Economy Tanzania’s funding crunch

Tanzania’s funding crunch

Finance Minister Saada Mkuya
Tanzanian Finance Minister Saada Mkuya

(AA) – The Tanzanian government is facing financial crises that are hindering a number of development projects due to funding shortfalls.

“We have been operating on a shoestring budget for the past six months now,” Finance Minister Saada Mkuya told The Anadolu Agency by phone from capital Dodoma.

“The government has been largely depending on Tanzania Revenue Authority (TRA) collections to run its affairs,” he said.

But the minister said the collections were only enough to cover public servants’ salaries and the national debt.

“We are operating on our own cash,” he asserted.

“We are fighting and struggling to use the money we have by sending what we have – even in small rates – to support development projects,” added Mkuya.

The government’s financial crisis comes months after donor countries and Tanzania’s development partners decided to withhold nearly $500 million in budget support.

They had demanded action against government officials involved in the recent escrow account scandal and other scandals.

Tanzania was gripped by controversy for months after the Public Account Committee released a report accusing senior government officials of having fraudulently authorized the disbursement of at least $122 million of public funds from an escrow account to a private company.

It has since been shown that certain officials benefited from the escrow account money, receiving millions of dollars from James Rugemalila, a shareholder in the Independent Power Tanzania Limited company.

The National Assembly has asked President Jakaya Kikwete to sack four top government officials implicated in the scandal: Attorney-General Frederick Werema; Energy and Minerals Minister Sospeter Muhongo; Energy and Minerals Permanent Secretary Eliachim Maswi; and Land, Housing and Human Settlement Minister Anna Tibaijuka.

Since then, Werema and Muhongo have both voluntarily tendered their resignations, while Kikwete has sacked Tibaijuka. Maswi, meanwhile, was suspended from his post.

Minister Mkuya said the financial crisis had taught Tanzania “not to depend on donors’ support in terms of the national budget and development projects.”

More than 70 percent of Tanzania’s national budget is funded by foreign donors.

The remaining 25 percent is drawn from national income from agricultural products, exports, tourism, mining and tax revenue, among other sources.

According to a January TRA report, the authority currently collects more than 800 million Tanzanian shillings each month.


A report issued by parliament’s budget committee asserted that the government had failed to adequately finance development activities, releasing only one third of the funds expected.

“Many ministries and government institutions have not received the amounts needed for development projects,” committee deputy chair Kidawa Salehe told AA.

“The Finance Ministry had been diverting funds from other government organs and institutions to other activities to meet crucial requirements,” he said.

Salehe cited a rural electricity program and road improvement schemes as examples of government institutions that had been adversely impacted by the reallocation of funds.

So far, the ministry has diverted more than 43.9 billion Tanzanian shillings from the Rural Energy Agency to meet other expenditures.

The ministries of science and technology, communications, transport and works have not received sufficient development funds, which were allocated in the 2014/15 financial year.

“Activities in these ministries, including development projects, have been mostly affected,” Peter Serukamba, chairman of parliament’s infrastructure committee, told AA.

“No funds have been released in the last six months,” he lamented.

Opposition leader Freeman Mbowe, for his part, urged the government to cut unnecessary expenditures so that the saved money might be rechanneled to meet more important needs, including development projects.

Cyril Akko, CEO of the Tanzania Tour Operators’ Association, urged the government to take tangible steps aimed at raising tourism income by removing unnecessary taxes and levies.

“Most tourists coming to Tanzania are coming via Nairobi through the Jomo Kenyatta International Airport instead of the Kilimanjaro International Airport, because landing fees are higher in Tanzania compared to our neighbors,” he told AA.

Akko cited uncertain policies and higher lodge and campsite fees as additional obstacles facing Tanzania’s tourism industry, which currently contributes some 20 percent of the nation’s GDP.

Previous articleTurkey condemns Jordanian pilot’s execution
Next articleSaudi Aramco boosts investment to raise market share