29 May 2012

Tanzania: Study Faults Weak Mining, Manufacturing Sectors' Linkage

A new University of Dar es Salaam study has faulted the weak link between mining and manufacturing sector, calling for policies to strengthen the linkages and at the same time add agriculture in the transformation equation.

The study, 'The Role of Mining in Industrialization in Tanzania and Implications for Structural Transformation Agenda', uses the various lessons from other countries' experiences to call for further re-examination of the fiscal regime in mining (Mining Act 2010) for the economy to benefit more from this sector.

Professor Amon Mbelle from the University of Dar es Salaam said the study found weak role of mining in industrialization as well as limited capacity of mining and manufacturing alone to affect Tanzania's transformation agenda. The main objective of the paper was to assess the potential of mining sector in Tanzania in supporting the country's transformation agenda.

The assessment of the role of mining in industrialization was done using a mix of methodologies with the use of secondary information from existing data sources like publications and reports as well as conducting interviews with mining experts.

However to feel that impact and create linkages, the Chief Inspector of Mines at the Ministry of Energy and Minerals Mr Edwin Ngonyani told 'Daily News' that it was prudent to create conditions to ensure more mines come in. "Let us change perceptions, we have a combination of six mines whose total investment is one billion US dollars.

South Africa has 700 mines, Ghana has 100 mines and Democratic Republic of Congo recently reported opening a three billion US dollar mine...we need to head that direction to see the impact of the sector," he said. He said it was unfortunate that the country has only witnessed one mine in the last seven years, yet in the period between 1998 and 2005, there were seven mines started.

An economist from the University of Dar es salaam Nicas Yabu argued that there is need for deliberate accumulation of funds from minerals for budget stabilization, provision of income, or as a "fund for future generations".

"Lessons show that there is need to promote both small scale and large scale mining and have deliberate policy to promote both forward and backward linkages," he said, arguing that for a need to commit mineral revenues to support industrial development.

He said recent discoveries of enormous mineral resources in Tanzania provide high expectations and hope to play a key role in supporting the transformation agenda of the country. The mining sector is largely dominated by the private sector and is organized around three layers including small-scale mining, middle-scale mining and large scale mining.

Seven multinational companies dominate the structure but there are also registered dealers and brokers. The sector's contribution to total exports in 2010 was 36.3 per cent, with 49.1 contribution to non-traditional exports. Gold contributed 95.2 per cent; copper 2.5 per cent rough diamonds, 1.1 per cent; silver, 0.5 per cent, gemstones, 0.4per cent and others, 0.3 per cent.

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