Tanzania's glass manufacturing sector has experienced significant growth, with container glass production capacity expanding to about three-and-a-half times domestic demand. This expansion has created new opportunities for exports to regional markets, but also puts pressure on manufacturers to secure these markets to maintain production levels. The growth in manufacturing capacity is a reflection of increasing investment in the sector.
Kioo Limited, a leading glass manufacturer, has directly employed over 900 people and supports an estimated 2,500 additional jobs across the wider value chain. The company's expanded plant has created capacity beyond domestic requirements, making exports crucial to sustaining production and employment. According to Kioo Limited General Manager, Mr Vineet Verma, the company's ability to access competitive regional markets will be critical to fully utilizing the expanded capacity.
The expansion of regional markets could provide Kioo Limited with an avenue to absorb excess production while strengthening its position in manufactured exports. Greater access to neighboring markets would enable the company to increase production volumes, improve capacity utilization, and support businesses involved in transport, packaging, and distribution. The plant produces glass containers for various products, including beer, spirits, soft drinks, water, and food products.
Despite the opportunities, Mr Verma identified energy costs as a major challenge to the competitiveness of Tanzanian glass in regional markets. The natural gas price paid by Kioo Limited is more than twice that available to some glass manufacturers in Egypt and South Africa, which compete for the same markets. Electricity costs also add to production expenses, making it harder for Tanzanian manufacturers to compete.
The absence of effective export incentives makes it harder for Tanzanian manufacturers to compete with producers from countries offering rebates, duty drawbacks, and freight support. Additional duties imposed on glass containers entering some regional markets further increase the final cost of Tanzanian products. Mr Verma emphasized that improving market access, energy costs, and export incentives would allow manufacturers to utilize excess capacity and sustain more than 3,000 jobs linked to the glass industry.
Mr Verma also called for greater discussion on packaging policy, particularly the use of glass for alcoholic beverages. He noted that glass is recyclable and suitable for beverages and food products. The company's expanded capacity has created an opportunity for Tanzania to increase manufactured exports while strengthening industrial linkages and employment.
The growth of Tanzania's glass industry highlights the need for effective export incentives and improved market access to regional markets. Addressing these challenges will be crucial to sustaining employment and utilizing excess capacity in the sector. With the right support, Tanzanian glass manufacturers can compete effectively in regional markets and contribute to the country's economic growth.
Key points
- Tanzania's glass manufacturing capacity has expanded to about three-and-a-half times domestic demand, creating opportunities for exports to regional markets.
- High energy costs and limited export incentives pose challenges to the competitiveness of Tanzanian glass manufacturers in regional markets.
- Improving market access, energy costs, and export incentives can help sustain more than 3,000 jobs linked to the glass industry.
