I am director of a company incorporated in France that engages in servicing mining sectors in different parts of Africa. We plan to establish a business in Tanzania’s mining sector and came across Tanzania’s Mining (Local Content) Regulations of 2018 where I find that preference should be given to locally-obtainable goods and services. There is also a provision of tendering requirements. Does everything need to be tendered? I find this quite awkward.
There is nothing awkward about these Regulations. These Regulations are in line with what other countries are also doing to ensure that the local communities and people fully benefit from their resources.
The Regulations apply to the contractors, subcontractors, licensees, corporations and other allied entities carrying out mining activities. They impose various conditions regarding tendering procedures by which preference is given to local goods, services and producers; ensuring all contractors and subcontractors comply with local content requirements; and reporting requirements regarding compliance to the regulations. As such, every entity carrying out mining activities should ensure that local content is a component of such activities. The Regulations respond to Tanzania’s Mining Policy which intends to capacitate local population, thus augmenting the sector’s contribution to national development, in terms of employment and training of Tanzanians and procuring local goods and services.
To comply with local goods and services preference requirements, tendering is required with a view to ensuring that Tanzanians are aware of the goods and services required and are given the opportunity to service the sector. Despite the requirement, the Regulations, vide regulation 16, do not necessitate tendering everything. Goods or services can be procured through sole sourcing. The contractors, subcontractors, licensees or allied entities must inform the Mining Commission, in writing, of each proposed contract or purchase order which is to be sole sourced if such proposed contract or purchase order relates to mining activity. With sole sourcing, the value of the proposed contract or purchase order is irrelevant, provided that such contract or order relates to mining activities. There are no criteria by which sole sourcing or competitive bidding modes apply. Therefore, it appears optional to procure goods and services through either sole sourcing or competitive bidding, only that notifying the Mining Commission under competitive bidding procedure, the value of the proposed contract or purchase order is material. The value of the contract or purchase order is irrelevant under sole sourcing mode. However sole sourcing should not be used to circumvent the Regulations and/or inflating prices for various supplies as has been noticed in the past. We recommend you also engage with the Mining Commission for more information.