Tanzania seeks more returns from minority stake, state-owned companies

Dar es Salaam. The Office of the Treasury Registrar has set a target for companies in which the government holds a minority stake to contribute 10 percent of the national budget, aiming to further stimulate economic growth. 

Currently, the 56 companies in which the government has a minority shareholding contribute three percent of the national budget. The objective is to increase this figure by capitalising on their improving performance. 

“We have already conducted calculations and identified sources that will help us achieve this target. Over the next five to ten years, the contribution to the national budget is expected to reach that level. At present, these companies are growing at an annual rate of 52 percent,” said the director of performance management and evaluation for commercial entities, Ms Lightness Mauki. 

She made the remarks during the annual meeting of chairpersons and directors of companies in which the government holds a minority stake. The meeting sought to facilitate discussions on investment strategies and growth. 

Ms Mauki noted that the government has invested Sh2.9 trillion in these companies, with dividend payouts increasing annually. She said their positive performance justifies the decision to set a higher contribution target for the national budget. 

Speaking at the official opening of the meeting, the Minister of State in the President’s Office (Planning and Investment), Prof Kitila Mkumbo, emphasised that these companies must align their strategic and business plans with the National Development Vision 2050. 

He added that the government would continue fostering a conducive business environment to ensure these companies generate significant dividends and compete globally. 

According to officials, 10 Tanzanian companies are currently performing well in international markets, offering valuable lessons that can be leveraged to enhance the country’s global competitiveness. 

“I commend the 56 companies in which the government holds a minority stake for consistently providing dividends, which have risen to Sh195 billion over the past four years. This is a commendable achievement, but there is still room for improvement,” said Prof Mkumbo. 

He expressed optimism that within the next five to ten years, Tanzania could have companies ranked among the world’s top 500 performers. 

“This is achievable because these companies are demonstrating strong performance. As a government, we must learn from them to provide better guidance for public institutions on contract negotiations and capital growth,” he added. 

“In the future, we want certain government functions to be transferred to the private sector, as the private sector has the potential to drive economic growth. Globally, governments are not as effective in trade but perform exceptionally well in other areas,” he stated. 

Additionally, Prof Mkumbo launched a new guide for directors and chairpersons of these companies to enhance their commercial engagement. 

For his part, Treasury Registrar Nehemiah Mchechu revealed that from the next financial year, more public companies would be listed on the Dar es Salaam Stock Exchange (DSE). 

He stated that the necessary government processes had been completed, with the final step being an evaluation by a consultant. The initiative aims to enable more Tanzanians to have a stake in public institutions while reducing the financial burden on the government in providing capital for these entities.