President Samia vision to double mining contribution to economy

The current government is banking on improving investment climate and embrace partnerships with the world’s largest miners, among other measures that seek to achieve its resolve to almost double the contribution of the mining sector to the economy.

Tanzania is home to a range of minerals including the best performing gold which, according to the Bank of Tanzania, is now the country’s leading foreign exchange earner.

Gold generated a total of $2.7 billion exports in 2021, the central bank indicates.

Other minerals include nickel, graphite, tanzanite, sapphire, cobalt, diamond, silver, ruby etc.

The account of the mining sector to the gross domestic product (GDP) increased from 3.4 percent in 2015 to 5.2 percent in 2019, according to President Samia Suluhu Hassan’s inaugural speech to the Parliament last year.

Its revenue also increased from Sh168 billion in 2014/2015 to Sh527 billion in 2019/2020, she said.

However, President Samia wants to improve the economic contribution of the mining sector to at least 10 percent of the GDP by 2025.

“The sixth phase government intends to accelerate this success by enforcing the Mining Act of 2017, continuing to control smuggling and remove investment barriers to attract and facilitate government negotiations and ultimately enter into partnerships with the world’s largest miners,” she told the lawmakers in Dodoma.

Some of the measures being taken to achieve the targets include strengthening mineral marketing and auction centres as well as encouraging the building of the mineral refining and processing factories in the country.

“Emphasis will be placed on the quality and efficiency of the technology.”

“We will develop small-scale miners and provide them with training, loans and equipment. In addition, we will further strengthen the State Mining Corporation (Stamico) to participate more fully in mining activities,” President Samia emphasized.

Investment environment

President Samia has repeatedly stressed on improving Tanzania’s investment environment across all sectors in attempt to revive the economy which was hit by the global outbreak of Covid-19 pandemic.

When she sworn-in new permanent secretaries of different ministries last April, she warned government officials over frustrating the business community through unrealistic taxes, unnecessary bureaucracy, delayed refund and unfriendly administration of taxes among others.

She warned corrupt officials who delay issuing of work permits to foreign investors and those who forced them to hire locals in some top positions.

“We want investors to enjoy our good business environment. If we keep such obstacles we are pushing them back. Companies are closing businesses and that is serious,” she added.

“When they close businesses, we lose jobs, our economy suffers and that way, no money is left in circulation – which the biggest outcry among Tanzanians.”

In the mining sector, she specifically stressed on improved partnerships, mentioning the recent Barrick Gold agreement.

After negotiations that stayed for almost two years, Barrick signed framework agreement with the government of Tanzania in 2020. The two partners formed Twiga Minerals Corporation which the government owns 16 percent free-carried shareholding in accordance with the mining law.

However, the president stressed that there are still challenges in the partnership, especially in the tax structures.

“We should not reach a point of flexing muscles with mining investors because we still need them. If there are taxes which the ministry of Finance cannot exempt, bring them to us so that we can deal with them. Go and put things in order,” she said.

Secondly, she asked the responsible officials to fast-track agreement with companies eyeing to start mining nickel. In January 2021, the government of Tanzania signed an agreement with Kabanga Nickel (formerly LZ Nickel) of the UK to develop the project in the north-western region.

“We have also agreed with some companies for new investment. Negotiation teams should hasten the process so that the companies start mining,” she said.

She said if there were policy or legal challenges, the negotiation team should forward to the top leaders for further actions.

The third issue was about mineral exploration in the reserved areas in which she said Tanzania cannot just be proud of having the minerals in the grounds without benefiting people.

“Let us see how we can extract the minerals. We still need the animals and at the same time we need the minerals. By the way the animals do not eat the minerals, we should look at the opportunity cost of mining and that of not mining,” she added.

President Samia also hinted on Tanzanite mining at Mirerani where the government built a 24km fence and introduce military guards.

She said smuggling was ongoing, asking officials to heighten security. She also warned that nobody should touch Block C of the Mirerani tanzanite as it was reserved for special purposes. The block is thought to contain significant high quality deposits of the rare mineral that is only mined in Tanzania.