Local suppliers in Tanzania: Ready for the petroleum sector?

Abstract

This study examines the gaps between the international oil companies’
(IOCs) expectations and the Tanzania’s industrial base regarding the
requirements of the oil and gas sector. The focus is on perceived IOC
sourcing priorities and intra-firm improvement priorities as perceived from

the perspective of the locally owned, managed and operated firm. A cross-
sectional survey of 110 Tanzanian controlled firms focused on three major

areas: perceived buyer expectations, identified improvement areas, and
experience in improvement processes. The findings indicate that
development priorities on the supplier (or seller) side are generally in
balance with what they assume to be buyer priorities when it comes to
product and delivery processes. One exception is quality, which is
considered less important to improve than assumed customer priorities. Less
than a half of the local firms have formalized improvement processes, and a
quarter of these have experience with foreign firm collaborations.
Nevertheless, Tanzanian firms have a long way to go in order to qualify for
demanding customers in the oil and gas industry. The extent of local
participation is primarily a result of government policies and local content
legal requirements imposed on the IOCs, but also on the local firms’
willingness and ability to improve towards international standards within
the petroleum sector.

* Associate Professor, University of Dar es Salaam, E-mail:
wineaster@udbs.udsm.ac.tz