Industrial output: The zone giving Dar a run for its money

According to the latest Consolidated Zonal Economic Performance Report for the quarter ended September 2024, manufacturing output in the zone surged by 30.8 percent, reaching Sh930.9 billion and representing 19.4 percent of Tanzania’s total manufacturing output.

This marks a significant shift in the country’s industrial landscape, as the Southeastern Zone’s rise contrasts sharply with the decline of Dar es Salaam’s manufacturing sector.

While Dar es Salaam, traditionally Tanzania’s industrial hub, experienced a drastic 37.9 percent drop in manufacturing output, falling from Sh3.6 trillion in September 2023 to Sh2.2 trillion in September 2024, Southeastern saw explosive growth.

The zone’s success can be attributed to a combination of factors, with natural resources like the gas reserves in Mtwara playing a pivotal role.

Energy-intensive industries, including cement manufacturing and agro-processing, are benefiting from the region’s rich energy supply, lowering production costs compared to other regions facing energy shortages.

Infrastructure development has also been a major factor in the growth of southeastern. The expansion of Mtwara Port and improvements in road networks have made transportation of goods more efficient and affordable, helping manufacturers in the region reduce operating costs.

Speaking with The Citizen, an economist from the University of Dar es Salaam (UDSM), Dr Tobias Swai, attributed the rise of Southeastern’s manufacturing sector to the region’s wealth in natural resources.

“Mtwara, for example, holds significant natural gas reserves, which are crucial for energy-intensive industries such as cement manufacturing, steel production, and agro-processing. The availability of affordable energy has allowed local industries to thrive, reducing their reliance on costly imports,”  he said.

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Dr Swai added that unlike other regions where energy shortages have impeded growth, Southeastern benefits from a stable energy supply that acts as a catalyst for industrial development.

Beyond energy, infrastructure development has played a critical role in boosting Southeastern’s economic success.

The executive director of Research on Poverty Alleviation (Repoa), Dr Donald Mmari, pointed to the expansion of Mtwara’s port and the improvement of regional road networks. These enhancements have significantly reduced transportation costs, making it easier and cheaper for manufacturers to move raw materials and finished products.

“As a result, more investors are looking to Southeastern as a viable location for manufacturing,” he said.

With Dar es Salaam facing increasing logistical bottlenecks and high operating costs, emerging zones like Southeastern are becoming increasingly attractive to businesses, Dr Mmari added.

The decline in Dar es Salaam’s manufacturing output, compared to the rise of Southeastern, marks a significant shift in Tanzania’s industrial landscape.

Dr Mmari offered a broader perspective, noting that Southeastern’s expansion represents a wider trend toward decentralising industrial activities across Tanzania.

“This shift could reduce the pressure on urban centres like Dar es Salaam, foster more balanced economic development, and ensure that the benefits of growth are spread more evenly across the country.”

However, the decline of nearly Sh1.4 trillion in Dar es Salaam has raised questions about the long-term sustainability of the city as the nation’s primary industrial hub.

An economist at the University of Dodoma (Udom), Dr Mwinuka Lutengano, noted that while Dar es Salaam has long been the focal point of manufacturing, the region is now grappling with challenges such as congestion, high operating costs, and limited industrial space.

“Southeastern’s ability to offer lower business costs, combined with natural resource advantages, makes it a more attractive destination for manufacturers,” he said.

Dr Lutengano added that Southeastern’s manufacturing sector has the potential to become one of Tanzania’s economic powerhouses.

“The region’s success will depend on continued investment in infrastructure, energy security, and education. If these factors are sustained, Southeastern could lead the way in Tanzania’s manufacturing growth.”

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For his part, an economist at Mzumbe University, Dr Daudi Ndaki, attributed this growth to the region’s focus on resource-based industries, particularly in agro-processing and construction materials.

“The presence of large agricultural estates in Southeastern has provided a constant supply of raw materials for industries such as cashew nut processing and cement manufacturing. This advantage sets the region apart from others like the Lake Zone, which, despite its focus on agriculture, lacks the same level of infrastructure and energy resources,” he said.

Agro-processing has become one of Southeastern’s most robust sectors. An economist at UDSM, Dr Emmanuel Maliti, highlights the region’s strong agricultural base as a key driver behind its manufacturing growth. “Southeastern’s large agricultural base, especially in crops like cashews, tobacco, and maize, has spurred the growth of agro-processing industries. These industries not only add value to raw agricultural products but also create jobs, contributing significantly to regional economic growth,” Dr Ndaki said.

One of Southeastern’s primary advantages over Dar es Salaam is its lower cost of living and business operations.

An economist from Saint Augustine University of Tanzania (SAUT), Dr Isack Safari, pointed out that the rising costs of rent, utilities, and wages in Dar es Salaam have made the city increasingly expensive for businesses.

“In contrast, Southeastern’s remains more affordable, allowing manufacturers to reduce operational costs,” he said.