Tanzania’s President John Magufuli has been unapologetic about the decisions his administration has made to purportedly ensure that the people of Tanzania get a fair share of the wealth generated by country’s natural resources. He has repeatedly maintained, mining companies have “robbed” the government out of billions of dollars, through tax evasion and exporting tonnes of mineral concentrate overseas for processing.
One of the measures Magufuli introduced last year was increasing inspections of mineral exports at the country’s port of Dar es Salaam and a clearing fee for mineral exports. The exercise resulted in the impounding of the containers of mineral concentrates belonging to British miner, Acacia. The government claimed the company understated the value of the mineral concentrates by more than ten times to evade tax payment.
Last year, Magufuli’s tough stance seemed to have paid off, as some foreign owned companies, facing no choice, offered to partner with the government.
But commentators have branded Magufuli’s actions as ‘populist’, claiming they can discourage potential investors from setting up in the country, and stunt economic growth.
Investment activity in the global mining sector has been hindered by low commodity prices, mainly attributed to low commodity prices. And as a result of the situation, mining companies are operating on very thin margins. Instead, given the situation, the general expectation is that Tanzania should have been focusing on initiatives to attract foreign investors.
It remains to been how Tanzania’s new approach will impact on the economy. But Magufuli seems hellbent on finishing the task he has started, regardless of the consequences in the medium to long-term.