Industrial policy execution TZ’s big challenge

Dar es Salaam. Tanzania’s gradual path to an industrial economy has been adventurous, full of challenges and, mostly, tough challenges. But all this has not been because of lack of policies, for the country has had its full share of the same since independence.

Some of these policies were weak and some strong but the main problem, as so often pointed out by academicians, has been inadequate implementation to achieve the desired results.

“The results in terms of industrial development have failed to keep pace with the rhetoric,” says John Page from the Brookings Institution.

And so goes the adage; “Policies are crafted in Tanzania, improved in Uganda and implemented in Kenya.”

Existing policy framework

The current industrial policy direction points to deepening the private sector-led industrial growth as a way of transforming the economy from its heavy reliance on agriculture. Two major policy documents cater for economic transformation through industrialisation. They are the Tanzania Development Vision (TDV) 2025 and the Sustainable Industrial Development Policy for Tanzania (SIDP 2020).

Vision 2025: Created in 1999 the Development Vision 2025 aims at propelling Tanzania from a least developed country to a middle income country with a high level of human development and whose economy is diversified and semi-industrialised.

“This implies priority on science and technology and innovations to raise productivity in agriculture with priority to value addition by moving up the value chain in agriculture and promoting linkages with other sectors,” reads a policy analysis report from Repoa.

According to experts the Vision 2025 marks an important milestone in Tanzania’s industrial policy-making by emphasizing the desire and wish to move once and for all from an agricultural economy to a semi-industrialised one. The mistake that Tanzanian policy makers made, however, and which became the biggest impediment to the implementation of the Vision was the failure to put in place a framework for its implementation at the inception stage, according to the Tanzania Industrial Competitiveness Report 2012.

Industrial development policy

The Sustainable Industrial Development Policy 2020, on the other hand, seeks to facilitate shifting the economy’s engine of growth from the public to the private sector.

The Industrial Policy was created in 1996 after a decade of adopting the Structural Adjustments Programmes imposed by the multilateral institutions on Tanzania and which had dealt blows to Tanzania’s economy and led to a slump in industrial growth.

The idea of creating the Industrial Policy “was to consolidate, in the short run, the existing national capabilities in the industrial sector, and to build up new capacities in activities with competitive advantages for export markets in the medium term,” reads part of the report of the Industrial Competitiveness report.

The Industrial Policy would guide the promotion of the private sector to take the lead in industrialisation while the government would be responsible for putting in place a conducive policy and regulatory environment and the requisite infrastructure.

“The government would only invest directly in industrial ventures which are strategic and of critical national economic importance such as iron and steel industry,” reads a policy analysis document from Repoa.

SID was to be implemented in three phases. Phase I (1996-2000) was for a short-term programme to rehabilitate and consolidate existing industrial capacities. Phase II (2000-10) was a medium-term programme to generate new capacities in areaswith potential for creating competitive advantage through the use of efficient technology and learning process. In this phase the emphasis was put on initiating production of intermediate goods and light capital. Phase III (2010-20) encompassed a long-term programme to achieve major investments in basic capital goods industries to ensure consolidation of the industrial structures developed in the first two phases.

Policy implementation

Several strategies and plans have been crafted to facilitate the implementation of the major policies. As pointed out earlier, however, most of these implementation frameworks were came out late.

Tanzania Integrated Industrial

Development Strategy 2025

It was formulated and adopted in 2010 with a view to provide concrete strategies to implement SIDP 2020 and build a competitive industry by putting in place a competitive business environment. The strategy was adopted, four years after the SIDP 2020 had been created, to promote the efforts of achieving the SIDP goal of bringing an economy to a state of accelerating industrialisation and to provide concrete strategies to implement SIDP 2020.

The strategy, which was also meant to harmonise the SIDP and the Vision 2025, targeted six sub-sectors: agro-processing, textiles, leather, fertiliser and chemicals, light machinery and iron and steel.

Mini-Tiger Plan 2020

In 2005 the government created the Tanzania Mini-Tiger Plan 2020 to fast-track the implementation of Vision 2025, by replicating the Asian Tigers model in Tanzania. This was six good years after the Vision had been gaining dust in the shelves.

The plan states: “The successful development of the manufacturing sector is the formula that all economically thriving Asian countries followed and it is not an exaggeration to say that the sector’s success holds the key of the nation’s further development.” It is the Mini-Tiger Plan that led to the introduction of Special Economic Zones and Export Processing Zones, which have been implemented with mixed results.

Long-Term Perspective

Plan 2011/12-2025/26

Another plan created to help implementation of the Vision 2025 was the Tanzania Long-Term Perspective Plan (LTPP) 2011/12-2025/26.

The Long Term plan has been divided into three five years plans to simply its execution. The FYDP I (2011/12-2015/16) was to focus on building the requisite infrastructure, improve energy supply and markets. The FYDP II (2016/17-2020/21), which was tabled in Parliament this year intend to deepen idustrialisation as the key pillar of socio-economic and political development while the FYDP III (2021/22-2025/26) will focus on further promoting the competitiveness of the manufacturing sector and a substantial improvement in Tanzania’s share in global and regional trade.

National Trade Policy 2003

The trade policy was drafted by the ministry of Industry and Trade and strictly followed the principles stated in the Vision 2025 by focusing on private sector led export growth. The National Trade Policy 2003 emphasized stimulation and encouragement of value addition as one of its chief objectives.

Kilimo Kwanza Policy

Pillar number seven of Kilimo Kwanza polic, which was adopted in 2009, emphasizes industrialisation to address the needs of agricultural producers. Policy aims are that industrialization would both lead to increased supply of fertilisers and agricultural machinery and improved seeds as well as adding value to agricultural produce.

Small, Medium Enterprise Development Policy 2003

This policy specifically acknowledged the special role of SMEs in the context of Tanzanian industrialization. It aimed to address the constraints to industrialization and to tap the full potential of Tanzania’s SME sector. The policy had a beneficial impact on SME performance, but many constraints it aimed to address still exist to this day.

Criticism on implementation

Industrial strategies and plans, especially those created to support the SIDP and the Vision 2025 are too many, according to experts.

“In many case these proposed policies possibly are beyond the government’s capacity to implement.

Indeed, there are numerous policy reports that contain long lists of proposed actions but fail to give clear priorities as to what could be achieved realistically under existing administrative and financial constraints. In addition, integration of all these policies in a common national framework has not been adequately ensured,” says Prof Samuel Wangwe in a paper entitled Tanzania Industrialisation Report. Moreover the sheer number of programmes, plans, strategies and initiatives focusing on industrialization that have been introduced since 2000 shows that industrialisation has received more attention in the national development framework than ever before.

But experts say what matters is not the multitude of policy documents but resource allocation and timely, consistent and effective policy implementation.