Transcript Tanzania Country Background Paper Presentation

TANZANIA COUNTRY BACKGROUND
PAPER
PROF. LETTICE K. RUTASHOBYA
TANZANIA COUNTRY COORDINATOR
SAFIC Tanzania Team
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Lettice Rutashobya
Marcellina Chijoriga
Goodluck Charles
David Rwehikiza-PhD candidate
Japhet Mbura-PhD candidate
OUTLINE
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Introduction
Macro-economic Situation
Economic Transition
Research questions
Sector focus
– Agribusiness
– Tourism
• Conclusions and implications for further research
Introduction
• There is a broad consensus emerging that improving
the investment climate in Africa is the best way to
spur industrialization, technological development,
sustained poverty reduction and improvement in the
general standard of living.
• The argument that Africa’s business environment
needs some improvement has therefore gained
increasing currency.
Introduction
• However, in the face of such overriding concerns
about unfavourable business environment and several
business challenges in Africa and Tanzania in particular,
recent studies (e.g. Willem te Velde, 2010; Charles,
2009) indicate that some firms are able to break
through and become successful.
• In the presence of findings that show that African firms
are becoming successful in the often challenging
environment in the continent, empirical data on
performance drivers of African firms are scarce and do
not adequately address or explain the dynamic relation
between the contingencies, the strategies and the
performance of the firms (Jorem et, al., 2012).
Introduction
• Our current study on successful African firms and
institutional change attempts to address these
gaps in the existing literature.
• The research issues are in line with the key
strategic management concerns that attempts to
explain the issue of firm success and
determinants of performance difference among
firms.
• Theoretically, we situate our research in two
broad debates: Theories of the firm and
institutional perspectives.
Introduction
• Even as the theoretical debate on the firm performance is
advancing and empirical studies have been conducted in
various countries, the issue of differences in firm
performance in different contexts is still less understood.
• This is perhaps due to lack of clear understanding of the
specificities of the industry and institutional contexts in
which firms are embedded and their influence on firm
strategy and resources dependence.
• This argument is based on the view that while firm-specific
factors matter in their performance, the context in which
they operate needs to be understood.
• Unfortunately, understanding of the contextual differences
in Africa and in Tanzania in particular is limited.
Macro-economic Situation
Basic economic statistics (2010/2011 figures):
 GDP: USD 20.49 billion
 Real GDP Growth rate: 7 percent
 Total Exports: USD 2925.8 million
 Total Imports: USD 5834.1 million
 Mean Exchange Rate: TZS 1,587 per USD
(September, 2012)
 Population Total: 45 million people
 Total area: 947,300 sq km of land
Macro-economic Situation
• Although the average growth of GDP in the last decade
has been 7%, growth has not been broad-based and propoor
• Export sector is factor driven (minerals &raw materialstraditional agricultural crops)
• Recent move- promotion of agro-processing and
agribusiness
• Agricultural Growth Corridors
• Agricultural Special Economic Zones
Economic Transition
1961
• Freedom
• Socialist economy
1967 • State owned
1980’s
Currently
• Structural Adjustment programme
• Economic Reforms (ongoing)
Business Environment
• Tanzania is ranked extremely poorly by the global indices
• World Bank Ranking (126-140 out of 183 countries
from 2005-2012)
• Global Competitiveness Report (2011/12) -113 out of
139 countries
• The most problematic factors for doing business in
Tanzania are identified in the Global Competitiveness
Report – See the next slide
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Overall Research Question
• How do successful local firms in Tanzania gain
competitiveness, sustain and grow their
businesses amid the changing market and
institutional conditions?
Specific Research Questions
• What are the main internal factors that have
contributed to the success of firms in the
agribusiness and tourism sectors?
• What are the main external factors that have
contributed to the success of firms in the
agribusiness and tourism sectors?
• How do successful firms in agribusiness and tourism
manage their relations with local and international
institutions?
Specific Research Questions
• What are the critical moments in agribusiness
and tourism firms, and how do enterprises use
them to transform and grow in volatile business
environments?
• Are there any discernible differences in the
strategies between successful local small ,
medium and large firms?
• Are there any discernible differences in the
strategies and results of firms operating locally
and those crossing borders?
Sector Focus
• For many years the economy of Tanzania has
been largely dominated by agricultural sector
• However, the structure of the economy in
terms of GDP composition has changed in
recent years.
• The share of agriculture in GDP (24.1% in
2010) has declined relative to services (43.9%
in 2010) (see Figure 1).
SECTORS
• Other sectors that contribute significant share of
GDP include manufacturing 9%, fisheries, 2% and
mining 3.3%.
• Recent growth has been strongly driven by the
service sector and the construction and mining
sub-sectors.
• Even with the changing trend in the structure of
the economy, agriculture remains the leading and
strategic sector in terms of employment creation
(75% of the population), and poverty reduction.
Sectors Focus
Agribusiness
• Although Tanzania has been promoting
agriculture in the last 50 years, development
of agribusiness has not been a serious priority
• However, there have currently been
deliberate measures to promote agribusiness
and agro-processing.
Sub-sectors focus
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Following the efforts done by the country to promote agribusiness, the value
addition in the agro-processing sub-sector registered 55.6 percent of the whole
manufacturing sector in the country in 2008 (IIDS, 2011).
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Although this paper does not cover all sub-sectors, a key sub-sector involving agroprocessing considered in our current research is food processing:
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coffee and tea (largely owned by foreigners),
edible oils (dominated by large firms which are mainly local),
Dairy (local firms)
fish processing (both local and foreign owned located in Mwanza and DSM),
grain milling (maize,millet, wheat and soghum)-locally owned mainly located in DSM
Bakeries and confectioneries (mostly small firms and local spreading across the country)
Our major unit of analysis is the processors
Horticulture is also considered given its growth potential (mainly foreign large
firms).
Tourism
• The industry is thriving and is rated among the fastest
growing sectors in the country taking a lead in bringing
foreign exchange.
• The industry accounts for 32% of total Tanzania exports .
• It attracts about one million tourists per year, paying
around US$ 1.1 billion.
• The tourism industry is the second pillar of Tanzanian
economy.
• The total contribution of Travel and Tourism to GDP in 2011
is around 13 percent.
• The sector contributes to more than 10 percent of the total
employment.
• The share of travel and tourism in GDP and its contribution
to the total employment is expected to rise at least until
2021.
Tourism sub sectors
Hotels and restaurants
• The potential of hotels and restaurants in Tanzania is huge as the volume of both
internal and local visitors is increasing.
• Hotels and restaurants generate a large number of indirect jobs through backward
and forward linkages that can be enhanced further and realized without new major
investments.
• In 2009, Tanzania had 529 hotels with 32,315 rooms and 58167 beds.
• A total of 641 firms are registered as hotels, rooming houses, camps and other
lodging places with the Revenue Authority.
• A total number of 727 firms are registered as restaurants, cafes and eating places
with Tanzania Revenue Authority
• While small and medium level hotels and restaurants are largely locally owned, the
majority of high end hotels are foreign owned
Tourism sub sectors
Tour Operators
• This is a sector that is a preserve of local owners by Government
policy.
• The sub sector is hardly hit by foreign tour agents located in the
country of origin who sometimes link directly with tourist hotels,
hence denying local agents some potential business opportunities.
• Most of the companies are located in the Northern Circuit where
most tourist attractions are found.
• Out of a total of 633 firms registered with the Tanzania Tours
Operators Association (TATO), 63 percent were located in Arusha,
Kilimanjaro and Manyara, while 30 percent were located in Dar es
Salaam, the commercial heart of the country.
Key Observations and Consideration
for further research
• As Tanzania’s economy transforms the business environment
is still volatile with a number of challenges
• Owing to the importance of agribusiness, policy makers are
increasingly focusing attention on agribusiness and agroindustries in their strategies to promote development.
• Further, a number of weaknesses are observed in the tourism
sector.
• These include weak linkages between the accommodation
sub-sector and other sectors such as agricultural and the
manufacturing sector.
Key Observations and Consideration
for further research
• However, our analysis shows that there are no reliable
sources of data that document the profiles and performance
of agricultural activities, agribusiness and tourism
• Studies are needed for example to profile the entire
agricultural sector and its subsectors including the value chain
development.
• The conceptualization of agribusiness needs further
theoretical and empirical analysis to enable specific studies on
how various activities are interconnected in the development
of agribusiness.
Key Observations and Consideration
for further research
• An analysis of the structure of the agribusiness sector and
of the major subsectors, the dynamics of agribusiness
enterprises, the exchange and trade relations in the
production chain from agriculture to agro-industry, and the
role of institutions important for moving agro-industry
towards modernization could be interesting.
• By applying institutional and network theories it would be
interesting to establish how different firms are strategically
interconnected in the development of the value chain.
• It would be interesting to establish the overriding
constraints that contribute to low growth of the sector.
Thank You for Listening