Introduction

Mineral revenues have become increasingly important in Tanzania but questions have been asked about the extent to which they contribute to the development of the areas in which the minerals are located and to the wider economy. This chapter reviews some of the issues relating to the contribution of mineral wealth to the Tanzanian economy by investigating the case of the gold service levy in Geita District and its impact on the local community.

Local Government Authorities (LGAs) in Tanzania play a critical role in delivering governance and social and economic services directly to the people. Such services include infrastructure of all kinds, education, health, water, security and sanitation. According to the Local Government Act No. 9 of 1982 and the Policy on Local Government Reform of 1998, LGAs are supposed to identify and improve local revenue mobilization and to identify potential areas for investment to promote sustainable economic and social development activities in their respective jurisdictions.

Resource-rich LGAs usually expect local economies to benefit from the extraction of resources including oil, gas and mineral investments. Unfortunately, this has not always been the case. These LGAs have either been denied the fiscal space to collect revenues or do not always know how to take advantage of extractive activities to enhance sustainable economic development. Local investments in natural resources such as minerals and gas should in principle provide opportunities for LGAs to strengthen their revenues and to use the same for provision of public goods and services. It is in the context of the above that this chapter was prepared, partly based on a study by Ngowi (2015).

Minerals and Development

Mineral wealth has been viewed as a mixed blessing in relation to development. While the income and foreign exchange generated contributes to the national balance of payments as well as to government revenue and to employment, the extent of positive impact depends critically on who gets the revenue and how it is used to strengthen both the local and national economy. Very often the mineral extraction process is managed by a large foreign company, and the share of the benefits that remains in the country depends on the agreements made. There is significant potential for corruption that may affect both the share that remains within the country and the share of the remainder that accrues to the local population.