Foreign direct investment and poverty alleviation

177 Pages·2012·2.38 MB·English

Foreign direct investment
and poverty alleviation

Africa Studies Centre
African Studies Collection, vol. 44

Foreign direct investment
and poverty alleviation

The case of Bulyanhulu
and Geita gold mines, Tanzania

Emmanuel M. Nyankweli
Published by:
Africa Studies Centre
P.O.Box 9555
2300 RB Leiden
Netherlands
[email protected]
www.ascleiden.nl

Cover design: Heike Slingerland
Cover photo: Geita goldmine (Emmanuel Nyankweli)

Printed by Ipskamp Drukkers, Enschede

ISSN: 1876-018X
ISBN: 978-90-5448-119-5

© Emmanuel M. Nyankweli, 2012
Dedication

To my wife, Yasinta and son, Austin

and

I honour my mother
Maris-Stella and the Nyankweli family for their support

“For the LORD gives wisdom, and from his mouth
come knowledge and understanding”
(Proverbs 2:6)

Contents

List of tables ix
List of figures x
List of photos x
List of maps xi
List of boxes xi
List of abbreviations xii
Acknowledgements xv

1. SETTING 1
Background 1
The development of Tanzania’s mining sector
and changes in economic policy 2
Socio-economic issues 6
Demographic characteristics 7
The Lake Victoria Greenstone Belt and selection of the study area 8
Structure of the book 11
2 FDI, POVERTY, CORPORATE SOCIAL RESPONSIBILITY
AND CHANGING LIVELIHOODS 12
Foreign direct investment (FDI) 12
The concept of poverty 13
Corporate social responsibility (CSR) 15
CSR and poverty alleviation strategies 19
Theoretical links between FDI and poverty 20
3 RESEARCH METHODOLOGY 23
Livelihood analytical framework 23
Research design, sampling and operationalisation 26
Research questions and operationalisation 28
Data sources, data collection and data analysis 32
Changing livelihoods in Sukumaland 36
Population, livelihood and poverty in mining neighbourhoods 42
4 THE MINING CODE AND FDI PERFORMANCE IN TANZANIA 49
The evolution of Tanzania’s Mining Code 49
Comparison of the 1979 and 1998 Mining Acts 52
Compensation for persons vacated from their land
due to mine development 58
Various overlapping laws and acts that govern compensation 60
vii
Tax regimes in Tanzania 60
FDI performance prior to the reforms 63
FDI performance after the reforms 64
Distribution of FDI in Tanzania’s economy 65
Sectoral distribution of FDI in Tanzania 66
5 SOCIO-ECONOMIC IMPACTS OF MINING INDUSTRIES
ON LOCAL NEIGHBOURHOODS 67
Economic impact 67
Social impact 73
6 ENVIRONMENTAL AND HEALTH IMPACTS OF MINING OPERATIONS
ON LOCAL NEIGHBOURHOODS 79
Degradation of land and vegetation 79
Water pollution 81
Air pollution and noise 85
Health impact 87
7 CSR IN TANZANIA’S MINING INDUSTRY 94
Introduction 94
CSR policies in the mining industry 95
Community development practice as a CSR approach to mining 96
Socio-political context of community development 97
BGML’s CSR initiatives 99
GGML’s CSR initiatives 108
Large-scale mining’s expenditures for community development 116
8 SUMMARY, CONCLUSIONS AND POLICY RECOMMENDATIONS 119
Introduction 119
The contribution of the gold mining sector in Tanzania 120
Effects of gold mining on livelihood in the LVGB 123
Corporate social responsibility and local economic development 129
General conclusion 130
Policy recommendations 136
Further research 138

Annex 1 139
References 144

viii
List of tables

1.1 Mineral exports, 1967-1989 3
1.2 Mineral exports, 1989-1998 4
1.3 Mineral exports, 1999-2007 5
1.4 Economic and demographic trends, 2000-2008 7
3.1 Districts, wards and villages involved in the study 27
3.2 Criteria for respondent income categories 28
3.3 Household distribution in income categories by village sample 29
3.4 Research questions 29
3.5 Ethnic diversity by mining neighbourhood 42
3.6 Average family size by mining neighbourhood 43
3.7 Gender distribution and highest education level of respondents 43
3.8 Housing characteristics by mining neighbourhood 44
3.9 Major sources of water by mining neighbourhood 45
3.10 Major source of energy for cooking by mining neighbourhood 45
3.11 Major economic activities in large-scale mining by mining
neighbourhood 46
4.1 Employment in the large-scale mining sector in Tanzania 58
5.1 Government revenue accrued from the mining sector,
1997-2007 69
5.2 Mining sector contribution to overall national GDP, 2000-2008 71
5.3 Perceived ranking of social ills 74
5.4 Mean expenditure per capita by category of item 77
6.1 Land managed by GGML 80
6.2 Areas with different categories of disturbed land 81
6.3 Comparison of concentration of heavy metals at Nyakabale
with standard concentrations in surface soils 82
6.4 Comparison of concentration of heavy metals in sampled plants
from Nyakabale with standard concentrations in plants 82
6.5 The upper limits of a safe dietary intake of trace elements 84
6.6 HIV/AIDS prevalence and new reported cases, 2002-2006 88
6.7 Reported cases of STD infections, 2002-2006 89
6.8 Reported cases of skin diseases, 2002-2006 91
6.9 Reported cases of diarrhoea, asthma, ear and eye diseases,
and tuberculosis, 2002-2006 92
7.1 Large-scale mining expenditures for community development 117
8.1 The positive and negative impact of FDI in the gold mining sector 131-134
ix
List of figures

1.1 a-b Pre-independence mineral production 3
1.2 Trends of gold exports and value, 2001-2006 6
1.3 Sectoral contribution to overall GDP at factor cost 7
3.1 Livelihoods framework 25
5.1 Foreign exchange earnings from gold and traditional export crops,
1999-2008 69
5.2 Value of mining services and equipment procurement 2000-2004 70
5.3 Total mining taxes paid to the Government of Tanzania, 1997-2009 72
5.4 Taxes paid to the Government of Tanzania by four major mines,
2000-2007 72
6.1 HIV/AIDS trend in mining neighbourhoods 89
6.2 a-d STDs trend in mining neighbourhoods 90
6.3 a-e Diarrhoea, asthma, ear and eye diseases and tuberculosis trends
in mining neightbourhoods 92-93
7.1 Large scale mining’s expenditures for community development,
1999-2005 118

List of photos

5.1 Makeshift shelters at BGML neighbourhood (Kakola village) 73
6.1 a-b Structural damage due to increasing mining operations 87
6.2 The human cost of gold and a deadly price to pay 91
7.1 BGML’s employees settlement scheme 100
7.2 a-b Community housing project 102
7.3 Kahama Education Enhancement Project (KEEP) 102
7.4 Health infrastructure development project 103
7.5 Community water pump 105
7.6 a-b BGML’s smallholder gardening projects 107
7.7 a-c Nyankumbu girls’ secondary school project 109
7.8 Construction of a new operating theatre and extension of maternity
ward at the Geita District Hospital 110
7.9 GGML-AMREF VCT Centre at Geita bus station 110
7.10 a-c Kilimanjaro Challenge and its beneficiaries 112
7.11 Harelip patient before and after the surgery 112
7.12 a-c Small-scale mining projects 113
7.13 a-d Nyakabale agricultural project 114
7.14 a-b Nyankumbu brick project 115
7.15 GGML water pipeline 115
7.16 a-b GGML sponsored sporting events 117
x