Mining sector contributing only 2.8 per cent of the country's Gross Domestic Product (GDP)-TANZANIA | JamiiForums | The Home of Great Thinkers

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Mining sector contributing only 2.8 per cent of the country's Gross Domestic Product (GDP)-TANZANIA

Discussion in 'Jukwaa la Siasa' started by R.B, Aug 21, 2012.

  1. R.B

    R.B JF-Expert Member

    Aug 21, 2012
    Joined: May 10, 2012
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    DESPITE its export value the performances of various mineral products in the world market, the sector has in general lacked apparent benefits to local communities and tend to cause endless conflicts between investors and the people in the area.

    Statistics show that the mining sector has for years been contributing only 2.8 per cent of the country's Gross Domestic Product (GDP), thus raising a state of discontents among state and non state actors over the little gains.

    For example, the recent attempt by the government to raise gold royalty rates to four per'cent saw most of the mining firms complying although for some non state actors it was still too low compared with other major African gold producers.
    The National Bureau of Statistics (NBS) first quarter 2012, show that the mining sector recorded a growth rate of 14.3 per'cent compared to only 0.8 per'cent in the similar first quarter of the corresponding period 2011. The growth rate was attributed to the increase in gold and diamond production, noted the report.
    The gold produced increased from 8,140 Kgs in the first quarter of 2011 compared to 16,736 Kgs in the similar period of 2012. Diamond produced increased from 10,472 carats in the first quarter of 2011 compared to 57,330 carats in the period under review of 2012.
    Dominated by gold and invigorated by recently discovered uranium in different places, the sector has grown at an astonishing rate since liberal mining legislation was introduced in the late 1990s to attract investments. Gold exports have continued to play a significant role in the country's foreign earnings due to the appreciation of its prices in the world market.
    The value of gold exports according to the Bank of Tanzania (BoT) monthly economic review for June this year, increased by 30.4 per cent to 2,330.7 million US dollars (3.72tri/-) largely due to a rise in the world market price by 21.9 per cent to 1,671.08 (about 2,673.73/-) per troy ounce.
    "The volume of gold exports also went up to 38.4 tonnes from 37.4 tonnes recorded during the year ending June 2011," noted the report. Commenting on the Bank report Dr Dothath Olomi, the chairman of the Institute of Management and Entrepreneurship Development said however, there was great need to enhance export based agriculture products to ensure the nation with sustainable foreign earnings.
    "Although gold contributions to country's exports are enormous, but benefits accrued were still minimal due to the nature of the investments and contracts signed," he observed. Dr Olomi who cautioned on the seriousness on the forthcoming contract signing especially on the gas sector to ensure win win situation.
    He urged stakeholders led by the government to increase investments in agro based products to fill the supply constraints gap and harness potential benefits emerging from the neighbouring countries like Burundi, Rwanda, Democratic Republic of Congo (DRC), Kenya and Uganda.
    Some of the commodities exported to the neighbouring countries are cement, textile, apparels, edible oil, plastic items, iron and steel products, wheat flour and paper goods. In the BoT report, the value of export of goods and services in the period under review was 7,990.2 million US dollars (12.78tri/-) compared to 7,050.7 million US dollars (11.28tri/-) recorded during the year ending June 2011.
    The improvement was largely on account of increase in gold exports and travel receipts. Traditional exports amounted to 761.1 million US dollars 1.22tri/-), which is 9.2 per cent higher than the level exported in the corresponding period of 2011. The development was mainly attributable to an increase in both export volumes and prices of cotton, tea, cloves and cashewnuts.
    Exports value of tobacco declined by 5.9 per cent to 271.9 million US dollars (435.04bn/-) mainly due to decrease in the world market prices. The value of non-traditional exports was 4,108 million US dollars (6.57tri/-), compared to 3,560.5 million US dollars (5.69tri/-) recorded during the year ending June 2011 dominated by gold and manufactured goods.
    Last week, Barrick Gold, the world's biggest gold producer, confirmed it is considering selling its 74 per cent stake to the China National Gold and the Zijin Mining Group - the state owned, in its African operation, African Barrick Gold (ABG).
    As the fourth largest producer in Africa, gold accounts for over 40 per cent of the value of its goods exports. With four mines in the North West, ABG is the country's largest extractor of the metal.
    Chinese companies have been positioning themselves in the country's growing mineral economy and last year, Sichuan Hongda announced a 3 billion US dollars investment in coal and iron ore mining, while the Export-Import Bank of China have provided 1 billion US dollars in loans for a 532km gas pipeline.