NEWS ANALYSIS: The President, Mining and The Rise of Populism
By Omar Mohammed
In late February, President Jakaya Kikwete of Tanzania gave a speech to mining sector stakeholders that caused a mighty uproar in the press. Speaking at Dar es Salaam’s Kilimanjaro Hyatt Hotel to launch the Presidential Award on the Extractive Industry Corporate Social Responsibility and Empowerment (CSRE) programme, the president was quoted as saying, ‘it’s disappointing to see some mining investors want to benefit alone… leaving the government and surrounding communities with nothing.’
According to published reports, President Kikwete told industry attendees that the lack of apparent benefits to local communities is a problem that, ‘triggers endless conflicts…between investors and residents living around the mining areas.’
‘If companies pay taxes that are due to the state… they will have good relations with the government,’ he added. In a tone that was described by one newspaper as ‘serious,’ he called for the creation of better linkages between the industry and other economic activities in the country. He said he was baffled by reports that mining companies choose to import goods from abroad that can be easily found in the country. “People… ask, “what do we get in return? Our gold is taken, companies have tax holidays and exemptions, [yet] they don’t even buy our goods or support us economically,”’ he said.
The speech and its perceived critical tone, especially, was unexpected. Reading the coverage, one would have been forgiven for mistaking the president’s comments for the kind of rhetoric usually associated with activists campaigning against perceived misdeeds by the mining sector. Mr. Kikwete was not only co-opting their message but in many ways he sounded like he was channeling their anger.
Meanwhile, the way the story unfolded in the media showed how narratives about the sector evolve and enter the public discourse. It began with the president giving what the media interpreted as a critical speech about the industry, which was then echoed by an incendiary press who amplified it to their readers who will, with complaints to public officials, in turn reinforce the anti-mining sector arguments. The storyline seemed to subscribe to the now familiar trope of “foreign investors unbridled in their plundering of our resources while local communities benefit little from what is rightfully theirs.” That’s the narrative that dominated Tanzania’s newspapers and airwaves.
However, in the media coverage that followed, conspicuous in their absence were voices from the mining sector explaining or offering an alternative perspective. But a couple of weeks after the President’s speech, the industry body, the Tanzania Chamber of Minerals and Energy, granted me an e-mail interview, presenting a different narrative to the one carried in the press earlier in the month.
Mining and its contributions to the economy
The chamber strongly disputed what they termed as an ‘outdated characterisation’ of the industry, arguing that mining is ‘driving socio-economic development both in Tanzania and across the African continent.’ While they disagreed with the media’s spin, saying that reading the speech in its entirety would show how supportive of the sector President Kikwete is, they were also quick to emphasize what they believe are significant contributions mining brings to Tanzania’s economy.
On the issue of taxes, for instance, TCME points out that their members paid over US$150 million (Tsh 250 billion) in taxes in 2010 alone. Furthermore, they argue, ‘total taxation from the life cycle of the five main producing companies in Tanzania are estimated to reach almost US$3.5 billion in total.’
As to the question of whether there exists linkages between the sector and the country’s overall economy, TCME calls attention to the activities of one of its biggest member, African Barrick Gold (ABG). The chamber says ABG currently employs 9,200 people whose wages amount to US$148 million, a chunk of which, they argue, drives spending in the local economy.
In 2009, for example, the chamber argues, ‘through employment, taxes, royalties, and local procurement, roughly 70% of African Barrick Gold’s revenue was retained in the Tanzanian economy.’ They also point to ABG’s community development spending, which, they say, through its ‘Maendeleo Fund’ ‘provides US$10 million annually…to support communities [surrounding] the mining areas.’ In addition to this, TCME claims that ABG, ‘spent more than a half a billion dollars purchasing goods and services in 2010 of which 59% were made in Tanzania.’ All this, they say, demonstrates just how ingrained in the economy modern mining firms are.
If these figures are indeed true, why is it then that the mining sector is a target of so much suspicion and vitriol?