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Tanzania’s mining industry is on track

ONCE upon a time in this column I wrote on the plight of our mine industry with regards to the popular phraseology of win win situation! I cited two examples of Namibia and Botswana that have always been on top of Africa’s competitive indexes, be it in good governance, anti graft policies, sound management of their economies and others.

However my submission was based on a relatively late discovery of diamonds in Botswana that has shot up the country to be one of the leading countries in quality diamond production in the world.  So as Namibia, whose economy hinges on mine industry providing 43% of its export contributing 20% of the country’s Gross Domestic Product (GDP).     

Botswana was once rated as one of the poorest countries in the world, thanks to its abundant mineral wealth discovered as late as 1967 and has now defied the poverty status of Botswana people.The large scale diamond production in Botswana started 26 years ago and has played a decisive role in contributing significantly to export earnings and employment of human resource thus uplifting the living standard of its people.

The exploration and development of mineral wealth is the results of sound competitive policy, regulatory framework, and provision of geo-security data that stimulated exploration and mining.In return, the mining industry took the challenge of social responsibility in terms of planning for the community involvement and empowering the indigenous people.    

For both Namibia and Botswana, it was a win win situation for them. Comparatively, Tanzania is a giant with abundance of minerals and gas yet to be fully exploited.The booming mining industry emerging as the main driver of the Tanzania economy has always raised eyebrows to both the investors and the government when it comes to the real beneficiary of this industry.

Most of the African countries including Tanzania contend that the mining boom has failed to meet the high rising socio-economic expectations.  But people refuse to agree that mining is enclave industry that mainly benefits countries by the way of increasing tax revenues rather through employment generation or promoting economic diversification.  Also it takes so long for mining firm to be a project up and running and longer still to make it profitable.   
The rapid growth of the mineral sector in Tanzania has been the results of the conducive geological environment, major economic reforms; mineral policy 1997, enactment of internationally competitive fiscal, legal regimes and political stability of the country.The Mining Policy also spelled out the role of government that would stimulate and guide private mining investment by administering, regulating and facilitating the growth of the sector through well organized and efficient institutional framework.

Last year I came across a document “The 2009/10 Mid-Year up date, Survey of Mining Companies” in the world authored by an internationally known Fraser Canadian Institute.  The survey looks into exploration and development of minerals in different countries.The report was somewhat negative to Tanzania.  It was reported that Tanzania had changed from a country encouraging foreign mining investment to one which actively discourages new investments, constantly harassing resident foreign miners and keeps changing the laws and regulations or abusing the operation of the current laws and regulations to the detriment of foreign miners and benefit of the government.

 But the situation has changed now for the better! With new found of gas plus the abundance of minerals has placed Tanzania higher on the ladder and perhaps could be one of the leading countries in this industry. Africa is a home to 30% of global mineral reserves yet the geological risks are numerous and rising amidst competition for high-quality projects. Tanzania belongs to that bracket of doing well.

According to one of the recent documents, “Geopolitics of Mining in Africa” examining geopolitical risks investors should focus on when assessing the attractiveness of African linked mining stock, puts Tanzania together with Botswana and Ghana for Low Risk Geological Investment.  What does this mean?  Tanzania has scored high and may attract investors by virtue that it is low risk.  Geological risks include high impact events that typical results in project delays and increased input and transaction costs.        

Tanzania is said to be one of those countries that have made particularly noteworthy strides to reduce red tape in recent years, but weak rule of law, inefficient bureaucracies and endemic corruption remain widespread.Sometimes in other African countries, investors are forced to add corruption as another cost and risk of doing business in Africa.

The report which is basically known as “Key Investment Risk and Countries to Watch,” cautions African countries that major advanced economies that needed resources could play producing countries against one another to access deposits with relative ease.This is because for the last few years the global demand of resources has risen sharply. 

The balance of power has shifted to resources-rich countries which have become more aggressive in increasing their share of resources revenues often playing companies and countries against one another.  There is empirical evidence suggesting that African countries are increasingly vulnerable to this trend.

Very confidently I can say that we have the right people at the helm of the Ministry of Energy and Minerals to keep on guard to these intrigues.Professor Muhongo is one of the top Geologists of this country and has a solid CV that was strong enough for him to secure UNESCO’s top post in 2010 but his missing the post was a blessing in disguise so that he could lead this very strategic ministry bedevilled with all sorts of social ills. Names like Dr Shabani Nzori renowned international geologists had good words to say on Professor Muhongo’s appointment and that leaves me in peace that he will do the needful for this country. God Bless.       

+255754342711 Senior Citizen

over 8 years ago