DAR ES SALAAM, Tanzania
In November 2021 at the Dubai
Airshow, Tanzania placed an order for a Boeing 767-300 freighter, besides a
787-8 Dreamliner and two 737 MAXs.
The freighter would be used to
capitalise on Africa’s burgeoning cargo demand, Boeing and the Air Tanzania
Company said.
“The 767 freighter will give
Air Tanzania exceptional capability and flexibility to meet passenger and cargo
demand within Africa and beyond,” said Air Tanzania chief executive Ladislaus
Matindi.
And now, as national carrier
prepares to receive Africa’s first B767-300F, a mix of excitement and anxiety
is palpable in Dar es Salaam.
Last month, plane spotters saw
the aircraft conducting test flights at the Boeing Factory at Paine Field,
Seattle. It was expected at the Julius Nyerere International Airport on March
31, but the delivery was delayed by “supplier issues”.
Boeing said “quality issues”
forced it to rework the 767Fs and the delivery is expected this month.
But in Dar, President Samia
Suluhu Hassan has been fuming over the purchase of this plane, which was billed
to turn Dar into a cargo hub in the region.
This is well over double the
$37 million figure in the original purchase contract agreed with the plane
manufacturer in Washington D.C.
Irked by the revelations amid
a growing public outcry, on April 9, President Samia sacked John Nzulule,
director-general of the Tanzania Government Flight Agency, which was charged
with handling Air Tanzania’s plane purchases under the John Magufuli-initiated
revival strategy.
The President also dissolved
the Tanzania Railways Corporation board, after the CAG findings showed that the
public agency twice rejected tenders to purchase locomotives and passenger
coaches for the new standard gauge railway (SGR) at the lowest bid price of
$263.4 million, in favour of a $478 million offer, costing the government about
$215 million more.
The rot in the two corporations is just an example of a web of corruption in the Tanzanian government and quasi-government institutions flagged by the CAG Charles Kichere.
The revelations in Mr
Kichere’s audit for the 2021/2022 fiscal year, which was made public on April
7, put the spotlight on the President, who has been endeavouring to clean up
the public sector and the country’s image as an investment destination in
Africa, devoid of red tape and graft.
They also potentially dent her
campaign for re-election in the next cycle of polls.
Mr Kichere’s report unveils
serious misuse and embezzlement of funds in flagship government projects dating
from the era of Samia’s predecessor John Magufuli, but this time also
implicating her own administration in no small measure.
Firebrand opposition leader
Tundu Lissu of the Chadema party has put the estimated loss of public funds due
to graft, mismanagement and negligence at Tsh2 trillion ($862 million).
Major projects such as the
standard gauge railway, the Nyerere Hydropower Dam and the Air Tanzania revival
programme have been flagged for serious impropriety while virtually all the key
public utilities are under scrutiny for irregular expenditure.
Backed by President Samia’s call for more transparency in government spending, the annual CAG audit for the first time included projects that were previously exempt from audit by the Magufuli administration. One is the Air Tanzania’s plane purchases.
Although CAG Kichere issued
unqualified opinions indicating satisfactory financial reporting and
record-keeping by 96 percent of the 1,045 government agencies audited in
2021/2022, his report details endemic financial irregularities and loss-making
trends in most of them.
The spotlighted entities
included the Tanzania Telecommunications Corporation, Tanzania Electric Supply
Company, Medical Stores Department, Muhimbili National Hospital, Tanzania
National Parks Authority, Rural Energy Agency and the National Health Insurance
Fund.
Pension funds National Social
Security Fund (NSSF) and Public Service Social Security Fund were found to be
struggling with fast declining occupancy rates in their Dar es Salaam real
estate investments, partly due to a steady exodus of big business clients to
the administrative capital Dodoma.
A total of 45 public entities
were cited for making losses for two consecutive years, 14 of them being
commercial firms that are supposed to be reporting profits instead of losing
money.
Top on the new list of shame
is the national carrier, Air Tanzania, despite cutting its losses minimally
from Tsh36.18 billion ($15.6 million) to Tsh35.2 billion ($15.17 million).
Tanzania Railways Corporation
posted a much higher deficit — Tsh31.29 billion ($13.5 million) in 2022 —
against Tsh22.8 billion ($9.83 million) in 2021.
The National Development
Corporation cut its losses by over half, from Tsh26.3 billion ($11.33 million)
in 2021 to Tsh11.9 billion ($5.13 million), but remained on the critical list.
State-owned TIB Development
Bank recorded a Tsh838 million ($361,200) loss in 2022, against Tsh292.3
million ($125,990) in 2021, which was blamed on an increase in non-performing
loans to 20.3 percent, well above the central bank’s 5 percent threshold. It is
instructive to state that most of the bank’s clients are government
institutions.
Among non-commercial firms,
the NHIF led in the loss-making zone, with its losses shooting up almost
twofold from Tsh109.7 billion ($47.28 million) to Tsh204.6 billion ($88.2
million) in just two years.
According to Mr Kichere, most
of the listed non-commercial public entities suffered as a consequence of
“having no access to government subsidies or alternative sources of income,”
while those in the commercial category were guilty of “poor business decisions,
poor supervision of investments, and poor financial management.”
The report says that many
government institutions have failed to meet their own performance targets in
line with strategic plans, undermining their ability and capacity to compete
with private sector rivals. Weaknesses were also detected in revenue collection
and recording in 180 local government authorities, with more than Tsh91 billion
($39.22 million) going down the drain.
The audit also brought to
light that government officials were colluding with some international private
companies to perpetrate the graft and rot within government, as in the invoice
matter involving aircraft maker Boeing.
Standard Chartered Bank has
also been criticised over the conditions that it set for a $1.46 billion loan
to facilitate the SGR project, which ultimately raised the cost by several
million dollars.
According to the report, the
bank named Turkish firm Yapi Merkezi as the only acceptable contractor for at
least two phases of the project. The company was eventually awarded the
construction job via a single-source tender arrangement, in spite of Tanzania’s
procurement rules that stipulate competitive bidding for such contracts.
Under the Yapi Merkezi
contract, the Tanzanian government is obliged to pay between $5.2 million and
$5.5 million for each rail kilometre built over a 790-kilometre stretch, while other
phases of the planned 1,800-km line, which were subjected to a competitive
bidding process, are costing from $3.9 million to $4.6 million per kilometre.
In its 2022 report on
operations in Tanzania, Standard Chartered Bank described its SGR loan as the
“largest syndicated transaction in sub-Saharan Africa outside the oil and gas
sector to date (which has) positively changed the accepted norms on how such
deals are structured and how risks are managed effectively.”
The Nyerere hydropower project
in southern Tanzania was also flagged for delayed payment of Tsh327.9 billion
($141.33 million) in assorted levies to hasten its completion.
President Samia has instructed
Chief Secretary Moses Kailua to supervise “legal action” against public
officials implicated in the widespread financial accounting flaws spelt out in
the audit.
Public expectations are that
the President’s move marks the beginning of a bigger crackdown on government
corruption under her government and more heads will roll.
But the president continues to
face pressure to do much more towards curbing graft within her administration,
with main opposition parties Chadema and ACT Wazalendo predictably using the
CAG report’s findings as fresh fuel to further drum up public apathy towards
Samia’s ruling CCM party.
ACT Wazalendo leader Zitto
Kabwe described the report’s findings as “the same old story” of poor
governance under CCM, quoting the report’s observation that only 36 percent of
the 6,947 recommendations contained in the 2020/2021 audit were implemented.
Chadema secretary-general John
Mnyika said the public outcry triggered by the report’s revelations was not
likely to cool down as quickly as in previous years because of a soaring cost
of living caused in part by some uncontrollable factors such as the Ukraine
war, drought and the impact of Covid.
According to Mr Mnyika,
ensuring financial discipline in governance should be “a top priority at this
time of economic difficulties for everyone.”
“Adding up all the dirt mentioned by the Controller and Auditor-General this
year, more than Tsh2 trillion have been lost,” Mr Lissu is quoted by the
Citizen newspaper as saying. “This is happening in a country whose people are
facing many problems.”
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