TPR Tanzania

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Tanzania 171

Tanzania Country Report

1. Trade structure and patterns

1.1 Aggregate trade

DespitetheimpressivemacroeconomicperformanceoftheTanza-

niaeconomyoverthelastdecade(1995-2005),thetrade(especially

theexport) responsehas been ratherdismal.As shown inTable1,

whereasimportshaveincreasedtremendously(about18percent)be-tween1999to2003,exportgrowthhasdeclinebyanaverageof-0.6%

per annum respectively, implying decit in trade balance.

Inthecontextofthisstudy,tradeperformancebetweenTanzania

andtheSADCblocshowanencouragingtrendforTanzanianexports

essentially reecting the benet of increased regional integration initia-

tives(KwekaandMboya,2004).Regionalintegrationinitiativeshave

includedtheprogressiveabolishmentofsomecrossbordernon-tariff

barriersandimpactofSA’saccessiontoSADC.

Thegrowthinexportsisalsopartlybecauseofwindfallgainsfrom

Tanzania’s export of cereal productsdue to the famine that hit theneighbouringcountriesofMalawi,ZambiaandDRC.ExportstoSADC

countriesincreasedalmostfour-foldbetween2000and2003,result-

ing in an average growth rate of over 45% in ve years, compared to

importsthatincreasedby6%onaveragerespectively.However,itis

importanttonotethatexportbaseremainsquitelowinvaluecompared

toimports.



172 TradePerformanceReview

1.2 Top 10 import sources and export destinations

Anexaminationonthemajorsourcesofimportsanddestinationof

exportsinTable2revealsthreeimportantfeaturesofTanzania’strade

sector.First,theUKcontinuestobethemajordestinationof(overa

thirdof)Tanzania’sexports,mainlyfortraditionalcashcropssuchas

coffee,cottonandsisal.Secondly,Table2alsoshowsconsistencyin

themajortradingpartnersforTanzaniainthatmostoftheexportdesti-

nation countries are also a signicant source of imports. These are UK,

SA,Japan,India,KenyaandGermany.However,theimportsfromthe

MiddleEastandAsiancountries(excludingJapan)arenotmatchedby

exportsasthesearemostlyoil.

Finally, although bilateral trade with SA has increased signicantly

intherecentyears,Tanzania’spenetrationintotheSAmarketseems

disappointedlylow.However,itisimportanttoviewthesurgeinimports

fromSAinthecontextofthemoreactiveeconomicpositionthatSAn

rms are assuming in the Tanzanian economy. SA is one of the top 5

sourcesofFDIinthecountrywithmostofthepreviouslystate-owned

enterprises being sold to SA rms. Naturally, these companies source a

signicant share of their inputs from SA in addition to trade opportunity

for many other rms in Tanzania to import from SA (Kabelwa, 2002).

1.3 Exports and imports by region

Table 3 shows the major trading blocs for Tanzania. The EU

remainsthe largestsingletradingpartner,accounting for57%of all

Tanzaniaexportsand 22%of imports.This impliesapositivetrade

balanceforTanzaniawithEU.FollowingthisisAsia(13%ofexports,

and35%ofimports).ThedominantpositionofSAassourceofimports

hasalsomadeSADCanimportantsourceofimportsalthoughAfrican

countriesotherthanSADChavegreaterprospectsasdestinationfor

Tanzania’sexports.

Table 1: Tanzania’s Trade Balance with the world and with SADC, 1999-2003 (USD).

1999 2000 2001 2002 2003 Growth

Exports 2067.97 1629.62 1683.40 1646.14 1989.97 -0.67%

Imports 592.15 670.81 783.06 905.77 1148.44 17.65%

Trade Balance 1475.82 958.82 900.34 740.37 841.53

Exports to SADC 6.83 11.75 9.04 16.71 37.81 45.88%

Import from SADC 191.83 162.62 181.67 181.38 247.82 6.41%

Trade Balance with SADC -185.00 -150.87 -172.63 -164.67 -210.01



Tanzania 173

1.4 Fastest growing import and export partners

OneofthecharacteristicfeaturesofTanzania’stradeperformance

inthelastdecadeisthatnon-traditionalexportsincreasinglyoccupya

signicant share of total exports. This has two implications. First, there

arenewexportopportunitiesbeingrealised(WorldBank,2005)which

means,secondly,thatthedrivetodiversifytheexportbasketissuc-

ceeding. Consequently, there are new (and hence a diversication of)

exportdestinations1followingtheimplementedtradeandothermac-

roeconomicreforms.Infact,noneofthecountriesmentionedintable

4,exceptFrance,aretraditionaltradepartnersforTanzania.Also,the

risingshareofnon-traditionalexportsrevealstheslowgrowthoftradi-

tionalexports.

Table 2: Top 10 sources of imports and destinations for exports

Imports Exports

Country Share of total (%) Country Share of total (%)

South Africa 12.5% United Kingdom 34.1%

Japan 8.3% Japan 7.8%

India 7.8% Kenya 6.9%

Saudi Arabia 7.0% France 6.8%

China 5.5% India 6.4%

Kenya 5.5% Netherlands 6.0%

United Kingdom 5.4% South Africa 3.3%

United Arab Emirates 5.4% Belgium 3.1%

Bahrain 3.8% Germany 2.7%

Germany 3.5% Netherlands 1.1%

Table 3: Exports and imports by region

Region Exports Imports

SADC 6.3% 13.5%

NAFTA 1.2% 4.5%

European Union 56.8% 21.7%

MERCOSUR 0.1% 1.5%

Japan 7.8% 8.3%

China 0.3% 5.5%

Africa 11.9% 6.6%

Oceania 0.2% 1.7%

Americas 0.2% 0.1%

Asia 13.3% 34.7%

Europe 1.8% 1.8%

Other 0.0% 0.0%

1 These include exports of live animals to particularly Comoro and Seychelles, and imports of furniture and building materials from Yemen, Chile, Morocco and Egypt.





Tanzania 175

Table 5: Commodity composition of imports

ProductShare of total imports from

world (%)

Share of total imports from

South Africa (%)

Share of total imports from

RoSADC (%)

Ch 1: Live Animals 0.3% 0.5% 2.2%

Ch 2: Vegetables 5.5% 1.9% 3.7%

Ch 3: Animal or Vegetable Fats 3.6% 0.1% 0.8%

Ch 4: Prepared Foods 2.8% 6.7% 15.7%

Ch 5: Mineral Products 17.1% 3.7% 3.4%

Ch 6: Chemicals 10.3% 10.3% 54.6%

Ch 7: Plastics 6.0% 8.7% 0.8%

Ch 8: Leather 0.3% 0.1% 0.0%

Ch 9: Wood Products 0.2% 0.3% 1.5%

Ch 10: Wood Pulp & Paper 2.9% 8.2% 3.4%

Ch 11: Textiles 4.7% 1.5% 0.5%

Ch 12: Footwear 0.6% 0.2% 0.1%

Ch 13: Stone & Glass 1.3% 0.8% 0.7%

Ch 14: Precious Metals 0.0% 0.0% 0.0%

Ch 15: Base Metals 8.7% 25.5% 3.2%

Ch 16: Machinery 21.1% 22.4% 5.0%

Ch 17: Vehicles 11.5% 6.2% 4.0%

Ch 18: Scientic Equipment 1.7% 1.5% 0.2%

Ch 19: Arms & Ammunition 0.0% 0.0% 0.0%

Ch 20: Misc. Manufactures 1.3% 1.5% 0.1%

Ch 21: Art & Antiques 0.0% 0.0% 0.0%

Ch 22: Unclassied 0.0% 0.0% 0.0%

1.6 Fastest growing import and export commodities

1.6.1 Fastest growing export commodities

ThefastestgrowingexportstotheworldareshowninTable7to

includemineralproducts 3,somemanufacturedproducts,ceramicprod-

uctsandcereals.Importantly,thefastgrowthoftheseproductshap-

penedfromaverylowbaseorfromaonce-offtraderesultinginaspike

inexports.Thesecanbedistinguishedintothreecategories.First,the

boom innon-traditionalexports,especiallyexportsof goldandother

minerals,food(cereals)andhorticultureproducts.Secondly,manufac-

tured exports to the world reect the trade impact of FDI, especially

the privatised rms. Most of the exports of this category are destined

totheRoSADCasshowninTable8.Thisgroupalsoincludeexports

3 The World Bank’s Diagnostic Trade Integration Study for Tanzania shows that Mining exports has grown faster and become largest source of growth in Tanzania than

any other product.




totheAGOAmarket,mainlytextileproducts.Finally,mostofexportsto

SA(seeTable7)aremostlyrawmaterial(agro-productsandminerals)

rather than nal goods, reecting the different comparative advantages

betweenSAandTanzania.

Table 6: Commodity composition of exports

ProductShare of total Exports to

world (%)

Share of total Exports to

South Africa (%)

Share of total Exports to

RoSADC (%)

Ch 1: Live Animals 12.4% 2.1% 0.6%

Ch 2: Vegetables 19.8% 10.3% 47.3%

Ch 3: Animal or Vegetable Fats 0.3% 0.1% 3.8%

Ch 4: Prepared Foods 6.8% 6.1% 6.7%

Ch 5: Mineral Products 5.9% 0.7% 2.2%

Ch 6: Chemicals 1.0% 0.0% 10.7%

Ch 7: Plastics 0.3% 0.1% 3.2%

Ch 8: Leather 0.7% 0.4% 0.0%

Ch 9: Wood Products 0.6% 0.2% 0.1%

Ch 10: Wood Pulp & Paper 0.2% 0.2% 0.1%

Ch 11: Textiles 6.9% 8.7% 9.0%

Ch 12: Footwear 0.5% 0.0% 2.9%

Ch 13: Stone & Glass 0.7% 0.3% 8.0%

Ch 14: Precious Metals 42.8% 70.5% 0.0%

Ch 15: Base Metals 0.6% 0.0% 3.4%

Ch 16: Machinery 0.3% 0.1% 2.0%

Ch 17: Vehicles 0.0% 0.0% 0.0%

Ch 18: Scientic Equipment 0.0% 0.0% 0.0%

Ch 19: Arms & Ammunition 0.0% 0.0% 0.0%

Ch 20: Misc. Manufactures 0.0% 0.0% 0.2%

Ch 21: Art & Antiques 0.0% 0.0% 0.0%

Ch 22: Unclassied 0.0% 0.0% 0.0%

1.6.2 Fastest growing import commodities

Ontheimportside,asmostof theproductslistedinTable9 are

nottraditionalimportsforTanzania,weconsiderthemtoberelatively

newerimports(perhapsasaresponsetothedemandforrawmaterials

in recently established rms or as a response to a more liberal import

regime)hencegrowingfastfromaverylowbase.Forinstance,mostof

thefoodproductslistedinTable9and10arepresumablysuppliestoa

recently ourishing tourism industry, where international hotels source

foodandbeveragesuppliesmostlyfromSouthAfrica.SouthAfrican

Airways(SAA)tookoverTanzanianAirwaysso itisnotsurprisingtoseeanupsurgeofimportsofaircraftandproductsthereoffromSouth

Africa (see Table 10). Certainly there is some level of diversication of



Tanzania 177

Table 7: Fastest growing exports to the world (Average growth rate 1999-2003)

Product Average Absolute Value (Tshs mil) % Growth

H26: Ores, slag and ash 61,182 1,090.9%

H95: Toys, games, sports requisites 52 224.9%

H90: Optical, photo, technical, medical, etc apparatus 15,892 152.3%

H10: Cereals 18,794 145.7%

H63: Other made textile articles, sets, worn clothing etc 5,151 132.6%

H69: Ceramic products 148 112.0%

H91: Clocks and watches and parts thereof 3 106.8%

H92: Musical instruments, parts and accessories 129 99.9%

H49: Printed books, newspapers, pictures etc 1,053 99.8%

H96: Miscellaneous manufactured articles 188 84.4%

H58: Special woven or tufted fabric, lace, tapestry etc 859 84.1%

H60: Knitted or crocheted fabric 2,969 83.4%

H46: Manufactures of plaiting material, basketwork, etc. 2,185 70.9%

H34: Soaps, lubricants, waxes, candles, modelling pastes 5,856 69.2%

H30: Pharmaceutical products 182,926 61.2%

H43: Furskins and ar ticial fur, manufactures thereof 2,651 53.9%

H71: Pearls, precious stones, metals, coins, etc 547,731 53.2%

H22: Beverages, spirits and vinegar 3,026 49.6%

H72: Iron and steel 4,740 48.4%

Table 7: Fastest growing exports to South Africa (Average growth rate 1999-2003)


H56: Wadding, felt, nonwovens, yarns, twine, cordage, etc 180 315.2%

H61: Articles of apparel, accessories, knit or crochet 125 220.5%

H39: Plastics and articles thereof 40 178.4%

H24: Tobacco and manufactured tobacco substitutes 1,092 118.0%

H07: Edible vegetables and certain roots and tubers 109 105.2%

H71: Pearls, precious stones, metals, coins, etc 13,561 40.9%

H22: Beverages, spirits and vinegar 543 34.9%

H84: Nuclear reactors, boilers, machinery, etc 5,593 33.9%

H44: Wood and articles of wood, wood charcoal 115 32.7%

H43: Furskins and ar ticial fur, manufactures thereof 47 25.7%

H05: Products of animal origin, nes 188 10.4%

H53: Vegetable textile bres nes, paper yarn, woven fabric 111 7.1%

H03: Fish, crustaceans, molluscs, aquatic invertebrates nes 413 3.8%

importsources,assomemachineryisnowimportedfromSouthAfrica

thatusedtobeimportedonlyfromtheWest.ImportsfromSADCotherthanSouthAfrica(Table11)includeorganicchemical,perfumesand

animalproductsasfastestgrowingimports.




Table 8: Fastest growing exports to the rest of SADC (Average growth rate 1999-2003)


H15: Animal, vegetable fats and oils, cleavage products, etc 1,204 464.4%

H34: Soaps, lubricants, waxes, candles, modelling pastes 1,921 379.9%

H96: Miscellaneous manufactured articles 13 309.1%

H63: Other made textile articles, sets, worn clothing etc 839 162.9%

H94: Furniture, lighting, signs, prefabricated buildings 15 140.2%

H17: Sugars and sugar confectionery 167 86.9%

H12: Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 87 73.7%

H39: Plastics and articles thereof 373 73.3%

H44: Wood and articles of wood, wood charcoal 8 56.2%

H30: Pharmaceutical products 407 49.6%

H32: Tanning, dyeing extracts, tannins, derivs,pigments etc 84 43.8%

H49: Printed books, newspapers, pictures etc 14 40.6%

H07: Edible vegetables and certain roots and tubers 356 27.7%

H68: Stone, plaster, cement, asbestos, mica, etc articles 3 23.6%

H70: Glass and glassware 1,679 18.6%

H11: Milling products, malt, starches, inulin, wheat gluten 1,480 17.8%

H72: Iron and steel 435 14.2%

Table 9: Fastest growing imports from the world (Average growth rate 1999-2003)

Product Average Absolute Value(T SHS) % growth

H14: Vegetable plaiting materials, vegetable products nes 63 207.8%

H51: Wool, animal hair, horsehair yarn and fabric thereof 75 61.7%

H75: Nickel and articles thereof 402 53.6%

H50: Silk 30 51.0%

H97: Works of art, collectors pieces and antiques 282 48.3%

H56: Wadding, felt, nonwovens, yarns, twine, cordage, etc 20,041 42.1%

H33: Essential oils, perfumes, cosmetics, toileteries 26,322 41.6%

H13: Lac, gums, resins, vegetable saps and extracts nes 694 40.7%

H53: Vegetable textile bres nes, paper yarn, woven fabric 2,735 39.5%

H60: Knitted or crocheted fabric 483 38.3%

H01: Live animals 1,908 38.3%

H45: Cork and articles of cork 39 33.4%

H67: Bird skin, feathers, articial owers, human hair 362 32.0%


H54: Manmade laments 10,299 31.3%

H78: Lead and articles thereof 676 28.8%

H61: Articles of apparel, accessories, knit or crochet 8,497 19.8%

H20: Vegetable, fruit, nut, etc food preparations 3,329 19.8%

H29: Organic chemicals 41,787 19.0%

H31: Fertilizers 43,851 18.8%



Tanzania 179

Table 9: Fastest growing imports from the world (Average growth rate 1999-2003)

Product Average Absolute Value(T SHS) % growth

H14: Vegetable plaiting materials, vegetable products nes 63 207.8%

H51: Wool, animal hair, horsehair yarn and fabric thereof 75 61.7%

H75: Nickel and articles thereof 402 53.6%

H50: Silk 30 51.0%

H97: Works of art, collectors pieces and antiques 282 48.3%

H56: Wadding, felt, nonwovens, yarns, twine, cordage, etc 20,041 42.1%


H13: Lac, gums, resins, vegetable saps and extracts nes 694 40.7%

H53: Vegetable textile bres nes, paper yarn, woven fabric 2,735 39.5%

H60: Knitted or crocheted fabric 483 38.3%

H01: Live animals 1,908 38.3%

H45: Cork and articles of cork 39 33.4%

H67: Bird skin, feathers, articial owers, human hair 362 32.0%


H54: Manmade laments 10,299 31.3%

H78: Lead and articles thereof 676 28.8%

H61: Articles of apparel, accessories, knit or crochet 8,497 19.8%

H20: Vegetable, fruit, nut, etc food preparations 3,329 19.8%

H29: Organic chemicals 41,787 19.0%

H31: Fertilizers 43,851 18.8%

Table 11: Fastest grow ing imports from the RoSADC (Average growth rate 1999-2003)


H29: Organic chemicals 168 453.0%


H70: Glass and glassware 25 200.7%

H15: Animal, vegetable fats and oils, cleavage products, etc 161 154.5%

H01: Live animals 29 130.1%

H74: Copper and articles thereof 293 109.1%

H49: Printed books, newspapers, pictures etc 295 47.1%

H25: Salt, sulphur, earth, stone, plaster, lime and cement 245 46.3%

H32: Tanning, dyeing extracts, tannins, derivs, pigments etc 9 38.0%

H30: Pharmaceutical products 179 31.3%

H36: Explosives, pyrotechnics, matches, pyrophorics, etc 328 18.9%

H64: Footwear, gaiters and the like, parts thereof 3 16.0%

H95: Toys, games, sports requisites 3 9.6%

H10: Cereals 482 9.1%

H28: Inorganic chemicals, precious metal compound, isotopes 37 8.6%

H85: Electrical, electronic equipment 361 6.1%




2. Trade intensity with the SADC regionTable12givesestimatesoftradeintensitiesforexportandimports

in2003withSADCcountries.TheindexofexportintensitywithSADC

countriesforTanzaniaisshowntobefargreaterthan1,implyingthat

TanzaniaexportedtoSADCmarketbygreaterproportionthanthetotal

exporttotherestoftheworld.Thatis,theindexshowsgreaterpros-

pectsforTanzanianexportsintheSADCmarket.

Importshaveamuchhighertradeintensitythanexports.Thisis

a re;ection of the fact that Tanzania imports signicant quantities of

machinery and other inputs from South Africa and exports nal goodstotheEU.Onewouldthusexpectthispatternoftradeintensity.

Table 12: Trade intensities for exports and imports in 2002 and 2003

Exports Imports

2003 4.3 15.0

3. Intra-industry trade

Theresultsforthe15productgroupswiththemostintra-industrytrade are reported in Table 13. Most of the products identied with high

intra-industrytradeareagriculturalfoodstuffsinwhichTanzaniaalso

hascomparativeadvantageinproduction(milk,tobacco,sugar,glass,

sh, pepper and coconuts). Tanzania import milk products signicantly

fromKenyaandSA,butalsoexportsmuchrawmilktoneighbouring

SADCcountriesespeciallyDRC–presumablyrevealingthatTanzania

hasstrongcomparativeadvantageinproductionoftheseproducts.It

isalsopossiblethat,astheaverageincomeincreaseinTanzania,con-

sumersexercisemoresovereignty,wherehigh-incomebracketsprefer

importedsubstitutesofdomesticallyproducedconsumerbrands.Also,

the ourishing of the Tourism industry has heightened import of food -

stufffortouristconsumption.

Table 14 presents specic estimates of GLI for trade between Tan-

zania and SA. Notably, the index is much lower (nearly zero) than those

ontradewithworldshowinglittleornointra-industrytradebetween

Tanzania and SA. Nevertheless, some traces of export and import of

cereals,tobaccoandbananaexists–whichapparentlymaybereport-

ing both the export of raw products and import of nished product from

thesamesectors.Infact,SAsupermarketchains“Shoprite”tradein

Tanzanian and imports SA brands ofmost products.The relatively

higher GLI of 0.13 for machine tools seems like an outlier, probablycapturing a one-off export of specic tools made in Tanzania.



Tanzania 181

Table 13: Intra-industry trade with the wor ld: Top 15 commodities (HS4)

HS code Commodity Imports (Tshs mil) Exports (Tshs mil) Grubel-Lloyd index

0401 Milk and cream, neither concentrated nor sweetened 360 - 0.88

2402 Cigars, cigarettes etc, tobacco or tobacco substitute 3 91,797 0.81

0701 Potatoes, fresh or chilled 4,800 547 0.51

7010 Glass bottles, asks, jars, phials, stoppers, etc 1,038 15,912 0.48

3307 Shaving and toilet preparations nes, deodorizers - 11 0.29

0803 Bananas, including plantains, fresh or dried 4,270 37 0.28

1702 Sugars nes, lactose, fructose, glucose, maple syrup 38 16 0.21

0904 Pepper (Piper), crushed or ground Capsicum, Pimenta 2,669 596 0.08

2204 Grape wines(including fortied), alcoholic grape must 42 1 0.04

0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried 3,955 88,271 0.04

3401 Soaps 789 12,358 0.01

0303 Fish, frozen, whole 16,044 693 0.01

3923 Containers, bobbins and packages, of plastics 4 2,823 0.01

0306 Crustaceans 2,007 31,768 0.01

3304 Beauty, make-up and skin care preparations - 708 0.01

Weighted average of total intra-industr y trade 0.03240588

Note: - implies that the gure is (or close to) zero.

Table 14: Intra-industry trade with South Africa: Top 15 commodities (HS4)

HS code Commodity Imports (Tshs mil) Exports (Tshs mil) Grubel-Lloyd index

8461 Machine-tools for shaping metals, nes 3 - 0.13

1007 Grain sorghum - - 0.04

2402 Cigars, cigarettes etc, tobacco or tobacco substitute - - 0.02

8605 Railway passenger and special purpose coaches 96 - 0.02

3922 Bathroom wares, of plastics - - 0.02

8513 Portable battery, magneto electric lamps 1,198 2 0.01

8471 Automatic data processing machines (computers) - - 0.01

8459 Machine tools except lathes to drill, bore/mill/thread - - 0.00

0803 Bananas, including plantains, fresh or dried - 0.00

5905 Textile wall coverings 325 - 0.00

8409 Parts for internal combustion spark ignition engines 0 - 0.00

1204 Linseed - 0.00

Weighted average of total intra-industry trade


TradewiththeRoSADC(seeTable15)showshigherintra-industry

trade relative to that with SA. Most of the products with higher GLI

areofmanufacturedgoodsandfurniture.AlthoughTanzaniadoesnot

havecomparativeadvantageinmanufacturingproducts,theproducts

foundtobearhigherintra-industrytradearelightmanufacturesmostly




producedfordomesticmarketbutalsowhicharealsotraded(justas

Tanzanianconsumersalsoprefertoconsumeproductsproducedin).

Most of the intra-industry trade in this respect reect retailing business

acrosstheregion(especiallytoDRC,MalawiandZambia).Thedata

may also reect re-exporting. The appearance of rice in the list reects

crossbordertradeincerealsthatiscommonbetweenthesecountries..

TanzaniaBreweriesproductshavealsowonmarketshareintheDRC,

Malawi and Zambia but Tanzania similarly imports Namibian and Zim-

babweanbrandsofbeer.

Table 15: Intra-industry trade with the RoSADC: Top 15 commodities (HS4)

HS code Commodity Imports (Tshs mil) Exports (TShs mill) Grubel-Lloyd index

4001 Natural rubber and gums, in primary form, plates, etc - - 0.67

3808 Insecticides, fungicides, herbicides etc (retail) 115 38 0.50

3304 Beauty, make-up and skin care preparations 20 125 0.48

2710 Oils petroleum, bituminous, distillates, except crude 54 18 0.47

3924 Plastic table, kitchen, household, toilet articles 17 83 0.39

3004 Medicaments, therapeutic, prophylactic use, in dosage 62 897 0.38

1511 Palm oil and its fractions, not c hemically modied 181 1,941 0.31

4819 Paper, board containers, packing items, box les, etc 3 23 0.23

2203 Beer made from malt 180 38 0.21

5607 Twine, cordage, rope and cable 3 27 0.19

6301 Blankets and travelling rugs 2 56 0.15

5202 Cotton waste, including yarn waste and garnetted stock 7 126 0.11

4011 New pneumatic tyres, of rubber 86 9 0.11

1006 Rice - 609 0.10

6405 Footwear nes, sole not leather, rubber or plastic 5 1 0.10

Weighted average of total intra-industry trade 0.05


4. Tariff analysisTable16showstheextentandstructureofliberalizationoftheTan-

zaniantraderegimewithrespecttoSADCregion.Itisshownthatthe

Tanzaniantrade regimehasbeengreatlyrationalizedwithhighcon-

centrationofimportsintofew(mainly3)tariffcategories.Morethan

twothirdsoftotalHS6linesareintwotarifflines:zero-ratedandthe20

– 29% band; with no product lines on the 40% or more tariff band. The

WorldBank’s(2005)DTISstudyshowthataveragetariffrateshaves

beendeclininginEastandSouthernAfricaasshowninFigure1.

Whiletariffbandsfortotalimportsareratherspread,importsfromSADCaremuchmoreconcentratedwithabouthalfofimportsin the

10-14%band,andnearlyanotherhalfsplitbetweenzero-ratedand20-



Tanzania 183

Table 16: Tariff analysis

Tariff (%) % of Total HS 6 Lines Imports from SADC (%) Total Imports (%)

0% 38.1% 20.0% 28.8%

1-4% 0.0% 0.3% 16.1%

5-9% 2.3% 1.9% 13.4%

10-14% 5.7% 49.0% 9.7%

15-19% 16.0% 2.7% 12.9%

20-29 35.5% 26.1% 18.8%

30-39% 2.3% 0.0% 0.6%

40% 0.0% 0.0% 0.0%

Figure 1.1. Simple Average Tariff in Eastern and Southern Africa

1997 1998 1999 2000 2001 2002 2003 2004

25%

20%

15%

10%

TanzaniaCOMESA countries (simple average) SADC countries (simple average)

Note: Membership in the Common Market of Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) overlaps.

Source: Adopted from World Bank, 2005.

29% band. Clearly this reects harmonisation result for trade regime re-sultingfromtheregionalintegrationinitiativebySADCmemberstates

(the 2000 trade protocol). Notable from table 16 and associated Figure

1.2isthehighershareoftotalSADCimportsinthe10-14%tariffband

reecting the reality of the economic structure of the SADC economies.

Mostofthesecountriesareproducersof agroproducts,andlessso

nal products or capital goods. This is a further evidence to show that

SADC economies are less the producers of manufactured nal and

capitalgoodsthanintermediate(especiallyagricultural)products.Tariff

analysiswithrespecttoSACU(seeTable17andFigure1.3)showsa

slightly different picture. Like in the case of SADC, zero-rated imports

occupythelargestshare(aboutonethird)ofimports.However,unlike

inthecaseofSADC,importsaremoresmoothlydistributedbetween

various tariff bands; presumably implying a more diversied nature of

theSACUeconomiesunlikethoseofSADC.




Figure 2: Tariff analysis SADC (2002)

0% 1-4% 5-9% 10-14% 15-19% 20-29% 30-39% 40%

60%

50%

40%

30%

20%

10%

0%

% of Total HS 6 Lines Imports from SADC Total Imports

0% 1-4% 5-9% 10-14% 15-19% 20-29% 30-39% 40%

40%

35%

30%

25%

20%

15%

10%

5%

0%

% of Total HS 6 Lines Imports from SADC Total Imports

Figure 3: Tariff analysis



Tanzania 185

5.Trade agreements planned and in forceTanzania has active memberships in two regional trade agree-

ments,namelySADC(accordingtotheSADCTradeProtocolof2000)

andtheEastAfricanCommunity(theEACincludesKenya,Tanzania

andUganda).Ingeneralthough,regionaltradeintegration(andrelated

agreements) ismuchmoreadvancedfor theEAC than SADC.The

laterhaditsorientationmoreintoregionalcooperationonmattersof

commoninterest(includingthepoliticalcohesionratherthanjusttrade

orientationthat is justbeginning tofeature inits integrationefforts).

First with ratication of SADC trade protocol and its subsequent drive

forafreetradearea(FTA)andcustomunionin 2012,andsecondly

withaccessionofSouthAfricahasgreatpotentialforenhancingtrade

andinvestmentopportunitiesintheregion.

TheEAChassuccessfullyestablishedacustomunionasanentry

pointforfurtherintegrationthathasrecentlyshownintentiontoaspire

forapoliticalfederation.Withthesedevelopmentsinmind,Tanzania

hasfounditselfinanecessarydilemmafollowingitsearlierwithdrawal

from COMESAand its highly contestedoverlappingmembership in

SADCandtheEAC.Twoissuesarekeyinthisdilemma.First,there

hasbeenpressurefromthebusinesscommunityforTanzaniato re-

join COMESAowing to its perceived lost business opportunities inCOMESA.Secondly,thesuccessoffurtherintegrationinEACiscon-

sideredtobeatriskifTanzaniaconsolidateshermembershipinSADC

whiletwoEACpartnerstateconsolidatetheirswithCOMESAbody.For

instance,whileTanzaniahaspledgedtonegotiatetheon-going(and

rather controversial) EPA through the SADC conguration, her EAC

partnershaveclearlyadvancedtheirsthroughtheenlargedCOMESA

(inthiscasenamedESA)body.Inaddition,thethreeregionalbodies

(i.e.SADC,EACandCOMESA)areallkeentoestablishsomeform

ofFTAandsubsequently,aneffectivecustomunionjustasEAChas

done.Clearly,thiscomplicatestradeandapparentlycompromisesthe

objectivewithwhichthesebodieswereestablished.

InpursuitoftheEPAnegotiationsthatrequireanACPcountryto

concludeanEconomicPartnershipAgreement(EPA)withtheEUun-

deraparticularregionalbody,TanzaniahasoptedtonegotiateanEPA

under the SADC conguration. This indicates her intention to embrace

SADCintegrationprocessparallelwiththatofEAC,albeittheinherent

difculties of overlapping membership. With the EAC’s agenda to fast-

trackpossibilityforfederation,thechallengeinprovidingsincerelead-

ershipforthisissueisimperative.Tanzaniaisalsoeligibleformultilat-

eraltradepreferencesundertheUS’AGOAandtheEU’sEBAinitiative,

bothofwhichhaspresentedmoreexportopportunitiesthanTanzaniahasbeenabletoexploitgiventhelowlevelofsupplyresponse.The

governmentisundertakingeffortstobuildTanzania’scapacitytoac-




cessglobalmarketsandincreaseexports,whileconformingto trade

rules,especiallythoseoftheWTO.

Nevertheless, this is not to imply that existence of RTAs is not hav-

ingimpactontradeperformance.Firstly,tariffpeakshaveeffectively

beenlowered(seeFigure1.1)bothasresultofmacroeconomicreform

policiesandestablishedunderstandingby regionaltradepartnersto

harmoniseandlowertariffstoboostintra-regionaltrade.Second,and

followingfromabove,mostnon-tariffbarriershavebeenpulleddownto

give room for smooth ow of merchandise goods between countries. In

thiseffect,muchoftheinformalcross-bordertradehasbeenformalized

andseveralexportandimportbansandquotas(forinstance,forcere-als)havebeenlifted.Trade(particularlyexport)performanceforTanza-

niainEACandSADChasincreasedsubstantiallyoverthelastdecade.

Agricultural(food)cropsexportsrespondedpositivelytotheopeningof

borderswiththeEACpartnersandTanzania’sliftingoftheexportban

fortheseproductsandthewindfallmarketarisingfromneighbouring

SADCcountriesthatwereaffectedbydraught.Inaddition,SouthAfrica

hastakenTanzania’stradeorientationintonewdimensionsuchthatit

isoneofthekeytradepartnersinthelasttenyears.

Withthisbackgroundinmind,thefutureofTanzania’stradeagree-

mentsisclearlyhingedontheEAC’smaturingintegration,theeffective-

nessofwhichlargelydependonhowiteventuallytacklestheexisting

overlappingmembershipstoSADCandCOMESA.

6. Revealed comparative advantageThepurposeofarevealedcomparativeadvantage(RCA)analysis

istoidentifysectorsorproductsthatacountrycanandhasproduced

more efciently that it has on other goods. Such analysis can be made

byanalysingtradedatatoidentifystrongerexportrelativetototaltrade

oftheparticularcountry.

TheestimatesofRCAanalysisforTanzaniaareshowninTable17fortopandbottom20products.Asexpected,Tanzaniaisfoundtohave

strongRCA intraditionalcashcrops (e.g.coffee, tea, cotton,sugar,

etc.) and other agricultural products including sh hides and skins etc.

Conversely, Tanzania is conrmed to have low or no RCA in manufac-

turedproducts.

WithrespecttotradewithSADC,similarconclusionarisesasabove

inthatTanzaniahasstrongRCAonagriculturalproducts.Theonlydif-

ferencebetweenRCAwithworldversusSADCtradeisthattheRCAis

much stronger on food products (cereals, sh, fruits and vegetable) and

textile.Thesearealsotheproductsthathaveexportopportunityinthe

SADCmarketcomparedtotherestoftheworld.Inaddition,Tanzanian

manufacturedproductsdonothaveaRCAintheSADCmarket.



Tanzania 187

Table 17: Revealed comparative advantage with respect to the world: Top 20 commodities (HS2)

HS code Product Absolute Value (Tshs) Index value

9 Coffee, tea, mate & spices 256,459 38.5

3 Fish, crustaceans & aquatic invertebrates 408,470 31.4

53 Veg text b NESOI; veg b & paper yns & wov fab 21,004 27.0

24 Tobacco and manufactured tobacco substitutes 140,218 25.0

6 Live trees, plants, bulbs etc.; cut owers etc. 41,066 15.5

71 Nat etc pearls, prec etc stones, pr met etc; coin 1,473,383 12.1

26 Ores, slag and ash 185,719 10.9

17 Sugars and sugar confectionary 28,315 8.8

81 Base metals NESOI; cermets; articles thereof - 6.8

7 Edible vegetables & certain roots & tubers 90,505 5.6

52 Cotton, including yarn and woven fabric thereof 157,504 5.4

18 Cocoa and cocoa preparations 24,513 5.3

5 Products of animal origin, NESOI 11,835 4.9

12 Oil seeds etc.; misc grain, seed, fruit, plant etc 60,931 4.1

13 Lac; gums, resins & other vegetable sap & extract 2,059 3.6

8 Edible fruit & nuts; citrus fruit or melon peel 140,753 3.5

56 Wadding, felt etc; sp yarn; twine, ropes etc. 8,702 2.6

1 Live animals 2,581 2.3

41 Raw hides and skins (no furskins) and leather 20,208 2.1

70 Glass and glassware 23,925 1.7


Table 18: Revealed comparative advantage with respect to the world: Bottom 20 commodities (HS2)

HS code Product Absolute Value (Tshs mil) Index value

95 Toys, games & sport equipment; parts & accessories 122 0.01

37 Photographic or cinematographic goods 4 0.01

86 Railway or tramway stock etc; trafc signal equip - 0.01

87 Vehicles, except railway or tramway, and parts etc 164 0.01

35 Albuminoidal subst; modied st arch; glue; enzymes 25 0.01

83 Miscellaneous articles of base metal 23 0.00

20 Prep vegetables, fruit, nuts or other plant parts 1,282 0.00

29 Organic chemicals 172 0.00

75 Nickel and articles thereof 1 0.00

91 Clocks and watches and parts thereof 1 0.00

67 Prep feathers, down etc; artif owers; h hair art - 0.00

57 Carpets and other textile oor coverings 26 0.00

42 Leather art; saddler etc; handbags etc; gut ar t 6 0.00

36 Explosives; pyrotechnics; matches; pyro alloys etc 23 0.00

65 Headgear and parts thereof 156 0.00

78 Lead and articles thereof 23 0.00

28 Inorg chem; prec & rare-earth met & radioact compd 380 0.00

2 Meat and edible meat offal 14 0.00

45 Cork and articles of cork 12 0.00

51 Wool & animal hair, including yarn & woven fabric - 0.00





7. Revealed trade barriersRevealedtradebarriers(RTBs)showtheextenttowhichthepro-

portionofaregion/country’s(inthiscaseSADC’s)importsofaparticu-

larproductinitstotalimportsfromanotherregion/country(inthiscase

Tanzania)islessthantheproportionofimportsofthatproductfromin

totalimportsfromtheRestoftheWorld(RoW).Table19reportsresults

forthetop20commoditiesattheHS2level.ItappearsthatTanzania

hasverylow tradebarriers formostagriculturalproducts (especially

cerealsandtobacco)andsomelabourintensiveproductssuchastex-

tiles.ThesearegroupsofproductsinwhichmostcountriesinSADC

includingTanzaniahavecomparativeadvantageintheirproduction.In

fact, there is a signicant cross border trade on food products (espe-

ciallycereals)betweenTanzaniaandherSADCneighbours.

Conversely,as shown inTable20,SADC importsrelativelyvery

low proportion ofmanufacturedproducts in their total imports from

Tanzania than it imports from the RoW. Once again, this reects the

factthatSADCcountries(excludingSouthAfrica)havenocomparative

advantageinproducingmanufactures,whichinturnlimitintra-SADC

traderelativetotheRoW.Theanalysispointtothefactthatagricultural

(especially food) products bears signicant prospects for the policy ob-

jectivetoboostintra-regionaltradeinSADC.



Tanzania 189

Table 20: Revealed trade barriers with respect to SADC: Bottom 20 commodities (HS2)


16 Edible preparations of meat, sh, crustaceans etc - 0.0

18 Cocoa and cocoa preparations 306 0.0

20 Prep vegetables, fruit, nuts or other plant parts 330 0.0

21 Miscellaneous edible preparations 4 0.0

36 Explosives; pyrotechnics; matches; pyro alloys etc - 0.0

37 Photographic or cinematographic goods - 0.0

43 Furskins and articial fur; manufactures thereof 3 0.0

45 Cork and articles of cork - 0.050 Silk, including yarns and woven fabric thereof - 0.0

51 Wool & animal hair, including yarn & woven fabric - 0.0

57 Carpets and other textile oor coverings - 0.0

65 Headgear and parts thereof 43 0.0

66 Umbrellas, walking-sticks, riding-crops etc, parts - 0.0

67 Prep feathers, down etc; artif owers; h hair art - 0.0

75 Nickel and articles thereof - 0.0

79 Zinc and articles thereof - 0.0

80 Tin and articles thereof - 0.0

81 Base metals NESOI; cermets; articles thereof - 0.0

89 Ships, boats and oating structures - 0.0

92 Musical instruments; parts and accessories thereof - 0.0


Table 19: Revealed trade barriers with respect to SADC: Top 20 commodities (HS2)


10 Cereals 14,977 39.8

24 Tobacco and manufactured tobacco substitutes 3,192 50.2

12 Oil seeds etc.; misc grain, seed, fruit, plant etc 259 0.9

63 Textile art NESOI; needlecraft sets; worn text art 2,866 13.5

70 Glass and glassware 3,854 21.6

52 Cotton, including yarn and woven fabric thereof 195 13.2

11 Milling products; malt; starch; inulin; wht gluten 1,805 15.6

53 Veg text b NESOI; veg b & paper yns & wov fab 66 9.2

34 Soap etc; waxes, polish etc; candles; dental preps 4,856 1.7

13 Lac; gums, resins & other vegetable sap & extract - 7.3

55 Manmade staple bres, incl yarns & woven fabrics 13 0.0

56 Wadding, felt etc; sp yarn; twine, ropes etc. 32 6.5

8 Edible fruit & nuts; citrus fruit or melon peel 36 2.2

71 Nat etc pearls, prec etc stones, pr met etc; coin 1,580 1.6

9 Coffee, tea, mate & spices 516 2.2

23 Food industry residues & waste; prep animal feed 192 2.0

25 Salt; sulphur; earth & stone; lime & cement plaster 1,580 0.2

3 Fish, crustaceans & aquatic invertebrates 818 2.6

41 Raw hides and skins (no furskins) and leather - 2.2

7 Edible vegetables & certain roots & tubers 351 2.8




8 ReferencesKabelwa,G(2002)“SouthAfricanFDIinEastAfrica:TheCaseof

Tanzania” Globalisation and East Africa Working Paper Series No. 5,

EconomicandSocialResearchFoundation,DaresSalaam.

Kweka,J.(2004),“TransportCostsandTradePolicyinTanzania”,

Paper Prepared for CREDIT, University of Nottingham, October, 2004.

Kweka,J.andP.Mboya(2004),“RegionalIntegrationandPoverty:

TheCaseofTanzania,”EconomicandSocialResearchFoundation,

DaresSalaam.

United Republic of Tanzania, (2003), “National Trade Policy”, Minis-tryofIndustriesandTrade,2003,DaresSalaam,Tanzania.

WorldBank(2005)“Tanzania:DiagnosticTradeIntegration(DTIS)

Study–DraftMainreport”,April,theWorldBank,WashingtonDC.

Documents

TPR Tanzania