By Joseph Kahama, Chairman, Tanzania Chamber of Minerals and Energy:
Four years later in 2012, the effects of Tanzania’s “strong gold production” on its economy remain relevant and significant. The National Bureau of Statistics (NBS) has announced that once again, the mining industry has proven itself as a critical player in Tanzania’s economic growth and development. It was announced this month that the Tanzanian economy expanded by at least 6.4% in the third quarter of 2011, and this was heavily influenced by the simultaneous growth in the mining industry. As Africa’s third largest gold miner, Tanzania also produces diamonds and tanzanite, but the mining industry is dominated by gold, which is the country’s primary foreign revenue earner. As a result, favourable gold prices in the world market during the third quarter of 2011 inevitably benefited gold production, the mining sector and the Tanzanian economy as a whole.
NBS announced that while the 6.4% growth is commendable, it fell short of the 6.7% recorded in the corresponding quarter last year. This is primarily due to the power outages as a result of a number of factors, including insufficient rains, and rise in fuel prices that occurred during this period. The crippling effects of the power outages penetrated every aspect of economic activity in the country, and the mining sector was not exempt. At the height of the energy crisis, gold mining companies such as African Barrick Gold (ABG), were forced to purchase emergency back-up power facilities. ABG, which has four gold mines in Tanzania, announced in December 2011 that energy-related issues during 2011 had the potential to reduce gold production by about 35,000 – 40,000 ounces of gold. Tanzania’s economy and its mining sector are intrinsically connected. It is clear to me that the same elements which would improve the prospects for the mining sector would inevitably also benefit the entire economy.
The mining sector contributes to the Tanzanian economy in a variety of ways. Members of the Tanzania Chamber of Minerals and Energy (TCME) generate revenue by paying taxes, duties and royalties totaling over Tsh250bn a year. These revenues can then be invested into healthcare, education and infrastructure as well as other public service provisions. Additionally, our members contribute to the country’s economic activities through job creation and the procurement of services and goods, of which 60% is currently sourced nationally. The reverse is also true in that the Tanzanian economy facilitates the mining sector.
I believe that the symbiotic relationship between the mining sector and the Tanzanian economy can and will continue to flourish. It is our mandate as the TCME to facilitate the process by providing an effective and transparent platform for communication between all relevant stakeholders. TCME is dedicated to enhancing the environment in which the mining industry does business so as to ensure the future development of Tanzania.
Ends.