Tanzania’s gold sector: from reform and expansion to conflict?

Abstract

Over the last decade, Tanzania has become Africa’s third largest producer of gold, behind South Africa and Ghana. In the 1990s, in an effort to transform itself into an economically viable, investor friendly state, the government of Tanzania (GoT) reformed its investment and tax code to attract multinational mining companies vying for mineral extraction rights. These reforms included allowing companies to repatriate 100 percent of profits, pay a royalty rate of only three percent on gold, and owe no duty on imports of mining-related equipment. Unlike any other companies in Tanzania, mineral companies also remain exempt from paying capital gains taxes (Curtis and Lissu 2008). While these actions opened the door for rapid development of the country’s mineral sector, particularly in the gold rich Lake Victoria region, they also created widespread instability and confrontation with artisanal mining communities that were displaced to make way for the operations of multinationals.