Jay456watt
JF-Expert Member
- Aug 23, 2016
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By Patricia Rodrigues
Tanzanian President John Magufuli made international headlines in October 2015 when he was elected amid a wave of optimism stemming from his tough stance against corruption. Magufuli quickly embarked on a campaign to tackle public sector graft and to dismantle corruption networks in his first year in office. Investors and international media were impressed: it seemed that an African leader was matching election rhetoric with action, and that a promise to tackle corruption was being fulfilled.
Non-stop dismissals, stalled policy
However, optimism has waned as high-profile dismissals of allegedly corrupt politicians have remained Magufuli’s only policy tool. Tangible public sector reforms have yet to be implemented, and no concrete changes in the structure or processes of state institutions have been introduced. Moreover, some government officials have been removed after disagreeing with the president, rather than for being implicated in misconduct. The manager of state electricity company Tanesco, for example, was dismissed after failing to consult Magufuli over power tariff increases despite their approval by the regulator. A climate of uncertainty and fear of contradicting the president has since pervaded the public sector, and is likely to continue to slow decision- and policy-making.
Extractives under scrutiny
Magufuli has adopted harsh rhetoric against foreign investors, threatening license revocations where projects have failed to start generating revenue for the government. The quest for revenues has made mining and the wider extractives industry the obvious target for the government. While mining currently contributes 5% of GDP and a similar share of tax revenues, the president has argued that this could be increased if companies invested more and paid their fair share of taxes. In keeping with this assessment, mining companies in January were hit with higher tax bills.
Meanwhile, two presidential committee audits released in May suggested that the government had lost up to $48 billion of tax revenue over two decades because of the under-declaration of mineral exports and the overly generous terms of Mining Development Agreements (MDAs). Magufuli intends to have all MDAs reviewed to edit clauses that he perceives as placing the country at a disadvantage. The government is intent on having MDAs and Production Sharing Agreements (PSAs) in the oil and gas industry renegotiated in coming year, leading to a rise in contract risks.
Tanzanian President John Magufuli made international headlines in October 2015 when he was elected amid a wave of optimism stemming from his tough stance against corruption. Magufuli quickly embarked on a campaign to tackle public sector graft and to dismantle corruption networks in his first year in office. Investors and international media were impressed: it seemed that an African leader was matching election rhetoric with action, and that a promise to tackle corruption was being fulfilled.
Non-stop dismissals, stalled policy
However, optimism has waned as high-profile dismissals of allegedly corrupt politicians have remained Magufuli’s only policy tool. Tangible public sector reforms have yet to be implemented, and no concrete changes in the structure or processes of state institutions have been introduced. Moreover, some government officials have been removed after disagreeing with the president, rather than for being implicated in misconduct. The manager of state electricity company Tanesco, for example, was dismissed after failing to consult Magufuli over power tariff increases despite their approval by the regulator. A climate of uncertainty and fear of contradicting the president has since pervaded the public sector, and is likely to continue to slow decision- and policy-making.
Extractives under scrutiny
Magufuli has adopted harsh rhetoric against foreign investors, threatening license revocations where projects have failed to start generating revenue for the government. The quest for revenues has made mining and the wider extractives industry the obvious target for the government. While mining currently contributes 5% of GDP and a similar share of tax revenues, the president has argued that this could be increased if companies invested more and paid their fair share of taxes. In keeping with this assessment, mining companies in January were hit with higher tax bills.
Meanwhile, two presidential committee audits released in May suggested that the government had lost up to $48 billion of tax revenue over two decades because of the under-declaration of mineral exports and the overly generous terms of Mining Development Agreements (MDAs). Magufuli intends to have all MDAs reviewed to edit clauses that he perceives as placing the country at a disadvantage. The government is intent on having MDAs and Production Sharing Agreements (PSAs) in the oil and gas industry renegotiated in coming year, leading to a rise in contract risks.
