African Mining Brief

A Mining Charter for Tanzania

The charter should emphasise and state in clear terms that the mineral wealth of Tanzania is a property of the people and is held in trust on their behalf by the government among other prerequisites discussed in this article.

Tanzania has often been rated as among the countries endowed with vast natural resources. The country is also endowed with Tanzanite, a gem found nowhere else in the world, but alas, it is Kenya, India and Thailand that are said to be the main exporters and cutters of the gem, thereby making more money from it than Tanzania does. I never stop wondering why if the giraffe is protected by law and highly esteemed as our symbol, why not Tanzanite?

I happen to come from Mwanza region, which is surrounded by a number of mining centres within the region or in nearby regions. But the infrastructure and hygiene conditions of the city are so alarmingly poor one cannot help asking what benefits the city gets from the mining activity. Local authorities, I am informed, are restricted by law from imposing levies on mining concerns, and hence unable to gain directly from the resources.

Then there are construction contractors and consultants in the sector. To the best of my knowledge, there are probably only two local contractors working directly in the mining sector either as earthworks contractors or in environment protection (concrete fill). I also know only one local consulting firm involved in housing activities in one of the major gold mines. There may be others, which would be very welcome, but the trend seems to be that any local firms that manage to settle only do get subcontracts under very stringent conditions.

A question has to be asked, then: why is the situation like that? I have no sure answers of my own, but I tend to feel that the contracts and concessions with the mainly foreign mining firms are drafted in such ways that leave a lot of loopholes and maybe deliberate rooms for the mining concerns to push and shove in the quest to make as much profit as possible.

Yet, globally, there are requirements for corporate responsibility on the part of investors, and insistence for a sense of belonging. Some firms, especially in the oil industry, have strict codes of operations in their own countries. I am inclined to feel that when mining concerns look at our ethical and corporate responsibility requirements here, they probably exult with the feeling of operating in the jungle, where they are responsible to themselves and not to any higher authority.

Chatter in Place
It is no wonder then that in spite of our leaders’ constant assurance that all is well in our mining sector, the average Tanzanian never ceases complaining. And I do not believe that these average Tanzanians are merely given to complaining, or that they are totally unable to perceive the reality of what is taking place in their own country. I believe there is something amiss that needs to be addressed by the government. It is with this conviction that I am writing this article, proposing that the government considers establishing a mining charter for the nation.

Let’s not forget that as a condition for investors’ coming in, we have been compelled to be signatories to the Multilateral Investment Guarantee Association. This is because the investors want to be assured that their investments will not be nationalised. I do not see anything wrong with having in place that said charter, which will seek to establish a similar assurance to the citizen, through the government of the day that holds all these resources in trust for him.
The charter should address the following issues:

Emphasise openness in the concessions and contract entered with mining concerns

Emphasise the right of the state to be represented in the process of production in order to know how much is being produced

Require a code of practice for mining concerns

Establish a mining regulatory authority that will undertake the monitoring of the production and production process

That wherever there is mining activity, the citizens in the whole country shall be entitled to see some benefit from the activity

Require the investors to ensure a percentage of their proceeds or profits directly invested in the country and thereby create employment.

That the benefit shall accrue not only in terms of royalties and taxes, but also in terms of additional benefits like roads, schools, hospitals and jobs, first to the area in which mining is done, secondly to the whole country. The policy applies to tourist circuits, and arguments that such a proposal will divide the country are therefore unfounded.

That the environment will be protected during and after mining activities

That there will be no discrimination in terms of gender, race or religious belief among workers in the mines and associated offices, and this to include the level of payments. Payments made at headquarters outside Tanzania as fringe benefits or bonuses must be disclosed to the government. Publish as you pay must be mandatory.

That the primary offices for business operations by the local subsidiaries will always be located in Tanzania, and that cost control should involve close consultation with the proposed state mining regulatory, to avoid excessive and unnecessary overheads like daily flights for managers who work in the mine and spend the night in Dar or Arusha.

That will limit tax relief only to initial capital, and for the duration of the establishing of mines only.

That will advocate for production sharing as far as practicable.

These are just skeleton ideas that can be worked on and polished by experts, and I understand that many of the issues above are covered by existing policies in one way or the other, but I believe the proposed charter will go a long way to reaffirm the fact that the nation’s mineral wealth is ours and not the other way around, and so whoever wants to invest in the sector must have Tanzania in mind, as well as other agendas that they may have.

I strongly believe that with such provisions in place, the construction industry will benefit indirectly, through creation of infrastructure and housing.

The present situation where we have scores of multinational mining concerns operating very profitably in our country, while we cannot afford reasonable education, clean water, sufficient food and medical services for our people is surely a very negative and deplorable blot on the admirable political stability and peace that we are currently enjoying, and practical steps need to be taken, including sound negotiations with the investors and with the multilateral institutions that have a hand in the current economic structures of the nation.