CAG report reveals governance failures in Zanzibar public institutions, urges training and accountability

Unguja. The Controller and Auditor General's (CAG) report has highlighted deficiencies in some public institutions' internal control management due to their failure to establish these units, thereby operating in non-compliance with the law. The report recommends that these institutions undergo training.

The information is detailed in the CAG report within the audit of financial statements for Regional Authorities, Local Government Authorities, and Special Departments of the Revolutionary Government of Zanzibar (SMZ), presented to the House of Representatives on June 27, 2024.

Operational shortcomings have also hindered audit committees from functioning properly, resulting in these committees and internal audit units failing to review CAG reports, year-end accounts, and provide feedback on identified deficiencies and irregularities.

In the 171-page report, CAG Dr Othman Abbas Ali noted that internal audit units appear inadequate, advising these committees and units to undergo training to enhance their effectiveness.

Among the institutions identified with these deficiencies are the Office of the Northern Unguja Regional Commissioner, Chake Chake Pemba Municipal Council, Fire and Rescue Squad, and the Valantia Unit (KVZ).

Contract management

The audit has identified flaws in contract management within some public institutions, including breaches of crucial provisions specified in these contracts, leading to failures in achieving planned development project goals.

Dr Abbas also noted instances where development projects were executed using draft contracts, resulting in financial losses due to additional payments caused by non-compliance with contract terms or failure to impose compensation fees for delayed work.

Revenue collection

During the fiscal year 2022/23, nine out of 12 local government authorities collected Sh11.5 billion internally, falling short of the Sh15.5 billion budget by Sh3.9 billion.

The audit revealed that one authority lacked a budget for internal revenue collection, prompting the Office of the President of Finance and Planning to review the issue thoroughly and establish a revenue collection budget.

This would enable the institution to provide community services and sustain itself in line with the concept of establishing the City of Zanzibar.

Financial management

While some institutions have shown improvement in financial management, others were found to have disciplinary shortcomings, leading to non-compliance with the Public Finance Management Act No. 12 of 2016.

Major issues included cash payments, tax evasion loopholes, delayed government revenue deposits in banks, and non-compliance with government directives regarding electronic receipts during payments.

Non-competitive procurement

The report also exposed instances where public institutions made purchases without considering price competitiveness, adhering to draft contracts submitted to the Attorney General's Office.

Other issues included failure to attach essential procurement documents to payment records and making purchases contrary to procurement plans, resulting in higher costs than budgeted.

Certificate issuance

In the fiscal year 2022/23, the audit issued 22 audit certificates, with 19 satisfactory (86.36 percent), and no adverse or failure-to-comment certificates.

Recommendations from local government authorities showed that out of 512 recommendations, 380 (74 percent) were implemented, with 44 (8.59 percent) at various stages of implementation.

However, 47 recommendations (9.18 percent) were not implemented, 23 (4.49 percent) were repeated, and 18 (3.52 percent) were outdated.

Lack of insurance

Despite the legal requirement for public motor vehicles to be insured, the audit identified 15 public institutions failing to insure vehicles, including cars, motorcycles, and scooters.

This negligence could result in government losses due to expenses for vehicle repairs after accidents, prompting recommendations for prioritizing compliance.

What others say

Mohamed Haji, a law expert from the State University of Zanzibar (SUZA), emphasized the need to prioritize the CAG report and take action against those responsible for mistakes.

Independent activist Zainab Mbarouk highlighted the ongoing need for the government to improve institutional systems for efficiency.

In contrast, procurement expert Shekha Suleiman Ali acknowledged improvements but urged the CAG to have more authority to take action beyond auditing, emphasizing the need for effective follow-up on recommendations.