Tanzania’s change of mining laws have come to the fore after Africa’s richest man Aliko Dangote said that the new laws would potentially scare away investors.
The comments have already drawn a response from President John Magufuli’s administration, which termed them as unfortunate given the kind of ‘assistance’ Dangote’s investment has received.
“These policies scare away investors and that once an investor has left it is very difficult to bring that investor back. Tanzania needs to take another look at these new laws. These policies need to be clearly defined and investors need to be reassured that their investments are safe,” Mr Dangote, who has a $620 million cement factory in Mtwara, Tanzania, said.
Mr Dangote, speaking during the Financial Times Africa Summit in London, said that the new policies were harmful, mostly because of the ‘backdoor’ plan by Tanzania to eventually own 16 per cent of all firms at zero cost.
“The plan by parliament to allow the government to take 16 per cent of an investor’s assets for free is basically coming through the backdoor to seize assets.
They can come back in the next few years and take a majority of the shares at their price. It is a wrong policy. Once you chase an investor out, it will be very difficult to bring that investor back. They have scared quite a number and this is not a good thing,” Mr Dangote is said to have told the summit.
However, Tanzania’s Minister for Investment, Charles Mwijage, defended the administration, terming Mr Dangote’s comments unfortunate in the light of the president’s ready assistance to the billionaire’s cement investment in the country.
“The government’s investment policies are clear, transparent and aimed at ensuring that the government also benefits from the country’s resources. The “free carried interest” is a requirement for companies operating in the extractive industry that existed in Tanzanian laws even before the recent review. Investors in the extractive industry are obliged to cede 16 per cent free carried interest to the government to ensure the country benefits from its natural resources,” Mr Mwijage said. Read more here.