Here is how Mining Companies Exploit Africa
Tanzania has raised the bar higher for mining companies through renegotiating mining contracts with the Multi-National Companies. Now the companies have to fulfill the 30 per cent black ownership up from 26 percent.
This is following the trend set by South Africa. SA has directed that mining Companies have no option but to deposit 1 per cent of their annual turnover at the Mining Transformative and Development Agency. These resources will be used for the benefit of black South Africans.
The government of South Africa now demands that 50 percent of all prospecting licenses have to be owned by black South Africans.
The rhythm is nearly the same with mining rights where blacks must own 30 per cent.
Further, the mining companies are required by law to purchase 70 percent of their products from local firms and 80 per cent of local services. This is to ensure that mining benefits the locals.
Tanzania has effectively borrowed leaf and now they are demanding better terms in the existing mining rights. This situation arose after President John Magufuli carried out an audit and discovered that the legal provisions were too generous for mining companies in terms of providing incentives.
“I will not stop at anything to reverse the exploitative mineral contracts.” Said President John Magufuli.
Tanzania is operating under the Mining Act of 1998. This law is the biggest obstacle for Tanzanians to benefit from their mining sector.
It is hard to imagine the mining laws in Tanzania are aiding the Mining companies to evade paying taxes legally. Who drafted these laws which are working against the interest of the people? We demand answers.
It is disheartening to learn that the same Act allows 100 per cent ownership of mining companies by foreigners. This is the law that makes it impossible for Tanzania government to get into joint ventures with such companies.
On the taxation front, matters are not very different. It’s more ceding of resources. The tax laws provides for a 10 year tax holiday. The companies afterwards required to pay a royalty fee of 3 per cent of the total value of the total mineral output.
To put a hot nail on a wound, the foreigners are allowed to repatriate 100 per cent of their profits.
In neighboring Kenya, matters are not any different. Kenya government has been talking of providing more incentives in the name of attracting investors.
Mining companies now pay 10 per cent as corporate tax for the first 10 years followed by 15 percent for the next 10 years.
The bolts and nuts in mining laws need to be tightened across Africa to make sure the owners of minerals gain.
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