Tanzania yet to use its mineral; riches to drive economy


JF-Expert Member
Nov 14, 2007
The country`s decision to remove itself from doing business and instituting liberal economic policies could be the reason behind the poor economic returns of some of its natural resources.

Tanzania is rich in natural resources, having gold, diamonds, uranium, not to mention tanzanite gemstones which are only found in Tanzanian soil, yet it remains among the poorest countries in the world.

Dr Haji Semboja of the University of Dar es Salaam Economic Research Bureau (ERB) told this paper in Dar es Salaam that Tanzania should have retained a stake in some critical business activities, such as in mining, a case well demonstrated by the actions of diamond-rich Botswana and gold-rich South Africa.

Tanzania is the continent's third largest gold-producing country after South Africa and Ghana. Dr. Semboja noted that should the locals get empowered to run the mines it would have generated a great impact in the economy as profits would have been re-invested locally into other productive sectors such as agriculture, tourism and trade.

He said most foreign investors had no interest to re-invest locally into other sectors, but took the profits out of the country, leaving a little to the community in the so called 'social responsibility schemes.

"Contracts are not a problem and not peculiar to Tanzania because the same contract if given to the locals would bring impact through re-investment.

The aim should be to empower these entrepreneurs," said Dr. Semboja. Dr. Semboja gave an example of small scale miners in the Tanzanite-rich Mererani who despite accounting for less than 5 per cent of the gemstone production, have contributed much to the growth of Arusha City. Tanzanite One, which is a foreign company controls over 90 per cent of Tanzanite production.

"Other than taxes to the government, Tanzanite One has no interest to make its profits drive other economic activities such as building, tourism and agriculture around and beyond Arusha," said Dr Semboja. "People need a system where they can mobilize investment capital as they did recently in an airport handling company and a cement company IPOs [Initial Public Offers].

We can buy technology and even management but we own the minerals," he said. According to Tanzania Chamber of Minerals and Energy, total mineral exports by its members in the year 2005 amounted to $692.8 million compared to just $16.1 million in 1997.

The sector contributed 3.5 per cent to GDP in 2005/06. To date, mining has created more than 8,500 direct jobs.

Writer: The Guardian
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