15 June 2017

Tanzania: We Must Draw Lessons From Mineral Sand Reports

Photo: The Citizen
President John Magufuli speaks at State House in Dar es Salaam after he received the second Presidential Committee report on the mineral concentrates saga.

As the nation ponders the way forward after the damning mineral sand reports revealed how the multinational mining companies managed to rob this nation of trillions of shillings in revenue, a simple question that quickly comes to one's mind is: Does this nation lack economic and legal experts in the mining field?

May be to put the question clearer or more direct one would ask: Was Tanzania facing shortage of economic and legal experts when the government was negotiating contracts with the mining companies in mid 1990s given the fact that mining officially started in 1998? The simple answer to this question is no.

This country had plenty of them! Now, another question that comes up is: "What happened to those officials in whom we placed trust to represent Tanzania in the negotiations?" Again the answer is simple: they put first their personal interests.

Since President Dr John Magufuli assumed the highest leadership post in the country after the general elections in 2015, he has all along been preaching about embracing patriotism.

In simple definition, patriotism is a state or a habit of vigorous support for one's country. The subject of contracts in this country has always attracted a heated debate.

The experience shows that majority of contracts signed between foreign companies or foreign service providers and the government, especially in the areas of mining, tourism, aviation, communication, energy and transport have never been of significant advantage to the nation.

Since mining companies began their operations in the country, the mining contracts were shrouded in deep secrecy for reasons not known to the public.

This aspect of confiden tiality, undoubtedly, provided room for the officials in whom we had placed trust to negotiate on our behalf to sell the country's interest to the mining companies, most likely, for a kickback.

Members of Parliament (MPs), at different times, had raised their voices, calling for making the contracts public, but in vain. They went further and proposed that the agreements be presented in the Parliament for scrutiny without success.

Previously, this was not done and today, we see how this secrecy has cost the nation. Now that President Joseph Magufuli has thrown his weight into opening this huge can of worms that has revealed despicable acts committed by investors, the nation draws several lessons.

First, we must go back to the drawing board to craft proper procedures and guidelines to follow when entering into contracts with multinational companies.

There is no doubt that this country has its procedures and guidelines that the government follows before entering into contracts with multinational companies, but the findings in the two reports on mineral sand show the existing procedures and guidelines appear to be somehow, prone to bringing about agreements full of loopholes for tax evasion and avoidance.

However, before resorting to scrutinise these procedures and guidelines, former government officials who were involved in the whole process of drafting the mining contracts must be questioned.

We thank Prof Nehemiah Osoro's probe team for putting forward this recommendation simply because it will help to find out where there are problems.

Secondly, the government must cultivate a culture of conducting studies in countries with success stories. By the time the government was negotiating with multinational mining companies in late 1990s countries like Ghana, South Africa and Botswana had already gained experience in the field. In this sense, the government should have borrowed a leaf from them to avoid the loss it has incurred in revenue.

Thirdly, the two reports on copper concentrates must serve as an eye-opener to the government to revisit other contracts in other sectors, including reviewing some laws.

In July 2015 the Parliament passed three crucial new pieces of oil and gas legislation - the Petroleum Bill 2015, the Oil and Gas Revenue Management Bill (OGRM bill), and the Tanzania Extractive Industry (Transpar ency and Accountability) Bill (TEI bill)- after debating for five days only.

It would be recalled that the legislations were passed with a strong majority backing from the ruling Chama Cha Mapinduzi (CCM) party, after 40 opposition MPs were suspended for disrupting debates in the earlier days.

Though, the quick passing of the bills might have been done in good faith, the manner in which they were debated and passed sparked criticism from civil society groups, complaining that there was not enough time to review and comment on them.

Given the fact that gas is now becoming an integral sector in the country's economy there is a pressing need to review laws governing the industry. Bearing in mind that the laws were quickly passed by the Parliament investors will definitely capitalise on the loopholes in the legislation to evade and avoid tax.

President Magufuli needs a pat on the back for having noted this problem. Unless we take an affirmative action by casting the net wider into revisiting all contracts with multinational companies that have invested in the country this nation will never reap the benefits from its national resources.


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