The competitiveness of Tanzania’s coffee exports to African Countries and Non-African Countries

Abstract

Coffee exports in Tanzania significantly contribute to foreign exchange earnings, employment and livelihood of smallholder farmers. However, Tanzania accounts for less than 1% of the world coffee exports and evidence of the extent to which its export competitiveness differs between African and non-African markets is limited. The purpose of this study was to compare Tanzania's coffee export competitiveness between the two export destination market groupings using the Revealed Comparative Advantage (RCA) theory by Balassa in 1965. Secondary data regarding coffee exports (HS Code 0901) for the period 2005 to 2024 was gathered from the United Nations Comtrade database and International Trade Centre (ITC). Consistent with the RCA theory conceptualization, comparative advantages between African and non-African countries' markets have separately been computed by calculating RCA for coffee exports between African and non-African markets and to demonstrate Tanzania's relative export specialty and competitiveness. Tanzania coffee export shows poor and sporadic and highly fluctuation competitiveness on African markets (only limited number of countries such Kenya, South Africa, Morocco, Uganda sustained comparative advantage), on contrary strong and broader and sustained competitiveness on non-African markets, especially Europe, North America, Asian and Oceanian countries have shown better trend for Tanzania with RCA above a unit in majority of non-African countries. Findings imply that Tanzanian coffee exports mostly rely on its traditional international market, but a lot of opportunities in the African regional markets have not been exploited. The study concludes that Tanzanian coffee export competitiveness needs to be boosted on African continent market and sustained for non-African for achieving a more diversified and resilient coffee export sector. The study recommends trade facilitation measures to streamline export procedures, value addition and certification initiatives, improved compliance with international quality standards and harnessing the opportunities offered by the AfCFTA to penetrate regional markets are also suggested.