Poor trade logistics derail industrialisation in sub-Saharan African countries, including Tanzania, according to the latest report on Light Manufacturing Industry in Africa issued by the World Bank.

In the report, there are four broad factors associated with trade logistics that affect industrial development in the country, among others, is higher inland transport costs emanating from poor transport infrastructures.

The report shows that transport costs add to at least two per cent to production costs in the manufacturing sector leading to poor industrial development.

The second factor, according to the report, is higher port and terminal handling fees which add to at least one per cent of production costs.

“For Tanzania, insufficient storage capacity, poor container management, and a distorted profit incentives of the container terminal operator, have led to a severe congestion at Dar es Salaam Port,” reads part of the report.

It further reads: “Some shipping companies have reduced the frequency at which their ships stop at the Dar es Salaam Port, with one dropping its route altogether.”

The report indicates the third factor as higher customs and technical control fees which also add to one per cent to the production cost in the manufacturing sector.

“Lack of automation and single customs window result in higher customs fees and delays, which further compound the African deficit in infrastructure by reducing turnovers of containers and ships,” the report further reads.

The next factor is higher costs of documentation and letters of credit, which add to two per cent to production costs in the manufacturing sector, according to the report.

Meanwhile, the report has shown that Tanzania’s economic growth rate of seven per cent per annum has not recorded any sign for industrialisation.

Quoting the report the country’s director of the World Bank to Tanzania, Burundi and Uganda, Mr Philippe Dongier, recently said that: “although Tanzania has been growing at seven per cent per year, job creation has lagged behind and the country could benefit from the development of labour intensive sector like light industry.”

Like many Sub-Saharan African countries, Tanzania has ample low-cost labour giving it comparative advantage in labour intensive sectors and abundant natural resources that can provide inputs for light manufacturing industries, but it is not substantially tapping such advantages, said Mr Dongier.

“This report is valuable because it gives us a blue print on how to develop this sector by identifying the binding constraints and designing effective policy solutions to address these constraints based on experience of other countries,” he said.

In the report, apart of poor trade logistics the basic constraints halting industrial development in Tanzania and other sub-Saharan African countries include financial constraints, limited skills, barriers to productive industrial land and high input costs.

With regard to solutions, according to the report among others, they include undertaking concrete action to improve workers’ skills and increase the number of skilled human resources and instituting policy for harnessing industrialisation funds.

Others are improve port and transport infrastructure, harmonising and improving customs operations, facilitating easy control and access to land and removal of trade barriers, especially removal of import tariffs on industrial inputs.

During the dialogue, the consultant and former executive director of the Tanzania Investment Centre, Mr Emmanuel Ole Naiko, said since Tanzania has been ranked low in Doing Business by the World Bank indexes, it was high time that the national task force to address those barriers affecting business operations.

Mr Ole Naiko added that constraints identified by the report on Light Manufacturing Industries were identified in the previous World Bank report, hence there was need to take policy measure to rectify them.

“I would like to conclude my remarks by emphasising that the most effective way of addressing our weakness is to do something about skills. Let us review our school curricular to prepare young people to be entrepreneurs,” he said.

On his part, the executive director of Economic and Social Research Foundation, Dr Hoseana Lunogelo, said there was a great need to expand Vocational Education and Training Colleges in a bid to increase level of industrial skills and number of skilled personnel.

Dr Lunogelo said the tendency to convert technical colleges into universities has been reducing the number of skilled workers necessary to run the manufacturing sector.

Source: http://thecitizen.co.tz