Tanzania Tightens Oversight of Parastatal Company Bosses

Tanzania has implemented new measures to enhance scrutiny and accountability within its parastatal companies, aiming to prevent financial mismanagement and corruption.

Reasons for Increased Oversight:

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Persistent Financial Irregularities:

Parastatal companies in Tanzania have been plagued by allegations of financial irregularities, including embezzlement, overspending, and inflated contracts. *

Erosion of Public Trust:

The mismanagement of public funds has eroded public trust in these companies, which are often responsible for providing essential services such as electricity, water, and transportation. *

Economic Impact:

Financial mismanagement in parastatal companies can stifle economic growth by diverting funds away from productive investments.

New Oversight Measures:

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Establishment of Parastatal Reforms Secretariat (PRS):

The PRS is tasked with monitoring the performance of parastatal companies, identifying potential risks, and recommending reforms. *

Strengthening Internal Audit Functions:

The PRS has mandated parastatal companies to establish strong internal audit departments to ensure financial discipline and prevent fraud. *

Appointment of Independent Board Members:

The government has introduced regulations requiring the appointment of independent board members to parastatal companies. These members will provide external oversight and bring expertise from the private sector. *

Audit by the Controller and Auditor General (CAG):

The CAG will conduct regular audits of parastatal companies to ensure compliance with financial regulations and the efficient use of public funds.

Consequences of Non-Compliance:

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Legal Sanctions:

Company bosses found guilty of financial mismanagement or corruption will face severe legal consequences, including imprisonment and fines. *

Dismissal from Office:

The PRS has the authority to recommend the dismissal of company bosses who fail to meet performance targets or violate regulations. *

Recovery of Embezzled Funds:

The government has taken steps to enhance its ability to recover embezzled funds through asset freezes and international cooperation.

Expected Benefits:

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Improved Financial Management:

The new oversight measures are expected to lead to improved financial management and reduce the risk of fraud and corruption. *

Enhanced Public Trust:

By ensuring greater transparency and accountability, the government aims to restore public trust in parastatal companies. *

Economic Efficiency:

Tightening oversight will help ensure that public funds are used efficiently for economic development. Tanzania’s efforts to enhance oversight of parastatal company bosses are a significant step towards promoting good governance, transparency, and accountability in the management of public resources. The implementation of these measures will contribute to a more prosperous and equitable Tanzanian economy.Treasury to Track and Evaluate Heads of State-Owned Enterprises Performance

Treasury to Track and Evaluate Heads of State-Owned Enterprises Performance

The Treasury Registrar’s office in Tanzania is developing a system to provide accurate and timely information on the performance of heads of state-owned enterprises (SOEs). This move aims to facilitate informed decision-making by appointing authorities. According to Treasury Secretary Nehemiah Mchechu, the system will address situations where directors are removed and reinstated quickly, highlighting the need for reliable information to support such decisions. The Treasury has already implemented a digital system to assess board performance, which has been successfully used to evaluate boards and enhance their accountability. Currently, there are 304 organizations under the Treasury Registrar’s office, including 248 institutions with majority government ownership and 56 with minority government interest.

Dividend Declaration

For the fiscal year ending May 2024, the government expects to receive a total dividend of Sh637 billion, with Sh279 billion from commercial entities and Sh358 billion from other organizations. This fiscal year, 145 organizations contributed to the dividend, an increase from 109 last year. However, 159 organizations did not contribute. Despite the increase in contributors, Mchechu expressed concerns about the level of dividends and contributions, believing that there is potential for improvement. He noted that non-tax revenue remains at 3%, below the target of 10%. President Samia Suluhu Hassan emphasized that the dividends reflect the supportive business environment, while the significant dividends received from minority stakes indicate a need for greater efficiency in government-run companies. The President believes that the 10% non-tax revenue target can be achieved with contributions from all organizations. She stressed the critical role of SOEs in Tanzania’s aspiration to become a middle-income country.

Top Dividend Contributors

The top ten entities with double-digit dividends (over Sh10 billion) presented their contributions to the President, including the Tanzania Ports Authority (TPA) with Sh153 billion, the Tanzania Communications Regulatory Authority (TCRA) with Sh34.7 billion, and NMB Bank Plc with Sh54.5 billion. NMB Bank CEO Ruth Zaipuna attributed the increase in dividends to significant growth in loans and deposits, as well as higher efficiency. Twiga Minerals, Airtel Tanzania, Puma, and TPC Moshi also made substantial contributions, highlighting the government’s stake in profitable commercial enterprises. Airtel Tanzania’s Board Chairman Eliud Sanga praised the government’s efforts to address investment and regulatory challenges, creating a conducive environment for business growth.

Tanzania Tightens Scrutiny of Parastatal Company Executives

The Tanzanian government is implementing measures to enhance oversight and accountability of executives leading parastatal companies. This move comes amidst concerns about financial mismanagement, inefficiency, and corruption within these entities. According to a government directive, all parastatal company board members and executives will be required to undergo training on governance, ethics, and financial management. The training will be conducted by the Tanzania Institute of Directors. The government has also directed ministries responsible for overseeing parastatal companies to conduct regular performance audits and evaluations. These audits will assess the companies’ financial performance, operational efficiency, and adherence to ethical and legal standards. In addition, the government has established a task force to review the structures and governance frameworks of all parastatal companies. The task force will identify areas for improvement and make recommendations to the government. The government’s actions aim to strengthen the management and accountability of parastatal companies, which play a crucial role in the Tanzanian economy. These companies are responsible for a significant portion of the country’s revenue and provide essential services to citizens. However, concerns have been raised over the financial performance and ethical conduct of some parastatal companies. In recent years, allegations of corruption, mismanagement, and weak oversight have surfaced, leading the government to take steps to address these issues. The government’s measures are expected to enhance transparency and accountability within parastatal companies, fostering public trust and safeguarding public resources.