Tanzania: Unnecessary expenditure, unnecessary hardship

Good governance implies the efficient delivery of public services that promote the well being of the majority of the population. Unfortunately, the Tanzanian government lacks sufficient resources to render basic services satisfactorily.

Nonetheless, there is widespread consensus that considerable amounts of public expenditures are unnecessary, due to their perceived negligible utility to the majority of Tanzanians.

Over the past three years, top government officials in Tanzania have acknowledged the problem of unnecessary expenditures across all administrative levels and have vowed to stop and reverse it. In order to demonstrate how public budgeting is characterised by unnecessary expenditures, Sikika has, for the second time, focused its budget analysis on a list of six expenditure items which are deemed to be either inefficient or non essential. These are:

* Training (both foreign and domestic): too many workshops and trainings are held in expensive conference facilities or hotels. There are surely other venues which are more affordable.

* Allowances (non-discretionary, discretionary, and in-kind): current per diems over-compensate for additional expenses incurred by working out of the office.

* Travel (both in-country and out-of-country): many government officials needlessly travel on the same mission. The application of communications technology could eliminate those trips.

* Fuel, oil, and lubricants: unit costs are highly inflated and quantities are unrealistically high.

* Acquisition of new vehicles: government officials purchase mostly luxury cars instead of more affordable ones proportional to the status of our economy.

* Hospitality supplies and services: meals and beverages should be provided in moderation.

BACKGROUND

In the October 2008 joint annual health sector review meeting, Sikika made a statement regarding unnecessary expenditures by the ministries of health and social welfare. In November 2008, Prime Minister Mizengo Pinda announced his intention to cut unnecessary spending on allowances, seminars, and workshops. He established a directive that all ministries and regions are required to request a permit from the Prime Minister’s office before holding a seminar or workshop. In addition, he extended this policy by promising to reduce the procurement of expensive luxury cars and to redirect the savings toward programs and projects that have a more direct impact on rural areas, where about 80 per cent of all Tanzanians live.

To follow up on the implementation of the Prime Minister’s directives, in April 2010 Sikika published the first edition of this brief on the government’s efforts to refocus expenditures. The purpose of the brief was to inform the Tanzanian public about how the recurrent budget’s efficiency has improved between fiscal years (FY) 2008/09 and 2009/10. To take into account the recently passed budget, Sikika has updated and enriched its previous analysis with the budget estimates for FY 2010/11.

The analysis of the budget books reveals that the overall sum of unnecessary expenditures dropped significantly one year after the Prime Minister’s announcement in 2008.

The sum of all unnecessary expenditures fell from 684 billion (bn) Tanzanian Shillings (TSh) in FY 2008/09 to 530 bn TSh in FY 2009/10, which is a reduction of 22.4 per cent. However, in the current fiscal year (2010/11) these expenditures will rise slightly to 537 bn TSh. This development clearly contradicts the government’s stated commitment to spend its resources more wisely.

According to the 2008/09 budget, training expenses and allowances represented approximately two-thirds of all unnecessary expenditures (272 bn and 171 bn TSh, respectively). Thus any reduction in one of these two budget items would have a considerable effect on overall expenditures. Although the topics addressed in these trainings are of national interest, one may doubt whether they require such a substantial amount of funding.

The analysis of both budget items draws a mixed picture. The greatest amount of the overall savings in the FY 2010/11 budget was due to the successful reduction of training expenses. During the last two consecutive years, these expenses have been continuously scaled down from 272 bn to 57 bn TSh. That is a remarkable reduction of 79.2 per cent. We assume this is a result of the Prime Minister’s imposed directive requiring all ministries and regions to request a permit before they
can hold a seminar or workshop.

However, the sum of all allowances has gradually risen to 269 bn TSh in 2010/11, which means that current expenses are 57.1 per cent above the 2008/09 level. Due to this negative development, 45 per cent of the savings from reduced training expenses have been cancelled out.

Since the payment of allowances is partly related to the attendance of workshops and seminars we would expect parallel, instead of diverging, budget allocations. So we ask ourselves: ‘Where are the allowances going to be spent?’ Moreover, these findings contradict the government’s latest commitment to cut down on this kind of expenditure.

The third largest amount of all unnecessary expenditures is for travel expenses both within and outside of the country. In FY 2008/09, the Tanzanian government spent 155 bn TSh on those budget items. Over the last two years, this sum has successfully been reduced to 124 bn TSh, which is a reduction of 19.8 per cent. The development of expenditures on fuel, oil, and lubricants are less encouraging since they remained rather stable over the last few years. The spending for these items in 2010/11 is 1.4 bn, which is 2.7 per cent above the 2008/09 amount of 51 bn TSh.

Regarding expenditures on fuel, oil, and lubricants, the Department of Public Debt and Services has ranked first again. However, it is also important to mention the Law Reform Commission which has equally cut significantly on these expenses. At the bottom of the table one finds the Ministry of Energy and Minerals, whose expenses are more than 14-fold above the 2008/09 level.

Tabora Region cut a remarkable 47 per cent of its expenses while Kilimanjaro Region increased them by more than 10 times the 2008/09 level.

With the current information, it is difficult to determine the legitimacy of these costs. Therefore, we request the parliament and all related oversight bodies to investigate the usefulness of those expenditures.

Tanzania is a poor country which depends heavily on external funding, yet its officials have not stopped purchasing inefficient luxury vehicles which consume large amounts of fuel.

The Minister’s commitment to reduce the public procurement of vehicles is only moderately reflected by the aggregate budget figures. The aggregated 2010/11 estimate is 13.7 per cent below that of the previous year. However, the current acquisition of vehicles still amounts to 15.3 bn TSh and is thus only 1.4 per cent below the FY 2008/09 expenditure level.

Changes in expenditures on hospitality supplies and services are more disappointing. A promising 17.5 per cent reduction of these expenses in FY 2009/10 has been counteracted by a 30 per cent increase this year. The current estimate is 20 bn TSh, which is 3.6 per cent above the 2008/09 level.

Both the ministries of infrastructure and development and the judiciary cut almost all of their expenses on new vehicles. This encouraging development has been counteracted by increased car purchases by other ministries. The Ministry of Finance and Economic Affairs increased its spending on new vehicles by more than 39 times the 2008/09 level. The Ministry of Home Affairs has increased its vehicle budget 131 times over the amount it spent two years before.

At the lower administrative level, Dodoma Region was the only one which managed to cut its expenditures on new vehicles (-53.3 per cent). Tanga Region has increased its expenditures exactly 80-fold. Based on the current non-transparent budget process, it is impossible to tell the reasons for the reduced or increased acquisition of vehicles. Again, there is no possibility to track those expenditures. Thus we rely on the official oversight bodies which are supposed to investigate the cost-effectiveness of these questionable expenditures.

Over the last two years, the largest cuts in aggregated hospitality supplies and services originated from the Ministry of Education and Vocational Training. It reduced these expenses by a remarkable 5.2 bn TSh (86 per cent). At the bottom of the list we find the Electoral Commission and the Ministry of Home Affairs and Prison Services. The former’s expenses are about 41 times and the latter's are 22 times higher than in 2008/09. It would certainly be informative to receive an explanation from each of these institutions for the significant increases in these expenses. At the regional level, Tanga has cut 80 per cent of its expenditures on this budget item. In contrast to that success, Manyara Region increased its hospitality expenses by more than 12 times the 2008/09 level.

According to the recurrent budget figures of the last three fiscal years, we find evidence that the government has made efforts to reduce unnecessary public spending. However, this budget analysis points to a serious disparity between fiscal policy pronouncements and actual budgeting. It also demonstrates the Parliament’s inability to hold the government accountable effectively. As a result, concrete reductions of unnecessary expenditures in line with government commitments remain largely elusive, with the exception of reduced expenditure on training and travel which needs further explanation.

While we commend the Prime Minister’s decision to directly control seminars and workshops, which has resulted in a remarkable 79 per cent reduction of spending in this area, his criteria for approval of these activities have not been made publicly available. This is a clear illustration of the arbitrary nature of public budgeting in Tanzania and the ineffectiveness of Parliament to influence it. The Prime Minister approves budget estimates for certain items within the Cabinet and then defends them in Parliament, while being fully aware that they are unnecessary.

Most ministries and regions have cut unnecessary expenditures on particular budget items, but they have also increased unnecessary expenditures on other items. Is this because they are not required to request permits from the Prime Minister to spend money on these other items? However, if there were efficient government budgeting and effective budget oversight by the Parliament, the requirement to request a permit from the Prime Minister would not be necessary to reduce unnecessary expenditures.

When the government executes the FY 2010/11 budget, it should match its words with actions by reducing and controlling unnecessary expenditures, although these expenditures have already been approved by the Parliament. In the FY 2011/12 budget, the government must do the same by drastically reducing unnecessary expenditures - across all ministries, departments, and regions - on seminars, travel, allowances, hospitality, fuel, and new vehicle purchases. We would specifically recommend addressing the following points:

* Workshops and seminars only target a small number of individuals and have a minor benefit for the majority of Tanzanian citizens. They should therefore be organised in a more cost-effective manner.

* Urgently cut spending on allowances. At the moment they act as an incentive to government employees instead of covering the basic costs incurred by working away from the office.

* To reduce travel expenses, cut down on the number of people who travel on the same mission. Hire competent staff at the local level to reduce follow-up by the central government. Harness the Internet and other telecommunication technologies in order to reduce travel expenditures significantly.

* Stop purchasing new vehicles. Sell the most expensive ones and replace them with moderately-priced, fuel-efficient vehicles. This includes the extravagant BMW and Mercedes Benz fleets of the State House. The 15.3 billion TSh that the government has allocated for the acquisition of new vehicles is enough to build more than 100 dispensaries in remote areas. This could bring about a significant improvement in delivering services to citizens, especially in rural areas. Divert the funds that have been saved due to the reduction of unnecessary expenditures towards increasing the salaries of lower and middle-level civil servants. This could help to improve the provision of public services such as health care and education.

* Reduce unnecessary hospitality expenditures. It is immoral and inhumane if the government overspends on such items while pregnant women are dying due to the lack of delivery kits in hospitals and clinics.

* In the health sector, there are many urgent issues that could be addressed by targeted funding. For example, the Ministry of Education and Vocational Training has reduced expenditures on hospitality supplies and services by more than 5 bn TSh. This saved amount could be used to purchase more than 5,000 delivery beds, which would reduce the number of pregnant women who deliver on the floors of hospitals and clinics.

* A more transparent budget process is required for stakeholders to be able to meaningfully analyse public budgets in order to help improve budget efficiency in the future. Access to information is therefore a prerequisite to this.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* This is an edited version of the full report. For more information visit Sikika and Policy Forum.
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