Debate reveals irregularities in LGA empowerment funds

Dar es Salaam. Failure by most Local Government Authority (LGAs) to disburse 10 percent of their budgets in terms of loans to people from special groups has triggered debate among stakeholders.

Section 37A (1) of this Act requires all LGAs to set aside 10 percent of their budgets for the financial empowerment of groups of the women, youth and people with disabilities (PwDs) at the 4:4:2 ratio.

But, a recent report by the Controller and Auditor General (CAG) report 2020/21 revealed numerous irregularities in the management, disbursement and recovery of the funds something that has triggered debate among stakeholders.

The irregularities include 10 LGAs failure to disburse Sh6.68 billion and 155 LGAs failure to recover Sh47.01 billion in the 2020/21 fiscal year of review.

In the other areas of concern, CAG Charles Kichere says in his report that five LGAs issued Sh178.61 million to non-qualified groups and Sh1.24 billion was not transferred from the deposit account in eleven authorities to WYPwDs’ special account.

Giving his recommendations, Mr Kichere says non-recovery of loans could deplete the revolving fund and that in order to attain the fund’s aim and sustainability previous CAG recommendations should be implemented.

“Due diligence should be performed before issuing loans to special groups and exert more efforts in collection of outstanding loans from these groups,” says Mr Kichere in his report.

The CAG says for the funds to serve the intended purpose of poverty alleviation and promote economic growth among citizens in the groups, disbursed loans should be recovered according to agreement.

He urged the President’s Office-- Regional Administrative and Local Government (PO-Ralg) to institute effective loan recovery measures through involvement of loan management officers and promote voluntary repayment compliance in order to attain the fund sustainability.

Tabling the Wajibu Institute of Public Accountability (Wapa) analysis on the CAG report on Friday, institute’s board chairman Yona Kallagane said the scrutiny has found that lack of monitoring mechanism was a result of poor loan management as well as implementation of other projects.

He suggested that the PO-Ralg to collaborate with the regional secretariats in enforcing implementation of the 2019 guidelines for management of the WYPwD empowerment fund.

“This includes the opening of a special bank for collection, deposition and disbursement of the funds. This would significantly address the challenges,” he said.

Speaking in Parliament, Mr Festo Sanga, (Makete, CCM) when debating the PO-Ralg budget said the 10 percent loan didn’t benefit the intended groups, instead politicians and government employees were the main beneficiaries.

“Over Sh200 billion has been disbursed since 2018 without benefiting the youth. Unscrupulous civil servants and politicians have been forming bogus groups that are used for siphoning the money from the councils which is typical unfair,” he said.

Citing an example, he said Dar es Salaam Region dished a total of Sh52 billion for empowerment loans to WYPwDs in the 2018/19, noting that Sh14 billion was recovered and that the remaining ended in the pockets of dishonest people.

According to him, a similar situation was recorded in Tabora Region where Sh5.7 billion was issued to youth in the same fiscal year, but only Sh2 billion collected back.

“Minister Bashungwa [Innocent] should make follow-up on over Sh200 billion unrecovered from beneficiaries in order to benefit faithful group members or could be channeled to fund implementation of development projects such as road, water and schools,” he said.

Ms Grace Tendega, Special Seats, Chadema, said the fund was disbursed to the youth, women and PwDs without providing them with entrepreneurial education something which is the cause of what is happening.

“PwDs are forced to form groups in order to qualify for the loans. Most of the time, this condition has been disqualifying people from this group from getting the loans and continue with poverty alleviation and economic empowerment struggles,” she said.

For his part, United Nation Association (UNA) project coordinator Lucus Fedelis said lack of balance between revenue collected by most councils and expenditure was the reason for failure disbursement of funds for economic empowerment to special groups.

“Most councils located in remote areas of the country are struggling in terms of revenue collections, therefore, spending most of their revenue to fund recurrent and implementation of some few projects instead of dishing to special groups,” he said.

Regarding failure to service their loans, Mr Fedelis said the lack of financial skills among member of most groups was another challenge as a result instead the funds are channeled in other areas instead of the intended purpose. “Bad choice of implemented projects lead to failure of the projects to become profitable, leading to loses and wastage of secured funds,” he said.

“For instance, agriculture projects that are seasonal and climate change dependent as well as lack of accurate market information have been other key factors for the groups to fail especially the youth,” he added.