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            People living in extreme poverty hesitate to pay taxes for their development because they think that the government fails to fulfil its responsibility of solving their development challenges. The challenges include poor infrastructure, lack of medical care in the village dispensaries, poor education system and lack of clean water. That is said today in Dodoma by Hon. Mendrad Kigola (MP) during the follow-up meeting of the stop the bleeding campaign coordinated by Policy Forum (PF) in collaboration with Tanzania Tax Justice Coalition (TTJC).

Stop the bleeding campaign was launched in 2016 in Dodoma with the aim of calling for informed actions and political will by the government to put in place interventions that will reduce and eventually stop all acts that contribute to loss of resources from our country.

A number of studies indicate that African countries including Tanzania lose significant amount of revenues every year as a result of harmful tax incentives, illicit financial flows and secrecy in contracts. Some of these studies include;

  • Tax competition in East Africa: A Race to the Bottom?
  • Double Taxation Agreements: Gain or loss to Tanzania?
  • Still Racing towards the Bottom? Corporate tax incentives in East Africa;
  • High Level Panel Report on Illicit Financial Flows commonly known as the Mbeki Report;
  • Reports by Controller and Auditor General and
  • The One Billion Dollar Question

The campaign had the key recommendations to the government which include:

Provision of tax incentives only on the basis of a thorough cost-benefit analysis, including an assessment of the impact on poor people and vulnerable groups. The government should ensure that corporate tax incentives are audited to check that the investment for which an incentive is offered has actually been carried out. Tanzania Revenue Authority capacity should be strengthened to collect taxes through providing financial resources and technical capacity. The government should invest more in other measures such as enabling environments and political stability to attract Foreign Direct Investment (FDI) than giving unnecessary incentives. The government should end harmful tax treaties that limit the ability for Tanzania to raise revenue to fund quality public service delivery.

Presenting achievements made by the government and legislators since 2016, Nicholas Lekule (PF’s Budget and Policy Analyst) said that “Informed discussion in the Parliament on tax incentives including the powers to grant incentives has increased and more MPs are now familiar and conversant with the agenda”. There is also a positive move by the government and decision makers to call for contract transparency in the extractive industries as well as enactment and review of laws governing extractive investments.

Contributing in the discussion Hon. Amb. Adadi Rajabu (MP) advised the government to effectively train officials who are responsible for negotiating extractive contacts because the multination companies know how to avoid paying taxes.

Members agreed that a summary of what has transpired in the meeting should be recorded by Policy Forum and submitted to Hon. Job Ndugai Speaker of the National Assembly.

 

 

 

 

 

 

HakiRasilimali Calls for the Preservation of Civil Society Space in Natural Resource Governance in Tanzania

Dodoma, 26 October 2017

HakiRasilimali - Publish What You Pay Tanzania, a platform of civil society organizations working on extractives advocacy in Tanzania, has called on stakeholders to acknowledge, appreciate the role of civil society and preserve its space in the natural resource governance in Tanzania.

The call was made ahead of a national conference on mining, oil and natural gas sector in Tanzania aimed at "collaborative reflection on how this sector can effectively contribute to sustainable development in the country" to be held in Dodoma this week.

“The conference will be held on 2 and 3 November 2017 in Dodoma, bringing together stakeholders from all spheres of society within and outside Tanzania, with a view to discuss, learn and share experiences with policy makers, regulators, civic groups on opportunities for collective approaches towards harnessing the potential of the extractive sector to contribute meaningfully to growth and inclusive socio-economic development,” said Donald Kasongi, the Chairman of HakiRasilimali - Publish What You Pay Tanzania.

The conference comes against a backdrop of currently broadening debate on policies, laws and regulations that aim to ensure upholding sovereign management of natural resources in Tanzania.

“We congratulate the efforts through the President of Tanzania, Dr. John Magufuli for demonstrating exceptionally high levels of patriotism in promoting models that will ensure that the sector can play its full part in building a predictably prosperous and resilient economy in which human development outcomes are central,” Kasongi said adding that “this has been demonstrated through the recent negotiations between the government and corporate entities with mining stakes in the country.  The dialogue leading to ensuring that the best scenario for Tanzania’s interests in the resources are secured while at the same time maintaining competitiveness and commitment to creating an investment climate that allows well intentioned investors to continue operating in the country.”

On his part, Bishop Munga of the Interfaith Standing Committee on Economic Justice and the Integrity of Creation said they hope that the rigour in management of the extractive commodities will be broadened to include wider stakeholder groups in public, private and civic sectors.

“It is therefore critical to ensure that governance of the sector is effectively guided by collaborative tools. This collaboration is always achieved with active participation of civil society at local, sub national and national level consultations,” Bishop Munga said.

The platform has also called for the disclosure of all contracts between companies, governments and beneficial owners in the sector and awareness raising campaigns to be provided to all Tanzanians in order to allow productive analysis on these contracts and eliminate "unconsciousness” on the agreement terms.

Moreover, HakiRasilimali has also urged for extractive sector operations that are fully compliant with both national and international social and environmental safeguards to avoid human rights violations and environmental degradation. Also counseled was the importance of expanding dialogue and responsiveness to emerging gender issues in the extractive industries in Tanzania.

Note to Editors:

(HakiRasilimali Members are Action for Democracy and Local Governance, Governance Links, Governance and Economic Policy Centre, ONGEA, HakiMadini, Policy Forum, and Tanganyika Law Society),

Partners:  Interfaith Standing committee

For further information or to request interviews please contact:

HAKIRASILIMALI - Racheal Chagonja +255 745 655 655 coordinator@hakirasilimali.or.tz

 

The Policy Forum monthly breakfast debate on September 29th, 2017 dedicated to discussing the Concealed Opportunities of the Informal sector in Tanzania. The debate entitled The Power of Tanzania’s Informal Economy: Unveiling the Concealed Opportunities”, was presented by William Madiwa from Tanzania Trade and Economic Justice (TTEJF).

According to Madiwa, the reality of the informal economy cannot be denied. The formal sector has the characteristics of difficult entry, frequent reliance on overseas resources, corporate ownership, and large scale operation, capital-intensive and formally acquired skills, often expatriate meanwhile the  Informal  sector  is characterized by  reliance  of indigenous  resources where  by  individuals  who  are  engaged  in it do  not  need  to  have  a formal education, or a proper certification to conduct their activities.

He furthered the discussion by stating that Informal sector plays an important role in reducing urban unemployment, crime and violence, and serving as a breeding ground for new entrepreneurs which also contributes to poverty reduction as its roots go deep into household economic especially the rural population.

Illuminating that the key to policy making towards informality is twofold, Madiwa recommended the following:

First, to specify more basic objectives, such as efficiency and equity (fair and impartial), which transcend informality and its persistence in itself is neither good nor bad.

Second, to disaggregate informality into policy-relevant categories, rather than take it as an undifferentiated lump and then gauge policies by their impact on its magnitude. Reducing the costs of transaction for paying taxes as with the use of a simple presumptive tax- will help incentivize small informal business become formal but it might not be enough. Improving the livelihoods of the working poor in the informal economy, particularly women, by increasing their access to productive resources and services as well as legal and social protection and by enhancing their voice and representation. Several levels of intervention and different entry points need to be taken up simultaneously for a system-wide change to be effective.

Prof. of Economics and Business at Mzumbe University Honest Ngowi said that it is wrong to say or think that informal sector does not contribute to tax revenues.  According  to  the  Integrated  Labour  Force  Survey,  2006  (ILFS)  the informal  sector  was  the  second  main  employing  sector  after  agriculture  by  employing  10.1 percent  of  the  employed  persons,  followed  by  other  private  sectors  with  8.6  percent,  where agriculture  employed  75.1  percent.   Hereafter, The Integrated Labour Survey report 2014 indicates that jobs from both the formal and informal sectors increased from 16.6 million in 2006 to 20 million in 2014 which eventually is notable that the informal sector employment is more than doubled from 1.6 million to 4.3 million (2006 - 2014).

Prof. Ngowi emphasized that the informal sector is here to stay, for it has been around since time immemorial. It is not a Tanzanian or African phenomenon but worldwide and debates are ongoing on whether or not the sector should be formalized.

It has been revealed that the sustainability of social accountability monitoring (SAM) as a tool and an approach would depend on how it is successfully entrenched within Tanzanian communities with gradual reduction of dependency on donor resources as an exit strategy. If SAM continued to be donor-driven, it would one day collapse, stakeholders at a recent learning event were told.

Speaking in Mwanza at a two day zonal reflection meeting that brought together participants from the Lake and northern zones organised by Policy Forum, Representative of the Shinyanga Regional Administrative Secretary (RAS), Burton Mwakanyamale said: “In order for the SAM programme to be sustainable even after donors have pulled out, the government needs to put some resources in it because it is has enormous potential as a monitoring and evaluation opportunity for local government not shy of assessing its work,” he urged.

He further elaborated: “These efforts by such nonprofit institutions should be consolidated as much as possible and be owned locally by communities. I am sure they will give huge support to the citizens much as they are being supported by others.”

He warned, however, that without good relations and communications between these nongovernmental organizations, the citizens and the respective local authorities they were working with, they could be no tangible development to the citizenry.

For his part, Director of a Mwanza based Community Active in Development Association (CADA), Mr. Peter Matonyi concurred with Mwakanyamale by saying that it was very important for Policy Forum and other civil society organizations and NGOs to work collaboratively with government organizations and institutions, and local and international organizations so as to bring development to community.

But he said that in order that relation to work out, all these organizations in general needed to be transparent on all their financial matters as a way of creating trust and integrity to the community they working with.

Mr Matonyi commended Policy Forum and SAM for being educative and informative to citizens at the grassroots on policy, financial matters and on how they can know their rights when implementing the different development projects directed to them.

“Currently communities where SAM operates know their responsibilities and also know how to oversee them. Likewise, people now know the importance of participating in development activities, and meetings voluntarily,” he said.

He further said that through SAM, the community has been able to know the financial disbursement from the Treasury to the lower level meant to implement the intended projects in their areas.

“It is the responsibility of the community to bring to account the unfaithful and irresponsible leaders who halt developments in their areas hrough abuse and misuse of public resources,” he urged.

In his opening speech Policy Forum Coordinator, Semkae Kilonzo, said that the main objectives of the zonal learning session among mothers were: to document the lessons learned, challenges as well as results of the previous SAM exercises; the promotion organizational learning by engaging with the civil society and government officials at the local level in policy, to have insights of what worked and not worked as far as social accountability and other advocacy initiatives were concerned and also use the shared experience at the ground level to inform engagements related to policy processes at the national level.

Kilonzo further noted that the meeting had also intended among other things to focus on capturing and reflecting on the most important lessons as far as the SAM practice in the country was concerned for the purpose of using them to advance their work.

By Daniel Semberya, Mwanza

Policy Forum (PF) network is looking forward to framing its future efforts on Social Accountability Monitoring (SAM) based on the lessons learned in the previous years of implementation in Tanzania.

Speaking in his opening speech to participants from Coastal and Southern Tanzania attending a two day Zonal learning session that has started today on the 20th September, 2017 in Morogoro, PF’s Coordinator Semkae Kilonzo said that the meeting was an opportunity to reflect and share lessons and experiences emerging from the implementation of Social Accountability Monitoring (SAM) and other accountability work in coastal and southern Tanzania.

Further, Kilonzo elaborated that the meeting would also complement the ongoing country capacity enhancement efforts towards social accountability practitioners using the shared experience at the ground level to inform engagements related to policy processes at the national level.

“Our new strategic plan intensely focuses on monitoring evaluation and learning (MEL) to capture the dynamics, causal mechanisms, reasons underlying and positive or negative changes, tacit knowledge and the contexts or operating environment in which SAM can be most impactful and to share these lessons with practitioners in the country and beyond,” he said.

Kilonzo noted that Policy Forum has planned to conduct two zonal reflection meetings in 2017, which among other things would focus on capturing and reflecting on the most important lessons as far as the social accountability monitoring practice in the country is concerned for the purpose of using them to advance their work.

He mentioned the objectives of the meeting among others as: The documentation of the lesson learned, challenges as well as results of the previous SAM exercises; to promote organizational learning by engaging with the civil society in policy and budget advocacy issues.

Others were to have insights of what worked and what did not work as far as social accountability and other advocacy initiatives were concerned.

For her part, the Programme Officer at the Embassy of Switzerland Jacquiline Gatera Ngoma commended Policy Forum’s efforts in convening and enhancing the very-much needed learning around SAM.

“we understand the various challenges that face our planning, budgeting and execution processes and we commend Policy Forum to have spearheaded SAM trainings and implementation in Tanzania," She further added that:

“CSOs are a bridge between the government and citizens and they need to really work out that bridging function for mutual benefits." But to achieve this, she urged the government to recognize CSOs (especially those engaged in social accountability initiatives) as partners in development and give them full cooperation.

 

By Daniel Semberya

 

Despite the optimism around the draft National Land Policy 2016, stakeholders have advised the government to adequately address the resettlement of people facing acute land shortage to areas with adequate land and to empower the landless including women.

This was counseled at the Policy Forum monthly breakfast debate on August 25, 2017 dedicated to discussing the 2016 Land Policy Draft. Entitled “The New Land Policy (Draft) 2016: Giving Land Back to the People or Taking it away?”, the main talk was presented by Richard Mbunda from the University of Dar es Salaam.

Mbunda commenced his presentation by posing two major questions to the audience: “Is the Draft National Land Policy 2016 in consonant with the aspirations of more than 75 percent of the population? Does it give or take land away from the people?”

According to Mbunda, policies aren't an end in itself hence they must have objectives that rhyme with aspirations of the people and be guided by an ideology which was lacking in the draft National Land Policy of 2016.  Moreover, it was advised that the subsequent version of the policy ought to treat land as a natural resource and be consistent with the spirit the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017. In particular, adopting the legal logic of Section 4 and Section 5, which declares “the People of United Republic of Tanzania shall have permanent sovereignty over all natural wealth.”

Reacting to the presentation, stakeholders noted that the draft policy only guarantees women’s access to land but is completely silent on their rights to own land or make decisions on land and the produce coming from it, lamenting that it allowed the coexistence of the customary tenure which limits the position of women to own land especially at grass root levels. De facto inequity in land and property rights can be reversed, they argued, if the framework explicitly addresses gender inclusive access to land. It was stated that without specific attention to gender inclusiveness, important segments of society may be excluded from the benefits of land administration, management and development schemes.

They also advised that the policy should include a resettlement processes that adhere to the principle of prior informed consent and protect grazing land.

Stakeholders commended the government for following the African Union and Cabinet guidelines for drafting the policy and observed that the process thus far has been consultative and has a clear implementation strategy. Moreover, some of the Breakfast Debate participants were of the view that the draft policy was premised on the promotion of sustainable utilisation of land, good dispute settlement and the formalisation of informal settlements. Above all they said, provided a good stepping stone towards a people-centred land policy.

Furthermore, Professor Lupala, a representative from the Ministry of Lands, Housing and Human Settlements Development gave a brief on the process and status of The draft new land policy where he mentioned that platforms such as Breakfast Debate are very useful to accumulate important contributions from citizens of the United Republic of Tanzania and assured the crowded that most of the comments given shall be accommodated in the next Land Policy draft. 

Policy Forum monthly breakfast debate on the 28th of July, 2017 was dedicated to the launch of the last of a series of the Tanzania Governance Reviews (TGRs) by Policy Forum that measure the quality of governance in Tanzania. Entitled “Tanzania Governance Review 2015/16: From Kikwete to Magufuli: Break from the past or more of the same?”, the publication was presented by Brian Cooksey from the Tanzania Development Research Group.

Cooksey highlighted that despite some short-term success, Tanzania’s overall governance performance during the Kikwete decade was disappointing. The 2015-16 TGR report portrays the Kikwete’s administration as weak in tackling tax evasion and corruption and praises the Magufuli reign in its approach against corruption but condemns the restrictions on Access to Information, Freedom of Expression and Freedom of Assembly.

Furthermore, the report shows that after coming to power in October 2015, President Magufuli wasted no time in showing that he meant business on implementing his campaign promises to fight laziness, waste and corruption in the government but nevertheless Magufuli’s reign has taken away the freedom of the Parliamentary Committees by substituting opposition legislators with those of the ruling party to lead the Public Accounts Committee (PAC) and the Local Government Accounts Committees (LGAC).

Cooksey said that Tanzania has been a member of the Open Government Partnership (OGP), which monitors budget transparency in about 100 countries worldwide in terms of opportunities for public participation in the budget process, and the level of parliamentary and supreme audit oversight since 2011. According to the Tanzania’s 2015 Open Budget Survey, Tanzania scored 46 out of 100 which is worse than Uganda (62/100) and Kenya (48/100). Tanzania also performed well in supreme audit 50 out of 100 but did poorly in public participation in budget process 33 out of 100 in reference to Tanzania Independent Reporting Mechanism (IRM) Progress Report 2014-2015.

However, The Former Controller Auditor General (CAG), Ludovick Utouh further noted that things have been changing positively with the Magufuli government on issue of accountability; the fifth phase government is taking actions which people did not expect. Despite the numerous good things the fourth government accomplished, its major weakness was its inability to act on the recommendations from the oversight institutions’ report, only 30 percent recommendations from the CAG’s office were implemented by the government for the entire eight years of his service, he continued.

Utouh also emphasized for the benefit of future assessments, the country’s history should be remembered. It is the fourth phase government that formulated oversight institutions like the Social Security Regulatory Authority (SSRA) and enacted a law on the CAG’s office.

So what was the conclusion at the debate regarding the transition to the new administration, a break from the past or more of the same? The Cooksey wound up by stating it was both a break with the past and more of the same:

Break with the Past

  • Frontal attack on government waste, indiscipline and corruption;
  • more aggressive tax compliance and enforcement strategy, targeting investors, especially foreign mining companies; and proactive Industrialization policy

More of the same

  • Excessively powerful executive more systematic moves to restrict freedom of speech, opinion and assembly; informality undermines formal institutions; increasingly, politics trumps economics.

On his part, Twaweza Executive Director Aidan Eyakuze commented that it is too early to celebrate achievements realized by the fifth phase government , citing a French saying "plus ça change, plus c'est la même chose” translated “the more things change , the more they stay the same” emphasizing that performance of the local government in implementing projects should proactively be monitored.

The Tanzania Governance Review is a high-quality, authoritative and informative review that constitutes a major source on trends in governance in Tanzania for the public, CSOs and stakeholders in government, donor agencies and the academic and research community.

The entire series of seven TGRs covering the years 2006-07, 2008-09, 2010-11, 2012, 2013, 2014, and 2015-16 can be accessed on the Policy Forum website: http://www.policyforum-tz.org/pf-governance-studies

 

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

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