"Mining companies are now Tanzania's main exporters. For example, gold mining companies during the year 2009 exported gold with nearly 1.2 billion US dollars.
Unfortunately, under the special Mining Development Agreements (MDA) entered into the mid 90s with most of the gold mining companies operating in Tanzania, the firms were not required to repatriate to Tanzania any specific percentage of their earnings.'
Mark Bomani, Tanzania's first post- independence Attorney-General & Chair of the 2007 Presidential Mining Review Committee.
By sheer luck, I stumbled upon a commentary whose highlights I am quoting immediately at the launch of this perspective today by Tanzania's first Attorney-General, published by this newspaper's inside pages on October 30.
Given the insight and important information in this commentary penned by no other than the Chairman of the Presidential Mining Review Committee, Mr Mark Bomani, I thought his commentary deserved both a separate news story over and above publishing it as an opinion.
A quick glance at the commentary was revealing. For those who missed it, follow these excerpts:
"The last 24 months have witnessed a wide fluctuation of the value of the shilling vis-à-vis the US Dollar; from about TSh1,100 to the dollar two years ago to around TSh1,500 to the dollar today - a depreciation of over 30 per cent.
"This kind of fluctuation cannot be good for the economy of Tanzania... Tanzania can only benefit from the shilling depreciation if it exports massively. Unfortunately, Tanzania's present economy is import oriented. Therefore, any lessening of the value of the shilling means expensive imports.
"One clear example is the rising price of petroleum, now retailing at around Sh1,700 per litre! An increase in the price of petroleum means immediate rise in the cost of imports generally and higher production costs for our minerals..."
So, if you tie up with the highlight of Mr Bomani's commentary quoted at the launch of this perspective, you can imagine the difference it would have made for our economy if Tanzania was getting even a quarter of $1.2 billion dollars the mining companies are spiriting away from this country per year taking the 2009 figure given by Mr. Bomani alone!
Mr Bomani is arguing in his commentary that the excuse mining companies had of having no guarantee of the safety of their revenues given the fragility of the local banks.
Says he: "The price of gold which was about $260 an announce at the time the agreement with the mining companies was signed, today an ounce of gold fetches $1,200 - almost a five-fold increase, which means that exporters of gold are today reaping enormous sales revenues. Furthermore, there are numerous international banks operating in Tanzania today such as Citibank, Barclays, and Standard Chartered, etc, which would be able to easily handle any foreign exchange requirements."
Mzee Bomani, the erstwhile chairman of the Presidential Mining Review Committee appointed in 2007 says the fear by mining companies that there was a risk of their money being seized by creditors of local banks or the state taxation authority is simply hollow "given this era of transparency and rule of law".
"My Committee had actually recommended that mining companies should be obliged to repatriate to Tanzania at least 60% of their earnings with the Bank of Tanzania guaranteeing that anytime they required foreign exchange for their operations they would get the money. The implementation of this recommendation would enable Tanzania to have access to over $700 million in foreign exchange per year from gold exports alone, in addition to foreign earnings from other sectors," says Mr. Bomani.
So, to all intent and purposes, Tanzania gets nothing from its immense mineral resources given this sort of scenario. What it gets is exactly what an author of a book gets - royalty from his publisher - that is, token money since he/she had no hand in the actual printing of the book!
But Tanzania, which means a mass of land, is owned by all Tanzanians. And this mass of land is the one that is endowed with the gold, diamonds, nickel, oil, gas and so forth. Why should someone come to reap all this wealth and spirit it away leaving Tanzanians with huge craters and nothing else, except a pittance called 'royalty'?
Yet this is the question none of the political parties addressed in a concrete way in the last General Election campaigns. None spoke the words: We will nationalise our mines and other commanding heights of the economy. Or: we will negotiate for parity or equity shares in the ownership of our minerals at least at 50 per cent. Why were they afraid? Who runs this country? Aren't the people of this country sovereign?
Makwaia wa Kuhenga is a Senior Tanzanian Journalist.
