TRALAC - Trade Law Centre

Tanzania: Government to repossess failed privatised public firms

Wednesday, 08 December 2010

Source: The Citizen (Tanzania)

The government has finished making an assessment of industries and factories which do not operate effectively after being handed to investors several years ago, the Minister for industry and trade, Dr Cyril Chami said yesterday.The Minister was speaking shortly after launching a two days East Africa Community (EAC) and United Nations Industrial Development Organization (UNIDO) workshop on industrial upgrading and modernization programme which is basically aiming at improving both small and medium scale industry’ production in the region.

Minister Chami said the assessment report on non-productive Tanzanian industries will be presented before the cabinet ministers for final decisions on whether the government should retain the investments or allocate them to other investors.

“We are aware of the industries and factories which are not operating while in hands of investors, the government is working hard to retain them or give allocate them to other investors, but we are doing this very carefully because it is all about contracts and thus we would not like to fall in trap of paying back billions of money,” said Dr Chami.

Meanwhile, the Minister for State, Investment and Empowerment, Dr Mary Nagu said that the government would retain all industries and companies from investors who have failed to develop them and give it to wananchi.

Minister Nagu was addressing wananchi in Hanang district on the issues she would focus on during her coming five years as an MP and cabinet minister.

She said the government had privatized industries, factories and plantations in order to get enough tax and create employment opportunities but most of investors have failed to run the business and ended up closing firms.

“The government is focusing at retaining its investments and give it to other people who are able to run them effectively,” she said.

On National Food Company (NAFCO) farms which have already taken from investors, Minister Nagu said the government will distribute the farms in Hanang district to wananchi.

According to Dr Nagu, the distribution of farms has already started but was temporary stopped to enable the general elections to take place in October 31.

“We were already started to divide farms to wananchi in this area but we decided top stop the exercise due to the general elections activities, I assure you that the exercise will continue soon after sworn in of councilors,” said Dr Nagu.

Commenting on industries performance, the Minister for industry and trade said many countries in Sub Saharan Africa need to exploit preferential market schemes such as African Growth and Opportunity Act (AGOA), Everything But Arms (EBA) and other international schemes if they are intending to upgrade industrial production.

Dr Chami said the global business environment has changed and thus there was a high need for export from EAC.

However, the Minister said that EAC was facing serious challenges on exploiting benefits from abroad including weak industrial base and low productivity capabilities.

“Due to low levels of industrialization in the region, most industries continue to produce similar products and also operate on small scales levels,” said Dr Chami.

He mentioned other challenges as inappropriate financial services, low technology, investment and lack of marketing which is caused by inadequate product quality and certification services.

He said the EAC-UNIDO upgrading and modernization programme was timely to the region’s current situation and that more efforts need to be made mainstream the concept into the regional and national industriazation strategies.

Commenting on the importance of supporting the improvement of MISMEs, the Minister said the sector which accounts 90 percent of firms was generating between 60 and 70 percent of employment in the region.

“This sector contribute much in providing employment to EAC wananchi, but it contributes less than 20 percent of national GDPs, therefore upgrading and modernizing of the sector is inevitable,” said Dr Chami.

However, Dr Chami asked financial institutions, delegates from partner states and development partners to come up with funding propositions because the programme was basically in need of financial resources.

“We are expecting to gain a lot after this workshop, each country will work on the recommendations that will be given after technical discussion and thus obviously there will be positive changes in the industrial sector,” said Dr Chami.

The UNIDO country representative, Mr Emmanuel Kalenzi said East African countries were in good position to achieve industrial economic development if agriculture production will be given first priority.

Mr Kalenzi said Tanzania has already set a vivid example under ‘Kilimo kwanza’ initiative and that such efforts would enable the availability of raw materials and thus strengthen industrial operation in the country.

He said the UNIDO and EAC was focusing at bringing partner states together to discuss the role of industry support institutions including technical centres, business associations, technology, training and research.

The UNIDO upgrading and modernization programme is initially targeting MISMES in gro-processing, manufacturing and related services such as quality products, standard conformity, packaging, product design and foster collaboration and networking within the region and globally.

By Florence Mugarula

The Citizen Reporter