Transparency across the extractive industry value chain has significant benefits to all parties involved in the sector.
Dastan Kweka is a Program Officer for Extractive Industries in Tanzania.
The results are in! On October 25th, Tanzania held its general election and social media was ablaze with #Tanzania decides trending as citizens across the country took to the polls. The race was tighter than it has ever been since Tanzania transitioned to a multiparty system in the early 90s. Despite fears of instability and violence, the process mostly went off peacefully.
Amidst the electoral race, Tanzania is also in a race regionally to become the first liquid natural gas exporters of Africa. It is already Africa’s third largest gold producer and is looking to diversify into other commodities. Huge gas deposits spell out massive potential government revenues and local economic development opportunities.
Naturally, country plans for exploiting these valuable gas resources was a common campaign topic. Some candidates made ambitious promises to use revenues from the gas sector for financing public infrastructure and essential services such as free education. While such promises might have rallied the crowds, they were also misplaced and misleading since significant revenues from the resources will not be seen until 10 or more years. Not to mention, using natural gas reserves as collateral is enormously risky for the country’s economy, due to price volatility. If a loan is taken based upon future resources, but then the value of those resources decreases, Tanzania could find itself in a very precarious position financially. Just ask Ghana.
In March, the Tanzanian government promised to disclose contracts signed with investors in the extractive industries sector before the general elections. The release was to include contracts without confidentiality clauses and was to be preceded by public education programs on television and radio to assist the public to make sense of the complicated documents. So far though, no such disclosure or education programs have occurred.
What’s more, in August, the then outgoing President Kikwete – now retired but still chairperson of the ruling party, signed three energy-related bills into law including the Extractive Industries Transparency and Accountability Act 2015, which carries provisions on contract disclosure. Less than a month later, his party launched its election manifesto, which surprisingly carried no provision on contract disclosure, but did repeatedly note transparency and accountability as important pillars of good governance.
And while all of this transparency talk is an important step, a commitment to transparency must be more than mere rhetoric. Currently, the rhetoric and the reality are far from aligned.
For instance, Tanzania was declared a compliant member of the Extractive Industries Transparency Initiative (EITI) in 2012 and held that status until its temporary suspension in September 2015 over missed reporting deadlines, which the EITI chair attributes to “technical and clerical delays.” In addition, as a member of the Open Government Partnership (OGP) initiative, Tanzania pledged to improve various government websites to enable citizens to access information freely and timely. However, what matters is not just releasing information, but releasing the right information, in the right manner and when citizens are interested in it.
The study found that 85% of citizens are in favour of contract transparency and would like to know the details of the deals between the government and foreign investors. According to the same study, by not making such documents public, the government is fuelling mistrust since most citizens associate the secrecy around contracts with corruption, adding to the body of evidence that contract transparency is important to ensuring “laws are followed, country benefits are maximized and communities are reassured that the government is acting in the public interest.”
Transparency across the extractive industry value chain has significant benefits to all parties involved in the sector. The Extractive Industries Transparency and Accountability Act of 2015 is a good start for Tanzania, but as it doesn’t have retroactive effect, it may allow many contracts to escape public scrutiny forever.
And while the successful elections may have many hopeful for a brighter future for Tanzania, the dark cloud of uncertainty of the future of Tanzania’s resource development looms. With current bottomed-out oil and gas prices, it remains unclear whether Tanzania will profit from its riches at all. If it does, the current pricing environment poses risk of the government striking short-term deals to lock in foreign investment and only benefit the elites.
President-elect John Magufuli now has to deal with the twin perils of wanting to secure large-scale investments and maintaining power with constituencies calling for greater accountability. His party already lost several key seats in Parliament particularly in the Lindi region (near recently discovered gas fields) due to the opposition’s successful erosion of their support base with the claim that the ruling party will not manage the gas exploitation for the benefit of local communities.
It is up to President Magufuli to prove otherwise. Namely, that Tanzania is ready to move beyond pride in holding peaceful elections to delivering unquestionable accountability.