Exports and not local demand, fuel Tanzania’s factory growth

New data from the Bank of Tanzania (BoT) show the value of selected manufactured products rose by 37.4 percent from Sh4.41 trillion to Sh6.06 trillion in the quarter ending March 2026, with the central bank attributing the strong performance largely to rising external demand.

According to the central bank during the period, exports of manufactured goods surged by 54.5 percent compared with the same quarter last year.

The figures suggest Tanzania’s manufacturers are no longer relying solely on the domestic market for growth. Instead, factories are increasingly producing for buyers across the East African Community (EAC), the Southern African Development Community (SADC) and other export destinations, reflecting the country’s growing role as a regional manufacturing base.

The strongest gains were recorded in products linked to construction, food processing and consumer goods, sectors that continue to benefit from expanding regional trade.

The value of vegetable oils and fats almost tripled to Sh242.2 billion, up from Sh82.3 billion in the corresponding quarter last year. Wheat flour increased from Sh309.1 billion to Sh416.1 billion, while cigarette production rose sharply from Sh127.3 billion to Sh218.8 billion.

Construction-related industries also maintained strong momentum. Cement production increased from Sh583 billion to Sh658 billion, while rolled steel climbed from Sh259.3 billion to Sh330 billion, reflecting sustained investment in infrastructure and a growing appetite for Tanzanian building materials within and outside the country.

Production also increased across mattresses, ceramics, soap and detergents, and coffee and tea products, underlining broad-based expansion across several manufacturing subsectors. Industry players say the figures demonstrate that Tanzania’s industrial sector is becoming increasingly competitive, but caution that the country has yet to unlock the full economic benefits of manufacturing.

The Tanzania National Chamber of Commerce, Industry and Agriculture (TNCC) Director for Industry, Mr Ezekiel Kahatano, said the latest data represent an encouraging milestone for the sector.

“This is undoubtedly a positive development for Tanzania’s manufacturing sector. It demonstrates that industries are expanding and that demand for Tanzanian products is growing both domestically and internationally,” he said.

However, he argued that Tanzania’s industrial transformation remains incomplete because much of what the country exports still undergoes little processing before reaching foreign markets. “The reality is that a significant proportion of what we export is either raw materials or semi-processed products rather than fully processed manufactured goods. We have not yet fully exploited the country’s manufacturing potential,” he said.

Mr Kahatano noted that traditional export commodities, including cashew nuts and other agricultural produce, continue to leave the country with limited value addition, denying manufacturers opportunities to create jobs and earn higher export revenues.

“We still export large volumes of products that could generate significantly greater value if they were processed locally before reaching international markets. That is where the biggest opportunity lies,” he said.

He said Tanzania should now shift its focus from simply increasing production to expanding value-addition industries capable of producing finished goods for export.

“As TNCC, we believe there is enormous room to further expand the manufacturing sector. The next stage should be increasing industrial processing capacity so that more value is created within Tanzania instead of exporting raw or semi-processed products,” he said.

Mr Kahatano added that strengthening local content policies would further accelerate industrial growth by encouraging businesses and public institutions to source locally manufactured goods wherever possible. “It is largely a matter of political will. If policies consistently promote and support local content while ensuring locally manufactured products remain competitively priced, there would be little justification for importing goods that can already be produced domestically,” he said.

Economist and policy specialist Mr Kennedy Rwehumbiza believes Tanzania’s geography is becoming one of its biggest industrial advantages.

“These figures can largely be attributed to Tanzania’s strategic location for manufacturing. Many industries are establishing production facilities here because the country provides efficient access to markets across the EAC, SADC and other regional destinations,” he said.

He said improvements in transport infrastructure, ports and regional logistics have strengthened Tanzania’s attractiveness as a production base for manufacturers seeking to serve multiple markets from a single location. The export-led growth, he added, also suggests that government policies aimed at promoting trade and industrial investment are beginning to produce results.

“The data indicate that policy measures are encouraging greater participation in international trade. Manufacturers appear to be responding positively to opportunities in regional and export markets,” he said.

However, Mr Rwehumbiza urged caution in celebrating the headline figures without understanding what lies beneath them.

“It is important to examine which manufacturing industries are driving this growth. Whether it is steel, construction materials, food processing or other subsectors, we need to understand where Tanzania is developing a genuine competitive advantage,” he said.

He said policymakers should also determine whether the increase reflects industries producing enough to satisfy domestic demand before exporting surplus output, or whether Tanzanian manufacturers are increasingly positioning themselves specifically for export markets.

“That distinction is important because it will shape future industrial policy. If our industries have developed the capacity to compete regionally, then Tanzania has an opportunity to position itself not just as a producer for its own consumers, but as one of East Africa’s manufacturing hubs,” he said.