Mkapa’s mining legacy: A solid foundation

Wednesday November 27 2019

 

By Dr Dalaly Peter Kafumu

The launch of the biography of Retired President Benjamin William Mkapa titled My Life, My Purpose: A Tanzanian President Remembers detailing his candid assessment of his life and leadership legacy made me remember the saying of the wise “no pain no gain”.

His legacy in revamping the mining industry in the late 1990s from a declined industry to a vibrant one will endure as a valuable lesson.

Reforms of the mining industry in Tanzania that Mkapa undertook entailed pain but eventually paid off as chronicled herein.

As the first president in a multiparty political system at the onset of the free market economy in 1995, Mkapa was confronted by a globalisation axiom that wanted developing countries adopt political pluralism in a free market economic system that would promote inflows of foreign capital and technology into these countries.

This socioeconomic political situation pressed Mkapa to undertake liberalisation of almost all sectors of the economy, including the mining industry, by creating a sustainable conducive investment environment.

Mkapa’s government sought World Bank assistance to put in place the Mineral Policy of 1997 and a Mining Act of 1998 to lure investors to Tanzania for mineral exploration and development.

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The emplacement of these statutes was intended to stimulate foreign direct investment (FDI) by nurturing a private sector-led mining industry.

These statutes were accompanied by rigorous promotion of mining investment opportunities to foreign and local investors inviting them to invest in the mining industry in Tanzania. Mkapa, then President of Tanzania, took up a personal crusade by conducting a dialogue with international chief executive officers of the world’s major mining companies in Arusha in 1998.

To continue delivering the right message to the world, on the November 15, 2001 the President attended and delivered a speech with the theme “Turning Idle Mineral Wealth Into a Potent Weapon Against Povert” at the Annual General Meeting of the South African Chamber of Mines in Johannesburg.

In this conference the President told investors that the government of Tanzania was ready to partner with the world to enable capital, technology and skills to come to Tanzania to explore the abundant mineral resources and help the nation fight poverty.

Following this presidential visit to South Africa, the government also subscribed to the Mining Indaba, one of the largest annual world mining conferences that brings together investors in exploration, mining and mining financing from all over the world in Cape Town, South Africa. Tanzania also subscribed to the mining developer’s conference, the PDAC Annual Conference in Toronto, Canada. The government then annually attended these conferences to continue luring investors to Tanzania.

As a result of these efforts, large-scale mining was revived beginning 1998 and for seven consecutive years there was at least one large-scale gold mine commissioned in Tanzania.

The commissioning of seven large-scale gold mines increased the production of gold from less than 1 ton per annum in 1998 to over 45 tons per annum in 2009 and made Tanzania the fourth largest producer of gold after Ghana, South Africa and Mali. Proceeds and employment from the industry also grew.

However, amid achievements, the public was wary of the reforms, and demanded more immediate benefits, but Mkapa pushed the reform agenda by reiterating: “…we cannot pretend that we are an isolated cherubic country in this globalised economy. We need to enter and dance the tune as we adapt…” An occasion to be remembered was the commissioning of the Tulawaka Mine in early 2005, where Mkapa told the public that “…foreign direct investment in the mining industry is one of the important ingredients in the development strategy of the nation…” He termed those who were opposed as “…enemies of development who were driven by idiotic jealousy…”

Mkapa’s mining industry reforms in Tanzania were, however, greeted by a public outcry for more benefits. By the end of his era in 2005 the public perception on mining had become a major obstacle to the mining industry development in Tanzania.

These perceptions might have arisen due to overly optimism among the public of immediate direct benefits from the industry. Unfortunately, large-scale mining projects are capital intensive, technologically demanding and take a very long time to make profits and bring lasting benefits.

Mr Jakaya Mrisho Kikwete took over the presidency at the end of 2005 and was determined to overcome the challenges encountered by his predecessor to forge ahead in developing the nation’s economy.

Kikwete designed a new Mineral Policy of 2009 and the Mining Act of 2010 that pushed for more benefits to the citizens and the country by endeavouring to implement a local content strategy that obliged government and people’s participation in the mining industry value chain, including the development of small-scale mining but without frustrating FDI inflows.

Again, the current President, Dr John Pombe Magufuli, driven by the same noble cause of bringing more benefits of the mining industry to the country and its people, ordered a review of the Mining Act of 2010 to ensure increased government and citizen participation in the mining industry at the same time sustaining FDI.

The review of the mining code once again retained FDI inflows into the country as was exemplified this year by the 16 per cent/84 per cent - equity Government/Barrick in Twiga Minerals JV deal that ensures the giant international mining company keeps its appetite to invest in Tanzania with increased local economic benefits.

Mkapa’s initial reforms in the 1990s in a challenging global economic system stand today as a firm foundation of the development of the mining industry in Tanzania.

Our statutes need to be modified overtime to bring more economic benefits to the country and its people but also continue attracting FDI inflows into the country to boost foreign reserves and balance of payment. “My Life, My Purpose: A Tanzanian President Remembers” will always be a great lesson. Asante sana Mzee Mkapa; tutakukumbuka.

Dr Dalaly Peter Kafumu is a Member of Parliament, geologist, expert in the mining industry and a former Commissioner for Minerals

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