Tanzania’s Strong Oversight Laws Let Down By Weak Implementation, According to Global Index on Natural Resource Governance

• A strong legal framework for Tanzania’s oil, gas and mining sectors is not adequately enforced, finds 2017 Resource Governance Index (RGI)
• Tanzania’s oil and gas sector classified as “weak” in governance, scoring 53 out of 100 points; mining industry scores 49 out of 100
• Across all areas of natural resource management, Tanzania must close the gap between law and practice in order to improve governance
• Enforcement challenges in Tanzania’s mature mining sector can provide lessons for oil and gas
• STAMICO governance rated “poor”

DAR ES SALAAM, 28 June 2017—The 2017 Resource Governance Index, compiled by the Natural Resource Governance Institute (NRGI), gave Tanzania’s oil and gas sector a weak overall score of 53 out of 100 points. This translates to a rank of 36th among the index’s 89 sector-specific country-level assessments.

Silas Olan’g, NRGI’s East and Southern Africa/Tanzania manager, said: “Tanzania has not yet started large-scale production following the discovery of significant offshore gas but if governance can be improved, Tanzania’s gas industry has the potential to deliver significant benefits to one of the world’s fastest growing populations.”

Tanzania governs value realization from natural gas and minerals better than it manages the resulting revenues, researchers found. The index’s value realization component measures the potential for good governance in licensing, local impacts and state participation.

In the licensing category, Tanzania’s oil and gas sector scores 48 of 100 points and ranks 27th– well behind the index’s top performer Mozambique, which gets a score of 72 of 100. This weak result is mainly due to the absence of an external body tasked with overseeing compliance with Tanzania’s 2015 Petroleum Act, which is poorly implemented. Tanzania’s performance in hydrocarbons revenue management is weaker than that of other new oil and gas producers like Ghana, Mozambique and Uganda.

In comparison, Tanzania’s mature mining sector ranks 42nd among the index’s 89 extractive country assessments, and 18th among 34 mining sector assessments. Concerns over distribution of benefits between investors, the government and local communities have led the Tanzanian government to take steps towards improving governance and transparency.

However, the index results point to a need to close the gap between legal requirements and actual enforcement across several areas. Reforms are needed in control of corruption and in government effectiveness – as recognized by the current administration. Social and environmental concerns need attention, particularly in terms of local impact. And the public should be able to access contracts between the government and resource extracting companies as required by TEITA Act 2015.

Olan’g added: “There is much to be done to improve Tanzania’s oversight of its mining industry. Tanzania is Africa’s fourth-largest gold producer, and the industry needs strong governance and a transparent framework. Rules need to be enforced adequately, and the public should be able to access information to show that the system is working properly.”

In the index, the governance of Tanzania’s State Mining Corporation (STAMICO) was in the bottom five out of 45 state-owned enterprises based in Extractive Industries Transparency Initiative countries. STAMICO does not publicly disclose annual reports or details of its operational and commercial results, though audit reports published by the auditor general provide some of this information.

Full results from the Resource Governance Index globally are available at www.resourcegovernanceindex.org.

Note to editors:

The Resource Governance Index is the sum total of 89 sector-specific assessments in 81 countries (in eight countries NRGI assessed both oil and gas and mining sectors), formulated using a framework of 149 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents.

For each assessment, NRGI has calculated the composite score using the scores of three index components. Two of the components comprise new research based on expert answers to the questionnaire, and directly measure governance of countries’ extractive resources.

The first component—value realization—covers the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises. The second—revenue management—covers national budgeting, subnational resource revenue sharing and sovereign wealth funds. The index’s third component assesses a country’s enabling environment. This component draws on pre-existing research to measure the broader governance context.

Enquiries:

Noel Wandera
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Lee Bailey
Communications Director
Natural Resource Governance Institute (London)
lbailey@resourcegovernance.org
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