Dar Port saga: Syndicates steal billions

Dar es Salaam. Entrenched syndicates pocket a staggering Sh350 billion every year from illegal operations at the Dar es Salaam Port, The Citizen can report.

The network of corrupt public servants, politicians and businessmen are directly responsible for the rot at the country’s main port, it has emerged.

A recent study by the World Bank for example estimates that corruption cartels and general inefficiency at the port were fleecing the government revenues estimated at $157 million (Sh345 billion) annually.

The Citizen’s own inquiries reveals how ministers, Members of Parliament, top civil servants and their spouses had turned the port into a cash cow, receiving millions in direct benefit and also openly solicited for contributions to turn a blind eye on the looting.

The extent of the scramble for the billions at the port has partly been exposed in the last couple of days as President John Magufuli and Prime Minister Kassim Majaliwa acted to rein in on the cartels.

That more than 2,700 containers had been cleared without the due taxes being collected over the last one year, in the course denying the government a reported Sh80 billion in tax evasion, is just but a tip of the iceberg. “The loss in tax is a small fraction of the billions of shillings paid in excess during huge procurements whose price is sometimes inflated by about 50 per cent,” said a senior official at the port who requested for anonymity as he was not TPA’s spokesman and also due to the sensitivity in the ongoing investigations.

According to the source, a clique of employees at the port were enjoying top political patronage and had become untouchables. “They are some of the people behind the procurement cartels and also run errands for well-connected businessmen implicated in the tax evasion scandals,” explained the source.

According to our source, it was common to find memos written by government officials or their spouses and politicians seeking financial contributions from TPA and from the same clique controlling key areas of port revenues.

TPA managers had also perfected the art of travel, some reportedly attending foreign training or study tours to Europe, Asia and the Americas for up to three times in a month, raking in millions of shillings in allowances and per diems.

Low ranking port employees are awash with stories on how some of their colleagues had become “overnight billionaires” once they found their way to the all-important revenue management and control postings.

The latest Tanzania Economic Update (TEU) report by the World Bank points to the huge Dar Port potential and the revenue siphoning loopholes that if well managed, could become the single largest income earner for the State, with revenues reaching the astronomical figure of Sh2.93 trillion every year, or more than five times of the highest recorded income of Sh500 billion at the port in 2013.

According to the TEU report, unlike many reforms that cost a lot of money, all that is needed to fix the rot at the Dar Port is cost-effective measures such as reducing corruption, increasing consumer awareness of inefficiency costs, motivating reformers and improving coordination.

“With these actions, Tanzania could potentially accelerate its economic prospects to achieve additional revenues of up to $1.8 billion (Sh2.93 trillion) per year, or a seven per cent increase in its gross domestic product, while neighbouring economies stand to gain $830 million,” noted the report published in 2013 and recently updated. The World Bank says there was apparent desire for change among stakeholders following some positive record at the port, particularly in 2013 but whose impetus later lacked political will to drive more positive results.

It was this window that was referred to last year by Rwanda President Paul Kagame and the Burundi President Pierre Nkurunziza when they toured the facility to launch new cargo trains to their respective countries towards the end of Mr Kikwete’s presidency.

Mr Kagame in fact marveled at Tanzania’s potential, joking that all he would need to run the economies of East Africa was the Dar Port.

Mr Nkurunziza on his part had been impressed that small reforms had raised cargo flow into his country from just 10 per cent to 75 per cent. The Dar es Salaam Port provides a gateway for 90 per cent of Tanzanian trade and is also the access route to six landlocked countries including Malawi, Zambia, Burundi, Rwanda, and Uganda, and Eastern DRC.

Corruption, inept systems and blatant theft of transit cargo were some of the reasons these countries were shifting business to competing ports such as Mombasa in Kenya and Durban in South Africa. The latter had actually shown interest to twin up with the Dar port.

For the local businesses and shipping companies, it is the simple things as delay in cargo clearance that is most frustrating, sometimes taking up to 20 days when the same is four days in neighbouring Kenya.

The TEU found out that while officials at the Port of Mombasa charge simple flat rates, Dar es Salaam Port fees are based on the value of the merchandise, which explains why fees are 74 per cent higher.

According to the report, the cost of these inefficiencies translates into a tariff of 22 per cent on container imports and about five percent on bulk imports, and financial losses for shippers and shipping companies.

“These costs are in general passed on to consumers,” said Jacques Morisset, lead economist for Tanzania, Uganda and Burundi and author of the report. According to the report, an average household would save 8.5 per cent of total expenditures if the Dar es Salaam Port were as efficient.

The overall view is that President John Magufuli would have to confront the forces that resist change at the port in order to drive home the success that he cherishes.

“The lack of enthusiasm for reforms is explained by the asymmetric distribution of benefits and costs associated with the current inefficiency of the port, which is exploited by a handful while costing multiple consumers, firms, and households across the country,” said Morisset.