Losses, plunder, lethargy in strategic state-owned firms rattle Samia

Sunday April 02 2023
Tanzanian President Samia Suluhu

Tanzanian President Samia Suluhu. She was furious after receiving the Controller and Auditor General report for 2021/2022 that painted revealed loss and lethargy in management of state-owned firms. PHOTO | ERICKY BONIPHACE | POOL | AFP

By The EastAfrican

Tanzania’s infrastructure projects have come under fresh scrutiny with the Auditor-General indicating the country may have lost money in false procurement, delayed payments and general mismanagement.

Last week, President Samia Suluhu was furious after receiving the Controller and Auditor General (CAG) report for 2021/2022 that painted revealed loss and lethargy in management of national carrier Air Tanzania, the standard gauge railway, and state-owned TTCL telecom firm. For example, Air Tanzania is fingered for the purchase of a cargo aeroplane at an unjustified high price.

The CAG report says the last instalment for the purchase of the plane was $37 million, however, a $86 million invoice was submitted for payment.

“Where did this invoice come from? What did the contract say?” the president asked after receiving the report on Wednesday at Ikulu in Dar es Salaam.

“And when you received the invoice, you still presented it to the government for payment. What step did you take after you received the invoice? When you look at it critically, you will notice that the price hike is something that started internally,” she added.

The cargo plane, still at Everett factory in Washington DC, is among four Boeing planes — the others are a 787-8 Dreamliner and two 737 MAX jets — that were ordered in 2021 at a reported total cost of $726 million.


Magufuli’s pet project

Air Tanzania was the former President John Pombe Magufuli’s pet project as he sought to place Tanzania on the map of national carriers. The airline has, however, suffered losses as its two aircraft remain grounded due to mechanical problems. According to President Samia, those found culpable will have to resign.

Also in trouble is TTCL, the state-owned telco, the CAG report flagged mounting losses.

“Frankly speaking, TTCL has failed in the telecom business, let them focus on providing broadband, in fact, if they engage in telecom and the broadband belongs to them, there is no fairness in the competition," President Samia said.

“As for government institutions that have been consistently making losses, we need to conduct an analysis and establish those that should continue to exist and those that must be shut down,” President Samia said.

Ineffective for decades

She also cited the National Development Corporation (NDC), which she added had been ineffective for decades.

“They are a burden to the government and have no positive impact. Do we really need to have more than 200 state-owned entities? We need to remain only with those that are operating efficiently and do away with those that no longer make any economic sense,” she said.

CAG said that TTCL had a target to register more than 100,000 new customers in the Dar es Salaam region during the period under review, but it only managed 40,000 customers.

Equally fingered was the standard gauge railway (SGR). Officials at the Tanzania Railway Corporation had been promising completion of the project’s phase on time, but often failed to meet deadlines.

Locomotives tender

CAG said TRC twice rejected the tender to purchase the locomotives and passenger coaches from the lowest bidder at an offer of $263.4 million and instead made a non-competitive purchase of $478 million.

According to the CAG report, the non-competitive option cost the taxpayers an additional $215 million.

TRC is also said to have gone into the purchase without a performance guarantee, leading to a loss of Tsh13.7 billion (5.3 million euros). “Due to this delay, the consultant’s period was extended, and that resulted in an increase in the fee of Sh26.2 billion,” CAG indicated in a note.

President Samia pointed an accusing finger at some civil servants and heads of divisions for their deliberate failure.

On Wednesday, she also received a report from the Prevention and Combating of Corruption Bureau.

About Tsh10 billion ($4.2 million) may have been misappropriated through irregular invoicing, while another Tsh414 billion ($176.4 million) paid to various contractors as penalties for delayed settlement of pending bills.

Reporting by The Citizen and Emmanuel Onyango