Posted: Friday July 06, 2012 4:43 AM BT

Specific programmes are required to enhance growth in different furniture industrial clusters, a recent report has said. The research report published by Research on Poverty Alleviation (REPOA) found that the construction of industrial clusters is needed to support the pro-poor growth of manufacturing firms in Tanzania.

The research report, based on a study on the informal furniture manufacturing industry in Dar es Salaam, identified challenges faced by owners and workers as being insufficient business skills, poor infrastructure within the industrial clusters, technological backwardness, and insufficient raw materials among others.

"Achieving an advanced furniture manufacturing sub-sector means that furniture firms must grow and this growth depends on improving firm-level management of furniture manufacturing operations and product quality to meet the local, regional, and international markets demands," said the researcher, Mr Edwin Mhede.

The study titled, "The Growth of Micro and Small, Cluster-Based Furniture -Manufacturing Firms and their Implications for Poverty Reduction in Tanzania" calls for support in furniture industrial cluster growth by providing specific programmes to improve firm-level management and product quality.

It examined the growth of micro and small furniture-manufacturing firms that operate in three industrial clusters in Dar es Salaam - Keko, Buguruni-Malapa, and Mbezi Beach kwa Komba - as well as the role of clusters in fostering furniture manufacturing enterprise growth, and the connection between this growth and reduction in poverty among enterprise owners and workers.

Findings from the study shows that on average, the furniture manufacturing firms that were studied grew in terms of payments to the firm owners and workers. Firms were also found to benefit from being located within a cluster, and were aware of the benefits.

There was, however, lack of increase in employment numbers throughout the time frame of the study, although 62 per cent of the interviewed firm owners reported improvements in their standards of living over time.

"Out of the three clusters, entrepreneurs in the Mbezi Beach kwa Komba furniture cluster were the most likely to realise improved standards of living followed by those in Buguruni-Malapa and then Keko," said Mr Mhede. The study further recommends the initiation of business incubators and the construction of industrial clusters, parks, and zones as some of the means by which clusters may be initiated to support the pro-poor growth of manufacturing firms in Tanzania.

"This will encourage those furniture manufacturing firms that have successfully started improving product quality, marketing, and management to relocate to formal industrial areas," stated Mr Mhede. He said that the government needed to attract industries producing similar and related products into these industrial clusters.

REPOA is a non-profit, non-governmental policy research institution specializing in research on socio-economic and development issues. The organisation conducts and funds research provides training to researchers and promotes dialogue for the development of pro-poor policy.

According to the Tanzania Invest website, the manufacturing sector in Tanzania remains relatively small with most activities concentrating on the creation of simple consumer products such as foods, beverages, tobacco, textiles, furniture and wood allied products.

The contribution of the manufacturing sector to the overall Gross Domestic Product (GDP) of the country has averaged 8 per cent over the last decade, however activities within the sector have been registering an annual growth of over 4 per cent and the sector is currently the third most important to the Tanzanian economy, behind agriculture and tourism.

In 1986, the Tanzanian government made a decision to liberalize trade and investment policies within the country. In the early 1990s, the government launched a programme designed to restructure and privatize the publicly owned enterprises. Between 1990 and the turn of the century, the general use of the installed industrial capacities rose from an average of 20 per cent to approximately 50 per cent as a result of the launch of this programme.
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