Tanzania continues to lose money to misuse of public funds and ghost workers, although progress has been made towards reduction of tax exemptions and the number of “qualified audit opinions.”
In a report to parliament last week, Controller and Auditor General (CAG) Prof Mussa Assad revealed misuse of public funds to the tune of Tsh600 billion ($288 million) during the 2013/14 financial year.
Revenue leakages attributable to tax exemptions, however, sharply fell from Tsh1.81 trillion ($868.2 million) in the 2011/2012 financial year to Tsh31.8 billion ($15.25 million) during financial year 2013/2014 while the number of government accounts carrying the suspicious tag of “qualified opinion” had shrunk from 26 per cent to 5.1 per cent over the same period.
Explaining the suspected misuse of Tsh600 billion ($288 million) to parliament in Dodoma, CAG said some of the money had been paid to ghost workers, and retired employees who had been working in diplomatic missions but continued to draw foreign service allowances.
“I advise that instead of paying foreign service allowance to retirees, the Ministry of Foreign Affairs and International Co-operation should consider the same amount to facilitate transportation of personal effects,” Prof Assad said.
Tanzania lost Tsh1.01 billion ($484,500) in salaries to ghost workers while another Tsh845 million ($405,000) was paid in statutory deductions to pension funds, health insurance schemes, financial institutions and the Tanzania Revenue Authority from the ghost workers’ salaries.
“My audit has also established that former government employees, including those who have died, those who resigned and those who have retired, are still receiving salaries through their accounts. Health insurance, Pay As You Earn and social security contributions are still being deducted from these salaries,” Prof Assad said.
His revelations attracted criticism from analysts who saw the report as evidence of a lack of political will to stem the loss of public funds.
“The best way I can describe this country’s financial mismanagement problem is that it is a chronic problem,” said Revenue Watch Institute’s resident economist for Tanzania Silas Olan’g.
Mr Olan’g added that the solution lay in strengthening the oversight role of grassroots communities that are supposed to be beneficiaries of the misappropriated development project funds.
Although some communities in Tanzania have already formed public expenditure tracking systems, the economist said, these grassroots trackers need training to better understand how to track public expenditure.
The government should be transparent at all levels of the procurement process and the beneficiaries should understand everything in the process, Mr Olan’g added.
Some of the monies were lost through tenders that were awarded without following proper bidding procedures and misuse of tax incentives by some multinational firms.
In some cases local government authorities and central government paid more money than the contracted sums while some procurement was conducted outside the agreed plan for the financial year. Discrepancies were also found in some audited public institutions.
National Housing Corporation, for instance, was found to have awarded tenders worth Tsh1.75 billion ($840,000) in non-competitive bidding.
The Ngorongoro Conservation Authority without proper reason issued a Tsh2.3 billion ($1.1 million) tender on restricted bidding terms, meaning that only a selected few bidders were allowed to participate.
Perry Maggita, a private fraud investigator who once worked as a debt collector for Collection Africa, a firm associated with former director of Tanzania Intelligence and Security Service Hass Kitine said: “We could be losing some of these monies through schemes to raise funds for the ruling party’s General Election costs.”