Revealed: Parastatals paying State dividends with borrowed money

Dar es Salaam. President Samia Suluhu Hassan on Monday August 1, revealed that some state-run firms and revenue-generating institutions were being compelled to borrow money in order to pay dividends to the government even as they were actually under-performing.

“The fact is that these parastatals are in bad shape. Those that I have appointed to lead them must hit the ground running,” President Hassan said.

She was speaking at State House in the city during the swearing-in of regional commissioners, regional administrative secretaries and heads of public institutions appointed recently.

She said at some point, all state-run firms and revenue generating institutions were being compelled to pay dividends to the government, something that forced some managers [of the firms and institutions] to go for commercial loans in order to protect their positions.

The revelation reminds Tanzanians of the queries by pundits who used to question the rationale behind decisions by executives of some state-run firms to pay dividends while their institutions were struggling financially and some in deep debts.

For instance, in June 2019, the then minister for Land, Housing and Human Settlements Development, Mr William Lukuvi, said Tanzania Telecommunications Corporation (TTCL) had accumulated land rent arrears to the tune of Sh40 billion.

He said a total of 207 institutions had accumulated land rent arrears to the tune of Sh200 billion, with TTCL topping the list.

But in surprisingly, in June 2018, TTCL Corporation paid the government some Sh1.5 billion as dividend for the 2016/17 financial year.

Similarly, TTCL paid a Sh2.1 billion dividend to the government in 2019 in what was reported to be from the company’s profit of Sh8.3 billion during the 2017/18 financial year.

In fact, the Controller and Auditor General (CAG), Mr Charles Kichere, said earlier this year that operations of 16 government entities relied on loans.

Apart from TTCL Corporation, other institutions that were said to be in bad shape financially included Tanzania Petroleum Development Corporation (TPDC), Tanzania Electric Supply Company (Tanesco), Tanzania Ports Authority (TPA), National Insurance Cooperation (NIC), National Development Corporation (NDC), Tanzania Standard Newspapers (TSN), Tanzania Investment Bank (TIB), Tanzania Forestry Research Institute (Tafori) and State Mining Corporation (Stamico). The President hinted at more reforms in government, indicating that this time, leaders at regional and district levels would be changed.

“We have made a review in various groups ranging from, but not limited to, regional administrative secretaries, district commissioners to district executive directors,” she said.

She directed Prime Minister Kassim Majaliwa to ensure that all those who were, and those to be appointed, must undergo a special orientations.

To start with, she said, with effect from today there would be a special training for RCs aimed at reminding the leaders on what was expected of them.

“Sometimes it might be wrong to put blame on them (appointees) for their failure to deliver. They may not be the problem, but lack of coaching for them,” said the President.

She commended those who were appointed, saying it was her hopes that they would deliver.

She directed them to cooperate with people in their areas of jurisdiction if they were to meet the intended objectives.

She said she would be watching closely on the appointees and not hesitate to strip off their position if they did not meet the government’s expectations from them. She said her appointments were based on three criteria-- qualifications, capability and one’s alignment to aspirations of the nation.

“That is it. I have appointed those whom I believe will help me,” recounted the President.

She retaliated against her warning on the abuse of public funds.

“I once said, if you want to see my true colours, play with the public fund. I repeat, don’t dare misuse the public fund, I will not let it slide,” said President Hassan.

“Use money for the intended purposes,” she insisted.

In his remarks, Mr Majaliwa urged those who were appointed to do what it took to deliver.

He wanted them to go and listen to citizens and work on challenges that they are grappling with.

“The President has put her trust in you. So, don’t let her down,” advised the Premier.