Fulfil commitments, JK tells mining firms
By Judica Tarimo
1st March 2012
President Jakaya Kikwete has warned investors who do not pay rightful taxes to the government or fulfil their social responsibility commitments were to blame for the conflicts that ensued in their operations.
“It’s disappointing to see some mining investors want to benefit alone…leaving the government, surrounding communities with nothing,” said Kikwete when officially launching the Presidential Award on the Extractive Industry Corporate Social Responsibility and Empowerment (CSRE) programme. The award will be contested annually and companies with outstanding performance will be acknowledged.
According to the President, investors’ failure to pay taxes to the government, support small-scale operators, and surrounding communities creates hostile environment in the mining operations.
“This triggers endless conflicts and tug of war between the investors and residents living around the mining areas,” said the president, in the wake of increasing public concerns over mining investors’ benefiting from the sector at the expense of millions of poor Tanzanians.
He described the CSRE presidential award as an important milestone in the development of the country’s mining industry, but noted that investors must act responsibly and observe the underlying principles.
“Mining investors need to pay taxes that are due to the state, rightfully and timely. They have to support local development projects around them. They have to empower small-scale mining operators,” said Kikwete.
If investors observe these principles, he said, they will enjoy good relations with the government, small mining operators, and local communities noting that all sides (the government, investors, and surrounding communities) must benefit from the country’s mining operations.
“In the end everybody benefits and a win-win situation will be realised. I believe this is the best insurance policy one can long to have as an investor and as an investment destination.”
If this is absent, he said conflicts would ensue, something which was not healthy for business and may put the investments in jeopardy. “Everybody will be at risk losing,” he insisted.
Apart from direct contributions, mining companies must promote socio-economic growth of the respective areas and the country’s economy by sourcing goods and services locally, thus creating jobs and incomes for Tanzanians.
He said that it was unfair for mining investors, with all sorts of incentives (tax holidays, exemptions etc) to generate profits but contribute nothing to the communities where they operate.
According to Kikwete, there were services which can be sourced locally, decrying the growing tendency of mining companies of importing every service and commodity from abroad.
Sourcing goods and services locally, he said, would create “what economists call backward and forward linkages. This will make the people strongly feel a sense of ownership and an obligation to protect the investments.”
“But if such things are absent people will have no stake in the operations of the company. As a result, they may care less about the presence, survival and progress of the company. They may even turn hostile,” said the President, appealing to all mining investors to take it seriously.
Besides, Kikwete said in the same context of CSR, large-scale mining companies should use their economic strength and technological capacity to help small mining operators improve their operating systems, increase productivity, and production.
“I believe, this will reduce jealousies, minimise friction, and avoid unnecessary hostility and increase friendship and cooperation. If large companies assist small operators and treat each other as partners, instead of competitors or contenders, it will very much improve relations between the two players.
“It will clear undue misunderstanding and remove the mistrust and resentment. Attitudes of hostility, threats and violence can easily be avoided. In the end everybody benefits,” he added.
He proposed that all these components (including community well-being and sustainability, local industry participation, community safety, water and environment, infrastructure development roads, electricity etc) should be incorporated as indicators for picking the winner of the Presidential Award on CSRE.
SOURCE: THE GUARDIAN