making the most of the commodities boom: tanzania vuyo mjimba
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Making the Most of the Commodities Boom: Tanzania
Vuyo Mjimba
The Country
• Location: Eastern Africa, bordering the Indian Ocean, between Kenya, Zambia and Mozambique
• Land area 945 000km2
• Population, 40.2m
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
Economic IndicatorsGrowth 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
(Mbelle, 2005)
Economic History
1967-1985 1986-1995 1996-PRESENT
UJAMAAMKUKUTA/MKUZA
Socialism:EconomicDecline
LiberalizationPartial Reforms
Macroeconomic StabilizationStructuralReforms
LIBERALIZATION&
PARTIALREFORMS
GROSS DOMESTIC PRODUCTIONGDP (Current US$) for Tanzania and SSA 1960-2007
0100200300400500600700800900
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
SSA
GDP
in B
illio
n$
024681012141618
Tanz
ania
GDP
in $
GDP (current US$) SSA GDP (current US$) Tanzania
• Source: World Bank, World development Indicators, WDI (December 2008)
GROSS DOMESTIC PRODUCTION
GDP (Current US$) for Tanzania and SSA 1960-2007
0100200300400500600700800900
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
SSA
GDP
in B
illio
n$
024681012141618
Tanz
ania
GDP
in $
GDP (current US$) SSA GDP (current US$) Tanzania
• Source: World Bank, World development Indicators, WDI (December 2008)
!! UJAMAAL % PR
M & M
Allocation of GDP by Sector
• Source: IMF,USGS and UNCTAD 2009
Allocation of GDP by Sector, Tanzania (average 1990-2002)
Agri46%
Manu8%
M&Q1%
Others45%
Agri Manu M&Q Others
% Allocation of GDP by Sector SSA (average 2000-2006)
Agriculture19%
Industry48%
Services33%
Agriculture
Industry
Services
Allocation of GDP by Sector
% Allocation of GDP by Sector, Angola (average 2000-2008)
Agri, 8
Manu, 4.7
Mining*, 3.4
Others, 27Oil and Gas, 57
Agri
Manu
Mining*
Others
Oil and Gas
•Source: IMF
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
Inflation.
• Source: World Bank, World development Indicators, WDI (December 2008)
Infalation, consumer prices (annual%) for Tanzania, Kenya and South Africa
-10
0
10
20
30
40
50
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Years
Infla
tion
%
Inflation, consumer prices (annual %) Tanzania Inflation, consumer prices (annual %) Kenya
Inflation, consumer prices (annual %) South Africa
International Trade
• Source:
Exports and Imports of goods and services (% of GDP) Tanzania and SSA 1960-2006
0
10
20
30
40
50
60
Years
% o
f G
DP
Exports of goods and services (% of GDP) (NE.EXP.GNFS.ZS) Tanzania
Imports of goods and services (% of GDP) (NE.IMP.GNFS.ZS) Tanzania
Exports of goods and services (% of GDP) (NE.EXP.GNFS.ZS) 12 Sub-Saharan Africa
Imports of goods and services (% of GDP) (NE.IMP.GNFS.ZS) 12 Sub-Saharan Africa
Savings
• Source: World Bank, World development Indicators, WDI (December 2008)
Adjusted savings:gross savings (%of GNI) for Tanzania, Kenya, South Africa and SSA
0
5
10
15
20
25
30
35
40
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Years
% Sa
vings
Adjusted savings: gross savings (% of GNI) Tanzania Adjusted savings: gross savings (% of GNI) Kenya
Adjusted savings: gross savings (% of GNI) South Africa Adjusted savings: gross savings (% of GNI) SSA
Foreign Direct Investment
• Source: World Bank, World development Indicators, WDI (December 2008)
FDI (% of GDP) Tanzania and SSA 1970-2006
0
1
2
3
4
5
6
7
Years
FDI %
of G
DP
Foreign direct investment, net inflows (% of GDP) Tanz Foreign direct investment, net inflows (% of GDP) SSA
Demographics
Demographics and Employment Tanzania 1960-2006
0
10
20
30
40
50
60
70
80
90
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Years
% P
op
ula
tio
n
Employment in agriculture (% of total employment) Employment in industry (% of total employment)
Employment in services (% of total employment) Population ages 0-14 (% of total)
Population ages 15-64 (% of total) Population ages 65 and above (% of total)
•Source: World Bank, World development Indicators, WDI (December 2008
Demographics and Employment in SSA
0
10
20
30
40
50
60
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Years
% P
op
ula
tio
n
Population ages 0-14 (% of total) Population ages 15-64 (% of total) Population ages 65 and above (% of total)
National Income Distribution
• Source: World Bank, World development Indicators, WDI (December 2008) and Earth Trends
Income Distribution % of Population
010203040506070
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Years
% In
com
e
Income share held by highest 10% Kenya Income share held by highest 10% South Africa Income share held by highest 10% Tanzania
Income share held by highest 20% Kenya Income share held by highest 20% South Africa Income share held by highest 20% Tanzania
Income share held by lowest 10% Kenya Income share held by lowest 10% South Africa Income share held by lowest 10% Tanzania
Income share held by lowest 20% Kenya Income share held by lowest 20% South Africa Income share held by lowest 20% Tanzania
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.
Major ActorsMINERAL 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
Gold Production
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
Source:USGS (2005)
Gold and Gemstones Production
• Source: USGS and Chamber of Mines South Africa
Gold Production( in thousand kg) in Tanzania, South Africa and Ghana 1996-2006
0
100
200
300
400
500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Years
Tho
usan
d kg
Ghana
Tanzania
South Africa
Gold Production
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
Source:USGS (2005)
Gold Reserves
• Source:USGS, 2006
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
Gemstone Production• In thousand carats
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
Source:USGS (2005)
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 11Source:USGS (2005)
Diamond, Gemstone value chain
• Source: Baartjes, Mintek 2007
Exploration
Production
Cut & Polish
Manufacture
Retail
Mine Set up
Diamond, Gemstone value chain
• Baartjes, Mintek 2007
Cut & Polish
Rough Sales
Rough Dealer
Cut &Polish
Polished Sales
Polished Dealing
COPPER
USGS,2007
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
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
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.
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
SA69.2 76.3 58.4 63.9 66.1 70.1 77.8 82.8
S
ource:USGS (2005)
Possibilities• Gold• Copper
• Gemstone• Iron ore
Looting and routing
World($138million)
USA($500million)
Tanzania
($12million)
WHY(NOT) GEMSTONESSole source of Tanzanite ?Reaction of current actors
Tanzania mineral policy ? Researcher safety
Parallels with Botswana
THANK YOU