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Although Tanzania has a mature mining industry and is Africa’s fourth-largest gold producer with revenues constituting 80% of the extractive industries’ 12% contribution to Tanzanian government revenues  based on data collected during 2016, the country scores 49 of 100 points and ranks 42nd  among 89 country assessments in the 2017 Resource Governance Index (RGI) on governance in the sector.

This was observed at a Policy Forum monthly breakfast debate on the 30th of June, 2017 dedicated to discussing the 2017 Resource Governance Index, a report that measures the quality of governance in the oil, gas and mining sectors of 81 countries including Tanzania. Titled “Natural Resource Governance Index 2017: What is Tanzania’s standing in the global rankings for Oil, Gas and Minerals Transparency?”, the debate focused on a presentation by Silas Olan’g from Natural Resource Governance Institute (NRGI) who also took the opportunity to launch the report after the global launch on the 28th of June, 2017.

In his presentation, Olan’g stressed that most countries still face daunting governance challenges and tend to find natural resources a curse due to the shortcomings that appear in the monitoring of the oil, gas and mineral sectors.

He said that concerns over equitable distribution of benefits between investors, the government and local communities have led the Tanzanian government to begin taking solid steps towards improving governance and transparency. Some of these measures, such as improved access to sector data, are captured by this assessment. Others, such as renegotiation of contracts, are not. The results point to a need to close the gap between legal requirements and enforcement across several areas, and more specifically, to address shortcomings in licensing and state-owned enterprise (SOE) governance

On hydrocarbons, he said that many countries extracting the resource, revenues come from the sale of oil by the international oil company. These transactions have proven susceptible to corruption in many countries, and the selection of buyers and prices will determine whether the country gets a good return from their resources. However, the sales are often conducted in secret and with limited oversight.

Silas Olan’g said that The 2017 RGI can be used by policymakers, civil society and experts to benchmark countries against best practice, global leaders, regional or other peers and also enables focusing efforts of governance reform by identifying gaps.

Expounding the legal dilemmas facing the extractive industry in the country, Hon. John Momose Cheyo Former Public Accounts Committee Chairperson- Parliament of Tanzania claimed urged the government to draft or amend existing statutes to suit current problems that the sector is facing. He also opposed a move by state to table new extractive Bills under certificate of urgency.     

He further argued that, the external influence in the mining, oil and gas sectors cannot be overruled with reference to the Acacia Mining Saga (Acacia operates three gold mines in Tanzania: Bulyanhulu, Buzwagi and North Mara and the Tanzanian government in March 2017 imposed a ban on all unprocessed gold and copper concentrate exports, and report from June allegations follow the publication of a first investigation into Acacia’s mining in Tanzania that alleged Acacia had under-reported by more than 10 times the level of concentrate  exports while Acacia strongly rejects accusations of Tanzanian government).

Prof. Sufiani Hemed Bukurura, a Principal Researcher pointed that “a glaring omission seems to be lack of information on the extent to which external forces affect or negatively influence resource extraction outcomes”. He emphasized that there’s a lot to learn from the 2017 Resource Governance Index but more details need to be filtered from detailed qualitative materials. Prof. Bukurura also stressed that there is a yawning gap between policy, legal requirements and implementation in the Oil, gas and mining sector.

At a public hearing today, HakiRasilimali submitted to the parlimentary committees on Energy and Minerals and Constitutional and Legal Affairs its opinion on the following bills tabled in parliament on the 29th of June 2017:

1. The Written Laws (Miscellaneous Amendment) No. 4 Of 2017
2. Natural Wealth and Resource Contracts (Review and Renegotiations of Unconscionable Terms) Act 2017
3. The Natural Wealth and Resources (Permanent Sovereignty) Act 2017

HakiRasilimali is a platform of Civil Society Organizations (CSOs) working on strategic issues around minerals, oil and gas extraction in Tanzania incorporated as a non-profit company under the Companies Act of 2002 (reg .133413). HakiRasilimali is affiliated to Publish What You Pay (PWYP), a global membership-based coalition of civil society organizations (CSOs) in over forty countries united in their call for an open and accountable extractive sector, so that oil, gas and mining revenues improve the lives of women, men and youth in resource-rich countries and that extraction is carried out in a responsible manner that benefits countries and their citizens. HakiRasilimali membership to PWYP is an institutional commitment to global transparency agenda.

To read the full submission, please click on the link below:

http://www.policyforum-tz.org/sites/default/files/BILLSANALYSIS2017.pdf

Recently, the President of the United Republic of Tanzania, Dr. John Pombe Magufuli  constituted two high level committees of experts tasked with investigating potential under declaration of mineral content in the exportation of unprocessed mineral concentrates and ores largely from Bulyanhulu and Buzwagi mines both owned by Acacia Mining Plc and to provide recommendations on how to handle the subsector. Further, the committees were tasked to examine the fiscal aspects of the mining regime. The findings presented thereafter led to a meeting with the Barrick Executive Chairman Prof. Mr John P. Thornton, owners of Acacia, which has now opened negotiations with the government.

Having closely followed these events and reactions from various quarters with keen interest, we, the undersigned platform of Civil Society Organizations (CSOs) of HakiRasilimali – PWYP working on extractive industry advocacy, wish to communicate our position on the matter.

We have reviewed the two summary reports and are in support of some of the recommendations made by the respective committees which build on previous similar counsel and hence OBSERVE as follows:

1.    WE COMMEND the President Dr. John Pombe Magufuli for his leadership, courage and boldness in bringing back the debate on Tanzania's natural resource management to national attention, public discourse and for his call to initiate a process of reviewing extractive industry-related legislation.

2.    We REITERATE that citizens have a fundamental right to obtain explanations and justifications from duty-bearers entrusted with the responsibility for managing their natural resources. This right to social accountability, conversely, requires duty-bearers to provide justifications regarding the decisions they make on mineral extraction throughout the value chain. This entails disclosure of all extractives contracts which should be made accessible to the public via the Ministry of Energy & Minerals' website. If future such agreements are not to be discredited, secrecy on these matters have to be discontinued as they exacerbate citizens’ mistrust of those entrusted with management of the resources.

3.    We UNDERSTAND that extraction of resources involves complex decisions, trade-offs and long-term commitments. These decisions will be more credible, help manage expectations and avoid destructive and dangerous state of confusion if citizens understand the economic rationale behind them.

 

4.    We CALL UPON robust and efficient legal, fiscal and regulatory reforms which will include the following:

a.    A fully functioning and independent TEITA framework including its Multi-stakeholder Group which respects CSO engagement and the value that civic actors bring to the process including enhancement of public understanding of government revenues from the extractive sectors and maintenance of realistic expectations.

b.    In light of the president’s call for review of legislation, we caution against a rushed process to amend existing laws (noting the norm that started as far back as 2010 with the Mining Act which has resulted in numerous bills passing the legislative process without adequate parliamentary and citizen scrutiny).

c.    There are now increased grounds for not only public disclosure in contracting but full participation of parliament in the contracting process. The legislation should provide for mechanisms for parliamentary scrutiny and discussion of future agreements after the drafting and negotiation by the government in the extractive industry to make it difficult to exploit any systemic weaknesses within the executive branches of the state. Ratification of the MDAs and other such agreements by parliament would have ensured that representatives of citizens had ample time to discuss the merits of the contracts before they came to effect and was another way of bringing the agreements to the public domain.

d.    Transfer mispricing issues which has the cross hairs of tax policy as it relates to the competing objectives of three parties: the revenue-maximizing objective of the domestic tax authority, the revenue-maximizing objective of the foreign tax authority and the tax-minimizing objective of the taxpayer. We urge the government to investigate if there are any cases of transfer mispricing in the transactions between Barrick, Acacia and all its subsidiaries. And if any cases were involved, such transactions should be reversed and Barrick and Acacia compelled to pay the due taxes.

e.    HakiRasilimali - PWYP believes that management of natural resources is not merely about collecting revenues but also sees the larger picture of the value addition as important. The various extractive industries value chains in their entirety will be a major driver for inclusive growth through linkages with other sectors of the economy and job creation only if they will be factored in future reforms. For this reason, we welcome the government’s insistence on in country smelting where economically viable and discouraging importation of semi-processed mineral products in the country.

Although these bold decisions by the president come late, they help shape future discussions in relation to the mining sector. In execution of the recommendation by the teams of experts, however, HakiRasilimali – PWYP URGES the government to be mindful of the following issues that could present legal conundrums in the future:

f.    International legal commitments that the government is bound with guaranteeing companies protection from nationalisation and safeguards against retrospective legal applications;

g.    The need to continue being an investor friendly country where both the investor and government engage in a win-win situation.

h.    The need for an open and consultative process of revoking the existing legal framework and fiscal regime.

 

Prepared by: HakiRasilimali - PWYP secretariat

Note: HakiRasilimali is a platform of Civil Society Organizations (CSOs) incorporated as a non-profit company under the Companies Act of 2002, working on strategic issues around minerals, oil and gas extraction in Tanzania. HakiRasilimali is affiliated to Publish What You Pay (PWYP), a global membership-based coalition of civil society organizations (CSOs) in over forty countries united in their call for an open and accountable extractive sector. (Members: Action for Democracy and Local Governance, Governance Links, Governance and Economic Policy Centre, ONGEA, HakiMadini, Tanganyika Law Society and Policy Forum. Partner: Interfaith Standing Committee on Economic Justice and Integrity of Creation).

Link to full Statement in PDF

Members of the African Parliamentarians Network Against Corruption (APNAC) during the meeting held on June 8, 2017, Dodoma

In 2016, Policy Forum (PF) in collaboration with Tanzania Tax Justice Coalition (TTJC) organized the launch of the Stop The Bleeding (STB) campaign aimed to trigger informed actions and enhance political will to put in place interventions that will reduce and eventually stop acts that lead to loss and flight of public resources from the country. The campaign took place in Dodoma and comprised of members of the African Parliamentarians Network Against Corruption (APNAC) and other stakeholders.

To discuss what have happened since the 2016 STB engagement, on 8 June 2017, PF joined efforts with members of the TTJC and organized a follow-up session with invited APNAC members.

Outlining achievements of the campaign, Israel Ilunde (member of TTJC) argued that compared to other East African Countries (EAC), Tanzania has been acting faster to address harmful tax incentives. He cited tax policy changes that led to increase in the tax base and omission of several harful tax exemptions.

Ilunde claimed that,there are more informed discussions in the Parliament on tax incentives, including the powers to grant them and that MPs are now more familiar with the agenda. Furthermore, most of the government’s strategic documents emphasize on the need to mobilize domestic resources and show the rationale of curbing harmful incentives including unnecessary tax exemptions. He mentioned some of the government strategic documents such as the Five Year Development Plan (FYDP II) and 2017/18 Budget Speech by the Minister for finance.

However, it was observed that despite the amount of policy documents the government has, if they are not fully implemented especially in the areas where most revenue is lost, the country will continue to lose public resources and there will be a less positive impact especially in service delivery improvements.  For instance, the study done by The Interfaith Standing Committee on Economic Justice and the Integrity of Creation (ISCEJIC) shows that the country is losing $ 1.83 billion (Sh 4.09 trillion) annually from tax incentives, illicit capital flight and the failure to tax informal sectors.

On the other hand, the government was urged to work in partnership with other stakeholders such as CSOs that are working towards the same goal.

The Tanzania Tax Justice Coalition is a loose coalition of CSOs interested in tax justice established in 2013 under PF coordination. Members include: Policy Forum, Action Aid Tanzania, Kepa, Youth Partnership Countrywide (YPC), Tanzania Coalition on Debt and Development (TCDD), Tanzania Trade and Economic Justice Forum (TTEJF), Tanzania Youth Vision Association (TYVA), Governance and Economic Policy Centre (GEPC), Tanzania Education Network (Ten/Met), Community Development for All (CODEFA) and Norwegian Church Aid (NCA).

Limited disbursed funds should address the most pressing socio-economic needs

On 26 May 2017, Policy Forum dedicated its monthly Breakfast Debate to discussing the National Budget for the financial year 2017/18. Titled “The National Budget 2017/18: What is changing in the education and agriculture sectors,” the debate included two presentations by Makumba Mwemezi, a programme officer from HakiElimu, an education rights organisation, and Fazal Issa a programme officer from ForumCC, a climate change group.

Presenting an overview of the Education Budget 2017/18, Mwemezi argued that budget allocated for education is between 16% and 17% of the national budget which still falls short of what is needed to meet the demands of the sector as well as international commitments which require an apportionment of 20% of the total available resources.

Highlighting on the impact of the provision of fee-free basic education, he noted an increase of 46% enrolment for pre-primary students which is equivalent to 500,000 new entrants. The enrolment of primary school students also soared by 41% equivalent to 552, 289 entrants. The growth of numbers of students who are enrolled, however, has resulted in a shortage of 168,328 primary school classrooms and 12,568 secondary school classrooms.

Before fee-free basic education, the shortage of primary school classrooms stood at 146,106. The enrolment increase has created a demand of 22,222 classrooms which requires an estimate of Tsh 267 billion for construction. However, the Ministry of Education, Science and Technology has allocated funds in the financial year 2017/18 to construct only 2,000 classrooms.  

Illuminating on the 2017/18 budget for Agriculture, Livestock and Fisheries Ministry, Issa said that the budget trend between 2010/11 - 2016/17 has not been convincing whereby it averages only Tsh 350 billion which is equivalent to 2% of the national budget annually. The average percentage is far less than the agreed target of 10% under the Malabo Declaration. In 2014, African Union (AU) Heads of State adopted the Malabo Declaration on Accelerated Agriculture Growth and Transformation for Shared Prosperity and Improved Livelihoods. One of the goals of the declaration is to allocate at least 10% of public expenditure on agriculture and rural development.

Issa highlighted that “in the National Budget 2017/18, the government has allocated a total of Tsh 267.86 billion for the Ministry of Agriculture, Livestock and Fisheries. The amount equals to only 0.85% of the total estimated national budget of TZS 31.69 trillion”.

Regarding climate change, Issa insisted that from the budget allocations, the government has not prioritized climate change as only 26 activities are related to the issue out of 207 to be implemented for the 2017/18 financial year.

Other issues raised during the debate included the need of discussing and advocating for efficient domestic resource mobilization and that despite challenges of late disbursements in both sectors, the panel debated on the importance of advocating for the efficient use of the limited disbursed funds to address the most pressing socio-economic needs.

Others mentioned the lack of consistency when it comes policy focus citing emphasis on Kilimo Kwanza as a strategy to reduce poverty and now concerted efforts have shifted to industrialization as an alternative.

Nicodemus Eatlawe a programme manager from Ten/Met said “If the country is not investing in agriculture, we will always remain poor because the large population which is more than 60% depends on agriculture. Investing in agriculture will help feed our people and even our neighbors.” Eatlawe advised asked the Civil Society Organizations (CSOs) to continue challenging the government to increase the education budget to meet demands of the sector. He cautioned, however, that increasing education budget will not solve every problem of the sector.

 

Musambya Mutambala from STIPRO responding to the questions during the Breakfast Debate

The government should conduct a baseline assessment to determine the targets that the country plans to achieve from the oil and gas sector and set expectations around realistic local content levels.  The argument stemmed from the Policy Forum’s breakfast Debate entitled: “Thinking local: What are the Lessons & Challenges of enhancing Local Content in Tanzania?” that took place on April 28, 2017 in Dar es Salaam.

Presenting on the challenges facing Tanzania’s oil and gas local content, Thomas Scurfield from Natural Resource Governance Institute (NRGI) said the baseline will help to determine the current local capacity and capabilities in the sector and provide what is possible, feasible and detect the beneficiaries (the local communities).

Scurfield recommended for the policies that will contain legally binding requirements for domestic employment, local ownership, in-country goods and services provision and capacity development. Experience shows that without binding requirements, extractive companies often have little interest in enhancing local content. Given established international supply networks, companies may fail to be proactive in sourcing local labour or suppliers even if the necessary capacity exists in the country.

He insisted, “we can draw lessons from Nigeria and Ghana where 280 categories of goods and services were emanating from the realistic policy targets’’.

With regards to the local content and improving technological capabilities in the oil and gas sector, Musambya Mutambala from Science, Technology and Innovation Policy Research Organization (STIPRO) urged the government to commit itself to designing policies that will push for the adoption of more efficient technologies.

Musambya explained that the government should establish an institution to manage knowledge production and use for the development of the oil and gas sector. Its main objective should be to forge collaboration among stakeholders involved in the oil and gas sector and create a synergy that will fuel resources needed for technological capabilities.

Moreover, there is a need of reviewing the national budget allocated for Science, Technology and Innovation (ST&I) activities and consider achieving the promise of allocating 1% of GDP for ST&I issues. The private sector is advised to initiate internal resource mobilization strategies that particularly target financing local enterprises for the technological capacity building.

Dr. Lucas Katera from REPOA underlined on the significance of strengthening middle-level institutions, vocational training schools and technical schools to uncover essential knowledge on local content to the future generation.

The discussion also centered on the view that the government needs to communicate with its citizens and manage their expectations to avoid unnecessary confrontations like the skirmishes that took place in in Mtwara in 2013.

Participants recommended future policy discussion to focus on how local content could benefit marginalized groups especially on issues related to gender and social diversity.

The Local Content Policy of Tanzania for the oil and gas industry also directs that a baseline needs to be carried out to identify the current capacity and capabilities for Tanzanian-owned companies to become suppliers and to develop a needs assessment to identify the capacity enhancement needed for Tanzanian experts in the oil and gas industry.

Double Taxation Agreements should be reviewed  to develop robust systems to curb illicit financial flows from mining

The government has pledged to consider recommendations suggested by the study entitled, Where is the Money?  Taxation and the state of Africa Mining Vision  (AMV) implementation: A case study of Tanzania and East Africa. The Commissioner of Minerals Eng. Ally Samaje made the promise during the National Launch of Africa Mining Vision Study on Tanzania organized by Policy Forum in collaboration with Tax Justice Network- Africa, Tanzania Tax Justice Coalition and HakiRasilimali on May 15, 2017, Dodoma.

Eng. Samaje clarified, “the government is working on domesticating Africa Mining Vision whereby the recommendations will be translated into the policies and legal framework to make sure that the country is getting sufficient benefit from the extraction of the resources”. He further urged stakeholders to conduct a study on the implementation of the AMV in other African countries that are successful in domesticating the vision with a purpose of showing lessons and gaps that the country can learn.

During the discussion, it was noted that the country is not getting enough revenues from the extractive industry. This is caused by the presence of illicit financial flows and transfer pricing in the mining sector. To curb the problem, a member of the Parliamentary Standing Committee on Minerals and Energy Hon. Innocent Bashungwa (MP) recommended the Ministry of Minerals and Energy to speed up the process of domesticating the AMV. He claimed that” the government has been talking about domesticating the AMV since 2011 but up to the moment, it has not done so”.

On the other hand, it was observed that the executive government makes mining investment decision without involving the Local Government Authorities (LGAs). This causes chaos in the community that owns the land and sometimes the LGAs fail to solve the problems because they don’t have enough information.

Chairperson of the Parliamentary Standing Committee on Minerals and Energy Hon. Doto Biteko said the committee will be confident to speak about implementation of the AMV because they have the information that have been well researched. He further encouraged CSOs to use their capacity to criticize systemic issues so as to improve the mining sector.

The study examined the fiscal regimes and revenue management frameworks in the country in order to:

  • Develop a scorecard to measure progress made in the country and regional economic bloc in relation to AMV implementation;
  • Measure progress made in the harmonization of national and regional fiscal and revenue management frameworks; and
  • Draw lessons and provide recommendations on the bases of the above objectives to support national processes towards the formulation of Country Mining Visions.

Some of the study recommendations include: revisiting Double Taxation Agreements so as to develop robust systems to curb illicit financial flows from mining. Also, the government and CSOs need to work together to create public awareness about the AMV.

 

 

Preamble

Tanzania’s realization of the Sustainable Development Goals (SDGs) and Five Year Development Plan II (FYDP II 2016/17- 2020/21) largely depends on its ability to effectively mobilize sufficient, predictable, reliable and timely domestic financial resources. We, the members of the Tanzania Tax Justice Coalition, a loose coalition of Civil Society Organizations interested in advocating for a just and transparent tax system in Tanzania, would like to share our views on how the government can build on recent achievements to further raise domestic resources which in turn will help improve the quality of public service.

The coalition currently comprises of Policy Forum, Action Aid Tanzania, Kepa, Youth Partnership Countrywide (YPC), Tanzania Coalition on Debt and Development (TCDD), Tanzania Trade and Economic Justice Forum (TTEJF), Tanzania Youth Vision Association (TYVA), Governance and Economic Policy Centre, Tanzania Education Network (TenMet), The Interfaith Standing Committee on Economic Justice and Integrity of Creation, Norwegian Church Aid (NCA), Open Mind Tanzania, Community Development for All (CODEFA), Inter University Tax Justice Network Forum (IUTJNF) and Activista. To read more click here

In 2017 Policy Forum intends to use community radio stations to inform and raise awareness of the targeted community on issues related to extractive industry, gender, social development goals, accountability and policies related to public resources.

Four community radio stations located in Lindi, Mtwara, Iringa and Kahama have been employed to broadcast PF’s agenda through their programmes. The stations are Mashujaa FM (Lindi), Safari FM (Mtwara), Ebony FM (Iringa) and Kahama FM (Kahama). The radio programmes will commence from the mid-April to November 2017.

Prior to the commencement of the programmes, two radio presenters from each radio station attended a two day training in Dar es Salaam which highlighted about PF’s areas of advocacy and contents of the programmes.

Overall objectives of the radio programmes are to equip the targeted community with information and knowledge on the investment of extractive industry and how it can impact development of the community. Relevance and importance of openness in the extractive contracts, gender, oil and gas policy, local content, laws and regulatory framework will be emphasized in the programmes.

The programmes will be tailored to raise awareness, increase understanding and emphasize importance of shared obligation in governance and accountable use of public resources.

The community will participate in the programmes by contributing in the discussion through phone calls, short text messages and interviews. Later on they will also be involved in the evaluation of the radio programs.

                                                                     Photo:Participants discussing at their round tables

Civil society representatives have called upon the government to uphold freedom of expression in the country after a spate of draconian legislation enacted in recent times. Speaking at the Policy Forum’s breakfast Debate titled “Taking Off to the Inclusive Society: Freedom of Expression in Tanzania” that took place on 31st March 2017, Anna Henga of the Legal and Human Rights Centre (LHRC) said that the Cybercrimes Act No.14 of 2015, the Statistics Act of 2015 and the Media Services Act No. 13 of 2016 abridged freedom of expression despite Tanzania ratifying various international human rights instruments.

Furthermore, Ms. Henga said some of the laws such as the Cybercrime Act of 2015 was passed under the Certificate of Urgency by only 86 MP (the quorum was not met) leaving Hon. Zitto Kabwe (MP) to clarify that the quorum is established in the mornings when MPs sign in but later during deliberations and voting, it is usual that they refrain from challenging the continuation of proceedings and voting if it so happens that most of the members have left the house. He called upon civic actors, however, to challenge this culture.

Expounding on the rationale of the cybecrime law, Henga said it was enacted to criminalize offences related to computer systems and information communication technologies and for investigation, collection and use of electronic evidence and related matters. She explained that the law has penalized various individuals and institutions for their political affiliations and criticism of the state and urged CSO efforts to advocate for freedom of expression. She mentioned analysis of laws, using television and radio programmes and litigation as some of the tactics that can be deployed as part of the wider strategy to enhance freedom of expression and fight for the amendments and or repealing of draconian laws.

Paul Malimbo from Media Council of Tanzania (MCT) weighed in the discussion by reminding participants the back and forth nature of how rights in the country have progressed over time.  He said that prior to 1984, it was difficult for an individual whose human rights including freedom of expression were violated to demand for such rights in a court of law because it was not stipulated in the constitution but after 1987, people could demand such rights. He said the current trajectory, hence, raises concern that freedom of expression in Tanzania is regressing and that progress can be unpredictable.

An additional point on history was made by Maria Sarungi, the Director at Compass Communications who reminded that the nation’s founding father Mwalimu Julius K. Nyerere rule was underpinned by the philosophy of freedom of expression and that this spirit that should continue. “We have to take responsibility to ensure that every citizen understands the mother of all laws (constitution) which considers freedom of expression as a right,” she concluded.

Policy Forum holds the People and Policy Debates on the last Friday of the month to broaden public understanding and debate on a topical policy issue. Issues chosen for the breakfast debates are wide-ranging and speakers are drawn from the public sector, academia, civil society, donor agencies and the private sector, and the talks are open to the public and attended by interested individuals and professionals.

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