A cloud of red dust welcomes you to Geita. It chokes the air and colours life throughout this mining community, which hosts Tanzania’s largest gold deposits. It cakes houses, plants, trees, eateries, and the general merchandise shops that line the town’s main streets and back roads.

For an area that tops all upcountry districts in Tanzania in revenue collection from mining, Geita, 1,050km north-west of Dar es Salaam, is a telling commentary on how natural resources have failed to profit communities where they have been discovered as well as the country at large.

“When you talk of benefits from mining, according to statistics from last year, there is tremendous increase in terms of taxation. Last year, Geita Gold Mine (GGM) paid about $100 million dollars in taxes,” Manzie Mangochie, the Geita District Commissioner, told a group of 18 reporters from Tanzania, Uganda and Ghana on a tour of mining communities.

“But when you talk about the people living around the mines, the problem, in my opinion, is the law. It is not stated anywhere that the surrounding villages or the district authorities will have a share of the taxes being collected,” Mr Mangochie added.

Until 2006, when the government reviewed mineral agreements with mining companies, Geita District had never directly received a penny from the gold mine it hosts, but which South Africa-based AngloGold Ashanti (AGA), the world’s third gold miner, has exclusively owned and operated since 1999.

Following that review, Geita District Council, as well as other district councils where mining companies operate, started receiving a flat annual fee of Tsh315,724,000 ($200,000) and nothing more.

A 2008 report, A Golden Opportunity?: How Tanzania is Failing to Benefit from Gold Mining, notes that not only is the fee miniscule, it forms part of the terms mining companies agreed to since the early 1990s.

The impact of the Tsh1.9 billion ($1.2 million) that this district of over one million people has received to date is hardly visible. Apart from the 1,152km Dar-Mwanza highway that runs through the town, few other roads tarmacked.

The town has an acute shortage of clean water, even though 13.4 per cent of the district’s total area is covered by water. Residents say many water sources are contaminated by the mercury and cyanide that small and large scale miners use respectively.

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Mr Mangochie blames the low impact on the council.

“For example, there are not enough classrooms in our schools; pupils are not sitting at desks. If they made a decision that, well, next year the $200,000 we receive from GGM, we will spend to improve the education system, that will have an impact. But once they say Ok we have to distribute it to every ward, will that have an impact?” he asked.

But Mr Mangochie won’t say what amount would be enough “without looking at the numbers from the mining companies.”

The Geita Gold Mine contains 14.7 million ounces of proven gold reserves. It comes ahead of Bulyanhulu in Shinyanga Region with 11.2 million ounces; North Mara with 3.3 million ounces; and Buzwagi with 2.6 million ounces. These three mines are exclusively owned and operated by Barrick Gold, the world’s largest gold miner.  

GGM’s concession covers 196.27 square kilometres (19, 627 hectares). By contrast, small-scale miners’ concessions do not exceed 10 hectares — a sticky issue in Tanzania’s mining industry as it engenders feelings that the government discriminates against its own people.

“We have no jobs; our mining area has been taken away by the government and allocated to the investor,” said 19-year-old Remy Mwaya, who started mining at the age of 16.

It is not uncommon to find young men, women and a few old people idling around pubs as early as mid-morning playing a game of pool while drinking cheap liquor. The more industrious ones transport people on bicycles or motorcycles or sell foodstuffs, cheap electronics and clothes by the roadside. 

GGM produces between 200kg and 500kg of gold every week, compared with the 2-5kg of gold a month small-scale miners produce, according to Juma Haruna Sementa, the Resident Mines Officer and Inspector of Mines and Explosives in Geita. At current gold prices, the value of GGM’s gold is between $9.23 million and $23 million a week.

AGA has invested Tsh957.3 billion ($600 million) in GGM since 2000, according to Tenga Tenga, the company’s communications manager. It has paid Tsh1.08 trillion ($683 million) in taxes and royalties to the Tanzanian government since it started operations 13 years ago.

Mr Tenga could not say what the company’s total earnings over the same period were. But, the Golden Opportunity report notes that for the period 2000-2007, AGA sold $1.549 billion’s worth of gold.

Industry analysts and civil society activists have attributed Tanzania’s marginal benefits from its minerals to bad laws and the practices of mining companies.

In 2010, the government heeded a public outcry about the 1998 mining law and enacted a new law, which incorporated a number of recommendations from civil society. For instance, it increased the royalty rate for gold from 3 to 4 per cent; it provided for the government to own stakes in mining operations; and restricted issuing of mining licences to Tanzanians.  

What the law did not do was create more transparency in the mining sector, nor did it establish a fair compensation regime for people whose land is gazetted for exploration and mining, said Bubelwa Kaiza, who co-ordinates the Tanzania chapter of Publish What You Pay, a non-profit organisation that advocates transparency in the extractive sector.

“In the current regime, mining companies are free to come and negotiate with the government without following proper channels, which is not proper if the public is to benefit from its natural resources,” Mr Kaiza told The EastAfrican.

What is more, “The compensation was not according to recommendations because it is not clear on the approach used to pay value for land. People are only paid according to what they have above the soil and not the quality of the land,” he added.

The law, moreover, did not even specify a percentage from royalties that should go to the villages around the mine or the district council where the mine is located — a key recommendation of the Bomani Commission, whose work informed the new law. President Jakaya Kikwete established the commission, chaired by former attorney-general Mark Bomani, in November 2007 to investigate the mining laws and contracts.

In any case, the new law, whose implementation effectively began last year, does not apply retrospectively. So, “existing gold mines remain governed by the generous fiscal terms and tax stabilisation clauses outlined in individual mineral development agreements,” notes The One Billion Dollar Question, a 2012 report about the magnitude of tax revenue losses in Tanzania.

This, and the Golden Opportunity report, conclude that mining, which accounts for nearly half the country’s exports, has failed to contribute fairly to the economy.

“Without changes to the fiscal terms of these agreements, Tanzania is unlikely to generate significantly increased mining revenues,” adds The One Billion Dollar Question.