Saturday, July 25, 2009

Penetrative Theft

Photo: A view of Mwanza, North Western Tanzania.

Tanzania is the third largest producer of gold in Africa. Does this mean that the country receives lots of revenue from this massive industry and that hundreds of thousands of people are employed extracting gold? No, most people are poor and only a few thousand people are employed in the industry now.

In fact, the government gives so many tax breaks and other benefits to foreign miners that even politicians, who usually make lots of money even when their electorate remain poor, don't make that much from gold. Well, I'm sure they do ok, but for some strange reason, they seem happy to watch the country's gold being raided by these foreign operators.

In addition to demanding low royalties from foreign companies, the country is losing out because gold had traditionally been labour intensive. Now, with high technology extractive processes, employment is minimal, most of the big earners are not Tanzanian and the majority of workers are paid very low wages. Several hundred thousand former artisan miners are unemployed as a result of these foreign companies taking over.

Much of the Tanzanian government's thinking on the industry seems to have been shaped by the bizarre strictures of the International Monetary Fund and the World Bank, who insist on low taxes, low royalties, incentives for foreign 'investment' and various de facto subsidies that are not available to any Tanzanians who might otherwise be able to get into the industry. As a result, Tanzanians haven’t a hope of being to compete, competition only being a good thing when the odds are stacked against them, it seems.

The biggest operators in Tanzania, Canadian Barrick Gold and South African AngloGold Ashanti, appear to be making huge amounts of money by these various deceits. But those who can do anything about this don't seem interested in intervening. The above international financial institutions don’t actually see any problem in such iniquities. The Canadian and South African governments could intervene, though they may not see this as being in their interest. But I don't understand why the Tanzanian government has for so long failed to right this terrible injustice.

In addition to this assault on the Tanzanian economy and the welfare of Tanzanians, the international financial institutions, multinational extractive operators and others involved don't seem to have any respect for democracy or human rights. In the long term, extractive industries cause immense environmental damage, the consequences of which will be borne by Tanzanians.

National and international laws need to protect people and prevent multinationals from destroying whole communities and defrauding sovereign countries. They should also prevent irreversible destruction of environments, which will probably affect future generations more than present generations. Rich country governments who are profiting from these industries, along with the powerful but unelected and unaccountable members of international financial institutions, also have a duty to see that these laws are properly policed.

Sadly, Tanzania is not the only country in Africa where this sort of exploitation is taking place. In fact, most African countries with natural resources that are highly valued by the West are being similarly plundered: Ghana, Democratic Republic of Congo, Nigeria, the list goes on. But Tanzania is one of the few where Western governments didn't have to oversee a war in order to take what they wanted. For some reason, the Tanzanian government is far more compliant that some other African administrations. Sphere: Related Content

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