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The Fourth Industrial Revolution from the perspective of a developing country

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[Translate to en:] Männer arbeiten in Goldmine
Miners at work in Mgusu, Tanzania. Photo: picture alliance / Sandra Gätke | Sandra Gätke

One could say that, currently, in Tanzania the person of the president is more important than the office of the presidency itself. In the course of a few weeks, Tanzania’s former vice-president, Samia Suluhu Hassan, seems to have overturned everything: policy decisions, former achievements, severe criticism of abuses of democratic procedures, and violations of civil and human rights by the regime of Tanzania’s recently deceased president.

Although it is too early to draw conclusions, after only six weeks in office, critical observers worry that the country is moving from one extreme to the other: from a president who described restricting the plunder by mining giants as a waging a “war”, to a president who, given the country’s economic dependence, feels unable to “flex her muscles” in front of foreign investors and instead has opened the door for potential further plunder.

Dorothee Braun heads the Rosa-Luxemburg-Stiftung’s East Africa Office in Dar es Salaam, Tanzania. This article originally appeared in maldekstra #11.

Judging by the debates in parliament and on social media, Magufuli’s legacy is to be jettisoned as much as possible. The key terms in Magufuli’s speeches are to be removed from the vernacular. The term wanyonge (the wretched, destitute) is seen as divisive, the term ubeberu (imperialism) implies a criticism of investors and representatives of development partners.

Tanzania’s Mining Industry

Unsurprisingly, the mining industry welcomed the new president’s change of course. The chairman of the Tanzania Chamber of Mines, Philbert Rweyemamu of Barrick Gold, said he was optimistic, as the outstanding VAT refunds from the Tanzanian government, allegedly amounting to several million US dollars, would increase the company’s investment capital. Wherever the Ministry of Finance sees difficulties waiving taxes, the president said, she will take matters into her own hands. The possibilities for mining mineral resources in conservation areas would also have to be subjected to a comparative cost-benefit analysis.

Nor is it surprising that in the weeks leading up to Magufuli’s death, Western media coverage did not say a word about the president pulling the plug on mining giant Barrick and commodities trading and mining company Glencore. In 2018, he revoked the licences of both companies to mine the Kabanga nickel deposit located in north-western Tanzania, on the border with Burundi.

Tanzania is endowed with the blessing or curse of massive mineral deposits that are essential for the technological development of the “Fourth Industrial Revolution” or a “green” future, among other uses. Nickel, cobalt, and graphite are needed for the development of future battery technology. Securing their market penetration will depend on the gigantic Tanzanian deposits of 18 million tonnes of graphite, 58 million tonnes of nickel, and about 45,000 tonnes of cobalt.

According to estimates by the World Economic Forum (WEF), demand for high-purity nickel will increase by a factor of 24 in 2030 compared to 2018, while demand for cobalt will quadruple. According to data from Barrick and Glencore in 2014, Kabanga hosts the world’s largest nickel deposit, which is unrivalled in its purity.

Legal scholar Friedrich Müller’s 2012 analysis—despite an increase in complexity and number of actors—sums up the perspective of countries that are on the periphery of capitalist penetration. What we euphemistically call globalization is not just a mere technical economic integration of the world, a rapid restructuring of business and national economies, and an increase in mutual economic dependencies. “It is above all a new kind of contest of violence and power, one controlled from behind the scenes by an undemocratic planetary executive consisting of the IMF, the World Bank, the WTO, the OECD and the G8 summits. It is an equally abstract and brutal imposition of the economic models and economic policy ideology of the richest Western industrialized countries on the societies of the so-called periphery.”

Mineral Wealth Does Not Mean Public Wealth

Throughout his mandate, President Magufuli refused to limit state intervention to regulatory tasks. Mining companies had enjoyed relatively low tax rates and weak regulatory oversight for decades. This was to change when Magufuli took office. For although Tanzania is one of the top producers of mineral commodities, there is still a dire need for the structural transformation of the economy.

Mineral wealth does not translate into the everyday reality of most of the population. Wealth is generated elsewhere, as can be seen in the example of the rare mineral tanzanite. India processes 95 per cent of the precious minerals mined in Tanzania and makes an annual turnover of 300 million US dollars, followed by Kenya with 100 million. Tanzania lags far behind with just 38 million.

The Magufuli government sought to transform those economic relations based purely on the extraction of raw materials. Not only did it reform the regime of tax rates, corporate participation and regulatory oversight, but in 2018, on the basis of two previously passed laws, it revoked several of the existing licences for the mining of gold, silver, nickel, copper, and rare earth minerals and placed a moratorium on new licences.

In January 2021, Tanzania concluded a framework agreement with the family-owned company Kabanga Nickel Limited to mine the deposits. The application of hydrometallurgical processes, according to the agreement, is not only intended to reduce the project’s ecological footprint, but also to turn Tanzania’s vision of becoming a hub for metal extraction and refining into a reality.

According to the Global Battery Alliance/WEF modelling, turnover throughout the value chain will increase eightfold by 2030, 45 percent of which will be in battery production, and 24 percent in metal refining. However, whether battery technology will offer a viable future solution for the decarbonization of the transport industry is another question altogether.

In light of the marginal recycling rates of currently just 7 percent of global metal demand and the high climate, social, and environmental costs of metal extraction, one is reminded of the words of former UNEP Executive Director Klaus Töpfer. In his lecture “Putting markets back in the service of people”, he criticized the dominance of technology in society and its approach of always trying to correct issues caused by the use of technology with other technologies. According to Töpfer, markets now set the pace for decisions and democratic institutions are falling behind. These factors result in practical constraints that affect current decisions to the extent that they are often described as unavoidable.

In its report, the WEF weighs the location of high environmental and social risks in the mining areas against the many ways in which technology can be used to achieve global sustainability goals. Africa is a massive market, and battery technology has many applications: electrifying rural communities, reducing post-harvest losses, or generating livelihood opportunities.

Yet as long as the strategies of a “green” future are based on the continuation of an asymmetric economic order and do not consider how it could be dismantled, the future that the international community promised itself remains an empty dream for the wanyonge. They are suffering from land grabbing, environmental destruction, and tyranny, all of which flies under the radar of public awareness.

A first step would be for the international community to hold companies accountable for their true environmental and social impact along the value chain—well aware that large parts of the Sustainable Development Goal-relevant impacts take place outside the national borders in which they are located. Developing engineering, research, and productivity capacity in the mining countries themselves would be a necessary second step.