Challenges of Dependence on Mineral Revenues in Tanzania's Economic Growth for the Year 2024/2025

The heavy reliance on mineral revenues poses significant risks to Tanzania's economic stability and growth due to market volatility and global uncertainties. Ensuring diversified and stable revenue sources, managing high expenditure needs, and addressing regulatory and geopolitical challenges will be crucial for the successful implementation of the Ministry of Minerals' budget for 2024/2025.

Revenue and Expenditure Overview for 2023/2024

1. Approved and Revised Budget:
   • 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
2. Revenue Collection Target:
   • Total Target: TZS 1,006,705,169,300.00
   • To Treasury: TZS 882,128,205,000.00
   • Ministry's Institutions: TZS 124,576,964,300.00

Achievements in Mineral Revenues

• Mineral Sector Tax Revenues:
  • 2022/2023: TZS 3,143,212,216,996.76 (13.9% of total tax revenues by TRA)
  • Year-on-Year Increase: 50.3% from TZS 2,091,256,445,986.27 in 2021/2022

Key Challenges

1. Dependence on Mineral Revenues

• Volatility: Mineral revenues are highly susceptible to global price fluctuations. The 2023/2024 mineral tax revenue was significant but subject to change due to market instability.
  • Example: Diamond prices dropped by 19% between July 2023 and March 2024, influenced by geopolitical events like the Russia-Ukraine war.

2. Global Market Uncertainties

• Economic Downturns: Global economic instability can significantly affect mineral prices and demand, impacting Tanzania's revenue projections.
• Geopolitical Conflicts: Such conflicts can create market uncertainties, leading to unpredictable revenue streams.

3. High Expenditure Needs

• Budget Allocation:
  • Total Revised Budget for 2023/2024: TZS 163,008,241,000.00
  • Development Projects: TZS 96,823,300,000.00
  • Salaries: TZS 20,307,498,000.00

4. Infrastructure and Capacity Building

• Investment Requirements: Enhancing geological surveys, supporting small-scale miners, and building institutional capacity require significant investment in equipment and training.

5. Regulatory and Management Issues

• Implementation Challenges: Effective administration of new regulations (e.g., CSR guidelines) requires coordination among stakeholders, which can be complex and resource-intensive.

6. Geopolitical and Environmental Factors

• Impact on Stability: Unforeseen geopolitical and environmental events can disrupt economic stability, affecting revenue projections and expenditure needs.

Figures and Estimates

• Revenue Collection Target for 2023/2024:
  • Total: TZS 1,006,705,169,300.00
  • To Treasury: TZS 882,128,205,000.00
  • Ministry's Institutions: TZS 124,576,964,300.00
• Mineral Sector Tax Revenue for 2023/2024: TZS 3,143,212,216,996.76 (13.9% of TRA's total tax revenue)