TANZANIA: THE government will today unveil a grand plan for value addition of domestic products seeking to generate higher export returns and contribute to economic development.
The move comes at a time when demand for Tanzania’s products particularly food items in the East African Community is on an upward trend.
Thus, the government initiative that will be tabled today in Parliament by the Minister of the State in the President’s Office responsible for Planning and Investment Professor Kitila Mkumbo, seeks to increase the benefits earned from exports of locally made products which are mostly traded in raw form.
“Value addition on domestic products will guarantee producers higher return, allow penetration of a new, potentially high-value market and extend the production season,” he told ‘Daily News’ in a telephone interview from Dodoma at the weekend.
Prof Mkumbo said to capitalise on the regional and global markets, the government has come up with a comprehensive plan for value addition that will go as long as to the grassroots level to benefit smallholder farmers.
“Despite the increased exports of its domestic products in recent years, Tanzania has been gaining little because most of the goods are in raw form,” he noted.
An economist-cum-investment banker, Dr Hildebrand Shayo said first and foremost, Tanzania can create a wide range of goods and services with advanced technology if producers who are adding value to their products are given not only the necessary but genuine tailored support.
“This is a crucial step towards integrating Tanzania into the regional economy and helping the nation earn forex that is needed by the country to import goods that cannot be produced domestically,” he said.
He said Tanzania must continue to prioritise value addition and increase domestic productivity if it hopes to dominate the Kenyan market and beyond because given prevailing circumstances, the sky is the limit for Tanzania.
Most of its goods are still organic and from the health point of view that is the direction the world is moving in to promote organic food.
For this reason, local manufacturers must add more value to both their production and export operations.
Although it is rarely stated outright, anecdotal evidence suggests that Tanzania provides large quantities of raw materials to Kenyan manufacturers, who add value and re-export the goods as being made in Kenya.
“I can’t hold Kenyan manufacturers responsible for this, but Tanzania needs to take note of the potential we are losing by exporting jobs to our neighbouring countries,” he said.
For example, Tanzania’s geographic location allows for the year-round production of a wide variety of fruits, which, if exported as finished goods with added value, might generate significant foreign exchange.
To fully realise and take advantage of the enormous benefits, businesses and farmers must integrate value addition into their export operations.
“To be honest, I don’t think the government has done enough to consider the best course of action for taking advantage of this opportunity,” he said.
He added, “Given that business is competitive, there is no quick route in our country. To extend and grow the value chain, we must enhance our primary output.
We need to do research and add value to our exports to make the most of the export revenue we are not currently receiving. Beyond processing maize meal, we also need to alter our palates because other products like starch, glucose and sorbitol can be exported for additional revenue.”
Data from several credible sources shows that Tanzania’s poor engagement in value-addition activity is causing Tanzania to lose from the global market as the country continues to export mainly raw for example oranges, pineapples, avocados, cocoa, citrus instead of fit-for-table final products that can command market quality and standards.
“This implies that despite hearing reports of the deals reached during international exhibitions like the Dar es Salaam International Trade Fair, Tanzania is simply scratching the surface in terms of profits as it enjoys a very minimal percentage of the wealth gotten from the value addition process.
Tanzania will have an even more disadvantageous position in the African Continental Free Trade Area (AfCFTA) due to its uncompetitive production environment, low-value addition culture and low-capacity utilisation.
This is because Tanzania produces the most traded goods among African countries, including non-industrial goods, gold and crude oil.
Since many of the nations involved in the trade agreement have similar resources and products, Tanzanian manufacturers must be creative and unique by incorporating a high level of value addition.
“If we do not take serious, long-term action, we will continue to mouth off about how Kenya is oversupplying Tanzania with its products,” he said.
He said value additions on exports will boost the nation’s GDP and economic growth. They will also create jobs and increase income, which will lower the high unemployment rate.
On his part, Dr Petro Magai, Senior Lecturer at the University of Dar es Salaam, Business School said there is a need for empowering small-scale entrepreneurs on processing infrastructures as fundamental tools for value addition.
“There should be sufficient infrastructures for entrepreneurs to undertake processing of goods before exporting them. This will guarantee the higher export earnings,” he said.
In this initiative, Dr Magai underscored the need for close involvement of the government in putting processing infrastructures.
“There is no way the government shouldn’t take an active part in this by empowering its people to undertake value addition, particularly agricultural products,” he said.