Miners in Tanzania prepare to go underground: Despite its enormous mineral wealth, the country is also one of the poorest in the world. Photo/LEONARD MAGOMBA
The discovery of oil reserves in Uganda, Kenya’s determination to locate and exploit its oil reserves and the impressive mineral wealth of Tanzania, all point to a prosperous future for the region.
However, the history of many mineral-rich developing countries gives reason for East Africans to worry.
The mineral wealth of, for example, Cameroon, Zambia, Congo and Sierra Leone has hardly been a blessing, cursed as it is with poor accountability, intrusive military regimes, forced migration, severe environmental pollution, low human development indices, and weak democratic institutions — often leading to devastating political conflict and enduring economic decline.
A newly released report by the Society for International Development argues that new entrants can inject dynamism into the mining sector in Tanzania if strong and stable institutions, policies and overall economic management are put in place.
The main concern of the report entitled, “The Extractive Resource Industry in Tanzania: Status and challenges of the mining sector,” is that while Tanzania is endowed with vast resources in the form of forestry, petroleum, natural gas and minerals, it is also one of the poorest countries in the world
Several communities have also suffered loss of land, homes and traditional livelihoods as a result of evictions to make way for mining activities.
There has been a decline in small scale mining, which as previously stated once employed nearly a million people, while complaints of environmental degradation area are rife as suspicion and distrust mark the relations between local communities and mining companies.
Resource curse
The resource curse in developing countries manifests itself politically in a widening gap between the electorate and the governing class, bad decision-making, corruption and rent-seeking behaviour and industry policies that tend towards import substitution rather than promoting a competitive manufacturing sector.
However, mining laws remain a common denominator in mining’s contribution to positive economic development.
In the name of creating an “enabling environment,” Tanzania has been accused of being too generous to foreign investors at the expense of the national interest.
The government has been offering generous tax exemptions to mining companies; mineral development agreements are often shrouded in secrecy, while agreements and contracts are locked in by stabilisation and freezing clauses that ensure that the existing legal-fiscal regimes at the time of signing contracts do not change over the lifespan of the project and that subsequent legislation does not apply to the relationship between the parties to the agreement.
Gladys Kirungi is a programme officer with the Society for International Development
