Coal mining: Deputy minister right on competition

21Jan 2019
The Guardian
Coal mining: Deputy minister right on competition

MINERALS deputy minister Stanslaus Nyongo in the past week faced a testy moment when visiting Tancoal Ltd, a partially state owned joint venture firm complaining that a coal mining section handed to a Dangote Cement Co. was not producing.

 In that case the idea was to withdraw the licence so that the zone is handed to the state-based joint venture firm, and that presumably be in the interests of the country, that we control our own resources against unreliable foreign investors, etc. The deputy minister was decidedly of a different view.

In his response to remarks by Tancoal manager Engineer David Kamenya to that effect, the deputy minister underlined the need for competition in the coal mining sub-sector, implying evidently that a Tancoal monopoly would not be good for the country. There is an aphorism that the legal profession attributes to British legendary chief justice Lord Acton, that 'power corrupts, and absolute power corrupts absolutely.' There was a monopoly status for nearly every state company during the first phase government, and most of them collapsed.

These lessons appear to have been lost on some if not indeed a quasi-majority of officialdom and especially parastatal executives and their 'big brothers' in academics, and often enough in politics. They crave for the old monopoly status which they unerringly confuse with the national interest, whereas the link is false, as each of us must have competition in life so as to push himself or herself to work more, and better. There is an aphorism attributed to King Solomon in one of his books, saying "spare the rod, spoil the child." The rod is competition.

Despite the Arusha Declaration, upon which more people are now taking as authoritative on policy issues, we need to remind ourselves of other sources of national direction. These issues of monopoly or total production of state industries were discounted during the second phase government, and many who have joined ranks government have not lost touch with the market rationality.

At one time in July 1992, second phase president Ali Hassan Mwinyi was touring a portion of the city industrial zone at the invitation of the Tanzania Confederation of Industries (CTI). They read an address imploring the president to ensure effective protection of the country's 'infant industries' (a line of argument that ended with AGOA in 2012 or thereabouts), and the president was primed with an answer. He said candidly that 'experience in the past 25 years (starting from the Arusha Declaration, nationalizations) has shown that the more industries are protected, the more they mess up." Progress in the sector relies on competition, not protection.

That is basically what the deputy minister has reiterated in relation to coal mining. For the sector to be healthy each interested party ought to find a niche to enter that industry, so that everyone cuts down costs and finds more markets. Carving out a monopoly for a state-controlled firm is to start carving up its failure, years later.