Tanzania tackles graft with snail’s pace – donors

By Kizito Makoye, Dar es Salaam –  A group of donors that provide general budget support (GBS) to Tanzania has once again criticized the government for its slow  pace in fighting petty and grand corruption.

Speaking at the National Policy Dialogue in Dar es Salaam recently, a minister counselor at the Royal Norwegian Embassy  Mr. Svein Baera, who chairs  the GBS group of development partners;  expressed concern on lack of progress in key sectors despite massive donor support ostensibly due to corruption.

Tanzanian people’s direct  experience  of corruption risks leading to a culture that becomes a vicious circle, he said.

“The fight against petty and grand corruption still needs more action…the government is expected to do even more to display and enforce zero tolerance for corruption or any other misuse of public funds,” said Mr. Baera at a joint press conference with the country’s Finance Minister Mustafa Mkulo.

He added that “We need to see evidence of real progress in the total set of actions from the government to fight both grand and petty corruption.”

Donors slashed funding pledges for Tanzania’s 2010/11 budget by US$ 220 million due to concerns about the slow pace of  country’s reforms.

Mr. Svein candidly rebuked Tanzania authorities to be more realistic in their anti-corruption crusade by giving information to the public  on progress  they were making in fighting graft.

He observed that it  is important  to balance the focus on controls and enforcement in the fight  against corruption with prevention efforts particularly in public procurement.

Among grand corruption scandals, is an infamous Kagoda Agriculture company, which  was the single biggest beneficiary of funds looted from the Bank of Tanzania’s  external payment arrears (EPA) account after receiving dubious payments of over US$ 30 million.

As a clear demonstration of donors’ keen follow up, Mr. Baera said he was concerned that  Tanzania had presented a different budget  to the International Monetary Fund board contrary to the one approved by the Parliament  in July this year.

“There are differences between the budget presented to the IMF executive board and the one approved by Parliament in July 2010, with much more optimistic revenue forecasts and a higher level of domestic financing used to justify sharply higher expenditures,” said Mr. Baera.

Finance minister, however, adeptly responded that budget figures that had been presented to the IMF were raw “and the IMF knows that.”

Mr. Baera stressed that the government also failed to put in place a strategy that would facilitate prioritisation of expenditures in the event of revenue shortfalls as it is happening now.

He noted that poor budget preparations that do not take care of possible future revenue shortfalls “undermine the credibility of the budget as an effective policy and planning tool.”

The donors,  under the chairmanship of Norway, are expected to give Tanzania $534 million this financial year.

The amount is $220 million less than the $754 million given during the last financial year.

Donors have also asked Tanzania government to consider reducing tax exemptions in order to reduce the yawning budget deficit currently haunting the country’s economic plans.”This could contribute significantly to increased domestic revenue and close the fiscal gap over the medium to longer term,” Mr. Baera said.

There are also concerns that despite steady high economic growth and positive progress in many areas, there is limited evidence of poverty reduction and improvement of livelihoods for the majority of Tanzanians, he said

A Dar es Salaam- based  NGO Uwazi-Twaweza revealed in its recent analysis that  Tanzania has granted tax exemptions amounting to $3.8 billion during the past ten years, even as the country grapples with failure to meet revenue collection targets.

In 2008/09 and 2009/10, tax exemptions were 2.8 and 2.3 per cent respectively, of the country’s GDP. According to Uwazi, in Kenya and Uganda tax exemptions amounted to one per cent and 0.4 per cent of the countries’ GDPs respectively.

Kizito Makoye is a Tanzanian journalist based in Dar es Salaam