CAG report: Samia breathes fire

What you need to know:

  • President Samia Suluhu Hassan yesterday received the CAG’s 2021/22 report and hinted at major reforms in the collection and management of public funds, as well as classification and operations of some state-owned entities to prevent the loss of taxpayers’ money through embezzlement

Dar es Salaam. President Samia Suluhu Hassan yesterday hinted at major reforms in the collection and management of public funds, as well as classification and operations of some state-owned entities to prevent the loss of taxpayers’ money.

The reforms will affect loss-making public institutions; management of funds meant to be issued as loans to women, youth and people with disabilities; systems used by local authorities to collect revenue and payment of contractors, among others.

2021/22 reports

The envisaged reforms were highlighted after President Hassan received the Controller and Auditor General (CAG) and Prevention and Combating of Corruption Bureau (PCCB) reports for the 2021/22 financial year.

Under the changes, some state-owned corporations will be disbanded, while others will have to scale down their operations to make them efficient and profit-oriented organisations that can attract additional capital from the private sector.

“As for government institutions that have been consistently making losses, we need to conduct an analysis and establish those should continue to exist and those that must be shut down,” President Hassan said, citing the National Development Corporation (NDC), which she added had been ineffective for decades.

“They are a burden to the government and have no positive impact. Do we really need to have more than 200 state-owned entities? We need to remain only with those that are operating efficiently and do away with those that no longer make any economic sense,” she said.

Public procurement

The President also said operations of institutions responsible for public procurement, including the Government Procurement Services Agency (GPSA), should be reviewed.

This was after CAG Charles Kichere said in a summary of his 2021/22 report that GPSA was ineffective and unable to keep pace with the execution of development projects.

“Going by the pace of development, what do we need to improve? I believe that some of these challenges can only be resolved by adjusting the existing systems,” the Head of State said.

President Hassan added that Tanzania Telecommunications Corporation (TTCL) should confine itself to the management of the National Information and Communications Technology Broadband Backbone (NICTBB) as it had failed to compete with private firms in the provision of telecommunication services.

On funds local government authorities issue as loans to groups of women, youth and people with disabilities, President Hassan said the disbursement system would change in the coming financial year.

This was after the CAG informed the President that Sh88 billion in loans had not been recovered.

President Hassan said the loss was largely due to a lack of integrity among some councillors, who created phantom groups of women, youth and people with disabilities and pocketed the money.

“We now need to change and come up with a system that will involve banks. Local authorities will be required to deposit money in bank accounts. The money will then be issued as loans through banks. Councillors must not be allowed to do as they please.”

President Hassan also warned against delays in paying contractors, saying this led to spiralling costs in project implementation due to accumulating interest, adding that this was an avenue through which public funds were embezzled.

“When there are interest arrears to be paid by the government, they sit down with contractors and negotiate their share of the money.”

President Hassan said the government had paid an extra Sh418 billion in accumulated interest as a result of delayed payments, adding that this was a “huge” sum that could have been spent in executing more development projects.

The President said failure to pay contractors on time was among reasons for low money circulation.

She also took issue with over-invoicing in public procurement as the relevant officials remained silent.

President Hassan specifically voiced her concern about Air Tanzania Company Limited’s new Boeing 767-300 freighter, whose initial payment contract was for $37 million, but the actual invoice indicated a $87 million bill.

“People leading such institutions don’t deserve to be in office. They are supposed to raise queries whenever they get such grossly inflated bills instead receiving them and keeping quiet.”

Improve efficiency

The President also said the Tanzania Ports Authority (TPA) and Tanzania Revenue Authority (TRA) systems should be aligned to improve efficiency and reduce unnecessary losses.

“TRA and TPA, specifically Dar es Salaam Port, should work together to reduce the possibility of revenue loss. Also, the doors should be open to the private sector to chip in and improve technology and other systems at ports in the country,” she said.

She was responding to PCCB’s report, which said customs, cargo handling and revenue collection systems at Dar es Salaam Port were especially prone corruption, as were inspections conducted by institutions stationed at the port.

PCCB director general Salum Hamduni told President Hassan that the agency saved Sh14.2 billion and $14,571 in taxpayers’ money through investigations conducted in 2021/22.

Sh8.4 billion was to have been lost due to tax evasion, while the outright theft was Sh2.6 billion was prevented in the execution of development projects in Manyara, Rukwa, Katavi, Kigoma, Morogoro, Mtwara, Simiyu, Pwani, Singwe, Tanga and Mwanza region.

1,188 cases investigated

“The PCCB investigated a total of 1,188 cases, including 16 cases of grand corruption. These grand corruption cases include one that involved Sh8 billion in the execution of the bus rapid transit project and also misappropriation of Sh3 billion National Health Insurance (NHIF) funds,” he said.

Mr Hamduni added that at least 100 investigations had been conducted following queries raised in previous CAG reports and expenditure of Covid-19 relief funds.