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Support for private sector, financiers key in reviving defunct industries

THE key role offered by the private sector in driving economic development, often referred to as engine of growth, has since long been common knowledge. Private sector has thus received amassed attention by policy-makers in the emerging world and by the development community alike.

In this context, the creation of an enabling business setting through business environment restructurings has been acknowledged as an important pre-requisite for unleashing a private sector response that leads to dynamic growth, and ultimately employment and income generation.

A debate is ongoing especially in Tanzania following privatisation of previously owned asset; on whether was right or wrong thing to do, whether intention was good or bad and importantly what underlined measures taken on board during 1990s privatisation of government assets epic.

While in Morogoro, February 12th 2021, President Dr JPM once again echoed toughly about factories that were privatised during 1990s and the owners or businesspersons who attained privatised asset’s boldness of not doing what was premeditated on agreed agreement during privatisation takeover process.

In my judgment, Dr JPM’s remark is a work-up call to the Ministry of Industry and Trade and Treasury Registrar. These two organs, amongst other roles have to strategically put in place an approach that would support to once and for all bring to operation factories or industries to be resuscitated under new owners or arrangement that earlier haven’t achieved envisioned plan.

Handy follow-up on Dr JPM’s remarks prompts two circumstances where one need to read between the lines of this visionary leader in Tanzanian history. I do recall well, one year (2016) after his first being elected as president and bearer of CCM party, on his way to Morogoro to Dodoma, the President received complaints from Morogoro economically active residents.

These citizens, apart from cheering Dr JPM for his victory as President, were penetratingly nostalgic to the president that Morogoro Region designed to host strategic industries and factories have ceased to attain intended objective. Privatised factories that provided sources for occupation and income were not in use, or the owners continued to have them padlocked.

Assertions further were voiced to the president that the recipients of factories and industries were thought to develop these assets used them for other uses, technically denying Tanzanians i.e. several Morogoro based residents sources of meaningful economic activities and income to mention a few.

ikewise, three years later, April 8th 2019, the president Dr JPM while in Mlale in Ruvuma Region, inaugurating maize processing factory owned by the national service (JKT) once again reiterated once more on the need for those who acquired factories and industries that were not in use to ensure they revive these assets, otherwise, these assets will be taken back to the government possession, to be allotted to other prospective investors and stringent measures will be taken against those who didn’t do what had been contracted in the handover agreement when privatised.

President Dr JPM statement on non-operational factories and industries, once more resurfaced this year in February 2021 while in two days regional tour in Morogoro.

The President, if my memory is right, went further to handpick investors who have stayed with acquired assets for more than 20 years without doing anything on them, instead using them as collateral in accessing funds that were used for other purposes contrary to agreed plan.

Knowing Dr JPM as a President and a Leader who is stern to walk on his talk, echoing and retelling three times on the same subject on defunct factories signals his seriousness and passionate on the entire issue of revitalising these factories and industries, believed to have been used for unplanned against premeditated covenant with off takers.

While the ball now rests on the hand of responsible Ministry and TR to ensure mistakes of the past not to be repeated what could be a better approach to appeal to new investors?

Is going to the market to look for new investors going to business as usual or a need for a robust plan might be needed?

Empty handed advertisement to charm new investors isn’t in my opinion enough to entice new owners?

What could be best alternative approach to help achieve intended vision of Dr JPM to see most of 400 privatised factories and industries being useful to Tanzanians as source of employment and also source of income to the government?

Could advice-giving be sourced elsewhere, outside government corridor decision making bureaucracy?

CCM 2020-2025 party manifesto dossier, in its 303 pages, noticeably consents that the CCM Party acknowledges the importance of functional industries in our economy as one of robust pillar to build a healthy and strong economy with aftermath to help reduce poverty alleviation to many Tanzanians, while supporting to amateur a foundation for a strong economy.

This boldness section of the manifesto in my view reinforces CCM party determination to deliver what it had promised Tanzanians as a ruling party.

Centred on Dr JPM’s observations and party’s manifesto admission, isn’t my plan to echo Dr JPM’s questions and concerns on defunct industries and factories, but to put in viewpoint, what I have confidence, would help the bearers of re-claimed factories or industries to ensure this time round mistakes of the past are avoided.

My advice to whoever responsible in re-auctioning of these factories/industries to new owners, to ensure themselves have at least marketing document tool to help entice serious investors and financiers who might be approached to provide long term financing loans.

Isn’t enough to come open and assert here are industrial unit that government would want to give to investors? I am of the opinion some of these factories need to be given to investors at what in economics termed as “one dollar price” concept while an extra value of these factories or industry units to be re-allocated to investor is clear.

Instead of shuffling around team of government officials to visit and revisit these defunct assets, there is need for government official bestowed with mandate to transfer these assets to new investors or financial institutions likely to provide long term financing to be in a position to induce potential investors with brief market economic sense manuscript.

In my judgment, the manuscript has to have ephemeral economic sense facts on potential market of products to be produced, on whether, raw materials be locally available or be imported, brief potential kind of technology, brief report on what form of governance is would-be feasible, brief concern on production effect on environment and brief on expertise and skills that might be needed.

These in my opinion are key issues government side has to have in place to entice investors. Amongst dossiers mentioned to entice investors and financiers, for illustrative purposes, I will pick market theme to help exemplify why is vital for investors and financiers eyes? In any kind of business, market of what is being created or mass-produced is one of main determining factor.

Many up-and-coming new businesses, in my opinion enjoy longevity and prosper because their owners conduct regular market research that help to realise target market, identify market segment, identify consumer problems and pinpoint realistic competitors. It’s the naivest way for industrialists to keep up with market trends and maintain a competitive edge by sizing up business prospect.

Market research can be carried out at various stages of a business life cycle, from handing over an asset, pre-launch and beyond.

Treasury registrar and ministry of industry and trade team having a greater understanding of the factory’s marketplace from the very start will enable them to track investor business locus and any sector challenges that might impacts operation thereafter.

Most new businesses will come across two different sorts of off- takers; understanding product market will thus give government side the ability to understand how their target new owners consider and adapt to their needs in order to turn them into regular clients and brand advocates while avoiding mistake of the past where owners were left without clear follow up mechanisms.

Thus why, some of those investors who acquired assets circumvented the government concern for more than 20 years doing nothing with factories to benefit the economy.

Research undertaken to ascertain why most investors didn’t comply with terms and condition of take-over agreement of most of 400 industries founded that many of those who acquired those factories didn’t have a precise business plan in the first place.

That alone lead to a lot of problems before take-off that could explain why they failed and on government side no detailed plan was in place on how to handle privatised firms including follow-up structure. A business plan and meticulous follow up structure in my opinion was missing and for the future to avoid repeating similar mistake government need to have feet on this before transferring acquired assets to new investors.

Without it, errors and mistakes will reaper or are more likely. Not following a specific plan can cause mix-ups, predominantly on government side and the misperception may even lead to miscalculations and frustration triggering envisioned objective of giving factories and industrial units to new investors not to be achieved.

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