Wednesday, October 19, 2011


Sebastian Mrindoko,

ESTABLISHING profitable public enterprises (PEs) has been one of the government's top priorities to enhance its contributions into the nation's socio-economic development.

Apart from being reduced significantly, PEs continue to have a major dominance in the economy. Statistics from the Treasury Registrar show that there are 238 PEs.

The process of reformation has never been in vain as some of the PEs are currently run profitably to even paying dividends to the government.

For example, the Tanzania Standard Newspapers Limited and National Housing Corporation (NHC) and which in the year ending June 2011 paid 40m/- and 250m/-respectively. Others are the Tanzania Ports Authority (TPA) 2bn/- and Bank of Tanzania (BoT) 1.5bn/-.

But a large proportion of dividends payable to the government come from the private companies with minority shareholding like the NMB Bank, Mbeya Cement, Airtel, Kilombero Sugar.

"There are multitudes of smaller PEs and few larger ones which constitute big portion of this total investment into PEs," said Mr Zitto Kabwe the Chairman of the Parliamentary Public Organisations Accounts Committee at the CEOs Roundtable (CEO-rt) held last week in Dar es Salaam.

The Parastatals have investments worth 10.3tr/-, which is 30 per cent of the national gross domestic product (GDP).

"The ineffective PEs have not only failed to contribute to development but have siphoned out resources that could have gone to other important activities. The costs of continuing to subsidize unprofitable state enterprises have taken a heavy toll on the Treasury," observed Mr Kabwe.

Political interference is mentioned as one of the major impediments for the PEs under performances thus ending up in heavy losses and unbearable debts. They face continuing risks of political meddling, of cronyism and corruption in their governance and operations.

At the forum, business leaders expressed worries over the ever-rising number of regulatory authorities in the country, warning that the institutions are now a big burden to tax-payers.

The Chairman of CEOs' Roundtable (CEO-rt), Mr Ali Mufuruki, said there was need to assess the institutions, review structure and harmonise functions and their financing.

According to Mufuruki, the regulatory bodies are not only regulating as they were supposed to do, but also reaping a lot of money investing heavily to an extent that they compete with us in the market. They are a real burden to us.

On this the Energy and Water Utilities Regulatory Authority (Ewura) came into spotlight for multiple charges in petroleum products among major factors which make fuel prices high.

One vivid example is the price of petrol and diesel, which is above 2,000/- per litre due to the long chains of fees and charges imposed by Ewura and some executive agencies.

A litre of petrol costs almost 450/- when it is offloaded at the port, but when tax is added, its value goes up to about 1,050/-. But when a dealer sells to customers its price increases up to more than 2,000/-because of excessive charges by regulators.

Business leaders were of the opinion that the government finds another way of financing EWURA and other such bodies to relieve the burden to the end consumers.

"Despite the role they play in regulating the market, but it is unprofitable to have multitude of government agencies that are a burden to citizens and the economy," said Mr Mufuruki.

"We appreciate the role played by the regulatory bodies but get more worried when they assume the taxman's role as well as competing with the private sector in some investment opportunities," he said.

However, he said, experience shows the need to strictly control their budgets. The Auditor General has repeatedly shown how these bodies mismanage their financial resources.

The CEOrt is a policy dialogue forum that brings together CEOs and Executive chairs of leading companies in Tanzania with the objective of finding solutions to economic and social challenges.


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