Watchdogs are as good as those who man them

It is a great shame that the government finds it necessary to set up yet another organ to oversee the activities and performance of the country’s financial sector.

In 1966, the then government struck out at the colonial EA Currency Board, opening its own central bank under the 1965 Bank of Tanzania (BoT) Act.

BoT was also charged with the noble tasks of being a bankers’ bank, and banker to the Government itself.

One of BoT’s crucial tasks was to supervise, oversee, control and otherwise ensure sterling performance within the country’s financial sector.

This was in so far as it related to the domestic economy, and its status vis-a-vis foreign transactions.

However, it took more than a generation for the government to realise that the Bank of Tanzania had been overloaded with duties and responsibilities.

This generally encumbered its overall performance, reducing it to a humpty-dumpty status of humongous proportions.

Hence the 1995 Bank of Tanzania Act, which imposed upon the Bank the single main objective of shaping and managing monetary policy.

Somewhere in the confusion, everyone seemed to lose sight of what was going on at the bank and in the financial sector.

It was not until more than a decade later that it emerged the Central Bank itself had fallen victim to a scandal involving the loss of hundreds of millions of dollars.

The full extent of the losses has never been determined.

This is largely because the Govt. is more than anxious to minimise the scandal through damage control, flak deflection and pooh-poohing the affair.

However, independent audit revealed that Tsh133 billion (about $130 million) was swindled from the BoT External Payment Arrears account in 2005 alone.

That’s ample testimony to the rot that went on under the noses of the Bank’s principal officials.

If that could happen at the Central Bank, how could the bank excel in ensuring good governance and practice in the rest of the financial sector?