Tanzania in plan to establish more mineral trading hubs to fight tax evasion

Tanzania’s mineral-rich regions are at advanced stage of establishing government-controlled mineral trading hubs to curb tax evasion and illegal exports of the country’s mineral wealth.

Simon Msanjila, Permanent Secretary in the Ministry of Minerals, said the hubs will be ready by the end of June, adding that almost all regions have started procedures for the establishment of mineral markets. This, he said, include allocation of sites and buildings to be used for trade.

The trading centres are meant to enable miners to conduct business with banks, retailers, brokers, jewellers and other traders in a well-regulated environment.

They will also help to ensure that businesses pay the required levies to the government.

Prime Minister Kassim Majaliwa, who launched the initiative, said the move is to “ensure all constraints in the mineral trade chain are removed and promote the industry to benefit Tanzanians individually and nationally.”

Gold trading centre

Tanzania launched an international gold trading centre on March 17 in the gold-rich region of Geita in the north, joining South Africa and Botswana, which run a gold exchange and diamond bullion market respectively.

The Geita region produces over 40 per cent of all the gold exported from Tanzania.

The centres are also in line with the new Mining Act enacted as part of mining sector reforms, which requires buying and selling of minerals to be conducted at mineral and gem houses.

“If mineral and gem houses have not yet been established within a particular area, the Mining Commission will establish buying stations,” the Act reads.

The reforms, launched about three years ago, are part of a drive by President John Magufuli’s government to get as much benefit out of mineral trading as possible.

Miners

According to the Federation of Miners Association of Tanzania, there are over six million small-scale miners in the country.

Players say with mineral-buying centres in place, the country will collect more levies from artisanal miners, control illegal mining, and achieve better overall regulation of the industry across the value chain.

In February, parliament passed a law designed to relieve small-scale miners of the burden of paying a 5 per cent withholding tax and 18 per cent value added tax, leaving the holders of primary mining licences with a tax obligation of just 7 per cent.

Since taking the office in 2015, President Magufuli has been pushing for more revenues from the mining sector, which is a relatively small contributor to national output.

"We are not profiting from our gold as we should," the president said while pushing for the reforms.

Official data shows that the mining sector’s contribution to Tanzania’s economic growth was 0.2 per cent between 1995 and 1999; 3.4 per cent in 2007 to 2008; and 4 per cent by 2015.

In 2017, President Magufuli ordered the military to construct a 24km perimeter wall around the tanzanite mining area in Mererani in Manyara Region, southeast of Arusha town, to curb smuggling of the rare gemstone.