How Tanzanian manufacturers can now secure at least Sh5.4 billion in financing
Tanzanian manufacturing companies now have an opportunity to secure a minimum of Sh5.38 billion in financing to expand their operations following an agreement signed between the Confederation of Tanzania Industries and the funding programme Manufacturing Africa. PHOTO | FILE
What you need to know:
- The programme is open to manufacturers seeking to raise financing to expand their operations or set up greenfield projects.
Dar es Salaam. Tanzanian manufacturing companies now have an opportunity to secure investor readiness support from the Manufacturing Africa programme.
The programme is open to manufacturers seeking to raise financing to expand their operations or set up greenfield projects.
This was communicated during the signing of a greement signed between the Confederation of Tanzania Industries (CTI) and a funding programme called Manufacturing Africa.
Manufacturing Africa is a programme of the UK government's Foreign Commonwealth Development Office (FCDO) which aims to help Africa address pressing challenges such as a growing labour force and an underdeveloped manufacturing sector.
The programme works by providing existing and greenfield manufacturing projects with investor readiness support so they can raise debt and equity financing in the global finance eco systems.
Speaking at Tuesday's signing ceremony, BDO East Africa audit partner Ali Selemani said through the agreement, Tanzanian industries will now be able to get investor readiness support free of charge to support them with their capital raising objectives.
He indicated the minimum transaction size for support under the programme being Sh5.38 billion with no upper limit.
“What we do is help the companies to comply to become investor ready through providing technical support,financial due diligence and ESG due diligence so they can position their projects for FDI investors on both the equity and debt fronts,” he said.
Mr Selemani cited an example of a company in one of the areas the programme operates, which received Sh134.5 billion after the going through the Manufacturing Africa investor readiness support.
“What we do is to look at the company's needs and advise on the best way to proceed, whether it's obtaining a loan or equity investment."
According to Mr Selemani, the challenge in Tanzania is the fact that most businesses are family-owned, making it difficult for them to sell shares hence there is a bigger preference for debt financing.
One of the criteria to qualify for the financing is the level of job creation, production, and business sustainability as well as gender balance.
Manufacturing Africa is operating in 5 other countries, namely Nigeria, Senegal, Ethiopia, and Rwanda, and has unlocked financing to the tune of Sh2.259 trillion so far, according to him.
The Confederation of Tanzania Industries (CTI) said the manufacturing sector is expected to play a critical role for development in the future, asking the government to prioritize it in the planned Vision 2050, in efforts to propel development.
Speaking during the event, CTI executive director Leodegar Tenga said it is important to recognise how the sector will advance development and benefit more people in the future.
He said the availability of investment capital for industries was crucial to help achieving the goals, while emphasising that Manufacturing Africa has the expertise and ability to assist manufacturers with investor readiness so as to secure capital for industries.
"For us, it is a great honour to collaborate with them to support our industries. Industries should take this important opportunity to drive the development of our country," said Mr Tenga.
He said that currently, there is a strong push to create competitive industries, and this will be achieved through good leadership and sufficient capital.
Prioritizing industries
He also emphasised that industrial development relies on progress in other sectors, such as education for skilled labour, transportation for efficient goods movement, and agriculture for raw materials, highlighting the interconnected nature of sectoral growth.
"This is the right time to consider these factors because it is the moment to plan and prioritise the development of sectors that will lead us to economic prosperity through Vision 2050," said Mr Tenga.
CTI chairman Paul Makanza said, "We must be clear about what we are crafting - Tanzania's Development Vision and Strategy, not a plan. A vision is aspirational and timeless, providing long-term direction. A strategy is a set of smart, time-bound choices that will move us towards our desired direction."
Speaking at the event, the Minister of State in the President's Office (Planning and Investment), Prof Kitila Mkumbo, said, "Science today clearly proves that one of the fundamental factors that will drive a nation's progress is industrialisation. Various studies confirm that the main difference between developed and undeveloped countries is investment in the industrial sector.
Therefore, it is impossible to create a vision without involving industries, and this should be our priority to make significant progress."
