24 June 2014

Tanzania: Mining Firms Blamed Over 'Inflated Costs'

TAX collections from the mining sector remains minimal due to a tendency by mining companies to curtail their profits through inflating operational costs, a senior official with the National Bureau of Statistics (NBS) has claimed.

NBS' National Accounts Statistics Manager, Mr Daniel Masolwa, made the revelation over the weekend in Morogoro during a special training session for journalists on the best way of writing stories about statistics.

He said what the country earns from the industry could be far-off higher than what it gets now if the mining firms would be ready to give correct figures on their operational costs.

Mr Masolwa pointed out that mining firms were at times giving out irrelevant statistics on operational costs largely to make people believe that they were higher than returns.

"This is where the difficulty comes in. These firms do not give correct figures on their returns; they just give unrelated figures on operational costs," he noted.

The NBS official linked the hitch with the current Mining Act, saying the law was giving room for such bilking, thus, its review was the only solution to ensure that the sector significantly contributes to the national economy.

Mr Masolwa said that in previous years even getting relevant statistics on mining growth was hard due to the firms' laxity in giving the information. Tanzania Chamber of Minerals and Energy (TCME) statistics shows that the mining industry contributes 3.7 per cent of the GDP.

However, the country has set down a vision to ensure that by 2025 the industry's contribution to the GDP shots up significantly to 10 per cent.

Reached for comment, TCME Communications and Advocacy Manager, Mr Nyanda Shuli, said the claims were unjustifiable as there was no statistics showing how the firms were inflating operational costs.

"If there are official statistics supporting the claim, then it would be much better if they would be presented so that we can have grounds for following up the matter," he pointed out. Mr Shuli noted that the chamber and country at large would greatly benefit from mining activities should this dishonesty be exposed.

He added that the current gold prices in the world market have remarkably gone down, which has also affected revenues generated from the sector.

In May, this year, Global Finance Integrity (GFI) a nonprofit, Washington DC-based research and advocacy organisation producing analyses of illicit financial flows, revealed that Tanzania misses out about 248 million US dollars a year in tax revenue.

NBS Economic Statistics Director, Mr Morrice Oyuke, said that releasing exact statistics was fundamental because they were vital for assessing implementations of various socioeconomic programmes.

He added that implementations of National Strategy for Growth and Reduction of Poverty (MKUKUTA) on Tanzania Mainland, the Strategy for Poverty Reduction (MKUZA) in Zanzibar, the Tanzania Five Year Development Plan, 2011/2012 - 2015/2016 and Millennium Development Goals (MDGs) success depended primarily on the extent to which appropriate statistics were given.

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