Parastatal reforms to enhance customer satisfaction

Daily News Reporter

THE ongoing reforms of the public companies are not intended for competing with the

private sector, but only to make those with commercial face to offer customer satisfaction and operate profitably.

Industry and Trade Permanent Secretary, Dr Hashil Abdallah cleared the air yesterday following the fear over the government’s transformation plan that aims at making public institutions operate commercially and profitably.

“Our intention is to make commercial public institutions compete in creating corporate minds so that they offer better services, attract more customers and eventually earn profit,” underscored Dr Abdallah.

“The government is not there to do business and compete with the private sector, but to facilitate business,” he insisted when speaking to the Daily News.

Speaking earlier, economists cautiously welcomed the government’s transformation plan of public institutions, saying the entities should be business minded but not strictly sticking to business etiquettes. In doing so, according to economists who spoke during an interview, yesterday, it will distinguish them from the private sector in terms of price of services, thus helping them enjoy economies of scale as they stand a chance to win more customers’ hearts.

Going by the World Bank, the effectiveness of public institutions depends on the trust that citizens and businesses bestow upon them.

Operating profitably could provide a room for public parastatals to stand on their own feet and reduce a burden on the government as they will need less or no subsidies for their survival, but instead, pay dividends to the government.

The office of the Treasury Registrar (TR) has been mandated to ensure state entities operate productively. Until April 2023, there were 298 public institutions, 248 of which the government is the majority shareholder, with the rest being the minority shareholders, according to the Treasury Registrar, Mr Nehemiah Mchechu.

Speaking recently in Arusha, President Samia Suluhu Hassan warned that exit door was open for loss-making state entities under the coming reforms. Economist from the University of Dar es Salaam, Prof Abel Kinyondo, was of the view that public institutions should be business-minded, but not probusiness per se.

For the public institutions to thrive, he suggested, they should borrow a leaf from the private sector, but not have the same intention of maximising profits, as their main objective is to maximise service delivery. He expounded public entities ought to draw a lesson from private sector by being productive, efficient, timely and cost efficient.

“Public institutions should not incur loss when it comes to service delivery nor should they maximise profit at the expense of citizens,” cautioned Prof Kinyondo.

“Efficiency, quality and standards can make public institutions attract more customers and achieve economies of scale.” He said given the fact that public institutions serve the general public, quality services will touch the lives of many, contributing to uplifting them from poverty.

Economist from Dodoma University, Dr Lutengano Mwinuka said the main objective of establishing public institutions is to offer services, but for them to be efficient, they need to use the private sector management practices.

Like the private sector, he opined, public enterprises need to embrace efficiency, effectiveness, quality and innovation. “There is a notion that the government should not do business.

However, the reality is that the business component cannot be avoided, if public institutions are to be efficient,” asserted Dr Mwinuka. Neo-conservative ideology of neo-classical welfare economics underscores the linking of the public agency efficiency to managerial ability, authority and accountability by the adoption of managerialist (businesslike) principles and practices.

Such principles and practices include strategic planning and management, customer service, quality assurance, performance management and risk management.

However, for the public institutions to bring windfall and unlock their real value, Dr Mwinuka stressed the need for inviting collaboration from the private sector when necessary, an advise that the government has greeted well.