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Tanzania’s Mining Sector and Its Implications for the Country’s Development

Author

Listed:
  • Petro S Magai
  • Alejandro Márquez-Velázquez

Abstract

This paper analyses the factors that reduce the mineral sector’s contribution to the Tanzanian government’s revenue. This sector accounts for nearly half of the country’s exports and places it among Africa’s largest exporters. Yet, ordinary Tanzanians have seen little benefit from their country’s exports boom. This is partly because the government has enacted tax laws that are, as we shall see, overly favorable to multinational mining companies, and partially due to the business practices of the companies themselves. The situation is further exacerbated by these companies avoiding taxes altogether by claiming losses. Nonetheless, they continue to invest in operations. Critics argue that the government fails to capture a substantial amount of state revenue as a result of low royalty rates, unpaid corporate taxes and tax evasion major gold mine operators. This paper argues that the Tanzanian government should increase its involvement in the mining industry by entering into joint ventures with mining companies, or by increasing its shares in them. Its involvement will result in an increase in tax and royalties collection.

Suggested Citation

  • Petro S Magai & Alejandro Márquez-Velázquez, 2011. "Tanzania’s Mining Sector and Its Implications for the Country’s Development," Competence Centre on Money, Trade, Finance and Development 1104, Hochschule fuer Technik und Wirtschaft, Berlin.
  • Handle: RePEc:mtf:wpaper:1104
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    File URL: http://finance-and-trade.htw-berlin.de/fileadmin/HTW/Forschung/Money_Finance_Trade_Development/working_paper_series/wp_2011_04_Magai-Marquez_Tanzanias-Mining-Sector.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
    2. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Holterman, Devin, 2014. "Slow violence, extraction and human rights defence in Tanzania: Notes from the field," Resources Policy, Elsevier, vol. 40(C), pages 59-65.
    2. Eva Näfe & Barbara von Toll, 2011. "Is Broad Industrialisation Imperative for Development? Case Studies on Uganda and Tanzania," Competence Centre on Money, Trade, Finance and Development 1105, Hochschule fuer Technik und Wirtschaft, Berlin.

    More about this item

    Keywords

    working paper; daadpartnership; finance-and-trade;

    JEL classification:

    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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