The document discusses several approaches Tanzania has taken regarding its extractive industries, particularly oil and gas. It outlines the natural gas policy approach, legislation-based approach, contractual-based approach using production sharing agreements, transparency approach by joining the EITI, and a local content policy. It also discusses questions about when Tanzania will start benefiting from natural gas revenues, CCM and UKAWA's differing priorities around agriculture and education, and the potential for industrialization to create jobs under Magufuli's leadership.

1. 1
INTERVIEW QUESTIONS BETWEEN JOYCE MMASSY AND PROF
HANDLEY MPOKI MAFWENGA SIMBA
The African
Prof Handley Mpoki Mafwenga Simba
[Ph.D (finance -COU), MSc (finance -Strathclyde), MBA (Mg.Eco -ESAMI/MsM), LLM
(taxation- UDSM), LLB (Tudarco), PGD tax mgt (IFM), AD tax mgt (IFM), ICSA (UK)]
[Macro-Fiscal Policy, Advocacy and Tax Expert (Govt-URT)]
1: Do you think the government approach on Extractive Industry especially in Oil
and Gas is good enough? If not then what is your opinion?.
There are approaches of fivefold which I could be able to briefly highlight at this juncture
which constitute as one of the main consolidative approach on Extractive Industry;
The Natural Gas Policy Approach
This is a non-binding approach which its scope is confined to the midstream and
downstream sectors. The Policy provides, on the one hand, an active role for the
Government in the natural gas sector and, on the other hand, a variety of new terms of
investment which serve State's economic and social objectives. This Approach is very
important because any policy plays as a pillar for the legal and institutional framework of
the sector. “No Policy, No Rule of Law in the ambit of Legal and Institutional
framework”.
However, key challenges of the Gas Policy include but not limited to the management of
valuable resource, policy, legal and institutional frameworks to facilitate more effective
management of the industry. Lack of human resources with the requisite skills and
knowledge for the industry; natural gas infrastructure; development of the domestic
market and managing the export market; revenue management; how to meet public
expectations; including how to respond to the needs of health, safety and environment
protection. The Government is also indebted to ensure good management of gas
revenues taking into consideration the resource curse phenomenon.
Legislation-based approach
Currently, Tanzania in oil and gas exploration and development is using legislation-
based approach where the activities are regulated by the 1980 Petroleum Act, Other
key legislation includes the Income Tax Act of 2004 and the Environmental

2. 2
Management Act of 2004 which are applicable for the Fiscal regime and Environmental
issues. This approach is good as it is compatible with the international best practice.
Contractual-based approach
We are using also a Contractual-based approach while the Tanzania's Model PSA
(2004, revised in 2008), and a PSA addendum for natural gas (2010) are the
Instruments now in place. The Model PSA is a tripartite Agreement for negotiations
between foreign oil companies, the Government and TPDC. It sets out the terms under
which exploration and production can take place. The Government is using the flexible
approach which allows for the negotiation of the important issues (such as Area, Work
Program and Economic terms etc.) within the framework of production sharing
arrangements.
In relation to operations being carried out, the MPSA highlights options that maybe
applicable depending on the agreement entered between the parties. The first case is
where all costs are borne by the investor during the exploration stage and the costs can
be recovered by the investor later during the development stage. The second case is
when TPDC actively participates in the expenses of the project by 25%. This however
can only be during the development stage and not during the exploration stage. TPDC
can enter into joint operations with the investor and will only contribute in the expenses
other than the exploration expenses. However the investor remains the sole operator of
the activities, under properly definite rights and obligations. The investor will carry out all
operations which must be approved by a Joint Operating Committee in which TPDC and
investor have equal representation. This approach is very important to Tanzania, as
represented by TPDC thereby claiming an outright ownership of the oil and gas subject
to the its share of production.
Transparency Approach
This is another model that Tanzania has embraced to be the robust and broad approach
in addressing Good governance and effective public financial management while it
became compliant to EITI in 12th
December 2012. The Government of the United
Republic of Tanzania in its efforts to promote transparency in the extraction of minerals,
oil and gas resources joined the Extractive Industries Transparency Initiative (EITI) in
February 2009.
In this model a common approach is Publish What You Pay (PWYP) campaign. The
Government advocates for a mandatory approach to revenue transparency essentially
focused on companies’ disclosure obligations. Mining, Oil and Gas companies are
required to fill the prescribed template to TEITI. The reconciliation under TEITI aims at
investigating the discrepancies and the nature of such discrepancies for the assurance
of disclosure quality. TEITI is taking a voluntary, two-sided approach to revenue
transparency. It sets an international standard for companies to publish what they pay
and for governments to disclose what they receive. It is based on independent audit,

3. 3
reconciliation and wide dissemination of payments declared to have been made by
companies and revenues declared received by governments.
The TEITI Work plan is to strengthen and deepen transparency in the extractive
industries according to EITI Standard and priority activities under G8-Tanzania
Partnership. To implement agreed activities under the G8 -Tanzania Partnership, TEITI
has key stakeholders, which are the Ministry of Energy and Minerals, the Prevention
and Combating of Corruption Bureau (PCCB), Attorney General (AG), Tanzania
Minerals Audit Agency(TMAA), Tanzania Petroleum Development Corporation(TPDC),
Tanzania Revenue Authority (TRA), Oil and Gas Association Tanzania (OGAT),
Tanzania Chamber of Minerals and Energy (TCME), Energy and Water Utilities
Regulatory Authority (EWURA), Ministry of Natural Resources, National Environment
Council (NEMC), Public Procurement Regulatory Authority (PPRA), Civil Society
Organizations (CSOs), and Prime Minister Office –Regional Administration and Local
Governments (PMORALG).
In this Approach, Multi-Stakeholders Group (MSG), as a governance oversight body for
EITI implementation in Tanzania, continued with its role of facilitating informed debates
on how resources are managed by the GoT since 2013 when First Report was made in
place.
Local Content Policy-based Approach
The Local Content Policy for Oil and Gas Industry, 2014 is now in place where room for
the new levels of government take, a broader mandate for local content and capacity
training has been preserved. In this regard the creation of oil industry capacity based in
the solid formation of linkages (TPDC being a key player as national oil company) in
leading roles; and a clear institutional framework and an exhaustive local content policy
are prime facie issues. The Government adopts a Multi-stakeholder approach to ensure
that the policy develops and caters for the industry’s needs as well as the support
measures, including access to financing for local entrepreneurs, the development of non
dedicated infrastructures, the setting of relevant institutions for monitoring and
oversight, and the partnerships required to harmonize regional frameworks, platforms
and policies.
This Approach is very important because involves developing appropriate regulations
and frameworks that will optimize national value creation from the extractive industries -
by stimulating employment and entrepreneurship, value-addition, diversification, transfer
of technology and knowledge creation, and would build capacity to our people in such a
way that they will be able to come up with an understanding of the extractive industry
value chain and its economics. These have to go in tandem with the broader transfer
restrictions and a prioritization of the domestic gas market by the Government. The only
key challenge is how we can harmonize our policy within the Regional blocks so as our
people can attain comparative and competitive advantages. Other Challenges include
lack of human capacity and education skills, poor infrastructure, weak industrial base,
poor governance and inadequate business environment.

4. 4
2. When will Tanzania start to benefit from natural gas?
As you may be aware, Tanzania currently produces natural gas in two locations, Songo
Songo Island and Mnazi Bay though substantial exploration works are under the
process in variety of the wells currently containing measured and probable reserves
including gas fields such as Mkuranga-1 in Ruaruke, Pweza-1 Well in Block -4, Kiliwani
Gas Field and Ntorya Gas Field. However, the consumption and production of Gas is
expected to attain its clientele in 2023 where not less than 251,960,784 Million of Cubic
Feet (MMCF) would likely be realized and with high shift of not less than 507,843,137
Million of Cubic Feet (MMCF) in 2024 registering sustainability and consistency yield up
to year 2044. As of now, more that 53TCF have been explored from the sector.
However, these data may experience changes depending on the level of productivity
and changes in the geological and economic factors. Likewise, of recently, an effort has
been taken by the Government to ensure that energy sub-sector benefits from the Gas
while expecting much benefits in the near future. This would likely cut-costs in energy
and enhances productivity in the country.
However, Tanzania should be indebted to have a place a prudent management of the
new wealth which would include the establishment of a “sovereign wealth fund”
somewhat, savings fund for intergenerational equity and stabilization fund to overcome
economic factors. This would ensure future generations of Tanzania benefit from the
gas revenues and revenues are protected from volatility in price trends.
3. During the campaign period, CCM and UKAWA have two different disputes,
CCM campaign for Agriculture revolution while UKAWA insists on prioritizing
education improvement. What is your opinion on the two?
The priority on Education improvement has already been covered by the CCM Election
Manifesto since the Musoma Declaration of 1974 and this is basically subject for review
in each and every year and especially in the Public Expenditure Review. This is a
sectoral policy which is given priority in the Development Plans. If you may recall, CCM
adopted the slogan of TANU which stressed on the abolition of Poverty, Ignorance, and
Disease which have never been rejected in the Fiscal frameworks. UKAWA which is a
non-registered political group probably is aiming at filling that would be gaps in the
implementation of the Education in the Country rather than improvement because in the
Government’s efforts there is a value addition in the education Life Cycle through
budgetary operation.
On the other hand, the Agricultural revolution for CCM captures also education because
KILIMO Kwanza Resolution of June, 2009 has Ten Pillars and in Pillar No 10 one of the
Activities is to Sensitize campaign on KILIMO KWANZA at national, regional, district,
ward and village levels in which the specific task is to Mobilize schools and colleges in
the campaign on KILIMO KWANZA which is coordinated by the Ministry of Education
and Vocational Training in collaboration with the Prime Minister’s Office Regional
Administration and Local Governments. This Activity is continuous so as to address
sustainable improvement in education under the umbrella of KILIMO KWANZA through

5. 5
critical review. Moreover, Agricultural Revolution under CCM is very important to be
compatible with technological changes which also go in tandem with education; and the
sector employs more than 80% of Tanzanians and it is a key segment that plays a
pivotal role as inputs to the Manufacturing segment of the economy. Taking into
consideration that, Agriculture cannot be implemented caste-aparte from, education
CCM has a noble selection than UKAWA.
It should bear in mind that, apart from KILIMO KWANZA there are several projects
under Public Private Partnership which have to be given priority; there is SAGCOT
Programme which is an inclusive, multi-stakeholder partnership to rapidly develop the
region’s agricultural potential. Its objective is to foster inclusive, commercially successful
agribusinesses that will benefit the small-scale farmers, so as to improve food security,
reduce rural poverty and ensure environmental sustainability. The risk-sharing model of
a public-private partnership (PPP) approach has been demonstrated to be successful in
achieving these goals. There is also Rural Micro, Small & Medium Enterprise
(RMSMES) programme commonly known as Muunganisho wa Ujasiriamali Vijijini
(MUVI), which aims to support the Government in poverty reduction strategy, within
MKUKUTA Plan which broadly aims at transforming Tanzania’s agriculture based
economy into export & market led, so as to be competitive semi industrial based.
I would analyse critically that UKAWA and CCM’s Strategies are asymmetric in profile;
because prioritization of Education will end up onto sensitizing productivity in agriculture
but will demand more efforts in Monitoring and Evaluation at the sector than would be
Agriculture as priority that accommodates education. Education is a means to achieving
objectives in agriculture but Agriculture is independent parameter being a starting point,
as means to achieving its objectives and an end to itself.
Taking into consideration that the growth of agriculture has been very low from 3.2% in
2013 to 3.4% in 2014, John Magufuli is obliged to ensure that there is a high growth in
agriculture to attain value chain which would be able to accommodate expected
employment scope in the Country. Of course, John Magufuli must strive to attain
comparative and competitive advantage because productivity in pyrethrum industry has
increased and the global price in Sisal product has been favorable, thereby curbing the
demand gaps in Saudi Arabia, United Kingdom, Spain, Nigeria, Germany, Syria, China,
Japan, Kenya and Kuwait.
4. The CCM presidential election candidate, Dr. John Pombe Magufuli has also
been insisting on the importance of industrialization in the country which will
help to create jobs. Is it possible?
Yes Indeed! It should be noted from the outset that, the function of industry as a hub for
the economy is underlined by the fact that the manufacturing sector is a key for
intermediate input transactions in the Tanzanian economy, and its share in total value
added (VA) and employment amounts to above 10%. John Magufuli has to pursue
objectives under the integrated industrial development strategy (IIDS) which assumes

6. 6
that the manufacturing sector would contribute 23 % share of GDP by 2025 in order
to perform the vision.
Again, business services as well as other non-industry sectors strongly benefit from
industry’s demands in the course of upstream and downstream value chains. The
symbiosis of industry and other sectors on the input level can be termed “Joint
Production”. There is a deep and mutual productive integration, particularly with the
service sector, which renders the traditional dichotomy and antagonism between
industry and services obsolete. Combined with this “Joint Production”, the relevance of
industry is considerably higher than it is often given credit for.
Due to this interconnectedness, industry generates strong positive spillovers to other
sectors; Industry exerts higher multiplier effects on the total economy than other
sectors. In fact, every unit of additional demand in the manufacturing sector may
generate more than one unit of additional output in the total economy. As this output
increases more than an increase in the Money supply, the inflation forces will be
controlled and the value of our shillings would likely be strong, therefore, causing even
the labour costs to be cheaper.
The current situation in Tanzania must enforce John Magufuli to concentrate in this
sector because the growth of the sector has not been conducive. It grew by 6.8% in
2014 registering a slow pace in the growth due to the reduction of production outputs in
pyrethrum sub-sector. The contribution of this sector to GDP declined to 5.6% in 2014
as compared to 6.4%.
Regarding employment, there are two segments, the small-and Medium Scale Industry
which employs a large population in our country and has employed about 5,570,000
people an increase from 5million in 2013 registering about 11.4% increase and the
Large Scale Industry where the costs of production must be attained at an economy of
scale, and the production outputs have to be increased to tackle inflation. The aim
however is to go above the average in the employment scope in our country and more
basically in the industry sector.
Considering the relevance of industry for the above -mentioned growth drivers, it comes
as no surprise that a strong industrial base goes hand in hand with higher economic
growth and technical progress of which John Magufuli promises to bring Tanzania as a
portfolio clientele not only within the Regional Blocks but also Globally. Suffice it to say
that, due to these beneficial spillover effects, a renaissance of industry would also have
an important social dimension: it can help Tanzania to reduce the burden of excessive
unemployment in many parts of our Country. We could also remember that, the
government introduced the “Mini-Tiger Plan 2020” in 2006 which aimed at boosting the
national economy through rapid industrial development. This initiative led to the
establishment of a Special Economic Zones (SEZ) programme and Economic
Processing Zone (EPZ) areas in different parts of the country. This has eventually been
a catalyst for the manufacturing industry in Tanzania which is one of the strategies to

7. 7
promote employment, investment and industrial production in which John Magufuli must
ensure they attain sustainable development in the economy.
Apart from macroeconomic relevance, industry offers solutions to societal challenges.
The innovative and creative capacities of manufacturing businesses in Tanzania would
be able to essentially tackle many future challenges, e.g. population growth in emerging
economies or dwindling natural resources. Hence, Industry acts as a hedging
instrument. Likewise, in lieu of strengthening the sector, it will be easy to formalize other
informal sectors like Machingas and Mama Lishe because the industry-based
infrastructure will change and the costs will be reduced due to the high value addition in
the sector. Likewise, the IIDS (2011 – 2015), confirms that the government conceives
industrialization as the main catalyst to transform the economy, generate sustainable
growth and reduce poverty.
The IIDS had to be implemented in three phases. Phase I (1996-2000) was for a short-
term programme to rehabilitate and consolidate existing industrial capacities. Phase II
(2000-10) was a medium -term programme to generate new capacities in areas with
potential for creating competitive advantage through the use of efficient technology and
learning process where the emphasis was put on initiating production of intermediate
goods and light capital. Phase III (2010-20) encompassed a long -term programme to
achieve major investments in basic capital goods industries to ensure consolidation of
the industrial structures developed in the first two phases. Therefore, John Magufuli
has to ensure that the capital base currently in place is quantifiable in reality in industrial
development.
Moreover, as we are now moving to the Gas businesses, exploitation of Oil and Gas
which would attempt to cause Labour Mobility from Manufacturing Sector will be
deprived due to the potential value addition in other sector. Hence, John Magufuli will be
able to curb the resource curse phenomena.
Thanks for your Courtesy