Poor infrastructure cause of low capacity utilisation - study

The country`s infrastructural constraints-unreliable electricity, inadequate water, poor technology, poor road transport and cargo handling problems have been cited as the major causes of low capacity utilisation in the industrial sector.

The industrial sector`s performance survey unveiled by the Ministry of Industries, Trade and Marketing, last week in Dar es Salaam, indicated that most of the domestic industries were unable to utilize market opportunities and potentials available on the international market.

``The industrial sector in Tanzania is still inward oriented, as what is produced by the sector is mostly consumed within the economy,`` noted the survey.

The study found that domestic sales constituted 71.59 per cent share of total sales in 2005 compared to 24.41 per cent share exports recorded in the same year.

The 2006 survey showed that domestic sales constituted 74.83 per cent share of total sales while export sales stood at 25.17 per cent.
It was noted that most of the industries surveyed were not competitive at the international level and that problems to industrial technologies used, power, infrastructure and skilled power were a constraint to full capacity utilisation.

The industrial sector faces critical and many challenges including outdated laws and regulations, poor state of physical infrastructure and utilities, inefficient production techniques, marketing, financing and human resources.

Although competitiveness originates at the firm level, the government has an important role to play in terms of effecting economic reforms and industrial policies in fostering competitiveness, it noted.

Issues that require government actions, according to the report, include improvement of infrastructure, financial resources for industrial development, and adoption of policies that enhance utilisation of technological capabilities.

Despite the problems, there are some industrial sub-sectors that recorded impressive export performance. About 97.8 per cent, 97.76 per cent, 80.0 per cent, and 72.57 per cent of fishery, tobacco, cashew nuts and tea sectors respectively, were recorded in the export market surveyed during 2006.

In order to address the current challenges facing the industrial sector, the survey recommended comprehensive approach involving all stakeholders - government and private sector.