Nairobi — Tanzania is reviewing its 12-year old mining policies in order to unlock the full potential of its mineral wealth. Though it is home to the world's most precious minerals such as gold, diamond, nickel, uranium and tanzanite, these have not made any significant contributions towards the country's economic growth.

The mining sector which has attracted massive foreign direct investments, has been under intense scrutiny for many years, with the public demanding that the government re-examines mining contracts. Two weeks ago, parliament passed a new mining law that will see royalty paid on minerals like gold go up from three to four per cent.

The Mining Act 2010 also requires mining companies to list on the Dar es Salaam Stock Exchange and the government to own a stake in future projects, through the State Mining Company. Presently, gold is mined by world giant mining companies Barrick Gold, AngloGold Ashanti and African Resolute. Tanzania is the third largest exporter of gold after Ghana and South Africa.

Revenues from gold exports account significantly to the national economy. Last year, gold exports were worth $1.2 billion, with the volume increasing to 36.9 tonnes from 30.5 tonnes recorded the preceding year. This represented a 51.9 per cent increase.

Buzwagi Gold Mine, which begun to export gold in June last year significantly contributed to the increase -- even though gold prices went down by 5.6 per cent to $822.6 per troy ounce. However, despite the gold boom, the government admits that the full potential of mineral wealth has not been forthcoming.

African Eagle Ltd on the other hand is planning a nickel project while two other firms -- Mantra Resources and Uranex last month confirmed uranium oxide deposits in Southern Tanzania. The two are waiting for the new law to come into force before they begin mining. It is estimated that the country has about 53.9 million pounds of uranium oxide deposits.

But what are the critical elements that African countries like Tanzania need to address in order to unlock their growth potential? Semboja Haji, a senior economist and research fellow at the University of Dar es Salaam told The EastAfrican that the ownership system of national resources is a critical element that nations need to examine.

Countries which have benefited from national resources like Botswana, Norway and Saudi Arabia are sensitive to ownership, management and operations, he said. In contrast, Dr Semboja gave the example of Mexico, whose oil wealth has failed to change the country's economic status.

According to Dr Semboja Tanzania is a resource-led economy where ownership of resources is a national model."Royalty revenues are only enough to keep government bureaucrats comfortable. National ownership, good policies, good management entities with competent human capital would unlock Tanzania's potential and grow the economy," he said.

Royalties from various minerals attracted a total of just $57 million last year. The country hopes to double this amount after the new mining law comes into force. Mwesiga Baregu of St. Augustine University said in unlocking growth potential, Tanzania and other African countries also need to formulate policies regarding exploiting and utilising the minerals.

"These policies should recognise that minerals are depleting resources. We need to reinvest the funds we get because we will not have these resources say in 50 years," said Prof Baregu. He said trade relationships between African states with technologically advanced ones should help developing countries benefit from capacity building.