Corporate social responsibility of the mining companies in Tanzania
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Corporate social responsibility of the mining companies in Tanzania
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PII
S032150750017392-3-1
DOI
10.31857/S032150750017392-3
Publication type
Article
Status
Published
Authors
Paul Mtasigazya 
Occupation: Lecture
Affiliation: The Mwalimu Nyerere Memorial Academy, Karume Campus, Zanzibar
Address: Tanzania, United Republic of,
Edition
Pages
46-55
Abstract

CSR of the mining companies.

The findings revealed that there is poor practice of CSR due to none compliance of the mining companies on paying tax, environmental pollution in Tighthe river in north Mara, inadequate compensations to the relocated local communities in Tanzania as well as low contribution of mining companies to the National economy that have turned the Country into resource curse. Also, it was noted that some challenges such as weak legal enforcement and lack of government stake in the mining companies resulting into myth of mining companies’ social responsibility in Tanzania.

It is therefore concluded that the government should increase its stake in Mining Companies as it is in Botswana and also establish comprehensive legal and regulatory framework for effective and efficient CSR in Mining sector in Tanzania.

Keywords
Tanzania, mining sector, mining companies, corporate governance, corporate social responsibility
Received
04.04.2021
Date of publication
24.11.2021
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269
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1 INTRODUCTION
2 The subject of corporate social responsibility (CRS) is very important in Tanzania mostly because of it is still a relatively new subject in corporate governance, and there are quite a few researches done about this field. Although responsible thinking and caring for the surrounding have become more important and popular, Tanzanian society is still generally demanding bigger responsibility from mining companies and organizations1.
1. World Bank. 1996. The World Bank Participation Source. The International Bank. Washington D.C.
3 In this regards, the practice of CSR is still largely voluntary despite having legislations such as the Extractive Industries Act of 2015, The Mining Act of 2010, The Petroleum Act of 2015 and The Environmental Management Act of 2004 that have provisions that require companies to have CSR. Fortunately, government together with the rise of civic society have taken bigger lead and turned their attention to more socially responsible companies.
4 In the mining sector, some of the companies subscribing to CSR principles are Barrick Gold with its much publicized “responsible mining” approach, Anglo Gold Ashanti, Resolute Mining, and Tanzanite one2. In Tanzania mining companies’ social responsibility has become a national agenda because the country has unique geological environment that hosts a variety of economic minerals.
2. Ibidem.
5 The most famous deposit is the Lake Victoria Greenstone Belt in the central and north-central parts of the country, but there are viable resources of various minerals in the north-east and the south-west as well. During the British colonial era (1918-1961) mineral production and revenue were mainly from gold, diamonds, lead, mica, salt and tin. Gold was at a peak level in 1940 when it contributed to about 90% of the value of the mineral production [20]. The discovery of large diamond deposits in Shinyanga region in 1940 and the subsequent establishment of Williamson Diamond Mine Ltd (WDML) led to a dramatic rise in the national mineral revenue.
6 During Independence (since 1961) the mining sector still failed to attract the kind of large and modern investment seen in other sectors of the Tanzanian economy throughout the late 1970s and the 1980s. Consequently, the mines in operation during this time period were those established by colonialists and run by the government after independence and did not lead to immediate changes in the mining sector. In the early 1960s, the contribution of mining to Gross Domestic Product (GDP) averaged was 3-4% [20]. In the period 1960 to 1966, however, the last big gold mines at Geita and Kiabakari closed down. Following political changes in 19673, a number of industries were nationalized and mining sector included in this reform.
3. The Arusha Declaration, which was passed on January 29, 1967, summarized Tanzania's commitment to socialism, espouses the importance of national self-reliance and debates the nature of development. The document was originally written by Julius K. Nyerere, who served as the first president of Tanzania between 1964 and 1985 (author’s note).
7 In the liberalization period up to the 1980s, diamond production from Williamson Diamond Mine accounted for more than 70% of the total value what was the equivalent to $435 million of mineral production in Tanzania4. As production at WDML continued to decline, contribution of the mining sector to GDP fell to about 1% (equivalent to $218 million) in 1988 and its contribution to national revenue was only 0.3%5. There was little investment in the sector, and due to price regulations and lack of market, the greater share of recovered gold and gemstones were smuggled out of the country. According to official figures, the total gold production was only 800 kilograms in 1981-1989 [12]. This nominal production in mining companies signified mundane corporate social responsibility at that time in Tanzania.
4. 2013. Ministry of Energy and Mineral and Mineral Audit Agency Report. Dar es Salaam.

5. 2013. Mining Companies Annual Reports, Dar es Salaam.
8 In 1986, Tanzania agreed to a structural adjustment programme designed by the World Bank and IMF. Internal and external trade was liberalized, and the government opened up for foreign investment in the country [20]. In Tanzania, the liberalized mining legislation of late 1990s, which offered lucrative contracts to international mining companies, did not encourage an upgrading of Tanzania’s Artisanal Small Miners sector to a medium-scale mining operations6.
6. World Bank.1996…
9 In 1967, Arusha Declaration transformed the entire mineral sector that not only included mining but also mineral trading and mineral value addition activities. A mineral sector was State-directed economic development strategy. The strategy directed, among other things, that medium to large scale private owned investments in the mineral sector was not to be allowed without State participation of not less than 51%. All means of production were to be nationalized and became public investments, whereby the mining industry was not spared. The Arusha Declaration was the guiding flare to achieve this noble goal of public ownership of means of production including a mineral sector.
10 The liberalization of mining, accompanied by the legalization of the buying and selling of gold and gemstones through banks and designated dealers, had immediate effects [5]. In 1991, mineral sales increased almost 70%. This dramatic raise is attributed to record gold production and sales mainly by small-scale miners7.
7. Africa Peer Review Mechanism (APRM) Report, 2010/2012. Corporate Governance in Tanzania. Tanzania.
11 The economic reforms also entailed a boom in large scale mining. Foreign investors were invited to enter the country’s mining sector, and since the late 1990s, Tanzania has received large capital inflows [14]. In addition to Geita Gold Mine and the AFGEM Tanzanite mine major mining establishments include Kahama Mining (owned by the Canadian company Barrick, the third largest gold company in the world), Afrika Mashariki Gold Mines, Golden Pride Project, Buhemba Gold Mine, and WDML8. The increase of the multinational companies was not a problem if there is a conducive enforcement of legal framework and privatization policy which presupposes effective mining Companies’ social responsibility.
8. Ibidem.
12 Alongside these large establishments, there are thousands of people engaged in small scale mining. In the Tanzanian context, the terms artisanal and small scale miners are seldom differentiated. However, in the 1998 Mining Act, a small scale miner “is the holder of a mineral right through a Primary Mining License issued by the Commissioner for Minerals” [19]. A survey conducted for the World Bank in 1996 estimated that 550 000 people were directly employed in small scale mining9. Another study estimated that by the late 1990s, the sector employed somewhere between 500 000 and 1.5 million employees with Geita Gold Mine having 2400 employees [6].
9. Ibid.
13 These figures continue to be widely quoted, since no baselines on mining have been conducted since then, and since national surveys like the Household Budget Survey and the Labour Force Survey have little information on mining activities. However, the mining Act of 1998 entailed a number of changes which have resulted in an increase in small scale mining over the last 6 years [19].
14 At the moment, there are 5 600 small-scale claim holders for minerals, gemstones, stones and salt in the country, but many are dormant due to lack of capital. If we estimate that two thirds of the claim holders, 3 700, are active, and that each mine has 30-60 mine workers, it means that there are some 170 000 small scale mine workers in the country. Several observers have referred to the relationships within small scale mining as exploitative, since mine workers generally work for food and shelter only in the period before actual extraction is begun [6; 12].
15 The contribution of the mining sector to national revenue was only 0.3% equivalent to $36 million in 1998 while after the establishment of the Mining Act in 1998 artisanal miners decreased and the relationship with small scale miners was exploitative in nature implying that at this juncture the Mining Companies’ CSR was trivial and mundane. So this study seeks to examine the mining CSR by focusing on the legal compliance of the mining companies, ethical compliance that focuses on companies acting justly and fairly, and well as the economic responsibility of the mining corporations to the local communities in Tanzania.
16 STATEMENT OF THE PROBLEM
17 Tanzania is endowed with huge amount of minerals which have contributed to development of the mineral sector especially from the liberalization period in 1980’s to 2021. This period has witnessed an increase of the multinational companies in Tanzania coming to invest in mineral sector. These companies include Mine Resolute Gold established in 1998, Anglo Gold Ashanti - in 2000, Barrick Gold Corp and Afgem Tanzanite - in 2001, Afrika Mashariki Gold - in 2002, and Meremeta Co. Ltd Gold established in 2003.
18 These companies are obliged to comply on corporate social responsibility by acting in accordance with to Environmental Management Act of 2005, Mining Act of 1998, Corporate Tax Act and other ethical standards guiding the operation of the mining companies in Tanzania. Observance of the fore mentioned obligations have caused a formal debate (in decision making bodies such as parliament and local councils) and informal debate (discussion) in the areas where these companies are operating, particularly rural areas especially when they operate hazardously.
19 Therefore, this study seeks to unfold whether the mining companies comply to CSR and if not why is it so?
20 LITERATURE REVIEW
21 In an attempt to accurately define the concept of CSR it is argued that no single definition has dominated past researches. It is also argued that CSR is the umbrella that covers a variety of Stakeholders, Corporate Philanthropy and Corporate Social Policy [3].
22 In Tanzania, CRS is widely understood as philanthropy (“doing good with part of the profit”) and thus refers to charitable community support projects in most cases [15]. In the contemporary global business environment, CSR generally refers to sustainable business performance, i.e. the principle to generate profit itself in a socially and environmentally responsible way. Community involvement and development is part of CRS, but other aspects, such as labour practices/human rights, environmental friendly production methods, and fair and transparent operating practices are equally important [1].
23 However, in an endeavour to have a holistic view, this paper accepts all these definitions and their similarities and interprets all concepts as one, using the term “CRS”. Besides, this is the case in Tanzania where the term CRS endorses all social, environmental and corporate actions of the Mining Companies that affect positively or negatively the people’s lives [2; 4], and illustrates that CRS relies on 2 fundamental values that have constituted the basic premises for the development of its thinking: First, businesses operate at the satisfaction of society, and Second, businesses act as a moral representative within society [4]. The cornerstone of the economic system and the main role of every corporation is to be profitable by the selling of products and services that have demand. CRS includes all the economic, ethical, juristic and philanthropic demands that society requires from them at any given moment of their operations [6].
24 A very important step for the launch of CSR was the Green Paper on CSR which presented by European Commission10 and defines CSR as “a concept where Companies integrate social and environmental concern in their business operations and in their interaction with their stakeholders in a voluntary basis”. An intense globalization movement in issues such labour, human rights and transparency are part and parcel of CSR [13; 16].
10. European Commission, 2002. Corporate Social Responsibility: a business.
25 Studies indicate that the companies which include their stakeholders in their planning and implementation of CSR programmes stand higher chances of succeeding in their social responsibility and sustainability than those that formulate and implement CSR programmes independently [9]. Full stakeholder participation means involvement of the beneficiaries from the preparatory stage of problem identification, intervention identification, project financing, project implementation and project monitoring and evaluation. This involves interaction with and among people concerned11. Therefore, the process of stakeholders’ involvement means stakeholders are present and engaged in the process of analyzing, planning and design, taking action, evaluation and review.
11. World Bank .1996…
26 Furthermore, it is noted that CSR projects that do not involve communities where they are based stand a greater chance of either failing from reaching their objectives or being rejected by their intended beneficiaries. Community involvement is not just about being nice; it is a central pillar in the business of CSR. Some external secondary stakeholders in Tanzania are rejecting or ignoring local CSR projects affecting them, which raises a question of whether they have been consulted at all in the relevant decision making12.
12. Ibidem.
27 Using the experience of communities in the area of the Geita Gold Mine (GGM) in Tanzania and stakeholders, this paper analyses the relationship between CSR and involvement of non-consumer stakeholders in decision making processes and their outcomes. The use of a combination of interviews with key informants, and focus groups to obtain information, opinions and perceptions of company administrators, business people, government actors and local community members fills analytical gap between claims on CSR success stories made by companies and the experience of people on the ground. It was found out that key leaders in the local communities who were neglected in the CSR decision making process were led to view the projects as redundant or irrelevant. It is further recommended that for an autonomous, robust and sustainable CSR project, a company needs to be inclusive, by integrating local key representatives at every stage of the CSR project’s life. In addition, it further that for CSR projects to be genuinely appreciated, and to meet the goals it sets with communities as the beneficiaries of transformation, the CSR projects need to be monitored carefully and audited regularly. The fore mentioned study was based on stakeholders’ participation and engagement in corporate social responsibility but it does not consider the compliance of mining companies on corporate social responsibility in Tanzania which this research paper seeks to unravel.
28 METHODS AND MATERIALS
29 This sub-section presents the methods for data collection, sampling techniques and procedures and methods of data analysis.
30 Purposive sampling was applied for selecting respondents from the mining companies because they have the role of ensuring CRS in mining companies in particular to the government, citizens, and other stakeholders in Tanzania. Another criteria for using purposive sampling is the issue of extreme case purposive sampling where the researcher expects that the mining companies and local communities have rich information with regard to mining companies and CRS. The sample size is presented in table 1.
31 Table 1. Sample size and its Composition (N=74)
32
S/№ Category of respondents Total number of respondents
1 Artisanal miners 16
Mining Companies Respondents 6
3 Ordinary citizens 52
4 Total No. of respondents 74
33 Source: Field data (April, 2021).
34 This study surveyed selected documents about mining companies’ social responsibility in Tanzania written in different context across the world. Literature from Tanzania and experiences from global context were analyzed. In the analysis, major themes were drawn from research objectives of the study. Hence data were grounded on themes and all data were qualitative.
35 In fact, this was a monitoring study to check whether mining companies in Tanzania adhere to CRS by complying to the environmental Management Act, paying corporate taxes, donations, protecting human rights in their operations as intended. It was therefore an exploratory study which though to uncover experience of complying on CRS to different stakeholders and challenges hindering CRS of mining companies in Tanzania. The qualitative paradigm was selected because of its underlying assumption that a phenomenon is likely to be examined in detail in order to be understood [8; 11]. Also, a comprehensive documentary review was undertaken with regard to the management of the Mining Companies’ operations in Tanzania and research questions under investigation.
36 Content analysis was adopted in analyzing the data obtained from documentary review and in-depth interviews and cross tabulation was used in data collected. Under Content analysis technique, data were systematically classified into defined categories comprising patterns of related information sub-themes. For instance, the data collected on tax payment compliance of the mining companies in Tanzania and the extent to which mining companies donate local communities services in Tanzania were analysed based on these sub-themes. This method of data analysis facilitated the making of inferences from the qualitative data. On the other hand, cross-tabulation was used to analyze the quantitative data that were mainly obtained from the field and documentary review.
37 PRESENTATION OF THE FINDINGS AND DISCUSSION
38 This sub-section presents the findings on CRS in particular how the mining companies in Tanzania donated services to local communities and preserved the environment as well as paying taxes. The large scale mining companies include Mine Resolute Gold (with investment of $77 million), Anglo Gold Ashanti ($450 million), Barrick Gold Corp ($280 million), Afrika Mashariki Gold ($72 million), Meremeta Co. Ltd Gold ($65 million) and Afgem Tanzanite (with investment of $20 million).
39 Tax payment compliance of the mining companies
40 In examining tax payment compliance of mining companies as company’s CRS, the attention was paid on the extent to which companies pay corporate taxes as well as small scale miners in Tanzania. The findings are presented in table 2 for further details.
41 Table 2. The responses on whether mining companies complied with tax payment
42
S/№ Category of respondents Mining companies paid taxes Mining companies did not pay taxes Total № of respondents
1 Artisanal miners 2 (25%) 14 (75%) 16 (100%)
2 Mining Companies Respondents 00 6 (100%) 6 (100%)
3 Ordinary citizens 20 (38.5%) 32 (61.5%) 52 (100%)
4 Total No. of responses 22 (29.7%) 52 (70.3%) 74 (100%)
43 Source: Field data, April, 2021.
44 Table 2 indicates that majority of respondents, i.e. 52 (70.3%) constituting of 14 (75%) artisanal miners, 6 (100%) respondents from the mining companies, 32 (61.5%) ordinary citizens stated that the mining companies were not paying corporate tax to the Tanzanian government. Nevertheless, the minority of the respondents had the view that the mining companies were paying taxes. This view was shared by 22 (29.7%) respondents such as 2 (25%) artisanal miners, 20 (38.5%) ordinary citizens, who maintained that the mining companies paid taxes to the government.
45 The findings show that in the year 2019, the contribution of mining revenue tripled to about 1%in mineral revenue collection from $84.5 million in 2015/16 to $202.7 million - from July 2019 to April 2020 of total domestic revenue, but this is still very low compared to Botswana where the mineral industry provides about 50% of Government revenue [17].
46 Up till now, none of the companies have started paying the 30% corporate tax since they have not yet recovered their capital expenditure. As the major mining companies advance to their full capacity and start to pay the corporate tax, the revenue to the government is expected to rise significantly. It is interesting to note that the much-debated royalty makes up less than a third of the total revenue income from the sector. In fact, tax on foreigners and local employees’ salary (“pay as you earn” - PAYE) add up to more than the amount paid in royalties13.
13. 2009. Ministry of Energy and Minerals and Tanzania Mineral Audit Agency (TMAA) Report on Minerals Royalty Forms and Rates Applicable in the Mining Industry; 2017. Ministry of Mineral Report, Dar es Salaam.
47 Many people argue that the tax holidays and other incentives that have been granted to investors were too generous. There is also a feeling among both government officials and ordinary people that companies may not declare the correct amount that they are producing and that they in this way evade taxation. A common complaint is also that the 3% is indeed too low. The government set up the commissions to look into these issues because the public has been complaining that the mineral sector is not contributing enough to the national14.
14. 2017. Ministry of Mineral Report, Dar Es Salaam; 2013. Mining Companies Annual Reports, Dar es Salaam.
48 The commissions and the public suggested that the Government should consider increasing royalty rates on minerals produced so as to boost Government revenue. This suggestion has also been shared by different committees formed by the Government to review the performance of the mineral sector15. The low revenue collection from the mineral sector is contrary with the purposes of establishing the Tanzania Mineral Audit Agency (TMAA) under the Ministry of Energy and Minerals which has been established to facilitate the maximization of Government revenue from the mining industry through effective monitoring and auditing and to ensure sound environmental management in the mining areas.
15. Ibidem.
49 Also there have been the political commitments revealed though political speeches. For instance, in his inaugural address to the nation in December, 2005, President Jakaya Kikwete outlined the need for Tanzania to benefit from the mining sector. Furthermore, during his May Day Speech in 2006, he promised to review the mining contracts to ensure that the nation is benefiting from minerals. The same month the committee was formed to review the Mineral Development Agreement signed with the companies. In September 2006, the Review Committee submitted its report to the government, recommending both substantive changes to the mining and fiscal laws relating to mining.
50 Some of the proposal included state participation in development of infrastructure at the mines, corporate tax to be paid at the start of production and not after recovering investments costs, compensation for people displaced by mining to be pegged to the values of mineral exploitation on their land, and the mining companies to contribute to a government funds for environment rehabilitation16.
16. Africa Peer Review Mechanism (APRM) Report, 2010/2012….
51 In 2015, when 5th phase President Hon. Dr. John Pombe Joseph Magufuli came into power, there were significant reforms in the mining sector aimed at promoting revenue collection and CRS. There have been a number of changes in the Mining industry and more expected due to the 2017 Minerals Act. The government of Tanzania is trying to make the sector more attractive but there are still several punitive or restrictive regulations.
52 The changes in the legislations have increased the loyalties increasing from 4% to 6% and an introduction of 1% clearing fees on the value of all minerals exported from the country. Also, the new laws give the government of Tanzania an ability to acquire 16% of shares from major mining companies on free carrying basis. The amendments led to the establishment of Joint Venture Company known as Twiga Minerals Corporation Ltd between the Government (16% shares) and Barrick Company (84% shares); and payment of compensation of $100 million from Barrick Company as initial settlement of the agreed $300 million.
53 In this case, the Mining Regulations on Local Content, which came into effect in January 2018, requires mining companies to have bank accounts in a Tanzanian-owned bank in the country. This government’s decision is in line with changes in mining laws aimed at curbing illicit financial flows in the mining sector. Yet, most of the major gold miners had not started paying corporate tax in the fourth phase regime (2005-2015); instead they only pay royalties, local levies and other taxes. So despite of setting the commissions, tax evasion continues in many mining companies. This irregularity is underscored by for instance TMAA indicated that no single mining company has started paying 4% of royalty and in the same period only two companies (not mentioned in the report) were paying 30% of the corporate tax which most of the companies have not been paying17.
17. 2013. Ministry of Energy and Mineral and Mineral Audit Agency Report. Dar es Salaam.
54 But this trend has slightly changed since the 5th phase government came to power in 2015, as a result of TMAA’s efforts; at least $64.8 million in additional corporate income tax has been collected since 2009, accounting for roughly 7% of mining tax receipts between 2009 and 2017. This amount only includes tax adjustments relating to hedging arrangements and the consolidation of income for tax purposes. The total amount of additional tax revenue attributable to TMAA is likely to be higher18. Also, the generous tax concession means that mining companies are able to avoid declaring a taxable income.
18. Ibidem.
55 The latest report of the Tanzania Extractive Industries Transparency Initiative (TEITI) generated local newspaper headlines on the issue of payment of corporation tax by mining companies. According to TEITI, just a single mine in Tanzania, Golden Pride owned by Resolute Tanzania Ltd, paid corporation income tax amounting to Tsh. 71.1 billion ($0,309 million) for the year ended 30th, June 2011. This revelation triggered debate on whether or not the government was truly earning enough taxes from gold mining industry19.
19. 2013. Mining Companies Annual Reports, Dar es Salaam.
56 While figures in the TEITI report were corroborated by, the former Minister for Energy and Minerals, Prof. Sospeter Muhongo, announced in Parliament in his 2013/14 budget speech in May that 3 gold mines - Geita Gold Mine, Tulawaka Gold Mine and Golden Pride Mine - actually paid Tsh. 467.7 billion ($20,3 million)in corporate tax [18]. Corporate tax is paid to government after investor companies, not just in the mining sector, recoup their capital expenditures, and this is common practice under tax law around the World.
57 TAX COMPLIANCE OF SMALL MINERS IN TANZANIA
58 The findings indicate that when it comes to collecting revenue from small scale miners, the government does not seem to have enough resources for a proper management. Out of 153 quarterly reports to the mining office in Mererani, only 5 claim holders report that they have had production20. The percentage reporting taxable profit is a little more than 3%. A medium scale miner in Rwamgasa, Geita, showed the team evidence that as a medium scale miner he had paid royalties, but said that Manager of his company had never paid any taxes on the salaries of 100 employees, and that he saw no reason of paying taxes from the salaries of his employees.
20. 2017. Ministry of Mineral Report, Dar es Salaam.
59 This is the clear indication that medium and small scale miners do not pay income taxes as required. In fact, this is a clear indication of weak CRS in Tanzania with regard to the companies and small scale miners not paying taxes. Since 2015 to 2021, the multinational companies were paying taxes which in long run mining sector’s contribution to the government’s coffer rose from Tsh. 161 billion ($7 million) in 2014 to Tsh. 528 billion ($22.9 million) in 2020. The sector accounts to 52% of all foreign currency and commands 51.9% of the value of the exported products.
60 DONATIONS BY MINING COMPANIES DONATED TO LOCAL COMMUNITIES
61 This paper examined the extent to which mining companies donated services to local communities. These services include water, health, education services and any other support provided by these Companies to local communities.
62 Table 3. The responses on whether mining companies donated services to local communities
63
S/№ Category of respondents Mining companies donated services to local communities Mining companies did not donate services to local communities Total № of respondents
1 Artisanal miners 8 (50%) 8 (50%) 16 (100%)
2 Mining Companies Respondents 3 (50%) 3 (50%) 6 (100%)
3 Ordinary Citizens 22 (42.3%) 30 (57.7%) 52 (100%)
4 Total No. of responses 33 (44.6%) 41 (55.4%) 74 (100%)
64 Source: Field data, April, 2021.
65 The findings presented in table 3 indicated that a slight majority of respondents 41 (55.4%) were of the view that mining companies did not donate services or any other support to the local communities surrounding them. On the other hand, 33 (44.6%) were of the view that mining companies donated services and other support to the local communities.
66 Donations are integral part of corporate social responsibility. In Tanzania, the companies’ investment in social development is registered by the Ministry of Minerals and incorporated into the calculations of the total revenue contributions of the sector under the rubric “donations”. Also, there was a break-down of the donations to community development by the largest mines in the period from 1999 to 2016. Of the $17 million donated by the companies in the whole period, $12 million, or 70%, was spent on water and roads21.
21. Ibidem.
67 However, critical voices from the citizens and non-government organizations argue that the companies’ investment in these sectors is simply for their own benefit. They typically repair roads leading to the mine only, and draw water pipes that they themselves need. People’s suspicion about the “selfish” motives of mining companies when it comes to community development is partly confirmed by the fact that such donations have gone markedly down after the initial infrastructure for the mining companies was in place. Donations in 2002 were only 1/5 of the level in 200022. On the positive side, donations to education projects have increased over the years and were the largest post in 2019.
22. Ibid.
68 The Ministry of Minerals also registers how much the various companies spend on human resource development, i.e. training of their employees. Since 1997, the major mining establishments have spent more than $7 million on training of approximately 7500 people. Training may range from providing basic training in machine operation to sponsorship of professional levels23. The long term effect of this human resource development is hard to quantify, but it will last even after the closure of the mines.
23. 2013. Ministry of Energy and Mineral and Mineral Audit Agency Report. Dar es Salaam.
69 In other cases the management of Geita Gold Mine is concerned about CRS and of creating a positive image of the mine in Tanzanian society. Since 2000, the mine has spent close to $4 million on development projects. Almost half of this amount, $2 million, was spent on a 22 km long water pipe which was drawn from Lake Victoria24. Three villages along the route have been provided with water taps on the condition that they protect the entire pipe from damage and sabotage [17].
24. Ibidem.
70 People in Geita town are bitter because they have not benefited from the pipe and they presently have an acute water situation. GGMs $1 million rehabilitation of the Geita-Ilogi road, on the other hand, benefits a large number of people since it has facilitated transport to Dar es Salaam substantially. In addition to their investments in roads and water, the company has supported a number of development projects within health, education and income generating, as well as more ad hoc donations to various organizations and events.
71 The most interesting aspect of Geita Gold Mining’s community support, however, is their yearly support directly to the District Council. Since 2002 to 2019, Geita Gold Mining has agreed to support the District with Tsh. 150 million ($137 614) per year. According to the District Planning Officer, the company agreed to do this when requested by the Council at the Investors Forum Meeting to contribute to development. The council had referred to the practice of another foreign investor to convince GGM to follow their example.
72 The Geita Gold Mining development fund is managed by a committee made up of the District Commissioner, the District Executive Director, three members of parliament, the Chief Councillor, and the Human Relations Officer of GGM. Through the fund, as well as other development projects, the company has managed to build a comparatively good reputation in terms of corporate social responsibility. Just looking at the amount of money donated is misleading.
73 A number of informants argued that considerable sums of money have been lost due to corruption. One of the respondents from Geita region is open in his critique:
74 “… the money provided by GGM for the projects which pass through the District Council is not fully utilized for the intended projects, instead (it is used) to promote individual projects … The people cannot do anything about the corruption because they are not informed of the money, neither the projects”.
75 According to several informants, money has not only been lost, but projects that were intended for certain villages have been redirected to villages where central officials had their personal interests. As a result of the irregularities, GGM has now decided that they will no longer let the Tsh.150 million go through the District Council. Instead, the council is asked to come up with a concrete building project that they need funding for, and then GGM simply provides the building, using its own contractors. Several stake holders criticize this solution, as the local communities are notinvolved in the process and are not given the chance of neither employment nor voluntary participation.
76 In fact, these donations are not benefiting the local communities because of irregularities and corruption associated to them. Also, the measure taken by Geita Gold Mine suggests denying local people’s participation in their development projects.
77 MINING COMPANIES COMPENSATION TO THE CITIZENS RELOCATE/DISPLACED
78 This section examined whether mining companies provided compensation to their surrounding communities fairly and timely. The findings indicate that majority of respondents, i.e. 46 (62.2%) were of the view that mining companies did not compensated the surrounding communities after being relocated due to the commencement of the mining activities. On the other hand, 28 (37.8%) of respondents had the view that Mining companies compensated the communities relocated on time.
79 The documentary findings indicated that the re-opening of Geita Gold Mine in 1999, a village called Mtakuja had to be relocated. The company paid the money for compensations, but left it to the government and District Council to deal with the practicalities. It turned out that at least 857 people who were entitled for compensation never received their money25. Apparently, the lists contained fake names, while people who were actually living in the village were never registered. Some people were also said to be fooled to sign for money that they never received. Mining officer at Geita stated as follows:
25. 2013. Mining Companies Annual Reports, Dar es Salaam.
80 “An elderly man was supposed to be compensated with Tsh. 20 million ($18 348). The officials had the money ready in 500 shilling notes. When the old man spent a long time counting at the counter, they told him that he was wasting their time and ordered him to just sign and then move on. He did so and later realized that he had been paid Tsh. 5 million only. He lost 15 million!”
81 The government’s Prevention of Corruption Bureau investigated the case in 2002. Two GGM employees and a number of civil servants were found guilty. In February 2004 it was decided that the government should offer Tsh. 600 million ($260.869) to those who had not been properly compensated. People in Geita still have the feeling that the “big fish” got away with their crime, and there are all kinds what levels of government were involved and who benefited from the compensation money. Similar problem of inadequate compensation to local people occurred in in Nyangoro village where African Mashariki Gold Mines carried out the campaign to force villagers to accept inadequate compensations which actually is against human rights and good CRS.
82 Poor compensation is also against environmental Management Act of 2004 which provides for the compensations to persons or communities who will have been victims of corporation’s actions, and also it is the violation of human and property rights.
83 ENVIRONMENT MANAGEMENT COMPLIANCE OF THE MINING COMPANIES IN TANZANIA
84 The environment is the top agenda in the most economic and social activities in the World today. Tanzania adopted a policy on environment back in 1997. This was followed by establishment of an institution to deal with the environmental issues in the country namely the National Environmental Management Council (NEMC) in 1983. This study investigated whether the mining companies were complying with environment management in Tanzania as required by the environment management Act, 2005.
85 The findings indicate that a slight majority of respondents, i.e. 41 (55.4%) were of the view that the mining companies did not comply with environment management Act of 2005 because these mining companies polluted water in rural communities; soil erosion was experienced and the houses were getting fracture on their walls. This view was shared by 8 (50%) artisanal miners, 3 (50%) Mining companies respondents, 30 (57.7%) ordinary citizens. On the other hand, 33 (44.6%) respondents composed of 8 (50%) artisanal miners, 3 (50%) Mining companies’ respondents and 22 (42.3%) Ordinary citizens said that the mining companies complied with environment management Act of 2005.
86 The findings on poor environment management were further revealed by companies which did not compensate environmental damages resulting from their activities. For example, in North Mara where Barrick has a mining site, the tailings dam was freely running into the pastures and fields, and heavily contaminated waters from the processing plant adversely affected the local people by leaking into their water sources.
87 The report further found that chemical spill in the Tigithe river in Kibasula ward caused 2534 households were affected and 4 heads of the cattle died after drinking water. This was contrary to the Mining Act of 1998 section 96 which states that “The license offered shall be utilized without causing any harm to the land owners or the rightful residents”. So this environmental pollution presupposes that the question of corporate social responsibility specifically the mining company’s responsibility of environment and local people protection has not been adequately realized in Tanzania.
88 This observation is in line with Bomani Commission Report which states that:
89 “Tanzania does not benefit sufficiently from multitude of natural resources in the land as it further states that small scale miners were demoralized because of being left out in law and protocol enforcement in the mining industries, this group of people has been in fight with multinational mining companies26.
26. Bomani Commission Report, 2007…
90 THE CHALLENGES FACED BY TANZANIA IN ENFORCING CORPORATE SOCIAL RESPONSIBILITY IN THE MINING SECTOR
91 Let me try to unfold the setbacks hindering effective mining companies’ social responsibility in Tanzania.
92 1. Government ownership of the share in the mining companies.
93 This paper notes that lack of the government stake in the mining companies in Tanzania could explain as to why CRS in Tanzania has not been done. In this case, Tanzania does not own any share or stake in the mining companies as such the multinational companies own the stake by 100%. Thus the question becomes how government can hold the companies accountable while it has neither financial share nor constituted to the management team of the company. In case of Tanzania, ownership concentration of the government is not found in the mining companies, and the ownership structure provide shareholders with the responsibility to monitor the management and appointment of the board of directors which undermined the government on holding accountable and making multinational companies accountable to the local community and nation at larger.
94 The findings indicate the irregularity in companies’ management not only in mining corporations. It is seen in companies listed in Dar es Salaam stock exchange that control from 20-75% equity stake of the shares27. This stake suggests that large shareholders are assuming control and monopoly; hence boards of directors are accountable to the shareholders as opposed to government of Tanzania.
27. Africa Peer Review Mechanism (APRM) Report…
95 2. Weak enforcement of the laws in Tanzania.
96 The findings indicate that the challenge in Tanzania is weak enforcement of the laws and regulations. All 100% respondents in this study had the view that “corporations may also not act ethically because they know that even if they did not behave ethically, they will be still safe”. The Business Registration and Licensing Authority (BRELA) is one of the institutions that is said to have limited capacity as overseer of the company’s operations. The weak enforcement of laws is seen in the environment laws and anti-corruption strategies that have caused rampant corruption in mining contracts, and local government leaders who are bribed to convince the villagers to accept inadequate compensations.Also the effort to create acceptable ethical practices are undermined by collusion, rent seeking behaviors, corruption and lack of corporate integrity.
97 RECOMMENDATIONS AND CONCLUSION
98 Government should encourage better practices of corporate governance regarding business society relationship by abolishing the involvement of senior government officials and members of the parliament in the corporate boards of directors so as to deter conflict of interest and political entrepreneurship. The government should increase its stake in the Mining companies by 51% of the shares so that it gains its strong control in mining sector.
99 As noted in this study, it is concluded that the CSR of the mining corporations is hardly implemented because mining companies have been given too generous conditions as such the country is turned into resource curse. Therefore, the government need to establish corporate governance legal framework, increase government stake in the mining corporations, as well as strengthen organizational and social capital so that local people and their government can hold accountable the companies as well as be able to harness the CSR of the Mining Companies in Tanzania.
100 Many studies are still needed in mining companies in Tanzania. In this regard, other researchers may wish to conduct the same study and focus on mining companies from 2020 to gain insights into experience of the implication of CSR in Tanzania. Another study may be carried out on accountability in the mining companies in Tanzania.

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