Making the Most of the Commodities Boom: Tanzania

1
Making the Most of the Commodities Boom Tanzania

• Vuyo Mjimba

2
The Country

• Location Eastern Africa, bordering the Indian
  Ocean, between Kenya, Zambia and Mozambique
• Land area 945 000km2
• Population, 40.2m

3
The Economy

• Import commodities consumer goods, machinery and
  transportation equipment, industrial raw
  materials, crude oil.
• Imports partners China 12, Kenya 8, South
  Africa 7.7, India 6.9, UAE 5.9 (2007
• Exports commodities gold, coffee, cashew nuts,
  manufactures, cotton
• Exports partners China 10.3, India 9.7,
  Netherlands 6.5, Germany 6.3, UAE 4.9
  (2007
• Source CIA WORLD FACTS BOOK

4
Economic Indicators

• Growth of the Tanzanian economy 1965-2004(
  Real)
• 1965-2004 2.6
• 1965-1966 7.8
• 1967-1985 2.9
• 1986-2004 3.9
• 1986-1993 3.2
• 1994-2005 4.5

5
Economic History

• 1967-1985 1986-1995 1996-PRESENT

MKUKUTA/MKUZA
LIBERALIZATION PARTIAL REFORMS
UJAMAA
Macroeconomic Stabilization Structural Reforms
Liberalization Partial Reforms
Socialism Economic Decline
6
GROSS DOMESTIC PRODUCTION

• Source World Bank, World development Indicators,
  WDI (December 2008)

7
GROSS DOMESTIC PRODUCTION
M M
L PR
!!
UJAMAA

• Source World Bank, World development Indicators,
  WDI (December 2008)

8
Allocation of GDP by Sector

• Source IMF,USGS and UNCTAD 2009

9
Allocation of GDP by Sector

• Source IMF

10
Monetary Policy and Financial Sector

• 1980-No capital or Money markets
• 1991 BFIA and LART
• 1992 Private Banks and NBFIs
• Bank of Tanzania Act, 1995

11
Inflation.

• Source World Bank, World development Indicators,
  WDI (December 2008)

12
International Trade

• Source

13
Savings
14
Foreign Direct Investment
15
Demographics

• Source World Bank, World development Indicators,
  WDI (December 2008

16
National Income Distribution
17
Minerals in the Economy
Gold, Copper, Nickel, Diamond Gemstone, Iron Ore, Cobalt, Coal and Natural Gas. Calcite, Cement, Phosphate minerals, Silver, Vanadium, Titanium, Platinum Group Metals, Uranium Salt (of all types), Stone, Sand and Gravel.
18
Major Actors
MINERAL MAJOR ACTOR
GOLD Barrick Gold, Geita Gold
COPPER Barrick Gold, Xstrata plc
Gemstone TanzaniteOne Ltd, Artisinal miners
Diamond De Beers Group
Iron Ore NDC
Nickel Albidon, BHP Billiton
Coal Tanpower Resources
Natural Gas Orca Exploration Group
19
Gold Production
20
Country 1998 2002 2005 2006
WORLD 2,500,000 2,530,000 2,470,000 2,460,000
South Africa 465,100 398,523 294,671 272,128
United States 366,000 298,000 256,000 252,000
China 178,000 192,000 225,000 245,000
Ghana 72,541 69,271 66,852 66,205
Mali 20,562 56,043 49,230 55,484
Papua New Guinea 61,641 61,379 68,483 50,000
Tanzania 427 43,320 52,236 46,000







SourceUSGS (2005)
21
Gold and Gemstones Production
Gold Production
22
Gold Production Rankings
Country Share in World Production Share in World Production Share in World Production Share in World Production World Ranking African Ranking
1998 2002 2005 2006
South Africa 19 16 12 11 1 1
United States 15 12 10 10 2
China 7 8 9 10 3
Ghana 3 3 3 3 10 2
Mali 1 2 2 2 11 3
PN Guinea 2 2 3 2 12 4
Tanzania 0 2 2 2 13 5







SourceUSGS (2005)
23
Gold Reserves
Mine Production (metric tons gold content) Mine Production (metric tons gold content)
2005 2006 Reserves
Country
South Africa 793 840 6 000
USA 256 260 2 700
Tanzania 52 47 850 (2)
World 2 470 2 500 42 000

• SourceUSGS, 2006

24
Gemstone Production

• In thousand carats

25
Country 1999 2004 2005 2006
WORLD 61,100 86,200 91,800 91,300
Botswana 17,200 23,300 23,000 24,000
Russia 11,500 21,400 23,400 23,400
Australia 13,400 6,058 8,577 7,310
Angola 3,600 5,490 6,300 7,000
DR Congo 4,120 6,180 6,100 5,600
South Africa 4,010 5,800 6,400 6,240
Tanzania 200 258 185 200







SourceUSGS (2005)
26
Gemstone Production Rankings
Country Share in World Production Share in World Production Share in World Production Share in World Production World Ranking African Ranking
1998 2002 2005 2006
Botswana 28 27 26 26 1 1
Russia 19 25 25 26 2
Australia 22 7 9 8 3
DR Congo 7 7 7 6 7 4
Angola 6 6 7 8 6 3
South Africa 7 7 7 8 5 2
Tanzania 0.3 0.3 0.2 0.2 16 11







SourceUSGS (2005)
27
Diamond, Gemstone value chain
Exploration
Mine Set up
Production
Cut Polish
Manufacture

• Source Baartjes, Mintek 2007

Retail
28
Diamond, Gemstone value chain
Rough Sales
Rough Dealer
Cut Polish
Cut Polish
Polished Sales
Polished Dealing

• Baartjes, Mintek 2007

29
COPPER
Mine Production Mine Production
2005 2006 Reserves
Country
Chile 5 320 5 400 150 000
USA 1 1440 1 220 35 000
Zambia 436 540 19 000
Tanzania 3.5 3.2 160 (0.03)
World 15 000 15 300 480 000








USGS,2007
30
Mineral Policy of Tanzania 1997

• OBJECTIVES
• to stimulate exploration and mining activities
• to regulate and improve artisanal mining
• to ensure that wealth generated from mining
  support sustainable economic and social
  development to minimise or eliminate adverse
  social and environmental impact of mining
  activities
• to promote and facilitate mineral and mineral
  based products marketing arrangements
• to alleviate poverty especially for artisan and
  small scale miners
• to promote and develop Tanzania as the gemstone
  centre of Africa
• Source Government of Tanzania Mineral Policy

31
Government Role

• Policy formulation to accommodate the overall and
  sectoral government policy framework.
• Advising on legislation, regulation and fiscal
  matters related to the sector.
• Revenue collection through royalties, annual
  rents, prospecting rights and licenses.
• Monitoring of mining activities.
• Collection and maintenance of geo-technical data
  for promotional purposes.
• Provision of extension services to small scale
  miners.
• Administration and inspection of mining
  activities, and
• Carrying out research on minerals.

32
Bank credit to private sector (of GDP)
2000 2001 2002 2003 2004 2005 2006 2007
TANZ 4.1 4.4 5.5 6.7 7.6 8.9 10.8 10.8
KENYA 25.8 23.6 24.2 23.1 25.4 24.5 24.9 25.5
SA 69.2 76.3 58.4 63.9 66.1 70.1 77.8 82.8
S ourceUSGS (2005)
33
Possibilities

• Gold
• Copper
• Gemstone
• Iron ore

34
Looting and routing
World (138million)
Tanzania (12million)
USA (500million)
35
WHY(NOT) GEMSTONES
Sole source of Tanzanite ?Reaction of current actors
Tanzania mineral policy ? Researcher safety
Parallels with Botswana


36

• THANK YOU