There is fear and uncertainty in Tanzania’s financial services sector, as the government of President John Magufuli is pushing the implementation of regulations to limit the involvement of foreign-owned insurers and banks in mining-related businesses.
In its report, Reuters, quoted the following section of the Mining (Local Content) Regulations of 2018: “A contractor, sub-contractor, licensee (mining company) or other allied entity shall maintain a bank account with an indigenous Tanzanian bank and transact business through banks in the country.”
On the matter of insurable risks to mining activity, Reuters highlighted the following: “The insurable risks relating to mining activity in the country shall be insured through an indigenous brokerage firm or where applicable an indigenous re-insurance broker.”
According to the regulations: “an indigenous Tanzanian bank” is a bank that has 100% Tanzanian or a majority Tanzanian shareholding.”
Major foreign-owned banks operating in Tanzania that are likely to be affected include Barclays Bank, Citi, Standard Chartered Bank , Stanbic Bank and South Africa’s First National Bank (FNB).
Last month, under orders from Magufuli, Tanzania’s mining ministry passed regulations which will make it mandatory for foreign-owned mining groups to offer shares to the government and local companies.
Source: Adapted for African Mining Brief from a Reuters report