Tanzania moves to ensure viability of state entities

 

reasury registrar Nehemiah Mchechu speaks during his meeting with board chairpersons and heads of government institutions and agencies and public organisations in Dar es Salaam. PHOTO | CORRESPONDENT

By Alex Nelson Malanga

Business journalist

Summary

·         The Treasury registrar's office is to assume the role of a holding firm for state-owned entities to...

increase their economic contribution 

Dar es Salaam. The Treasury registrar’s office plans to come up with a system that will see it assume the role of a holding company for state-owned entities.

This is meant to fine-tune their operations and help the government to realise returns on the Sh70.67 trillion that has been invested in the organisations.

A holding company usually owns the assets of other companies and often only plays an oversight role and does not actively participate in running the day-to-day operations of its subsidiaries.

Treasury registrar Nehemiah Mchechu said yesterday that the decision was prompted by inefficiency and low contribution of public institutions to GDP, which is presently below one percent.

“My office needs to operate as a holding company. We should not consider ourselves as a regulator, but rather a part of institutions,” he said during his meeting with chairpersons of state entities’ boards and heads of institutions.

He said with the new modality, his office will be a believer in engagement with institutions, but without compromising its authority.

This, Mr Mchechu explained, will be a good approach to keep things moving at a pace desired by the government.

He urged public institutions, which contribute 20 percent of employment in the country, to be creative in their operations so that they can increase productivity and contribution to the country’s economy.

“Commercial-oriented entities should work around the clock to make sure they increase their contribution to government coffers.”

The value of dividends issued by the public institutions increased to Sh850.28 billion in the 2021/22 financial year compared to the preceding year’s Sh637.66 billion.

Non-commercial institutions, for their part, were not spared either, with Mr Mchechu urging them to increase efficiency to reduce their dependency on the government.

He said the government is now required to provide the public sector with Sh1.1 trillion in capital for them to sail through the financial crunch that they are going through.

He urged state-owned institutions to be creative in seeking alternative sources of finance, saying that it could be loans or other arrangements.

Citing an example of the Dar es Salaam University College of Education (Duce), he queried as to why they did not think of coming up with a private school or two that could be competing in the market with other schools.

Mr Mchechu also said state-owned entities have a responsibility to offer better services as a compliment to President Samia Suluhu Hassan’s political will to create a conducive business environment to attract both local and foreign investors.

“President’s commitment to making reforms in the county is high as she is determined to attract both local and foreign investors.

“As a sign of support to the President, board chairmen need to be strict when it comes to governance,” Mr Mchechu said.

Speaking during yesterday's meeting, the National Board of Accounting and Auditing (NBAA) chair, Prof Sylvia Temu, expressed the need for having a smart business and investment strategy, if they were to increase their efficiency.

“With a rate of return of below one percent, how can we (public institutions) help the government’s efforts in moving Tanzania from the lower middle income to upper middle income,” she queried, calling for the public institutions to pull up their socks.

Tanzania targets upper middle-income status by 2050 as per the new 2050 Vision whose preparation has already started.

Mwalimu Nyerere Memorial Academy board chairman Stephen Wasira said for the public institutions to perform handsomely, massive investment should be made in human capital.

The Veteran politician said human resources with smart brains will avoid the government from entering dubious contracts that have been causing a huge blow to the country.

“Dubious contracts erode Tanzanians’ confidence in the government. We need to mend our ways,” cautioned Mr Wasira.

The Cashewnut Board of Tanzania chairman, Brigadier General (rtd) Aloyce Mwanjile, asked the Treasury registrar to help in facilitating investment by getting rid of bureaucracy.

“We once got an investor to construct an industrial park for cashew nuts processing. However, he is being frustrated by bureaucracy.

“Bureaucracy scares away investors. I recommend that you (Treasury Registrar) should be somewhere in the middle fast-tracking the processes to avoid unnecessary bureaucracy,” he said.

In the country there are 298 public institutions, 248 of which the government is the majority shareholder, with the rest being the minority shareholders, according to the Treasury Registrar.