Tanzania: Annual Government Budgetary Allocations

THE Tanzania Government budget for the 2011/12 financial year stands at Tsh13.52 trillion (about US$8.62 billion at the June 8, 2011 exchange rate), compared with Tsh11.6 trillion for the 2010/11 financial year.

However, analysts who spoke to Business Times in Dar es Salaam this week strongly criticized the structure of the national budget for allocating over 80 per cent of the funding to recurrent expenditure, leaving a paltry 20 per cent for development projects!

In that regard, the analysts – who included renown economists and politicians – stated that this is the major reason behind the prevailing slow pace of socio-economic development, and increased corruption within the Government.

Recurrent expenditure on goods and services is expenditure which does not result in the creation or acquisition of fixed assets. It is mainly expenditure on supplements, wages and salaries, purchases of goods and services, as well as 'consumption' of fixed capital (depreciation).

Noting that the Tanzania budget has depended on donor contributions by up to 30 per cent in the past ten years, Prof. Humphrey Moshi of the Department of Economics at the University of Dar es Salaam said it is a matter for regret that the budget is largely apportioned to recurrent expenditure, mostly in allowances and supplements – which gives a clear room for misuse of public funds.

Professor Moshi was reacting to a request to comment on the ongoing controversy surrounding the permanent secretary to the
ministry of Energy & Mineral Resources (MEM) David Kitundu Jairo.

Apparently, Jairo was involved in the unusual act of soliciting contributions from publicly-funded institutions under the ministry with which to ostensibly facilitate smooth passage of the ministry's budgetary proposals in the National Assembly!

Jairo was suspended from duty after the member of Parliament for the Kilindi Constituency on the ruling party's ticket, Beatrice Shellukindo, claimed in the House that he had solicited Tsh50 million from each of about 20 institutions under the ministry.

Following the findings of a probe by the Government Controller & Auditor-General (CAG) into the matter, the Government's chief secretary, Phillemon Luhanjo, reinstated Jairo in office last week, announcing that he had been cleared of any wrongdoing.

However, President Jakaya Kikwete just as soon intervened, directing that Jairo remain under suspension while a select parliamentary committee looked into the affair afresh.

Prof. Moshi said Jairo’s solicitation of millions of shillings from the institutions for paying officials' allowances was prima facie indication of corruption, and is a result of the negative recurrent expenditures budgeting syndrome.

He said there was no good reason to solicit sums of money to pay allowances as the ministry and its institutions do have their own budgets for their workers' allowances when they are out of their usual working stations on official assignments. There is, therefore, every reason to believe that Jairo’s action and the funds were aimed at a completely different purpose other than the one given!

“Recurrent expenditures – mostly those in the form of allowances and supplements – retard socio-economic developments efforts,” Moshi says. “Jairo’s move to solicit millions of shillings was not  justified; the CAG report did not state how the money was spent... and why the solicitation was required!”

If Tanzania is to develop socially and economically on a meaningful and sustainable basis, Moshi says, then then Government has to set aside at least to 50 per cent of its annual budget specifically for development projects.

It should also effectively cut down public expenditure b, among other things, permanently dispensing with superfluous allowances and supplements among its Ministries, Departments and Agencies (MDAs).

“Take a good look... If similarly solicited millions were added together in the last five years of President Kikwete’s regime, it could amount to several billions of shillings in expenditures that are otherwise unaudited! If, for example, the funds were directed  to the state power monopoly TanESCo for development projects this could have finally resolved the ongoing severe power crisis – with much positive impact created,” Moshi argued.

Prof. Ibrahim Lipumba, an economist and the national chairman of the opposition political party Civic United Font (CUF), told Business Times that the President Kikwete Government has demonstrated unmitigated weakness in leadership as demonstrated by the shoddy manner in which it is handling the Jairo saga. This is bound to make people lose hope in his ability to govern and bring about a better life for all his subjects.

The reported solicitation of millions of shillings by the Energy Ministry for paying out-of-station allowances to the ministry's budget delegations in Dodoma was highly improper and nonprocedural, Lipumba stated.

Noting that  every Government ministry and institution has its own funds allocated to it for such purposes, Lipumba said doing what Jairo did “creates weakness in management.

“Take, for example, EWURA (Energy & Water Utilities Regulatory Authority). If EWURA was told to raise funds for the ministry, it would no doubt solicit same from the big oil marketing companies which are under its jurisdiction. When that happens, can you rightly expect the Authority to be able to exercise effective control over the companies thereafter and as a matter of course?”

Lipumba lamented that the money solicited by the Energy Ministry's could have gone into building water wells in villages where water is a major problem; or build 12 dispensaries worth Tsh200 million each; or 25 dispensaries worth Tsh100 million each – and much more!

Noting that the manner and style in which the Government dealt with the Jairo issue was purely defensive and aimed at protecting Jairo, Lipumba said he expected the investigations to involve the Prevention & Combating of Corruption Bureau (PCCB) and the police.

This never happened, and directing CAG to look into the matter – whose mandate is limited to auditing and matters of Income and cashbook flows – made sure that it would never reveal whether or not the solicited funds were aimed at bribing MPs to pass the ministry's budget proposals without serious questioning!

Lipumba also said that the chief secretary’s revelation that solicitation of financial contributions to facilitate budget approval in the National Assembly is normal conduct among Government ministries implies that the Government has been wasting billions of shillings in staff allowances and supplements every year... Money which could have helped to foster socio-economic development.