Thursday 19 April 2018

President Magufuli gears up for industrialisation as the remedy of youth unemployment

President Magufuli gears up for industrialisation as the remedy of youth unemployment
(Tanzania Daily News 05/09/17)
President Magufuli gears up for industrialisation as the remedy of youth unemployment

In a move to establish sustainable inclusive economic growth in the country, in his second year in office, President John Pombe Magufuli (JPM) is making great strides in addressing the rising concerns around youth unemployment in Tanzania.

Realising that unemployment is a global pandemic, the fifth phase government under his government has opted for the Industrialisation as an agenda with the main aim of creating jobs which will then improve household incomes, and try to lift a substantial portion of the Tanzanians from extreme or moderate poverty. Industrialisation as a theme, also features in the Second Five Year Development Plan that spans from 2016 to 2021.

According to the International Labour Organization (ILO) World Employment and Social Outlook 2016, it is estimated that the global youth unemployment rate reached 13 per cent in 2016 up from 12.9 per cent in 2015, and it is expected to maintain the same level throughout 2017. The figures indicate that between 2016 towards the end of 2017, global unemployed youth is expected to rise by half a million to reach 71 million.

In spite the fact that the Tanzania unemployment rate has dropped from 11.7 percent in 2006 to 10.3 percent in 2014, the issue still remains a challenge to the country’s economic growth.

In recognition of this unemployment trend, President Magufuli’s administration took a decision to embrace industrialisation as a panacea to partly tackle unemployment among the youth because industrialisation drive is expected to be one of the significant remedies by creating thousands of job opportunities across the country.

Looking at the global historical trends, in 2008, the World Bank and Commission on Growth and Development identified 13 countries such as with success stories, which had achieved high and sustainable economic growth since the 1950s, a period which witnessed a 7percent growth in GDP per capita per annum for over 25 years.

10 out of the 13 countries included Malaysia, Republic of Korea, China, India, Vietnam, Brazil, Thailand, Japan, Taiwan, Indonesia and Singapore, all had similar features of manufacturing led growth (World Bank 2008: The Growth Report Strategies for Sustained Growth and Inclusive Development) Unexpectedly, the adopted industrialisation direction has started yielding positive results.

In President Magufuli’s first year, a total of 1,423 industries had been set up with a majority of them having an average capacity to employ a minimum of 500 people on permanent basis and 500 more in indirect jobs; and another 19 industrial development projects in yet under implementation phase.

This is good news to the urban youth who are in dire search of employment opportunities. For instance, in October 2016, President Magufuli inaugurated a Fruit Processing factory in Mkuranga, in the outskirts of Dar es Salaam, with the capacity to employ over 560 permanent employees.

In January 2017, he also inaugurated a Packaging Factory in Shinyanga with the capacity to employ a total of more than 800 people both directly and indirectly, as well as over 2,400 more people once the factory is fully operational.

In March 2017, 2,169 small, medium and large manufacturing companies had registered with the Tanzania Investment Centre, a one stop shop for businesses keen on investing in the country; with this number alone (2,169) multiplied by an average of 500 direct employees which will for instance come to 1,084,500 job opportunities, the government will be making a significant frog-leap in addressing unemployment.

It is important to note that industrialisation will not only create employment directly through establishment of industries, but also involve processing agricultural products, mineral processing such as steel production and gas products, livestock with dairy, meat and leather processing among others. All these sub sectors have the potential to create massive job opportunities; for instance with increase in demand for agricultural raw materials which employs over 75 percent of Tanzanians who will likely enhance commercial agriculture activities particularly in the rural areas.

Another area where industrialisation is expected to be a panacea to unemployment is through the number of Public Private Partnerships (PPPs) which President Magufuli’s administration has embarked on.

An impressive example is the Liganga Iron Ore and the Mchuchuma Coal mining and power project which will be implemented by the government in partnership with Tanzania China International Mineral Resources Ltd (TCIMRL) and estimated to cost over USD$ 2.8 billion. This project will involve constructing a 600MW coalfired power station, and expected to create over 31,000 job opportunities.

The construction of the Standard Gauge Railway (SGR) along the central line is another critical project which will immensely boost the industrialisation drive, and has a major impact on the economy and curbing unemployment in various parts of the country. Over 600,000 job opportunities are expected to be created in the first phase of the project and offer 300,000 permanent jobs thereafter.

Nonetheless, the SGR project, is estimated to cost over Tsh 2.8 trillion, and feature a 160 kilometre per hour, bullet train with the capacity to transport over 15 million tonnes of cargo, and will not only reduce transportation cost for existing businesses, but also urbanize rural areas and create new commercial centres across the project areas and reduce road haulage that would in turn safeguard our tarmac roads against rapid wear and tear.

It is important to note that there are numerous challenges facing implementation of the industrialisation agenda particularly around policy formulation, financing of the initiatives, serviced industrial land space and infrastructure.

By referring to the industrialisation success stories of the Tiger economies, it is critical to establish policies that will promote the private sector to raise the level of productivity through protectionist policies from foreign competition in the domestic market to cause incentives in local exporting companies; thorough management and accountability to ensure timelines of ongoing development projects are achieved.

It will increase domestic revenue collections and provide finance alternatives, and strategic PPPs and private sector participation through a harmonious business environment with predictable policies.

Once these aspects are achieved, Tanzanians will likely witness the country making a strong leap towards becoming an industrialised state, and given the pace and urge of the President to achieve his ambitions, yes this will achievable in a foreseeable future.

On that note, the fifth phase government with President Magufuli assuming the driving seat, has made numerous efforts to ensure the country has a pool of skilled laborers who will be able to exploit the job opportunities created from industrialisation.

These government’s efforts have started at the grassroots level by improving availability of free primary and secondary level education which has witnessed more than 1.2 million pupils enroll in primary schools in the first year of the initiative.


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