Mining Reforms: Another Lesson from President Magufuli of Tanzania

By Staff Writer, NAIROBI

Last week, Barrick Gold Corp. and the government of Tanzania under President Dr. John Pombe Magufuli, announced the launch of Twiga Minerals Limited, a new company replacing the mighty Acacia PLC, that will be jointly owned by the two parties. 

Under the new arrangement, Tanzania will own 16% free-carried interest but the two will share the economic benefits of the company in a 50/50 mechanism. This is contrary to the previously arrangement before Magufuli came into power when, Barrick through her subsidiary, Acacia, owned everything in three gold mines in Tanzania, leaving the East African Economy, depend on taxes and levies, mostly missing them out, due to escalated operating costs or lack of transparency.

Africa should congratulate President Magufuli of Tanzania for winning this battle. It was the battle that teaches other Africans a lesson of a lifetime. I bet, it was a fierce battle because we can read and hear lots of noise from Tanzania after the government announced its intentions.

It is in public domain that Magufuli’s initial efforts to revamp the mining sector were met by both internal and external opposing forces. Two Tanzanian MPs, Tundu Lissu and Zito Kabwe were among those on record to warn the government that it will never win the war with Acacia and Barrick. The government has finally prevailed. 

Like other pragmatic reformists, Magufuli moved his agenda; engaged both Barrick and Acacia, at some point declared his position that he will not work with Acacia, and the rest is history.

As Africa celebrates this success from Tanzania, African leaders must learn to differentiate between populist politics-where people are promised much without focus on implementation, and pragmatism-where delivery for socio-economic development is the main focus.             

                                Win- Win Tanzania- Barrick Deal 

In the new arrangement with Barrick, Tanzania will, on top of joint ownership of the Twiga Mining company, it will receive an ex gratis payment of $300m in three instalments. Tanzania will also take part in the management and affairs of the company. 

The country will also benefit from other taxes, levies, upper hand on allocation of Corporate Social Responsibility budget. Acacia, the company that was blamed for looting Tanzania's gold reserves without due regard to the interest of Tanzanians is no longer operating in Tanzania and will not operate anywhere else-it has been deregistered and in Tanzania it is replaced with Twiga Minerals.

Tanzania under Magufuli, has many other successes in the mining sector but the formation and joint ownership of the new company, Twiga Minerals, ushers in a new modus operandus that many other African countries, engulfed in the resource curse curve, may wish to emulate.