Struggling state firms to know their fate in August

 

By Alex Nelson Malanga

 Business journalist

Summary

·         The government is concluding an of the corporations' performances, as directed by President Samia Suluhu Hassan a few months ago

Dar es Salaam. The government will next month publicise underperforming corporations that need to

be scrapped, merged, or given more time to improve their performance.

Treasury Registrar, Mr Nehemiah Mchechu, made the announcement yesterday while receiving Sh2.5 billion in dividends from TIPER, Tanzania’s largest oil storage facility.

Mr Mchechu revealed that the government is concluding an evaluation of the corporations’ performance, as directed by President Samia Suluhu Hassan a few months ago. The evaluation also includes underperforming companies in which the government has shares.

He stressed the importance of government corporations fine-tuning their operations to maximize returns on the Sh70.67 trillion invested in these organizations.

“The government wants to see accountability and efficiency in the corporations it owns,” emphasized Mr Mchechu, while praising TIPER as a promising performer.

“Next month the leaders of government corporations and companies that the government has shares, and I, will have a meeting with the President,” said Mr Mchechu.

To ensure the viability of state-owned enterprises, directors, chairpersons, and board members will be required to possess relevant sector-specific skills, Mr Mchechu outlined.

He noted that inefficiencies and poor contributions to the Gross Domestic Product (GDP) that is below one percent, were largely due to incompetent leadership.

“We want [underperformance] to be a thing of the past. We are determined to make a revolution. We want to restore accountability in government corporations,” declared Mr Mchechu.

“We are not ready to keep paying salaries to people who are not productive due to various reasons. The time for having CEOs and board chairpersons who have no expertise in the areas they are working with is no more,” Mr Mchechu noted.

Mr Mchechu further stated that the government would establish performance contracts with directors and board chairpersons, and failure to meet the set targets would result in necessary actions being taken.

Starting next year, poorly performing entities will be made public with the goal of encouraging improvement but failing to do so may lead to consequences, he said.

He added that the government would create an enabling environment for efficient company performance by providing capital and removing political interference hindering progress.

Additionally, amendments to laws and regulations that hinder public entities’ performance will be made.

TIPER’s managing director, Mohamed Mohamed, highlighted their improved performance over the past decade, thanks to an investment of Sh73 billion. Currently, their storage capacity stands at 254 million litres per month.

“With the investments that we have made, we expect to increase our storage capacity to 314 million litres,” asserted Mr Mohamed.

Mr Mohamed pointed out that TIPER’s efficiency allows them to offload fuel from tanker ships within three to four days, compared to other operators who require eight to ten days.