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Article

26 Jun 2017

Author:
Allan Olingo, The EastAfrican (Kenya)

Tanzania: ‘Exploitative’ mining tax incentives favour multinationals, denying locals the 'benefit' from natural resources

"‘Exploitative’ mining tax incentives return to bite Tanzania’s revenue"

Tanzania’s cocktail of incentives in the mining sector has begun to bite as President John Magufuli’s administration grapples with some of them...[It] is trying to renegotiate some of its mineral development agreements with multinational mining companies after an audit commissioned by President Magufuli revealed that the country offered “extremely generous” incentives to these firms...“I will stop at nothing to undo or reverse these exploitative mineral contracts,” President Magufuli said.

The Mining Act was enacted in 1998. It is this Act that is now being seen as the greatest setback in the country’s’ quest to enjoy the fruits of its natural resources. “The Mining Act of 1998 is seen as extremely favourable to foreign mining companies. Its implementation saw several amendments of financial laws, including the Foreign Exchange Act, meant to attract investors but the government ceded too much ground. The presence of these tax incentives has enabled mining companies to effectively escape taxation altogether,” said Mmari Chacha, a Dar-based international energy consultant at Innovate...“Any true change shall only be from amending the laws so as to see Tanzania benefit from these resources,” said opposition legislator Tundu Lissu, who is also president of the Tanganyika Law Society...

Kenya, which is gearing to start exporting its oil, has hit it big with the mining sector, offering incentives as a means to woo investors...However, Kenya Civil Society Platform on oil and gas coordinator Charles Wanguhu said that the secretive nature of deals signed between the government and companies prospecting for minerals, oil and natural gas could expose the country to major losses in future.