WHY ACACIA SACKINGS MAY COST BANKS TENS OF BILLIONS "Credit News 24"
Sources within the Tanzania Mines, Energy, Construction and Allied Workers Union (Tamico) branch at the mine said most of the workers who had been laid off took loans from various banks and financial institutions.
Banks face an uphill task of recovering an estimated Sh30 billion in loans following the sacking of 2,000 workers at Bulyanhulu gold mine in Shinyanga Region.
Sources within the Tanzania Mines, Energy, Construction and Allied Workers Union (Tamico) branch at the mine said most of the workers who had been laid off took loans from various banks and financial institutions.
Bulyanhulu Mine spokesperson Asa Mwaipopo confirmed at the weekend that 1,200 and 800 direct and indirect jobs, respectively, had been cut at Bulyanhulu mine, one of three gold mines operated by the firm.
Tamico sources said the sacked workers were issued loans under the salaried and other personal loan arrangements.
This could heighten anxiety within the banking sector which is already grappling with high levels of non-performing loans.
The Monetary Policy Statement for June 2017 published by the Bank of Tanzania (BoT) shows that non-performing loans increased to 10.8 per cent during the year to April 2017 from 8.2 per cent recorded in the previous year.
Mr Mwaipopo said during a function to bid farewell to the first group of retrenched workers that only 150 workers will be retained at Bulyanhulu.
Tamico said through its representative at Bulyanhulu that the decision to slash the workforce at the mine had caught the body by surprise.
According to company reports, the laid-off workers at Bulyanhulu account for almost 66 per cent of Acacia Mining direct employment.
Other effects of mine closure
The scaling down of operations at the mine would also have other significant to both the local and national economies, The Citizen has established.
Jobs
The axed 2000 jobs pose a burden to the economy and leave about 10,000 of their dependents without livelihoods. Dozens of suppliers to the mine who would have to scale down their operations might be forced to reduce workers adding to the number of jobless people in the area.
The Total Economic and Tax contribution report 2016 compiled by by Ernst and Young indicated that Acacia’s total direct, indirect, and induced economic contribution in Tanzania in 2016 included more than 36,000 jobs that produced about $339 million (about Sh750 billion) of labour income.
The National Union of Mine and Energy Workers of Tanzania (Numet) said about 500 workers among laid off workers were their registered members who were contributing over Sh7 Million to the union monthly.
Numet’s country general secretary, Mr Nicodemus Kajungu, told The Citizen yesterday that his union has 4,500 registered members and Acacia employee formed a bigger part of Numet membership.
“Despite losing revenue from the workers we will also lose manpower as the major union drive,” he said. “Our spending at the union remains apparent as income from the workers is decreased.”
Reduced taxes
The central government and the local authorities would receive less taxes, royalties and fees as Acacia scales down operations.
About 75 per cent of Msalala District Council’s annual revenue has come from Acacia.
Total tax contribution in 2016 in terms of direct, indirect taxes paid by Acacia, its employees, suppliers, and other affected businesses, was estimated at $214 million (about Sh470 billion).
The 2016 showed that Acacia’s total government revenue contribution per employee was more than 100 times higher than the national average.
No more good spenders
The reduction in production and the retrenchment will also affect the local economy, in terms of spending in villages and towns surrounding the mining site.
The booming ‘gold townships’ of Kakola and Kahama are expected to be highly affected.
Shrinking CSR
Although Acacia General manager Asa Mwaipopo has announced that the company Corporate Social Responsibility will remain as planned, there is fear that the effect will be seen in the long term.
Currently, the company has said is implementing various CSR programmes in Msalala, Nyanghwale and Kahama councils.
Acacia’s annual CSR spending is estimated at $11 million (Sh28 billion). Of this, over $6 million was spent in education, health, infrastructure, water and sanitation, primarily in the communities surrounding Acacia’s mines.
Exports earnings
The scaling down of gold production will affect export earnings because gold is one of the major exports.
The Bank of Tanzania (BOT) Monthly Economic Review for June 2017, shows that Tanzania exported gold worth $1.5 billion in the year ending May 2017, higher than $1.22 billion exported during the year ending in May 2016.
In 2015, gold exports accounted for $1.3 billion of Tanzania’s exports, representing more than 90 per cent of the country’s mineral exports.
The Citizen
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