MANDATORY MINING STATE PARTICIPATION IN TANZANIA: ANALYSIS OF LEGAL AND REGULATORY IMPLICATIONS ON INVESTMENTS

Abstract

The need to reinforce Tanzania’s resource sovereignty to maximise revenues while creating investment-friendly environment has triggered debates in Tanzania for quite long. To realise this objective, in 2017, Tanzania introduced the seemingly revolutionary legal reforms which the government has described as ‘nationalistic’ in addressing historical injustices in Tanzania’s extractive sector. Among these reforms is mandatory state participation in the mining operations by which the Government acquires a minimum of 16% non-dilutable free carried interest (FCI) shares in the mining companies’ capital. This article proffers critique on the law with a view to establishing the extent to which Tanzania can successfully realise the intended objective. It argues that the FCI requirement has occasioned clear controversies which, if not addressed, stand to unnecessarily exasperate investors, thus incentivising their undesired behavioural responses to the legal system or resorting to relocating their investment projects to other destinations. As such, amendments to the law cannot be underestimated.