LET'S MAKE ENOUGH

Tanzania 2017 | ECONOMY | VIP INTERVIEW

TBY talks to Charles J.P. Mwijage, Minister for Industry, Trade & Investment, on policy continuity, imports of fertilizers and cotton, and expectations for the year ahead.

What policies is the Ministry pursuing to demonstrate policy continuity under the country's new government?

Our government promotes industrialization and in doing so we look for sectors that can employ a good number of people. One area is agri-processing. We want to ensure that we produce enough food and that we come up with the industries to process that food to reduce the post-harvest loss. At the same time, this will create employment for people working in farms, factories, and the transportation sector. We aim to create employment for at least 40% of the able workforce in Tanzania. As part of this, we focus on the modernization of agriculture and achieving high productivity. We want to ensure we can produce sufficient goods and services to meet local demand, as well as specialized goods for export abroad. We want to achieve import substitution and export promotion. We want our products to be of an international standard. The trend toward urbanization means we need to promote industries that serve an urban population. For example, there is a need for bottled water, food, and light industries. Having these industries in the country ensures that we do not spend the little money we have on importing goods that we can produce ourselves. We also have some major flagship projects planned. We want to ensure that in this phase we start up the long-time Mchuchuma coal and Liganga iron-ore mining projects. These projects have been on the books and in the government's budgets for over 30 years. These projects will feed our steel industry and in line with this, we also want to improve our energy mix. We want to deliver 600MW from Mchuchuma, with 250MW being used for iron smelting and the rest being fed into the national grid to supply power nationwide. We also have a fertilizer project starting in 2016 in Lindi. It involves an international consortium led by German company Ferrostaal Industrial Projects GmbH and will produce around 1.3 million metric tons of fertilizer per year. The production of fertilizer in Tanzania will be a game-changer for us as agricultural yields will increase. With higher productivity in farming, we will have cotton and food available at reasonable prices. People can be more comfortable if they have to spend less money on food. We want to support the cotton industry and we have a strategy to improve its value chain. With the integration of the cotton chain, this will lead to more employment in the entire system, from cotton growing to clothing manufacturing. In other areas, we look to set up a tire manufacturing to service the car industry. I have a mandate from the government to do this and we are working on this. This would start as a state-owned company and then be sold to the private sector.

Going forward, how will you manage imports of fertilizers and cotton, as well as prices, to protect investors in these local industries?

The protection mechanism we intend to use will ensure that whatever we import is of a high quality and is taxed according to existing laws. With this, I am confident that our companies will be strong enough to compete. Some companies currently dump substandard and counterfeit products on the Tanzanian market and do not pay duties and taxes. This is why our local companies have not been able to compete in the past. Furthermore, with our new consortium we will have players coming into the market who are competent in their industries so we do not expect to give subsidies.

What is the ministry's view on public ownership and will there be a greater role for the state in the national economy in the coming years?

Under our government, there is no such nationalization vocabulary. During the privatization processes, businesses were allocated industries and factories to operate at a profit. They were sold assets at a token price on the condition that they produce goods and services, create employment, and pay taxes. In cases where they have failed to meet these conditions, we ask them to find someone else to run the business. However, there are many genuine reasons why these businesses do not perform. We are working through the reasons and providing guidance. A good number are back on the right track now. For example, some businesses were failing because there was no power; however, we now produce around 1,400MW from gas, hydro, and renewable sources so there is enough electricity available today. Nationalization is not taking place. The government is not taking industry back; if we want to become involved in a sector we will start our own businesses or factories. We want private sector assets to be profitable because they are strategically located and they support the country's basic infrastructure. The best way to protect our local industries is to work on enforcing existing tax and importation regulations, which we oversee.

What are your expectations for the year ahead for the ministry and for Tanzania in general?

I see us going into industrialization and Tanzania becoming a middle-income country before 2025. We have a new outlook because this government is trying to make sure that every player receives fair treatment. Some people pay taxes while others do not. This is a friendly government with an emphasis on ease of doing business. We want to make sure that all private investors are treated equally. We want to provide a fair and level playing field for each and everyone. Therefore, anyone interested in investing in Tanzania is welcome and we are open to working with everybody.