thousands）
a Consumer Goods
Food and Food Products
Non-food Products
Textile and Clothing ＊

19.0
9.4
9.6
5.4

31.0
11.9
19.1
14.7

43.6
16.1
27.4
19.6

67.8
33.5
34.3
19.2

71.4
27.3
44.0
22.9

68.8
25.5
43.3
30.9

24.6
6.7
7.8
14.2

69.7
19.0
50.4
40.2

8.1

10.2

16.1

28.9

23.6

25.4

8.0

22.7

0.3

0.6

1.2

1.1

1.4

1.9

0.9

2.5

c Capital Goods
0.6
Other Manufacturing
0.4
Total Manufacturing（Employment）
28.1
N.B:（i）n.a = Not available（ii）＊ = Not included in absolute amount

1.4
0.8
43.4

2.9
0.8
63.4

2.0
1.4
100.0

3.1
1.9
100.0

4.6
1.2
100.0

2.3
0.4
35.3

6.5
1.1
100.0

b Intermediate Goods
Basic Chemicals, non-edibe oils
Petroleum Products

Source: Computed from Ntaional Bureau of Statistics data, various industrial production surveys.

In 1995（Table 1）almost 60（59.7）percent of value added and nearly 70（69.7）
percent of employment in large-scale manufacturing industries originated from theconsumer goods industries. Even more striking, the share of consumer goods increased
only marginally during the（1987−1995）period; 59.7 percent of the increase in value
added and 69.7 percent of the increase in employment came from the consumer goods
industries.
The slight increase in the overall share of consumer goods production masks some
important changes in relative contribution of particular industries. The contribution offood and non-food products declined from 36.4 percent of value added in 1987 to 22.8
percent in 1995, while non-food consumer goods nearly doubled as a proportion of total
value added from 19.9 percent in 1987 to 36.1 percent in 1995. Textiles and clothing
production accounted for much of the latter increase.
In fact, textiles and clothing accounted for 25.4 percent of the total increase in largescale manufacturing industries value added and 40.2 percent of increased employment（1987 to1995）. A different pattern emerges from the trends of gross output as shown

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in（Table 2）.
Table 2: Structure of Gross Output in Manufacturing Industries 1987 - 1995

Consumer goods
Textiles and Clothing
Intermediate goods
Capital goods
Other maanufacturing

Gross output（T.shs milion）
1995
1991
1987
1741.2
963.7
779.1
538.4
228.3
263.0
996.4
391.8
256.0
269.3
140.2
14.3
38.4
26.8
42.2

Total manufacturing1354.6

Industries

Output1750.83583.7

Share of total（percent）
1991
1987
55.0
57.5
13.0
19.4
22.4
18.9
8.0
1.1
1.6
3.1
100.0

100.0

1995
48.6
15.0
27.8
7.5
1.1
100.0

Value added / Gross output（percent）
1995
1991
1987
30.9
29.2
16.0
36.1
38.7
7.0
30.4
36.4
34.2
23.5
34.4
42.0
25.5
10.8
7.3
20.2

27.2

25.5

Source: As Table 1.

As table 2 shows, consumer goods production declined from 57.5 percent（1987）to48.6 percent（1995）. The share of producer goods industries in total gross output rosefrom 20 percent（1987）to over 30 percent（1995）. This is in contrast with the trends
in value added pointed out in（Table 1）in which the share of consumer goods
production actually increased slightly between 1987（56.3%）and 1995（58.9%）.
The contrast is due to changes in the proportion of value added in gross output. The
consumer goods industries in 1987 were predominantly low value added industries.
The ratio of value added to output was only 16 percent（Tables 1 & 2）. It increased
remarkably to 30.9 percent in 1995 due to the change in textiles and clothing
production away from low value cotton ginning to high value added spinning andweaving.
In the producer goods industrial sub-sector, the ratio of value added to gross output
was initially high（34.6%）in 1987 for intermediate and capital goods taken together.
But the ratio decreased to 28.9 percent in 1995. The decrease was due to the growth ofrelatively lower value added producer goods industries.
The overall ratio of value added to gross output rose from 20.2 percent（1987）to27.2 percent（1991）and to 25.5 percent（1995）. This relatively low share of value
added in gross output reflects the continued predominance of industries involved insimple processing of raw or semi-finished materials. More specifically, Table 3
illustrates the growth trends in manufacturing value added between 1996 and 2005.

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Table 3: Growth Trends in Manufacturing Industries Value Added 1996-2005
GDPAnnual

Manuf. Annual

GDP

Manuf. Value Added

Manuf. shareT.shs. Million

T.shs. Million

in GDP（%）

1996

1,401,711

111,894

8.0

4.2

4.8

1997

1,448,090

117,489

8.1

3.3

5.0

1998

1,505,827

126,887

8.4

4.0

8.0

1999

1,577,292

131,491

8.3

4.7

3.6

2000

1,654,319

137,809

8.3

4.9

4.7

2001

1,749,358

144,647

8.3

5.7

4.9

2002

1,857,175

156,219

8.4

6.2

8.0

2003

1,962,432

169,653

8.6

5.7

8.6

2004

2,094,516

184,218

8.8

6.7

8.6

2005

2,237,079

200,797

9.0

6.8

9.0

Year

GrowthGrowth Rate（%） Growth Rate（%）

Source: BOT, Economic Operations and Bulletins 2005

The rate of growth of value added in manufacturing industries has been more rapid
than the rate of economic growth as a whole with the exception of years 1999（3.6%）,
2000（4.7）and 2001（4.9%）. In 2005, manufacturing sector registered 9.0percent
growth compared to 8.6 percent（2004）. The increase in the growth rate wasattributed to increased production of cement, beverages and textiles, BOT（2005）.
However, although the rate of growth in manufacturing sector almost doubled
between 1996 and 2005, its share to the GDP was almost static. It ranged between 8.0
percent（1996）and 9.0 percent（2005）implying an average share of 8.4 percent
annually.
On the other hand, the economic performance, in general, continued to display a
growth momentum of 6.8 percent（2005）compared to 6.7 percent（2004）and 5.7
percent（2003）compared to 6.7 percent（2004）and 5.7 percent（2003）. This trend
suggests that, sectors other than manufacturing ones have been contributing much
more to the GDP than the manufacturing sector. The outstanding achievement in thegrowth is a reflection of the effects of the on-going economic reforms undertaken by
the Government since the 1990s. The reforms range from privatization of state assets
to trade liberalization and the pursuance of prudent fiscal and monetary policies.
However, the sector also experienced several obstacles arising from an increase inoil prices and regular power cuts. In the last quarter of 2005, these obstacles impacted
negatively on the industrial production and product prices. At the same time, thecontinued importation of sub-standard products into the local market poses unfair
competition with the local industries. Table 4 depicts the shares of selected

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Table 4: The Share of Manufacturing Sub-sector in Total Manufacturing Value Added（percent）
Activities

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Food, Beverage and Tobacco

34.6

43.5

38.4

39.0

41.0

36.4

34.5

31.9

37.1

21.2

Textiles and Leathered Products

24.8

19.4

21.1

26.4

24.8

24.7

26.5

22.5

25.5

23.2

Wood and Wood Products

7.2

6.2

5.6

6.8

4.2

3.1

3.6

2.7

2.2

2.7

Paper and Paper Products

4.4

4.1

3.9

3.8

4.1

3.5

4.8

6.4

5.0

4.9

Chemicals and Rubber Products

15.2

12.6

11.6

10.5

11.6

13.8

13.2

19.7

14.4

19.0

Non-metallic Mineral Products

5.0

4.5

4.5

3.9

3.7

4.6

3.4

3.1

1.0

1.1

Basic Metal Industries

4.4

4.1

4.3

4.2

1.9

2.5

3.2

2.8

3.6

3.4

Fabricated Metal Products

2.7

4.5

10.1

4.9

8.0

9.9

9.8

9.5

9.0

9.6

Other Manuf. Sub-sectors

1.7

1.2

0.6

0.5

0.7

1.6

1.1

1.3

1.9

2.6

Source: Computed from URT, Economic Survey, 2005

manufacturing sub-sectors in the manufacturing sector.
Looking closely into the categories of manufacturing industries（Table 4）, foodprocessing and textiles have maintained dominant positions in their shares in total
manufacturing sector. Wood and wood products manufacturing declined its share from
7.2 percent（1996）to 2.7 percent（2005）partly because of problems associated withlog supply. Manufacturing of paper and paper products increased, raising its sharefrom 4.4 percent（1996）to 6.4 percent（2003）.
Chemicals and related products manufacturing was fluctuating with an upward
trend. The fluctuations were mainly due to the balance of payment situation in view of
the relatively high import content of fertilizer which is the largest component of theindustry（MIT, 2003）. The manufacturing of non-metallic mineral products sub-sector
continued with its share of（5.0-3.1）percent over the（1996-2003）period. But theshare drastically declined to 1.0 percent and 1.1 percent in 2004 and 2005 respectively.
The decline reflects the production problems faced in cement factories especially withirregular power supply.
The share of basic metal industries has been fluctuating in a downward trend from
4.4 percent（1996）to 3.4 percent（2005）. Expansion of this sub-sector has been slow
and capacity utilization has fluctuated widely. However, a dramatic increase in
manufacturing of fabricated metals, machinery and equipment increased their sharefrom 2.7 percent（1996）to 9.6 percent（2005）. It is from this sub-sector that most of
the capital goods manufacturing takes place.
A cursory glance, at the backward and forward linkages, indicates that there has
been a considerable increase in that direction. The iron and steel sub-sector
manufactures billets for steel products which are used as inputs or intermediate goods

Industrial Manufacturing and Trade Development in Tanzania

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in the metal working factories. These factories manufacture component, equipment
and spare parts which are necessary for other factories such as those which
manufacture agricultural machines such as ploughs and hand hoes.
The fact that the country（Tanzania）is well endowed with iron ore（Liganga）andcoal reserves（Mchuchuma）has meant that there is a great potential for backward
and forward linkages in the engineering industry. The linkage can lead to increased
job opportunities and economic expansion as a whole. The forthcoming section
examines industrial employment and investment trends.

Ⅲ Trends of Industrial Employment and Investment
The growth of industrial employment has, in general, been higher than the rate of
growth of total employment in the economy. On average, the rate of growth ofindustrial employment has been increasing at the rate of 7.6 percent compared to 4.4
percent the rate at which total employment has been growing from 1996 to 2005.
Table 5 shows the trend of growth of industrial employment.
Table 5: Trends of Growth of Industrial Employment 1996-2005
Total Wage

Industrial

Industrial Labour（%）

Annual Growth Rate ofAnnual Growth Rate of

Employment

Employment

Total Employment

Total Employment（%）

Industrial Employment（%）

1996

375,635

48,314

12.9

2.1

11.3

1997

392,770

53,516

13.6

4.6

10.8

1998

405,713

62,118

15.3

3.3

16.1

1999

472,505

63,355

13.4

16.5

2.0

2000

484,341

69,664

14.4

2.5

10.0

2001

498,732

78,301

15.6

3.8

12.4

2002

499,925

78,490

15.7

0.2

0.2

2003

512,828

80,514

15.7

2.6

3.0

2004

526,491

83,712

15.9

2.7

4.0

2005

554,456

88,713

16.0

5.3

6.0

year

Source: URT, Economic Survey 2006

As it can be seen from table 5, industrial labour force constitutes, on average, about
15 percent of the total wage employment. Its rate of growth has been fluctuating
rather broadly ranging from 16.1 percent（1998）to 0.2 percent（2002）. The
fluctuations can be explained mainly by the fact that the bulk of employees arerecruited when new factories are completed or expanded. On the basis of thisobservation, industrial sector plays a minimal role in labour absorption process. Closely

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related to industrial employment, table 6 shows the trends in industrial investment.
Table 6: Industrial Investment Trends 1995-2005（T.sh. Million）
year

Total

Industrial

Annual Growth

Annual Growth

Indus. Invest.（%）

Investment

Investment

Total Investment

Industrial Investment

Total Investment

1995

1144

151

−10.0

−12.6

13.2

1996

1656

281

44.8

86.1

17.0

1997

1981

268

19.6

−4.6

13.5

1998

1687

185

−14.8

−31.0

11.0

1999

1725

204

2.3

10.3

11.8

2000

1779

277

3.1

35.8

15.6

2001

1638

301

−7.9

8.7

18.4

2002

1957

454

19.5

50.8

23.2

2003

1933

469

−1.1

3.3

24.2

2004

2022

492

4.5

4.9

24.3

2005

2458

595

21.6

20.9

24.2

Source: MIT, Industrial Investment and Performance Report 2005

Industrial investment more than tripled while total investment doubled over thesame period（1995−2005）. However, although an upward investment trend is clear ineither cases, it is also obvious that considerable fluctuations of industrial investment
with annual growth rate were evident. While industrial investment tripled during the（1995−2005）period, value added almost doubled. This is an indication that capital
was not being used efficiently. In fact, this is one of the factors which prompted theGovernment to embark on massive privatization of state-owned assets.
In support of Government efforts in economic development programmes, financial
institutions have been extending loans（credits）to various sectors in the economy.
Table 7 shows commercial banks sectoral lending.
Table 7: Commercial Banks Sectral Lending（1996-2005）（percent）
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Agriculture

7.9

8.3

6.2

5.9

6.2

7.1

12.7

12.1

12.1

12.9

Manufacturing and Mining

29.4

24.8

27.3

28.7

29.7

30.6

28.0

27.0

27.0

22.9

Public Administration

4.5

5.6

3.9

3.0

2.2

2.2

1.8

1.4

1.4

1.4

Construction

2.5

3.5

2.6

2.4

2.8

4.2

5.0

5.1

5.1

4.5

Transport and Communication

5.3

7.0

10.0

14.2

9.5

9.2

9.8

11.8

11.8

8.6

Tourism

0.7

1.4

1.1

1.2

2.2

1.1

2.5

2.3

2.3

2.8

Agr. Co-operative and marketing

5.5

4.0

1.8

2.0

0.9

0.4

n.a

n.a

n.a

n.a

Trade, Hotels and Restaurants

21.2

18.3

24.8

24.5

27.1

26.6

26.6

25.0

25.0

24.1

Other Services＊

23.0

27.1

22.3

18.1

19.4

18.6

13.6

15.3

15.3

22.8

＊Include Electricity and Water
Source: BOT, Economic Operation and Bulletins 2005

Industrial Manufacturing and Trade Development in Tanzania

In 1996, about 29 percent of the total commercial banks

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credits went tomanufacturing and mining sector. Electricity, water and other services sector was thesecond recipient 23.0 percent, followed by trade, hotels and restaurants 21.2 percent. In
2001, the commercial banks increased their credits to the manufacturing and mining
sector to over 30.6 percent followed by trade, hotels and restaurants to about 27
percent. In fact, for the entire period under review, the manufacturing and mining
sector received more attention than other sectors from both the Government financial
institutions in resource allocation.
Judging from the trend of resource allocation, in favour of industrial sector at theexpense of other sectors, one would expect, the industrial sector to perform better
than other sectors commensurate with the high resource allocations from theGovernment and financial institutions. Table 8（a）（b）illustrates sectoral
performance in terms of annual growth rates of real GDP and their contribution.
Table （8 a）
（b）
: Annual Growth Rate of Real GDP by Sectors and their Contributions.（at 1992 Prices）
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005
5.2

（a）Annual Growth Rates of Real GDP（%）
Agriculture

3.9

2.4

1.9

4.1

3.4

5.5

5.0

4.0

5.8

Manufacturing

4.8

5.0

8.0

3.6

4.8

5.0

8.0

8.6

8.6

9.0

Mining and Quarrying

9.6

17.1

27.4

9.1

13.9

13.5

15.0

18.0

15.4

15.7

Electoricity and Water

11.1

2.2

5.5

3.9

5.9

3.0

3.1

4.9

4.5

5.1

Construction

7.6

8.2

9.9

8.7

8.4

8.7

11.0

11.0

10.8

11.9

Transport and communication

1.1

4.9

6.2

5.8

6.1

6.3

6.4

5.0

6.0

6.4

Trade, Hotel and Restaurants

3.5

5.0

4.7

5.8

6.5

6.7

7.0

6.5

7.8

8.2

Financial and Business services

0.4

7.7

5.6

4.1

4.7

3.3

4.8

4.4

4.8

5.3

Public Administration

1.6

3.2

2.7

3.5

3.6

3.5

4.1

4.1

4.3

5.1

Total GDP（At Factor Cost）

4.2

3.3

4.0

4.7

4.9

5.7

6.2

5.7

6.7

6.8

45.6

（b）GDP Sectoral Shares（%）
Agriculture

50.5

50.2

49.1

48.9

48.1

48.0

47.5

46.7

46.3

Manufacturing

8.0

8.1

8.4

8.3

8.3

8.3

8.4

8.6

8.8

9.0

Mining and Quarrying

1.5

1.7

2.0

2.1

2.3

2.5

2.7

3.0

3.2

3.5

Electoricity and Water

1.7

1.7

1.7

1.7

1.7

1.7

1.6

1.6

1.6

1.6

Construction

3.9

4.1

4.3

4.5

4.6

4.8

5.0

5.2

5.4

5.7

Transport and communication

5.1

5.2

5.3

5.4

5.4

5.4

5.4

5.5

5.4

5.4

Trade, Hotel and Restaurants

15.6

15.8

15.9

16.1

16.4

16.5

16.6

16.8

16.9

17.2

Financial and Business services

9.9

10.3

10.5

10.4

10.4

10.2

10.0

9.9

9.7

9.6

Public Administration

8.0

8.0

7.9

7.6

7.7

7.5

7.3

7.2

7.1

7.0

Total GDP（At Factor Cost）

4.2

5.1

5.1

5.0

4.9

4.9

45.0

4.5

4.4

4.6

Source: Computed from BOT, Annual Reports and Bulletins（various issues）

During the year 2005, almost all major sectors of the economy registered higher
rates of growth than the year 2004 except for agriculture which grew at a rate of 5.2

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percent compared to 5.8 percent in 2004（Table 8a）. Low growth rate of agricultural
sector was mainly due to drought in the last quarter of 2005 and inadequate allocationof resources to the sector.
In our viewpoint, drought will continue to affect agricultural development unlessdeliberate measures are taken by the policy-makers to embark on agricultural
irrigation leading to what is referred to as green revolution. After that stage, industrial
development producing

and equipment for agricultural sector, can safely beembarked on. Agro-based industries can be assured of raw materials from agricultural
sector. Increased agricultural productivity in the rural areas can certainly lead tosurplus labour shifting to agro-based industries and to those industries manufacturing
agricultural equipment.
However, although agriculture seems to be neglected in terms of resource allocationcompared to manufacturing sector（Table 7）, it continues to dominate the scene as an
undisputable sector in sectoral contribution to the GDP（Table 8（b））. For the entire
period（1996−2005）, the share of agriculture in the gross domestic product（GDP）
was higher than the shares of other sectors.
The performance of manufacturing sector which contributes an average of almost
8.6 percent to the gross domestic product（GDP）, has grown at an average rate of 6.5
percent for the period under study（1996−2005）. The growth performance of the
manufacturing sector started in the mid-1990s with the commencement of thestructural reforms accompanied with the introduction of incentive packages, increaseof capital and establishment of new industries under the export processing zones.
Increased demand for locally produced goods and expansion in provision of financial
services contributed to good performance of the manufacturing sector.
However, the sustainability of manufacturing sector s good performance is affectedby the continued importation of sub-standard and second hand goods into the local
market. The sub-standard and second hand goods continued to militate against faircompetition in the domestic market（MIT, 2003）.
On that ground, we tend to support Michael,E.P.(1990）who argues in support ofsome protection of industries at the factor-driven and investment-driven stages ofcompetitive advantage. At the factor driven stage, the source of competitiveness issolely drawn from basic production factors such as natural resources, cheap labour,Industrial Manufacturing and Trade Development in Tanzania

33

etc. It is contended that in factor driven economies, industries compete using relatively
cheap and unsophisticated technologies. Therefore, these economies are sensitive toworld economic cycles and exchange rates which drive demand and relative prices.
On the other hand, the investment stage is characterized by the ability of acountry s industry to absorb and improve the technology. Countries like Argentine,
Brazil, Mexico and Asian NIEs are at the investment-driven stage of competitive
advantage. At this stage, foreign technology and methods are mastered by local
enterprises which begin to develop their own technology refinements including theirown product models. Michael. E.P（1990）points out that few countries havesucceeded to move from factor-driven to investment national competitiveness. In fact,
the main reason for this sluggishness centres on poor factor creation beyond the
traditional factor conditions: natural resources and cheap labour.
The main factors which, in fact, bedevil most developing countries including
Tanzania are capital accumulation through savings, human resources up-grading
through on the job training, research and development particularly at company levels.
Besides, capital accumulation and human resources up-grading, work motivation andsearch for better technologies are other factors.
Bearing in mind the state of economies at the factor-driven stages of competitive
advantage, we tend to support the view of some protection. But, the general views
orchestrated principally by international financial institutions such the World Bankand the International Monetary Fund（IMF）postulate that protection of local
industries is dysfunctional to developing economies because it hampers the overallnational productivity. The thrust of such argument is that national competitive
advantage would not be fully reflected in rising productivity unless governments
pursue trade policies which expose local industries to international competition.
But there are also views contending that governments have great direct influenceon national competitive advantage at the factor-driven and investment-driven stages
and that protection is one of the instruments governments can use. Michael.E.P,
though a staunch critic of protection policies argues positively that tools, at thedisposal of a government,such as capital, subsidies and temporary protection are

most powerful at factor-driven and investment-driven stages in a nation s competitive
development . In his view and I quote him

protection of infant industry can be

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effective in nations lacking well established competitors in an industry in which strong
foreign rivals are present. By delaying entry of foreign competitors, a number ofdomestic rivals can be established and trigger the self-reinforcing process of national
competitive advantage.
The logical conclusion is that governments policies on protection should reflect on
one hand, the objective reality of the nation s stage of competitive advantage and thestate of local industries, on the other. In other words, there are no hard and fast rules
against protection policy. Unfortunately, industrial and trade policies which addressconsiderations such as those advocated by authors like Michael. E. P are yet to take astable and a coherent shape in Tanzania s industrial sector. The task before the policymakers is to clearly identify the underlying characteristics of national competitive
advantage in order to develop appropriate policies.
Another view which is also supported by the World Bank and IMF is that thelinkage of local industries

protection to the overall effects of macroeconomic

structural adjustment is untenable. It is argued that the advocacy of protection as ameans of providing a breathing space to industries to adjust is invariably diverted atdelaying instead of prodding the process of restructuring towards competitive
leverage.
But the problem with this view is that, it does not provide viable alternatives as tohow local industries can adjust to an environment characterized by factors such as
credit squeeze, high interest rate, increased cost of servicing foreign debts, etc. It israther unrealistic to expect industries to adjust, suddenly pay debts including otherobligations and still expect them to be competitive. The logic of breathing space seems
to be relevant in this context and should be supported. Closely related to trends inindustrial employment and investment is trade performance and industrial
development.

Ⅳ
Tanzania s quest for export trade in industrial products in order to improve its
capacity to import and resolve its trade deficits has been a subject of concern for along time. The country maintained a surplus balance of trade up to 1979. A leap inexport earnings was also registered in 1994. It resulted from the implementation ofIndustrial Manufacturing and Trade Development in Tanzania

35

trade liberalization measures and charges in Volume and prices of three major export
crops: coffee, cotton and tobacco. The export earnings from the three crops peaked in
1996. Since then, export performance has not shown consistent improvement. This
trend suggests, the economy is yet to become competitive in the global market. Table
9 shows Tanzania s external trade and import coverage ratio.
Table 9: Tanzania's External Trade and Import Coverage Ratio（T.shs. Million）
year

Coverage

Trade

ExportImportVolumeVolumeVolumeRate

1996

1,157,773

455,419702,354

0.65

1997

1,172,655

459,549

713,106

0.64

1998

1,299,299

391,805

907,494

0.43

1999

1,546,252

455,656

1,090,596

0.42

2000

1,625,757

531,119

1,094,698

0.49

2001

2,115,933

746,742

1,369,194

0.55

2002

2,335,014

874,067

1,460,947

0.59

2003

3,186,123

1,174,784

2,011,339

0.58

2004

4,145,866

1,448,589

2,697,277

0.54

2005

5,143,880

1,753,126

3,390,754

0.52

2006

6,337,152

1,785,501

4,551,651

0.39

Source: BOT,Annual Report 2005/06

It is evident from table 9, that external trade performance is characterized by apersistent erosion of import coverage. In 1996, import coverage ratio was 0.65. The
ratio was 0.49 in 2000 reaching a coverage of 0.39 in 2006.
The import volume increased by almost 60 percent between 1996 and 2000 while
over the same period export volume grew by almost 17 percent. Between 2004 and2006 import volume increased by about 70 percent（68.7%）while export increased byjust one third of the import volume. Based on the study of Export Development
Committee（2006）, three categories of constraints militate against the performance ofthe country s exports in spite of the existing potential. First, the supply-side
constraints, encompassing low capacity for the production and delivery of goods andservices; second, constraints related to inefficient trade support services and the third
constraint is concerned with low capacity for effective participation in the multilateral
trading systems.
During the year ending June 2006, Tanzania s import bill went up by 25.8 percent to

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US$3,437 million following an increase in imports of capital goods, intermediate goods
and consumer goods. Much of the increase was registered in intermediate goods
category which went up by US$1361 million largely because of the increase inimportation of oil and other industrial inputs.
The fast increase in oil import is largely explained by the persistent increase in oil
prices in the world market. During the period（2005/06）, the price of refined oil
increased from an average of US$550 per ton in July 2005 to an average of US$674 per
ton in 2006（BOT, 2005/06:29）.
The import bill on capital goods went up mainly due to a surge in import oftransport equipment, building and construction machineries. Expansion of construction
activities led to the increase in the importation of building equipment. Machinery
imports that account for about 45 percent of total capital imports were directed to themining, communication and manufacturing sectors.
But the country s export sector is still overwhelmed with traditional exports with
agricultural products accounting for about two thirds of total exports. Consequently, alarge portion of export basket is vulnerable to vagaries of weather and adverse
variations in world commodity prices.
On domestic front, two conflicting sets of views emerged since the inception ofimport trade liberalization policy. Industrialists have supported import liberalization
policy. But they have also raised their concern on the so called own-funded imports.
The own-funded importers flood the local market with substandard imported goods
through massive customs tax evasion leading to distorted local market competition.
The concern of local market distortion through flooding it with substandard
commodities has also been echoed by the Tanzania Bureau of Standard（TBS）who
have pointed out thus;
We have noted with great concern that the Tanzania market has been
flooded with substandard imported batteries（dry cells）which are not certified
by T.B.S. Substandard batteries have short life span and can destroy theelectronic equipment through leakage. In accordance with the Standards Act,
1975 it is illegal for any person to import, distribute / sell the batteries unlessthey comply with the Tanzania Standard（TZS）143: 1981. The brand of thebatteries with countries of origin in brackets are: ABC（Indonesia）, Bell &Industrial Manufacturing and Trade Development in Tanzania

37

Yarico（China）and Novino（India）. Consumers are advised to refrain frombuying batteries which are not certificated by TBS to ensure safety of theirelectronic equipment.
Director,（TBS）, in BOT, Tanzania Investment Report, 2001:30

At this point, it may be proper for the Government to resort to trade defense
instruments some of which are safeguards, subsidies & countervailing duties, antidumping legislations, etc to ensure fair competition of local manufacturing industries
with imported commodities in compliance with the WTO Agreements on safeguards.
Safeguards are measures an importing country can take to restrict imports if it isestablished that increases in imports are causing injury to domestic industry.
According to WTO Agreement on safeguards, if a sub-sector of a domestic industry
of a country suffers from injury or there is a threat of injury from imports, measures
for safeguarding that sector can be taken by the importing country. Import restraint
measures may be in the form of raised tariffs above the set levels or quantitative
restrictions on imports.
Generally, the process for safeguard action is triggered by an industry that isvigilant on the flow of imports. When an industry considers that it needs safeguard
action and the required pre-conditions are satisfied, it may ask the Government tostart the process of action. Safeguards are intended for use in the public interest andhave time limit. They are applied only to the extent necessary to contain or remedy
serious injury and facilitate adjustment. Application of safeguard measures in
Tanzania will, in fact, be in line with its WTO commitments of ensuring free and faircompetition.
Further, a subsidy is a measure that confers some benefits to producers andexporters. It exists where a public body or government provides a financial
contribution（grants, loans or equity）. During the pre-WTO era, it was theconventional instrument for stimulating production for export in developing economies.
Some countries provided domestic producers and exporters with subsidies to increase
and diversify their products and exports, promote technological development andenhance competitiveness in the domestic and international markets.
However, it is also argued that a subsidy is an unfair instrument because it impedes

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competitiveness of prospective exports from other countries and distorts local
production. In order to guard against such unfair practices, clear rules and procedures
have been laid down in the WTO system on granting subsidies and action against
some of them.
Tanzania has no export subsidy scheme in place to date. But there is a provision
under WTO for use of subsidies in special cases. It is imperative for Tanzania toinvestigate this instrument further and its potential in stimulating exports as shown intable 9.
Anti-dumping legislation is another defense mechanism at the disposal of a country
against unfair competition. Currently, such legislation is not in place. Dumping, which
occurs when a country/company exports a product at a price lower than the price itnormally charges for the same product in its local market, distorts trade andundermines local industries competitiveness.
WTO prescribes action against dumping which affects competition. The Agreement
provides details on how the existence of dumping and the margin of dumping can be
determined. To invoke action against dumping, the invoking country should determine
whether or not dumping exists, its margin, the level of threat or material injury to
local industry and the causal link between the dumping and the injury.
The remedial measure against dumping is the imposition of an anti-dumping duty.
Tanzania is moving ahead with further liberalization of its import regime yet there isno law on anti-dumping and the incidence of dumping is on the increase. There is aneed for the country to legislate against dumping and create effective capacity for its
implementation in both pubic and private sectors.
Tanzania agro-processing industries are situated in proximity to significant markets
or to international shipping facilities. However, there have been incidences of large
quantities of agricultural raw materials that are not collected and delivered on time tothe agro-processing plants due to unreliable infrastructure that link the sources ofthese raw materials to the processing plants and ultimately to the markets.
The cost of electricity presents also a formidable impediment to seasonal producers.
The electricity bills are based on peak consumption and represent a significant
increase in transaction costs for the manufacturers. Further, extension services areeither inadequately developed or far from the processing activities, a situation that

Industrial Manufacturing and Trade Development in Tanzania

39

leads to items such as packaging materials, preservations, etc, being shipped from Dares-Salaam or from neighboring countries. Suitable cold storage facilities and coldtransport chains are lacking, thereby limiting processing activities to bottling, canningand similar preservation methods. But the high value added export opportunities
reside in the fresh cold packaging and shipment of processed foods.
The textile and leather sub-sectors are constrained by inadequate demand for theirproducts. Critical successes of these industries are economies of scale, quality andaccess to sufficiently large markets. It can be stressed that the market of Tanzania
should be sufficient to maintain a moderately sized industry especially with access tocotton and other inputs.
The structure of demand is characterized by unsophisticated subsistence type ofneeds. Consequently, the levels of market differentiation and saturation are also low.
Private consumption expenditure is growing fast with a record of real growth of 6.6
percent between 2001 and 2004（UNIDO, 2004）.
In this vein, there is a need for local market expansion and a creation of an export
culture. There is also a need to clamp down on unofficial and illegal trade to pave theway for competitive infant industries development. Firm strategy and structure can
influence an industry to be competitive. The firm strategy and structure can be
pursued through cluster cooperation especially within the supply chain. The strategy
can greatly contribute to the improved utilization of domestic market opportunities
and ensure that producers can source and supply the required products with the rightprice, quality and time as required by the market.
Firms

strategies, in Tanzania, are characterized by the presence of Government

officials in the boards of directors of companies. This is one of the ways through which
the Government can address individual company s problems and contribute towards acompetitive industrial development. The subsequent section looks at tertiary training
and industrial development.

Ⅴ
In Tanzania, educational system is in the order of 7-4-2-3 years, that is, Primary
School Level, Secondary School Ordinary Level, Secondary School Advanced Level andUniversity Level in that order of ascendancy. The end of every educational level is

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marked with the beginning of tertiary training.
Tertiary training is a form of learning whereby the uses and the means of training
are intimately interlinked. This is because tertiary training tends to prepareindividuals to be more innovative, more job-oriented and they score higher in personal
initiative than in theoretical academic knowledge.
Primary education in Tanzania is viewed as a complete package in itself rather thanas a means of creaming off the academically brilliant pupils to join secondary
education. Primary education is intended to provide the pupils with knowledge as atool to enable them play a vital role in productive activities such as in small andmedium enterprises in their respective communities.
At the end of the seventh year, the pupils sit for primary school final examination at
national level after which tertiary / vocational or industrial manpower training starts
as pointed out below:
The most prominent vocational education and training includes vocational
training centres, Folk Development Colleges, Technical Secondary Schools andPrivate Vocational Schools. Admission requirements to formal and non-formal
vocational education and training centres range from primary school leavers toanybody with subsequent level of education and wishing to acquire requisite
skills.
URT, Education and Training Policy, 1995.

Specifically, tertiary training of industrial manpower can be viewed at three levels:
Artisan, Technician and professional levels. Artisan are the most important group of
workers in the production process. They implement the production programmes
prepared by engineers. Artisans must be capable to communicate with workers inother categories. They have to know the engineering drawings and the basic
principles of planning and job organization.
Artisans are trained in Post-Primary Technical Centres, Technical Secondary
Schools（Ordinary Level）, Folk Development Colleges（FDCs）, Vocational Training
Institutes and in Prison Rehabilitation Centres.
The Post-Primary Technical Centres admit pupils who have completed seven years
of primary school education. They stay in Technical Centres for two years. The mainIndustrial Manufacturing and Trade Development in Tanzania

41

objective of Technical Centres is to provide employable skills to pupils who are notselected to proceed with secondary school education. At the end of the two-year
period, they sit for GradeⅢ. Trade Test which is administered by the Vocational
Education and Training Authority（VETA）.
Apart from Post-Primary Technical Centres, there are Technical Secondary Schools（Ordinary Level）under the diversified Secondary Schools Programme. The schools
impart technical education to students that can enable them join labour market
immediately after completing studies. The programme is designed to make technicaleducation complete in itself instead of being a stepping stone for higher education.
Folk Development Colleges（FDCs）are another category of institutions which train
artisans. The colleges are under the Ministry of Community Development, Gender
Affairs and Children. They were introduced in the 1970s as adult education postliteracy institutions. They organize courses which cater for the needs of small scale
manufacturing ventures. The courses cover a broad range of trades such as electricalinstallations, auto mechanics, plumber, home-economics and carpentry.
Further, technical education for artisans is administrated by the Ministry of Home
Affairs to prisoners. The policy of the Government of Tanzania with regard to
prisoners is that such people must be rehabilitated and reformed. They are taught
various trades. The trades include masonry, brick-making, automechanics, carpetmaking, black-smithery and construction activities. Experience shows that some of theex-prisoners become quite productive artisans after serving their prison terms.
The Ministry of Education and Vocational Training is another institution which
trains youths to become artisans through the Vocational Education and Training
Authority（VETA）. The Authority is also empowered to establish vocational
education training centres in the country to meet the needs for formal and informal
sectors.
The Vocational Education and Training Authority ensures that the system oftraining is based on demand. Up to now, the Authority administers about 50 vocational
education and training centres in Mainland Tanzania,（VETA, 1997）. The Authority
Administers three categories of Trade Tests: GradeⅠ Test which corresponds tohighly skilled workers; GradeⅡ Test that corresponds to skilled workers and GradeⅢ
Test which is equivalent to semi-skilled workers.

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The aim of the Government is to mobilize as many artisans as possible in order tominimize the constraint of technical manpower in manufacturing enterprises.
Technician level is another category of industrial manpower that is important in
manufacturing firms. Technicians are usually intermediaries between engineers andother workers. The primary task of a technician is to communicate the manufacturing
programmes from the engineers to the workers. A technician is expected to instruct
other workers technical terms and demonstrate to them how to operate theequipments and the uses of various instruments. In other words, technicians function
as foremen / supervisors in manufacturing firms.
After three years of training in Technical Colleges, the trainees are awarded
certificates which are equivalent to Full Technician Certificates（F.T.C）. Engineers
are another category of technical personnel at a professional level in manufacturingfirms. Engineers are expected to carry out engineering designs and structures, inspect
and test construction equipment. They are expected to locate mechanical defects inthe plant and supervise maintenance and repair of the plants.
In particular, an engineer must know how to design a product, organize production
and instruct his technicians involved in the production processes. A new product has
to suit not only customers needs but also it must fit into the given factory set up.
Organization of production can only be studied on a shop floor. Technical imaginationand creativity can only emanate from the shop floor experience.
Without experience on the shop floor as an integrated part of education, an engineer
cannot do his / her job satisfactorily. He / she must have practical knowledge ofmaterials, machines, tools and technical processes. This leads us to the recapitulation of
the paper and the way forward.

Ⅵ
The conclusion emerging from the paper hinges on industrial policy, trade andindustrial manpower development. Industrial policy should focus on prioritization andtargeting industries producing intermediate and capital goods. Specific mention has
been made of iron and steel industry as well as coal mining industry. The developmentof metallurgical industry is the sine qua non for the accelerated industrialization of
Tanzania because the industry has tremendous potential to the development of theIndustrial Manufacturing and Trade Development in Tanzania

43

agro-based industries.
The paper contends that policy instruments（tools）which can impact on industrial
growth, development and competitiveness should be reviewed and promoted. The
responsible institutions should work closely to create the right policy environment forsustainable industrial development. Policy co-ordination among different stakeholders
should be emphasized for industrial development.
The paper notes that because policy development is an interactive process involving
key stakeholders in the pubic and private sectors, the Government should encourage
the establishment of the public-private consultative mechanism. This partnership（mechanism）also augurs well for good governance. Good governance recognizes andrespects workers rights and duties. It ensures that workers are independent, united,prosperous and that they have their rights and responsibilities in an enterprise. Good
governance promotes unity between workers and management.
The paper stresses further that an ultimate objective of an industrial policy shouldbe that of competitive industrial growth through productivity, efficiency profitability
and sustainability. To date, industrial sustainability is hampered by high import
propensity level. Local industries do not only compete against cheap and substandard
imports but also production is inherently dependent on imported intermediate andcapita goods.
With respect to trade development, the prioritization of trade policy is necessary toensure maximum growth in trade flows. Trade policy has to emphasize thedevelopment of a competitive economy, capable of promoting export development.
Tanzania s major constraints affecting its trade performance include limited
production capacity, low competitiveness and weak trade promotion stance. The
criterion for trade policy prioritization should be determined against this background.
Analysis of trade policy tools（instruments）from this perspective highlights a few
tools that, I think, have to be accorded priority in the course of trade policy
implementation. The tools include one, investment promotion; two, tariffs & taxes;
three export processing zones; four, standards and quality; five, subsidies; six, export
development and promotion; seven, preferential treatment and eight, rules of origin.
To maximize the positive effects on trade sector, these tools must complement eachother. For instance, tariffs could be used for protection while taxation should be used

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for generation of Government revenue. In the course of policy implementation, thepriority objectives should be accorded to instruments addressing the perceived
binding constraints related to supply and delivery capacity. In this regard, thepromotion of investment in sectors and sub-sectors with high export potential shouldbe the guiding instruments.
Simultaneously, tariffs and taxation policies should be implemented in such amanner as to avoid discouragement of investments in areas where Tanzania has
comparative advantages. Priority has to be accorded also to export development
combined with promotion linked to exploitation of preferential treatment in Regional
Trading Arrangements（RTAs）and in Multilateral Trade System（MTS）. It is also
important to address the issues of substandards that often militate against Tanzania sexports to markets of industrialized countries.
Besides the use of tariffs as the conventional major trade policy instrument thelisting or ranking and prioritization process highlights the importance of addressing
supply-side issues and constraints. This is evident in the high ranking given to
instruments related to production and delivery capacity, investment promotion andexport promotion zones.
Promotion of investments and exports entails efforts towards the provision ofreliable and cost-effective socio-economic infrastructure. For Tanzania, deliberate
efforts have to be made towards the provision of reliable and affordable utility
services, improved transport network in terms of all weather roads, efficient
communications and storage facilities.
The essence of bringing about export trade-led growth is the adoption of a strategy
that takes into consideration prioritization of sectoral development which ensures that
sectoral policies reflect these priorities over a given time span. In view of theimportance of the agricultural sector, emphasis has to be placed on the sector s policies
and their impact on trade and on the relationship with other sectors. The formulationof the private sector development strategy（PSDS）is quite ideal as a link to all
sectoral policies.
The objective of sectoral policies should be to establish competitive supply capacity
in areas where the economy has comparative advantages. Sectoral policies should aim
at removing sectoral obstacles that obstruct competitive supply capacities from theIndustrial Manufacturing and Trade Development in Tanzania

45

stage of production to delivery stage. Productive sectoral policies perform a directfunction through the stimulation of supply capacity. Infrastructural sectoral policies
play the role of facilitating delivery while the social sector ensures the availability of
trained and trainable pool of health manpower to meet the demands of the productive
sectors.
The need for measures to integrate Tanzania s economy into the global economy
through trade policy depends on the success to increase the volume of domestic tradeas a stepping-stone towards higher performance in export process. The stimulation ofcompetitiveness should start with high efficiency relative to regional markets as anecessary route to international competitiveness. The key lies in the conversion ofprevailing comparative advantages to national comparative platforms.
Sectoral prioritization should also entail identification of important economic andsocial sectors and the linkage between them. In fact, the sectors that feature in any
strategy on trade development include education and heath in social sectors while
agriculture, manufacturing, mining, fishery, forestry, and tourism feature most in the
productive sector.
The status of social sector that s education and health lags behind productive sector
in terms of resource allocation. It is important that the Government channels adequate
resources in the social sector for the purpose of creating human capital critical toindustrial and trade development.
With respect to skilled manpower, industrial operators argue that the shortage ofskills from artisan to managerial levels is one of the most attendant constraints
contributing to poor performance of their manufacturing enterprises in Tanzania. In
our view however, the shortage of such skills emanates from within the enterprises
themselves rather than from the educational system of the country.
It has been pointed elsewhere above that, the educational structure of Tanzania
provides for tertiary training after every educational level in the educational structure.
Tertiary training institutions are the major source from which various sectors in theeconomy draw their manpower. Tertiary training institutions are, in fact, notnecessarily industrial-specific.
In my view, it is up to the industrial operators to design appropriate on the-jobtraining programmes which are more specific to their enterprises, train and retrain

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their workers accordingly. The shortage of skilled industrial manpower prevailing inmany manufacturing enterprises is also a result of lack of long-term employment
system coupled with reasonable remunerations and other incentives such as healthinsurances. Skills are normally acquired and accumulated within enterprises rather
than outside the enterprises.
A survey on human resources development conducted by UNIDO（2001）in
Tanzania is instructive on this point. It was found out that in the basic metal industrial
sub-sector, lack of technically skilled labour was a major constraint. In the textiles
clothing and footwear industrial sub-sector, low work ethics and apathy contributed
more to poor performance than most of the other factors. In the fabricated metals,
machinery and equipment manufacturing sub-sector, autocratic management style wasreflected in lack of accountability and transparency contributed greatly to poor
performance in the sub-sector.
These revelations provide a clear evidence that the problems affecting theperformance of manufacturing enterprises are not similar across the sectors. The
solution to the problems therefore, must primarily be sought from within theindividual enterprises（companies）.Even the type of in-company（on-the-job）training
programmes must reflect the problems which affect constantly the company
concerned.
The policy-makers should urge individual enterprises/companies to design incompany training programmes which are more relevant to the problems affecting theperformance of their enterprises rather than depending on the tertiary training withwhich most of their employees are equipped.
A caution is, further, in order here on export processing zones as tools for export
promotion, technology transfer and employment generation. Van A. Heedren（1999）
alerts the host countries of the export processing zones that the majority of theforeign companies operating in the Zones are subsidiaries of Transnational
Corporations（TNCs）with head offices abroad. He argues that the subsidiaries are
not enthusiastic enough to effect transfer of technology into the Zones as it is mostly
the assembly stage of production and light industries manufacturing activities that are
relocated in the zones. R&D and technology oriented pre-assembly stages of
production are carried out in the industrialized countries. He cautions that there is no

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scope for forward linkages because the entire output is meant for export, neither isthere any scope for backward linkages because most of the capital goods, rawmaterials and other related inputs are imported.
In fact, most of the export processing zones in Tanzania are engaged in textiles andapparels manufacturing, BOT（2004/05: 76）. But the export market for textiles andapparels is quite problematic. Until the conclusion of the GATT 1994 Accord, trade in
textiles and apparels was outside the scope of GATT and was subject to bilateralnegotiations between industrialized importing countries and the exporting countries
especially the developing countries including Tanzania（Velayudham, 2000: 47）.
But the industrialized countries which constitute a potential market for the textiles
and apparels from the developing countries decided to fix annual quotas for the importof the textiles and apparels into their markets and thus restricted export of textiles
and apparels from developing countries. This restriction is known as Multi-Fibre
Arrangement（MFA）. It has been widely used by industrialized countries to protect
their textile and clothing industries.
The developing countries have been demanding the scrapping off this arrangement（MFA）so that they could have a niche in those markets for their textile and apparelproducts in order to earn foreign exchange, but the demand has produced endlessnegotiations. Ironically, textile and apparel manufacturing is one of the sub-sectors
being encouraged in the export processing zones in Tanzania.
In my viewpoint, there is a need for a more broad-based export-generating strategy
that would enhance backward and forward linkages to the rest of the economy andearn foreign exchange for the country.

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