LIVE OFF THE LAND

Tanzania 2014 | INDUSTRY & MINING | INTERVIEW

TBY talks to Abdallah Omar Kigoda, Minister of Industry and Trade, on sustainably reaching development goals.

Abdallah Omar Kigoda
BIOGRAPHY
Abdallah Omar Kigoda holds a Master’s degree in Economics from Vanderbuilt University in Tennessee and a PhD in Agricultural Economics from the University of Missouri, Columbia. He was first appointed Minister of Industry and Trade in 1995, and then served as the Minister of Energy and Minerals in 1997 before leaving the post in 2000 to assume the role of Minister of Planning and Privatization. He was again appointed Minister of Industry and Trade in 2012.

The industrial sector in Tanzania accounts for around 22% of GDP. The Sustainable Industrial Development Policy predicts that by 2025 the figure will have reached 40%. What policies will ensure that this is the case?

First of all, I think the key area to focus on is infrastructural development, especially in energy. We have to develop our energy capacity to ensure the healthy development of several industries. The government has implemented a number of initiatives to ensure that we solve problems related to energy, and in fact the sector is one where we have registered marked strength. There have been discoveries of gas and the government is now in the process of harnessing this potential. A pipeline is under construction that will link the gas fields with the northern part of the country, where our industries are located. Recently, the government has also signed an agreement with General Electric and Symbion for the development of a 600 MW gas-fired plant. We are also working in the southern part of the country on developing coal for energy at the Ngaka Mines, which could add about 200-300 MW to the national grid. We also have a major wind power generation project in the central region of the country, in Singida, with the potential to generate between 100 to 300 MW. The intention is to be generating around 3,000 MW or more by 2015. I am hopeful that our industrial sector will grow faster than today once we have completed these projects. We have prepared an Integrated Industrial Development Strategy, which considers three main areas. The first is the development of basic industries, where we have placed a greater emphasis on iron, steel, and coal. We are also working hard on developing soda ash from the northern part of the country in Engaruka. We consider these to be key areas for the development of basic industries. We are also looking to boost the development of the petrochemicals, textiles, cement, fertilizer, and hide and skin subsectors, among others. Then comes our focus on the development of SMEs, which account for a huge portion of our manufacturing sector to the tune of 50%-60%. Some of the most important challenges in developing SMEs are technological requirements, capacity building, and, crucially, entrepreneurship and skill shortage. Quality of production is the only way we can contemplate entering foreign markets with local products. Again, we are looking at the possibilities of utilizing the surrounding market in different communities because when you produce, you need to sell.

What growth rate do you think can realistically be achieved within the next decade?

The industrial sector is now contributing close to 9% of total GDP. We are targeting 15%-20% once we have solved the energy challenges.

In March 2013, Tanzania signed a number of trade agreements with China, and the nation also has trade agreements in the region, including SADC, COMESA, and the East African Community. What lies ahead for Tanzania in terms of trade agreements?

The signing of trade agreements means opening up trade opportunities, and is vital to strengthening trade facilitation, which also raises the question of trade barriers. We need to reduce trade barriers for the rapid development of trade between countries. At the same time, we need to rationalize our customs procedures and tax regimes, and streamline the way we move goods between countries. I think these are the areas that we have to work on today. Otherwise, the impact of the several trade agreements in place today will be minimal. Then again, when we talk of trade facilitation with other countries, we want a setup that will allow our companies to export and not solely facilitate imports, but pursue workable and balanced trade. Again, given the current nature of the economy, we cannot expect to develop our industrial capacity without investment, both local and foreign.

“ The industrial sector is now contributing close to 9% of total GDP. We are targeting 15%-20%. "

Nearly 80% of Tanzania's population earns its living from the agricultural sector, which is not highly industrialized. What steps are being taken to modernize it?

Our agriculture sector mostly depends on rainfall. In that regard, we have to invest much more in irrigation. The infrastructural requirements for massive irrigation projects are daunting, especially in terms of resources. What we really need to do is to put more of an emphasis on agriculture and look at the areas on which we can concentrate. You also cannot simply develop agriculture by technological infusion, but must also develop agricultural infrastructure. Since most of agriculture is realized in rural areas, we need to look at rural infrastructure itself. If we can develop electricity and introduce semi-processing entities, I believe the sector will begin to contribute immensely to national GDP. This is one of the biggest challenges ahead, and if, say, we produce coffee, we have to also sell processed coffee. If we produce maize, we have to sell maize flour. These are some of the challenges that we have to deal with.

What are some of the major achievements of the government's privatization program?

What we are trying to do though privatization is import or develop skills, technology, and capital into the industrial sector. This can only be achieved by the private sector because the private sector, generally, is the best allocator of resources. We believe that the government should maintain the role of keeping the rule of law and order. Industrialization should be run by the private sector. That is why we have undertaken a number of reforms, including privatization.