How mining firms are milking Tanzania dry

As Tanzanians wait for the 2014/15 national budget with bated breath, a new report shows that the government loses about $248 million (Sh415 billion) annually in tax revenue through misinvoicing by mining companies alone.

Falling revenue in the current financial year has led to speculation that the government will raise taxes and impose new ones on consumers in its budget proposals to be tabled in Parliament on Thursday.

Although wide ranging in scope, the Global Financial Integrity (GFI) report fingers Tanzania’s mining sector as a major culprit in over-invoicing, which accounts for a big chunk of the estimated $1.87 billion the country loses each year through the malpractice.

Experts argue that if the government clamps down on tax fraud, the money saved could be enough to finance a significant portion of the Sh18 trillion-plus budget plan.

MPs have been debating ministerial budgets in Dodoma in the past fortnight during which they put the government to task over budget plans that are not implemented.

A number of lawmakers have warned that they will not approve the budget proposals to be tabled by Finance minister Saada Mkuya without assurances on how the government plans to raise the money.

Details of the GFI report focusing on the mining sector have been released by the US-based International Centre for Investigative Journalism (ICIJ).Reports on how mining companies have been ripping the country off over the years are not new, but the fresh details should add credence to claims that not enough is being done to deal with tax cheats.This is happening despite Tanzania being a signatory to the Extractive Industries Transparency Initiative (Teiti), which aims to increase transparency in the mining tax regime. Teiti is set to release its fourth report later this month. Teiti coordinator Athuman Kwariko was last week quoted as saying the initiative had played a pivotal role in the doubling of revenue from the extractive industry to Sh800 billion.

But since the GFI report was released, neither the Tanzania Chamber of Minerals nor individual mining companies have commented on the findings.Illicit flows and secretive tax practices are robbing many nations, particularly in Africa, of riches that could go towards development and stability, according to the report.

GFI says developing countries lose about $424 billion each year when importers and exporters mislead governments about the value of goods and services.

This dishonesty – known as trade misinvoicing – accounts for nearly 80 per cent of all the money that developing countries lose each year through illegal means. Trade misinvoicing occurs when companies charge too much (over-invoicing) or too little (under-invoicing) for imports or exports. Depending on the laws in place, this allows companies to pay less in taxes or receive more generous government assistance.

“Mining companies could be over-inflating their import costs to shift capital out of Tanzania illicitly with the added kick-back of lower taxable income due to artificially inflated inputs,” the GFI report says.

The Citizen could not independently verify the authenticity of the data, but judging from the figure mentioned, the amount lost during the past 11 years amounts to over $2.48 billion.

The report estimates that the government misses out on about $248 million per year in tax revenue from mining companies as a result – a substantial amount for a country in need of funds for development.

Weak governance and companies seeking to reduce their taxes are not the only players in this game. GFI found that most of Tanzania’s misinvoiced trade is with Switzerland and Singapore – two reputed tax havens.

Only six per cent of Tanzania’s imports come from Switzerland and Singapore, yet the countries accounted for 67 per cent of Tanzania’s total import misinvoicing over ten years.

Source; Citizen Newspapaer: June 10th 2014

The struggle for a post-extractivist alternative is a global struggle - Samantha

"Extractivism - a development model which underlies most economies of the Global South and shapes our societies - is deeply destructive, it rampages through communities, through forests and waterways, destroying the very basis for the reproduction of human beings. It ‘undermines’ the water we drink, the lands we live on and eat from, the forests we harvest from, and the air we breathe."

"… because of the centrality of extractivism to the food, energy, social and planetary crisis this is where we must start to make our challenges, and propose and build our alternatives.”

Read More about this at http://www.actionaid.org/nl/nederland/2014/05/women-mining-interview-samantha-hargreaves

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The Cost of Revenues Calculation in Mining

Our Dignity

Our Land

Our Settlements

Our Jobs

Industrial Mining costs us a big deal in the name of revenues. The predatory extractivism taking place in Tanzania does not only reap our wealth but our lives as well. From land grabbing, health issues, gender based violence, food insecurity, exploitation, water scarcity, decrease in household income to sexual violence, the list could go on. 

The ministry of energy and mineral has passed its 2014/2015 budget last week, where conducive environment for investors is one of the many agendas. Yet no budget allocated for mitigating the risks brought about by mining. or enough budget with good strategy and easy access of funds for empowering small scale miners mostly Tanzanians and specifically women.In my opinion, i think it is time we as a nation pause for a while and assess ourselves in terms of large scale mining  against its benefit to Tanzanians.

TAWOMA: Supporting the Disadvantaged in Tanzania Mining Communities

Tanzania Women Miners Association (TAWOMA) is a non government Organization  working for the interest of women and children in mining Communities of Tanzania. It is a membership organization formed in 1997 with more than 400 members in 15 active mining areas

 TAWOMA was formed as a result of gender imbalance and inequity in mining sector . Women organized as a response to exploitation and unhealthy conditions  in mining sector. The common mining association such as Regional Mining associations and Chamber of Mines overlooked the specific gendered issues and challenges of women. In mining activities, women   were subjected to several unfair deals, worked long hours with no or little pay, exposed to unhealthy working condition such as exposure to dust  and mercury fumes, faced violence both in private and public  and existence of child labour in mining areas. TAWOMA brought together women miners, service providers, mineral dealers under one umbrella of women miners to protect livelihood and human rights of women in mining.

The current organization of women miners provides a safe space for  women to discuss and challenge status quo in mining sector which favors men more than women. It provides a platform and legality to question the inequality in mining while supporting women to climb at the top of the sector.

Although TAWOMA institutional arrangement gives an accessibility of services and information of its members at the local level, the organization faces a major capacity challenge to deliver the desirable outcome to its members.  The organization lack a clear strategy to advocate for the policy and practice changes within the sector. Financially, the organization depends on subsidies from the government, hence lack the power to question the policies and practices which excludes women from the sector. In some areas, women in mining are organizing to respond to the gaps left by the organization. One of TAWOMA question would be to bring together these community based women in mining organization in a coalition for better use of the resources and experience presented.

This year, TAWOMA will be holding a grand election. The new leader will be challenged to re- organize the organization so that it presents women miners voice in a more specific way, with a focus to uplift women in mining livelihood and security.