The Role of Agriculture in Tanzania: Unpacking Industrialization Prospects and Constraints

Introduction

Agriculture in Africa represents a major economic activity and contributes, on average, 15% of gross domestic products (GDP), although this varies widely across the continent, from 2.5% in South Africa to 56% in Sierra Leone (World Bank, 2018a). The agricultural sector employs about 65% of the workforce (Osabuohien, 2020a; World Bank, 2017; FAOSTAT, 2015) and constitutes the primary income generating activity for many especially those in the rural areas. African agriculture is, therefore, believed to have the potential to contribute to eradicating poverty and hunger, by boosting agricultural investment and trade, creating jobs, and improving livelihoods (NEPAD, 2013; Osabuohien, 2020b). Tanzania’s agricultural sector is among the most diverse in East Africa. The country’s primary export crops include coffee, cotton, tobacco, cashew nut and tea. It also produces significant quantities of fruits and vegetables, pyrethrum – a plant used to make fertilizer – and sisal, which is derived from a species of agave plant and is used to create strong plant fibers for rope, twine and fabric (Katundu, 2020; Osabuohien et al, 2020).

In Tanzania, most of the population (more than 70%) is engaged in agriculture, residing in the rural areas and practicing small scale farming. Thus, Tanzania’s agricultural sector makes sense in a number of ways ranging from employment creation, input supplies in the manufacturing sector and food security to the industrial work force and the nation at large a few to mention; not forgetting the constraints facing the agricultural sector to adequately support industrialization on the other side (Massay, 2020; Kumburu and Pande, 2020). Agriculture’s importance to economic development goes far beyond its direct impact on farmers’ incomes, as it is the driver for the economy and the best hope for the food security in Tanzania, Africa and world at large. Agricultural development has benefited millions through higher income, more plentiful and cheaper food and generates patterns of development that are employment-intensive and benefit both rural and urban areas. More important it has contributed to the economy even outside agriculture where growth and job creation are faster and has raised wages. Tanzania’s economy has responded to the structural transformation with steadily increasing shares of total GDP from the services sector. Agricultural activities accounted for 30.1 per cent of the GDP in 2017, from 29.2 per cent in 2016 (URT, 2018). There are some indications of increase in trend for the subsequent years too.

According to the World Bank (2019), the current trends in agriculture in Tanzania offer a tremendous opportunity to catalyze private investment, both local and foreign, and raise the incomes of the poor. Since agriculture already accounts for a quarter of total GDP and two-thirds of jobs, enhanced agricultural growth must be part of the strategy to create more and better jobs and alleviate poverty. Recent signs of transformation in Tanzania’s agricultural sector offer encouraging opportunities for acceleration of growth, job creation and poverty reduction, if urgent steps are taken to improve the sector’s policy and regulatory environment and investments, according to a new World Bank report (2019).

Realizing the potential of agriculture for Inclusive growth and poverty Reduction, underscore the importance of having supportive public policies and spending which crowds in more private investments needed to catalyze a nascent agriculture transformation (Wolter, 2018). Signs of transformation within the study period (2008-2018) include a growing number of medium-scale farmers which has opened up opportunities for smallholder farmers through positive spillovers. These farms have created jobs for farmers through their demand for extra agricultural inputs and financial, traction rental, and especially, transport services.