Tanzania Daily News (Dar es Salaam)

Tanzania: Mining Firms for 'Reconciliatory' Talks

MINING companies are seeking urgent audience with the government to discuss stalled exploration work and new projects due to the prevailing hostile environment.

Tanzania Chamber of Mines and Energy Chairman, Ambassador Ami Mpungwe, said in Dar es Salaam earlier this week that the mining sector has always been treated with suspicion hence subjected to unjust scrutiny.

"But this problem is not confined to mining alone where new investments are not coming up and exploration work is almost halted," Ambassador Mpungwe said. He pointed out that while the government has on paper declared that it is embracing free market economy which encourage private investment, most Tanzanians including leaders still nurse old ideologies which treat private sector with suspicion.

"The private sector is being treated suspiciously hence we are performing poorly in tourism, agriculture and even in the East African Community common market," Ambassador Mpungwe pointed out.

He warned that the country's mining future is threatened by the hostile environment which has seen the country lose its third position in Africa's gold production to fourth after Ghana, South Africa and Mali.

The country's mining sector has since 2010 undergone an overhaul of policies, regulations and laws with royalty increased from 3 to 5 per cent for gold, no more tax holidays and payment of corporate tax after three years of operation even if the project is making losses.

Amb. Mpungwe dismissed the latest report by Washington-based Global Financial Integrity (GFI) which accused multinational mining companies of cheating through manipulating products and service invoices.

In its latest report, GFI said illicit flows and secretive practices are robbing many developing nations, particularly in Africa, of riches that could go towards development and stability. The not-for-profit organisation with a reputation for analysing large sums, believe developing countries lose about $424 billion each year when importers and exporters mislead governments about the value of goods and services, according to a new report.

The dishonesty - known as trade misinvoicing - accounts for nearly 80 per cent of all the money that developing countries lose each year through illegal means. Trade misinvoicing occurs when companies charge too much (over-invoicing) or too little (underinvoicing) for imports or exports.

The report estimates that the Tanzanian government misses out on about $248 million per year in tax revenue from mining companies as a result - a substantial amount for a country in need of funds for development.

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