Tanzania: How boosting work skills through education can lead to economic diversification

For Tanzania, a predominantly rural economy striving to achieve middle-income status by 2025, a major challenge is to create employment for 800,000 youth entering the labor market each year. 

This quest cannot be achieved without economic diversification. In a country where the agricultural sector accounts for nearly 66 percent of total employment, policymakers must create new jobs, particularly through expansion of existing firms and creation and growth of new enterprises.
 
What is stopping this expansion?
 
One key factor appears to be the quality of Tanzania’s education and training systems. These have long compromised the quality of its workforce skills and constrained business operations, innovation, and growth. However, there is little data on the specific skills shortages faced by Tanzanian firms or how they affect them.
 
In a new World Bank study, my team recently investigated these questions using data from a unique Enterprise Skills Survey, which asked Tanzanian employers questions about their workforce, the skills gaps affecting their operations, and what they are doing to overcome these gaps. The results were illuminating.
 
Here are some of the key findings: 

• Compared with non-innovators and firms primarily serving the domestic market, exporters and innovators suffer from greater skill shortages. This, in turn, impacts their investments into new technology, building new products and services, and quality assurance.
• While we observed that firms with higher shares of tertiary-educated workers are more productive, strikingly, the study saw no such impact of secondary and technical vocational education and training. This is a likely result of poor quality of secondary education in Tanzania. 
• The choices that firms make about their skills mix and the strategies they use to mitigate skill gaps directly impact their productivity. Among these strategies, the most effective was to use highly-skilled expatriates, outsourcing professional services, and external training. However, in-house training offered by most firms proved ineffective.

 
This study will now inform the policy dialogue on developing higher level skills in Tanzania, particularly in applied sciences, engineering and technology (ASET). It will also build ground for an upcoming World Bank project to enhance Tanzania’s education and skills for productive jobs.
 
Workforce skills are crucial to revive stalled growth
 
How do we define workforce skills? They are the set of competencies needed to carry out the tasks and duties of a given job. Skills range from the cognitive (such as basic literacy and numeracy) to non-cognitive skills (such as teamwork, communication, language, IT and other “soft” skills), as well as job-specific skills. They are acquired through a sequence of education, training and labor market activities, with skill formation proceeding in stages.
 
Tanzania has a working age population of 25.8 million in 2014. Its formal private sector accounts for less than eight percent of total employment. While the country has enjoyed relatively high growth rates in the last decade, this growth was largely driven by external aid.
 
There remains, however, enormous growth potential for various sectors. While inadequate workforce skills are not the only constraint on economic growth, they are an important obstacle. Skills imparted by basic education, such as literacy and numeracy, and greater supply of higher-level technical and scientific skills, are essential to ramp up productivity of all enterprises.
 
Here are some steps Tanzania can take to overcome its gap in workforce skills:

• Improve secondary education quality: This is especially relevant in light of the government’s recent commitment to universalize secondary education. Reforms must seek to improve English and IT skills that have broad application in many jobs, as well as basic proficiency in writing, critical thinking and problem solving. Technical vocational education and training (TVET) also requires reforms in curricula, faculty recruitment, and training as well as instructional practice oriented to industry requirements. 
• Expand the pool of tertiary-educated people across geographical regions: While our findings show that tertiary-educated workers impact productivity, that pool is currently too small. University-educated managers are associated with higher labor productivity because they tend to recruit more skilled workers and are likely to rate education deficiencies as a big obstacle, possibly because they are aware of the gaps between what is available in Tanzania and the rest of the world.

 
The current heavy reliance on Dar es Salaam, a major city and commercial port on Tanzania’s Indian Ocean coast, for tertiary educated workers raises costs for firms in other regions. This points to the need for greater geographical coverage by higher education institutions.

• Improve in-house employee training: Improving the overall quality of education and training is a timely process. However, internal and external training programs could improve firms’ productivity in the short-term. Right now, in-house training is singularly ineffective in Tanzanian firms, and they often have little resources to hire qualified outside providers.
  
  We recommend expanding the training role of industry associations, possibly in partnership with the Vocational Education and Training Authority (VETA) and Zanzibar’s Vocational Training Authority (VTA) – both government agencies that currently only focus on pre-employment training of TVET students. They can play a key role in developing cost-effective training programs, especially for small and medium enterprises.

Have a look at the key findings of the Tanzania Skills report .
 
See our skills development website .
 
Find out more about the World Bank Group’s work on education on  Twitter  and  Flipboard.