Industrialisation, trade hold the key to one trillion-dollar economy

DAR ES SALAAM: AS Tanzania begins turning Vision 2050 from a long-term aspiration into a national development agenda, industry and trade are increasingly taking centre stage in the country’s economic transformation plans.

The vision is ambitious. By 2050, Tanzania aims to become an industrialised, knowledge-based upper-middle-income economy with a one-trillion-dollar economy.

Achieving that goal will require more than steady economic growth. It will depend on the country’s ability to build stronger industries, expand exports, create quality jobs and generate greater value from its natural resources.

For policymakers, the challenge is clear: move Tanzania beyond exporting raw materials and towards producing higher-value goods that can compete in regional and international markets. That shift is already beginning to take shape.

Presenting the Ministry of Industry and Trade’s 2026/27 budget estimates in the National Assembly in Dodoma recently, Minister for Industry and Trade Judith Kapinga said the government remains committed to building an economy driven by value addition, industrial production and entrepreneurship.

“The ministry has continued to strengthen the business environment in order to stimulate inclusive and competitive economic transformation built on value addition of resources produced within the country and the strengthening of industries that use local raw materials,” Ms Kapinga told lawmakers.

Her remarks come at a time when manufacturing activity is expanding across the country. During the 2025/26 financial year, 25 medium and large-scale industries commenced operations, creating 39,250 jobs, including 7,635 direct jobs and 31,615 indirect jobs.

The new investments span a wide range of sectors, including fertiliser, pharmaceuticals, steel products, edible oils, cement, food processing and engineering products.

Taken together, they reflect a broader effort to build the productive capacity needed to support the ambitions outlined in Vision 2050.

Building the foundations of industrial growth

Industrialisation remains one of the government’s primary tools for creating jobs, increasing incomes and strengthening economic resilience.

The long-term strategy focuses on reducing dependence on imports while increasing domestic production and expanding exports.

Vision 2050 identifies industry as one of the sectors expected to drive structural transformation over the next quarter century.

The blueprint also highlights science, technology, innovation and digital transformation as essential ingredients for building a competitive economy.

Manufacturing is seen as particularly important because of its ability to create strong links with agriculture, mining, logistics, energy and services while generating employment across multiple sectors. The steel industry illustrates that approach.

Through the National Development Corporation (NDC), the government is advancing the Maganga Matitu iron ore project, which is expected to support local steel production and reduce reliance on imported industrial raw materials.

The project forms part of a wider strategy to establish integrated industrial value chains using Tanzania’s own mineral resources.

If successful, it could help retain more value within the domestic economy, while strengthening local manufacturing capacity.

The cement industry already offers a glimpse of what that model can achieve. Tanzania now has 15 cement factories with a combined installed capacity of 13.6 million tonnes annually.

By April 2026, production had reached 10.3 million tonnes, exceeding domestic demand estimated at about 8.5 million tonnes.

The surplus is being exported to neighbouring countries, including Rwanda, Burundi, Zambia, Malawi and the Democratic Republic of Congo.

The sector expanded further with the launch of WIH Holding Limited’s new factory in Kigoma Region.

With annual production capacity of 1.9 million tonnes, the plant is expected to boost industrial activity and create employment opportunities in western Tanzania.

Ms Kapinga noted that increased industrial output is essential not only for meeting domestic demand but also for supporting infrastructure development and regional trade.

Adding value to agricultural production

The government’s industrialisation strategy is closely linked to agriculture.

While increasing agricultural output remains important, greater emphasis is now being placed on processing agricultural products locally before they reach export markets. Sugar production remains one of the key priorities.

Tanzania currently has seven sugar factories with annual production capacity of about 800,000 tonnes.

By April 2026, production had reached 410,979 tonnes against national demand of approximately 550,000 tonnes.

To narrow the gap, Kilombero Sugar Company and Mkulazi Holding Company have continued expanding their operations.

Kilombero is expected to increase production capacity from 123,000 tonnes to 226,000 tonnes annually, while Mkulazi has already begun producing industrial sugar.

“The expansion of these factories will contribute significantly to reducing imports and strengthening domestic industrial production,” Ms Kapinga said.

The edible oil industry presents another opportunity.

Although Tanzania has 1,604 edible oil processing industries with a combined installed capacity exceeding 2.5 million tonnes annually, domestic production remains below national demand. As a result, the country continues to spend significant amounts on imports.

To address the challenge, efforts are underway to increase oilseed production, improve access to quality seeds and attract investment in processing facilities.

The broader objective is to strengthen the connection between agriculture and industry, ensuring that more value is created within the country.

The same approach is being applied to cashew nuts. Rather than exporting raw cashews, Tanzania is encouraging local processing to increase earnings and create jobs.

The country currently has 70 cashew processing factories, 50 of which are operational.

Six new factories were established in Mtwara and Lindi during the review period, while four more are under construction.

Once completed, the new facilities will be capable of processing 153,600 tonnes of raw cashew nuts annually.

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A growing pharmaceutical industry

Another sector attracting increasing attention is pharmaceuticals. Tanzania currently has 14 pharmaceutical and medical equipment manufacturers, while an additional 11 factories entered trial production during the 2025/26 financial year.

Together, the facilities have the capacity to produce approximately 3.5 billion units of medicines and medical supplies annually.

The government’s target is for domestic manufacturers to meet at least 60 per cent of national demand for medicines and medical supplies by 2035.

“In addressing the importation of medicines, the government has continued implementing specific strategies to ensure investment in pharmaceutical industries increases and enables the country to meet a larger share of its own requirements,” Kapinga said.

Beyond reducing import dependence, local pharmaceutical production is expected to improve health security while creating opportunities for investment, research and innovation.

The sector also aligns closely with Vision 2050’s emphasis on science, technology and knowledge-driven growth.

Trade gains momentum

Industrial growth is increasingly being matched by stronger export performance. According to ministry figures, Tanzania’s exports increased from 8.7 billion US dollars in 2024 to 10.08 billion dollars in 2025.

The growth reflects rising production capacity and improved access to international markets.

Europe remained an important destination for Tanzanian products. Exports to the European Union increased by 37.5 per cent to 943.8 million dollars. Regional markets also continued to expand.

Exports to East African Community member states rose by 8.7 per cent to 1.26 billion dollars, while exports to Southern African Development Community countries increased by 19.4 per cent to 3.55 billion dollars.

Trade with Asia strengthened as well. Exports to China increased by 15.7 per cent to 512.6 million dollars, while exports to Japan also recorded growth.

The figures underscore the growing importance of export competitiveness as Tanzania seeks to position itself more strongly within regional and global markets.

“We will continue promoting exports and creating opportunities for Tanzanian products to access regional and international markets,” Kapinga said.

Laying the groundwork for the future

Alongside investment in industries, the government has been reviewing policies intended to support long-term industrial growth.

During the review period, authorities completed revisions of the Sustainable Industrial Development Policy 2025 and the Entrepreneurship Development Policy 2025.

The industrial policy seeks to accelerate value addition, technology adoption, innovation and industrial competitiveness.

Meanwhile, the entrepreneurship policy focuses on improving access to infrastructure, financing and technology for small and medium-sized enterprises.

The reforms are expected to provide an important foundation for implementation of Vision 2050 across the industrial and trade sectors.

Attention is also focused on industrial parks, special economic zones and industrial clusters, which are expected to play a larger role in attracting private investment.

Among the most significant projects on the horizon is the Liganga and Mchuchuma integrated iron and coal project.

Ms Kapinga announced that negotiations with China’s Shudao Investment Group Company Limited had been successfully completed and partnership agreements are expected to be signed during the first half of the 2026/27 financial year.

Construction is expected to take three years. The project has the potential to save Tanzania approximately 1.22 billion US dollars currently spent on imported steel products while creating 6,500 direct jobs and about 26,000 indirect jobs.

“This is a historic milestone for our country and a project that will bring significant benefits to the national economy,” Kapinga said.

The government is also advancing the Engaruka soda ash project and other strategic investments designed to strengthen industrial production and increase export earnings.

The road to Vision 2050

Looking ahead, the Ministry of Industry and Trade plans to continue facilitating industrial investment, improving the business environment, promoting exports and supporting entrepreneurship.

The ministry received an allocation of 135.8 billion shillings during the 2025/26 financial year, including 41.9 billion shillings for development projects.

Future spending will continue prioritising industrialisation, value addition, export promotion and investment facilitation. For Tanzania, the stakes extend far beyond economic statistics.

Vision 2050 envisages a future in which factories process more of the country’s resources, businesses compete successfully in international markets and industries create opportunities for millions of Tanzanians.

Realising that ambition will require stronger industries, more competitive exports, modern technology and a dynamic private sector capable of driving innovation and productivity.

As implementation of Vision 2050 gathers pace, industrialisation and trade are increasingly being positioned not simply as sectors of the economy, but as key engines of Tanzania’s transformation over the next quarter century.