Tanzania Creates Export Zone

November 11, 2003

Tanzania Creates Export Zone

To generate value-added revenues from tanzanite, Tanzania will establish an Export Processing Zone in Arusha, Tanzania. Arusha is not far from Merelani, the only known mining source for commercial tanzanite in the world. The Guardian in Tanzania reports the aim is for an EPZ to develop the area into a large mining, cutting, jewelry manufacturing and selling center for the rare gemstone.

After unproven claims tanzanite was being used to fund al Qaeda in East Africa two years ago, the Tanzanian government clamped down on illegal trading activities in the area. "Already the government is carrying out the ground work for transforming Merelani into a controlled area," says Ibrahim Msabaha, Tanzania's deputy minister for Energy and Minerals.

Tanzania also sent delegations to India and Thailand in October to study trade zones and solicit cooperation in establishing the EPZ. The delegation signed a memorandum of understanding with the Indian government to explore opportunities forcooperating in establishing gemstones jewelry centers inTanzania.

Tanzania did not spell out its strategy for attracting international dealers or providing incentives for buying tanzanite at the EPZ. In 2001, a report funded by the U.S. Agency for International Development written by Lucie Phillips, Haji Semboja and Rogers Sezinga, suggested Tanzania simplify and lower taxes on rough goods following a thorough assessment of existing tax policy for the area. The report said the desire to develop a value-added zone was laudable, and suggested a number of ways that would make such an area attractive to international gemstone buyers.

In related news, gem dealers in the U.S. say they noticed a slow but gradual firming up of tanzanite prices for cut goods on world markets, and a rapid escalation for rough prices at the source. Dealers say that suggests further strengthening of cut tanzanite prices in the near future, despite frail but growing tanzanite sales at the U.S. wholesale market level.

by Robert Weldon, G.G.

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