Tuesday, February 28, 2012
The best way to tap our mineral wealth
Tanzania`s extractive industry is growing, as more resources are discovered. They include gold, base metals, diamonds, ferrous minerals, variety of gemstones, besides the world’s renowned tanzanite (blue zoisite) as well as rare metals.
Despite this richness, the industry is yet to play its part in transforming the economy as has happened in such economies as South Africa and Botswana to name just two.
The industry’s contribution to the GDP stands at only 2.3 per cent though plans are afoot to see it grow to 10 per cent according to the Development Vision 2025.
The major reason for this backwardness is that mining needs massive resources in terms of technology, which the country does not have.
The other ailment of mining in Tanzania is that this sector is still haphazardly organised despite having a number of lobbies. For instance, we only know that Tanzania has a land mass about 1 million square kilometers, but it is not quite clear whether many of its mineral potentials have been quantified. Up to now only 20 percent is mapped.
More important is that even with the little that is being mined, Tanzanians, who are the real custodians of this wealth, have yet to benefit much.
The report by our sister paper, The Guardian on Sunday, clearly states that in the past three years, Tanzania sold minerals to the tune of 7.2trn/--- equivalent to 50 per cent of this year’s government budget. Despite the huge sales, only 315bn/- (only 4.4 percent) went into the government coffers in terms of royalty.
One would claim that Tanzanians have been benefiting in terms of jobs, infrastructure construction as well as provision of social services. But the amount that goes into paying for these is negligible as many undertakings include jobs that are done by foreigners.
These are some of the diseases of this grand sector which if turned around could spur the economy into a middle income nation.
What therefore is the way forward?
First there is a need for Tanzania to reorganise mining activities and bring more of its people into the centre of the production, processing and marketing business.
What is happening at the moment is not organised mining despite there being government agencies like Tanzania Mineral Audit Agency (TMAA), State Mining Corporation (Stamico) that monitor some of the processes.
It is the irony of having the selling and buying and processing centres of tanzanite outside the country that prompted calls for its domestication. We all know that these have direct and indirect benefits to the economy.
The country must continue to vigorously pursue this approach at least for the gemstones for a start, if it is serious about ensuring more benefits flow into the economy.
Policy reforms, followed by close supervision of the domestication processes are bound to bear positive benefits to the economy.
These and many others are but some actions which Tanzania can take in the interim as it struggles to build capacity to tap its huge mineral and gas resources for the benefit of all. We believe this is the way to go.
SOURCE: THE GUARDIAN