The state is preparing to pump in over US$20 million to breathe life into the defunct General Tyre East Africa, whose production lines stalled in 2009 due to, among other factors, importation of cheap tyres.
Industry and Trade Minister Dr Abdallah Kigoda told The EastAfrican private investors were also putting in money to make the firm operational by mid-2013, to cater for the growing demand for quality tyres in the country and beyond.
“I cannot disclose names, but there is a long list of investors interested in a joint venture with the state to revive General Tyre; we are even now doing due diligence,” Dr Kigoda said in an interview in Arusha.
The firm is expected to employ nearly 400 workers and produce 1,000 quality tyres a day. This means that, without interruptions, the plant could be producing 240,000 tyres a year, earning the country Tsh96 billion (US$60million) if an average price per tyre is taken as Tsh400,000 (US$250).
General Tyre, the only tyre plant in the country, will start off by supplying tyres for all government vehicles before it enters the private sector market in the country and region.
Tanzania, East Africa’s second largest economy, has seen vehicles imports rise by nearly 70 % in a single year, reflecting an emerging middle class produced by an improved economy and greater social welfare.
The country had registered 93,009 cars of different types by the end of 2011, compared with 55,144 in 2010. The official government data, which does not include government, police, army and donor funded vehicles, shows that 67 % of registered vehicles were light passenger vehicles with a carrying capacity of less than 12 passengers.
Chinese tyres
The revival of General Tyre offers a quick fix, not only for the country, but also for East Africa in general, which imports the bulk of its tyres from China, Japan, India and Dubai. The cheap imports have been blamed for the increase in road accidents.
In Tanzania, traffic police reports show that road accidents claimed the lives of 3,582 people last year. During the same period, over 1,000 bus passengers accounting for 18 % of the total deaths also perished. Police reports blame most of these road accidents on tyre bursts.
Chinese tyres are gaining popularity in several African markets. Many African countries are price-sensitive markets and prefer to import low-priced Chinese tyres rather than the expensive European and American brands.
As a result, China has emerged as a leading exporter of tyres to African countries like Tanzania.
Analysts say most illegally imported tyres have a quality problem emanating from storage; some are poorly stored in godowns in hot places like Dubai for months, which seriously compromises quality.
Dr Gasper Mpehongwa, a lecturer at Tumaini University, said the revival of General Tyre will pose competition for the only East African tyre manufacturer, Sameer Africa Ltd, leading to improvements in quality and lower prices.
“General Tyre will make tyres that can withstand our poor roads,” Dr Mpehongwa toldThe EastAfrican.
Former General Tyre sales manager Phillip Mweta said the EAC tyre market is so huge that even having two local manufacturers will not satisfy it.
“General Tyre would be producing only 240,000 tyres a year, mainly for heavy duty vehicles, but the rough estimated demand for heavy duty tyres in Tanzania alone can hit two million tyres per year,” Mr Mweta explained.
In the four years since General Tyre closed shop, Sameer African has dominated the EA market with its Yana and Firestone brands.
General Tyre, which was once the largest industrial plant in the region, started production of tyres in 1971. At its peak it was making 1,200 tyres a day.
In the late 1990s and mid 2000s, the state-owned plant changed ownership several times with the divestiture from public corporations by the government.
Analysts are however sceptical that it can bounce back to its production levels of the 1970s and 1980s, citing changes in technology.