CHADEMA 2020 Election Manifesto: Key Proposals for Mining, Oil and Gas, Energy, and State-Owned Enterprises.

CHADEMA sees reforms in mining and energy as important ingredients for transforming Tanzania.
Thabit Jacob3 October 202010 min

In my previous piece, I discussed ACT-Wazalendo’s election manifesto and key promises made by the party for mining, oil and gas, energy and state-owned enterprises. In this follow-up, I turn to another opposition party, CHADEMA, to analyze its key policy proposals and promises in the same four areas.

Before analyzing the promises made in CHADEMA’s current election manifesto, it’s worth reminding readers that historically, mining reforms have constantly been an important political and electoral issue for CHADEMA in recent years. From the 2000s CHADEMA became increasingly critical of the ruling CCM’s failure to channel mineral wealth into socio-economic development and accused the ruling party of acting in the interests of foreign mining multinationals and not ordinary Tanzanians. Ahead of and during the 2005 and 2010 general elections, CHADEMA campaigned on an anti-foreign mining platform, focusing on the limited benefits and socio-economic burdens imposed by foreign mining companies due to what they called ‘shoddy and corrupt contracts’ between the companies and the government. The party criticized foreign companies’ poor contribution to the economy, tax evasion, and the abuse and killing of small-scale miners. It also condemned the adverse social and environmental impacts of large-scale foreign mines. It became clear that CHADEMA was keen to capitalize on the widespread feeling that Tanzania was gaining very little from its mineral resources, and the party turned mining and the fight against foreign mining companies into its main platform for political mobilization, as I have discussed elsewhere. CHADEMA’s 2010 election manifesto featured mining-related campaign slogans such as ‘Maliasili zetu kwa maendeleo yetu’, or ‘Our natural resources for our development’. In its 2010 election manifesto, the party promised that if it got into power the state would actively take part in minerals-related activities from exploration and extraction in joint ventures with either domestic or foreign private-sector partners. The 2010 manifesto also promised state ownership of not less than 50 per cent of all minerals-related ventures and the creation of a special minerals fund for use by future generations.

Apart from the party, CHADEMA’s current presidential candidate, Tundu Lissu, has a long history in the mining sector. Before he was elected to Parliament on a CHADEMA ticket in 2010, Lissu had made his name as a human rights activist and anti-foreign mining campaigner. He was a member of the Lawyer’s Environmental Action Team, a local NGO fighting for the human and environmental rights of artisanal and small-scale miners who had been evicted to make way for large-scale foreign-owned mines in the Lake Zone in the late 1990s. Between 2001 and 2005 Lissu and his colleagues were arrested multiple times and charged with sedition. In 2008, Lissu was a co-author of the very influential report, ‘A Golden Opportunity? How Tanzania is Failing to Benefit from Gold Mining’, commissioned jointly by the Christian Council of Tanzania, the Tanzania Episcopal Conference and the National Muslim Council of Tanzania. The report concluded that Tanzania was not benefiting from the mining sector due to weak existing mining laws and a fiscal regime that was too generous to foreign mining companies. Even after entering Parliament, Lissu never stopped his activism. When local communities were being abused and killed by Canadian mining corporation Barrick Gold in North Mara, Lissu was there to defend them.

Most recently, before an assassination attempt on his life, Lissu was very critical of the government’s handling of the mining tax conflict with Acacia in 2017. When the government imposed a ban on exports of mineral concentrates, Lissu criticized the move, noting that “the President’s decision would not benefit Tanzania because the country had no smelting capacity.” In May 2017, President Magufuli formed two special committees to investigate the content of 277 mineral sand containers impounded at Dar es Salaam’s port. When the two reports released their findings, Lissu was very critical of the results, calling them misleading, and even branding them “professorial rubbish”, a reference to the members of the two committees, who were mostly professors from various universities.

After this brief historical look at CHADEMA’s and Lissu’s involvement in the mining sector, let us now explore CHADEMA’s current manifesto promises for mining, oil and gas, energy and state-owned enterprises.

Mining

The CHADEMA manifesto acknowledges that Tanzania’s mineral resources must benefit both current and future generations and that therefore “we must use these resources carefully so that future generations can benefit” in the days ahead. To ensure that the country’s minerals benefit present and future generations, a Chadema says that its government will introduce the following measures.

The party promises to establish a mechanism for joint ventures in mining between Tanzanian citizens and foreigners. This move is aimed at enabling Tanzanians who lack the capital and technology to benefit from such joint ventures with companies that can provide capital and modern mining technology. This is a pragmatic move and suggests that, unlike CCM, CHADEMA openly acknowledges that domestic entrepreneurs have limited capital and that there are few alternatives to foreign investments in this capital-intensive sector. CCM seems finally to have realized this judging from its recent retreat over resource nationalism.

The party says it will also put in place legal mechanisms on tax exemptions in the mining sector as one of its strategies to reduce the nation’s losses due to tax exemptions. This is a welcome move, as tax avoidance and evasion is a rampant problem in the mining sector and beyond. A recent report estimates that Tanzania is losing about $1.83 billion a year from tax incentives and illegal capital flights.

The Chadema manifesto also pledges to “review and improve existing mining laws to comply with international standards so that the nation can benefit from mining without affecting investment”. This suggests that CHADEMA is unimpressed with the fast-track passing of recent laws that contravene various international standards, although the CCM government is already making a U-turn on some issues, including international arbitration. While the manifesto doesn’t offer many details about this promise, we hope that such international standards will go beyond legislation and incorporate industry best practices in areas such Free, Prior and Informed Consent, as articulated by ACT-Wazalendo, and the need to obtain social licenses to operate. This will ensure that local communities are protected by international standards in areas such as compensation, environmental protection, labor and human rights, among others.

CHADEMA also promises to collaborate with the private sector to enable small-scale miners to participate fully in the mining economy. This promise comes at a time when small-scale miners have been attracting a lot of political attention in recent years. President Magufuli’s battle with foreign mining companies has gone hand in hand with efforts to improve the plight of small-scale miners. Research suggests that the recent wave of resource nationalism also offers various challenges and opportunities for small-scale miners. Other scholars have warned that, while the state is determined to improve the conditions of small-scale miners, such efforts may end up benefiting domestic business interests and the state’s coffers more than small-scale miners themselves.

The party also says it plans to ensure that Tanzania’s minerals are used as collateral to secure capital to finance the construction of various infrastructural developments in areas such as water, roads, railways and energy. This is an interesting proposal at a time when emerging economies are increasingly using gold as collateral for borrowing. The problem for Tanzania is that the country lacks a gold reserve, although the central bank promised to set up a reserve earlier this year.

Oil and Gas

In the oil and gas sector, CHADEMA is promising (within 100 days) to “establish a mechanism for dialogue between the Government of the United Republic and the Government of Zanzibar with a view to reaching an agreement on oil and gas exploration and extraction.” This pledge to initiate a dialogue between the two governments over oil and gas resources is interesting. In my previous piece, I discussed why the implementation of oil and gas projects on mainland Tanzania is lagging behind. In Zanzibar, oil and gas is a key campaign issue for the opposition ACT-Wazalendo. Recently its presidential flag-bearer, Maalim Seif Sharif Hamad, promised that if elected, he would enact new pieces of legislation in the oil and gas sector to ensure that the interests of Zanzibar are prioritized.

I should also point out that, although Zanzibar’s Oil and Gas Act of 2016 vests control of hydrocarbon resources in the Revolutionary Government of Zanzibar on behalf of the People of Zanzibar, oil and gas remains a very contentious union issue. Item 15 of the 1st Schedule to the Constitution of the United Republic of Tanzania declares “mineral oil resources, including crude oil, other categories of oil or products and natural gas” to be “a union matter.” In his recent remarks, Seif Hamad promised to reach out to the union government in efforts to “remove oil and gas from Union matters.”

Chadema also says it “intends to build and upgrade the oil and gas pipeline network and connect it with all regional headquarters based on commercial and profit criteria.” This promise includes “the construction of gas and oil stations at ports and in various Zones based on safety criteria.” Like ACT-Wazalendo, CHADEMA’s manifesto indicates that the party is keen to expand its use of natural gas for domestic consumption. This is a timely promise at a time when the global gas market is becoming increasingly complex and unpredictable, and a focus on gas for domestic use rather than export sounds like a realistic option for emerging producers like Tanzania.

Energy

In the energy sector, CHADEMA’s manifesto starts by acknowledging that “energy is an important pillar in improving the lives of Tanzanians and nation-building.” The party also promises to collaborate with the private sector to ensure the availability of cheap and reliable energy. This promise is contrary to CCM’s approach in the sector, which sees a bigger role for state-owned enterprises, which are struggling with financial and capacity constraints.

The party also highlights Tanzania’s addiction to charcoal, noting that the main challenge has been accessing energy that is environmentally friendly. In addressing these challenges and ensuring access to clean forms of energy, CHADEMA again promised to enter into joint ventures with the private sector to collaborate in areas such as the generation, transmission and distribution of electricity across the country. Mineral resources (presumably gold) will also be used as collateral in building electricity infrastructure. The manifesto also plans to prioritize power generation from sources which include (1) hydropower (2) coal (3) solar (4) wind (5) biomass and (6) natural gas. Unlike ACT’s manifesto, which was very specific in giving the percentage share of each source in the overall energy mix, CHADEMA’s manifesto doesn’t provide specific figures.

One of the most eye-catching promises on energy is a pledge for “controlling corruption in contracts in the energy sector by establishing a transparent, accountable system and ensuring that laws are complied with including all contracts [which] must be reviewed by Parliament.” This a bold promise at a time when various stakeholders are demanding the energy and mining contracts that a government signs with companies in order to make the extractive sector more transparent should be made subject to disclosure. While there has been some progress in terms of policies aimed at improving contract transparency, implementation has been lacking. In 2015, the Tanzania Extractive Industries (Transparency and Accountability) Act was passed requiring the government to publish all mining and energy contracts in a portal accessible to the general public, though this is yet to happen. During the Extractive Industries Transparency Initiative Congress in Paris last year, Minister of Mining Doto Biteko promised that Tanzania would soon publish all contracts, though none have been published as yet. Most recently the government has signed nine agreements with Barrick Gold. The signing took place at State House, but Parliament was given no opportunity to go through the agreements, contrary to the law, as I pointed out in my recent interview with the BBC. The government has also offered various concessions to Uganda in respect of the crude pipeline construction, but the public deserve to know the details of both past and recent contracts and concessions.

 

 

State-owned enterprises

There is very little about state-owned enterprises in the CHADEMA manifesto, which is not entirely surprising due to the party’s liberal nature. The manifesto only promises that CHADEMA will encourage the participation of public organizations in infrastructure projects.

Final thoughts

CHADEMA sees reforms in mining and energy as important ingredients for transforming Tanzania. While ACT-Wazalendo’s economic plans point to a heavy reliance on current and projected income from extractive resources and mega-projects like the liquefied natural gas plant, CHADEMA is not banking its promised plans entirely on extractives, a smart strategy at a time when the global extractive industry is confronting various challenges.

This article was firstly published on Medium and it is republished here with its author’s permission. Thabit Jacob is a research fellow at Roskilde University. His research is broadly on the political economy of development, with a focus on politics of energy and resource extraction in the era of resurgence resource nationalism. He can be reached through his Twitter account @ThabitSenior. This is the writer’s opinion and it doesn’t necessarily reflect the views of The Chanzo Initiative and its editorial board.

Thabit Jacob

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