25 June 2014

Tanzania: U.S. Based Institution Lauds Dar On Resources' Transparency

THE government's move to join the Oslo-based Extractive Industry Transparency Initiative (EITI), whose goal is to publicly put information on revenue from natural resources, has been commended.

Global Financial Integrity (GFI) Policy Counsel, Mr Joshua Simmons, said the move is in the right direction as multinational corporations have been denying developing countries a fair share of earnings from their natural resources.

Mr Simmons whose institution released a report this year showing that developing countries including Tanzania are losing billions of dollars through cheating by multinational mining companies, said one of their recommendations is for transparency to prevail.

"There has been a lot of movement towards this goal particularly regarding the mining, oil and gas industries and Tanzania deserves credit for taking the very positive step by joining the Extractive Industries Transparency Initiative," Mr Simmons wrote in an email response to this reporter.

He further noted that GFI's recommendations on cracking down on trade misinvoicing and other forms of illicit financial flows can be achieved by bringing greater transparency and accountability to the international financial system.

"When it comes to trade misinvoicing, though, there is a lot more that can be done to increase customs enforcement and cut down on corruption and we outline some of those steps in our report - improving customs authorities' access to real-time pricing data, instituting stricter auditing and accounting standards focused on trade misinvoicing and establishing transparency of company ownership, among others," the GFI Policy Counsel noted.

The GFI study is based on macroeconomic data and methodologies for tracking illicit financial flows in the aggregate. Although researchers found that a large proportion of import over-invoicing represented in the data occurred on imports of fuel, we aren't able to link that misinvoicing to any specific individual actors or cases.

"However, because mining companies in Tanzania have the unique ability to obtain an exemption from duties on their fuel imports, over-invoicing fuel is an essentially costless way for mining companies to illicitly move capital out of the country, whereas any other company would have to pay higher import duties on over-invoiced goods," he pointed out.

But Chairman of Tanzania Chamber of Mines and Minerals, Ambassador Ami Mpungwe, dismissed the GFI report as full of inaccuracies.

"Anyone who says mining companies are cheating in any form is lying and the American institution's report grossly misrepresents facts and imagines that there is no government here," Ambassador Mpungwe told reporters last week.

He, however, expressed concern that the GFI report mentioned irregularities relating to oil marketing companies supplying fuel to mining companies.

"We do not condone wrongdoing and any oil company which is found cheating will not work with our members," Ambassador Mpungwe warned.

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 Washington-based NGO 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 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.

Copyright © 2014 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.