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Can Tanzania emulate Ecuador to change livelihoods?

Can Tanzania emulate Ecuador to change livelihoods?

Its main export is oil. The economy has recently been growing at 3-5% per annum, the construction industry is booming and the middle class is ballooning faster than the global market can set up new supermarkets and food courts in the capital Quito city in Pinchita province. Ecuador has been quietly making waves and making life better for its citizens. More than a decade ago, Ecuador went through real tough economic times.

Inflation was above 50%, export earnings were severely cut by falling world market prices and government revenue from taxes was nothing to write home about. The economy was in negative territory. Desperate situations call for desperate measures. The then president Jami Mahuad took the extreme measure of adopting American dollars as the official currency instead of the Ecuadorian sucre. Dollars must have added some sweetener into the economy because it arrested the runaway inflation.

That pleased a lot of people, but did not imprison general poverty. Significant changes in the economy came with the election of Raphael Correa as president at the beginning of 2007. The US-trained economist led constitutional reforms and referendums aimed at ensuring greater democracy, human rights and greater cultural diversity. Reforms also increased the powers of the presidency. Correa engineered renegotiation of government share of revenues from  locally produced oil and gas.

According to the BBC website, a new law that came into force in July 2010 stated that Ecuadorean state will own 100% of the oil and gas produced and that the first 25% of gross income from oil sales must go to the state. Ecuador exports almost 500,000 barrels of oil per day. A t current world market prices of $ 100 per barrel, that can fetch up to US $ 50 million gross per day. Much of that revenue was going mainly to foreign oil companies and not really benefiting Ecuadorians.

Putting a quarter of 50 million green bucks i.e. 12.5 million dollars into state coffers is pretty significant for the 15 million live citizens. Most companies were not happy contracts being renegotiated and many left. Tanzania, are we listening? In Ecuador, operating costs for oil companies must come from the remaining 75% gross revenue. Tanzania has beautiful Mount Kilimanjaro but it cannot rival the taller Mount Chimburazo (6,310 metres) in Ecuador.

Both are volcanic mountains. The breath-taking Galapagos Islands are 1,000 kilometres from mainland Ecuador but still form an integral part of the Ecuador. The Galapagos Islands are the place of birth for Darwin’s theory of evolution. Such is the diversity of Ecuadorian flora and fauna. Tanzania is famous for its abundant wildlife and vast areas preserved as national parks for present and future generations of the whole world to enjoy. Zanzibar isles, a famed tourist destination are just 50 kms from the Tanzanian mainland coast. Some of its leaders and other inhabitants believe  arnings from tourism, agricultureand trade are theirs to keep.

And if they find oil and gas tomorrow, it will belong only to Zanzibaris. They only like to share electricity blues. Although Quito is the official capital, the real powerhouse behind the economy is another city with its own world trade centre. Guayaquil has a population of about 2.25 million people, like Dar es Salaam the de facto capital of Tanzania and economic hub of the land of the Serengeti. Construction is booming in the Bandar-el-Salaam and elsewhere in Tanzania.

Ecuador may be swimming in oil revenue now, but Tanzania has plenty of natural gas and coal. Where there is so much gas, there is bound to be oil. Why do you think so many foreign companies have taken oil exploration concessions off the shores of Mtwara and Southern Tanzania coast? They know. It is just a matter of time till the oil is discovered.

Then the companies will reap mega profits while ordinary Tanzanians will run neighbourhood kiosks and their children languish in underfunded schools without basic science laboratories for teaching future scientists. Tanzania has plenty of gold now, gold that is being sold at about US $ 56,000 per kg at current prices.

Tons of gold are annually exported at great profit to gold companies. Did the police not foil a robbery attempt at Geita recently in which gold bars worth billions of shillings were recovered? Who really knows how much gold is exported from Tanzania? When the attempted robbery occurred at Geita, the police and the government inspector could not agree the exact quantity of gold that was being transported.

Who will verify inspectors when mine owners can prevent even top-level government officials from entering company premises? Maybe many gold bars are being smuggled in containers full of unprocessed mineral ore undetected. The word from the grapevine is there is enough gold in Tanzania to build a brand new city the size of Berlin. If we could just grab a quarter of that money like our friends in Ecuador did for oil and gas money, we could education up to university level for free.

So, will parliamentarians continue playing partisan politics on TV and in political fora? Or will they put the money where their mouths are? We hope they will be united in the process of changing the rules of the mining game starting from now instead of waiting for the constitution to be redrafted and approved in the coming years.

It took president Correa four years to bring drastic change but those changes are paying off, not because investors or the international community want such changes but because Ecuador has allowed for a strong president to take on big business with the support of the people. We have four years till next election. Enjoy your day.

tnaleo@hotmail.com; cell +255-787-246136

AT a recent 20th conference of financial ...

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Mwandishi: TONY ZAKARIA

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