MINISTRY OF WORKS TRANSPORT AND COMMUNICATIONS TOWARDS INDUSTRIALIZATION

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS TOWARDS INDUSTRIALIZATION - INITIATIVE IN THE ICT SECTOR PRESENTATION TO THE ANNUAL ICT PROFESSIONAL CONFERENCE 2018 24 TH – 26 TH OCTOBER, 2018 Monday, December 20, 2021 Slide 1

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Outline 1. Introduction 2. Policy Guidance 3. A Study on Factors Affecting Localization of ICT Equipment Manufacturing in Tanzania 4. Ongoing Initiatives to address the factors 5. Next Steps 6. Conclusion Monday, December 20, 2021 Slide 2

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Introduction The ICT sector in Tanzania - grown significantly over the past years ü ü ü ü number of licensees, mobile network coverage (94%) types of technologies, number of services provided voice telecom subscriptions (41, 833, 834, by June 2018) mobile money subscription (20, 855, 164 by June 2018) Internet users & Internet penetration (22, 995, 109 & 45% resp. by June 2018) number of television and radio stations (48 and 146 resp. by 2017) and the list goes on ……. The Government recognizes that effective use of ICT is critical factor for rapid socio-economic growth. Furthermore, ICT can be a positive enabler of broader development objectives. Monday, December 20, 2021 Slide 3

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Introduction Excerpts from the National ICT Policy 2016 “Not much is done in the area of production and development of ICT products for the local and regional markets. Export industry for ICT goods and services is virtually non existent. ” “…. . and majority of companies are micro and small-tomedium scale with most of them mainly involved in distributive activities such as retailing and the distribution of computer products and services. ” Monday, December 20, 2021 Slide 4

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Introduction What else? – Presence of ICT equipment manufacturing industries in Tanzania – Participation of locals in ICT equipment manufacturing – Reduction on percentage of importation of ICT equipment in Tanzania – Creation of employment – Increase of ICT contribution to GDP Monday, December 20, 2021 Slide 5

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Policy Guidance Tanzania Development Vision 2025 (TDV 2025) ü aims to transform the nation to a middle income country by 2025 through transformation to a self-sustaining semiindustrialized economy. The Five Year National Development Plan 2016/17 – 2020/21 (FYDP –II) ü Themed Nurturing Industrialization for Economic Transformation and Human Development Monday, December 20, 2021 Slide 6

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Policy Guidance ü The Plan has outlined Establishment of ICT equipment manufacturing, E–waste recycling and Software development Centers as priority intervention and requires the sector to develop a solid project proposal for the intervention. The National ICT Policy 2016 ü envisions at Tanzania with economically, socially and culturally enriched people in ICT – enabled knowledge society. ü The mission is to transform Tanzania into ICT – enabled knowledge-based economy through development, deployment and sustainable exploitation of ICT to benefit every citizen and business Monday, December 20, 2021 Slide 7

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Policy Guidance The NICTP 2016 gives directives on: ü Fostering a sustainable ICT industry, ü Promoting R&D, innovation and entrepreneurship in ICTs, ü Creating an enabling environment to facilitate development of ICT industry ü Create an enabling environment that nurtures the development and promotion of local content in ICT products and services in partnership with public and private sector ü Fostering participation of Tanzanians in ICT investment Monday, December 20, 2021 Slide 8

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Policy Guidance • To facilitate implementation of the policies, the Ministry engaged an independent consultant Deloitte Consulting Limited to undertake A Study on Factors Affecting the Localization of ICT Equipment Manufacturing in Tanzania (2017). • The objective is to study, analyze and advise on appropriate measures to be taken in stimulating localization of manufacturing of ICT Equipment in Tanzania for the government make an informed decision in this regard. Monday, December 20, 2021 Slide 9

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS The Study • The scope spanned three main deliverables – ICT Equipment Market in Tanzania – An Analysis of Government Measures that Impact Localization of Manufacture of ICT Equipment in Tanzania – Recommendations for Tanzania Decision Makers to Stimulate the Localization of ICT Equipment Manufacturing in Tanzania Monday, December 20, 2021 Slide 10

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS ICT Equipment Manufacturing Value Chain R&D Design Raw Materials Processing Manufacturing of Components Assembly of Components Packaging and Distribution Monday, December 20, 2021 Slide 11

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Meaning of Localized Manufacturing • Localization of manufacturing of ICT equipment, in the context of the study, refers to local manufacturing of ICT by both domestic and global companies. • This would involve participation in the whole or segments of the value chain. Monday, December 20, 2021 Slide 12

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS ICT Equipment Market in Tanzania • A trend analysis of key international ICT related standards and indicators for the Tanzanian market was conducted in order to determine the level of ICT uptake within the country • While demand of ICT equipment appears to be growing, the manufacturing of computer, electronic and optical products accounts for only 0. 004% of the total manufacturing establishment. • At 22. 9% in 2015, the value of ICT goods import as percentage of total imports is in line with the relatively high consumption of ICT equipment seen in the market Monday, December 20, 2021 Slide 13

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS ICT Equipment Market in Tanzania • In line with high level of demand relative to supply, the following has been depicted: Household ICT Access and Individual Use Ø Increase in no. of radio stations, pay TV subscribers, mobile subscribers; decrease in % of households owning a radio with increase in no. of radio ICT Use by Businesses Ø Businesses have not taken advantages of opportunity presented by increase in connectivity of consumers. Monday, December 20, 2021 Slide 14

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS ICT Equipment Market in Tanzania • High consumption of ICT Equipment relative to local manufacturing would indicate a corresponding high quantity of imports therefore provide an opportunity for Tanzania to: üImport semi finished goods and add value üTake part in import substitution through localization of manufacturing of the respective products • In addition, Tanzania’s strategic geographic location, membership in major trading blocs and growing population (with a growth rate of 2. 7% annually) point to an opportunity to leverage access to production inputs and markets to supply ICT equipment Monday, December 20, 2021 Slide 15

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS ICT Equipment Market in Tanzania • Access to ICT equipment market resulting from the large and growing home population, border sharing with various countries, maritime factor as well as trade blocs memberships would provide Tanzania with a competitive advantage i. e. global manufacturers would opt to set up plants to capitalize on cheap labour, trade blocs incentives and large local market which would in turn strengthen the local manufacturing industry. • The study further established an Enabling Environment in terms of Conducive legal and regulatory environment, availability of cheap labour, multiple sources of energy as well as political stability in Tanzania which is crucial in stimulating and supporting effectiveness and efficiency of local manufacturing, as well as incentivize local and foreign investment in the same. Monday, December 20, 2021 Slide 16

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Factors Impacting Localization of Production of ICT Equipment R&D Design Raw Materials Processing Availability of reliable source of energy to Availability of labour with support the advanced technical skills value adding in ICT as well as critical processes is thinking and problem solving necessary A strong and supportive innovation ecosystem. skills Availability of reliable source of energy to ensure that research and design labs are always powered Monday, December 20, 2021 Specialized skills and infrastructu re are required for this stage Manufacturing of Components Advanced and technical vocational skills Assembly of Components Software also forms one of the key components of ICT equipment requiring specialized skills for development Good transport network and infrastructure for moving inputs of production to assembly plants as well as manufactured equipment to distributors and consumers. Availability of energy is also important to ensure manufacturing plants are powered Reliable source of energy to ensure machines are powered Packaging and Distribution Reliable road, rail, air, and ports infrastructure is critical for efficient distribution of manufactured ICT equipment Slide 17

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Factors Impacting Localization of Production of ICT Equipment • Innovation Ecosystem - An enabling environment comprising of entrepreneurs, investors, researchers, academia and venture capitalists is critical in supporting and nurturing new ideas, technologies as well as businesses in ICT manufacturing sector from R&D to commercialization. • Skills - Availability of labour with academic and technical vocational skills in ICT as well as critical thinking and problem solving skills is necessary for active participation of the country across the ICT equipment manufacturing value chain. • Infrastructure - Good communication and transport infrastructure including ICT broadband, data centers, roads, rail, air, and ports is critical for communication as well as movement of manufacturing inputs and finished products. Monday, December 20, 2021 Slide 18

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Factors Impacting Localization of Production of ICT Equipment • Trade - Supportive ICT trade environment including attractive ICTrelated trade incentives creates a favorable business environment for local and foreign investors to set up businesses. • Energy - Adequate and reliable supply of energy is crucial in manufacturing, primarily in raw material extraction and processing as well as assembly of components stages of the ICT equipment manufacturing value chain. • Ease of Doing Business - Supportive business environment can be seen in the time it takes to start a business or set up a factory, capital requirement, ownership transfer, expatriate immigration quota, commercial property ownership, resolving insolvency as well as access to credit. Monday, December 20, 2021 Slide 19

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Ongoing Government Initiatives • Trade: The Blue Print developed by the Ministry of Industries and Trade to facilitate easy of doing business • Energy: The Rufiji Hydro Power Project – 2100 MW • ICT Skills and R&D: the Mo. WTC through the ICTCom • Innovation facilitation: Mo. EST through COSTECH initiation • Transport Infrastructure: the SGR by Mo. WTC through TRL Monday, December 20, 2021 Slide 20

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Quick Wins Seven quick-win recommendations i. Articulate ICT contribution targets, priority strategic industries and specific value chain areas in a national ICT strategy; ii. Develop national ICT Industry implementation strategy and guidelines; iii. Create ICT R&D Forum; iv. Establish/strengthen existing research networks; v. Develop ICT Skills development strategy; vi. Promote the development of incubators and innovation hubs; vii. Establishment of national accreditation standards body. Monday, December 20, 2021 Slide 21

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Next Steps • Finalization of draft Action Plan for localization of ICT equipment manufacturing in Tanzania Stakeholders involvement • Articulation of specific ICT contribution targets, ICT priority areas/industries, specific value chain areas in an ICT Industry Development Strategy Monday, December 20, 2021 Slide 22

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Conclusion • Localization of ICT equipment manufacturing requires having in place an environment that attracts and supports as many as possible of the ICT manufacturing value chain activities within Tanzania. • Collaboration from ICT professionals and others is invited to effect the ICT manufacturing chain activities within Tanzania. Monday, December 20, 2021 Slide 23

MINISTRY OF WORKS, TRANSPORT AND COMMUNICATIONS Thank you for your attention Monday, December 20, 2021 Slide 24