Experts press for new-look minerals policy for Africa

EXPERTS from 13 countries in the eastern African zone who convened in Dar es Salaam for a five-day meeting of an Intergovernmental Committee of Experts (ICE) on mining urged revisiting the extant mining regimes. This is with the overriding objective of coming up with mining policies and legislations that are deliberately designed to benefit the peoples of the region. The background to the meeting — a regular consultative gathering to compare notes and seek common solutions to problems affecting the mining sector — was the view that, despite abundant endowment with subterranean natural resources such as minerals in Africa, many of the countries involved do not benefit fully, or even substantially, from the potential riches! Tanzania, for example, is one such country where, surprisingly, its relatively vibrant mining industry contributes only a measly 3.3 per cent of the GDP! The gathered experts surmised that the continued lack of knowledge, coupled with insufficient mining skills among local entrepreneurs and poor working equipment, explain why such countries, Tanzania included, fail to benefit sufficiently from their naturally-endowed wealth. According to Tanzania Finance Minister Mustafa Mkulo, contribution of the mining sector to GDP was projected to reach ten per cent in 2025... But, due mainly to continued lack of mining expertise in Tanzania, the target goal under the National Development Vision cannot be achieved, Mkulo lamented when opening the meeting. “Lack of mining expertise had undermined Tanzania’s capacity to fully exploit its potential in the mining sector which, currently, contributes 3.3 per cent of the country’s Gross Domestic Product,” Mkullo asserted. This is despite the fact that Tanzania has vast mineral resources with great potential.

The Minister for Energy and Minerals Mr. William Ngeleja


These include precious metals (gold, diamonds and other gemstones, including the unique tanzanite); ferrous minerals and base metals: coal, uranium and other industrial minerals such as soda, kaolin, tin, gypsum and phosphates. Furthermore, reports of the Ministry of Energy & Minerals show that the mining industry has experienced a boom in both mineral exploration and mining activities during the past ten years. For example, while gold production rose from one tonne in 1998 to about 50 tonnes in 2008 — making Tanzania the third largest producer in Africa at that time; today it is the fourth, led by South Africa, Ghana and Mali in that order — the spread of benefits from the activity to the general population is very, very minimal! Despite seeing foreign direct investments of more than US$2.6bn in less than a decade, the industry has provided direct jobs to less than 14,000 people! Among other things, delegates from the 13 participating countries discussed how Africa should manage its mineral resources for the benefit of the continent. They, for example, pointed out that, while Tanzania is phenomenally rich in mineral resources of different varieties, the country still records high poverty rates compared with other countries having no such resources — or just marginally so endowed — in the sub-region and Africa as a whole! Speaking at the meeting — whose theme was 'Harnessing the African Peer Review Mechanism potential to advance mineral resources governance in Africa,' — Tanzania Minerals Minister William Ngeleja declared that Tanzania is in the course of revisiting the country's mining policy with a view to enabling more Tanzanians to benefit from the sector. Notable mining developments during the 'boom' period following the controversial mining policy (1997) and mining legislation (1998) include the commissioning of six large scale gold mines at Nzega, Geita, Bulyanhulu, North Mara (Nyamongo), Buhemba and Tulawaka. During that period, about 15 prospective sites for gold, nickel and uranium mining reached various stages of exploration. These developments resulted in increased minerals production, making the mining industry the second fastest growing sector of the economy after tourism. Despite these 'developments', however, the government in Dar is often blamed for lapses of accountability and transparency in mining operations. Furthermore, integration of the industry with other sectors is severely limited, as processing of minerals takes place outside the country, thus exporting jobs and domestic revenues! This is to say nothing of conflicts of interests involving the large (foreign) miners and small (indigenous artisanal) miners, as well as surrounding communities, including crop farmers and pastoralists. In that regard, Mining Minister Ngeleja says “the government has initiated a comprehensive review of the minerals sector, with a view to rectifying these drawbacks, by setting out a new minerals policy and mining legislation.” The minister admits that, despite being so phenomenally endowed with vast natural wealth, “nothing has so far triggered the much desired sustainable and equitable growth and poverty reduction among the people in the country!” In the event, he blamed the old policies formulated during colonial times as being the reason why Tanzania does not benefit from its minerals! The history of mining excavation policies used in the country from colonial times were based on the conditions given to the Mwadui Diamonds Mine in Shinyanga Region in the late 1920s, the minister argued. And, apart from the Mwadui mine, most mining sites were established in the past decade, and it had not been possible to change that policy format as it was intended to attract investors. In any case, the government admits that there are constraints to a fully beneficial mining policy and legislation. Ngeleja was quoted as saying that the new Mining Act promulgated in 2010 (and the 2009 mining policy) would benefit the nation as they seek the listing of local mining companies with the Dar es Salaam Stock Exchange (DSE)! The minister further said the Act is already working, whereby the government owns shares of between 20 and 45 per cent in some mining companies, especially those starting activities in the wake of the new regime. The government's intention is to take up to 50 per cent of shares in newly formed mining entities, with the minister affirming that “the implementation of this has started after the nation learned a lesson from Botswana and South Africa!” Under the new mining regime, the government will have free-carried shares in upcoming mining entities, while another portion of the remaining shares will be available to the general public via DSE. Furthermore, while the mining companies were paying US$200,000 (about Tsh320m) a year to finance social services in their areas of operation, the new Act has tightened this aspect of 'taxation' to relate to the miners' real incomes, the minister indicated. Still, the problem of equity and sustainability is not adequately resolved, as the contribution doesn’t go to the national budget and be used in an equitable manner for national development as a whole.

Tanzania Finance Minister Mr. Mustapha Mkullo


The full amount goes to District Councils, whose expenditures are usually subject to abuse that no central government agency can control! All in all, the meeting, which was organized by the United Nations Economic Commission for Africa (UN-ECA), discussed in broad terms how to improve the governance of natural resources. Participants observed that, despite its vast mineral resources, the continent continues to play an insignificant role in the global economy. Drawn from Burundi, Comoros, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Rwanda, Seychelles, Somalia, Uganda, DRC and the host Tanzania, meeting participants deliberated with a common stand to ensure that minerals in their countries benefit their people and the national economy. They agreed that countries need to be careful with mining companies entering into excavation contracts so as to ensure that they take greater focus on people’s welfare, including the provision of social services. Apparently, most African countries sign mining contracts without being aware of the impending dangers. But this should not be reason for failure of such companies to help the communities surrounding their operational sites, the participants declared. As Minister Mkullo told the meeting, it is important to take the requisite precautions in negotiating mining agreements “so that indigenous people should liberate themselves from poverty, and embark on economic growth of the nation at large.” In that regard, Tanzanian mining experts at the meeting urged their government to fully appraise the terms and conditions of the contracts made before being approved to avoid conflicts between investors and the surrounding communities. Kathryn McPhail, director of the International Council of Mining & Metals (ICMM), said “the lack of collaboration between governments, civil societies and the community is a result of policy failure in the sector. It takes time to strengthen policies for the benefit of the society,” she told the gathering. She said “various institutions should be involved — not just governments and the mining companies. Defining the country’s objectives like creating more employment opportunities enables a particular country to properly focus on development.” Sotari Gotera, the ICE senior economic affairs official for East Africa, said regulations governing mining hinder the sector’s productivity. “These should be reviewed to benefit the people, since most regulations are centred on business,” he argued.