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What you should know about President Magufuli’s plans to reform Tanzania’s mining sector

President John Magufuli and Mr Tao Zhang, IMF Deputy Managing Director, when they met in Dar-es-Salaam recently. PHOTO/IKULU
There was a time in late 2015 and early 2016 – when Tanzania’s President John Magufuli had only just been elected – that the man they call ‘The Bulldozer’ could do no wrong.
He fired incompetent hospital directors. He scrapped expensive national day celebrations. He staged surprise visits to government departments to make sure everyone was working. He put a cap on official travel, and vowed to eliminate corruption from his administration.
It was heady stuff, and not just for Tanzanians: all over Africa, long-suffering citizens looked at their own moribund governments and wondered to themselves, and then on social media: #WhatWouldMagufuliDo?
Overnight, Magufuli bulldozed a reputation for himself as an efficient, no-nonsense president who wasn’t afraid to go hard on corruption; a leader the rest of the continent would do well to emulate.
But as the months wore on, it became clear that Magufuli was not quite the breath of fresh air he promised to be – and that glowing reputation was not entirely deserved. His administration soon slipped into familiar patterns of patronage politics, while crackdowns on independent media and civil society raised fears that Magufuli harboured a dangerous authoritarian streak.
Is he serious, or are Magufuli’s attacks on mining companies another clever political stunt?

President John Magufuli during campaigns in 2015. PHOTO/IKULU
As Nic Cheeseman, professor of democracy and international development at the University of Birmingham, observes on his blog: ‘Tanzania’s President John Magufuli has begun his time in office with a set of high profile policies and a blaze of publicity. The regional and international media has revelled in images of Magufuli sweeping the streets and disciplining civil servants, praising his efforts to reform a political system that has failed to meet citizens’ needs for many years. However, in the shadows of these laudable activities the president has demonstrated a worrying authoritarian inclination to repress dissent and reject institutional checks and balances.’
Even Magufuli’s much-lauded anti-corruption drive was not all it seemed to be.

‘Stopping corruption by sacking officials in an ad hoc manner and making decisions on the spur of the moment may look dynamic and effective, but in reality it exacerbates the problem,’ says Cheeseman. ‘At root, corruption occurs because institutional checks and balances are not sufficient to prevent individuals from abusing their positions. Dealing with this by further undermining official processes ignores the heart of the problem and actually leaves institutions more, not less, vulnerable to manipulation.’

Where Magufuli is concerned, this should serve as a cautionary tale.
This year the president has been in the continental headlines again. He is now earning plaudits for taking on the big mining companies who, he says, have been plundering Tanzania’s wealth for decades. His administration has slapped a massive fine on UK-based Acacia Mining, the biggest gold miner in the country, for allegedly misreporting their gold exports. At US$190 billion, the fine is one of the largest in corporate history.
Magufuli’s actions may undermine regional initiatives to tackle exploitative industries

The route for the oil pipeline from Tanga-Tanzania to Kabaale in Ugaanda. PHOTO/IKULU
Officials at Dar es Salaam airport also seized a diamond haul worth US$29.5 million, again accusing the owners – London-listed Petra Diamonds – of undervaluing the export. The diamonds will be nationalised, the government said.
At the same time, Magufuli has pushed through new legislation to drastically reform Tanzania’s mining laws. He has put a ban on exporting unprocessed mineral ores in an attempt to force companies to refine locally. He’s raised the royalty rate on gold, from 4% to 6%. He has written into law that the government is automatically entitled to a 16% shareholding of certain mining operations in Tanzania – without compensation.
These are groundbreaking, near revolutionary policies designed to ensure that Tanzania benefits more from its vast mineral wealth – and big mining is running scared. As Reuters reported on Monday, mining companies are battling to come to terms with the new regulations: ‘Takeover bids and exploration plans have been cancelled and workers laid off. The share prices of many firms listed in Australia, Britain, South Africa and Canada with interests in Tanzania have halved as the value of their investments tumble.’
But before lauding Magufuli for his visionary leadership, it is worth considering what impact this is likely to have on the Tanzanian economy. It’s all very well to give big mining a bloody nose, but can Magufuli ensure that this translates into better economic prospects at home? Or will his tough stance come at the cost of a potentially devastating decline in foreign investment?
Southern Africa Resource Watch director Claude Kabemba told ISS Today there is no doubt that Tanzania’s mining industry needs a major overhaul. But he is concerned that Magufuli’s proposals are neither consistent nor comprehensive, and may ultimately fail to deliver the systematic reform necessary.
Will overhauling the mining industry translate into better economic prospects for Tanzanians?

President John Magufuli with an IMF delegation in Dar-es-Salaam. PHOTO/IKULU

‘I think there is too much instability in what Magufuli is doing,’ he says. ‘Although what he is doing will appeal a lot to ordinary Tanzanians who have not benefited enough from their mining industry, in the long term Magufuli is running the risk of building an industry on the premise of unpredictability. That is a serious problem both to the investors, and for confidence in the country.’

Nelson Alusala, a senior researcher at the ISS, raises another concern – that Magufuli’s actions may undermine or conflict with existing regional initiatives to tackle exploitative industries. This is especially in the case of the Regional Initiative against the Illegal Exploitation of Natural Resources (RINR), organised under the banner of the International Conference on the Great Lakes Region.
‘If Magufuli does not align his decisions with RINR, his efforts may be counterproductive to the regional initiatives, in that investors may opt to purchase from “polluted” sources (or blood minerals) that are easily available within the Great Lakes Region. Similarly, the approach may promote smuggling of minerals within Tanzania, as mining companies seek alternatives,’ says Alusala.
It is also worth considering the president’s motives. As his domestic popularity has declined over the past year – from an extraordinary 96% in June 2016 to a still-respectable 71% in June 2017 – Magufuli has been looking for ways to reconnect with his base and to win over an increasingly sceptical opposition.
In an excellent analysis on African Arguments, Tanzania analyst Dan Paget explains, ‘By espousing the language of sovereignty and economic war, Magufuli is tapping into political memories of liberation struggle and revolution. While Magufuli is marking a break from his predecessors, he is still invoking a romanticised idea of the past.’
In other words, Magufuli is playing populist politics. ‘The events of two weeks ago amount to a radical overhaul of Tanzanian mining policy, but also a masterclass in political manoeuvring. This is not to cast aspersions about the sincerity of Magufuli’s intentions to reform the mining sector, but to illustrate that those reforms serve several purposes at once,’ says Paget.
But Magufuli’s track record means that we are perfectly entitled to question the sincerity of his intentions. Magufuli has already flattered to deceive once before. Is he serious this time, or are his attacks on mining companies just another clever political stunt?
This story was first published by the Institute for Security Studies ISS. Simon Allison, is a consultant with ISS

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