1. Industrial Policy Programme and Industrial Competitiveness Report Findings
Presentation to DPG-PSD
Tuesday, 11th December 2012
Andrea Antonelli – UNIDO Dar es Salaam
Brian McCrohan – UNIDO Consultant
Falecia Massacky – Industrial Intelligence Group

2. Presentation Outline
Background UNIDO Industrial Policy Programme (IPP)
The Tanzania Industrial Competitiveness Report (TICR) and main findings
Selected theoretical questions and answers from TICR for discussion with the PSD Group
Selected Policy Recommendations
Conclusions/discussions

3. UNIDO IPP: Background
The Tanzania Industrial Competitiveness Report (TICR) is an important output of the UNIDO Industrial Policy Programme (IPP), part of the UNIDO Country Programme aligned with UNDAP ( )
IPP contributing to UNDAP Outcome 1 Cluster I: Key national institutions develop/enhance evidence-based pro-poor economic development policies and strategies
Objective: The IPP aims at “Building institutional capacities for industrial policy design, implementation, monitoring and evaluation”
Rationale: Weak institutional capacity, lack of information and poor sector dialogue lead to often flawed policy choices

4. UNIDO IPP/CP and GoT Plans
UNITED NATIONS DEVELOPMENT ASSISTANCE PLAN (UNDAP)
UNIDO COUNTRY PROGRAMME
(Economic Growth and Environment WGs)
MKUKUTA II
MKUZA II (NGRSP) 2010/ /15
VISION 2025
FYDP I
Unleashing Growth Potential
FYDP II
Nurturing an industrial economy
FYDP III
Realizing competitiveness led export growth
IIDS
LTPP

5. IPP: The Approach

6. IPP: Planned Tangible Deliverables
National implementation/competitiveness intelligence unit set and trained at MIT
Publication of key analytical inputs for industrial policy making, including the TICR, Sectoral Competitiveness and Value Chain Studies, Policy Briefs and Assessment of Business Environment for Industrial Activity (e.g. transactions costs)
Industrial observatory (UNIDO’s Industrial Competitiveness Intelligence System), if funds allow
Review of Industrial Strategy/Policy if needed
Revised IIDS Action Plan/Implementation Roadmap

7. TICR 2012: background, objectives
The report was a collaborative effort by UNIDO trainees under guidance. The contributions came from: MIT, POPC, UDSM, ZMTIM, REPOA, STIPRO and university graduates
The report seeks to provide a quantitative background on the current competitiveness of Tanzanian industry
TICR aims at facilitating the policy process from planning to implementation
The report does not look at the hard solutions but seeks to affect the political environment and institutional framework
Challenges to industrial development are explored
Policy recommendations are outlined for industrialization

8. Key Findings on industrial Competitiveness
Industry in Tanzania remains quite limited and concentrated in few sectors and regions.
Tanzania’s MVA has grown significantly in the last decade (above 8 percent per year) but the industrial base of Tanzania remains one of the lowest in the world (MVA per capita of only US$ 44).
Manufacturing Exports Performance has been very high but has been driven by resource based products (metals, minerals) and has not had the desired benefit for MVA and other linkages to the economy.
There has been little structural change within the industry- The growing economy is not translated into equitable growth, job creation and poverty reduction.
Structural change, diversification –verbally (though little diversification, main manufactured products are among the 20 world most dynamic!)

9. Selected Questions on market potential for Tanzania manufactured products
Can Tanzania promote real economic growth from the value addition of the resource based products?
What are the key products and market opportunities that Tanzania has?
Is trade integration really a strategic direction for Tanzania?

10. Structure of manufactured exports by technology classification for Tanzania and comparators, 2010

11. Resource-based Industrialization

12. Substituting manufactured imports from where?
93% of the goods that Tanzania is currently
importing are manufactures, suggesting a lack of a
vivid presence of domestically manufactured products. the goods that Tanzania is currently
vivid presence of domestically manufactured products.

13. Other Questions Raised
Can Tanzania promote real economic growth from the value addition of the resource based products?
What are the key products and market opportunities that we have?
Is trade integration really a strategic direction for Tanzania?

14. Step-wise market exploitation

15. Markets for manufactured products in Tanzania’s landlocked neighbours, 2000-2010

16. Tanzania’s share in selected global emerging markets for manufactures, 2000-2010

17. Markets for Tanzania’s top-10 resource-based manufactured exports, 2010

18. Other Questions Raised
Can Tanzania promote real economic growth from the value addition of the resource based products?
What are the key products and market opportunities that we have?
Is trade integration really a strategic direction for Tanzania?

19. Regional Integration
RI can act as a trigger for industrial development through enhanced openness intra-regional trade
RI can foster competition, give access to wider markets, help diversify investment and production
What has Regional Integration done for Tanzanian industry?

20. Regional Integration

21. Strong regional competitors: KNY & SA

22. Market growth and Tanzania’s presence in EAC & SADC markets for manufactured products 2000-2010

23. Policy Recommendations

24. Policy Recommendations
The emergence of a competitive manufacturing sector involves short-medium and long term strategies:
Short-term: involves a gradual shift from the current niche status of manufacturing towards increased value addition in agro-processing, accompanied by a rapid expansion of a few existing low-technology, labor intensive activities.
Medium-term: manufacturing could be clustered around mineral extraction projects which already exist or are currently in the startup phase, by strengthening forward and backward linkages to relevant manufacturing sectors.
Long-term: could eventually witness the emergence of a more diversified and more sophisticated internationally competitive manufacturing sector.
Intra-industry diversification in the short term, inter-industry one in the longer term

25. Practical Conceptualization
Need for good evidence (e.g. industrial intelligence)
Coherence, Leadership and Coordination at national level
Consistency at regional/local level (e.g. land issue)
Skills development through education, science technology and innovation as a long term strategy