In Tanzania, a silent crisis is unfolding beneath the surface of its gold-rich soil. The artisanal and small-scale gold mining (ASGM) sector – a lifeline for 500,000 to 1.5 million Tanzanians and producer of 30-35 per cent of the nation’s gold – has become a battleground where foreign financial enablers exploit loopholes, siphoning wealth from local miners.
Despite laws designed to protect this industry for Tanzanian citizens, the reality is stark: foreign actors dominate through indirect control, leaving miners trapped in cycles of debt and poverty. It’s time for Tanzania to rethink its approach, empowering its people over profiteers.
The ASGM sector is no small player. It churns out 15-20 tonnes of gold annually, fueling livelihoods in regions like Geita, Shinyanga, and Mwanza. Yet, beneath this economic engine lies a troubling trend. High global gold prices – up 16 per cent in 2019 alone – have lured foreign investors, from Chinese traders to UAE brokers, into Tanzania’s mining fields.
The Mining Act of 2010, amended in 2017, explicitly reserves small-scale mining licenses (PMLs) for Tanzanians. But legal barriers haven’t stopped foreigners from finding backdoors – pre-financing deals, proxy ownership, and land leasing schemes that give them de facto control over operations.
Take pre-financing, for instance. Foreign actors offer cash, tools, or mercury to cash-strapped miners, who then sign exclusive sales agreements at a fraction – sometimes 60-70 per cent – of the global market rates.
READ MORE: Tanzania’s Mercury Mirage: A Promise Unkept?
In Geita, cooperatives partner with foreigners who fund operations but dictate terms, while in Mwanza, PML holders lease land to foreign-backed operators. The result? A 2024 seizure of 15.78kg of smuggled gold at Dar es Salaam port, worth Sh3.4 billion, exposed how these networks bleed Tanzania dry – an estimated US$3.5 billion lost yearly to illicit flows, according to Global Financial Integrity.
Desperation and dysfunction
Why does this happen? The answer lies in a toxic mix of desperation and dysfunction. Local miners face steep barriers to formal financing – high interest rates, endless bureaucracy, and a lack of collateral. Foreign enablers step in as saviors, but their “help” comes at a cost.
Meanwhile, weak enforcement of the Mining Act lets proxies – local Tanzanians acting as fronts – mask foreign control. Government efforts, like the operational 28 gold trading centers established since 2019, aim to curb smuggling, but they’ve inadvertently opened doors to foreign brokers with better market access. In 2019, these middlemen controlled processing and trading, sidelining miners who couldn’t afford the US$44 entry fee for formal exchanges.
The human toll is staggering. Miners, the backbone of this sector, earn pennies on the dollar while foreigners reap the rewards. The Federation of Miners’ Associations of Tanzania (FEMATA) reported in 2023 that complex taxes and scarce local capital force reliance on these financiers.
Women, who make up 20 per cent of the workforce, often fare worst, stuck in low-paying roles like ore processing, exposed to mercury – a toxic byproduct of foreign-supplied “aid” that violates Tanzania’s Minamata Convention commitments.
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Foreign players hail from diverse corners: China’s Belt and Road Initiative fuels pre-financing for export; UAE brokers secure supply chains; Kenyan and Ugandan traders exploit porous borders; Indian firms tap jewelry networks; even Western firms from Canada and Australia dabble through equipment sales.
In 2019, Reuters reported that 90 per cent of ASGM gold was illegally exported, largely through these networks. With over 54,000 PMLs issued by 2024, 10-20 per cent may now operate under foreign influence. This isn’t investment – it’s economic colonisation.
Govt meassures
The Tanzanian government isn’t blind to this. Under President John Magufuli’s “economic war” (2015-2021), resource nationalism surged, aiming to reclaim wealth from foreign hands. President Samia Suluhu Hassan has continued this push, tightening rules – like requiring proof of exhausted local funding before foreign financing – and deploying task forces.
The Finance Act of 2024 mandates 20 per cent of gold for local processing, pressuring ASGM into formal markets. Yet enforcement falters. The Mining Commission lacks resources to patrol remote sites, and corruption among local officials greases the wheels of unregistered trade.
READ MORE: What Does Formalisation of Artisanal and Small-scale Mining Sector Look Like?
This isn’t just a Tanzanian problem – Ghana’s ASGM sector mirrors it, with informal sponsors locking miners into unfair deals. But Tanzania’s response risks entrenching brokers as gatekeepers rather than lifting miners. Trading centers have boosted state revenue, but if 90 per cent of gold still slips away, as parliamentary estimates suggest, the system serves elites more than the grassroots.
Beneficiaries
So, who benefits from keeping foreigners out of direct ownership? On paper, it’s the 1.5 million ASGM workers, promised control over their gold. In practice, local elites and politically connected license holders often partner with foreigners, creating a new class of profiteers.
The state gains royalties and reserves through the Bank of Tanzania, bolstering its legitimacy. Foreign investors, though, are sidelined to riskier, indirect roles—perhaps why large-scale mining attracts more of their capital.
The miners themselves? Their outcomes are mixed at best. Licensing costs and broker dependence keep profits elusive. Initiatives like mercury-free tech from Planet Gold sound promising, but high costs stall progress. As of February 2025, foreign enablers persist, driven by global demand and Tanzania’s riches.
It’s not enough to blame foreigners or tighten laws. Tanzania must attack the root: systemic failures that make miners vulnerable. First, unlock formal financing. Microfinance tailored to ASGM – backed by banks or global partners – could break the debt cycle, letting miners buy tools and negotiate fair prices.
READ MORE: Stakeholders Call on Media to Stop Stigmatizing Artisanal Miners
Second, enforce transparency. Robust tracking of gold from pit to market could slash smuggling and channel revenue home. Third, educate miners on their rights and finances, arming them against exploitation.
Beyond that, foster local power. Cooperatives could pool resources and bargaining strength, cutting out middlemen. Sustainable practices – like eco-friendly tech – could curb mercury’s toll while securing the sector’s future. And don’t forget women and marginalized groups – targeted support could lift them from the margins, making ASGM truly inclusive.
Tanzania’s gold is a national treasure, not a foreign windfall. The government’s nationalist stance is a start, but it’s hollow without action that empowers miners over enablers.
Strike a balance: welcome investment, but prioritise citizens. Transform ASGM into a sustainable, equitable engine – because if the wealth beneath Tanzania’s soil doesn’t uplift its people, who does it really serve?
Evans Rubara is a Tanzania-based natural resource management specialist. He is available at erubara@outlook.com or on X as @ThePunditsFolly. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo. Do you want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.
