State capture in Tanzania: a case of the Extractive Industry (1990s-2013)

Tanzania liberalised its mining industry in the 1990s with the expectation of making the sector the engine of economic growth and poverty reduction. Yet, hardly a decade had passed before the people realised that the expected benefits from the mining sector reforms were not forthcoming. In fact, as time went by, it became apparent that the state was “captured” to serve the interests of a few Mining Transnational Companies (MTNCs) at a substantive loss to the people. Thus, instead of mineral led economic growth and poverty reduction, there was mineral engineered poverty and violence. In that regard, the question which emerges is how and why did MTNCs manage to capture the state? In attempting to answer these questions, the study set out to: first, identify actors and major strategies of state capture in Tanzania’s mining industry; second, examine the politics of state capture in Tanzania’s mining industry; and third identify and explain the factor(s) which facilitate state capture in Tanzania. The necessary data were collected using three methods: Documentary Review, Elite Interviewing and Participant Observation. The findings of the study show that state capture in Tanzania came in part through the use of foreign aid. The confluence of interests between MTNCs, the World Bank and MTNCs’ home states makes the use of foreign aid as a strategy to capture the state achievable. Briberization is another strategy deployed to capture the state. In this, MTNCs use bribes in their various manifestations to exchange for favourable policy decisions from the state. In connection with briberization is offshoring where MTNCs deal-making and transactions are routed through offshore secrecy jurisdictions to bypass accountability rules of the country as well as other prying eyes. Moreover, the study has revealed that, apart from the fact that the rules of the game are tilted in favour of MTNCs, at the behest of MTNCs; the state violently suppresses local communities in safeguarding MTNC interests. Lastly, the study has shown that state capture in Tanzania is largely facilitated by the unrestrained power of the executive. As a result, policy decisions are discretionally made by state actors, who have little deterrence to guard against abuse.