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Tanzanian government relaxes protectionist regulations in the mining industry

Tanzanian government relaxes protectionist regulations in the mining industry

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The Tanzanian government has relaxed regulations requiring local mining companies to have controlling stakes in multinational companies.

Once seen as too ambitious, the Mining Sector Regulations 2018 required Tanzanian companies to have at least 51 per cent stake in mining firms while multinationals were to partner with their locally owned institutions.

Additionally, they sought to boost the participation of Tanzanian nationals and firms in multinationals' operations. But a year later, further amendments have seen procedural ownership percentage reduced to 20 per cent.

Analysts say that Tanzania, though endowed with abundant minerals, still feels little impact on its revenue collection or even on lives of most Tanzanians over the years.

The new Mining (Local Content) (Amendments) Regulations, 2019 reduced ownership restriction for local mining firms and financial institutions' preference. Indigenous Tanzanian companies, under the amended regulations, now have to own a minimum 20 per cent equity.

The Mining Regulations on Local Content (2018) defined an indigenous Tanzanian company as one "incorporated under the Companies Act that (a) has at least 51 per cent of its equity owned by a citizen or citizens of Tanzania; and (b) has Tanzanian citizens holding at least 80 per cent of executive and senior management positions and one hundred per cent of non-managerial and other positions."

Many local companies, be they contractors, sub contractors, licensees, do not have the capital and capacity needed to bring about development in the mining activities, and machinery are expensive for some local companies.

The Mining Regulations on Local Content (2019), which came into effect on February 8, opened the gates for more local commercial banks to participate in mining activities.

The new structure seeks to establish even participation in mining activities by local entities including contractors, subcontractors, insurance companies and financial institutions.

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