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7 CSR in Tanzania's Mining Industry UvA-DARE (Digital Academic Repository) Foreign direct investment and poverty alleviation in Tanzania: a case of Bulyanhulu and Geita Gold Mines Limited in Kahama and Geita districts Nyankweli, E.M. Publication date 2012 Document Version Final published version Link to publication Citation for published version (APA): Nyankweli, E. M. (2012). Foreign direct investment and poverty alleviation in Tanzania: a case of Bulyanhulu and Geita Gold Mines Limited in Kahama and Geita districts. General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). 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UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl) Download date:25 Sep 2021 Foreign Direct Investment and Poverty Alleviation in Tanzania A Case of Bulyanhulu and Geita Gold Mines Limited in Kahama and Geita Districts Foreign Direct Investment and Poverty Alleviation in Tanzania A Case of Bulyanhulu and Geita Gold Mines Limited in Kahama and Geita Districts ACADEMISCH PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Universiteit van Amsterdam op gezag van de Rector Magnificus, prof. dr. D.C. van den Boom ten overstaan van een door het college voor promoties ingestelde commissie, in het openbaar te verdedigen in de Agnietenkapel op dinsdag 20 maart 2012, te 14:00 uur door Emmanuel Maro Nyankweli geboren te Mwadui Shinyanga, Tanzania Promotiecommissie Promotor: Prof. dr. I.S.A. Baud Co-promotor: Dr. ir. A.F.M. Zaal Overige leden: Prof. dr. A.J. Dietz Prof. dr. O. Hospes Prof. dr. P. Knorringa Prof. dr. J.D. Sidaway Faculteit der Maatschappij- en Gedragswetenschappen 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) Emmanuel Maro Nyankweli (2012) Foreign Direct Investment and Poverty Reduction in Tanzania: A Case of Bulyanhulu Gold and Geita Gold Mines in Kahama and Geita Districts Keywords: FDI, Gold mining, Poverty Alleviation, livelihoods ISBN: ………………… Contents List of tables iv List of figures v List of photos vi List of maps vi List of boxes vii List of abbreviations vii Acknowledgements xi 1 Setting 1 Background 1 Development of Tanzania’s mining sector and changes in economic policy 2 Socio-economic issues 7 Demographic characteristics 8 Lake Victoria Greenstone Belt and selection of the area 9 Bulyanhulu Gold Mines Limited (BGML) 11 Geita Gold Mines Limited (GGML) 12 Structure of thesis 13 2 FDI, poverty, corporate social responsibility and changing livelihoods 15 Foreign direct investment (FDI) 15 The concept of poverty 16 Corporate social responsibility (CSR) 19 CSR and poverty alleviation strategies 25 Theoretical links between FDI and poverty 26 3 Research methodology 29 Overview 29 Livelihood analytical framework 29 i Research design, sampling and operationalisation 34 Research questions and operationalisation 37 Data sources and collection 41 Data analysis 46 Summary 61 4 The Mining Code and FDI performance in Tanzania 63 The evolution of Tanzania’s Mining Code 63 Comparison of the 1979 and 1998 Mining Acts 67 Compensation for persons vacated from their land due to mine development 75 Various overlapping laws and acts that govern compensation 77 Tax regimes in Tanzania 77 FDI performance prior to the reforms 81 FDI performance after the reforms 82 Distribution of FDI in Tanzania’s economy 84 Sectoral distribution of FDI in Tanzania 84 Summary 85 5 Socio-economic impacts of mining industries on local neighbourhoods 87 Overview 87 Economic impacts 88 Social impacts 94 Summary 100 6 Environmental and health impacts of mining operations on local neighbourhoods 101 Overview 101 Degradation of land and vegetations 102 Water pollution 104 Chemical pollution 104 Dewatering effects 108 Air and noise pollution 108 Airborne particulate matter 109 Noise and vibration pollution 110 Health impact 111 Summary 118 ii 7 CSR in Tanzania’s mining industry 121 Overview 121 CSR policies in the mining industry 122 Community development practice as a CSR approach to mining 124 Socio-political context of community development 125 BGML’s CSR initiatives 128 GGML’s CSR initiatives 139 Small-scale mining 145 Large-scale mining’s expenditures for community development 150 Summary 152 8 Conclusion and policy recommendations 153 Overview 153 The contribution of the gold mining sector in Tanzania 154 Effects of gold mining on livelihood in the LVGB 158 Corporate social responsibility and local economic development 165 General conclusion 167 Policy recommendations 175 Further research 177 References 179 Summary 195 Samenvatting 201 Muhtasari 209 Annex 217 iii List of tables 1.1 Tanzania Mineral Exports (US $ Million) 4 1.2 Liberalised Mineral Exports Mainly From Artisanal Miners 5 1.3 Liberalised economy: Mineral export between 1999-2007( $ mn) 6 1.4 Economic and demographic trends 9 3.1 Districts, wards and villages involved in the study 34 3.2 Criteria for respondent income categories 35 3.3 Household distribution in income strata by village sample 36 3.4 Research questions 37 3.5 Ethnic diversity by mining neighborhood 54 3.6 Average family size by mining neighborhood 55 3.7 Gender distribution of respondents 55 3.8 Highest education obtained by respondents 56 3.9 Housing characteristics by mining neighborhood 57 3.10 Wall building materials 58 3.11 Major sources of water in households by mining 58 neighborhood 3.12 Major sources of energy in households by mining 59 neighborhood 3.13 Major economic activities in large-scale mining by mining 60 neighborhood 4.1 Employment in the large-scale mining sector in Tanzania 75 5.1 Government revenue accrued from the mining sector 90 5.2 Mining sector contribution to overall national GDP, 2000-2008 91 5.3 Perceived ranking of prostitution as social ill 96 5.4 Perceived ranking of drug use as social ill 97 5.5 Perceived ranking of crime as social illn 97 5.6 Mean expenditure per capita by category of item 99 6.1 Land managed by GGML 103 6.2 Areas occupied by different categories of disturbed land 103 6.3 Comparison of concentration of heavy metals at Nyakabale with 105 standard concentrations of surface soils iv 6.4 Comparison of concentration of heavy metals in sampled plants 105 from Nyakabale with standard concentrations in plants 6.5 The upper limits of the safe dietary intake of trace elements 107 6.6 HIV/Aids prevalence and new reported cases, 2002-2006 112 6.7 Reported cases of STD infections, 2002-2006 114 6.8 Reported cases of skin diseaseses, 2002–2006 115 6.9 Reported cases of diarrhoea, asthma, ear and eye diseases, and 118 tuberculosis 7.1 Large-scale mining expenditures for community development ($) 151 8.1 The positive and negative impacts of FDI in the gold mining 168 sector List of figures 1.1 a-b Pre-independence Mineral Production 3 1.2 Trends of gold exports (in tons) and value, 2001-2006 ($ mn) 7 1.3 Sectoral contribution to overall GDP at factor cost (2010 prices) 8 3.1 Livelihoods framework 32 5.1 Foreign exchange earnings from gold and traditional export crops 89 1999-2008 ($ Million) 5.2 Value mining services and equipment procurement 2000-2004 90 5.3 Total mining taxes paid to the government of Tanzania,1997- 93 2009 ($ million) 5.4 Taxes paid to the government of Tanzania by four major mines, 93 2000-2007 6.1 HIV/Aids trend in mining neighbourhoods 113 6.2 a-d STDs trends in mining neighbourhoods 114 6.3 a-f Diarrhoea, asthma, ear and eye diseases and tuberculosis trends 117 in mining neighourhoods 7.1 Large-scale mining’s expenditures for community development 151 v List of photos 5.1 Makeshift shelters at BGML neighborhood (Kakola village) 95 6.1 Structural damage due to increased mining operations: 110 Nyakabale (near GGML) and Kakola (near BGML) 6.2 The human cost of gold and the deadly price to pay 116 7.1 BGML’s employees settlement scheme 130 7.2 a-b Community Housing Project 131 7.3 Kahama Education Enhancement Project (KEEP) 132 7.4 Health Infrastructure Development Project 133 7.5 Community water pump 135 7.6 a-b BGML’s smallholder Gardening Projects 138 7.7 a-c Nyankumbu Girls’ Secondary School Project 141 7.8 Construction of a new operating theatre and extension of the 142 maternity ward at Geita District Hospital 7.9 GGML-AMREF VCT Centre at Geita bus station 143 7.10 a-c Kilimanjaro challenge and its beneficiaries 144 7.11 Harelip patient before and after the surgery 145 7.12 a-c Small-scale mining projects 146 7.13 a-d Nyakabale Agricultural Project 147 7.14 a-b Nyankumbu Brick Project 148 7.15 GGML water pipeline (from Nungwe bay of lake Victoria to 149 the mine) 7.16 a-b GGML sponsored sporting events 150 List of maps 1.1 Geological map of the Lake Victoria Greenstone Belt adapted 10 from Borg and Shackleton (1997) 1.2 Locations of Geita (GGML) and
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