No easy answers in getting fair terms in tanzanite trade

President Samia Suluhu Hassan was lately urging on restraints on offloading tanzanite mined at Mirerani in Manyara region, wishing that dealers take control of supplying the rare mineral in the market, so as to boost its demand and thusits prce in international markets.  Quite reasonable, but the agency is unreliable.

The idea of restraining producers of first buyers (dealers) not to offload produce into the market is not just a sound idea for minerals but also for grain trade, and virtually any other commodity so long as the supplier has a grip on the market. Tanzania has a grip on the market as a sole supplier but does not have an agent who can actually hold the minerals to either follow or as some may wish, dictate prices in the world market. Even with a walled compound at Mirerani, there is no single buyer whose interest is to hoard the minerals until there are better prices; past experience doesn’t augur well to create such agency.

In the earl7y 1990s even gold was being wholly purchased by the central bank, and soon people were pushing  fake gold into its faults, definitely with inside knowledge, and the state dropped the business. There are similarities between the gold trade at that time and tanzanite trade at present, and to his credit, fifth phase president the late Dr John Magufuli once wondered if we can’t keep our reserves in actual gold mined in Tanzania, not having to worry about an account held in US dollars. Except for tradition, there is no reason why tanzanite or diamonds would not play the same role, but we need revenues rather quickly.

If the country, or rather the central bank would have problems hoarding gold, tanzanite or diamonds too wait for better days in the market – as the global market could just ignore that source and continue with business, as if sanctions had been imposed upon us – individual businessmen are at a greater disadvantage to try and hoard the item. The first impediment is the need for cash for other purposes just as it is the case for the central bank, while another is playing the game of someone else – you keep your supplies and he gets a better prices; you bring it back, the price level goes back to normal. As they say, ‘work done zero.’

When it comes to individual agents or for that matter miners, the logic of competition works in that sphere as well, along with another understated dimension, opportunity cost in hoarding gemstones, as security risks are heightened if rascals learn that gemstones worth millions of dollars are stashed in a private residence or office. Only banks or probably the central bank can be said to be equipped for such purposes, in which case appealing to dealers or miners (the bigger ones like Tanzanite One for instance) is risky, if salivating. And since we also enjoy low market prices in smart phones etc, let’s not be tempted.

We pay too much attention to natural resources instead of reforming land ownership, invite vast amounts of capital, to purchase manufacturing entities to make Tanzania not just a hub for the region, but the Near East as well.