Acacia’s contribution to economy declines

Acacia Mining PLC vice president for cooperate affairs Mr Deodatus Mwanyika (centre), listens to Acacia mining chief executive officer Bland Gordon (right), during the launch of Ernst and Young (EY) independent report in Dar es Salaam yesterday. Left is Acacia Mining chief government relations advisor Alex Lugano. PHOTO | EMMANUEL HERMAN      

By Alawi Masare, The Citizen Reporter

In Summary

The company, which was formerly known as Africa Barrick Gold (ABG), contributed $678 million to Tanzania’s Gross Domestic Product (GDP) in 2014 compared with $855 million a year before, according to Ernst and Young (EY) independent report presented yesterday.

Dar es Salaam. Acacia Mining, the largest gold producer in Tanzania, has slowed its contribution to the economy by about 20 per cent following closure of one of its mine sites.

The company, which was formerly known as Africa Barrick Gold (ABG), contributed $678 million to Tanzania’s Gross Domestic Product (GDP) in 2014 compared with $855 million a year before, according to Ernst and Young (EY) independent report presented yesterday.

In 2013, the firm contributed 3 per cent to GDP but it reduced to 2 per cent in 2014.

“This is due to the fact that Acacia closed one mining site to remain with three. Tanzania’s economy has also been growing significantly and at the same time the company reduced its spending,” said Joseph Sheffu, country managing partner for EY Tanzania.

Gold was the dominant non-traditional export when it traded above $1,600 per ounce in the world market and generated about $2 billion a year. However, it was overtaken in recent years by tourism (travel) and the manufacturing sector as the gold price depreciated to around $1,200 per ounce currently. In the year ending February 2015, tourism generated $2 billion while manufacturing goods and gold generated $1.36 billion and $1.31 billion respectively.

“The most important issue which we are also happy with is that our company is still contributing to the economy by supporting jobs and improving different community services through our social investments,” said Mr Deo Mwanyika, Acacia’s vice president for corporate affairs.

The report indicates that the company had 4,443 direct employees in 2014 (against over 5,000 in 2013) and supported 53,943 indirect jobs.

The firm also expressed its positive reception of the Value Added Tax (VAT) refund by the government.

“We are happy that the government is working hard to pay our VAT refund. In 2013, the government owed us $105 million but this has reduced to $50 million currently. We hope the government will continue repaying,” said Mr Brad Gordon, Acacia’s chief executive officer.

The report also indicated that 71 per cent of Acacia’s spending on goods and services in 2014 was paid to Tanzanian suppliers, an increase of 58 per cent compared with 2013