Tanzania-China trade partnership

WHILST Tanzania may have an economy that is amongst the lowest globally, the country has made strides in lifting itself out of the doldrums. Since 2011, fiscal deficit has been on the decline. Inflation will continue falling in 2013, according to Business Monitor International’s Africa team.  Relying mostly on agriculture, the country saw decent harvests in the middle of 2012, putting a bit more money in the hands of many Tanzanians. Together, these bode well for consumers’ purchasing power. But even as tremendous room for growth is expected on the consumer side, in general,incomes are  still  low. In this setup,the country offers potentially dynamic opportunities for companies that can target the market with low-cost products.

In Tanzania as well as the wider region, getting products to the end-consumer is probably the greatest challenge a company will have to overcome, but consumer trends show that if the price is right, there are huge opportunities at the mass market level, where consumers are willing to embrace new brands.

Per capita food consumption in local currency terms is seen to increase by 12.3% in 2013. The forecast by 2017 is for a compound annual growth rate of 7.4%. Meanwhile, grocery retail sales are set to grow  16.3%  in  2013. Toward  2017,  the compound annual growth is predicted to reach 13.7% . 1

The World Bank is also optimistic about the country’s prospects, projecting record economic  growth  of  between  6.5%  and 7% through 2014 for as long as Tanzania is not significantly affected by external shocks such as price fluctuations on food and commodities. The Bank’s economic update on Tanzania says that current strong economic performance can only be sustained if the government focuses on fiscal and debt sustainability as well as the best use of public resources and close monitoring of public accounts.

The Bank also attributed Tanzania’s impressive growth of over 6% in the past year to its strong fiscal performance through excellent  macroeconomic  management.  World Bank’s lead economist for Tanzania, Uganda and Burundi, Jacques Morisset, said that with a gross domestic product growth of 6.5% in 2011 and 2012, Tanzania has performed better than most developed and many fast-emerging economies such as India and Brazil.  2 

The private sector is also helping the state in sustaining agricultural growth in the region. Unilever, for instance, has co-chaired a public-private partnership initiative with the Tanzanian government to help launch ablueprint for the Southern Agricultural Growth Corridor of Tanzania program at Davos, Switzerland with the aim of transforming the area’s agricultural productivity. The programme hopes to transform some 350,000 hectares of land from Tanzania’s Port of Dar es Salaam through Malawi, Zambia and the Democratic Republic of Congo into one of Africa’s richest farmlands.

Tens of thousands of smallholder farmers now have the chance to become commercial farmers with access to modern irrigation facilities, assuring local food security and creating at least 420,000 new job opportunities in the agricultural value chain.

Funded by Unilever and a host of global businesses, government agencies, farmers, foundations and other donors, the programme aims to generate annual farming revenues of $1.2 billion and lifting more than 2 million local people permanently out of poverty.  3

Economic ties with China
Tanzania is a strategically important partner for countries like China given its location as an Indian Ocean gateway to mineral-rich Southern Africa. 

China established diplomatiNike