1 June 2019

Tanzania's Mineral Sector Reforms Yield Results

Tanzania continues to benefit from mining sector reforms, which Dar es Salaam says have seen the sector's contribution to GDP in 2018/19 increase to 5 per cent, up from 4.8 per cent the previous year.

In the 2019/20 financial year, the government targets Tsh470.9 billion ($205.5 million) in revenue from minerals, compared with a projected income of Tsh310.6 billion ($134.5 million) in the fiscal year ending June 30.

Mining Minister Dotto Biteko this past week told parliament that the government plans to boost production and exports, open new mineral trading centres, curb smuggling and ensure closer supervision of the industry.

By the end of March, Tanzania had collected Tsh244.3 billion ($106 million) from the industry, he said.

The state expects to open seven new centres for trading minerals in the next financial year in addition to the 21 already in operation.

The Mining Commission has put on notice for revocation 1,131 licences after the holders failed to comply with the country's regulations.

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By the end of March, 13,177 applications for mining licences had been submitted and 4,831 granted.

According to the minister, nine companies have expressed interest in constructing smelters and refineries in the country.

Trading hubs

Tanzania introduced several government-controlled mineral trading hubs in most of its mineral-rich regions early this year in an effort to curb tax evasion and illegal exports of the country's precious minerals, following a directive from President John Magufuli.

In just one month, Tanzania sold 198kg of gold worth $14 million from its first mineral hub, Geita.

"This amount is more than what we used to sell in one year," added Mr Biteko.

Records show that in Chunya centre in southern Tanzania, 22.4kg of gold worth $815,979 were sold in just four days.

"We used to sell 12kg in 12 months," said Mr Biteko during the opening of a trading centre in Mwanza.

The mineral trading centres are based in Geita, Kahama, Namanga, Chunya, Ruvuma, Shinyanga, Katavi, Dodoma, Kigoma, Tabora, Mara, Mbeya, Kagera, Iringa, Mwanza, Songwe, Tanga, Manyara and Singida.

The trading hubs will help all miners to conduct business with banks, retailers, jewellers and other traders. They will also help to ensure that businesses pay the required levies to the government.

Among other legal changes, Tanzania also relieved small-scale miners of the burden of paying withholding tax of 5 per cent and 18 per cent value-added tax. This left the holders of a primary licence with a 7 per cent tax obligation only.

Mirerani wall

The 24km wall surrounding Tanzanite mines in Mirerani in the northern Meanyara Region is credited with the collection of $606,257 from artisanal miners, up from $71,077 in 2017.

"With the wall and surveillance cameras in place, revenue and other charges collection has increased. The whole process has been made easier; artisans and small-scale miners are now less reluctant to pay taxes," said Mr Biteko.

The government is also constructing a centre around the tanzanite mine in Meirerani.

Official data shows the contribution of the mining sector to Tanzania's economic growth was 0.2 per cent between 1995 and 1999, increased to 3.4 per cent between 2007 and 2008, and to 4.8 per cent by 2017.

The current 5.07 per cent contribution is half the 10 per cent target for the mineral sector by year 2025.

Up to the end of March, the amount collected from the sector in all the mines amounted to Tsh244.002 billion ($105.665 million).

Since taking the office in 2015, President Magufuli has been pushing for more revenues from the mining sector.

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