Tanzania will soon have a new mining law that will replace the Mining Act of 1998 that has been widely criticised in recent years.
The main thrust of the proposed law is to ensure Tanzania benefits more from the sector that is among the topmost foreign currency earners. The Bill for the new law is to be tabled in Parliament next month
Critics of the current mining regime say the legislation that is in place now largely favours foreign investors. Indeed, benefits from gold mining are yet to trickle down substantially to the ordinary wananchi, much as Tanzania has, in less than a decade, become Africa's third largest gold producer.
To date, over $2 billion has been invested into mining activities but still the sector contributes a mere three per cent of gross domestic product.
Another area of dissatisfaction has been the three per cent royalty paid by the miners, which many economic analysts say it is too low. The current law is also blamed for allowing long tax holidays and many other fiscal concessions and incentives to the multinationals.
So far, information on the proposed new law has been scanty, making it difficult to know whether it will also affect existing mines or deal with new ones only. However, what has been clearly pronounced is the Clause that gives the State a 15 per cent stake in the mines and an increase in royalty.
The proposal sounds fine but then, we must caution, it might not do much in ensuring more benefits are accrued to the wananchi at large. We believe people can still benefit without direct involvement of the state as part owner in mining undertakings.
There can be numerous fall-over benefits from privately run mines so long as the taxman keeps a close watch, not to mention of the jobs and people's economic activities that are linkable to mining.
Doing so would significantly increase the role of minerals in wealth overall generation than increasing the royalties to even up 50 per cent, which is of course impracticable.
