Foreign revenue dependency falls

Dar es Salaam. Tanzania has cut its dependency on revenue from foreign sources by 33 per cent over the last 12 years.

In the 2015/16 fiscal year, dependency dropped to 13 per cent from 46 per cent during the previous financial year.

This is according to the 2015/16 Tax Statistics Report, which was jointly published by the National Bureau of Statistics (NBS) and ministry of Finance and Planning.

Published in August this year and posted to the NBS website recently, the report refers to foreign-sourced revenue such as grants, loans and Official Development Aid (ODA), which the country receives from its development partners routinely.

The report, which specifically refers to Tanzania Mainland, indicates that the drop in dependency on the foreign sources of government revenue is a result of increased domestic revenue, mainly resulting from ongoing expansion of economic activities and improved efficiency in revenue collection by the Tanzania Revenue Authority (TRA).

During the period, Tanzania raised more than Sh105 trillion, out of which Sh31.881 trillion was from external sources such as grants, loans, ODA and other kinds of financial assistance. A total of Sh74 trillion (69.9 per cent) out of the grand total was domestic revenue, while Sh31.8 trillion was from external sources.

From 2004/05 to 2015/16, the government continued receiving assistance from its traditional development partners and international financial institutions in form of grants and concessional loans.

The purpose of the grants and loans, the NBS report states, is to complement government financing efforts of implementing development plans, initiatives and programmes for poverty reduction and economic growth. Among the programmes involved are the National Strategy for Growth and Reduction of Poverty (Mkukuta), the UN-backed Millennium Development Goals, 2015 (MDGs) and the Sustainable Development Goals, 2030 (SDGs) and the National Development Vision, 2025.

The NBS report further states that, internally-sourced revenue, including local government tax, amounted to Sh13.622 trillion during the 2015/16 financial year, this being 86.2 per cent of the total revenue. A total of Sh2.17 trillion was sourced from the foreign sources.

Internally-sourced government revenue consists of tax and non-tax revenue collected by the central government. The revenue collected by the local government authorities supplements the central government revenue.

Beer was the main contributor of domestic excise tax over the last 12 years, accounting for 30.8 per cent. It was followed by mobile telephony products and services (26.4 per cent contribution), tobacco products (17.6 per cent) and liquor (10.2 per cent).

Thus, the total revenue collection jumped to Sh15.8 trillion during the 2015/16 financial year, from the Sh3.39 trillion in the 2003/04 financial year.

The NBS report reveals that the biggest increase was in the 2007/08 financial year, whereby revenue increased by 34.2 per cent.