Ministry of Minerals' 2024/2025 Budget Amid Economic Growth Uncertainties

The Ministry of Minerals faces significant challenges in implementing the 2024/2025 budget due to economic growth uncertainties. In 2023/2024, mineral sector tax revenues reached TZS 3.14 trillion, a 50.3% increase from the previous year, contributing 13.9% of total tax revenues. The revised budget for 2023/2024 was TZS 163 billion, with TZS 96.8 billion allocated for development projects and TZS 20.3 billion for salaries. However, dependence on volatile mineral revenues and global market instabilities, like the 19% drop in diamond prices, pose risks. Ensuring stable revenue sources and managing high expenditure demands will be crucial for the successful implementation of the 2024/2025 budget.

1. Revenue and Expenditure for the Year 2023/2024

• Approved Budget: TZS 89,357,491,000.00
• Revised Budget: TZS 163,008,241,000.00
  • Other Expenditures: TZS 45,877,443,000.00
  • Salaries: TZS 20,307,498,000.00
  • Development Projects: TZS 96,823,300,000.00
• Revenue Collection Target: TZS 1,006,705,169,300.00
  • To be Submitted to Treasury: TZS 882,128,205,000.00
  • To be Used by Ministry's Institutions: TZS 124,576,964,300.00​​.

2. Implementation of Ministry Projects for 2023/2024

• Major Projects:
  • Construction of a large and modern Multi Metals Processing Facility at Buzwagi Special Economic Zone​​.
  • Continued issuance of export permits, increasing from 10,318 in 2022 to 11,258 in 2023 due to higher demand for gemstones and coal​​.
  • Revenue from mineral sector taxes increased to TZS 3,143,212,216,996.76, which is 13.9% of total taxes collected by TRA, showing a 50.3% increase from the previous year​​.

3. Achievements and Challenges for 2023/2024

• Achievements:
  • Significant increase in mineral sector tax revenues.
  • Expansion and increased regulation of the mining sector.
  • Successful issuance and management of mining permits​​.

4. Plan and Budget Estimates (Revenue and Expenditure) for 2024/2025

• Guidelines Considered:
  • National Guidelines for Budget Preparation 2024/2025
  • CCM Election Manifesto 2020
  • Five-Year National Development Plan 2021/2022 – 2025/2026
  • Mineral Policy of 2009
  • National Development Vision 2025​​.
• Planned Expenditures:
  • Enhance revenue collection and increase the contribution of the mineral sector to the national GDP.
  • Develop strategic minerals and promote investment.
  • Continue geological research and support small-scale miners​​.

5. Work Plan for 2024/2025

• Key Implementation Areas:
  • Strengthen revenue collection and sector contribution.
  • Develop key and strategic minerals.
  • Promote investment and value addition in minerals.
  • Conduct extensive geophysical surveys and support small-scale miners.
  • Build capacity in institutions under the Ministry of Minerals​​.

Significant Increase in Mineral Sector Tax Revenues

• Total Revenue for 2022/2023: TZS 3,143,212,216,996.76
  • This accounted for 13.9% of the total tax revenues collected by the Tanzania Revenue Authority (TRA).
• Revenue Increase: 50.3% from the previous year.
  • Previous Year's Revenue (2021/2022): TZS 2,091,256,445,986.27

Challenges in Implementing the 2024/2025 Budget Considering Tanzania's Economic Growth

Focusing on the review of the 2023/2024 budget implementation and the 2024/2025 budget estimates, several challenges might affect the successful implementation of the 2024/2025 budget:

Economic Growth and Revenue Collection

1. Dependence on Mineral Revenues:
   • The 2023/2024 budget reported significant tax revenues from the mineral sector, totaling TZS 3,143,212,216,996.76, which was a 50.3% increase from the previous year. However, the reliance on mineral revenues can be volatile due to fluctuating global prices and demand​​.
2. Global Market Uncertainties:
   • The global market for minerals, such as diamonds, has shown instability. For instance, from July 2023 to March 2024, diamond prices fell by 19% due to economic downturns triggered by geopolitical conflicts like the Russia-Ukraine war​​.

Budget Allocation and Expenditure

1. High Expenditure Needs:
   • The planned expenditures for development projects, salaries, and other operational costs remain high. For 2023/2024, the total revised budget was TZS 163,008,241,000.00, with significant allocations for development projects (TZS 96,823,300,000.00) and salaries (TZS 20,307,498,000.00)​​.
2. Infrastructure and Capacity Building:
   • There are extensive plans for capacity building within the Ministry and its institutions, including enhancing geological surveys and supporting small-scale miners. However, these initiatives require substantial investment in equipment and training, which can strain the budget​​.

Implementation and Administrative Challenges

1. Regulatory and Management Issues:
   • The implementation of new regulations, such as the CSR (Corporate Social Responsibility) guidelines, has shown to be challenging. Ensuring compliance and effective administration of these guidelines requires coordination among various stakeholders, which can be complex​​.
2. Geopolitical and Environmental Factors:
   • Unforeseen geopolitical events and environmental factors can impact economic stability and growth, affecting revenue projections and expenditure needs.

Figures and Estimates

• Revenue Collection Target for 2023/2024: TZS 1,006,705,169,300.00
  • Submission to Treasury: TZS 882,128,205,000.00
  • Usage by Ministry's Institutions: TZS 124,576,964,300.00​​.
• Revenue from Mineral Sector Taxes for 2023/2024: TZS 3,143,212,216,996.76, accounting for 13.9% of TRA's total tax revenue​​.