The Tanzanian government has underscored its dedication to a robust minerals sector through the recently tabled 2023/24 National Budget in the National Assembly. With a specific emphasis on setting up a national gold reserve, combating smuggling, and fostering value addition, the government aims to stimulate growth, attract investment, and enhance revenue generation. These strategic measures, presented by Minister for Finance and Planning, Dr. Mwigulu Nchemba, are geared towards creating a vibrant and sustainable mining industry in the country.
Within the proposed budget estimates of 44.39 trillion Tanzanian shillings (TZS) for recurrent and capital expenditure, Minister Nchemba introduced amendments to the Mining Act, CAP 123. The amendments seek to exempt refinery centers from paying the one percent inspection fee, facilitating the growth of mineral transportation by small-scale miners and attracting increased investment. This initiative is anticipated to promote employment opportunities, generate revenue for the government, and enhance the mining sector's overall contribution to the country's GDP.
In a bid to attract sales at mineral trading hubs and increase the sector's contribution to the economy, the government plans to exempt Value Added Tax (VAT) on the supply of precious metals, gemstones, and other precious stones at designated buying centers, mineral markets, Gem houses, or refineries in mainland Tanzania. Minister Nchemba believes this move will spur value addition activities and encourage the sale of minerals in a competitive international market. These exemptions, combined with other measures, reflect the government's commitment to promoting a thriving mining sector.
The mining sector has been allocated 89.3 billion TZS in the 2023/24 financial year, demonstrating the government's commitment to its development. This allocation represents an increase from the previous year's budget of 83.3 billion TZS. To ensure value addition and prevent mineral smuggling, the government continues to invest in the establishment of mineral centers. With 40 new centers already opened during the Sixth Phase Government, the total number of mineral centers now stands at 93. Additionally, the government plans to construct centers of excellence for small-scale miners in Songea, Mpanda, and Chunya districts, further supporting local miners and promoting sustainable mining practices.
Recognizing the importance of strategic minerals, the government will collaborate with the private sector to expedite research and establish mineral auctions in the country. These initiatives aim to facilitate access to competitive international markets for gemstone miners, including Tanzanite, while encouraging value addition activities within the sector. Furthermore, the completion of gold refinery plants will allow the government to provide incentives for sufficient raw material availability. As part of this effort, the government has reduced royalties for minerals sold in refinery plants from six percent to four percent. These actions reflect the government's commitment to enhancing the mining sector's productivity and ensuring responsible mineral extraction practices.
Responding to President Samia Suluhu Hassan's directives and considering the contributions of Members of Parliament during budget discussions, the government has finalized procedures for purchasing gold through the Bank of Tanzania (BoT). This strategic move aims to establish a National Gold Reserve, offering competitive prices to miners and strengthening the country's currency. The BoT has already commenced purchasing gold and has acquired 400 kilograms of the precious metal. These reserves serve as a crucial asset for global diversification of reserves and contribute to the country's foreign exchange reserves.
The Tanzanian government's commitment to a vibrant minerals sector is evident in the 2023/24 National Budget. Through the establishment of a national gold reserve, measures to curb smuggling, and the promotion of value addition, the government aims to create a thriving mining industry.
With increased budget allocations, infrastructure development, tax exemptions, and support for small-scale miners, Tanzania is poised to unlock the full potential of its mineral resources. By strengthening the sector's contribution to the economy and ensuring sustainable mining practices, the government envisions a prosperous future for the country's mining industry.