Tanzania ranks high in industrial development, business climate – AfDB

Tanzania has improved in industrial development and business climate, according to the recently released African Industrialisation Index (AII) 2022, developed by African Development Bank (AfDB).

Its industrial development performance shows a steady upward trend as it was among the 9 top performers in Africa and ranked 3rd in three years and 4th only once during the surveying period (2010, 2019, 2020 and 2021).  In 2010 it ranked 3rd and was preceded by Senegal (1) and Ghana (2), but came before Ethiopia (4), Benin (5), Mozambique (6), Rwanda (7), Guinea (8) and Djibouti (9).

In 2019 again it ranked 3rd after it was preceded by Senegal (1) and Ghana (2), but came before Ethiopia (4), Benin (5), Mozambique (6), Djibouti (7), Rwanda (8) and Guinea (9). In 2020 Tanzania ranked 3rd the third time. It was preceded by Senegal (1) and Ghana (2), but came before Ethiopia (4), Benin (5), Mozambique (6), Djibouti (7), Guinea (8) and Rwanda (9).

However, in 2021 it ranked 4th and was preceded by Senegal (1), Ghana (2) and Benin (3), but came before Ethiopia (5), Mozambique (6), Djibouti (7), Rwanda (8) and Guinea (9). Looking at the figures Tanzania has performed very well in all four rankings. 

“Industrialiation is widely recognised as an essential component of Africa’s development and a foundation for the achievement of other development goals. Only the manufacturing sector is capable of generating decent jobs on the scale required to absorb the labour market entrants expected over the next two decades,” reads part of AII 2022.

Industrial development will enable Africa to benefit more from natural resources as “it is a foundation not just for sustained economic development, but also for a wide range of development goals.” This is also true for Tanzania which is endowed with abundant natural resources, including tourist attractions such as historical sites, beautiful bird and game viewing and cultural tourism.

In this year’s rankings Tanzania has moved to higher positions compared to last year’s, thanks to on-going reforms in various sectors of the economy. The country is one of the fastest growing economies in the world, which also attracts foreign investors.

According to government data, Tanzania’s real GDP growth is projected at 5.6 per cent in 2021 and 6.2 per cent by 2023. However, African Development Bank (AfDB) in its recent African Economic Outlook 2022 report projects that Tanzania’s GDP will grow by 5.0 per cent in 2022 and by 5.6 per cent in 2023.

With its energetic young labour force, rich in natural resources and fast-growing internal markets, Africa is projected to become the next global frontier for industrial development. Tanzania’s population has increased from 44,928,923 in 2012 to 61,741,120 in 2022. It is projected to double by 2044. Population is an important resource as its qualitative aspects, like literacy and life expectancy, contribute significantly to the country’s socioeconomic progress. 

Food and beverages are recording strong growth in Tanzania, says AII 2022. The government has been encouraging farmers to diversify agriculture and invest in irrigation farming to create food security in the country. With many parts of the country reported to get below average rainfall this year, according to

Tanzania Meteorological Agency (TMA)’s September 2022 forecast, farmers who depend on rain will most likely end up with low crop yield.

However, besides cautioning farmers to cope with changing weather patterns, the government has been saying there is enough national food storage, meaning that many parts of the country have not been very much affected in general food production in previous farming seasons.

Being the largest producer of cotton in East Africa, according to AII 2022, but most of it being exported, including its domestic garment producers import material, the government of Tanzania works hard to address this challenge “through its Cotton Clothing Strategy 2016-2020, which focuses on value chain integration, domestic processing and promoting the use of locally produced textiles.”

The goal of Tanzania’s Cotton-to-Clothing Strategy is to address constraints in a comprehensive manner and defining concrete opportunities that can be realised through the specific steps detailed in its plan of action (PoA). The current model has performed well and translated into robust economic and social returns.

“Nevertheless, value chain integration remains fragmented and the sector faces an uncertain future. While efforts have focused largely on the production and export of unprocessed cotton, cotton productivity has been declining relative to major competitors, signalling that interventions are required if the United Republic of Tanzania is to remain one of Africa’s premier suppliers,” reads part of the Cotton-to-Clothing Strategy 2016-2020.

Tanzania’s upward trend of robust value chains in textile and horticulture are attributed to strong regional integration and significant levels of investment in infrastructure and trade promotion. Tanzania has also been able to utilise Special Economic Zones (SEZs) in the promotion of economic development. SEZs facilitate rapid economic growth by creating incentives to attract foreign investment and boost technological advances.

As a whole Eastern Africa is “a leader in digitisation, particularly Kenya, and countries like Ethiopia, Rwanda and Tanzania have reprioritised industrialisation in their latest development plans, in an overall drive to create quality jobs,” according to AII 2022. This has put Tanzania in a competitive position in sub-Saharan Africa as even in this year’s Global Innovation Index 2022 it ranks among top performers.

AII is an analytical tool initiated by AfDB to assist African countries in their industrial development policies and development.