Why Tanzania wants to monitor heads of parastatals more closely
President Samia Suluhu Hassan speaks at State House, Dar es Salaam, on June 11, 2024 during the presentation of dividends by enterprises that are partly or wholly owned by the government. PHOTO | STATE HOUSE
What you need to know:
- The Treasury Registrar said his office has already successfully launched and begun using a digital system to evaluate the performance of parastatal boards
Dar es Salaam. The office of the Treasury Registrar is finalising a system that will ensure timely and reliable performance information on heads of state-owned enterprises to facilitate accurate decision-making by the appointing authorities.
Speaking on Tuesday at State House in Dar es Salaam, Treasury Registrar Nehemiah Mchechu highlighted an incident where a director was removed from their position and reinstated the following day, underscoring the need for reliable information to inform such decisions.
He was speaking during an event graced by President Samia Suluhu Hassan where institutions that are partly or wholly owned by the government declared their dividend for the current financial year.
Mr Mchechu said his office has already successfully launched and begun using one digital system to evaluate the performance of boards, which has enabled the assessment of the boards.
“Our office has started using new key performance indicators in agreements between board chairpersons and the Treasury Registrar,” he said.
“All institutions have signed performance contracts between their boards and the Treasury Registrar. These KPIs have been improved and consider sectoral distribution and core responsibilities. We will continue to improve based on feedback from our institutions, who are our main stakeholders.”
Currently, there are a total of 304 organisations under the office of the Treasury Registrar, with 248 being institutions where the government holds a majority shareholding and 56 institutions of minority shareholding.
For the fiscal year from July 2023 to May 2024, the total dividend to the government will be Sh637 billion, with Sh279 billion coming from commercial entities and Sh358 billion from other organisations.
“By the end of the fiscal year, we expect to reach Sh850 billion by the end of June this year,” said Mr Mchechu.
He said this year, 145 organisations contributed, which is 36 entities more compared to the 109 organisations that contributed last year, while 159 organisations did not contribute anything to the government’s fund.
Mr Mchechu stated that the amount of dividends and contributions is not satisfactory, believing there is potential for improved performance.
He said this is so because while President Hassan has set a target for non-tax revenue to reach 10 percent of tax revenue, this year’s non-tax revenue was at 3 percent, same as it was in last year.
During her remarks President Hassan stated that the distribution of dividends from organisations reflects that laws, guidelines, policies, and business environments support growth.
“The substantial dividends received from minority shareholding illustrate that there is a need for greater efficiency within government-run businesses,” she said.
“This is a message to our organisations that are 100 percent government-owned,” said the President.
She said it her belief that the 10 percent target of non-tax revenue is achievable if all organisations contribute their share, and those that already do should increase their contributions.
President Hassan insisted that as Tanzania aims for middle-income status, the performance of these institutions is critical.
On Tuesday top ten entities with double digits dividend (above Sh10 billion) presented their contributions to the President.
The group of institutions contributing 15 percent of gross revenue to the government was led by Tanzania Ports Authority (TPA) with Sh153 billion, followed by Tanzania Communications Regulatory Authority (TCRA) with Sh34.7 billion, Tanzania Forest Service Agency (TFS) with Sh21.3 billion, The Tanzania Shipping Agencies Corporation (Tasac) with Sh19.1 billion, and Business Registrations and Licensing Agency (Brela) with Sh18.9 billion.
Commercial entities were led by NMB Bank Plc, where the government has a 31 percent shareholding, providing Sh54.5 billion in after-tax dividends.
Speaking during the event, NMB Bank CEO Ruth Zaipuna said the bank was one of those entities that have witnessed a momentous growth during the past three years across a number of parameters to necessitate a rise in dividend payment to the government.
Ms Zaipuna told President Hassan that loans to customers have risen from Sh4.6 trillion of in 2021 to Sh7.7 trillion as of the year ending December, 2023 while customers’ deposits rose from Sh6.6 trillion to Sh8.5 trillion during the same period.
The total dividend from NMB Bank Plc also rose from Sh97 billion in 2021 to Sh181 billion for 2023 business proceeds, while that [the dividend] for the government rose from Sh30.8 billion to Sh57.4 billion during the same period.
The price for share of NMB Bank rose from Sh2,000 in 2021 to Sh5,200 at present. “This shows the huge trust that investors have in our bank and it also shows the investors have trust in the way the government was improving the business environment,” she said.
“During the period, NMB Bank has also emerged as one of the most efficient banks in east Africa…..If we all respect and understand the 4Rs [Reconciliation, Resilience, Reforms and Rebuilding] philosophy, we will build formidable institutions that will help Tanzania today and going forward,” she said.
Twiga Minerals, in which the government has a 16 percent stake, contributed Sh53.4 billion. Airtel Tanzania, in which the government owns a 49 percent stake, provided Sh40.8 billion. Puma, with a 50 percent shareholding, presented Sh12.2 billion, and TPC Moshi, where the government owns 25 percent, gave Sh10.2 billion.
Digital transformation
Airtel Tanzania has been making significant contributions to the Government since 2019. The government has received over Sh200 billion in dividends from Airtel Tanzania since then.
Speaking after the event, Airtel Tanzania board chairman Eliud Sanga said: “The government’s proactive approach to address investment policies and regulatory challenges has created a thriving and competitive market environment, allowing Airtel to do business for which we are profoundly grateful,” he said.
