- 71 LGAs paid $4.3 million (TZS10.08 billion) to various suppliers and clients without demanding receipts.
- About $32.7 million in revenue from rental charges for shops and houses located at the council’s bus stands and markets was not collected.
- Audit has prompted President Samia Suluhu Hassan to dissolve the board of Tanzania Government Flight Agency (TGFA).
An audit in Tanzania has exposed massive corruption and misuse of public finances across Local Government Authorities (LGAs) that led to the loss of billions of shillings, yet another pointer to why the country of nearly 65 million people still ranks high globally on corruption.
Tanzania Controller and Auditor General (CAG) 2021/22 report shows a total of 71 LGAs paid $4.3 million (TZS10.08 billion) to various suppliers and clients without demanding receipts while another 40 authorities wired $725,711 or TZS1.70 billion to beneficiaries without proof of the relevant supporting documents.
A total of $4.7 million in revenue collected from various sources was not deposited in the respective bank accounts of LGA in the FY 2021/22. A further, $32.7 million in revenue from rental charges for shops and houses located at the council’s bus stands and markets, market stalls, sale of plots, agriculture produce cess, liquor licenses, levy for extraction of construction materials, business license, and service levy was not collected, the report by Controller and Auditor General Charles Kichere revealed.
“I urge LGAs to develop precise collection strategies by identifying potential sources of revenue and venture into new sources within their areas of jurisdiction,” Mr Kichere noted.
Under the Tanzania law, Section 36 (1) of the Tax Administration Act, Cap. 438 requires the issuance of proof of payment, that is, a fiscal receipt or fiscal invoice using electronic fiscal devices for any and all sales of goods and or services.
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Overall, the National Audit Office of Tanzania (NAOT) found an additional 14 LGAs had supposedly made cash payments amounting to $640,000 (TZS1.5 billion) on various vendors contrary to the regulations.
“Making payments to vendors by cash may attract misuse of public funds and non-payment of the related taxes to the government. I advise that management of the respective LGAs comply with relevant laws and regulations by prohibiting the use of cash when making payments to their suppliers,” the CAG explained.
Lax checks in the use of public funds also showed $37.8 million (TZS88.42 billion) that was meant for loans to various special needs groups including women, youth, and persons with disabilities could as well have been lost. The LGAs could not provide documents to support the loan disbursement and recovery, a pointer to poor due diligence checks on part of officials on the applicants.
The CAG also found the LGAs woefully lacking in good loan processing procedures, loan portfolio management, and did not have adequate loan recovery procedures in place. A total of $960,500 of the unrecovered funds on record were owed by groups that ceased business operations and could not be traced. Equally shocking was the issuance of $382,492 in business loans to roughly 48 non existent groups.
“I found out that 201 groups in eight LGAs were loaned a total of $330,839, which had been deviated from approved or intended purposes,” the CAG reported.
Increased revenue collection
In the period under review, Tanzania’s improving business environment especially ease of making tax payments via mobile platforms and harmonizing the various payment processes led to increased domestic revenue collections in the financial year 2021/22.
“Furthermore, efforts were made to improve tax administration at the local government level by promoting the use of ICT systems and enhancing Government’s electronic Payment Gateway (GePG), whereby all institutions were required to use GePG system,” reads the CAG report in part.
All 184 LGAs raised revenue collections to $380.8 million, equivalent to 102 percent of the targeted $372 million during the period. In 2020/21, revenue collection closed at $328.2 million.
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“While there has been a positive trend in revenue collection in the past five years, it is important to ensure that all potential sources of revenue are fully utilized in order to achieve the set targets,” the CAG noted.
Already, the damning revelations on runaway misuse of public funds has led to the disbandment of the Board of Tanzania Railway Corporation (TRC), the firing of the head of Tanzania Government Flight Agency (TGFA) Eng John Nzulule, and the issuance of a stern warning to LGAs.
