Why Mineral Wealth Not a Blessing for Africa

Tanzania is one of the most abundantly endowed with natural resources just like most of other African countries, but is still ranked high amongst the 25 poorest countries in the world. Private investment in mineral sector in Tanzania is in place for almost 20 years since the country opened its doors for foreign direct investment (FDI) but has not reduced poverty; since more than 12 million Tanzanians are living under one US dollar.

Many of African countries which preceded Tanzania in privatizing their mining activities never experienced any blessings but their people are suffering under abject poverty. Nigeria is first in the list, then Ghana and Angola; and the list goes on.

It was thus hoped for Tanzania that could record a different picture because it would have learnt from other countries. But as the things are now unfolding following Presidential Committee on concentrates saga report (if proved true); Tanzania is falling on the same pit.

While natural resources like minerals and oil were source of blessings and development in other societies like those of Nordic countries and Northern America, the contrary is what prevailing in African continent. In Africa, more natural resources bring up more curse and poverty!

The committee’s report presented before President John Magufuli on 24th May 2017 shocked the public at large, because, from its clues, every sound mind Tanzanian felt that our mineral resources have been stolen for many years through export of gold concentrates for smelting. The report claims that what has been declared by Acacia as amount of gold in the concentrates is just a tenth percent of what was revealed by the presidential committee.

On the contrary, the committee’s report was objected by Gold Mining Company- Acacia which is responsible for exporting containers of concentrates for smelting; and it has been doing so for many years until recently when president Magufuli doubtful decided to intervene.

Acacia is now demanding independent committee to probe the same issue or otherwise it will consider taking legal action against the country. At this juncture, it is too early to commend the committee for its findings and the President for the steps has taken already or blaming Acacia that it has been cheating on amount of gold in concentrates it exports for smelting purposes until the whole truth is revealed probably by formation of independent committee as Acacia requests.

Change of mineral policies and laws doesn’t help much

This is not the first time for Tanzania to cross over with the gold mining companies. It will be remembered that the fourth president Jakaya Kikwete was also annoyed by little royalties and other taxes that the country was getting from mineral sector. His predecessor, Benjamin Mkapa will be remembered as the one who fast tracked liberalisation and privatization of almost everything that was owned by the state, including minerals.

Through mineral policy of 1997 and the Mining Act, 1998; Mkapa’s administration attracted massive investment in mineral sector but the sector remained poorly regulated and administered for the benefit of Tanzanians.

Mr. Kikwete formed what was known as Bomani committee whose recommendations resulted in formulation of new Mineral Policy of 2009 and then new Mining Act, 2010. The mineral policy of 1997 and its legislation of 1998 resulted in mineral contracts which were not based on win-win situation and hence denied the country worthwhile share from mineral sector.

Incoming of new mineral policy of 2009 and its legislation of 2010 were thought as a solution for Tanzania to get bigger share of mineral wealth from the hands of devious mineral investors.

Through new mineral law of 2010, Tanzania slightly improved its royalty from metallic minerals; from three percent to four percent. Whether this is still too little or is something that is very subjective argument.

Now President Magufuli wants to correct all mistakes done by his predecessors in allowing gold concentrates to be export for smelting. He has now intercepted 277 containers full of concentrates. It is claimed that gold concentrates had been exported for smelting since 2001. If the committee’s report is worthwhile, then for 277 containers we lose royalties of about Tzs. 33.17 billion as low estimate and 57.56 billion as high estimate.

From 2001 todate, how much money Tanzania has been losing since 2001 when containers with concentrates began to be exported for smelting? It must be a concern for us all because protection of national resources is a constitutional responsibility of every citizen.

International companies are guided by standards of ethics

On the other hand, Acacia as international mining company must be led by high and consistent standards of ethics in doing its mining business in Tanzania. If committee’s findings are going to prove that Acacia does not comply with standards of ethics in operating its business, then Tanzania will have legal grounds to demand all monies it has been losing for many years as result of Acacia’s cheating. If Magufuli’s committee findings which are seriously objected by Acacia won’t prove the whole truth, then Tanzania may enter into conflict with international mineral industry.

What is a root cause of all these

But what is the root cause of this saga! We have government institutions responsible for taking care of our share in mineral sector. We have the Ministry responsible for minerals which is full of experts. And this time around, the minister was not a mere politician, but also an expert in geology.

We have special agency for auditing concentrates before are taken out of country. The agency has advisory board which oversees the Agency’s management. Why all these fail to protect our interests in mineral sector! I think we have bigger problem as nation than we think.

If these people entrusted to protect our resources do let us down, why should we blame Acacia? This is the evidence that the root cause of poverty in Africa, including Tanzania in abusing natural resources is due to lack of integrity among our people in authority and not investors. British Writer, Samuel Johnsons, once said, “integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful”.

Thus, Tanzanians have knowledge without integrity.

The ancient Chinese philosopher and moralist, Confucius said this about governance, ” in a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of”.

From these wise phrases, the issue of concentrates is another obvious fact that we still have bad governance which results from lack of people with integrity. Where integrity lacks knowledge cannot work to solve the problem of institutional corruption. Magufuli’s administration needs to see the problem of gold concentrates in a bigger picture.

Mwalimu Nyerere was right

For 23 years of his presidency, Mwalimu Nyerere didn’t allow foreign investment in natural resources like minerals. His logic was simple; Tanzania couldn’t benefit from such mining activities by getting royalties and taxes only. Mwalimu believed that time would come when Tanzanians will be able to extract minerals using their knowledge and appropriate technology accompanied with integrity.

We all know what we are getting from mineral business, which is very small. Minerals are non-renewable resources; once they are finished they are finished. Economists tell us that currently, what mineral investment adds to our GDP is only four percent. Thus, we could wisely decide to leave this mineral business for far coming generations and find means for widening tax base a little bit and thus collect more money to fill this gap of four percent we get from mineral sector.

Since we have privatized mineral sector already, we now need to find out how to manage the little we get from mining activities and use it wisely. If what we get from mining companies is small and still we mismanage the same through dishonest hands, then we must strange creatures. We hurriedly went into mineral investment before having proper knowledge on how to manage this delicate industry. We will keep changing policies and legislations every now and then, but still won’t benefit us substantially as President Magufuli would like to.

Africa and Tanzania in particular, has no reason to swim under an ocean of poverty amidst all the natural resources we have. The only things that create wealth in the world, said British Business Executive, Sir Denis Rooke, are fishing, farming and mining. The country is abundantly potential for fishing, farming and mining industries; but who cares!

Corrupt officials must mercilessly be punished

We, thus, need to see how we are going to build national integrity so that we can end up having a society full of integrity and not people of mere knowledge without integrity. President Magufuli and his administration must understand that good governance is the fruit of well up bringing of our children and youth plus having in place fierce punitive legal system for corrupt people. And this cannot come from air. We need the best constitution that will help us to put in place proper legislations and institutions and make sure they are managed by people of high integrity.

Corruption in the country has been facilitated by poor politics of Chama cha Mapinduzi (CCM) after Nyerere, which in away had been nurturing corrupt system for many decades. Corruption pays off where anti-corruption legal framework is poor.

And since President Magufuli and his party are taking the issue of constitution making lightly, let’s be rest assured that President Magufuli efforts to deal with corrupt personalities will never bear fruits in long run and benefit Tanzania from its abundant natural resources regardless how many people will temporarily be affected by his actions.

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Source: The Citizen

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