So far Tanzania has made strides to strengthen its extractive sector, however significant governance challenges still exist.

 

Tanzania’s extractive sector dates to the 1960s but largescale mining started in mid 1990s. In comparative terms, it is the most fairly developed in the East African region. The country is endowed with vast deposits of minerals and ranked among the most diverse in Africa after the DRC and South Africa and 4th gold producer after South Africa, Ghana and Mali. Since the late 1990s, Tanzania has made significant strides in leveraging its vast extractive sector towards development .

In recent years, the Government recorded increased revenue from its mining sector which steadily rose to about Tsh.527bln in 2019/2020 and contributed Tshs. 2.7bln of Foreign Direct Investment recorded in 2019. In 2020, the sector was the fastest growing and net foreign exchange earner, surpassing other predominant sectors such as construction and tourism. Between 2015 and 2019 undertook major policy and legislative reforms to consolidate its participation in the sector, reduce tax evasion and maximise revenue collections. However significant governance challenges still exist. These include attracting new investors and boosting investor confidence into its vast natural gas deposits. The government aims to avoid the infamous ‘resource curse’ but has not been successful yet. Governance challenges still exist and citizens believe the country is yet to benefit more from its natural resource wealth.

Tanzania’s  policy and legislative framework has been on a zig zag course of highs and lows. Reaching a peak in 2010, the new sweeping legislative reforms in 2015/17 which aimed at giving government a firm grip on the sector  caused a knock off effect on the mining sector. Mining companies criticized some of the new laws (such The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017) as extremely restrictive, tinkered towards nationalisation and unattractive to new investment. The government has since lost a number of cases brought against it  by aggrieved mining companies to the International arbitration tribunals for dispute settlement. Many of these disputes originate from these reforms. Some of these laws still comprise part of Tanzania’s current extractive governance regime.

In a wider East African geological context, Tanzania is a trend setter and the neighboring countries in the region have largely benchmarked on its extractive governance framework to develop their own. If Tanzania gets its extractive governance reforms right, this could have a significant impact on the extractive regime across the region.

Moreover, Tanzania can be looked at as part of one East African geological ecosystem with mineral and petroleum rich rocks and basins straddling across the member states.  There are common minerals which can be found across the East African region. Developing a regional extractive governance framework is ideal for effective management and maximising regional benefits. Some minerals and petroleum resource prospects occur in transboundary and difficult to reach areas. Management of transboundary extractive resources and revenues is a challenge as they can be source for disputes and an impediment to investment. In some respects there is need for harmonisation of the extractive governance framework across the region. Collaboration and partnership on The East African Oil Pipeline between Uganda and Tanzania is an opportunity but there could be more areas for collaboration.

This program  therefore seeks to help the government maximise benefits from its extractive resource wealth by addressing some of the policy and legal gaps affecting the sector. The program expects to feed into the wider East Africa extractive sector governance framework, assisting member states to leverage their extractive resources for the benefit of their citizens.

Work under this area includes:

  • Policy and Legal Analysis
  • Convening and participating in policy and legislative spaces such as Parliament etc.

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