Why Companies Fail to Earn the Social License To operate? Insights from the Extractive Sector In Tanzania

Abstract

In this paper we explore the actions of companies operating in the extractive sector in Tanzania to address the question why their actions failed to earn these companies the social license to operate (SLO). We used focus group discussions to collect extensive qualitative data at various sites where extractive activities have been taking place in the country. Our findings how that although companies have implemented a number of actions in the form of corporate social responsibility projects, paid compensations for land taken over, and paid local taxes, such actions have not succeeded in earning them the SLO. We found that the role of central government is pervasive in the whole SLO granting process even though it is the local community that grants it. Thus, companies alone are unlikely to earn SLO in situations where government policies, which companies have to follow, are perceived by communities to be inequitable. We recommend that companies engage more effectively communities neighboring natural resources extraction sites and remain sensitive to the broader local political milieu that could affect the granting of the SLO. We further suggest that the companies’ efforts need to be buttressed by appropriate government policies. Finally, we make suggestions for future research. Keywords: social license to operate; Tanzania, corporate social responsibility; extractive sector; community engagement.