By John Njoroge, SANDTON, SA.
Dr. John Pombe Magufuli of Tanzania
As a keen follower of Tanzanian politics, since my days in Nairobi, Kenya, I can attest to have seen so much challenges facing Tanzania's guest for development.
As he launched his campaign for reelection in 2020 in the country's Capital Dodoma, Tanzania, on Saturday, President John Pombe Magufuli is believed to be the best positioned Candidate to win the election.
He is accredited as a man of reforms. The Mining sector reforms in Tanzania, foristamce, just like elsewhere in the world, relate to the whole of natural resources governance and is one of his major scorecards.
According to the OECD (2011) task force natural resourcesreport, both renewable and non-renewable, as well as ecosystem services are part of the real wealth of nations such that they uniquely form the natural capital out of which other forms of capital are made.
Governments and reformist leaders play a significant role putting in place policies that ensure that resources contribute to the long-term nations’ economic development, and not only to short-term revenue generation.
These observations resonate very well with an old ideology in Tanzania that I once read on natural resources governance to be the key roles of the government.
The Magufuli administration, one of the staunch believers of Mwalimu Nyerere’s ideologies, believed that It is against these principles of socialism and self-reliance if Tanzania’s natural resources are not well managed.
As pointed out earlier, benefits associated with mining sector reforms are many but with varied potentials. Of interest to this article is on domestic resource mobilization and financing of development projects.
Mining Sector Fiscal Reforms
Reforms in the mining sector culminated into the formulation of “The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017” ("Permanent Sovereignty Act").
The Act requires Parliamentary approval for future investor-state agreements, which must “fully secure” the interests of Tanzanian citizens, and restricts investors from exporting raw minerals, repatriating funds and accessing international dispute resolution mechanism. The act lies into the establishment of the Mining Commission to regulate the industry.
The Amendments Act in the mining sector increases the royalty on diamonds and gemstones from 5 percent to 6 percent, and raised the royalty on metallic minerals from 4 percent to 6 percent of gross value. The Acts provide several provisions relating to state equity in natural resource operations.
The Sovereignty Act requires that any natural resource contract provide for both state participation and the opportunity for participation by Tanzanian citizens. With regard to state equity, the government shall have no less than a 16 percent free carried interest in the capital of mining companies.
During the fifth phase government under President Magufuli, Tanzanians witnessed a raft of measures in the sector such as establishment of mineral markets and buying centers in various parts of the country in order to make it easier for small-scale miners to access markets.
Barrick Gold resolved its long over due issues with the government leading into increasing government stakes and more benefits to Tanzanians.
Resource Mobilization
One area that has benefited most from mining sector reforms under Magufuli is domestic resource mobilization. Resource mobilization at domestic level involves both Central Government, and Local government Authorities (LGAs).
While at central government level revenues accrues from the corporate income tax, at LGA level they mainly come in form of fees, charges and corporate social responsibility (CSR). Ever since the reforms were enacted, revenue collections in the mining have grown significantly.
For instance, mining revenues increased from 194bn in fiscal year 2016/17 to 346bn in fiscal year 2018/19.While the government expected to collect 470 bn but up to May 2020, it collected 528bn way above the target amount, according to local newspaper reports.
Likewise, with the establishment of mineral markets for small scale miners, between March 2019 to February 2020, the miners managed to conduct mineral sales valued at 1.088tri/- with government collecting royalties amounting to 78bn according to the June 2020 budget speech by the Minister for Minerals.
Infrastructure Development
Raising domestic revenues is one thing but how well this resource is being spent is yet another aspect altogether. The government has implemented stringent fiscal measures that have greatly reduced wasteful public expenditure such as unnecessary trips abroad, conferences, and workshops. This is why Africans wherever we are, strongly appreciate and admire what this man Magufuli is doing.
As a result, we witness substantial growth in the amount of resources allocated for development activities including infrastructure projects in Tanzania worth emulation by the rest of Africa.
Between 2016/17 and 2020/21 fiscal period, thegovernment budget analysis shows that development expenditure increased by 9.1 percent from 11,820.5 bn to 12,899.4 bn while general budget support (donor support) declined by 71.3 percent from 483.0 billion to 138.3 bn.
Infrastructure development manifests itself in a number of ways including construction of roads, railways, ports airports, ship building, schools, hospitals and so many other constructionrelated sectors. One such project benefiting from increased domestic resource mobilization is the railway infrastructure.
I was over joyed to learn that the government in Tanzania is implementing a major railway sector development with construction of a Standard Gauge Railway (SGR) from Dar es Salaam to Dodoma (722kms) in two phases. Upon completion, this will be the longest and most modern state of the art railway line in East Africa probably beating the famous Gauteng line here in South Africa.
While he focuses on building the SGR, he is also honoring the past by revamping, rehabilitating and modernizing the old Meter Gauge Railway (MGR) both in the central corridor and the northern corridor, shows reports from Tanzania.
These developments resonate with the famous British-Iraqi architect Zaha Mohammad Hadid’s note when designing the Daxing International Airport acknowledging the need for “designing the future while honoring the past with ancient Chinese Architecture”.
In the view of issues discussed in this article it is, with no doubt, the weak and activist based opposition in Tanzania cannot outsmart President Magufuli in the forthcoming October Elections. He is designing the "real future" of Tanzania.
Comments
Post a Comment