Public Authorities Other Bodies For The Financial Year 2018-2019

PUBLIC AUTHORITIES & OTHER BODIES
ANNUAL GENERAL REPORT OF THE CONTROLLER AND

AUDITOR GENERAL FOR THE FINANCIAL YEAR
2018/2019
30 March 2020
THE UNITED REPUBLIC OF
TANZANIA
NATIONAL AUDIT OFFICE
Controller and Auditor General, National Audit Office, Audit House, 4

Ukaguzi Road, P.O. Box 950, 41104 Tambukareli, DODOMA. Telegram:
“Ukaguzi", Telephone: 255(022)2115157/8, Fax: 255(022)2117527, E-
mail: ocag@nao.go.tz, Website: www.nao.go.tz
In reply please quote

Ref.No.FA.27/249/01/2018/2019 30th March, 2020
H.E. Dr. John Pombe Joseph Magufuli,

The President of the United Republic of Tanzania,
State House,
1 Julius Nyerere Road,
Chamwino,
P.O. Box 1102,
40400 DODOMA.
RE: SUBMISSION OF THE ANNUAL GENERAL REPORT OF THE

CONTROLLER AND AUDITOR GENERAL ON THE AUDIT OF
PUBLIC AUTHORITIES AND OTHER BODIES FOR THE
FINANCIAL YEAR 2018/2019
In accordance with Article 143(4) of the Constitution of the

United Republic of Tanzania of 1977 (revised 2005), and Section
34 of the Public Audit Act No. 11 of 2008; I am pleased to submit
to you my Annual General Report on the audit of Public
Authorities and other Bodies for the financial year 2018/2019 for
your kind consideration and onward submission to the Parliament.
I submit,
Charles E. Kichere
THE CONTROLLER AND AUDITOR GENERAL
Report of Public Authorities and other Bodies 2018/19 i

The Controller and Auditor General,
National Audit Office,
United Republic of Tanzania
(Established under Article 143 of the Constitution of the URT)
The statutory duties and responsibilities of the Controller and Auditor General are
given under Article 143 of the Constitution of the United Republic of Tanzania of 1977
(as amended from time to time) and amplified by the Public Audit Act, No. 11 of 2008
(as amended) and Public Audit Regulations of 2009.
Vision
To be a highly regarded Institution that excels in Public Sector Auditing.
Mission
To provide high quality audit services that improves public sector performance,
accountability and transparency in the management of public resources.
Core Values
In providing quality services, NAO is guided by the following Core Values:
✓ Objectivity: We are an impartial public institution, offering audit services to our
clients in unbiased manner.
✓ Excellence: We are professionals providing high quality audit services based on
standards and best practices.
✓ Integrity: We observe and maintain high standards of ethical behaviour, rule of
law and a strong sense of purpose.
✓ People Focus: We value, respect and recognize interest of our stakeholders.
✓ Innovation: We are a learning and creative public institution that promotes value
added ideas within and outside the institution.
✓ Results Oriented: We are an organization that focuses on achievement based on
performance targets.
✓ Team Work Spirit: We work together as a team, interact professionally, share
knowledge, ideas and experiences.
We do this by:-
• Contributing to better stewardship of public funds by ensuring that our clients are
accountable for the resources entrusted to them;
• Helping to improve the quality of public services by supporting innovation on the
use of public resources;
• Providing technical advice to our clients on operational gaps in their operating
systems;
• Systematically involve our clients in the audit process and audit cycles; and
• Providing audit staff with appropriate training, adequate working tools and
facilities that promote their independence.
Report of Public Authorities and other Bodies 2018/19

TABLE OF CONTENTS
LIST OF TABLES .............................................................. iii

ACKNOWLEDGEMENTS ........................................................ v
PREFACE ..................................................................... vii
EXECUTIVE SUMMARY ..................................................... viii
CHAPTER 1 ....................................................................1
BACKGROUND INFORMATION .................................................. 1
CHAPTER 2 ....................................................................6
TYPES AND TREND OF AUDIT OPINIONS ....................................... 6
CHAPTER 3 .................................................................. 10
SUMMARY OF OUTSTANDING RECOMMENDATIONS .......................... 10
CHAPTER 4 .................................................................. 12
FINANCIAL PERFORMANCE OF THE PUBLIC ENTITIES AND GOING CONCERN
ASSESSMENT ................................................................. 12
CHAPTER 5 .................................................................. 23
REVENUE MANAGEMENT IN PUBLIC ENTITIES ............................... 23
CHAPTER 6 .................................................................. 40
REVIEW OF CORPORATE GOVERNANCE ..................................... 40
CHAPTER 7 .................................................................. 48
STRATEGIC AND OPERATIONAL EFFICIENCY ................................ 48
CHAPTER 8 .................................................................. 56
MANAGEMENT OF EXPENDITURE BY PUBLIC ENTITIES ...................... 56
CHAPTER 9 .................................................................. 70
REVIEW OF INVESTMENTS IN PUBLIC ENTITIES .............................. 70
CHAPTER 10 ................................................................. 87
REVIEW OF TOURISM SECTOR IN TANZANIA ................................. 87
CHAPTER 11 ................................................................. 98
PERFORMANCE OF GOVERNMENT-OWNED BANKS ........................... 98
CHAPTER 12 ............................................................... 118
OPERATIONS OF SOCIAL SECURITY SCHEMES .............................. 118
CHAPTER 13 ............................................................... 136
ADMINISTRATION OF LOANS BY PUBLIC ENTITIES .......................... 136
CHAPTER 14 ............................................................... 139
PERFORMANCE OF WATER AUTHORITIES ................................... 139
CHAPTER 15 ............................................................... 152
REVIEW OF HIGHER LEARNING INSTITUTIONS ............................. 152
CHAPTER 16 ............................................................... 163
MANAGEMENT OF CASH AND CASH EQUIVALENTS ......................... 163
CHAPTER 17 ............................................................... 167
Report of Public Authorities and other Bodies 2018/19 i

MANAGEMENT OF PROPERTY, PLANT AND EQUIPMENT .................... 167
CHAPTER 18 ............................................................... 173
PROCUREMENT AND CONTRACT MANAGEMENT ............................ 173
CHAPTER 19 ............................................................... 194
SPECIAL AND FORENSIC AUDIT ............................................. 194
CHAPTER 20 ............................................................... 223
PERFORMANCE OF EXTRACTIVE INDUSTRY ................................. 223
CHAPTER 21 ............................................................... 237
TAX COMPLIANCE IN PUBLIC ENTITIES ..................................... 237
CHAPTER 23 ............................................................... 259
REVIEW OF CROPS AND PRODUCE BOARDS ................................ 259
CHAPTER 24 ............................................................... 265
EFFICIENCY OF PUBLIC ENTITIES UNDER HEALTH SECTOR ................ 265
APPEDICES ................................................................. 272
Report of Public Authorities and other Bodies 2018/19 ii

LIST OF TABLES
Table 1: Trend of Audit Opinions ................................................. 8

Table 2: Implementation Status of Prior Years’ Audit Recommendations . 10
Table 3: Public Entities that record loss/deficits ............................. 13
Table 4: Public Entities Financed by Debts ................................... 17
Table 5: Public Entities with Negative Capital ................................ 18
Table 6: Public Entities with Negative Working Capital ...................... 19
Table 7: Entities with Long Outstanding Trade Receivables ................. 25
Table 8: Government’s Budget Releases Versus Approved Budgeted Amounts
....................................................................................... 31
Table 9: Tenants Without Rental Contracts .................................... 33
Table 10: Customers with Outstanding Balance of Payment Security ...... 35
Table 11: Disputed Recovery Cost ............................................... 37
Table 12: Loss on Roaming Contract With MIC ................................. 38
Table 13: Public Authorities with no Boards of Directors or Acting
Chairpersons ........................................................................ 42
Table 14: Public Officers Acting for More than 6 Months .................... 45
Table 15: Staff Shortage .......................................................... 46
Table 16: Entities with Significant Budget Under Collections ............... 57
Table 17: Entities Which Could not Implement Expenditure as Planned .. 58
Table 18: Weaknesses in Budget Preparation and Implementation ......... 60
Table 19: Extract of Planned Activities of NDC for Industrial Parks ........ 75
Table 20: Projects that Failed to Commence Operations .................... 78
Table 21: List of Unmet Targets with their Planned Activities .............. 96
Table 22: Capital Adequacy Ratios below BoT Minimum Requirements.... 99
Table 23: System Access Rights which were Delayed to be Revoked ...... 100
Table 24: Overdraft Accounts Exceeding Approved Limits .................. 104
Table 25: Inaccurate Interest Rate Setups in Rubikon System ............. 104
Table 26: Reconciliation not performed for Suspense Account ............ 105
Table 27: Long Outstanding Items in Suspense Accounts ................... 106
Table 28: Mismatch between Interest Rate Reported in Customer Agreement
and System......................................................................... 107
Table 29: Missing Loan Contracts ............................................... 107
Table 30: Separated Staff not charged Commercial Rate ................... 109
Table 31: Uncollected Appraisal Fees ......................................... 112
Table 32: Trend of Non-Performing Loans .................................... 116
Table 33: Status of Government Loan ......................................... 122
Table 34: Benefit Packages Offered by the Fund ............................ 123
Table 35: Decrease in Return on Investment Undertaken by Social Security125
Table 36: Low Occupancy Rate of Investment Properties .................. 126
Table 37: Statutory Inspection to Employers ................................. 127
Table 38: Delayed Projects at NSSF ............................................ 132
Table 39: Loss Due to Non-Revenue Water .................................... 140
Table 40: Inadequacy Water Service Coverage ............................... 142
Table 41: Water Quality Compliance Analysis ................................ 143
Table 42: Significant Long Outstanding Account Receivable ............... 145
Report of Public Authorities and other Bodies 2018/19 iii

Table 43: Liquidity Problem Experienced by Water Authorities ........... 147
Table 44: Declining Trend in Postgraduate Students ........................ 155
Table 45: Decline in Enrolment of Undergraduate Students ................ 157
Table 46: Funds Collected Without Using GePG .............................. 165
Table 47: Payments Made to SUMA JKT........................................ 188
Table 48: Debt Status of Tenants Who Have Filled Land Cases against NARCO
...................................................................................... 190
Table 49: Details of Tenders Awarded Without Performance Guarantee . 193
Table 50: Payment Schedule of Acquired Farm .............................. 205
Table 51: Outstanding Liabilities of Pride Company ......................... 210
Table 52: Misappropriated and Fraudulent Payments ....................... 212
Table 53: Projects which are Not Operating ................................. 224
Table 54: Electricity Distribution Outage Hours Missing Number of Customers
Affected ............................................................................ 235
Table 55: Payments made Without EFD Receipts Being Issued ............. 239
Table 56: Weaknesses Noted During Inspection .............................. 254
Report of Public Authorities and other Bodies 2018/19 iv

ACKNOWLEDGEMENTS
I am extremely delighted
to achieve my
constitutional obligation,
for the first time as the
Controller and Auditor
General, of submitting to
the President of the United
Republic of Tanzania, the
annual general report on
the audit of Public Authorities and other Bodies for the financial
year 2018/2019.
It is with great honour that I take this opportunity to thank His

Excellency, Dr. John Pombe Joseph Magufuli, the President of
the United Republic of Tanzania, for his immense support and
personal initiatives to ensure that National Audit Office
accomplishes its constitutional mandate.
I convey my sincere gratitude to the Honourable Speaker and

Deputy Speaker of Parliament of the United Republic of
Tanzania, Chairpersons and Honourable members of
Parliamentary Accounts Committee for their cooperation that
has always been extended to my Office. I cherish this crucial
cooperation and trust that it remains strong as it is necessary for
delivery of our respective institutions mandate in serving our
country and its people.
I also acknowledge with gratitude, the invaluable assistance and

co-operation extended by the Treasury Registrar, Boards of
Directors, Accounting Officers, Senior Management and Staff of
all Public Authorities and other Bodies which were covered in my
audits.
I also commend the contribution of private audit firms which

have been working with my Office in the audit of Public
Report of Public Authorities and other Bodies 2018/19 v

Authorities and other Bodies. Their contribution toward
preparation of this report is essential and invaluable.
Finally, I must recognize important contribution of my entire

staff who have been working tirelessly, driven entirely by
professional call to complete assigned audit activities while
maintaining high level of quality in line with the professional
standards. It is a strong sense of purpose and dedication that has
made it possible to deliver this report within the statutory
deadline.
Charles E. Kichere
THE CONTROLLER AND AUDITOR GENERAL
30 March, 2020
Report of Public Authorities and other Bodies 2018/19 vi

PREFACE
The annual General Report on the audit of Public Authorities and

other Bodies (PA&OBs) for the financial year 2018/2019 covers
all significant audit matters noted during the year relating to
financial statements of PA & OBs and operational efficiency of
the Entities in implementation of the mandate in which they
were established.
In particular, the report has covered review of efficiencies in

operation of PA & OBs under Social Security Schemes, Water
Authorities, Higher Learning Institutions, Banking Sector and
Health Sector.
The report has further analyzed strategic reviews of PA & OBs,

investments of Public Sector Entities, and compliance of laws
and regulations such as Public Procurement Act, 2011 (as
amended in 2016) and its Regulations, 2013 (as amended in
2016), Income Tax Act, 2004 and other internal guidelines.
Also, I have assessed the performance and challenges being

faced in the development of the Extractive Industry in Tanzania
and briefly discussed about the Special and Forensic Audits of PA
& OBs which were requested by different stakeholders during the
financial year 2018/2019.
Report of Public Authorities and other Bodies 2018/19 vii

EXECUTIVE SUMMARY
Types and Trend of Audit Opinions

During the financial year 2018/19, I completed and issued
opinion on 148 audits for Public Authorities and other Bodies (PA
& oBs). Out of 148 opinions issued, one (1) was Adverse and 147
were unqualified.
Implementation Status of Prior Years’ Audit Recommendations

Out of 175 outstanding key audit recommendations I issued in
the financial year 2017/18, 74 (42%) were fully implemented, 56
(32%) are under implementation, 38 (22%) were not implemented
while seven (7) (4%) were overtaken by events. Out of 38
recommendations which are not implemented, 27 (78%) did not
have responses indicating progress of implementations.
Financial Performance of the Public Entities and Going

Concern Assessment
I have reviewed financial stability of Public Authorities and other
Bodies and noted that 23 entities were continuously recording
deficits/making losses. The loss was mainly attributed to low
performance, inadequate appraisal of projects and insufficient
alternative sources of revenue. I further noted that eight (8)
entities were financed by debts while six (6) entities had
negative equity.
The financial difficulties facing these entities highlight that it is

unlikely they will survive without Government support. Also,
there is a risk that these entities might not be able to deliver on
their mandates effectively.
Revenue Management in Public Entities

During the review of the revenue management in Public Entities,
I noted significant amounts of long outstanding accounts
receivable emanating from different Public Entities which
affects their liquidity. I also noted delays in handing over 13
Houses to Customers by Watumishi Housing Company (WHC), of
which could negatively impact realization of revenue.
Report of Public Authorities and other Bodies 2018/19 viii

Review of Corporate Governance
As I reported during the previous audit, I have continued to note
that some Public Authorities operate without Oversight Bodies or
substantive Chief Executive Officers. The entities that lack the
Oversight Bodies have increased from 24 reported in 2017/18 to
39 as at 30th June, 2019, while the entities that lack substantive
chief executive officers have been under acting chief executive
officers who in most cases retain such positions for a long
period.
Strategic and Operational Efficiency

From the review of Strategic and Operational Efficiency of Public
Entities, I noted that Gaming Board Tanzania operates with draft
Internet Gaming Regulations for more than seven years, and it
does not have administrative sanctions against non-compliant
operators who located their servers outside Tanzania Mainland
contrary to the requirement of Sports Betting Rules, 2016.
I noted that NHC Annual Work Plans are not aligned with
Corporate Strategic Plan. I further, noted the Corporation
neither performed monitoring and evaluation of the Strategic
Plan nor engaged a staff who should be responsible for
Monitoring and Evaluation (M &E) function.
At TANTRADE, I noted some anomalies including lack of crucial

tools for its function such as established market intelligence
system, robust established section for coordinating training
activates; and documented institutional cooperation. The entity
also lacked M&E tool for domestic market operations.
Management of Expenditure by Public Entities

The PA & oBs I reviewed have not taken adequate measures to
correct previous year’s anomalies in management of
expenditure. I therefore continued to note deficiencies some of
which similar to those identified in my previous audit such as
non-compliance with rules and regulations on expenditure,
activities implemented without proper budget approvals,
inefficiencies in the budget implementation. Other includes
Report of Public Authorities and other Bodies 2018/19 ix

inadequate management of advances and imprest, delayed and
non-remittance of statutory deductions to social security
schemes and ineligible expenditures.
Review of Investments in Public Entities

PA & oBs have not been benefiting from their investment due to
a number of weaknesses in the investment process. For example,
National Development Corporation (NDC) had inadequate
management of rubber plantations with weaknesses such as
uncultivated farm areas, lack of tools to measure latex quality,
and unattended farm. It also failed to receive 1,578 Tractors
from supplier as per agreement. The Corporation failed to
establish centre for tractor servicing and some of the tractor
available were slow moving of tractors, implying that joint
venture agreement with supplier was not fruitfully to NDC.
At Tanzania Investment Centre I noted inefficiency in dealing

with investors. For example, the Centre does not serve investors
within 14 days as provided in the Act and Strategic Plan. It also
takes 20 days for the Centre to process work permit while the
process of fully attendance and feedback to an applicant of
incentives of customs and excise duties to Tanzania Revenue
Authority (TRA) through the Centre takes four to twelve months.
I further noted that the Centre needs to evaluate the actual
investments done by the registered investors during the financial
year 2018/19.
Review of Tourism Sector in Tanzania

Despite the Government efforts to promote tourism, I have
noted several factors that pose challenges in the sector including
lack of diversification of tourism products, inadequate promotion
and marketing and lack of specified areas for tourism
investment. NCAA and TANAPA faced challenge to control human
populations that cause massive environmental degradation,
increase in human–wild animal conflicts, unknown and blockage
of diminishing wildlife movement routes. Further, I noted a slow
pace in controlling wide spreading of invasive alien plants at
Report of Public Authorities and other Bodies 2018/19 x

NCAA and low rate of tourists visiting Western and Southern
parts of the country.
Performance of Government-Owned Banks

I have continued to note Capital Adequacy Ratios which are
below Bank of Tanzania Minimum Requirements for TIB
Development Bank and TIB Corporate Bank. Also, TIB Corporate
Bank, Tanzania Agricultural Development Bank and TIB
Development Bank have been delaying in revoking the system
access right to separated staff. This deficiency exposes the
banks to security and financial risks.
I also noted that TPB Bank had experienced liquidity ratios which
are below regulatory ratios and deficiency in management of
overdraft and Suspense Accounts.
Operations of Social Security Schemes

I noted the weaknesses in the the social security schemes
covered in my report which comprised the Health Insurance and
Pension Schemes. The weakness includes absence of actuarial
valuation for PSSSF; long outstanding contributions on late
remittance at NHIF, WCF and PSSSF amounting to TZS 171.91
billion. Further, I identified the risk that the NHIF and PSSSF
may not recover matured Fixed Deposit Funds amounting to TZS
111.8 billion due to liquidity problems of the Banks.
Administration of Loans by Public Entities

I reviewed administration of loans in respect of National Board of
Accountants and Auditors (NBAA), Ngorongoro Conservation Area
Authority (NCAA) and National Housing Corporation (NHC) and
noted deficiencies such as: Inadequate cash flow to repay NSSF
loan; high interest rate on loan facility used in financing
Construction of Ngorongoro Tourism Centre (NTC) Investment
Property and non-compliance with loan covenants.
Performance of Water Authorities

Water Authorities have not fully addressed my recommendations
to improve on Non-Revenue Water issue. I have continued to
Report of Public Authorities and other Bodies 2018/19 xi
note challenges in these areas. For the year under review 20 of
the Water Authorities I reviewed had high percentage of Non-
Revenue Water with the total water loss of TZS 155.84 billion in
2018/19. The loss of TZS 74.14 billion included in this amount
was above the normal loss threshold. I also noted inadequate
water service coverage, low water quality and unsatisfactory
rate of debt recovery by Water Authorities, which stood at TZS
106.31 billion as at 30th June, 2019.
Review of Higher Learning Institutions

I identified scope for improvement in operational performance
of a number of Higher Learning Institutions I reviewed. Some of
the Higher Learning Institutions conducted tracer studies many
years ago, other have not conducted while other have conducted
partial studies which are not in line with the institutions plans.
These institutions need comprehensive operating procedures
which will be used as guidance for conducting tracer studies.
They also need to raise enough funds for such activities and
ensure consistency in conducting the studies. Tracer studies are
crucial for the institutions to understand the impact of offered
education. I further noted declining trend of students’
enrolment and delay in commercialization of patented
intellectual properties, non-accreditation of technical
institutions inappropriate conditions of motor vehicles used for
driving course and inadequate performance of the proposed
organization project.
Management of Cash and Cash Equivalents

During the review of cash and cash equivalent management
programs within the Public Authorities which involved
assessment of internal control measures for cash, management
of bank accounts, and management of cash flows I noted that
there is ineffective Utilization of Government Electronic
Payment Gateway (GePG) in some of the entities such as Ubungo
Plaza Limited (UPL), Dare es salaam Marine Institute (DMI) and
Kilimanjaro Airport Development Company Limited (KADCO).
Report of Public Authorities and other Bodies 2018/19 xii

Management of Property, Plant and Equipment
From the review of management of PPE in the Public Entities I
noted that most of the Public Entities face challenges in
maintenance of Non-Current Assets. The challenges include lack
of legal ownership of the assets, Non-maintenance of the assets
register, delays in disposing of assets and delays in completion of
some projects i.e. Construction of NHIF regional office Tabora.
Procurement and Contract Management

In the procurement activities of the Public Authorities, I noted
weakness such as lack of performance securities for awarded
tender for Sokoine University, delays in execution and
completion of awarded Tenders in TPA, TPB, AUWASA and
MORUWASA.
Special and Forensic Audit

During the audit under review I conducted special and forensic
audits in Tanzania Electric Supply Company Limited (TANESCO),
Promotion of Rural Initiatives and Development Enterprises
Limited (Pride), National Social Security Fund (NSSF), Shirika la
Usafiri Dar es salaam (UDA/UDART) and at Songas Limited which
is private company but with the Government investment.
At TANESCO identified dispute invoices amounting to USD 42.3

million. The disputed invoices amounts were from two (2)
creditors PAET and TPDC on the nature and amount of the
outstanding liability. Also, TANESCO had 936 creditors with TZS
291.1 billion who did not respond to auditor’s confirmation.
Songas Limited Special Audit was focused on determining if the

Government receives a fair share of benefits from the
investment made in Songas Limited. Government parties
involved TPDC and TANESCO.
At the Pride Company the audit was aimed to determine assets

and liabilities of Pride Company as at 31st October, 2019. In
Report of Public Authorities and other Bodies 2018/19 xiii

course of audit, I revealed fraudulent payments and
misappropriation of assets and liabilities.
Performance of Extractive Industry

I assessed the Government investments in the mining sector and
operational effectives of the midstream and downstream
regulators in the petroleum sector. The overarching issues I
identified included the following; mining projects initiated but
not operating, incomplete transfer of shareholding to STAMICO
and NDC, and increasing invasion at Tanzanite mine after
stoppage operations. Other included environment rehabilitation
fund not provided for Tanzanite Mine and Stamigold Mine,
inadequate control of Liquefied Petroleum Gas (LPG) retail
business operations and pricing and high cost amounted to TZS
7.9 billion for electricity charges caused by Stamigold’s use of
fuel to power the Mine.
Tax Compliance in Public Entities

I noted that a number of Public Entities failed to comply with tax
laws and regulations as they delayed in issuing Electronic fiscal
Device (EFD) receipts on cash received. Similarly, the entities
delayed in payment of property tax and land rent. There were
also cases of payments made but not supported by fiscal receipts
TZS 877.05 million.
I also noted at Stamigold there were understated revenues in the

VAT returns of TZS 4.5 billion and there was absence of transfer
pricing documentation.
Efficiency of Public Entities in Business Environment

I assessed efficiency of public entities in business environment
with focus on seven (7) entities namely TASAC, LATRA, TBS and
TTCL Corporation. I noted deficiency in monitoring commercial
motorcycles and tricycles, deficiency in management of
information systems, absence of approved strategic plan, Non-
implementation of planned capital Investment, unregulated
roaming charges resulting in a loss of TZS 1.11 billion to TTCL.
Report of Public Authorities and other Bodies 2018/19 xiv

Review of Crops and Produce Boards
Despite formulation of Crop Boards and other crop research
institutions by Government, during this audit I noted, there are
still challenges encountered by the entities including duplication
of functions among the entities (like extension and market
promotion services); inadequate financing of the entity’s
functions; inadequate crop quality control leading to the crops
lacking qualities of attracting higher prices in the market.
Efficiency of Public Entities under Health Sector

I reviewed the operations of Medical Store Department (MSD)
and Muhimbili National Hospital (MNH) as part of public entities
in health sector to determine propriety in their use of funds to
achieve the targeted objectives for the financial year 2018/19.
At MSD, I noted items received with shelf-life of less than 80%,
inadequate order fill rate of 53.8% based on sales made from 1st
July, 2018 to 30th June, 2019. MSD also led SADC procurement
services for medicine and health commodities, but the activity
was not sustainable. Some customers have been charged wrong
prices by MSD, there was inadequate funding by the Government
on procurement of medicine and medical supplies. Other cases
included preventable delays in completion of the project with
total cost of TZS 385.91 million for 12 months. The audit also
identified long outstanding Government receivables that
threaten MSD’s operations and Significant rejections of Claims
submitted by MNH to NHIF amounting to TZS 2.18 billion.
Report of Public Authorities and other Bodies 2018/19 xv

CHAPTER 1
BACKGROUND INFORMATION
1.0 Legal Framework for Public Audit in Tanzania

The Office of the Controller and Auditor General of the United
Republic of Tanzania is an office established in accordance
with Article 143 of the Constitution of the United Republic of
Tanzania (URT) of 1977 (as amended from time to time). Sub
article (5) of Article 143 of the Constitution of the URT and
Section 34 of the Public Audit Act No. 11 of 2008 and Section
48 (3) of Public Procurement Act No.7 of 2011 (as amended in
2016), require the Controller and Auditor General (CAG) to
audit all Public Authorities and other Bodies at least once in
every financial year.
CAG has the mandate to conduct financial, performance,

forensic or any other audit of Public Authorities and other
Bodies (PA&oBs) as stipulated in Sections 26, 27, 28 and 29 of
the Public Audit Act No.11 of 2008. Section 12 of the same Act
empowers CAG to make recommendations for the purpose of:
• Preventing or minimizing unproductive expenditure of

public resources;
• Maximizing the collection of public revenues;
• Averting loss by negligence, carelessness, theft,
dishonesty, fraud and corruption relating to public monies
and other resources; and
• Improving economy, efficiency and effectiveness in the
use of public resources.
Public Authorities and other Bodies prepare their financial

statements under accrual basis of accounting in compliance
with applicable financial reporting framework, that is,
International Public Sector Accounting Standards (IPSAS) or
International Financial Reporting Standards (IFRS). The
Commercial Public Sector Entities use IFRS while the rest
Report of Public Authorities and other Bodies 2018/19 1

follow IPSAS framework. The preparation and submission of PA
& oBs financial statements for audit purposes is a legal
requirement as per individual Public Authorities and other
Bodies’ Acts, the Companies Act of 2002 and the Public Audit
Act No. 11 of 2008.
Treasury Registrar has a role and responsibility of overseeing

Public Authorities and other Bodies in collaboration with
Board of Directors of the respective entity as stipulated in the
Treasury Registrar Ordinance Cap 418 and Section 6 of the
Public Corporations Act No. 16 of 1992 in relation to functions
of Public Corporations.
The Controller and Auditor General is required to submit his

annual reports to the President of the URT by virtue of Article
143 (4) of the Constitution of the URT of 1977. Under
Regulation 88 of the Public Audit Regulations, these reports
are submitted to the President by 31st March each year. Upon
receipt of the reports, the President directs persons
concerned to submit them to the Parliament within seven
days of the first sitting of the National Assembly.
If the President does not take steps of submitting reports to

the National Assembly, then CAG shall submit a copy of such
reports to the Speaker of the National Assembly (or the
Deputy Speaker if the Office of the Speaker is vacant, or if for
any reasons the Speaker is unable to perform the functions of
his/her Office) who shall submit the report to the National
Assembly.
The report of PA&OBs is subsequently discussed by the

Parliamentary Accounts Committee (PAC) on behalf of the
Parliament and report to that effect is then submitted to the
Parliament.

1.1 Scope and Applicable Audit Standards
1.1.1 Audit Objectives and Scope
The main objective of conducting audit is to enable CAG to
express an independent opinion on the fairness of the
financial statements of PA&oBs and whether they have been
prepared, in all material respects, in accordance with an
accepted financial reporting framework. Particularly, the
audits covered accounts for the periods ended, 31st December,
2018 and 30th June, 2019. The financial year for the
Government owned Banks ends on 31st December, while other
PA&oBs follow the Government cycle of closing the financial
year on 30th June.
The scope of my audit covered evaluation of effectiveness of

financial accounting systems and internal controls over the
activities, examination and verification of the accompanying
financial statements, performance reports and other audit
procedures considered necessary in arriving at an audit
conclusion. The audits were carried out based on risk and
materiality.
Therefore, the audit findings are confined to the extent that

records, documents and information requested for the
purpose of the audits were made available to me.
1.1.2 Applicable Auditing Standards

The National Audit Office (NAOT) is a member of the
International Organisation of Supreme Audit Institutions
(INTOSAI) and the African Organisation of Supreme Audit
Institutions of English-speaking Countries (AFROSAI-E).
Therefore, the applied audit procedures were in line with the
International Standards of Supreme Audit Institutions (ISSAI)
issued by INTOSAI and International Standards on Auditing
(ISA) issued by the International Federation of Accountants
(IFAC).

1.2 Responsibilities of the Board of Directors and Chief
Executive Officers
The individual Boards of Directors and Managements of
PA&oBs are responsible for the preparation and fair
presentation of financial statements in accordance with
International Financial Reporting Standards (IFRS) or
International Public Sector Accounting Standards (IPSAS). This
responsibility includes:
a) Designing, implementing and maintaining internal

control systems relevant to the preparation and fair
presentation of financial statements that are free from
material misstatement, whether due to fraud or errors;
b) Selecting and applying appropriate accounting policies;

and
c) Making accounting estimates that are reasonable in the

circumstances.
International Accounting Standards (IAS 1) and
International Public Sector Accounting Standards (IPSAS
1) stipulate the types of financial statements to be
prepared.
1.3 Organisation and Outsourcing of Audit Work

The audit of Public Authorities and other Bodies (PA & oBs)
are performed by Public Authorities Division under National
Audit Office. This Division is grouped into four subdivisions
namely Financial Institutions, Higher Learning Institutions,
Regulatory Bodies and Public Utilities and Service
Organisations.
Some audits were jointly audited or wholly contracted to

private audit firms which audit on behalf of CAG in line with
Section 33 of the Public Audit Act, empowers CAG to
authorize any person or body eligible to be appointed as an
auditor under the Auditors and Accountants (Registration) Act
No. 33 of 1972 (as amended in 1995), to conduct the audit of

public entities on his behalf. The outsourced audits are
subjected to a quality review process carried by my Office.
During the financial years ended 31st December, 2018 and 30th
June, 2019, CAG worked with 59 private audit firms. The
contracted auditors were bound by the provision of the law
not to disclose any information which relates to the business
secrets of the auditee which come to their knowledge in the
course of the audit.
The audit opinions remain the sole responsibility of the

Controller and Auditor General.

CHAPTER 2
TYPES AND TREND OF AUDIT OPINIONS
2.0 Introduction
According to International Standards of Supreme Audit
Institutions (ISSAI) 1200, the objectives of conducting audit of
financial statements is to enable an auditor to express an
independent opinion as to whether the financial statements
are prepared in all material respects in accordance with the
applicable financial reporting framework. This is achieved by
designing the audit in such a way that it will enable the
auditor to obtain reasonable assurance as to whether the
financial statements as a whole are free from material
misstatement, whether due to fraud or errors.
2.1 Types of Audit Opinions

2.1.1 Unmodified Opinion
An unmodified opinion is expressed when the auditor
concludes that the financial statements of an audited entity
give a true and fair view or are presented fairly in all material
respects in accordance with the applicable financial
reporting framework.
2.1.2 Modified Opinions

(i) Qualified Opinion
A qualified opinion is issued when: (a) The auditor,
having obtained sufficient appropriate audit evidence,
concludes that misstatements, individually or in
aggregate, are material, but not pervasive, to the
financial statements; or (b) The auditor is unable to
obtain sufficient appropriate audit evidence on which
to base the opinion, but the auditor concludes that the
possible effects on the financial statements of
undetected misstatements, if any, could be material
but not pervasive.

(ii) Adverse Opinion
An adverse opinion is expressed when the effect of a
disagreement is so material and pervasive to the
financial statements that the auditor concludes that a
qualification of the report is not adequate to disclose
the misleading or incomplete nature of the financial
statements.
(iii) Disclaimer of Opinion

The auditor shall disclaim an opinion when he is unable
to obtain sufficient appropriate audit evidence on
which to base the opinion, and the auditor concludes
that the possible effects on the financial statements of
undetected misstatement, if any, could be both
material and pervasive.
2.1.3 Emphasis of Matter Paragraph in the Auditor’s Report

If the auditor considers it necessary to draw users’ attention
to a matter presented or disclosed in the financial statements
that in the auditor’s judgment, is of such importance that it is
fundamental to users’ understanding of the financial
statements, the auditor shall include an Emphasis of Matter
paragraph in the auditor’s report provided the auditor has
obtained sufficient appropriate audit evidence that the
matter is not materially misstated in the financial statements.
Such a paragraph shall refer only to information presented or
disclosed in the financial statements.
2.1.4 Key Audit Matters

Key audit matters provide additional information to users of
the financial statements to assist them in understanding those
matters that, in the auditor’s professional judgment, were of
most significance in the audit of the financial statements of
the current period. Key audit matters may also assist users of
the financial statements in understanding the entity and areas
of significant management judgment in the audited financial

statements; as such matters are areas of focus in performing
the audit.
2.2 Audit Opinion Issued During the Year

In the year under review, 148 opinions were issued to the
Public Authorities and other Bodies (PA & OBs), out of which
147 were issued with unmodified opinions and one (1) with
adverse opinion while no entity was issued with qualified or
disclaimer of opinion. See Appendix I.
2.3 Trend of Audit Opinions

Analysis of trend of audit opinions issued to Public Authorities
and other Bodies for the 5 consecutive years from 2014/2015
to 2018/2019 is as shown in Table 1 below:
Table 1: Trend of Audit Opinions

ANNUAL GENERAL REPORT
OPINION 2014/15 2015/16 2016/17 2017/18 2018/19
Unqualified 107 108 101 121 147
Qualified 5 4 4 1 0
Disclaimer 0 0 0 0 0
Adverse 0 0 0 0 1
Total 112 112 105 122 148
Source: Analysis of Audited Financial Statements
2.4 Status of Submission of Financial Statements to CAG

Section 31 of Public Audit Act of 2008 requires any Public
Authority or Body to submit its financial statements to the
Controller and Auditor General (CAG) within three months
after the end of the financial year to which the accounts
relate.
Upon receipt of the financial statements as prescribed above,

Section 32 (4) of the same Act requires CAG to cause the
submitted financial statements be audited and within a
period of six months or such longer period as the National
Assembly may by resolution issue the report thereon.

Further, Section 33 (1) of Public Act of 2008 mandates CAG to
appoint any qualified person of firm to audit on his behalf
the books and accounts of any public authority which CAG
may require to audit pursuant to the provisions of this Act
and such person, or firm shall conduct the audit and report
thereon to CAG in such manner as CAG may direct.
For outsourcing, the two parties, CAG and the appointed

qualified person/firm sign the Service Agreement. Among
others, the Agreement requires the outsourced auditors to
submit the final audit reports to CAG within an agreed
timeframe.
In view of that, the agreed date with all outsourced auditors

for submission of final audit report relating to accounts of
the financial year ended 30th June, 2019 was on 15th
December, 2019.
However, up to 1st March, 2020, the final audit reports of 41

Public Authorities were not submitted to me for various
reasons as indicated in the Appendix II.

CHAPTER 3
SUMMARY OF OUTSTANDING RECOMMENDATIONS
3.0 Introduction
This chapter provides a summary of implementation status
and actions taken by accounting officers towards my audit
recommendations issued in previous years’ Annual Audit
reports in accordance with Sect. 40 (4) of the Public Audit Act
No.11 of 2008.
On 5th July, 2019, I received Government responses prepared

by the Paymaster General (PMG) on my previous annual
general report. I appreciate the effort made by the PMG in
responding to my reports and providing action plan on
implementation of the recommendations.
3.1 Implementation status of prior years’ audit

recommendations
Out of 175 outstanding key audit recommendations from my
previous years report, 74 (42%) were fully implemented, 56
(32%) are under implementation, 38 (22%) were not
implemented while 7 (4%) were overtaken by events. Out of
38 recommendations which were not implemented, 27 (71%)
were not supported by the Government’s responses. The
overall status of implementation of the recommendations is
very low as most of them are not implemented. Details of the
status of implementation and aging analysis of these
recommendations are shown in Appendix III and Table 2
respectively.
Table 2: Implementation Status of Prior Years’ Audit

Recommendations
Under Not Overta
Financial Impleme
implement implem ken by Total
year nted
ation ented event
2012/13 9 2 1 12
2015/16 29 5 3 2 39

Under Not Overta
Financial Impleme
implement implem ken by Total
year nted
ation ented event
2016/17 20 25 13 3 61
2017/18 16 26 20 1 63
Total 74 56 38 7 175
Percentage 42 32 22 4 100
Source: Auditors analysis
Delay in implementation of my recommendations means that

the deficiencies identified have not been addressed and are
likely to continue exposing the entities to the risks of fraud,
inefficiencies, and the failure to deliver on their mandate.
I therefore recommend that the Government through the

Paymaster General make sure the accounting officers fully
implement my recommendations to ensure that Public
Authorities and other Bodies minimize fraud risks, enhance
operating efficiency, and provide adequate services to the
public.

CHAPTER 4
FINANCIAL PERFORMANCE OF THE PUBLIC ENTITIES AND

GOING CONCERN ASSESSMENT
4.0 Introduction
The Public Authorities and other Bodies include Commercial
Public Sector Entities (CPSEs) and Other Public Sector Entities
(OPSEs).
According to the International Public Sector Accounting

Standards (IPSAS) 1, the Commercial Public Sector Entities are
those Government Entities with power to contract in their
own names; have been assigned the financial and operational
authority to carry on business; sell goods and services in
normal courses of its business to other entities at a profit or
full cost recovery; are not reliant on continuing government
funding to be a going concern (other than purchases outputs
at arm’s length); and are controlled by Public Sector Entity.
On the other hand, other Public Sector Entities (OPSEs) are

those entities responsible for delivery of goods or services to
the public with asset held primarily for their service potential
or to make transfer payments to redistribute income and
wealth; finance their activities directly or indirectly by means
of taxes and/or transfer from other level of government,
social contributions, debt or fees and do not have capital
providers that are seeking a return on their investment or a
return of the investment.
This chapter highlights financial performance and going

concern of CPESs and OPSEs. I have assessed the ability of the
current assets of an entity to meet its current liabilities, the
financing structure; and total revenue generated versus total
expenses incurred. The chapter also includes a summary of

recommendations provided for improvement. The following
are the findings and recommendations: -
4.1 Public Entities with Uncertain Survival

I reviewed the financial stability of 140 Public Authorities and
other Bodies and noted that 23 entities were continuously
making deficits; eight (8) entities were financed by debts, and
six (6) entities had negative equity. The financial difficulties
facing these entities highlight that it is unlikely they will
survive without Government support. Also, there is a risk that
these entities might not be able to discharge their functions,
thus, affecting their service delivery to the general public.
Details of the Public Entities are as follows:
4.1.1 Continuous deficit Made by some Public Entities

During the review I noted that, out of assessed 23 entities
that made continuous loss or report deficits, four (4) were
Commercial Public Sector Entities (CPSEs). The deficits/
losses are mainly attributed to non-performance and
inadequate appraisal of projects for CPSEs, and insufficient
alternative sources of revenue other than Government support
for Other Public Entities (OPSEs). The losses and deficits
recorded for the past two years and the names of the entities
are presented in Table 3 below;
Table 3: Public Entities that record loss/deficits

S/N Public Entity Category 2018/19 2017/18
TZS (000) TZS (000)
1 National Housing CPSE 93,807,122 143,690,910
Corporation
2 Tanzania Sisal Board OPSE 122,361 70,262
3 T-PESA LIMITED CPSE 688,693 360,305
4 Mkulazi Holdings CPSE 2,276,613 3,899,440
Company Limited
5 Ardhi University OPSE 432,121 671,891
6 National Kiswahili OPSE 32,143 77,423
Council of Tanzania
7 Babati Urban Water OPSE 397,382 74,983
Supply and Sanitation

S/N Public Entity Category 2018/19 2017/18
TZS (000) TZS (000)
Authority
8 Dar es Salaam OPSE 2,072,793 1,599,887
University College of
Education (DUCE)
9 Export Processing OPSE 470,493 664,457
Zones Authority
10 Fair Competition OPSE 40,686 22,288
Tribunal
11 Lindi Urban Water OPSE 403,301 93,039
Supply and Sanitation
Authority
12 Masasi Nachingwea OPSE 334,110 414,926
Water Supply and
Sanitation Authority
13 National Board of OPSE 24,955,207 593,661
Accountants and
Auditors (NBAA)
14 National Sugar Institute OPSE 176,124 57,089
15 Stamigold Company CPSE 6,239,398 16,419,263
Limited
16 Tanzania Food and OPSE 932,829 168,670
Nutrition Centre
17 Tanzania Investment OPSE 793,659 47,046
Centre
18 Tanzania Library OPSE 4,376,747 2,803,054
Service Board
19 Tanzania National OPSE 163,742 297,561
Business Council
20 University of Dodoma OPSE 6,172 12,060
21 Open University of OPSE 1,196,929 141,563
Tanzania
22 Tanzania Insurance OPSE 780,552 703,610
Regulatory Authority
23 Muhimbili University of OPSE 4,453,797 821,370
Health and Allied
Sciences
For example, I noted that National Housing Corporation (NHC)

had 75 uncompleted joint venture projects, out of these 33
(2017/18:32) were still in progress while 42 (2017/18:39)
projects were stalled. The Corporation is at risk of incurring

loss in terms of invested money and expected return from
stalled and uncompleted projects.
Also, according to published communications statistics by

Tanzania Communication Regulatory Authority (TCRA), during
the fourth quarter of the financial year 2018/19, TTCL PESA
Limited had an average market share of only 2% of mobile
money subscriptions. This is partly attributed to low volume
of transactions as compared to its competitors. For instance,
during the month of June 2019, the Company had only
451,254 (0.17%) transactions out of a total 260,439,103
mobile money transactions.
It is necessary that the Company introduce measures to

improve its operational efficiency, quality of service and
ultimately increase its market share so as to reverse trend of
loss making or recording deficit.
Further, I noted that Ardhi University rely largely on grants to

support its activities. During the year 2018/19, revenue from
grants accounted for 68% (2017/18: 70%) of its total revenue
of TZS 24.96 billion. Without seeking for new sources of
revenue, the University may fail to bridge the gap of
continuing losses.
I also noted that Export Processing Zones Authority (EPZA) had

been recording deficits for the last four years from 2016 to
2019. The deficits mainly resulted from insufficient revenue
generated from land lease and office rent as well as operator
and developer licenses for established economic zone. Up to
the financial year ended 30th June, 2019, the Authority had 15
gazetted economic zones. However, only three industrial
parks were operational while others were under various stages
of development. Without Government support for completion
of the economic zones, EPZA will continue making losses.

The National Board of Accountants and Auditors (NBAA)
invested in APC Investment Centre (a joint venture company)
through a loan financed by NSSF on expectation of repayment
of its loan through returns on the investment. The mismatches
between the expected return on investment and loan
repayment obligations to NSSF led to significant increase in
deficit in the NBAA accounts during the year ended 30th June,
2019. The deficit has largely resulted from an impairment of
TZS 21.83 billion of the loan receivable from APC and charged
interests and penalties on delayed loan repayment to NSSF
TZS 2.62 billion and TZS 344.68 million respectively. Servicing
the outstanding loan, interest and penalties on overdue loan
is crucial to ensure that Board reduce the related losses.
Despite having unfavourable condition, there were no

evidences that the entities have instituted measures to turn
around the situation. I am concerned that operating losses or
recorded deficits erode the capital of the entities and expose
them to financial risks. Further, the entities may face
difficulties in attaining their established objectives if the
trend of loss/ deficits recorded is not reversed.
I recommend that the entities (a) assess and establish

turnaround measures; (b) appraise projects to minimize the
risks of undertaking worthless project; (c) review operating
expenses with a view to minimizing the expenses to create
more sources of revenue.
4.1.2 Entities Financed Debt

I noted eight (8) entities with gearing ratio (total
liabilities/total equity) ranged from 100% to 6706% during the
year indicating that the entities rely largely on debts to run
their operations which are considered more susceptible to
financial risk. Out of eight (8) entities, two (2) are
Commercial Public Sector Entities (as referred in Table 4).

The high gearing ratios were caused by the increase in
borrowing cost due to delay in payment of overdue loans and
interests. For instance, at TPDC, the amount of interest
charged on loans during the year was TZS 83.52 billion
compared to the total amount paid on due amount of TZS
34.92 billion. The increase was also, attributed to exchange
losses as these loans are denominated in US dollars. During
the financial year 2018/19 the loss was TZS 34.42 billion. The
increase is a result of accrued interests and penalties for the
year.
Table 4: Public Entities Financed by Debts

S/N Entity Category Debt in Equity Capital
(TZS) (000) (TZS) (000) (%)
Gearing
Ratio
1 Arusha Urban OPSE 115,931,776 37,371,436 310
Water Supply and
Sanitation
Authority
2 National Sports OPSE 494,469 7,374 6706
Council of
Tanzania
3 Warehouse OPSE 560,739 27,060 2072
Receipts
Regulatory Board
4 National Board of OPSE 28,806,376 (8,861,254) >100
Accountants and
Auditors (NBAA)
5 Stamigold CPSE 74,576,781 (48,929,482) >100
Company Limited
6 Tanzania National OPSE 1,187,523 (1,068,685) >100
Business Council
7 Tanzania CPSE 3,523,427,00 354,030,000 >100
Petroleum 0
Development
Corporation
8 Cashewnut Board OPSE 20,501,478 13,708,977 150
of Tanzania
I am concerned that the higher gearing ratios may negatively

affect the operations and long-term financial stability of
these entities resulting in inability to meet their financial
obligations.

I recommend that the Entities establish appropriate
measures to lower the gearing ratios, which would include
creation of more sources of revenue, controlling
operational cost and servicing the debts in time. I also
recommend that the Government review modes of
operations of these entities and inject resources to revamp
their operations.
4.1.3 Public Authorities with Negative Equity Balances

During the financial year 2018/19, I noted that six (6) entities
had negative equity balance. Five (5) entities were Other
Public Sector Entities while one (1) was a Commercial Public
Sector Entity as shown in (Table 5). Having more debts than
assets cast doubt on on-going concern status of these entities.
The negative equity of these entities is mainly attributed to

losses incurred for multiple years and excessive debts.
Table 5: Public Entities with Negative Capital

S/N Entity Category Total Total Net Asset
Asset Liability TZS (000)
TZS (000) TZS (000)
1 Tanzania Sisal OPSE 398,606 812,646 (414,041)
Board
2 National Kiswahili OPSE 1,563,598 1,831,527 (267,929)
Council of
Tanzania
3 Cotton OPSE 43,490,424 50,215,616 (6,725,192)
Development
Trust Fund
4 Fair Competition OPSE 63,059 76,557 (13,498)
Tribunal
5 National Board of OPSE 19,945,122 28,806,376 (8,861,254)
Accountants and
Auditors (NBAA)
6 Stamigold CPSE 25,647,299 74,576,781 (48,929,482)
Company Limited
If the current trend continues, it is unlikely that these entities

will survive without Government support. Also, there is a risk
that these entities might not be able to discharge their
functions, thus, affecting their service delivery to the general
public.

I recommend that the Government review and restructure
the modes of operations of the mentioned entities to
revamp their operations in order to guarantee service
sustainability.
4.2 Entities Incapable of Paying Short-Term Obligations

Entities need enough working capital to meet short-term
obligations including payments to their creditors and staff
emoluments among other things. However, 30 out of 140
entities I reviewed had negative working capital (i.e. current
liabilities are greater than current assets) for the financial
year 2018/2019, whereby two (2) entities were Commercial
Public Sector Entities. I observed that the current ratio (total
current assets/total current liabilities) of these entities was
ranging from 0.09:1 to 0.97:1 (refer to Table 6) which is
below the current ratio of 1 indicating that such entities
cannot meet their obligation as and when they fall due within
12 months.
Table 6: Public Entities with Negative Working Capital

S/N Entity Category Current Current Working Liquidity
asset liabilities capital ratio
TZS TZS TZS
(billion) (billion) (billion)
1 National OPSE 0.94 1.32 -0.38 0.71
Construction
Council
2 National Sports OPSE 0.48 0.49 -0.01 0.97
Council of
Tanzania
3 Singida Urban OPSE 0.85 0.87 -0.03 0.97
Water and
Sanitation
Authority
4 Tanzania Sisal OPSE 0.07 0.81 -0.74 0.09
Board
5 Warehouse OPSE 0.46 0.56 -0.10 0.83
Receipts
Regulatory Board
6 National CPSE 44.21 67.87 -23.67 0.65
Development
Corporation
7 Babati Urban OPSE 0.70 0.96 -0.25 0.73
Water Supply and
Sanitation

TZS TZS TZS
Authority
8 Chalinze Water OPSE 1.98 3.97 -1.99 0.50
Supply and
Sanitation
Authority
9 Cotton OPSE 42.66 50.22 -7.55 0.85
Development
Trust Fund
10 Dar es Salaam OPSE 3.17 6.04 -2.87 0.52
Institute of
Technology
11 Export Processing OPSE 7.69 69.05 -61.37 0.11
Zones Authority
12 Kariakoo Market OPSE 0.83 1.07 -0.24 0.78
Corporation
13 Lindi Urban Water OPSE 0.43 0.62 -0.18 0.70
Supply and
Sanitation
Authority
14 National Board of OPSE 9.93 22.26 -12.32 0.45
Accountants and
Auditors (NBAA)
15 Stamigold CPSE 15.75 55.11 -39.36 0.29
Company Limited
16 Tanzania Trade OPSE 1.54 3.09 -1.55 0.50
Development
Authority
17 Tea Board of OPSE 0.29 0.48 -0.19 0.60
Tanzania
18 Tanzania Food OPSE 0.21 1.36 -1.15 0.15
and Nutrition
Centre
19 Tanzania National OPSE 0.56 1.11 -0.55 0.51
Business Council
20 Tanzania Tourist OPSE 0.51 2.26 -1.74 0.23
Board
21 Cashewnut Board OPSE 15.70 20.50 -4.80 0.77
of Tanzania
22 Tanzania- OPSE 1.21 1.53 -0.32 0.79
Mozambique
Centre for Foreign
Relations
23 National Arts OPSE 0.11 0.36 -0.25 0.31
Council
24 National Ranching OPSE 8.71 12.43 -3.72 0.70
Company Limited,
25 National Institute OPSE 3.46 4.31 -0.85 0.80
of Transport
26 Open University OPSE 3.56 5.17 -1.61 0.69
of Tanzania

TZS TZS TZS
27 Tanzania Fisheries OPSE 0.96 1.41 -0.45 0.68
Research Institute
28 Tanzania Forestry OPSE 0.46 0.57 -0.11 0.82
Research Institute
29 Tanzania Cotton OPSE 1.18 4.04 -2.87 0.29
Board
30 Dar es Salaam OPSE 100.32 175.27 -74.95 0.57
Water Supply and
Sewerage
Authority
The negative working capital of these entities among others is

attributed to; losses due to operational inefficiencies,
accrued interest and penalties on overdue loans, and
insufficient Government support to public entities which lead
to budgetary deficit.
For instance, at Export Processing Zones Authority (EPZA),

delays in payment of compensations of land for economic
zones’ development have resulted in substantial increase in
the liability. I observed that outstanding compensation
balance stood at TZS 69.05 billion as at 30th June, 2019
compared to TZS 64.10 billion reported as at 30th June, 2018.
The increase is a result of accrued interests.
Further, on 1st November, 2010, the National Board of

Accountants and Auditors (NBAA) entered into a long-term
agreement with NSSF. The loan was taken to finance
construction of APC Centre (a joint venture company). I noted
there were delays in repayment of the loan. The total amount
of overdue principal and interest as at 30th June, 2019, was
TZS 21.66 billion (2018: TZS 19.81 billion). A penalty charged
on overdue repayment is 2% of principal and accrued interest.
As at 30th June, 2019, accrued penalties stood at TZS 849.82
million (2018: TZS 630.40 million). As a result, the current
liabilities were higher than the current asset as 30 th June,
2019.

National Development Corporation (NDC) had a number of
strategic projects that are its core mandate to develop and
implement, but they had not been completed or implemented
because of either the pending Government approval or
underfunding. These projects include Mchuchuma coal and
Liganga Iron and Steel, Engaruka Soda Ash, Kilimanjaro
Machine Tools (KMTC), Tyre Manufacturing Plant and Rubber
Plantations. I noted that, for the past 5 years, NDC
experienced a huge budgetary deficit with an average of 80%
being the result of under release of funds from the
Government. For instance, in the financial year 2018/19, the
Government disbursed only TZS 2.9 billion (12%) out of TZS
25.2 billion budgeted for NDC projects.
Stamigold Company Limited had Trade and Other Payables

balance amounting to TZS 52.5 billion as at 30th June, 2019,
which evidences out of TZS 30.60 billion were not made
available for my verification of their accuracy, existence and
completeness.
I recommend that the entities with unfavourable current

ratios establish appropriate measures for raising the
current ratios including establishing resource mobilization
strategies, settle the short time liabilities in timely manner
and adopt cost cutting measures.

CHAPTER 5
REVENUE MANAGEMENT IN PUBLIC ENTITIES
5.0 Introduction
This chapter highlights observations related to management of
revenues by various Public Entities during the financial year
2018/2019. Revenue management encompasses the most
critical path for Public Entities’ existence, as it significantly
contributes to generation of cash which is necessary for the
entities to be able to meet their obligations as and when they
become due. Also, revenue management highly contributes to
the performance of Public Entities as it affects profitability.
The following have been identified as matters of concern in

terms of revenue management during the audit of various
Public Entities:
5.1 Watumishi Housing Company (WHC) Limited

5.1.1 Delays in Handing Over of Houses to Customers
Watumishi Housing build houses for selling to public servants,
private sector employees and other members of Social
Security Funds (PSSSF, NSSF and NHIF) across Tanzania and
Diaspora under mortgage, hire purchase/rent to own,
progressive payments and upfront cash arrangements.
During the financial year 2018/19, a total of 519 houses were

built. From a sample of 13 houses handing over cases, I noted
10 cases with delays of more than 12 months due to late
completion of respective houses. I have further noted that
three (3) customers, whose handovers were delayed, had filed
complaint with Watumishi Housing Company (WHC) Limited on
the subject.
The noted delays could negatively impact the image of WHC

in the real estate business that could result in a loss of market
share and, hence affecting their revenue.

I recommend that Watumishi Housing Company (WHC) exert
more efforts to accelerate completion of its construction
projects in order to avoid unnecessary disappointment to
customers, which might affect their business.
5.2 Energy and Water Utilities Regulatory Authority (EWURA)

5.2.1 Unmarked Petroleum Products for Domestic Use 1.4 Billion
Litres
Rule 2 of Petroleum (Marking and Quality Control) Rules, 2010
requires all petroleum products imported for domestics use to
be marked with an approved marker with exception of those
that are tax exempted.
However, from the review of EWURA performance report on

the imported petroleum products for the period between
2015/2016 and 2018/2019 I noted a cumulative difference of
1,381,274,744 litres between the marked petroleum products
and the total imported petroleum products for domestic use.
It is concerning that despite these shortcomings; EWURA has
no mechanism to establish the causes of the difference.
The noted inconsistencies indicate weakness in monitoring

petroleum products for domestic use which could result in
revenue loss.
I recommend that EWURA establish a mechanism that would

enable monitoring and reconciling of petroleum products
for domestic use for proper management and control.
5.3 Institutions with Long Outstanding Trade Receivable

Balances
A number of Public Authorities have significant amounts tied
up with Trade Receivables. Out of 140 entities that I reviewed
during the year, 34 had outstanding Trade Receivables
amounting to TZS 263,760.05 million most of these are Trade
Receivables related to utilities and costs of other services
rendered to customers. I believe the receivables could be

significantly reduced if most of the entities will automate
revenue collection methods, adopt prepayment strategies,
and strengthen debt recovery measures. Table 7 below lists
the entities with significant long outstanding Trade Receivable
balances:
Table 7: Entities with Long Outstanding Trade Receivables

S/N Institution Amount Percent of
TZS (Million) long
outstanding
receivables
1 Arusha Urban Water Supply and 1,493.15 54
Sanitation Authority (AWSA)
2 Babati Urban Water Supply and 155.88 43
Sanitation Authority (BAWASA)
3 Moshi Co-operative University 2,518.25 89
(MoCU)
4 National Housing 11,679.53 48
Corporation (NHC)
5 Tanzania Industrial Research and 468.48 56
Development Organization (TIRDO)
6 Arusha International Conference 6,012.31 84
Centre (AICC)
7 Centre for Agricultural 330.71 79
Mechanisation and Rural
Technology (CARMATEC)
8 Tanzania Commission of Science 402.51 14
and Technology (COSTECH)
9 Cotton Development Trust Fund 3,080.51 9
(CDTF)
10 Export Processing Zones Authority 961.35 18
(EPZA)
11 Fair Competition Commission (FCC) 291.86 8
12 Kahama Urban Water Supply and 417.95 28
Sanitation Authority (KUWASA)
13 Lindi Urban Water Supply and 220.22 48
Sanitation Authority (LUWASA)
14 Masasi-Nachingwea Water Supply 325.50 55
and Sanitation Authority
15 Mtwara Urban Water Supply and 917.35 50
Sanitation Authority (MTUWASA)
16 National Board of Accountants and 366.16 83
Auditors
17 Ngorongoro Conservation Area 1,620.00 85
Authority (NCAA)
18 National Sugar Institute (NSI) 354.06 87
19 Public Service Social Security Fund 83,520.00 80

S/N Institution Amount Percent of
TZS (Million) long
outstanding
receivables
(PSSSF)
20 Tanzania Trade Development 298.36 32
Authority (TANTRADE)
21 Tanzania Broadcasting Corporation 3,137.24 46
(TBC)
22 Tanzania Commission for 2,174.88 71
Universities (TCU)
23 Tanzania Industrial Research 468.48 56
Development Organisation (TIRDO)
24 Ubungo Plaza Limited (UPL) 9,403.62 92
25 University Computing Centre (UCC) 1,379.51 78
26 Engineers Registration Board (ERB) 600.00 35
27 National Institute of Transport 2,427.02 92
(NIT)
28 Sokoine University of Agriculture 3,896.27 39
(SUA)
29 Tanzania Cotton Board (TCB) 1,626.10 96
30 Workers Compensation Fund (WCF) 65,698.28 64
31 Tanzania Engineering and 398.71 83
Manufacturing Design Organization
(TEMDO)
32 Land Transport Regulatory 398.47 100
Authority (LATRA)
33 *Tanzania Communication 54,392.22 100
Regulatory Authority (TCRA)
34 Institute of Finance 2,325.11 48
Management (IFM)
TOTAL 263,760.05
The respective position affects the operations of these

institutions as the amount could have been channelled to
various productive activities undertaken by the respective
entities.
I recommend that the highlighted institutions improve their

debt collection mechanism which should involve thorough
and effective methods to ensure fully recovery.

5.4 Tanzania Shipping Agencies (TASAC)
5.4.1 Non-submission of Provisional Financial Statements and
Payment of Annual Levy
Rules 4 and 5 of Tanzania Shipping Agencies (Service Providers
Levies and Fees) Rules, 2018 require regulated service
providers to submit quarterly provisional financial statements
and pay annual levy to Tanzania Shipping Agencies (TASAC) on
a quarterly basis. Failure to do so attracts interest and fines.
However, from sample of 16 out of 980 licensed regulated

service providers, I noted that five (5) service providers had
neither paid nor submitted the quarterly provisional financial
statements. The total due from these providers is estimated
at TZS 10.35 billion. Further, I have noted that one service
provider out of 16 reviewed has been submitting returns but
never paid service levy aggregating to TZS 502.44 million.
This is significant amount that could have been used in

implementing various TASAC’s activities but is tied up on
trade receivables, hence hindering its operations.
I recommend that TASAC use effective approaches in

enforcing its mandates as stipulated by pertinent rules and
improve its efficiency and effectiveness in collection of
dues from service providers.
5.5 Tanzania Engineering and Manufacturing Design

Organisation (TEMDO)
5.5.1 Under-collection of Funds from Own Source
During the financial years 2017/18 and 2018/19, Tanzania
Engineering and Manufacturing Design Organisation (TEMDO)
budgeted to collect TZS 1.25 billion and TZS 780 million
respectively from own sources.
However, TEMDO collected only TZS 209.59 million and TZS

147.65 million during the years 2018 and 2019 which
registered under collection of TZS 1.04 billion (83%) and TZS
632.35 (81%). The shortfall in revenue collection is attributed

to the lack of comprehensive strategy for revenue
mobilization and inadequate capacity in marketing strategies.
The under collection had a negative impact on TEMDO

operations as it led to shortage of financial resources, hence,
failure to achieve its planned objectives.
I recommend that TEMDO develop a comprehensive

revenue mobilization strategy that would enable it to
achieve its goals.
5.6 Tanzania Ports Authority (TPA)

5.6.1 Weaknesses over Revenue Recognition
I noted deficiencies on invoices with total amounts of USD
390,282 for 2018/19 and USD 747,445 for 2017/18 relating to
vessels docked out, which were not captured in the respective
years as revenue. Also, 38 cargo invoices amounting to TZS
2.4 billion whose vessels arrived in 2019/20 were captured in
the year 2018/19 revenue. The anomalies indicate deficiency
in the TPA cut off procedure to ensure revenue is properly
accounted for in the appropriate periods. This resulted in
misstatement of TPA’s revenue.
I recommend that TPA institute proper cut-off procedures

including reviews to ensure revenue are correctly captured
in the period that it is earned.
5.6.2 Significant Increase in Trade Debtors for Dar es Salaam Port

Regulation 3.3.6 of the TPA’s Financial Regulations, 2018
requires services to be provided to customers on cash basis
and any credit to be approved by Director General through
Director of Finance.
On reviewing Dar es Salaam Port receivable balance, I noted

that out of TZS 66 billion debtors balance, TZS 25 billion (38%)
is related to 2018/19 alone.

The significant increase indicates that services to customer
were offered on credit rather than cash which might have
resulted in inadequate cash inflow and hence affecting TPA’s
planned activities.
I recommend that TPA review its controls with regard to

compliance with various guidelines and adjust accordingly
to meet its operational requirements.
5.7 UTT - Asset Management and Investor Services Plc (2015/16

- 2017/18)
5.7.1 Long Outstanding Staff Advance
Staff advances amounting to TZS 326 million were given to
staff in May 2017 to enable them to participate in Vodacom
IPO share issues. It was agreed that the advances given would
be recovered within 3 months. However, I noted that the
amount had not been recovered to the date of this audit.
UTT AMIS had put in place recovery strategies which empower

it to either take back the shares from its staff (at their
consent) based on the value advanced to them or make a full
recovery of the amount advanced by making deductions from
their salaries. However, as at the date of audit, none of the
recovery strategies were implemented.
There is a risk of loss to the Company since recoverability of

the advances becomes uncertain.
I recommend that UTT – Asset Management and Investor

Service (AMIS) implement a formalized plan to recover the
staff advances.
5.8 TTCL Pesa Ltd (T-Pesa)

5.8.1 Deficiency in Computation of Airtime Commission Earned
Clause 9.2 of the E-voucher Dealership Service Contract
between TTCL Corporation and TTCL Pesa Ltd (T-Pesa)
requires computed commission to be VAT inclusive and be
calculated on the basis of actual sales by T-Pesa.

However, the computation of airtime commission earned by
T-Pesa is based on electronic airtime from TTCL Corporation
rather than the actual sales by T-Pesa as stipulated by the
contract. T-Pesa’s current arrangement is based on the verbal
agreement between the two parties which is yet to be
effected in the contract. However, given the current running
contract, I am concerned that T-Pesa revenue might have
been misstated.
I recommend that T-Pesa amend the contract and include

new agreed arrangements or compute commission based on
the terms of the contract in force.
5.9 TTCL Pesa Trust Entity (T-Pesa Trust)

5.9.1 Absence of Independent Computation of Interest Earned in
Trust Accounts
Section 2.6 of Agreement between TTCL Pesa Ltd and TTCL
Pesa Trust Entity and Banks (NMB, CRDB, TPB and TIB)
requires interest earned on Trust account to be calculated
daily on outstanding balance and credited into the Trust
Account once at each month end.
However, TTCL Pesa Trust Entity management was unable to

demonstrate that there is a mechanism in place to ensure
that interest earned is accurate rather than relying on what is
deposited by the Banks in Trust’s Bank Accounts. I noted three
circumstances whereby interest earned were reversed by one
of the banks due to identified undercharge by the respective
bank.Absence of independent review/re-computation by T-
Pesa Trust management might result in financial loss to the
entity in case of an understatement of revenue goes
undetected.
I recommend that TTCL T-Pesa Trust perform daily

independent computation of interest to ensure accuracy
and completeness of interest deposited in the Trust
Accounts.

5.10 The Arusha International Conference Centre (AICC)
5.10.1 Low Occupancy Rates on Rental Properties
The Arusha International Conference Centre (AICC)
Headquarters’ Complex building has total rental space of
19,686 square meters from its three wings namely
Kilimanjaro, Serengeti and Ngorongoro.
However, it came to my attention that only 10,028 (51%)

square meters were occupied during the financial year ended
30th June, 2019, leaving 9,658 square meters unoccupied. The
revenue loss because of the total unoccupied space was TZS
2.32 billion during the year.
I recommend that AICC evaluate reasons for vacant rental

spaces and institute strategies that will ensure renting of
the spaces hence improve revenue of the Centre.
5.11 Inadequate Funding by the Government

My assessment of the Public Authorities funding during the
year identified cases of significant deviations between
approved budgets and amount released by the Government to
fund the budget. The concerned entities highly depend on the
Government and underfunding creates serious shortage in
their resources available for discharging their mandate. Table
8 below includes amounts approved and released by the
Government with related unreleased amounts.
Table 8: Government’s Budget Releases Versus Approved

Budgeted Amounts
S/N Institution Year Budgete Unreleas %
d ed
Amount Amount
TZS TZS
(Million) (Million)
1 Centre for Agricultural 2018/19 3,000 2,750 92
Mechanization and Rural
2 Tanzania Commission of 2018/19 11,095 7,505 68
Science and Technology
(COSTECH)

S/N Institution Year Budgete Unreleas %
d ed
Amount Amount
TZS TZS
(Million) (Million)
3 Medical Stores 2018/19 251,500 130,418 52
Department (MSD)
4 Tanzania Trade 2018/19 2,979 2,979 100
Development Authority
(TANTRADE)
5 Tanzania Broadcasting 2018/19 5,000 2,500 50
Corporation (TBC)
6 Tanzania Engineering and 2017/18 4,671 2,621 56
Manufacturing Design
Organization (TEMDO)
7 Tanzania Engineering and 2018/19 5,642 4,641 82
Manufacturing Design
The noted under-releases resulted in funds shortage by

highlighted Public Authorities, which might have affected
implementation of their functions.
I recommend that the Government enhance functioning of

these Public Authorities and other Bodies by adequately
funding them through their budgeted government
subventions.
5.12 Kilimanjaro Airports Development Company Limited

(KADCO) and Kariakoo Market Corporation (KMC)
5.12.1 Tenants Without Rental Contracts
Kilimanjaro Airports Development Company Limited (KADCO)
and Kariakoo Market Corporation (KMC) had a total of 710
tenants occupying their properties. However, a total of 401
(56%) of the tenants had no rental contracts while they are
still conducting business in the Corporations’ premises. Refer
Table 9 below;

Table 9: Tenants Without Rental Contracts
S/N Institution Total Tenants Percentage
Number of Without
Tenants Contracts
1 Kilimanjaro Airports 87 36 41
Development Company
Limited (KADCO)
2 Kariakoo Market 623 365 59
Corporation (KMC)
Total 710 401 56
I am concerned that KADCO and KMC may lose revenue in case

of disputes as incomplete contracts may not be enforceable in
the court of law.
I recommend that KADCO and KMC ensure contracts are

duly signed by their tenants to avoid possibility of losing
revenue through defaulters.
5.13 Medical Stores Department (MSD)

5.13.1 Significant Increase in Government Receivable Threatening
Operations of MSD
During the financial year ended 30th June, 2019, MSD
receivables from Government increased significantly by TZS
16.18 billion from TZS 37.45 billion that was outstanding in
the financial year ended 30th June, 2018. I am concerned that
MSD’s liquidity is deteriorating which affects MSD operations
including the outreach of medicine and medical equipment to
the society as well as implementation of its various plans.
I recommend that Ministry of Health, Community

Development, Gender, Elderly and Children pay their dues
to MSD in a timely manner to enable sustainability of its
operations and enhance the outreach of medicine and
medical equipment to the society.

5.14 Tanzania Petroleum Development Corporation (TPDC)
5.14.1 Loss of Revenue Due to Delay in Extension of Licenses for
Production Sharing Agreements (PSAs)
Section 57(1)-(4) of the Petroleum Act, 2015 requires the
holder of exploration license to apply for extension license in
respect of their blocks not later than 90 days before the due
expiry day of the license. It further emphasizes that the
Minister may accept an application for extension later than
ninety days and not, in any case, after the date of expiry of a
license. Section 59(8) of the same Act requires that when the
application is made, the license should be deemed to continue
in force until the Minister grants or refuses to grant the
extension of license, or lapses of application, whichever
occurs first even if the license has expired.
Furthermore, Section 6 of the Oil and Gas Revenues

Management Act, 2015 requires that, among others, Tanzania
Petroleum Development Corporation (TPDC) collect and retain
surface rentals or annual block fees, signature bonuses and
training fees for the purposes of enhancing development of oil
and gas subsector.
From the review of the list of Production Sharing Agreements

(PSA) licenses and their status and the status of PSA licenses
with TPDC, I noted the following anomalies:
• Seven (7) out of eight (8) operating PSAs gas
exploration licenses had expired.
• Holders of three (3) out of seven (7) expired PSAs
license had not applied for extension within 90 days
before expiration of the respective licenses as required
by the law.
• Five (5) PSAs whose licenses had expired were given
comfort letters instead of extension.
TPDC explained that the extensions were delayed pending

directives by the Public Accounts Committee (PAC) to review

the existing PSAs in line with the Natural Wealth and
Resources (Permanent Sovereignty) Act, 2017.
I am of the view that delays in resolving issue of expired

licenses might demoralise the investors concerned. Also, the
comfort letter issued does not suffice the necessity of licenses
as it cannot be enforced in the court of law in case of
disputes.
I thus, recommend that TPDC expedite implementation of

PAC directives and follow up with responsible Minister to
ensure that the licenses issue is resolved.
5.14.2 Significant outstanding receivable without performance

guarantee and interest on outstanding balance
Gas Sales Agreements or Terms (GSAs/GSTs) requires, TPDC’s
customers to pay upfront an amount at least equal to the
required amount (payment security), which is equal to daily
quantity of natural gas supplied and taken by buyers during
the previous three (3) months. GSA clause on payment
security is among precedent conditions that should be fulfilled
by GSA entered parties (buyers). The agreements further
entitle the seller (TPDC) to suspend deliveries of natural gas if
a buyer fails to replenish the payment security.
However, I noted an outstanding receivables of Payment

Securities from sales of natural gas amounting to TZS 368.28
billion from five (5) TPDC’s customers as at 30th June, 2019 as
detailed in the Table 10 below:
Table 10: Customers with Outstanding Balance of Payment

Security
S/n Customer name Starting Outstanding amount
supply date (TZS Billion)
1 TANESCO September 338.67
2015
2 Dangote Cement Ltd September 22.35
Tanzania 2018
3 Goodwill Ceramic Co May 2017 7.08

S/n Customer name Starting Outstanding amount
supply date (TZS Billion)
Ltd
4 Cocacola Kwanza Ltd May 2019 0.13
5 Lodhia Steel June 2019 0.05
Industries Ltd
Total 368.28
TPDC had not been charging any interest on the respective

receivable balances.
I am concerned that TPDC may not be able to recover these

outstanding amounts due to weak follow up mechanism and
enforcement of the GSA provisions.
I recommend that TPDC devise rigorous strategies to collect

the outstanding balances from the customers with interests
and insist on compliance with the provisions of GSA.
5.14.3 Accounts of M&P not Adjusted According to PSA’s Audit

Findings USD 45 Million
The Government of the United Republic of Tanzania, TPDC
and M&P (the contractor) entered into a Production Sharing
Agreement (PSA) in 2004 to undertake hydrocarbon
exploration at Mnazi Bay.
Under Annex D of PSA, TPDC is obliged to conduct PSA’s cost

audit every year and provide audit report to M&P while
Section 1.6 of the same Annex requires M&P to provide
official responses to the audit observations within sixty (60)
days from submission date, failure of which, M&P is deemed
to have accepted the audit observations and thus require to
adjust its accounts accordingly.
During the years 2016 and 2017, TPDC conducted audits on

the recoverable costs for Mnazi Bay PSA covering the years
2013, 2014 and 2015 and disputed a total cost of USD 45
million as indicted in Table 11 below:

Table 11: Disputed Recovery Cost
Year Cost Disputed Date of final Date of Response by Days
Claime Amounts audit report M &P taken
d by M (USD) issued to M&P to
&P Million respo
(USD) nd
Million
2013 22.8 6.4 14th March, 2017 18th October, 2017 218
2014 33.7 20.3 15th March, 2017 18th October, 2017 217
2015 43.2 18.5 12th July, 2017 18th October, 2017 98
45.2
I further learnt that M&P had requested TPDC to consider

reviewing the M&P’s audits findings relating to rejected costs
in view of the submitted responses. However, TPDC
maintained its position that the disputed costs have been
accepted by M&P by the virtue of failing to provide timely
responses to them as required by PSA.
Management explained that M&P had not yet agreed to adjust

the disputed cost and TPDC was still waiting for its board of
director’s approval to consult the Ministry of Energy and
Attorney General on the matter.
The failure to adjusting the rejected cost as per agreed terms

and conditions of PSA reduces the shared profit accruing to
TPDC hence, adversely affecting its revenue
I therefore, recommend that TPDC ensures that accounts of

M&P are adjusted and thus, correct amount of profit share
is shared with TPDC and then insist on maximum
compliance with the terms and conditions of PSA by all
parties to that agreement.
5.15 Dar es Salaam Maritime Institute (DMI)

5.15.1 Non-Compliance with GePG Circular
Ministry of Finance and Planning through the Treasury
Registrar issued Circular No. CCA 292/408/01/31 that requires
all MDAs, LGAs and Institutions to collect revenue using
Government e-Payment Gateway (GePG) by June 2018.

I noted that Dar es Salaam Maritime Institute (DMI)
implemented the respective Circular from July 2018.
However, during the year ended 30th June, 2019, DMI
collected a total of TZS 451.09 million and USD 184,750 in
accounts other than those with GePG contrary to the above
noted circular. This was attributed to lack of awareness of
change of process (system) by students and tenants.
It is my concern that collections might have not been

effective due to human interferences with the amounts
collected outside GePG system. Also, the practice inhibits
instant monitoring of collected funds.
I recommend that DMI ensure full compliance with the

Circular to promote efficiency and effectiveness in
collection of revenue.
5.16 TTCL Corporation (TTCL)

5.16.1 Loss on Roaming Contract with MIC
TTCL Corporation entered into a contract with MIC Tanzania
Limited for National Roaming with effect from 14th July, 2018.
The intention was to expand network coverage countrywide to
maximize revenue. The contract prices for the roaming
service are detailed in Table 12 below:
Table 12: Loss on Roaming Contract With MIC

S/N Details TZS
1. Radio Access Voice 8.5 per Minute
2. Data 2,500 per GB
3. Messaging (Local) 1 per SMS
4. Messaging (International) 2 per SMS
I noted that TTCL was offering lower package prices to its

customers than the package contracted prices it pays. As a
result, it made a loss of TZS 1.11 billion exclusively from the
roaming contract.

Also, if TTCL increases prices to curb the loss, there is
possibility of reducing its revenues due to stiff competition in
the market.
I recommend that TTCL seek alternative means of

countrywide coverage.

CHAPTER 6
REVIEW OF CORPORATE GOVERNANCE
6.0 Introduction
Public Authorities and Other Bodies (PA & OBs) are established
by laws with specific governance structure that enables them
to discharge their mandates in effective, efficient and
transparent way. Corporate governance does not only
introduce rules and laws that provide minimum requirements
but also customize practices that fit the public entities.
I reviewed governance of PA & OBs for the financial year

2018/2019 with a view to establishing effectiveness of
performance of the PA & OBs. The review focused on
management structure and composition of the Boards on
implementation of core functions; presence of proper
functioning of Board of Directors/Trustees on oversight
functions and performance of the Boards in directing
Managements of respective entities.
During the review, I noted that some entities had no Board of

Directors while other Boards had acting chairpersons. There
were public authorities whose Board of Directors had not
conducted meetings as required in their guidelines. I further
noted that, there were Public Entities of which had Managing
Directors acting for a long period.
This chapter, therefore, set out details of weaknesses noted

in the governance of PA & OBs and respective
recommendations for improvement.
6.1.1 Increase in Public Authorities with no Boards of Directors

Boards are oversight organs for the public entities that ensure
performance of the entity in the interest of the public. It
oversees management of the entity who are entrusted with
the day to day operations. A Board of Directors is a
responsible body in making decisions that provide the

direction of the organization in the interest of the public. In
this context, members of the Board are appointed to ensure
their participation in running public entities provide value
added decisions.
A Board of Directors is led by a chairperson whose

appointment is stated in the law establishing such particular
entity. The Board becomes active when it consists of all the
required members appointed and discharging their functions
throughout the period.
During the financial year 2018/19, I noted an increasing

number of PA & OBs with no Boards of Directors; where in the
current year, 31% of the audited PA & OBs had no Boards.
Apart from not having the Board of Directors some entities

also lacked substantive leaders and were therefore headed by
acting Chief Executives/Directors General. In addition, there
were 11 PA & OBs with Board of Directors led by acting
Chairpersons and acting Chief Executive Officers/Director
Generals Table 13. Figure 1 below shows three years
increasing trend of public authorities with no Oversight
Bodies:
Trend of Public Authorities with no Boards

39 of Directors
40
24
20
30
20
10
0
2016/2017 2017/2018 2018/2019
Financial Year

Table 13: Public Authorities with no Boards of Directors or Acting
Chairpersons
S/N Name of Entity Board Acting DGs
Available
1 Kibaha Education Center (KEC) No Board DG Appointed
2 Jakaya Kikwete Cardiac Institute (JKCI) No Board Acting
3 Institute of Accountancy Arusha (IAA) No Board DG Appointed
4 Centre For Foreign Relations (CFR) No Board Acting
5 Tanzania Fisheries Research Institute (TAFIRI) No Board Acting
6 Centre for Agricultural Mechanization and No Board Acting
Rural Technology (CAMARTEC)
7 National Institute of Productivity (NIP) No Board DG Appointed
8 Tanzania Wildlife Research Institute (TAWIRI) No Board DG Appointed
9 Ocean Road Cancer Institute (ORCI) No Board DG Appointed
10 Tanzania Industrial Research and Development No Board DG Appointed
Organization (TIRDO)
11 MWEKA College of African Wildlife No Board DG Appointed
Management
12 Mwalimu Julius Nyerere University No Board DG Appointed
13 Tropical Pesticides Research Institute (TPRI) No Board Acting
14 Tanzania Engineering and Manufacturing No Board DG Appointed
Development Organization (TEMDO)
15 Institute of Rural Development Planning (IRDP) No Board DG Appointed
16 TCAA-CCC No Board DG Appointed
17 Cashewnut Board of Tanzania (CBT) No Board DG Appointed
18 Marine Parks & Reserve Unit No Board DG Appointed
19 Tanzania Insurance Regulatory Authority (TIRA) No Board DG Appointed
20 Tanzania Pyrethrum Board No Board DG Appointed
21 Tanzania Meat Board No Board DG Appointed
22 National Economic Empowerment Council No Board DG Appointed
(NEEC)
23 Tanzania Trade Development Authority No Board DG Appointed
(TANTRADE)
24 Geita Urban Water No Board DG Appointed
25 Tanzania Bureau Of Standards (TBS) No Board DG Appointed
26 Procurement and Supplies Professionals and No Board DG Appointed
Technicians Board (PSPTB)
27 Tanzania Diary Board No Board Acting
28 Tanzania Broadcasting Corporation (TBC) No Board DG Appointed
29 Bukoba Urban Water No Board DG Appointed
30 Tabora Urban Water No Board DG Appointed
31 Tanzania Fertilizer No Board DG Appointed
32 Mtwara Urban Water No Board DG Appointed
33 Rukwa/Sumbawanga Urban Water No Board DG Appointed
34 Mpanda Urban Water No Board DG Appointed
35 LATRA CCC No Board DG Appointed
36 Tanzania Coffee Board (TCB) Currently Chairperson
have Board Acting
37 Tanzania Smallholders Tea Development Currently Chairperson
Agency (TSHTDA) have Board Acting
38 Tanzania Cotton Board (TCB) Currently Chairperson
have Board Acting
39 Tanzania Atomic Energy Commission (TAEC) Currently Chairperson

S/N Name of Entity Board Acting DGs
Available
have Board Acting
40 Gaming Board of Tanzania (GBT) Currently Chairperson
have Board Acting
41 Workers Compensation Fund (WCF) No Board
42 National Development Corporation (NDC) No Board
43 National Insurance Corporation (NIC) No Board
The lack of Board of Directors impacts the oversight functions

in providing strategic direction of the entities. It also delays
implementation of functions (including guidelines/regulations
and policies) as they lack approval of the Boards. Further,
acting Board chairpersons and Chief Executive
Officers/Directors General are limited in terms of
accountability and authoritative powers to make decisions.
I reiterate my prior year’s recommendation that appointing

Authorities, (a) Consider taking measures to ensure early
identification of Boards with nearly expiration period and
commence appointment process in advance to mitigate the
challenge and (b) Assess performance of the Acting
Chairpersons and Directors and consider reducing the
acting positions by making full appointments.
6.1.2 Inadequate Implementation of Directives of Board of

Directors
An effective Board of Directors gives directives to
management of the PA & OBs to enhance effective
performance of the entity. Implementation of the directives
may be long, medium and short term.
I noted cases of unimplemented directives of the Boards. At

Tanzania Civil Aviation Authority (TCAA) there were four (4)
unimplemented Board of Directors directives issued in a
meeting held on 10th October, 2018. The Board directed that
management seek for the service level agreement on internet
provision between TTCL and TCAA to ensure errors in the
revenue billing system are rectified in a timely manner. The

Management was also required to communicate with parent
ministry to separate air accident bureau from the TCAA.
Similarly, the Tanzania Food and Nutrition Centre (TFNC) did

not implement the directive to change administrative fee
from 10% to 15% on research money channelled through the
centre in order to increase revenue. The management of
Tanzania Tourist Board (TTB) had four outstanding directives
including working on the identified weaknesses in
management of billboards contract with A1 Outdoor Company
Limited.
The Office of Treasury Registrar enters into performance

agreement with the Boards of Directors on targets to be
achieved during the financial year. I noted that, the Boards of
Capital Markets and Securities Authority and Lindi Urban
Water and Sanitation Supply Authority did not adequately
implement the performance agreements.
I consider presence of unimplemented directives to be an

indication of weaknesses of the Boards performance in guiding
the management. Further, inadequate Board’s performance
affects achievements of the pre-determined targets that are
set in the performance agreements.
I recommend that the Boards institute follow-up

mechanisms to ensure implementation of their directives
are evaluated and set implementation timelines and hold
management accountable for unimplemented directives. In
addition, the Boards ensure performance targets agreed
with the Office of Treasury Registrar are effectively
implemented.
6.1.3 Officers in Acting Positions for More Than Six Months

Order D.18 (1) of the Standing Orders for the Public Service of
2009 states that; “acting appointments occurs where an
employee is assigned temporarily to perform the duties of a

position in a classification with a superlative substantive
post”. In this context Order D.24 (3) states ‘where possible, a
public servant shall not act in a vacant post for a period
exceeding six months. The appointing authority should make
sure that the process for appointing a substantive holder of a
respective post is completed within that period of six months.
The Public Authorities have adopted these general guidelines
in their internal regulations like staff and financial
regulations.
From the review of 10 PA & OBs I noted that, 146 officers

were acting in substantive positions for more than six (6)
months contrary to the Standing Orders cited above (Table
14). I further noted that, of these posts 15 were Directors
General (Chief Executive Officers).
Table 14: Public Officers Acting for More than 6 Months

Name Public Authority Number of Period in Acting
Officers in Acting Position
Positions
SOUWASA 3 6 to 17 Months
MSD 2 21 and 19 Months
TPA 81 More than 6 Months
AUWASA 2 19 and 21 Days
NCC 2 More than 3 years
BAWASA 1 More than 2 years
TMDA 6 Acting for 12 Months
HESLB 2 More than 6 Months
CAMARTEC 9 More than 6 Months
MNMA 1 Acting for 16 Months
NIT 6 12 to 36 Months
JKCI 12 8 months and 3 years
VETA 11 10 Months and 5
years
NBS 5 More than 9 months
SHUWASA 3 More than 6 months
Total 146
I consider that the performance of these acting Public Officers

for more than six months. My review performance evaluation
of the officers in the acting positions could efficiently be done
within six (6) months as stated by the Orders and therefore

enable the Appointing Authorities to make decision on
whether to confirm them or appoint other suitable personnel.
In this regard, the positions held by acting officers for a long

period may be a source of acting staff liabilities to an entity
and has also implication on the performance of the acting
officers.
I recommend that PA & OBs in collaboration with Treasury

Registrar review on regular basis employment status of
substantive officers and ensure the number of act posts
held by officers who act are reduced by approving them or
fill the posts with proper personnel.
6.1.4 Shortage of Staff in Public Authorities

The Public Authorities prepare organization structures that
aim to support functions of their organizations. The
organization structures identify human resources that are
required by the organization to accomplish its objectives.
In nine (9) out of 140 PA & OBs reviewed during the financial
year 2018/19 I noted that staff establishments had
requirements of 4,977 staff for various cadres. However, the
actual staff available were only 3,323 resulting in a shortage
of 1,654 staff equivalent to 33% of the requirements (Table
15).
Table 15: Staff Shortage

S/N Division Proposed Current Vacant Percentage
Staffing Level Status Posts of Vacancy
1 PPRA 152 71 81 53%
2 TCAA 553 444 109 20%
3 TPA 3196 2136 1060 33%
4 TASAC 195 141 54 28%
5 AQRB 54 24 30 56%
6 MTUWASA 70 53 17 24%
7 MNMA 427 277 150 35%
8 NEMC 277 142 135 55%
9 VETA 53 35 18 34%
Total 4977 3323 1654 33%

I consider that, PA & OBs make proper assessment of required
staff to discharge the mandated functions and that the
requirements are reviewed to determine their relevance over
time. As such, significant shortage of workforce does not only
reduce abilities of the public authorities to perform their
mandated functions but also over utilize the available human
resources by working above their capacity which results in
inefficiency.
The Public Authorities should capitalize on the rapid change in

technology and then assess whether all positions are still
needed in the entity’s organization structure. I believe proper
use of the technological changes by these entities would
reduce the scope of human resource requirements and the
need to fill some vacancies.
I, thus, recommend that PA&OBs in coordination with the

Treasury Registrar consider reviewing their staffing
requirements in line with their mandated functions and fill
vacant positions as required.

CHAPTER 7
STRATEGIC AND OPERATIONAL EFFICIENCY
7.0 Introduction
Strategic Management encompasses continuous planning,
monitoring, analysis and assessment of activities necessary for
an organisation to meet its goals and objectives. Strategic
Management typically involves analysing internal and external
strengths and weaknesses, formulating action plans, executing
action plans, evaluating the achievements and adjusting to
attain the objectives.
Operational Efficiency means the ratio between inputs to run

a business and the outputs gained from the business.
Operational Efficiency encompasses several strategies used to
accomplish the basic goals of delivering quality goods or
services to the public in the most cost effective and timely
manner.
My review of Strategic and Operational Efficiency included the

following entities:
1. Gaming Board of Tanzania (GBT)

2. National Construction Council (NCC)
3. National Housing Corporation (NHC)
4. Centre for Agricultural Mechanism and Rural Technology
(CAMARTEC)
5. Kilimanjaro Airport Development Company Limited
(KADCO)
6. Tanzania Trade Development Authority (TANTRADE)

7.1 Gaming Board of Tanzania
7.1.1 GBT Operates with Draft Internet Gaming Regulations for
More than Seven Years
The Gaming Board of Tanzania (GBT) operates internet
gaming activities in the country. However, Internet Gaming
Regulations are in draft and have not been approved to be an
acceptable document for use. Further, in preparations of the
draft Regulations the stakeholder’s opinions were not
considered and uploaded on GBT’s website.
It is necessary that the formulated Regulations take into

account stakeholder’s views. The approval of the regulations
is crucial in order to give wider guidance on internet casino
operations especially in the areas such as licensing,
supervision, fees management, vetting of internet and service
providers.
I recommend that GBT incorporate stakeholders’ opinions,

widen the regulation to cover all aspects of the internet
gaming and expedite finalization and approval of the
Regulations.
7.1.2 Lack of Administrative Sanctions Against Non-Compliant

Operators
The Gaming Board of Tanzania (GBT) conducts routine and ad-
hoc inspections of gaming operations to evaluate activities
performed by the operators and inspection reports are
submitted to Inspection and Compliance Manager for action.
The inspection reports for the financial year ended 2018/19

covered various deficiencies identified including: delays in
renewing of gaming license; changing of gaming business
locations without notification to the Board; unregistered slot
machines; lack of supportive and key employee licenses;
absence of gaming stickers; lack of permanent gaming
locations and absence of gaming license.

However, no actions have been taken by the Board mainly
because the existing Regulations do not provide for
administrative sanctions against non-compliant operators.
I recommend that GBT liaise with the Ministry of Finance

and Planning to amend its regulations by including
administrative sanctions to be imposed against
noncompliant operators.
7.1.3 Gaming Operator’s Servers Located Outside Tanzania

Mainland
Local replica server is a requirement for sports betting
operations, intending to mitigate the need to have
information locally when needed for further scrutiny under
Rule 17(2) and (3) of Sports Betting Rules, 2016.
I noted that servers of two operators (BITT-Tech and 360 with

licence Nos 005476/006160/005826 and 005527 respectively)
are located outside the Tanzania Mainland. This implies that
information on their financial affairs may not be easily
obtained when required by the Government Authorities
including Tanzania Revenue Authority (TRA) and Gaming
Board of Tanzania.
I am aware of the ongoing development of Gaming Regulatory

Electronic Monitoring System (GREMS) which is an electronic
regulatory tool that is expected to monitor and provide
assurance on the Government revenue, responsible gaming,
market awareness and business intelligence. Under this
development, it is expected dependency on the replica
servers will be significantly reduced and more real time
information will be collected and stored on GBT-own servers
located within Tanzania by June 2020. However, I remain
concerned that financial affairs of the operators may not be
obtained when needed until the project is completed.

I recommend that GBT comply with Sports Betting Rules by
ensuring that the operators locate their servers within
Tanzania Mainland.
7.2 National Construction Council (NCC)

7.2.1 Inadequate Implementation of Development Projects TZS
509.56 Million
The National Construction Council (NCC) has five years’
Corporate Strategic Plan covering from year 2016 to 2021.
According to the Corporate Strategic Plan, for the year
2018/19, NCC planned to execute and complete seven (7)
projects with estimated cost of TZS 509.56 million. However,
out of the seven (7) projects, only two (2) projects were
executed which is equivalent to 29% of the planned activities.
Management attributed the delays in completion of the
projects to budget constraints and inadequate human
resources.
I recommend that NCC continue with the efforts of

requesting Government grants and identifying other
sources of which can sustainably finance its projects
including increasing its internal income sources to complete
the projects.
7.3 National Housing Corporation (NHC)

7.3.1 NHC Annual work Plan not Aligned with Corporate Strategic
Plan
The National Housing Corporation (NHC) has a ten-year
Strategic Plan running from 2015/16 to 2024/25. The Strategic
Plan is aimed at achieving the strategic goals including: to
become a leading real estate developer; to become a real
estate manager; to strengthen operational capacity and
control mechanism; and to boost the corporate image.
NHC prepares Annual Action Plans to monitor planned

activities as part of its initiatives to guide the implementation
of the Strategic Plan. However, in the process of developing

the annual action plan, I noted that the Corporation did not
consider its Strategic Plan for the particular year. For
instance, while the Corporation planned to raise TZS 240
billion in its Strategic Plan for the financial year 2018/19, in
its annual action plan the Corporate indicated that it planned
to raise TZS 167.7 billion only for the same period.
Further, the Corporation did not perform monitoring and

evaluation of the Strategic Plan and did not have any
personnel responsible for monitoring and evaluation.
Absences of Annual Work Plans which are aligned with

Strategic Plan limits the Corporation in tracking
implementation of the Strategic Plan and take corrective
measures in a timely manner.
I recommend that the National Housing Corporation (NHC)

streamline its Annual Work Plans with the Strategic Plan to
ensure seamless implementation of its strategic objectives;
and perform monitoring and evaluation of the Strategic
Plan so as to measure its implementation and take
corrective actions in a timely manner.
7.4 Centre for Agricultural Mechanism and Rural Technology

(CAMARTEC)
7.4.1 CAMARTEC Strategic Plan (CSP) No Aligned to Five-year Plan
The Centre for Agricultural Mechanism and Rural Technology
(CAMARTEC) is identified by the Government as a key Centre
for agricultural development in the country. Also, the
Government’s Five-Year Development Plan II (FYDP II)
identified CAMARTEC as one of strategic institutions to
facilitate implementation of the Plan. In the Government five-
year plan, the Centre was tasked with the project of
constructing tractors for TZS 222.7 billion to be sold to Small
and Medium Enterprises up to 2021.

However, CARMATEC has not included construction of tractors
as one of its objectives in its Corporate Strategic Plan which
means that the plan is not aligned with Five-Year
Development Plan II (FYDP II). In this situation, CARMATEC
may not achieve the assigned objectives of FYDP II.
Further, while the Centre has Planning and Coordination Unit

in its Organization Structure, no Planning Officer has ever
been employed to fill the post since the establishment of
Centre in 1981. The functions of the unit have therefore been
performed by other departments on part time basis without
practical experience of planning and budgeting.
I recommend that CARMATEC liaise with Ministry of Industry

and Trade to (a) revise the Centre CSP to include the
objectives of the FYDP II that were directed to the Centre;
and (b) establish and employ staff for the Planning and
Coordination Unit to carry out its responsibilities.
7.4.2 Lack of Operating Regulations, Policies and Manuals

Review of CARMATEC noted following anomalies:
• Results of tests performed on all types of machinery

and equipment which were intended for agricultural
use and rural development were not published contrary
to the requirements of CARMATEC’s Act;
• Researches performed by the Centre including of

tractors, mounted multi-crop planters and beans
thresher were not patented;
• The Centre failed to prepare rules, policies and

manuals such as research policy, intellectual property
policy, workshop manuals and other important standard
operating procedures; and
• The lack of regulations to support the CARMATEC Act in

three out of four mandated areas of production,

technology transfer, research and development.
Regulations for testing were developed in 2018.
The absence of key regulations, policies and operating

manuals impact internal control systems and performance as
the Centre is not adequately guided to implement its
mandate.
I recommend that CARMATEC (a) enact the missing

regulations for all areas of the Centre purview; (b) publish
results of conducted tests for ease of administration and
management; (c) develop all important policies, manuals,
and other key procedure; and (d) patent all Centre’s
innovations that may be impacted by some kinds of
technological transfers.
7.5 Kilimanjaro Airport Development Company Limited (KADCO)

7.5.1 KADCO does not Maintain the Safety Key Performance
Indicators and Targets
Regulation 57 (1) of the Civil Aviation (Aerodromes)
Regulations, 2017 requires an operator of an aerodrome to
have in its operation a safety management system (SMS)
acceptable to the TCAA and that complies with the
requirements specified in the Civil Aviation (Safety
Management) Regulations, 2015. Further, Regulation 57(2)
requires an operator to establish and evaluate safety
performance indicators, alert levels and target levels at an
aerodrome acceptable to the Authority.
However, KADCO has not established the Safety Key

Performance Indicators and Targets. The matter was also
reported by TCAA in KIA Aerodrome Certification Inspection
conducted from 27th to 31st May, 2019. This leads to inability
of the company to measure the safety performance trends
and determine area of improvement.I recommend that
KADCO comply with the requirements of Regulation 57 (1)
of the Civil Aviation (Aerodromes) Regulations, 2017.

7.6 Tanzania Trade Development Authority (TANTRADE)
7.6.1 Absence of Trade Fair Facilities Accreditation Standards
TANTRADE regulations require the Authority to set the
standards and quality of the trade fair facilities.
However, TANTRADE had not developed standards for

accreditation of Trade Fair facilities in the country. Lack of
accreditation standards may lead to haphazardly established
trade fair facilities, which limit attainment of the Authority’s
goal and promotion of local products to the accepted
standards.
I recommend that TANTRADE Management establish Trade

Fair Facilities Accreditation standards and communicate
them to all stakeholders.
7.6.2 Delays in Implementing TANTRADE Functions

TANTRADE regulations require the Authority to develop tools
for monitoring market operations; establish a market
intelligence system; coordinating training activities and
research on trade fair facilities from various institutions such
as TIC and EPZA.
I reviewed implementation status of the TANTRADE functions

and learnt that some of the functions were not implemented
such as: absence of M&E tool for domestic market operations,
absence of established market intelligence system and
absence of robust established section for coordinating training
activates. Management explained that, they are developing
comprehensive regulations, tools and procedures for
implementing the same.
I recommend that Management of TANTRADE finalise and

approve all the tools so as to start working on all activities
defined in the regulations.

CHAPTER 8
MANAGEMENT OF EXPENDITURE BY PUBLIC ENTITIES
8.0 Introduction
In carrying out mandated functions, Public Authorities and
other Bodies (PA & OBs) spend money in line with their
policies, rules, laws, and regulations. In this regard, every
Public Authority establishes internal controls to guide
expenditures which may be in form of budget, authorization,
approval and verification processes.
From the evaluation of internal controls on management of

expenditure, I noted that Public Entities continued to incur
ineligible and/or fruitless expenditures. For the period ended
30th June, 2019, 36 Public Authorities recorded expenses
amounting to TZS 454.32 billion (2017/18: TZS 411.90 billion)
excluding non-cash expenditure like depreciation and
amortization of assets, and estimation for provision. These
Public Authorities had also payables and accrued liabilities at
the year-end amounting to TZS 184.43 billion (2017/18: TZS
152 billion) equivalent to 41% of the reported expenses.
Based on the above spending analysis, I evaluated internal

controls instituted by the authorities in managing such
expenditure. I noted repeated non-compliance with rules and
regulations guiding Public Entities. These included spending
on activities without proper budget approvals, presence of
inefficiencies in the budget implementation, inadequate
management of advances and imprest, delayed and non-
remittance of statutory deductions to Pension Funds and
National Health Insurance Fund. I also noted expenses which
lacked proper authorization and approvals by the Boards as
well as wasteful and ineligible expenditures.

This chapter highlights the matters noted and
recommendations issued to the following entities regarding
expenditure management:
8.1 Budget Implementation

Budget is the guiding tool in allocating and utilizing public
resources for attaining pre-determined targets and objectives.
In this audit, I noted that, 40 Public Entities had planned to

collect revenue of TZS 1, 240.82 billion and spend TZS
1,221.19 billion for the year under review, but the entities
had collected and spent an amount of TZS 822.68 billion and
TZS 766.90 billion instead which is equals to 66% and 63% of
the total approved budget.
I further noted 15 Public Entities with significant under

collections of budgeted revenue ranging from 29% to 77% as
indicated in Table 16. Also, I noted six (6) among them could
not implement expenditure budget as planned at the rate of
more than (50%) as shown in Table 17.
Table 16: Entities with Significant Budget Under Collections

S/N Name of Budget Actua Varianc Percen Budget
Entity (in l (in e tage implemen
Million Millio (in Varianc tation
TZS) n Million e rate
TZS) TZS)
1 CHALINZE 3,940 2,742 1,198 30% 27%
UWASA
2 CMSA 4,732 2,901 1,831 39% 14%
3 CASTECH 16,277 8,907 7,369 45% 15%
4 FCC 14,399 8,940 5,458 38% 30%
5 FCT 2,970 1,741 1,229 41% 41%
6 JKCI 33,589 20,04 13,549 40% 47%
0
7 LINDI UWASA 4,303 1,034 3,269 76% 34%
8 MANAWASA 4,014 2,869 1,144 29% 49%
9 SHUWASA 9,297 6,178 3,118 34% 21%

Table 17: Entities Which Could not Implement Expenditure
as Planned
No. Name of Budget Actual Varianc Percent Budget
Entity (in (in e age imple
Million Million (in Varianc mentat
TZS) TZS) Million e ion
TZS) rate
1 CAMARTEC 5,748 1,672 4,075 71% 74%
2 COSOTA 1,943 980 962 50% 52%
3 CTDF 92,318 27,378 64,939 70% 69%
4 DAWASA 342,673 177,038 165,634 48% 50%
5 EPZA 30,802 7,154 23,647 77% 75%
6 VETA 168,074 85,550 82,524 49% 52%
Low revenue budget performances on the mentioned Public

Authorities imply inefficiencies in implementation of planned
activities by the Entities and leading to non-achievement of
planned objectives.
I recommend that the mentioned Public Entities ensure

proper planning and use of realistic budget assumptions
during planning in order to improve the rate of revenue
collections and therefore increase resources available for
the budget implementation.
8.1.1 Inefficiencies in Budget Execution

Paragraph 69 of the budget guidelines for the preparation of
plans and budget of 2018/19 requires prioritization of
effective spending and prudent fiscal management to be the
main enforcement mechanisms for implementation of 2018/19
budget.
I noted that Tanzania Postal Corporation (TPC) had overspent

a total of TZS 1.65 billion because for the financial 2018/19
TPC budget was not developed from Corporate Strategic
Business Plan. The TPC 6th Corporation Strategic Business Plan
covered the period from July 2014 to June 2018 while the 7th
Strategic Business plan covered a period from July 2019 to
June 2024 and therefore, the financial year 2018/19 was not
covered by any of the Strategic Business Plans.

Dar es salaam Maritime Institute (DMI) had overspent a total
of TZS 604.64 million in different budget line items. The
overspending was not approved by the relevant authorities.
Likewise, EPZA had overspent TZS 118.46 million of which 79%
was for Board and Committee meetings.
Tanzania Broadcasting Corporation (TBC) had an overspending

of TZS 144.13 million on the contract for installation, training,
testing, Integration and commissioning of production
equipment for Tanzania Safari Channel. The approved budget
for project was TZS 607.23 million but actual spending was
TZS 751.35 million.
I consider that the overspending without proper approvals

from the relevant authorities undermines the importance of
the budgetary control within organisation.
I recommend that Boards of Directors of Public Authorities

and other Bodies strengthen the budgetary control
mechanisms in order to create a meaningful use of budgets
as tool for controlling and monitoring expenditure.
8.1.2 Inefficiencies in Budget Preparation and Implementation

Paragraphs 9 and 10 of the Guidelines for the Preparation of
Plans and Budget of 2018/19 directed strengthening and
maximizing institutional synergies amongst stakeholders to
achieve efficiency in implementation of the national strategy.
Thus, it requires all Accounting Officers to adhere to laws and
use of the national strategy during preparation and
implementation of their respective annual plans and budgets.
During the review of budget preparation and implementation,

I noted some deficiencies in five (5) Public Authorities out of
40 Public Authorities included in my sample. The deficiencies
included lack of involvement and participation of every unit
within the organization on budget preparation, there is no
linkage between the corporate business strategies/plans and

the budget, the budget is not in line with strategic plan and
inadequate documentation of budget monitoring and
implementation reports (Table 18).
Table 18: Weaknesses in Budget Preparation and

Implementation
S/N Name of Budget Deficiencies
Entity
1 PPAA - Lack of involvement of the two Directorates namely

the Directorate of Technical Services and the
Directorate of Finance and Administration, during
Budget origination process.
- There was no identification of priorities or core
activities of the entity to be included in the budget.
- There were no progress reports to monitor
implementation of the budget during the year under
review.
2 CPB - Absence of evidence to confirm that every unit

participated in the budget preparation process
(budget origination and participation).
- Budget not showing identification of priorities and
proper resource allocation to core activities.
- Absence of the quarterly performance reports
showing how budgeted activities have been met.
3 TPC - TPC had approved TZS 1.1 billion for

repair/renovation of the office buildings. However,
the budget and the Corporation Annual action plan
did not contain budget amounts of the renovation of
the six regional offices.
- The management did not prepare estimated BOQ
document which was to become a benchmark and a
cost ceiling for each respective regional office’s
repair and renovation costs.
4 NHC - In the process of developing annual action plan, the

Corporation did not consider its Strategic Plan for
the particular year. For instance, in the Strategic
Plan, the Corporation planned to raise TZS 240
billion during the year 2018/19, but in its action
plan it planned to raise TZS 167.7 billion.
Therefore, the budget could not reflect the planned
objectives.

S/N Name of Budget Deficiencies
Entity
5 MSD - MSD had a contract for procurement of motor

vehicles which exceeded the budget by TZS 446.57
million.
- There was no budget for the excess amount on this
procurement. This is contrary to Para 224 of MSD
Financial Regulations 2011, which states that before
any purchase is approved, the Director General shall
ensure that the proposed expenditure is sufficiently
covered under a specific approved budget allocation
and the Annual Procurement Plan.
Deficiencies noted may affect performance of the entities

hence, the overall national objectives on utilization of
resources may not be achieved.
I recommend that the Public Entities abide by the budget

guidelines and budget controls in preparation and
implementation of their activities.
8.2 Inadequate Management of Advance Payments TZS 750.52

Million
During the period 2018/19 the Tanzania Postal Corporation
(TPC) had paid 50% of the contract sums as advance payments
to contractors to enable the contractors to fasten completion
of their contracted works. The advances amounted to TZS
506.35 million. Nevertheless, the corporation made those
payments without security bonds which could be used to
cover the advances as required by Nineteenth schedule of the
Public Procurement Regulations 2013 (as amended in 2016)
under schedule 6.
Likewise, AICC paid TZS 100 million as advance to the former

Capital Development Authority (CDA) for acquisition of 31.5
acres of land at Njedengwa in Dodoma municipality. Later,
CDA was disbanded by the Presidential Order and its
activities, assets, liabilities and employees were transferred
to Dodoma Municipal Council. However, AICC had neither

obtained the land nor the refund of the advance up to the
time of concluding this audit in December 2019.
Similarly, NHIF KfW Project had no limit of amount of cash to

be paid to staff as advance/imprest for implementation of
project activities. As a result, a total of TZS 70.35 million and
73.82 million were paid as cash advances for conducting
advocacy training to stakeholders and service providers.
Carrying large amount of cash invites a risk of theft leading to
loss of public funds. NHIF is urged to refrain from this mode
of payment.
8.3 Payment of Insurance Premium contrary to Regulations USD

102,000
Section 72(2) of the Insurance Act of 2009 requires an insured
to pay to a Tanzanian Insurer all premiums due to the insurer
by depositing to the account of the insurer for insurance
cover. Further, Section 72(4) restricts a broker not to receive
any premium from the insured for insurance cover and doing
so is committing offences.
Contrary to above requirements, I noted that KADCO had paid

USD 102,000 as premium to the brokers, Astra Insurance
Brokers Ltd instead of Insurance Company. In addition, there
was no Insurance Policy issued to KADCO from insurer, but
only a Risk Note covering a period of three months from 1st
October, 2018 to 31st December, 2018 was issued by the
payee.
Payment of premium to a broker and purchasing of insurance

without an insurance policy amount to non-compliance with
the requirements of the laws and may result in a loss of public
funds. Further, the Corporation for the period under review
was not insured and was exposed to the risk of loss for any
calamity that could occur.

I recommend that KADCO: (a) to ensure the amount paid for
un-receipted insurance cover is recovered and (b) to
investigate the causes of such anomaly and take action so
that it does not recur.
8.4 Fruitless Expenditure Made to Ex-Employees of the Public

Authorities TZS 829.45 Million
Expenditures of Public Entities are guided by laws,
regulations, guidelines and policies developed by the
Government and respective entities. All of these aim at
safeguarding utilization of the public resources to activate
economic benefit of the resources spent.
I noted that, three Public Authorities paid a total of TZS

829.45 million to staff who had left respective entities due to
different reasons. Higher Education Students’ Loans Board
(HESLB) paid TZS 398.14 Million to ex-staff in form of motor
vehicle loans, housing loans and imprest (TZS 331.28; TZS
45.47 and TZS 21.40 million respectively).
Similarly, Tanzania Fertilizer Regulatory Authority (TFRA) paid

TZS 324.01 million as allowances (extra duty allowances TZS
214.95 million and other allowances TZS 109.07 million) to
seconded staff who are not entitled to such payment
according to Standing Order and approval of the Board. I
further noted that, the payment had not been approved by
the Board.
In the same way, Tanzania Port Authority (TPA) reported

outstanding loans amounting to TZS 107.30 million that were
issued to terminated staff. The loans were given in terms of
Bandari loans, Ramadhani, Easter, Advance rent, motor
vehicle loan and R/salary general.
These payments highlight weak managerial controls over loans

to staff and the checkout procedures for staff separating from

the entities. In return staff are given loans which are not
secured leading to losses of fund in case of staff termination.
I recommend that Managements of respective entities (a)

strengthen payment controls by ensuring precautions are
taken before issuing loans to staff, and (b) trace the ex-
employees and make follow-up to recover outstanding loan
balances.
8.5 Outstanding Land Rent and Service Levy to LGAs

Section 6(1)(u) of the Local Government Finance Act of 1982
provides sources of revenue for local government which are
all monies derived from the service levy payable by the
corporate entities i.e. the rate not exceeding 0.3% of the
turnover net of the value added tax and the excise duty.
TPA had long outstanding City Service Levy of TZS 989 million
and TZS 1.076 billion for 2016/17 and 2017/18 respectively
payable to Temeke Municipal Council while Morogoro Urban
Water Supply and Sanitation Water Authority (MORUWASA)
had not paid the Municipal levy amounting to TZS 58 million
to Morogoro Municipal Council. Similarly, National Housing
Corporation had delayed payment of land rent amounting to
TZS 404.26 million to Kilimanjaro, Dodoma, Lindi, Kigoma
Arusha, Mbeya, Tanga and Ruvuma regions.
Levy is one of important sources of revenue for the Local

Government Authorities. Delayed payment of service levy
increase liabilities to the paying entities and affect
implementation of budgeted activities.
I urge the Public Authorities to settle all the outstanding

service levy and land rents.
8.6 Unregulated Payments of Leave Passage TZS 1,575 Million

According to Regulation 3.1.3.13 of DAWASA’s Human
Resource Policy and Regulations (2018), the Authority
employee is entitled to an annual leave once in every two

years of leave cycle to and from employee’s place of
domicile. In this leave cycle the employee is paid travel
allowance.
Nevertheless, DAWASA paid 13th salary as leave passage with

the amount involved totalling to TZS 1,575 million to staff on
leave contrary to the cited Regulation. I further leant that
there were no any guidelines that was used to base the
payment of 13th salary leave passage. Management
acknowledged that it was reviewing the existing voluntary
agreement and recommendations to be presented to the
appropriate authority for being regularized.
I am concerned that payments were made without being

provided anywhere in internal regulations or approved by the
responsible authorities including the Treasury Registrar which
highlights the risk of misuse of public resources.
I recommend that DAWASA seek guidance from approving

Authorities including the Office of the Treasury Registrar
while at the time comply with requirement of its Human
Resource and Policies and Regulations.
8.7 Payment of Employees’ NHIF Monthly Contributions

Section 9 of NHIF’s Act of 1999 requires each employer to
make monthly contribution of 3% of each of his employees’
salaries to be deposited to the Fund together with the
employees’ monthly contribution of three percent of their
salaries.
During the period under review, TTCL contributed a total of
TZS 1.075 billion in respect of contributions to NHIF.
However, the amount paid by TTCL included all the 6% of the
contribution including 3% which was supposed to be
contributed by the employee. TTCL Management explained
that the 6% contribution by the employer was a result of
management and Staff Joint Negotiation Council in 2015 and
2017 respectively.

Similarly, DAWASA and LATRA also made contributions to NHIF
to the tune of 6% of the employee’s salary which covered
both; employer and employees’ contributions and no
deductions were made from employees’ salaries. As such, the
Authorities incurred medical cost of TZS 532.49 million and
TZS 157.64 million respectively.
I recommend that Public Entities comply with the

requirements of NHIF Act or in a special case, approval be
sought from the Office of the Treasury Registrar.
8.8 Improper Payment Process to Contractors by DAWASA and

Ministry of Water TZS 6.45 billion
On 18th June, 2018 through a letter with reference
CAB.5/125/03E/VOL.3/14, DAWASA received TZS 12.98 billion
from the Ministry of Water in respect of implementation of
various development projects. The release letter directed
that TZS 6.53 billion were to pay activities/projects under
DAWASA supervision while TZS 6.45 billion were to be used for
projects which did not relate to DAWASA and were supervised
by the Ministry of Water.
As of June, 2019, TZS 5.49 billion out TZS 6.45 billion

supervised by the Ministry of Water was paid to 17 different
Development projects which did related to DAWASA. These
included for instance, construction of office building (Maji
House) at Kilimani Dodoma, Construction of Water Supply and
Sewerage System for Dodoma University in Dodoma City, Local
counterpart funds for Transboundary water resources project
Songwe River Basins Development Project and Rehabilitation
and Extension of Headquarter for Rufiji Basin and Water
Laboratory buildings Iringa.
I noted a case where DAWASA had directly transferred to

contractors who were implementing the projects supervised
by the Ministry of Water. For instance, review of a DAWASA
Bank Statement noted payments of TZS 801.40 million made

to five different contractors involved in construction of office
building (Maji House) at Kilimani Dodoma. Since this project
was supervised by the Ministry of Water, fund controls would
have been made by the Ministry. DAWASA had no control over
certifying the work performed by contractors/consultants to
whom transfers were made. In such case, DAWASA was not
able to provide any supporting documents apart from the
instruction memo from Ministry of Water that contained
analysis of payments to be made and their Certificates.
Further, I could not trace the procurement process and
contract management process, compliance with withholding
tax requirements when making payments, and verification of
the work done by contractor.
I consider the Ministry to be aware with the controls over

payments to contractors implementing different contracted
projects in different entities. Therefore, it is my opinion that,
payment to contractors could be done by respective
implementing entities or the Ministry itself in collaboration
with the implementing entity. Payments made by DAWASA to
projects/activities which did not relate to the Authority just
under instruction of the Ministry were prone to nugatory
expenditure and misappropriation of the funds as DAWASA had
no power to validate the work performed by contractors
before payments.
I recommend that the Ministry of Water (a) adhere to the

budgetary and payment controls in place when disbursing
funds to Entities under it for implementation of projects,
(b) ensure the funds transferred by DAWASA to contractors
were actually for works performed and respective
expenditures were accounted for by the implementing
entities, (c) withholding taxes were deducted and
submitted to TRA as required by the tax laws.

8.9 Delays and non-submissions of Statutory Deductions
Section 18(5) of the Public Service Social Security Fund Act,
2018 requires statutory contributions to be paid to the PSSSF
on the last day of the month in respect of which any payment
of a month's salary or any part of a month’s salary is made to
the member and the employer shall deduct the contribution
from the salary. Section 14(1) of the National Social Security
Fund Act, 1997 requires a contributing Employer to pay
contributions to the NSSF within one month after the end of
the month in respect of which the contributions are due and
payable. Further, Section 9 (1) and (5) of NHIF’s Act 2012
(revised 2015) requires every employer to make monthly
contribution to the equivalent of three percent of his
employees’ salaries and that these contributions be made
within one month after the last day of contribution period to
which it relates.
However, I have continued to note significant delays in

remitting the statutory deductions to Pension Funds and NHIF
by Public Authorities as detailed below:
• Muhimbili National Hospital and COSTECH delayed

submission of statutory deductions to pension funds
amounting to TZS 887.83 million and TZS 142.36 million
respectively.
• MNMA and DUCE did not remit TZS 66.33 million and
TZS 298.22 million respectively to NHIF.
• DAWASA had not submitted TZS 7.667 billion to NSSF,
PPF and PSSSF out of which, TZS 7.13 billion were
penalties for delayed remittances.
• Fair Competition Commission was penalized TZS 62.75
million as a result of delayed remittances to PSPF.
Non-remittance or delay in remittance of deductions leads to

penalties which increase unnecessary expenses which erode
the financial resources of the paying entity which could be
used in other economic activities. Further, service delivery of

the Pension Funds and Insurance Fund are affected by these
delays as they depend much on the contributions.
I recommend that the Public Authorities ensure they remit

statutory deductions to the respective PSSSF, NHIF and
NSSF on time.

CHAPTER 9
REVIEW OF INVESTMENTS IN PUBLIC ENTITIES
9.0 Introduction
Tanzania Development Vision 2025 envisions to guide Tanzania
from a low productivity agricultural economy to a semi-
industrialized one led by modernized and highly productive
agricultural activities, which are integrated with industrial
production and services in both rural and urban areas.
As a process of nurturing Industrialization for Economic

Transformation and Human Development as well as an
initiative to reach the target of becoming a middle-income
country by the year 2025, Tanzania has developed a Five-Year
Development Plan (FYDP II) for 2016/17-2020/21. The FYDP II
build a base of transforming Tanzania by promoting requisite
industrial skills, production and service delivering skills, that
will be of a help in production and trade management,
operations and quality assurance.
In that regard, Public Entities such as National Development

Corporation (NDC), Tanzania Investment Commission (TIC),
and Centre for Agricultural Mechanization and Rural
Technology (CARMATEC), were assigned some responsibilities
to undertake various investments with the aim of supporting
modernized and highly productive agricultural activities as
well as industrialization agenda.
Other Public Entities such as Social Security Funds and

National Housing Corporation undertake various investments
and Joint Ventures with the aim of supporting
industrialization in order to get returns from those
investments.
Issues on investment activities relating to Social Security

Funds, Governments Owned Banks and Government

investments in the mining sector have been covered in
chapters 11, 12 and 20 respectively.
Therefore, this chapter highlights the issues noted and

recommendations that relates to investment by Other Public
Entities which have a role to stimulate the economy through
promotion of investments and those performing investment
activities.
9.1 National Development Corporation (NDC)

The National Development Corporation (NDC) has 13 projects
out of which, six (6) projects are operating under various
challenges. The six (6) projects are Industrial Estates (TAMCO-
Kibaha and Kange Industrial Park Tanga, Malaria Control
Project 100, Kalunga and Kihuhwi Rubber Plantations, Tractor
Assembly Plant, South Ngaka Coalfields and Kilimanjaro
Machine Tools).
While, other seven (7) projects are Mchuchuma and Liganga

Project; Maganga Matitu Kasi Mpya Sponge Iron; Engaruka
Soda Ash Project; Singida Wind Power Project; Arusha Tyre
Manufacturing Plant; Singida Solar Power Project, and Large-
Scale Sesame Farming in Kilwa for Edible Oil Production Plant
have been stagnant due to different reasons as indicated in
Table 20 below. During my audit, I noted the following
inefficiencies in the operations of NDC:-
9.1.1 Kihuhwi and Kalunga Rubber Plantation Management at NDC

NDC owns two rubber plantations at Kihuhwi in Muheza
District and Kalunga in Kilombero District with total of 1,543
hectares. During the year ended 30th June, 2019, the
Corporation incurred a total cost of TZS 93.17 million as
operational cost of running the plantation whereby a total
income of TZS 61.42 million was generated which resulted in a
loss of TZS 31.7 million. The following deficiencies were
observed in operating the plantations:

(i) Inadequate Management of Rubber Plantations by
NDC
A total of 1,033 hectares out of 1,543 available
equivalents to 67% have not been planted. According to
NDC Strategic Plan of 2018/19-2022/23, 2.5 million Kg
of dry rubber would be produced per annum by 2023
where NDC would plant 50 hectares Per Annum of
uncultivated area in each year. During the financial
year ended 30th June, 2019 NDC planted only 28
hectares at Kalunga instead of 50 hectares per annum
as per plan.
Moreover, up to end of the year under review, NDC had

established a nursery of rubber trees at Kalunga that
could be planted on 115 hectares of uncultivated area;
however, more than 50% of the available seedlings
exceeded their time for being planted apart from the
costs incurred for they preparation.
(ii) Lack of Diameters for Measuring the Quality of Latex

from Tappers
I noted that there is no diameter for measuring the
quality of latex from tappers before processing in the
factory. The diameter would help to determine the
qualities of latex if were mixed with water or not.
When latex is mixed with water, the volume is
increased leading to more payments to tapers than they
would otherwise receive.
(iii) Shortage of Manpower at Kalunga

About 98 hectares of rubber of Kalunga plantation were
burned by fire. This might be contributed by
inadequate workers to watch and supervise the farm
against fire break out and intruders. Kalunga had seven
(7) workers instead of 35 required for planting and
supervising the farm.

I recommend that NDC ensure planned activities of planting
new rubber trees and recruitment or hiring of laborers are
executed in a timely manner to achieve the intended
targets; and use diameters when measuring latex received
from tappers to overpayments.
9.1.2 Tractor Assembly Project

On 09th August, 2016, NDC entered into an agreement with
Ms. USURS.SA of Poland and Ms. SUMA JKT for implementation
of a contract formally signed by M/s SUMA JKT and M/s USURS
on 22nd October, 2015. The contact was for construction of
assembly hall and installation of equipment and machines for
tractor assembly. It also involved establishment of 8 Service
Centres for customer services and marketing of tractors;
training 23 key NDC plant staff in Poland and supply of 2,400
tractors of 6 model in the form of Semi Knocked Down (SKD)
and Completely Knocked Down (CKD) for USD 55 million (TZS
121 billion).
According to the former contract, construction of assembling

hall, delivery of 2,400 tractors, and establishment of eight (8)
sale and services of tractors were required to be completed
by August 2016.
The intention of this project was to mechanize the

agricultural sector in Tanzania to increase agricultural
productivity by providing feedstock to the industries.
However, I noted the following anomalies during the review:

(i) Centers for tractors Services not established
I learnt that the 8 sales and service centers were not
established contrary to the Section 26 of the
agreement. Thus, buyers of the tractors are facing a
challenge of frequent breakdowns of the tractors and
they do not get supporting services from the vendor.

Lack of support of maintenance by the vendor,
minimizes performance of the tractors hence,
affecting repayments of loans.
(ii) Failure to deliver 1,578 Tractors by Ms. USURS.SA

I learnt that Ms. USURS.SA did not deliver 1,578
tractors out of contracted 2,400 tractors.
Management of NDC explained that Ms USURS.SA had
shut down the production line of tractors due to the
financial constraints and that it had already reported
the matter to the Government to find solution with
the Government of Poland.
(iii) Slow moving of tractors

Following slow selling pace of tractors, NDC decided
to implement a hire scheme with a view to speeding
up distribution and sales of the tractors. As at 30th
June 2019, NDC managed to assemble a total of 526
tractors out of 822 of SKD/CKD tractors delivered at
site (Kibaha) and sold a total of 400 tractors to
various buyers under the scheme.
The slow pace of selling the tractors might largely be

caused by absence of service centers that would
have been used as marketing centers too.
I recommend that NDC and Gorvement:-

• Make follow up to Ms.USURS.SA to ensure there is
establishment of eight (8) Service Centers within the
country for customer services and marketing of
tractors as required by the contract to simplify
tractor services as well as marketing of the same.
• Ensure negotiation with Polland Goverment are
finalize and tractors are delivered as per agreement.

9.1.3 250 hacters of industrial parks have not been developed
NDC owns 3 industrial park estates namely TAMCO at Kibaha,
KMTC in Moshi and Kange in Tanga with an area of 74.11, 229
and 23 hectares respectively, making a total of 326.11
hacters.
I revealed that a total of 250.42 hacters (77% of the total

industrial areas) were not developed yet. The areas are 14.42
hacters of TAMCO, 213 hacters of KMTC and 23 hacters of
Kange.
Further, review of NDC strategic Plan of 2018/19-2022/23

noted inadequate implementation of annual planned activities
to develop the industrial parks for the year under review as
indicated in the Table 19 below:
Table 19: Extract of Planned Activities of NDC for Industrial

Parks
Targets Key performance Plans of Implementation
indicators 2018/2019 Status
5 km internal Construction of Internal road Waste stabilizer
road network, base constructed, Waste ponds, Water
one oxidation infrastructure in stabilizer ponds and reservoir and Power
pond, water TAMCO Industrial water reservoir substation were not
system and Park. constructed, Power constructed as at 30
two industrial substation June 2019
sheds constructed,
constructed by Conduct monitoring
2023. and evaluation.
4 km internal Constructed basic Construction of wall The wall and
road network, infrastructure in signage post. signage posts were
one oxidation KMT. not constructed .
pond, water
system and
two industrial
sheds
constructed at
KMTC by 2023.
4 km internal Constructed basic Construction of wall The wall and
road network, infrastructure in signage post. signage post were
one oxidation Kange. not constructed.
pond, water
system, and
two industrial

Targets Key performance Plans of Implementation
indicators 2018/2019 Status
sheds
constructed at
Kange by
2023.
I learnt that investors at TAMCO are developing their own

infrastructure such as waste stabilizer ponds, water reservoirs
and power substations but I am of the views that the situation
would lead in development of park infrastructure in un-
harmonized way. lack of necessary infrastructure imposes the
big challenge on investor’s attraction hence, failure of NDC to
attain its objectives.
I recommend that NDC ensures planned activities are

executed on time as per the set timelines in the strategic
plan and also to come up with strategies that will facilitate
development of all undeveloped areas within the industrial
parks in order to benefit out of them.
9.1.4 Low production Biolarvicides

Tanzania Biotech Products Limited (TBPL) at TAMCO Industrial
Estate in Kibaha produces Biolarvicides for Malaria-Vector
Control for both local and foreign markets. The plant is owned
by NDC and has capacity of producing six million litres per
annum.
During my review, I learnt that despite its capacity,

production is done on demand and this is due to two-year
shelf life of the product. Thus, for the year under review, the
plant produced and sold only 292,375 litres of the
Biolarvicides for Malaria-Vector Control which is 4.9% of the
plant’s capacity. I consider that NDC need to do more
promotion of the plant and the product to attract more
potential buyers from in and outside the country.
I recomend that Ministry of Health purchase more litres of

Biolarvicides from the plant to increase the plant’s

production and sale while combatting malaria and NDC
promote the plant and advertise more the product to
attract more potential buyers from in and outside the
country.
9.1.5 Long-waited government decision on revamping KMTC

KMTC was established to manufacture a wide range of
machine tools and engineering products, but the production
stopped in 1989 due to lack of economic feasibility largely due
to under-capitalization and poor market response. The
factory was specified in 1996 for divestiture under PSRC.
Unfortunately, it could not secure potential investor and was
transferred back to NDC in June 2009 through GN 237. KTMC
was operating below capacity and fails to rehabilitate power
system, establishment of mini foundry, working capital,
promotion and marketing.
Feasibility study conducted by NDC with a view to revitalise

the Company indicated that a total of TZS 1.665 billion were
required for procuring foundry machines, marketing and sales
promotional activities. KTMC qualified for a loan from GEPF.
However, I learnt that it did not obtain a Letter of No
Objection from the Government to secure the loan.
9.1.6 Underproduction of Coal and non-establishment of power

plant (Ngaka -project)
The Ngaka Thermal Coal Project is Intra Energy’s project
through a joint venture between Tancoal Energy Limited
(Tancoal) and National Development Corporation (NDC) of
Tanzania whereby Intra Energy owns 70% while NDC owns 30%.
The objective of the company is to explore and extract the
vast Ngaka coal fields in Ruvuma region in South West
Tanzania.
The project was initiated with a view to establishing a coal

mine with capacity of 1.5 million tonnes per annum and 400
MW power plants. A coal mine was established with current
production of 700,000 tonnes per annum which is equivalent
to 47% of the capacity. The power plant was expected to
commence by 2014/2015. However, this was not done up to
the year ended 30th June, 2019 due to failure of negotiations
between TANESCO and prospective investors. The failure
resulted from lack of Government Guarantee (credit support),
Currency to be used to repay loans and Tariffs barriers.
9.1.7 Stagnant projects at NDC

NDC developed various 13 projects so as to enhance
industrialisation, promote employment, and income
generation in Tanzania. The 13 projects include, seven (7)
established projects which had not commenced operations for
the periods ranging from the year 2011 to 2021. The failure to
commence operations was attributed to different reasons
including shortage of capital Funds, machinery equipment,
shortage of raw materials due to inadequate researches and
compliance with various Government laws and regulations.
Delays in development and operationalization of the projects

will result in failure of achieving (FYDP II) of 2016/17-
2020/21 that aims at building a base for transforming
Tanzania into a semi-industrialized nation by 2025.
The projects and their respective reasons for failure to

commence operations are shown in Table 20 below:
Table 20: Projects that Failed to Commence Operations

S/n Details Particular
1. Large scale sesame Uncompleted processing of land
farming in kilwa and ownership by NDC.
edible oil production
plant
2. Singida Solar Power Additional 150 Ha of land at Unyianga
Project Village in Singida Municipality is required
where TZS 500 million will be required for
compensation of PAP (People Affected by
Project). Also USD 126 million is required
for implementation of 100MW solar
project. The process is still on going.
The Singida Solar Power Project was
planned to reach Financial Close by

December 2018 followed by power
generation by December 2019. The Joint
venture partner (Sinohydro) decided not
to continue with the project due to high
commercial interest rate without
Government Guarantee and low power
tariff of not more than USc 4.5/kWh. NDC
is still looking for another investor to
partner with.
3. Mchuchuma and JVA Contract was signed in September
Liganga Project 2011 and original commissioning of both
Liganga and Mchuchuma was planned by
2018/2019 for production of iron and steel
product (1.0 million tons per year from
Liganga) and 600MW from Mchuchuma.
TZS 11.037 billion have been set aside to

compensate PAP. Disbursement of the
verified fund will be implemented after
conclusion of legal issues related to the
project.
The process of establishing power station

including power transmission line between
Mchuchuma and Liganga has not started.
TANESCO is expected to conduct
competitive tendering process for
prequalification to generate 600MW coal-
based power project.
4. Maganga Matitu JVA was signed on 2/9/2009 and planned
Sponge Iron Project commissioning date for production of
sponge iron 330,000 tons per year was
expected by 2013/2014
Due to inadequate research conducted

before forming a Joint Venture, new
research completed in 2017/18 at
Maganga Matitu concluded that the
reserve for iron ore is 8.0 million tons
only, which is not enough for commercial
production of sponge iron as previously
anticipated.
Coal reserve at Kataweka coal field is 100

million tons where NDC has send
application to Ministry of Energy and
Minerals (MEM) requesting the transfer of
prospecting License of Maganga Matitu
Resource Development Limited (MMRDL)

(joint venture) to Kataweka where the
discussion is pending negotiation on
Subscription & Shareholding Agreement
(SSHA).
5. Engaruka Basin Soda Operations were planned to commence in
Ash Project 2017 however, Funds for Techno economic
study secured in 2019. Soda Ash Plant to
be commissioned by 2021/22
Planned activities to enable project

execution were not completed because of
shortage of fund. The activities include
undertaking studies on Techno-economic,
ESIA, Hydrological survey & design of
water infrastructure and land Survey and
Valuation of properties of PAP for
payment of compensation.
6. Singida Wind Project Commissioning for generation of 50MW
was expected by December 2015.
Government directed the project to be

financed through PPP arrangement. NDC
failed to obtain potential partner because
the condition provided by the potential
partner Aciona Energy were not
acceptable.
7. Arusha Tyre In 2012 Government gave a mandate to
Manufacturing Plant NDC of reviving the former General Tyre
East Africa Limited (GTEA). Discussion
with potential investors on reviving tyre
production in Arusha using modern state
of art technology is yet to be finalized.
Revival of General Tyre plant was
expected to start by March 2019 and start
production of tyres by March 2020,
according to Sayinvest Proposal
I recommend NDC ensures that issues which impede

projects implementation from progressing are addressed as
matter of urgency to ensure that the projects start their
operation as initially planned.

9.2 Centre For Agricultural Mechanization and Rural
During my audit, I noted the following inefficiencies in the
operations of the Centre for Agricultural Mechanization and
Rural Technology (CARMATEC):-
i) Project of TZS 222.7 billion not taken on board by

CAMARTEC
The FYDP II 2016/2017-2020/2021 identifies CARMATEC
as one of the strategic institutions that facilitate
implementation of FYDP II where it was tasked to
construct tractors that will be sold to SMEs worth at
TZS 222.7 billion up to 2021. However, my review of
the Centre Corporate Strategic Plan (CSP) Plan 2017/18
– 2021/22 noted that the plan was not in line with the
FYDP II as the objective of construction of tractors
worth TZS222.7 billion was not captured and addressed
in the CARMATEC long term and short-term plan. This
implies the Centre priorities were in divergence with
that of the Government. Due to this the Country will
not achieve intended objectives of constructing tractor
worth 222.7 billion by 2021 at the time of performance
evaluation towards implementation of FYDP 2016/2017-
2020/2021. Moreover, there is absence of planning
officer despite the provision of Planning and
Coordination Unit in the Organization Structure of the
Centre since its establishment. Due to this planning
functions have been performed by other departments
on part time basis without practical experience of the
planning process and budgeting.
I recommend that CARMATEC liaise with Ministry of

Trade and Industry and review the Centre CSP to
include the objectives of the FYDP II that directed
construction of tractor project.

ii) 8,806 installed biogas plants not completed have
been abandoned
In collaboration with ABPP/HIVOS planned to
implement biogas plant programs in 2013 at the
investment cost of TZS 2.5 billion. In its response, the
Centre began developing the biogas since 2009 from
which 12,007 biogas plants were installed in the
country.
Review of project implementation revealed that 3,201

gas plants were commissioned which accounts for 26%
while 8,806 biogas plants equivalent to 74% installed
from 2010 to date were either abandoned, not
completed, unknown or not functioning and they are
regarded as wasteful investment.
Further, I noted the plants challenges of lacking

adequately trained Technicians to service the plants;
plants monitoring plans and visiting schedules; reliable
data of the functioning and defective biogas plants;
service call Centres; updated database; and periodical
inspections.
I thus recommend that CARMATEC revitalise the

abandoned plants and work on the noted challenges
facing the biogas plants.
9.3 National Housing Company (NHC)

The principal activities of NHC is to provide and facilitate the
provision of quality housing and other buildings in Tanzania
mainland for use by the general public while operating on
sound commercial principles. In order to efficiently and
effectively perform its functions, NHC enters into Joint
Venture agreement with various stakeholders.
From the review of Joint Venture projects, I found the

following deficiencies during its operation: -

(i) 24 storey building not built on Plot No 85 at
Lugalo
On 27th November, 2007 NHC entered into a joint
venture agreement with M/s Oil Com Limited
whereby NHC was required to contribute land on plot
85, Lugalo while M/s Oilcom Limited was supposed to
construct four residential apartment buildings each
having 10 storeys with each storey containing 10
rooms of three bedrooms and car parking space.
Contrary to the agreement, M/s Oil Com constructed
only four storeys. This implies 24 storeys out of 40
storeys equivalent to 60 percent were not
constructed.
(ii) Unauthorized Construction of Additional Floor

A joint venture agreement number JV 1036-37/102
which was entered between NHC and Kadri complex
Limited on 4th August 1995 allows construction of
three storeys vertical extension on top of existing
one storey structure (owned by NHC) at
Samora/Morogoro road. According to the agreement,
Kadri complex Limited) was required to finance the
extension and NHC to contribute land.
Contrary to the joint venture agreement, we noted

that Kadri Complex Limited constructed one un-
authorized additional floor on top of the three-storey
extension. The construction of additional four floors
was completed before issuing of the building permit
that determines whether the building could handle
the additional floor.
Moreover, according to the joint venture agreement,

building was to be used for commercial purpose;
however, the building is currently being used for
residential purpose. This implies there is change in
building use from original intended purpose.

I recommend that NHC: -
• Ensures joint ventures are properly managed and
building permits are obtained before projects are
initiated. Moreover, proper approvals are obtained
before any change are initiated; and
• Negotiate with OilCom (TZ) Ltd in order to arrive

at the best way in which the breach can be
remedied.
9.4 Tanzania Investment Centre

9.4.1 Delays in Attending Investors by TIC
Section 16 of the Tanzania Investment Act, 1997 provides all
Government institutions to co-operate fully with TIC to make
it an effective One-Stop Centre in performing its functions.
Under this, TIC liaises with other institutions to enable
approvals and grants of licenses within 14 days.
I, however, noted inefficiency in servicing investors where

investors were not serviced within 14 days as provided in the
Act and Strategic Plan (SP). I revealed that processing work
permit take 20 days while the process of fully attendance and
feedback to an applicant of incentives of customs and excise
duties to Tanzania Revenue Authority (TRA) through TIC take
four to twelve months.
I also noted delays in issuing derivative titles for land

investment where 18 plots of land were pending approval by
National Land Allocation Committee for a period ranging from
one to six months whereby applications were made from
October 2018 to February 2019 and approved in April, 2019.
Further, I noted lack of benchmark for monitoring time taken
in servicing investors for applications, registrations and
issuances of certificates of incentives.
I consider delays are caused by the lack of Standard Operating

Procedures (SOP) to provide guidance on how TIC should co-
operate with other institutions in carrying out its
responsibilities. The delays may discourage investors from
continuing with their investment plans.
I thus recommend that TIC develop comprehensive SOPs

that will enable the entity to corporate with other
Government institutions in carrying its duties efficiently.
9.4.2 Inadequate Performance Evaluation on actual Capital

Investment
Among core functions of After Care Unit as per TIC Strategic
Plan is to facilitate both the successful start-up and
continuing development of investment by ensuring
projects are successfully implemented whereby investors
are required to submit performance reports after every six
months as monitoring method.
I noted that the Centre did not evaluate the actual

investments done by registered investors. For the past five
years from 2014 to 2018, TIC registered 2,067 projects of USD
31.6 million where expected employment creation is 222,600.
However, there was no periodic information on actual capital
invested and jobs created against projections. Further, my
review of 12 files obtained out of 50 requested, revealed that
investors do not submit the six-month’s performance report as
required.
I recommend that TIC develop a mechanism that will

ensure data is collected and maintained for actual capital
invested against projections so as to achieve FYDP II of
2016/17- 2020/21 on semi industrialization and
employment creation.
9.4.3 Uncertainties on evaluation factors for expected

investment capital
Section 2(2)(b) of Tanzania Investment Act, 1998 states that
businesses will enjoy benefits and protection provided under
this Act when minimum investment capital is not less than TZS
equivalent to USD 500,000 for foreign investor or joint

venture, if locally owned, the minimum investment capital is
not less than TZS equivalent to USD100,000. Further, Section
2(2)(f) stipulates that investor is required to provide sufficient
evidence of capital available for investment so as to enjoy the
benefits and protection.
I observed that TIC does not evaluated the availability of

sufficient capital for investment as required in Subsection (f),
rather, it evaluates if the investor qualify for registration as
required in Subsection (b). According to management, an
investor is recommended to have sufficient capital when
he/she submits a bank statement which shows cash balance
equal to 25% of the minimum threshold for investor to be
registered under this Act which is 25% of USD 500,000 and USD
100,000 for foreign and local investor respectively.
Furthermore, the Centre failed to establish documentation of
the 25% factor.
I am of the opinion that the cash balance equals to 25% as

threshold factor may not guarantee that an investor has
sufficient capital higher than the threshold.
I, thus, recommend that TIC establish clear factors for

evaluation of investors’ financing capability as well as
availability of capital required.

CHAPTER 10
REVIEW OF TOURISM SECTOR IN TANZANIA
10.0 Introduction
Five Years Development Plan (FYDP) II of 2016-2020 identifies
specific interventions geared towards realization of the
targets in terms of contribution to Gross Domestic Product
and employment creation through promotion and marketing of
Tanzania as a tourists destination, diversification of tourism
products and services, identification of the areas for tourism
investments, infrastructure improvements especially roads
towards tourist attractions and improvement of training
offered in tourism and hospitality institutions.
Despite the Government efforts to promote Tourism sector, I

have noted several factors that poses challenges in including
lack of qualified personnel, poor infrastructure development,
lack of diversification of tourism products, inadequate
promotion and marketing, lack of specified areas for tourism
investment, poor quality of services and low state of
technology. These challenges hinder the development of
tourism sector in general as a result specific targets outlined
in the FYDP II may not be attained.
During the audit of Tanzania National Parks (TANAPA),

Ngorongoro Conservation Area Authority (NCAA) and Tanzania
Tourist Board (TTB), which are crucial actors in the Tourism
Sector, I identified scope for improvement in number of areas
that need immediate management attention: -
10.1 Dilemma on Decisions to Control Human Population, Human

activities and Domestic Animals within NCA
NCAA implements a multiple land use model whereby human
beings and animals live together within the conservation area
in line with the requirements of Section 3 of Ngorongoro
Conservation Area Act (Cap 284 R.E. 2002). The co-existence

of wild animals and human being makes the NCAA a unique
protected area in Africa where conservation of natural
resources is integrated with human development and hence
accorded the status of a World Heritage Site and listed as one
of the International Biosphere Reserve by the UNESCO’s Man
and Biosphere Reserve Programme.
Despite its uniqueness due to the co-existence of wild animals

and human being, Ngorongoro Conservation Area faces several
challenges as indicated below:
10.1.1 Massive Environmental Degradation

Since its establishment in 1959 to-date, the Authority has
experienced a massive environmental degradation resulted
from increase in human population. According to the census
of 2017, the current human population is estimated to be over
90,000 people compared to 8,000 people existed when NCA
was established. Domestic animals are estimated to be
799,462 compared to 261,723 in 1960, which compete with
wild animals on grazing land.
Increase in human population and domestic animals

contribute largely to rapid environmental degradation where
human activities further create adverse impacts as they both
compete for scarce environmental resources.
10.1.2 Increase in Human–Wild Animal Conflicts

Human- wild animal conflicts occur when growing human
populations overlap the established wildlife territory creating
competition for space and resources. Massive increase in
human population, domestic animals and increased human
activities within the area endanger conservation and wild
animal existence. Hunger and poverty were mainly caused by
restrictions imposed by the law which established the
multiple land use principles adopted in 1959 as the legislation
restricts agriculture and other key economic activities. Also,
continued attacks by wildlife to people and livestock create a

hostile relationship between the local community and the
Authority. During the year ended 30th June, 2019, a total of
seven (7) animals were killed and 16 animals were injured due
to human-wild animal conflict.
Human-wildlife conflicts inflict direct and indirect

consequences on people and animals as it can result in loss of
life or injury to humans and wild animals, depredation of
livestock, and degradation of habitat. Mitigation of human-
wild animal conflict is an important priority for the
management of biodiversity and protected areas.
10.1.3 Unknown Carrying Capacity of NCA

Limit of acceptable use and change (Carrying Capacity) refers
to the number of people, animals and/or crops which a region
can support without environmental degradation.
Audit of NCAA learnt that the carrying capacity of the

Ngorongoro Conservation Area (NCA) is not known as there is
no study conducted to determine the capacity.
Change in culture, attitudes and desire for development of

the communities within the NCA presents the Authority with a
dilemma in decision making on sustainability of NCA given the
co-existence of wildlife and indigenous people.
I recommend that NCAA conduct a study to determine the

carrying capacity of the area and review its multiple land
use model with regard to the established carrying capacity.
10.2 Blockage of and Diminishing Wildlife Movement Routes

Wildlife animals move from one suitable habitat to another by
using wildlife animal corridor. In Tanzania protected area
Tourism depends on but not limited to the ability of animal to
disperse and return to the area on annual basis and on a flow
of animals from other protected areas.

However, I learnt that various factors including growing
human population, new settlement in previously unpopulated
area, land use shift for agriculture and changes in
infrastructure block wildlife corridor movement.
Furthermore, I observed that opportunities for establishing,

maintaining and managing corridors between protected areas
are rapidly diminishing, endangering the future ecosystem
services and biodiversity provided by protect area. I noted
blockage of Migratory Corridor at Speke Gulf where various
studies conducted by Tanzania National Parks (TANAPA)
between 1959 and 2013 shows that Serengeti ecology is
incomplete due to this blockage. The reports revealed further
that migratory corridor at a Speke Gulf with estimated area of
129 square kilometres were blocked because of increasing
human activities and settlement at western part of Serengeti
National Park in Bunda District. It was reported that the Gulf
area was used by the wildlife to reach water from Lake
Victoria especially during the dry seasons.
Also, preliminary discussions with Management of (NCAA),

indigenous residents in Ngorongoro Conservation Area and
researchers indicated that there is a network of trails and
corridors linking the highland forests, Ngorongoro Crater with
the Serengeti Plains. On the Plains, certain places appear to
be important nodes for wildlife, such as the Olbalbal
depression and the Ndutu area which block the movement.
Apart from migrating wildebeest, other wildlife movements
within the NCA have had little study beyond the Ngorongoro
Crater.
I recommend that:
(a) TANAPA enhances more effort to ensure the area of
Speke Gulf is included as part of the Serengeti National
Park to protect the area; and
(b) NCAA finalizes survey/research toward determination of
conservation bottlenecks in the area and a way forward

with a view to examining validity of the existing Multiple
Land Use Model of the area.
10.3 Slow Paces in Controlling Wide-Spreading of Invasive Alien

Plants
Ngorongoro Conservation Area is heavily affected by 25 alien
species/invasive plants which need immediate intervention to
control them. Alien species have ability to transform the
structure and species composition of eco-systems by replacing
or excluding indigenous species through outcompeting them
for resources. According to Invasive Alien Plants Strategic
Management Plan 2011, it becomes far more expensive to
control them after being left for a long time and the chances
to control them effectively diminish over time.
I noted that there is a reduction in the rate of uprooting

invasive plants compared to the previous year. During the
year 2018/2019, TZS 114 million were spent and 2,195.68
hectares were uprooted compared to the year 2017/2018
where TZS 159 million was spent and 2,278 hectares were
uprooted. The decrease in uprooting pace is attributed to
little resources allocated including tools and manpower which
are not enough. Other factors include increased population
and human activities, lack of appropriate tools for uprooting
exercise.
NCAA needs to prioritize and focus more on dealing with

invasive plants. Areas with invasive plants have been
identified by location and not by hectors which also limit
effective planning of required resources.
I recommend that NCAA use the strategy for management

of invasive and alien plants revised in June, 2019 and
review the exotic species and weed management strategy
and tactics to effectively manage both weeds and exotic
species.

10.4 Water Shortage Noted in Parks
Water availability is essential for sustainability of all
resources and human activities in Parks. However, there has
been an acute shortage of water in area over the recent past
years. The shortage affects local people and wildlife in the
area. The shortage is attributed to the increased uses by
tourist facilities, increased domestic uses and drought in the
region.
Also, there is absence of water supply system network within

Serengeti National Park (SENAPA) despite the fact that
SENAPA is responsible for water supply to all facilities within
the Park including lodges, hotels, permanent tented camps,
balloon activities, offices and residential house. The water
has been supplied at the site by using water bowser with
delays due to frequent breakdown of water bowsers and
inaccessible road.
I recommend that NCAA and TANAPA develop an Integrated

Water Management Plan in order to guarantee sustainable
availability and use of this resource.
10.5 Low Tourists Visiting Western and Southern Parts of the

Country
TANAPA has a total of 17 National Parks, but only 4 Parks,
Serengeti, Kilimanjaro, Tarangire and Lake Manyara, generate
surplus revenues to subsidize Southern and Western Parks
while Arusha National Park is just about to break even. This
was attributed to inadequate marketing and poor
infrastructure includes roads, bridges, airstrips and trails.
Our review revealed that a total of 1,196,284 tourists visited

TANAPA during the financial year ended 2018/19, out of
which only 50,587 (equivalent to 4.25%) visited Western and
Southern Parks .This has resulted into low revenue collection
hence, development and rehabilitation of tourism
infrastructure of Western and Southern parks continue to

heavily depend on revenues generated from the Northern
Parks.
I recommend that TANAPA develop infrastructure and

marketing strategies to attract tourism in Western and
Southern parks.
10.6 Failure by NCAA to Focus on More Influencing Factors

A study for understanding factors that affect tourism industry
is essential in enhancing effective planning and efficient
allocation of resources in tourism business. The study would
identify influential factors and areas to which more efforts
and resources would be directed to attract more tourists.
However, NCAA focused on all factors collectively that
management consider to have impacted on tourism rather
than allocating resources to more influential factors.
Records on tourists who visited NCAA over the last five years
indicated fluctuating trend where for the year ended
2018/2019, NCAA experienced an increase of 14% for Non-
Resident tourist compared to previous year where there was
an increase of 6% only. Also, for resident tourists, the
Authority experienced an increase of 1% only for the year
ended 2018/2019 compared to an increase of 22% in the
previous year. I consider that it is crucial that NCAA identify
influential factors and focus on them. This is important to
stabilize and improve tourism business.
I recommend that NCAA conduct a study to identify

influential factors affecting tourism and focus on them to
attract more tourists.
10.7 Delayed Functioning of the Tourism Studio

In December, 2018, the Minister for Natural Resources and
Tourism directed the Tanzania Tourist Board (TTB) in
collaboration with other institutions under the Ministry to
establish a digital marketing studio in order to facilitate

provision of correct and instant tourism information that is
frequently searched by tourists.
According to the work plan, the project was to be completed

within 9 months from the date of receiving Funds whereby up
to January, 2019, other stakeholders of the project TANAPA,
NCAA and Tanzania Forest Services Agency (TFSA) had
contributed a total of TZS 342.17 million deposited into the
Board’s bank account. Up to the year ended June, 2019, the
Board had spent TZS 105.32 million to purchase ICT
equipment and construct and renovate the studio room.
Despite availability of funds, I noted delays in implementation
of the project as up to the time of concluding my audit in
December, 2019, the studio was not functioning yet.
I recommend that Tanzania Tourist Board (TTB) ensure the

studio is working as per the agreed timeframe and all
required resources are made available.
10.8 Inadequate Monitoring of Animal Killings Through Road

Accidents
TANAPA is facing a challenge of animal killings from road
accidents where a total of 2,266 were killed during the year
ended 30th June, 2019. Although both TANAPA and NCAA
continue to monitor road killings along highway, they lack
adequate technology (e.g. surveillance cameras) hindering
identification of those who kill the animals.
According to the Annual Protection Reports for the period

2018/2019, at Mikumi National Park (MINAPA), a total of 124
wild animals of different species were killed from 1 st to 3rd
quarters of which MINAPA expected to receive a total of TZS
56.64 million as fines and penalties, but only a total of TZS
12.45 million were collected making a difference of TZS 44.18
million.

Management explained that some of the road accidents
occurred at night in which the culprits could not be seen as
there are no surveillance cameras. Further, in other cases,
payments were negotiable due to the fact that TANAPA does
not have fines and penalties by-laws and for that matter it
depends on the National Wild Conservation Regulations which
are not binding in courts of law.
I recommend that both TANAPA and NCAA enact binding by-

laws and administer controls to rescue animal from being
killed through road accidents.
10.9 Absence of City Tour Sanctuary

Tanzania does not have a City Tour Sanctuary where African
arts and cultural values can be displayed in different
galleries, museums and theatres.
To promote tourism sector in Tanzania in line with Five Year

Development Plan (FYDP) II, both TANAPA and NCAA are
required to diversify tourism products and service including
but not limited to building City Tour Sanctuary.
Management explained that in their midterm plan, TANAPA

will collaborate with other Government institutions dealing
with real estate development like National Housing
Corporation and Pension Funds plan to acquire land in the
suburb of Arusha city for development of City Tour Sanctuary.
I recommend that TANAPA continue to collaborate with

other stakeholders to build a City Tour Sanctuary to
promote tourism.
10.10 Inadequate Execution of Tourism Activities by Tourist

Board
Among other objectives, the Tanzania Tourist Board (TTB)
planned to champion promotion and marketing of Tanzania as
a tourist destination through marketing and other promotional
activities. To achieve those objectives, TTB identified various

activities and set targets to be met in the financial year
2018/19.
From the review of implementation of the planned activities

to be conducted by using Tourism Development Levy (TDL)
during the financial year ended 30th June, 2019, I noted that
nine (9) out of 29 activities equivalent to 31% were not
implemented as summarized in Table 21 below:-
Table 21: List of Unmet Targets with their Planned

Activities
S/N TARGET PLANNED ACTIVITIES
1 Carrying out Tourism i. Conduct tourism market research
Market Researches in Mbeya, Ruvuma, Dodoma,
Arusha and Mwanza.
2 Promoting tourist i. Participation in Tourism road

attractions shows in two cities, USA
internationally ii. Conducting road shows in India
3 Promoting tourist i. Sensitizing domestic tourism
attractions locally so that marketing strategy
the number of domestic ii. Development and placement of
tourists is increased radio, TV spots, airplane advert
and to facilitate construction of
Billboards in Dodoma and Dar es
salaam
iii. conducting awareness seminars to
stakeholders to enhance Tourist
Information Centre functions
iv. Conducting stakeholders’ customer
service impact awareness
workshops
v. Conducting awareness campaign
for New Destination Brand,
designing and Printing of Cultural
Tourism Programme (CTP)
Booklets, Corporate strategic plan
and promotional materials
4 To take measures to i. Facilitating establishment of new
diversify Tanzania Culture Tourism Enterprises (CTEs)
tourism product in Dodoma, Simiyu, Mwanza,
Geita, Mara, Shinyanga, and
Morogoro and conducting
monitoring and evaluation for 20
established CTEs in Tanzania

I recommend that going forward TTB implements their
plans in order to enhance performance of tourism sector.

CHAPTER 11
PERFORMANCE OF GOVERNMENT-OWNED BANKS
11.0 Introduction
This chapter highlights deficiencies noted in the operation of
Government-owned banks and scope for improvement in
different areas such as loans collections, non-performing
loans, capital adequacy, portfolio at risk, credit decision in
granting loans, supervision and follow-up on late and
delinquent clients and projects. Performances of the
following Banks (TIB Corporate Bank, TIB Development Bank,
Tanzania Agriculture Development Bank (TADB), and Tanzania
Postal Bank (TPB) and the results are presented below:
11.1 Capital Adequacy Ratios Below BoT Minimum Requirements

Regulation 9(a) and (b) of Banking and Financial Institutions
(Capital Adequacy Regulations), 2014, and Bank of Tanzania
(BoT) circular No. FA.43/433/01/Vol III of 5th August, 2015
require every bank at all times to maintain core capital and
total capital of 12.5% and 14.5% respectively of its total risk-
weighted assets and off-balance sheet exposure. Regulation
19(2) of the Banking and Financial Institutions (Development
Finance) Regulations, 2011 requires a Development Financial
Institution to maintain at all times a minimum core capital
and total capital equivalent to 13% and 15% respectively of its
total risk-weighted assets and off-balance sheet exposures.
In the general audit report of 2017/18 of Public Authorities

and other Bodies (PA & oBs), I highlighted four banks (TIB
Corporate, TIB Development, TPB and Tanzania Women Bank)
whose core capital and total capital ratios to total risk-
weighted assets and off-balance sheet exposure were below
the minimum requirements stipulated in the Banking and
Financial Institutions Regulations, 2014 and BoT Circular of
2015. On that note, I recommended that those banks should
review their capital levels with a view to considering capital

injection to ensure compliance with Capital Adequacy
Regulations.
During the year ended 30th June, 2019, I continued to note

two banks which were still operating below the minimum
requirements for three consecutive years now (Table 22). The
deficiency exposes the banks to the risk of losing their
licences if the regulator decides to revoke it on the grounds of
noncompliance.
Table 22: Capital Adequacy Ratios below BoT Minimum

Requirements
Description 31.12.2018 31.12.2017 31.12.2016
Core Total Core Total Core Total
capital capital capita capital capital capital
(TZS in (TZS in l (TZS (TZS in (TZS (TZS in
Million) Million) in Million) in Million
Millio Million )
n) )
TIB Development Bank
Core and total 79,131 79,131 74,304 75,095 76,437 77,423
capital
Total risk weighted 656,475 856,702 942,621
assets
Core and total 12% 12% 9% 9% 8% 8%
capital ratio
BOT Minimum core 13% 15% 13% 15% 13% 15%
and total capital
ratio
TIB Corporate Bank
Core and total 16,606 17,819.68 12,971 13,763 21,394 22,379
capital
Total risk weighted 244,607.13 235,269 179,958
assets
Core and total 6.79% 7.29% 5.51% 5.85% 11.89% 12.44%
capital ratio
BOT Minimum core 12.5% 14.50% 12.5% 14.50% 12.5% 14.50%
and total capital
ratio
Source: Audit analysis
I reiterate my recommendation that TIB development and

corporate banks review the capital levels with a view to
considering capital injection to comply with the capital
adequacy regulation.

11.2 Delay in Revocation of System Access Rights to Separated
Staff
Banks ICT security policy requires system access to separated
staff to be revoked on the last day and the appropriate
security and personnel records to be adjusted accordingly.
However, my review of system access to separated staff for
TIB Corporate, TADB and TIB development banks noted delays
in revoking the system access right.
For instance, at TIB Corporate Bank two staff whose system

access rights remained active for more than 15 days from the
date of separation contrary to the ICT Security Policy. Late
revoking of system access was attributed to delay in sharing
information from Human Resource Department to IT
Department.
Table 23: System Access Rights which were Delayed to be

Revoked
Details Separation day Date of HR email
to IT department
Staff one 7th October, 2018 22nd October, 2018
Staff two 20th March, 2018 4th April, 2018
Delay in revoking system access rights to separated staff may

lead to unauthorised access to the bank’s systems and
perform fraudulent transactions which might result in
financial losses.
I recommend that TIB Corporate, TIB Development and

TADB Banks ensure system access rights to separated staff
are revoked on the last day and appropriate security and
personnel records are adjusted appropriately to avoid the
risk of fraud. Also, ensure separated staff information from
Human Resource Department are on shared time with IT
Department for revocation of access right and establish
staff exit clearance form which will include all systems.

11.3 Challenges in Implementation of IFRS 9
On 1st January, 2018 banks and other entities adopted new
International Financial Reporting Standards (IFRS) namely IFRS
9 (replaced IAS 39) dealing with financial instruments. The
major changes were on classification and impairment of
financial assets. Unlike International Accounting Standard
(IAS) 39 in which impairment of loss was based on incurred
loss model, IFRS 9 introduced Expected Credit Loss (ECL)
model in computation of impairment loss which considers
past, present and forward-looking information. During
adoption of IFRS 9, banks were required to review their
business model and establish impairment models. The banks
review necessitates updates on classification of financial
instruments consistent with the business model in practice
and IFRS 9 requirements. It has also resulted in new
methodology of computing impairment losses.
During the review of IFRS 9 implementation I noted various

challenges relating to data quality and systems, inadequate
policies and procedures, governance, internal capacity
constraint, presentation and disclosure, lack of internal credit
rating of counter parties, poor quality of collaterals,
determination of forward-looking information and non-use of
effective interest rate in computation of amortized cost.
These challenges resulted in hiring external consultants to
assist banks in developing impairment models.
It is my view that the noted challenges during first time

implementation should be a loud call for the banks to imbibe
the review of the developed impairment models by leveraging
the gained knowledge and experience from hired consultants
and reduce the outsourcing costs to be incurred every
financial year. Also improve the noted challenges in terms of
data quality, collaterals values, governance, internal ratings
of customers, and reliable source of forward-looking
information to ensure reliable impairment losses.

I recommend that Government owned banks establish
internal independent team to effectively challenge the
processes underlying impairments as well as the
calculation. This would include testing and challenging the
assumptions applied by the Banks. Also, harbour the
updating and review of the developed impairment models
by the external consultants to minimize annual review
cost.
11.4 Repetitive Errors on Mobile Money Transactions at TIB

Corporate Bank
During field visit to branches in Arusha, Mbeya and Samora I
noted recurring complaints on mobile banking as there were
repetitive customer complaints relating to the inefficiency of
mobile money transfers from the customer accounts. The
Bank kept on resolving the issue through reversing back the
amounts to the customers’ accounts, but it has not been a
permanent solution since the frequency of the complaints
indicates that the problem is repetitive in nature.
Frequent errors in customer transactions may lead to loss of

confidence on the customer side and loss of revenue to the
bank in terms of fees which may decline as a result of
reduced number of customer transactions through mobile
transactions channel. TIB Corporate Bank promised to conduct
thorough review on mobile money channels and seek
permanent solution to the problems with the vendor.
I recommend that TIB Corporate Bank conduct investigation

to find out main cause of error leading such complaints
including root cause of the repetitive errors and take
timely action which may involve short and long-term
solutions.
11.5 Liquidity Ratio Below Regulatory Ratio for TPB Bank

Regulation 7 of the Banking and Financial Institutions
(Liquidity Management) Regulations, 2014 requires banks or

financial institutions to maintain minimum liquid assets
amounting to not less than 20% of its demand liabilities.
During the audit I noted that TPB bank liquidity position at
31st December, 2018 stood at 19.17% ratio of liquid assets to
demand liabilities contrary to the statutory minimum
requirement of 20%. Non-compliance with regulations might
result in fines and penalties.
TPB Bank explained that Liquidity ratio was below regulatory

ratio due to non-renewal of fixed deposits totalling to TZS 47
billion by Public Institutions like National Health Insurance
Fund (NHIF), Workers’ Compensation Fund (WCF), and
National Social Security Fund (NSSF). Management has taken
measures to improve through curtailing lending, aggressive
loan recovery, engaging in deposit mobilization scheme and
borrowing from other banks and institutions including Bank of
Tanzania through Housing Microfinance Fund.
I recommend that TPB Bank comply with requirements of

the Liquidity Management regulations to avoid fines and
penalties from the regulator.
11.6 Deficiency in Management of Overdraft Account at TPB

Bank
During the audit, I noted the following deficiencies in the
management of overdraft accounts:
(i) Overdraft Accounts Exceeding Approved Limits

From the review of overdraft accounts, I noted instances
whereby Core Banking System (R) did not limit customers to
withdraw current accounts beyond the approved limits. Based
on sample tested, below are overdraft accounts which
exceeded approved limits as at 31st December, 2018 (Table
24). TPB explained that all the three overdraft loans
originated from Ex Twiga Bancorp which has a challenge with
its Core Banking System which allowed the facility to exceed

its limit. TPB promised to ensure that after normalizing its
repayment will not exceed the approved limit.
Table 24: Overdraft Accounts Exceeding Approved Limits

Account ID Balance as at 31 Overdraft Difference
number Dec, 2018 (TZS) Limit (TZS) (TZS)
91207000013 1,950,919,133 1,950,000,000 919,133
112604000001 364,894,683 280,000,000 84,894,683
191505000180 200,848,602 200,000,000 848,602
(ii) Inaccurate Interest Rate Setups in Rubikon System

Further, I noted that Rubikon system is not configured with
correct interest rates as per agreed contracts. This resulted in
loss to the bank as the said accounts were not charged with
interest during the year (Table 25).
TPB explained that, in quarter two of 2019 all insured costs

related to borrowers will have separate code whereby on
monthly basis, will be serviced from deposit accounts rather
than the current practice of debiting overdraft accounts and
increase the liability to TZS 306.7 million.
Table 25: Inaccurate Interest Rate Setups in Rubikon

System
Interest
Approved
Account Approved Interest Income
Interest
Number Amount income collecte
rate
d
300207000040 800,000,000 20% 133,906,881 -
210207000003 300,000,000 25% 9,753,426 -
150207000069 80,000,000 14% 30,610 -
(iii) Unrecoverable Overdrawn Accounts in Loan Book

The loan book contains overdrawn accounts amounting to TZS
306,754,415 being customer deposit accounts linked to a loan
account. These accounts are overdrawn because of indemnity
charges being debited to accounts with insufficient funds. As
these customer deposit accounts are opposed to overdraft
facility accounts, the overdrawn amounts are irrecoverable.
TPB explained that by nature of TPC agent’s accounts of
Pangani, Muheza, Babati and Mpwapwa which had a total of
TZS 66.11 million indicates the total balances of cash held
into those TPC offices which should be remitted to TPB Bank.
(iv) Overdrawn Customer Accounts in Other Assets

I noted a total of TZS 66.11 million overdrawn accounts as of
31st December, 2018 recorded as other assets. These
transactions originated from TPC agents accounts of Pangani,
Muheza, Babati and Mpwapwa, individual personal deposit
accounts and staff accounts. Hence, the overdrawn amounts
are irrecoverable. TPB explained that Rubikon system had a
challenge in accruing interest on overdraft. TPB decided to
engage consultant and set the timeline of implementation
before end of 2019.
The noted weakness in controlling overdraft and overdrawn

accounts exposes the Bank to a risk of loss due to
unrecognized revenue.
I recommend that TPB Bank enhance controls in the

management of overdraft facilities and special attention be
paid in the disbursement and recording of overdraft
facilities.
11.7 Deficiencies in Management of Suspense Accounts at TPB

Bank
(i) Lack of Reconciliation of Suspense Accounts

There was no reconciliation of the below listed
suspense accounts from January to December 2018.
Table 26: Reconciliation not performed for Suspense

Account
Account Account name Amount
number (TZS)
2064002 Transfers awaiting Payment in 227,775,422
Tanzania
2031007 Collection Agents - Principal (201,531,782)
Balances
2999999 System Control Account (185,866,658)
2999006 TWB Conversion Balances (155,384,563)

Account Account name Amount
number (TZS)
2999005 Conversion Twiga Balances 144,241,442
2031006 Postal Agencies - Principal (59,882,761)
Balances
(ii) Long Outstanding Items in Suspense Accounts

There were long outstanding items in suspense
accounts some dating as far back as 2015. The total
credit outstanding amounted to TZS 1.5 billion out of
which TZS 90 million were outstanding from a period
2015 and 2016. Examples of such items are as follows:
Table 27: Long Outstanding Items in Suspense

Accounts
Date Credit Outstanding Amount
(TZS)
12 Jul 16 James A Rugarabamu PSPF LOAN REC/ 6,097,877
18 Feb 16 TISS FROM CITIBANK 5,550,000
29 Jan 16 Unapplied fund (TISS from BOT) 5,196,386
26 Oct 15 MWANAISHA ABDULLA EHZN15 1,071,357
6 Oct 15 Pension Oct
Amount for TPB EFT 280815193 250,000
23 Dec 16 NALLE HASSAN M. 185,910
Also, I noted absence of supporting listing for the outstanding

transactions in System Control Suspense accounts with a
balance of TZS 185.87 million.
TPB Bank promised to review all credit outstanding suspense

transactions to determine the amount to be recognized into
profit and loss accounts as per financial regulations.
Lack of timely reconciliation of suspense accounts could

result in unauthorized or fraudulent transactions going
unnoticed.
I recommend that TPB Bank ensure all suspense accounts

are reconciled on regular basis, and errors identified and
corrected on a timely basis.

11.8 Weaknesses in Loan Documentation at TPB Bank
From the review of the TPB credit management process and
documentation I noted the following deficiencies.
(i) Mismatch Between Contract Interest Rate and System

Interest Rate
Interest rate recorded in the system was different from that
given in the customer agreements as summarized in the
Table 28. There was also difference between repayment
amounts registered in the system and repayment amount as
per loan agreement. Repayment amount as per system for
loans with reference number 220102000010 is TZS 18,499,076
while the loan agreement indicates repayment of TZS
18,504,671. Further, I noted absence of loan application
letters for loans with reference No. 220104002421 and
220104000267 amounting to TZS 5.9 million and TZS 3.3
million respectively.
Table 28: Mismatch between Interest Rate Reported in

Customer Agreement and System
Interest set in Interest set in loan
Loan Number
Rubikon agreement
220102000010 22% 25%
110102000017 28% 20%
110121000378 22% 25%
110113000932 21% 25%
Source: Customers agreement and system
(ii) Missing Loan Agreement

Five of the loans issued to customers amounting to TZS
421.49 million had no loan agreements as shown in the Table
29 below:
Table 29: Missing Loan Contracts

Current
Amount financed
Loan ID Contract Date Balance
(TZS)
(TZS)
11260400001 16 March 2010 280,000,000 364,894,683
12180300002 29 March 2014 2,000,000 101,956.00
28510200001 6 December 2018 38,000,000 38,000,000

Current
Amount financed
Loan ID Contract Date Balance
(TZS)
(TZS)
19190200001 17 June 2014 11,851,875 11,851,875
212-0087534 7 September 2016 8,400,000 6,650,595
Total 421,499,109
Source: Auditors analysis
TPB Bank explained that they will strive to comply with

lending manual by ensuring that interest rate inserted in the
core banking systems match with offer letter. Additionally,
repayment amount agreed in loan agreement must tally with
repayment schedule in core Banking system. Management
directed Branch managers to search for Loan application
forms that were missing at Dodoma and Mpwapwa branches
and were retrieved and filed for future references.
Missing loan files, documents, facility agreements and

inconsistencies in loan documentation exposes the Bank to
risk of loss in case a customer defaults and a reference to
facility agreements and other security documents are
required.
I, therefore, recommend that TPB Bank ensure the Bank

complies with all loan applications and procedures to
improve risk assessment process as this could help to
highlight any potential risks with an applicant’s loan
application.
11.9 Non-revision of Interest Rate on Loans Issued to Ex-Staff

Staff Loan Policy requires marking loans to the market rate
on the outstanding loan balance due from staff after
cessation of employment. However, staff loan balance of TZS
1 billion relating to 82 ex-employees of TPB Bank and one
staff of TIB development bank were not reclassified to
commercial loan portfolio as required by the Staff Loan
Policy.

Table 30: Separated Staff not charged Commercial Rate
No of Amount financed Outstanding
Year
Personnel (TZS) amount (TZS)
2012 1 6,000,000 3,001,520
2013 4 7,033,336 4,478,390
2014 2 6,116,205 5,816,205
2015 5 87,568,147 25,507,851
2016 8 76,908,000 61,934,529
2017 34 657,809,195 483,891,033
2018 28 637,253,483 456,777,119
Grand Total 82 1,478,688,366 1,041,406,648
Source: Bank Data
TPB Bank explained that they are following up with all ex-
staff to sign Memorandum of Understanding (MoU) committing
to pay the outstanding loans. Ex-staff who secure
employment elsewhere sign MoU to pay their loans balances
or new employer buys the loans. TPB Bank will put a
mechanism as advised where appropriate to ensure ex-staff
loans are re-classified and treated as commercial loans. TIB
Development Bank promised to review and fix an updated
interest rate as soon as employees leave the Bank.
Non-charging of commercial interest rate for ex-employee

loan balances understates revenue of the bank and is against
banks policy.
I recommend that TPB Bank re-classify ex-employee loans

to the commercial loan portfolio and charge appropriate
interest rate. In future, it has to ensure that the interest
rates on post-employment outstanding staff loans are
marked to the market as soon as they leave the Bank.
11.10 Review of Banks’ Backup Data at TPB Bank

The TPB Bank backup procedures require independent IT
personnel to review confirms and signs-off end of day (EOD)
and backup operations. During the audit, I noted exceptions
in 10 (66.7%) out of 15 sampled days where there was no
review done for the daily backup and end of day (EOD)

operations by independent personnel within the ICT
department.
Inadequate review of backup data by an independent

personnel may result in loss of bank’s critical data that may
go undetected for a long period of time.
I recommend that ICT Department of the Bank to see to it

that backup procedures are consistently reviewed on daily
basis by independent personnel in order to validate the
completeness and accuracy of the backup process.
11.11 Access to Rubikon System Not Restricted to System

Administrator
Access to amend customer charges in Rubikon system is not
restricted to System administrators contrary to TPB’s
procedures. With access to amend customer charges in
Rubikon not being restricted to system administrator, there
may be unauthorized amendments of customer charges in
Rubikon without following the Banks' due procedures.
I recommend that access to amend customer charges in

Rubikon system be restricted to System Administrators
only.
11.12 Deficiencies in Management of Dormant Accounts Status

TPB Bank had a total of 37,100 customer accounts that were
not marked dormant after account inactivity of more than 12
months or 24 months days as required by TPB Standard
Operating procedures.I also noted 13,969 customers’ accounts
that were considered as dormant before being inactive for
more than 12 months TBP Standard Operating Procedures. The
system is configured to flag account as dormant after 12 or 24
months of inactivity for both current and saving accounts
respectively.
TPB Bank explained that 37,100 customers’ accounts were due

to data migration issue. Tanzania Women Bank (TPB) system

(BR) was not stamping dormant date to account when reaches
730 days with no transactions. They were defaulted to
account creation date for TPB system (Rubikon) to accept the
migration. They will be automatically corrected by the system
when a customer comes to activate.
Failure to mark accounts as dormant after reaching maximum

allowable period of being inactive, may allow fraudulent
transactions to be passed through the accounts while
premature marking of active customer accounts as dormant
may result in customers not being able to access their
accounts. This may impact customers’ ability to transact and
result in delay using their accounts.
I recommend that TPB Bank review and configure Rubikon

system to ensure customer accounts are automatically
flagged as dormant once inactive period reaches 12 or 24
months depending on the type of the accounts.
11.13 Non-collection of 50% of Appraisal Fees Before Full

Appraisal at TADB Bank
TADB credit policy requires charging pre appraisal fee of 1%
from the approved loans. However, I noted 11 instances at
TADB Bank whereby 50% of appraisal fees amounting to TZS
223,817,677 were not collected before full appraisal. Instead,
the bank withheld it at the time of first disbursement
contrary to paragraph 10 (c) of the TADB credit policy which
requires portion of the appraisal/facility fees equivalent to
50% of agreed appraisal fee to be paid before the full
appraisal and 50% payable upon approval. (Refer Table 31
below)

Table 31: Uncollected Appraisal Fees
Name of the Loan Loan Appraisal 50% of
Borrower Approved Disbursed fee 1% of appraisal
approved fee not
loan paid at
commenc
ement of
the
appraisal.
TZS (000) TZS (000) TZS (000) TZS (000)

Duuma Amcos 88,150 66,625 881,500 440
Kapolo AMCOS 410,769 360,025 4,107,688 2,054
Ilandutwa 850,000 587,657 8,500,000 4,250
Agrobusiness
Co. Ltd
Matanana 39,940 39,940 399,400 199,700
Amcos
Kagera 12,000,000 12,000,000 120,000 60,000
Cooperative
Union (1990)
Karagwe 14,758,971 14,758,971 147,590 73,795
District
Cooperative
Union
Ngara 2,000,000 2,000,000 20,000 10,000
farmers’
Cooperative
Union
Nyarusai 858,353 800,000 8,584 4,292
Limited
You Spices 127,814 114,535 1,278,135 639
Enterprises
Njombe Milk 1,455,140 469,016 14,551 7,276
Factory
Company Ltd
Global Agency 12,174,399 7,570,202 121,744 60,872
Limited
Total 44,763,536 38,766,972 447,635 223,818
Source: Customer files
TADB Bank explained that they started lending operations

with smallholder farmers in groups who could not afford to
pay pre appraisal fees. Further explained that they have
expanded its lending scope to include corporate and
institutional clients and therefore pre appraisal fees will be

charged henceforth. Nonetheless, the Bank is currently
reviewing the credit policy to improve on this aspect.
Non-charging pre appraisal fee may result in financial

losses in the event where customers withdraw their
applications, or the applications have not been successfully
approved.
I recommend that TADB Bank complies with the credit

policy by ensuring that 50% of the appraisal fees is paid
upfront before full appraisal to cover the preliminary
cost and hedge against unanticipated losses in the event
of unsuccessful customers’ applications.
11.14 Financing a Project Undertaken on River Valley Without

Permit from NEMC
Global Agency Limited was granted loans of TZS
12,174,398,817 and TZS 7, 570,201,918 to develop a
drainage system of removing water from the farmland into
the river. During a site visit I observed that the project is
undertaken on riverbank of Ngono River in Kagera region.
Further, I failed to obtain from the borrower a report of
environmental impact assessment and approval for the
project from National Environment Management Council
(NEMC). This is contrary to the pre-disbursement conditions
requirement No. 4 of the approval letter of 16th May, 2018.
Granting loan for the project which is undertaken on

riverbank without approval from NEMC might result in loss
if NEMC stops the project and the client fails to repay the
loans.
I, thus, recommend that TADB Bank take corrective

measures on these loans and ensure in future that a
permit from NEMC is obtained first before loans are
granted to undertake projects that have impacts on
environment.

11.15 Weakness in Management of Super Users/Administrative
Credentials at TADB
Review of management of super user credentials observed
that the bank uses open source software named Keepass to
manage administrative credentials (username and
Password) contrary ISO 27001 and COBIT 5 standard of
super user password management which requires all super
user passwords to be registered and stored to the safe.
Also, I noted lack of periodic review of super
user/administrative access to the bank. TADB bank
explained that currently they are in the process of
acquiring the safe for storing super user/administrative
passwords.
Open source software can be designed to allow malware,

attack or send back the data to the developer which is
risky to the bank while unauthorized users can access data
which may lead to data theft, alteration and corruption.
I thus, recommend that TADB Bank consider stopping

using the open source software (Keepass) to store bank
super user credentials (username and password) and
implement the procedure of storing password to the
safe.
11.16 Deficiencies in System Development and Acquisition

TADB Bank had no documented standard of programming
language and database of the internally developed system
to provide guidance in the system development process. I
also learnt that the bank does not perform risk assessment
prior to acquisition a new system. This practice may result
in adopting a solution that is not in line with bank’s
strategic goals, objectives, quality and standard. TADB
bank promised to include system developments standards
in the software development manual.

I recommend that TADB Bank establish standard for
programming language and database which will guide
internally developed system, and conduct risk
assessment prior to acquisition and implementation of a
system to ensure the system is aligned with the Bank’s
operating procedures.
11.17 Low Recovery Rate of Charged Off Loans by TIB

Development Bank
During period of January to September 2018 TIB
Development Bank recovered only TZS 2.1 billion (2%) out
of the total of TZS 129 billion written off loans which
indicates low recovery rate. The recovered amount is lower
than the target of TZS 6 billion. Low recovery rate
increases the risk of liquidity to the bank since a huge
portion of resources that could have been invested in
profitable ventures are tied up on charged off loans.
The Bank explained that it had developed continuous Non-

Performing Loans (NPLs) reduction strategy and NPLs
management policy to improve the NPL position and
collections of charged off accounts. The strategies include
inter alia, debt collectors and engagement of judiciary to
unlock cases of the facilities or loans whose cases are
pending in court for a long time.
In line with the undertaken strategies, I recommend that

TIB Development Bank enhance the recovery procedures
in place to maximize recovery rate to meet the planned
target.
11.18 Deterioration of the Quality of Loan Portfolio at TIB

Development
The Bank of Tanzania (BoT) is striving to improve the
quality of banking sector’s assets which is reflected by the
ratio of Non-Performing Loans (NPL) to gross loans. BoT
directed all banks with higher NPLs ratio to formulate and

implement strategies to reduce the NPL ratio to the
maximum of 5%. To achieve this, BoT introduced
mandatory requirements for all banks and financial
institutions to make use of credit reference bureau reports
when carrying out credit appraisal to new applicants using
the existing credit reference system to reduce credit risks.
However, TIB Development bank’s ratio of NPL to total

portfolio was far above the industrial level of 11.3% as
published by BoT in Monetary Policy Statement issued in
June 2018 (Table 32).
TIB Development Bank commented that they are

strengthening loan collection and recovery functions in
terms of staff numbers, skills, and customer relations. For
2018, the bank managed to collect a total of TZS 3.87
billion from NPLs accounts which as of 31st December, 2018
stood at TZS 216.3 billion.
Further, the Bank explained that they have developed

Continuous improvement of credit accommodation
processes through review of Investment Policy (including
NPL reduction strategies) and Portfolio Management
Manual, recruitment of staff to alleviate gaps and
strengthen the Portfolio Management Directorate and
conducting intensive staff training.
Table 32: Trend of Non-Performing Loans

Category 30th 31st 31st 31st
September, December, December, December,
2018 2017 2016 2015
TIB 33% 38% 35% 14%
Development
Bank
Industrial 11.3% 11.7% 9.5% 6.4%
average (BOT
reports)
Source: BoT and TIB Development data

Deterioration of the quality of the portfolio erodes the
Bank’s core capital through writing off loans.
While acknowledging efforts by the TIB Bank towards

reducing the NPL, I recommend that the Bank exert
more efforts to improve the quality of the bank loan
book by increasing adherence to the BoT directives
during appraisal of new applicants using the existing
credit reference system to reduce credit risks and NPL
reach maximum target of 5%.

CHAPTER 12
OPERATIONS OF SOCIAL SECURITY SCHEMES
12.0 Introduction
Social security schemes are schemes established for the
purpose of providing social benefits to members of the
community as a whole, or of particular sections of the
community. The social security schemes among others
include Health Insurance Scheme and Pension Schemes.
Health Insurance Scheme provides coverage for health care

services. The National Health Insurance Fund (NHIF) was
established as a Public Institution under the Act No.8 of
1999 [CAP 395 as Amended] to ensure quality health care
services are available to public and private sector
employees and other groups, and their respective legal
dependants.
Pension Scheme is aimed at enabling people to live a

respectable life where they can meet their basic needs
even in the event of social and economic disasters that
lead to reduction or cessation of income. Such disasters
could be death or disability. Social protection also
addresses reduced income that may result from
retirement, maternity or sickness.
Following the merging of Pension Funds, up to 30 th June,

2019, Tanzania had 2 Pension Funds namely Public Services
Social Security Fund (PSSSF) and National Social Security
Fund (NSSF).
Public Services Social Security Fund (PSSSF) was formed on

1st August, 2018 through merging of 4 Pension Funds (PSPF,
GEPF, LAPF and PPF). That is, PSSSF serves public servants
while NSSF has the responsibility of serving private sector
employees.

This chapter highlights weaknesses noted in operation of
National Health Insurance Fund, Workers Compensation
Fund (WCF), and Pension Funds. The chapter also includes
summary of recommendations provided for improvement.
The following are the findings and recommendations:
12.1 Absence of Actuarial Valuation for PSSSF

An actuarial valuation is an analysis performed by an
actuary that compares the fair value of assets and
liabilities of a pension plan. Actuarial valuations are
necessary to assess long-term sustainability of a defined
benefit pension plan and serve as a decision-making tool.
As it was reported in my previous general report that the

actuarial valuation reports of merged Pension Funds (PSPF,
PPF, LAPF and GEPF) reflected actuarial deficits and low
funding levels. Compared to other merged Funds, the
funding level of PSPF (10.5%) was the lowest. However,
since the newly established Public Services Social Security
Fund (PSSSF) on 1st August, 2018 up to the time of audit in
November 2019, the Fund has not yet carried out actuarial
valuation to assess its short, medium and long-term
financial positions. It is necessary that the Fund perform
actuarial valuation so at to be in a position to assess
whether it will be able to meet future obligations using
available assets.
I thus recommend that PSSSF perform actuarial valuation

in order to analyse the sustainability of the Fund.
12.2 Long Outstanding Contributions and Penalties TZS

171.91 billion
All registered employers to social security scheme are
required to remit contributions not later than 30 days after
the month in which the contributions relate. Penalties are
charged for late remittance. However, I noted that NHIF,
WCF and PSSSF had a total of TZS 171.91 billion

contributions and penalties receivables for more than 30
days.
At NHIF, I noted the Fund had a total of TZS 24.59 billion

contributions receivable balances outstanding for more
than 30 days (10.18 billion (41%) outstanding for more than
a year). At WCF, a total of TZS 85.93 billion contributions
receivables was outstanding for more than 30 days (65.70
billion (76%) outstanding for more than a year). While
PSSSF had a total of TZS 61.39 billion receivable balance
related to penalties on delayed contributions out of which
TZS 61.02 billion (99%) was inherited from merged Funds).
Lack of timely collection of contributions income and

penalties may result in losses to the Fund.
I thus, recommend that Management of the mentioned

Funds institute effective measures on collection of
outstanding contribution receivables and penalties, that
can be invested for the benefit of the members.
12.3 Possibility of not Recovering Matured Fixed Deposit

Funds TZS 111.8 Billion
PSSSF and NHIF have matured fixed deposits with TIB
Development Bank. However, I leant the Bank was unable
to honour matured deposits. As at 30th June, 2019, the
matured deposits and interests to the Funds amounted to
TZS 111.8 billion, being TZS 16.8 billion for NHIF and TZS
95 for PSSSF.
Failure to collect maturing deposit and accrued interests

by the Funds may impact their cash flows.
I thus recommend that the Funds’ managements make

close follow up to ensure the invested funds are
recovered and in future make thorough analysis of risks
that may be faced before investing members’ funds.

12.4 Loans Due from Terminated Employees Not Recovered
TZS 974.20 million
General conditions of the NHIF’s Staff Loan Policy of 2014
states that in the event of employee termination of
services for any reason other than death or total
permanent disability, the outstanding loan balance from
the employee is deemed due and payable to the Fund
unless a specific loan repayment agreement is entered by
the exiting staff.
However, up to 30th June, 2019, I noted that NHIF had an

outstanding loan balance of TZS 974.20 million (2018: TZS
115.47 million) from terminated employees and were no
longer repaying their outstanding balances. This is an
increase of 744% compared to previous year’s balance.
Further, I learnt that, the Fund had not entered into any
new repayment arrangements with the terminated staff.
Thus, there is possibility that, the outstanding balance will
not be recovered. This will affect the Fund’s cash flow and
expose it to losses.
I recommend that the Fund intensifies its efforts to

recover the outstanding balance and take necessary
legal actions against the defaulters.
12.5 Long Outstanding Government Liabilities TZS 2,417.79

Billion
I noted that Social Security Funds have nonperforming
liabilities with Government and its Institutions. About TZS
2284.05 billion (94 %) of the Government liabilities were
due at the year ended 30th June, 2019. Some of the
liabilities matured since 2014. This situation exposes the
Funds to credit risk.
The Government debt to Social Security Funds as at 31 st

July, 2019 accrued to TZS 2,417.79 billion.

Table 33: Status of Government Loan
Name Loan - TZS (Billion)
PSSSF 731.40
NHIF* 220.39
NSSF 1,466.00
Total 2,417.79
*NHIF liabilities includes the loan of TZS 117 billion to the

Government without guarantee and signed agreement
advanced to University of Dodoma to finance construction
of Medicare Centre (Phase I and II). During the year under
review, the Fund granted an additional loan of TZS 2
billion.
Non-repayment of outstanding liabilities and accrued

interest on due date disturbs liquidity of the Funds. Hence,
they fail to fund new projects.
I thus recommend that Managements of the Funds

request the Government to repay the liabilities or
convert them into special bond.
12.6 Adverse Widening Gap Between Contribution Incomes

and Benefit Expenses
In the audit of NHIF, I assessed the trend of members’
contribution income against benefit expenses. I noted that
benefit expenses are increasing at a much higher rate than
the ability of the Fund to grow its contribution income.
The trend from 2013 indicates contribution income have
been growing at an average rate of 13% while benefit
expenses are increasing at 30% resulting in decline of
Fund’s surpluses. In the year under review, benefit and
members services expenses of TZS 489.61 billion exceeded
the contribution income TZS 431 billion by TZS 58.60.
Thus, the fund recorded deficit from dealing with
members.
I learnt that the trend is mainly contributed by benefit

packages offered by the Fund, some of which are loss

making (refer Table 3). The contribution income earned
from these packages is significantly lower than the benefit
expenses the Fund is incurring. In the year under review,
such benefit packages resulted in a deficit from dealing
with members amounting to TZS 32.44 billion (Table 34).
Table 34: Benefit Packages Offered by the Fund

Benefit package Contributio Claims Resulting Percenta
n received accepted in Deficit – TZS ge of
in Current Current (000) claims
Year – TZS Year – TZS against
(000) (000) contribu
tion
Student 8,254,247 9,826,911 (1,572,664) 119%
Retiree 2,997,083 30,222,201 (27,225,118) 1008%
Clerics without 585,858 981,861 (396,003) 168%
Family
Intern Doctors 63,811 91,386 (27,575) 143%
Mutual-Principal 854,876 1,814,079 (959,204) 212%
Mutual - 64,472 79,183 (14,710) 123%
Dependant
Clerics with 187,693 229,026 (41,333) 122%
Family
Toto Afya - 4,706,217 6,897,790 (2,191,573) 147%
Individual
Ushirika Spouse 6,221 11,853 (5,632) 191%
Ushirika 3,840 8,575 (4,735) 223%
Dependant
Total 17,724,318 50,162,865 (32,438,546)
In PSSSF, beneficiaries’ payments of TZS 1,500.90 billion

for the year ended 30th June, 2019 exceeded the
contribution from members by TZS 178.03 billion
equivalent to 13%.For the period from 1st August, 2018 to
30th June, 2019, total administrative and investment
management expenses of the Fund decreased to TZS 90.90
billion compared to TZS 124.35 billion for 11 months of the
previous year, the Fund’s net asset decreased by 96.74
billion.
Further, I noted total assets of the PSSSF decreased to TZS

6,554.74 billion (2017/18: TZS 7,043.80 billion). This
implies that the Fund utilized proceeds from matured
investments to cover the benefits expenses.

Continuous growth of benefits expense with a less than
proportionate growth in contributions income erodes the
existing reserves of the Fund and ultimately impact the
solvency and sustainability of the Fund.
I recommend that PSSSF and NHIF seek different options

to remediate the gap between contribution incomes and
benefit expenses.
12.7 Decrease in Return on Investments TZS 542.29 billion

Social security scheme invests in various undertakings such
as financial institutions, equities, government securities,
corporate Bonds, loans, tradable inventories, properties,
and Joint Ventures with a view to create more money to
pay benefits and operational expenses and ensure
sustainability.
The financial performance of Social Security Schemes for

the last three years (2016/17-2018/19) shows decreasing
trend in return on investment consecutively over this
period (Table 35).
At NHIF the decreasing return on investment was TZS 84.77

billion in 2018/2019 from TZS 109.47 billion recorded in
2017/2018 (Refer Table 27) representing a decrease of TZS
24.70 billion (23%). Further, during the period of 11 months
from merging up to 30th June, 2019, PSSSF return on
investment decreased to 429.90 billion from TZS 947.49
billion of previous periods, registering a decrease of 517.59
billion (55%).
Thus, within a period of three years, total return on

investment of NHIF and PSSSF decreased by TZS 542.29
billion. The decreases of return on investments at PSSSF
were mainly contributed by non-performing of undertaken
investments (para 12.8 and 12.10) and decreasing of

investment due to utilization of matured return to pay
benefit expenses.
This trend jeopardises cash flows of the Funds as a result,

their abilities to meet benefits, manage operational costs
as well as exploiting other promising investment
opportunities will be doubtful.
Table 35: Decrease in Return on Investment Undertaken

by Social Security
Details 2018/19 TZS 2017/18 TZS 2016/217
Name Return-TZS (billion) Return-TZS (billion) Return-TZS
(billion)
NHIF 84.77 107.37 109.47
PSSSF 429.90 1,119.76* -
Source: Financial statements
*The balance represents the return on investment of PSSSF

for a period of 13 months (1st July, 2017 to 31st July, 2018),
for comparability, I recomputed return on investment for
11 months which is TZS 947.49 billion.
I recommend that NHIF and PSSSF seek different options

to address investment risk.
12.8 Low Occupancy Rate of Investment Properties of PSSSF

PSSSF invested in properties which are rented to hotels,
companies, and individuals while others are used by Funds
as office premises. The average intended property market
occupancy rate is 80%.
However, I noted that PSSSF had eight (8) investment

properties with a total value of TZ 652.32 billion which had
occupancy rate below the intended rate. The occupancy
rates of these properties were ranging from 20% to 73%
(refer Table 36).
Management explained that the Fund had started to take

various measures to improve the occupancy rate, including

reviewing rental charges; renovating the properties and set
target to all property managers.
Vacant properties are prone to decrease in fair value due

to impairments. Also, the value for money may not be
achieved from the invested properties.
Table 36: Low Occupancy Rate of Investment Properties

S/N Property Property Total Occupied Vacant Occupancy
name Value building space- space- rate in %
TZS (000) space- (sqm) (sqm)
(sqm)
1 PSSSF 24,000,000 5,297 3,909.00 1,388 73
Samora
House
2 Garden 50,000,000 13,508 7,586 5,922 56
Avenue
Tower
3 Victoria 23,050,000 7,044 4,649 2,395 66
House
4 Millennium 67,055,000 12,95.55 7,354.15 5,602.40 57
Towers-II
5 PSSSF 22,000,000 10,000 1,956 8,044 20
Quality
Plaza
6 Sokoine 10,108,000 4,684 1,168 3,516 25
House
7 PSSSF 242,000,000 76,616 17,233 59,383 22
Commercial
Complex
8 PSSSF Twin 214,108,000 52,088 10,642.92 41,445.08 20
Towers
Total 652,321,000
I recommend that PSSSF ensure the occupancy rate is

raised by promoting the properties, reviewing the rental
charges and ensure all facilities within the properties
are in acceptable standard.
12.9 Deficiencies in Systems and Operational Controls

Information Systems and operational control of the Funds
under Social Security had a number of deficiencies that
resulted in losses, fraud and doubtful transactions.
At PSSSF, I noted that during the year ended 30th June,

2019 statutory inspections were not conducted to all

employers which is contrary to Fund’s Operational Policy
that requires the Fund to perform inspections to its
registered employers at least two times a year.
I noted that in two (2) regions and 1 district inspections

were done only once per year to a total of 32 (20%) out of
161 employers (Table 37). whilst, the Fund had a total of
TZS 61.39 billion receivable balance related to penalties on
delayed contribution as detailed in Para 12.2
Table 37: Statutory Inspection to Employers

Regions/District Number of Inspected Remarks
employers employers
Ilala District 109 16 Inspection done once
in a year for 16
employers only
Arusha Region 26 8 Inspection done once
in a year for 8
employers only
Tanga Region 26 8 Inspection done once
in a year for 8
employers only
Total 161 32
There is a possibility that the employers will delay in

remitting contributions and outstanding arrears may not be
recovered.
I recommend that PSSSF ensure statutory inspections are

conducted for all employers as stipulated in the
operational policy and all arrears are collected.
At NHIF I found various anomalies which include a total of

21,042 active NHIF cards received medical services with
claims totalling to TZS 1.78 billion but their principal
members had not made any contributions. A total of
104,729 over-age dependants (with age above 18 years)
received medical services with claims totalling to TZS
15.17 billion. A total of 4,441 revoked memberships also
received medical services with claims totalling to TZS 202

million. Further, I noted that there were 8,672 members
registered as retirees while were below the minimum
retirement age of 55 years as at the beginning of the
financial year 2018/19 with claims totalling to TZS 2.88
billion.
Offering medical services to ineligible members is contrary

to the requirements of Compliance Manuals and may result
in material financial loss to the Fund leading to its inability
to serve its members.
I recommend that NHIF re-evaluates and improves its

validation process at the health facilities to ensure
inactive cards are identified and members are not
provided with service until such time their membership
status is in good standing.
At Workers Compensation Fund (WCF), I learnt that the

average time taken to process claims from claimants is six
(6) months and above. I consider this as unfavourable time
as compared to the average period of three (3) months for
claims initiated in Dar es Salaam.
Increase of time of recuperation of claimants if the injuries

are not addressed timely.
I recommend that WCF evaluate the situation and

implement procedures for improving it, including
standardization of claims processing period.
NSSF received cheques paid by contributors which were

subsequently dishonoured by contributors’ banks. The
value of the cheques amounted to TZS 13 billion (2018: TZS
11 billion). The funds were not recovered up to April 2019
when the Fund stopped accepting cheques as a mode of
payment for contributions.

I am concerned that the longer these balances remain
unpaid the higher the risk that they will not be collectable
in the near future.
I recommend that management intensifies efforts to

recover the funds and take necessary legal action against
the defaulters.
12.10 Low and Non–Performing Subsidiary Companies

I noted that some of the Funds’ subsidiary companies and
Joint Ventures Investments were not performing as
intended. The underperforming undertakings include those
run by Ubungo Plaza Ltd (UPL), Karanga Leather Industries
Company Limited and Mkulazi Holdings Company Limited.
Ubungo Plaza Ltd (UPL) is owned by NSSF (35%), PSSSF (35%)

and National Insurance Corporation (T) Ltd (30%). Up to 30th
June, 2019, UPL did not pay dividend TZS 824.63 million
declared for more than three years because of shortage of
funds. Further, I noted UPL had a total of TZS 10.14 billion
rent receivable balance, out of which TZS 7.61 billion (75%)
is due from tenants who were evicted because of defaulting
in rent payments.
Lack of timely collection of rental income may lead to

losses.
I recommend that UPL institute aggressive measures on

collection of outstanding rents. I also recommend that
the Funds ensure investments operate as intended
and receivables from vacated tenants at Ubungo
Plaza Ltd are recovered.
Karanga Leather Industries Company Limited is a Joint

Venture company owned by PPF Pensions Fund (then PSSSF)
(90%) and the Prisons Corporation Sole under Tanzania
Prisons Services (10%). The purpose of the Joint Venture
was to revamp the existing shoe factory at Karanga area in

Moshi Municipality and to construct the modern tannery,
footwear, shoes sole processing and other leather goods
processing industry.
During the financial year ended 30th June, 2018, the

Company bought new machines at TZS 3.54 billion. The
new machines increased the production capacity of shoes
from 150 to 400 pairs per day.
However, I noted the Company faces market challenges of

its products, where production depends on order placed by
customers. I observed that the company is receiving a
minimum order of one pair of shoes.
I recommend that management ensure that production is

done through batches to achieve its goals; prepare the
marketing strategy to increase demand for its products
that will lead to increase in production rate.
Regulation 164 (1) of the Public Procurement Regulations

of 2013 (as amended in 2016) requires a procuring entity to
obtain quotations from at least three suppliers. However,
Karanga Leather Industries Company procured raw
materials at the total cost of TZS 310.19 million direct
from various suppliers. This non-compliance with
procurement Regulations might have resulted in conflict of
interest and value for money may not be achieved.
I recommend that the Company comply with the

requirements of the Public Procurement Act 2011 (as
amended in 2016) and its Regulations of 2013 during
procurement process exercise.
Furthermore, I noted retired expenditures amounting to

TZS 110.51 million were not approved by Interim Chief
Executive Officer (CEO) as per the designed form of
retirement. Lack of cross-checking retirements may lead to
misappropriation of the Company’s funds.

I recommend that Management ensure all laid down
retirements procedures are adhered to.
According to revised feasibility study of Mkulazi Holdings

Company Limited (jointly owned by NSSF 96% and Prison
Corporation Sole 4%) of January 2019, production of sugar
was expected to start during the financial year 2018/19.
However, production has not yet started, and the Company
has been making loss for three consecutive years which
amounted to TZS 8.87 billion up to 30th June, 2019 which is
equal to 30% of total invested funds TZS 30.60 billion.
I recommend that the Fund see to it the Industry

operates as intended to overcome the financial losses.
12.11 Delay in completion of Projects TZS 605.80 billion

During the period 2018/19 NSSF had construction projects
with total contracts prices of TZS 605.80 billion. The
projects were supposed to have been completed by dates
mentioned in the table below, but the completion was
delayed for more than a year up to the time of this audit in
January 2020 while a total of TZS 379.34 billion (63%) had
already been spent on the projects. Reasons provided for
the delays in completions are indicated in the Table 38
below.
I am of the view that, delay in completion of construction

projects lead to cost escalation of costs, affect attainment
of the intended objectives and value for money may not be
obtained.

Table 38: Delayed Projects at NSSF
S/N Name Project Contract Amount Implementation Reasons for
Details sum – spent status delays
TZS TZS
‘‘billion’’ ‘‘billion’’
1 Affordable The project 146.5 106.09 Lot 1-10 is 81% • Failure of
housing involved complete, Lot contractor
scheme construction 11-16 is 63% s to
Phase III - of 720 units complete and complete
Mtoni of residential Lot 17-20 is 83% the
Kijichi apartments complete. projects
and 100 units within
of specified
maisonettes. time
period
The project which led
was initially to
planned to expiration
be of
completed in contracts
January • Value for
2015, but money
was then audit
extended to which is
December, being
2018. conducted
by PPRA.
The PPRA
is in final
stage to
issue their
findings.
• From
November
2019 the
Fund
through
force
account
completed
417 houses
by
providing
them with
necessary
services
like water,
electricity
and waste
water
systems.
2 Mzizima The project 233.3 116.31 The pending Conflict
tower involved lots are 78% to between
construction completion. main
of residential contractor

TZS TZS
and and sub-
commercial contractor
towers. of cutting
The project and walling
was planned regarding
to be supplied
completed aluminum
on 5th March profiles. The
2017 conflict was
resolved in
October
2019.
3 Mwanza The project 72.8 51.12 The project is The project

tourist involved 73% complete was mainly
hotel construction delayed by
of a five star absence of
hotel of 200 Hotel
rooms of Operator
various types who could
including one define the
presidential finishes and
suite. interior part
The project of the
was planned Hotel. The
to be Fund is now
completed in discussion
on 28th with one
October 2016 prospective
operator
and expect
to engage
him by end
of April
2020.
4 Dungu The project 149.12 101.6 The stages of • Failure of
Farm & involved completions for contracto
Toangoma construction both locations rs to
Satellite of were 78% and complete
TOWN commercial 83% for satellite the
and village at Dungu projects
residential and at within
houses at Toangoma specified
Dungu & respectively. time
Toangoma- period
10 lots for which led
lower classes to
and 6 lots for expiratio
class. n of
contracts
The project • Value

TZS TZS
was initially for
planned to money
be audit
completed which is
on being
September conducte
2016 then d by
was PPRA.
extended to The PPRA
30th June is in final
2018. stage to
issue
their
findings.
• From
Novembe
r 2019
the Fund
through
force
account
complete
d 171
houses by
providing
them
with
necessary
services
like
water,
electricit
y and
waste
water
systems.
5 Apollo The project 4.08 4.22 The project was The project
Clinic at involved suspended for was
Mwl. rehabilitation over spending. suspended
Nyerere of existing for over
Pension basement of spending
Towers- Tower B, C, since 2015
Dsm ground and and was put
first floor of under PCCB
Tower B and investigation
the former which is not
NSSF yet
Dispensary. completed.
The project The fund is
was currently
expected to looking for a

TZS TZS
be tenant to
completed in occupy the
August 2015. space as
Apollo
Hospitals
are no
longer
interested
with the
project.
605.80 379.34
Sources of data: Financial statements
I recommend that the Fund conduct thorough review to

investigate the causes of delays and take appropriate
measures against the parties which cause the delay.
Further, I recommend that the Fund conduct frequent
monitoring and evaluation of project implementation to
ensure that they are implemented as per planned
schedules.

CHAPTER 13
ADMINISTRATION OF LOANS BY PUBLIC ENTITIES
13.0 Introduction
In executing its mandates, Public Entities secure loans to
finance various activities including development projects
under their mandate on the core objectives and activities
as provided by the establishment that govern the
respective entities. These loans might be either foreign or
local and differ in their nature and magnitude of risks.
Administration of these loans is of great concern as they
are secured against various assets that bear public
interests.
I reviewed the administration of loans in respect of

National Board of Accountants and Auditors (NBAA),
Ngorongoro Conservation Area Authority (NCAA) and
National Housing Corporation (NHC) and noted the
following deficiencies:
13.1 Inadequate Cash Flow to Repay NSSF Loan

On 01st November, 2010, National Board of Accountants
and Auditors (NBAA) entered into an agreement with
National Social Security Fund (NSSF) to acquire a loan
amounting to TZS 15 billion payable in 10 years at the rate
of 15% per annum for the purpose of financing the APC
Investment Centre.
Based on repayment schedule, the loan had a grace period

of 2 years, the repayment was to start on 11th May, 2014
and the last instalment was to be made on 11th November,
2021. Total amount that was required to have been paid
was TZS 13.87 billion (loan plus interest) as at 30th June,
2019, and the remaining loan amount was required to be
TZS 4.62 billion as at 30th June, 2019.

However, the Board paid a total of TZS 4.95 billion (loan
plus interest) to NSSF up to 30th June, 2019 and total
amount of the remaining loan was TZS 27.44 (loan plus
interest and penalty) billion as at 30th June, 2019 contrary
to the agreed repayment schedule (loan plus interest).
During the financial year 2018/19 the Board made a loss of

TZS 22.02 billion before shared loss in joint venture
compared to a restated surplus of TZS 2.49 billion in the
previous year. The loss was mainly caused by increased
interest and penalty on loan from NSSF and impairment
charge on loan to APC Investment centre.
The Board has not been able to repay the loan within the
agreed schedule and there is a risk of loss of funds for
paying penalties on delaying loan repayments.
I recommend that NBAA meets with NSSF to discuss the

restructuring of the loan for NBAA to have favourable
terms of repayments.
13.2 High Interest Rate on Loan Facility Used in Financing

Construction of NTC Investment Property
NCAA acquired loan facility on 20th June, 2014 of USD 17
million from CRDB bank for financing the construction of
Ngorongoro Tourism Centre (NTC) investment property with
interest rate charged at a fluctuating interest rate based
on London Interbank Offered Rate (LIBOR) plus 750 basis
points which can be reduced to a minimum 8.5% and
subsequently on 16th July, 2014 was reduced to 8%.
During the audit, I noted that interest of London Interbank

Offered Rate (LIBOR) plus 750 basis points which can
decrease to a minimum of 8% is very high interest
compared to the current market rates offered by
commercial banks. The equivalent rates for mortgage
facilities offered by top five commercial banks other than

CRDB ranges from 5% to 7%. Besides, LIBOR will be
discontinued in 2021, hence there is a possibility of a high
volatility based on alternative benchmark to be decided by
the Bank. Although the Authority has been making
payments on time (interest rates in 2016/17, 2017/18 and
2018/19 are TZS 1.55 million, TZS 2.17 million and TZS
1.74 million respectively) and in some instances
overpayment of the principal amounts, higher interest
rates than market rates have negative impacts on the
Authority’s cash flows.
I recommend that NCAA engage the Bank and

renegotiate the interest rate based on the facts stated
above in order to relieve itself from unnecessary cash
outflows burden.
13.3 Non-compliance with Loan Covenant

Clause 20.2 of the loan agreement between National
Housing Corporation (NHC) and East African Development
Bank (EADB) requires NHC to maintain the debt service
ratio of at least 1.5:1. While there is notable improvement
in debt service ratio from 0.63:1 in financial year
2017/2018 to 0.78:1 in financial year 2018/2019, the ratio
is still below the required ratio based on the agreement.
I recommend that NHC improve the liquidity which will

in turn improve the ratio.

CHAPTER 14
PERFORMANCE OF WATER AUTHORITIES
14.0 Introduction
Performances of Water Authorities are being measured
through various targets set in Memorandum of
Understanding between the Ministry of Water & Irrigation
and the Water Authorities with close supervision from
Energy and Water Utilities Regulatory Authority (EWURA).
The key indicators of Water Authorities performances
include protection of customers’ interests (service
accessibility and quality of service); sustainability of the
water authorities; metering ratio; revenue collection
efficiency; operational costs; and infrastructure and
environment sustainability.
This chapter highlights significant deficiencies noted in the

performance of Water Authorities and other crosscutting
matters affecting water provision services as detailed
below:
14.1 High Rate of Non-revenue Water TZS 155.84 billion

Non-Revenue Water (NRW) is the amount of water that the
licensee produces or purchases but lost before it reaches
customers. It is calculated by using water produced and
water connected to customers. NRW continues to be one of
the major challenges to the Water Authorities and can be
the result of physical (leaks, overflow) and commercial
(illegal connections, collection of revenue) losses. The
percentage of NRW is one of the key performance
indicators of efficiency of Water Authorities.
According to EWURA and Memorandum of Understanding

between UWSSAs and Ministry of Water and Irrigation, the
acceptable level of NRW for Urban Water Supply and

Sanitation Authorities (UWSSAs) is equal to or less than
20%. This target is to be achieved by all UWSSAs by 2019.
Overall NRW is still far from service level benchmark of 20%

for most of the UWSSA. From the review of 20 UWSSAs, I
found that only Kahama UWASSA was able to achieve the
service level benchmark of NRW. The remaining 19 Water
Authorities continue to grapple with water losses with the
recorded percentages, which were higher than their
tolerable normal losses. The total loss by these authorities
amounted to TZS 155.84 billion which was higher than the
acceptable loss of TZS 74.14 billion meaning that the
amount of TZ 81.70 billion represented unacceptable loss
based on the available data of the quantity of water
produced and water connected to customers as
summarized in Table 39 below:
Table 39: Loss Due to Non-Revenue Water

S/N Name of Total Accep Total Acceptable Unaccept
UWSSAs % NRW table Loss loss able Loss
% NRW (TZS (TZS in (TZS in
Millions) Million) Million)
1 Babati 38.9 20 1,271 653.32 617.39
2 Arusha 43.9 20 9,574 4,361.59 5,212.09
3 Dodoma 26.6 20 5,067 3,809.46 1,257.12
4 Singida 26 20 784.63 235.39
1,020
5 Morogoro 33.25 20 4,469 2,688.11 1,780.87
6 Masasi 23 20 712 619.08 92.86
nachingwea
7 Mwanza 36.61 20 11,045 6,034.01 5,011.24
8 Lindi 33.2 20 366 220.65 145.63
9 Chalinze 27 20 700 518.18 181.36
10 Tanga 27.94 20 5,002 3,580.81 1,421.58
11 Kahama 11 20 753 753 -
12 Moshi 20.3 20 1,887 1,858.97 27.88
13 Mtwara 22 20 867 787.94 78.79
14 Musoma 57.5 20 4,186 1,455.98 2,729.95
15 Songea 20.4 20 630 617.33 12.35
16 Bukoba 45 20 1,865 828.79 1,035.99

S/N Name of Total Accep Total Acceptable Unaccept
UWSSAs % NRW table Loss loss able Loss
% NRW (TZS (TZS in (TZS in
Millions) Million) Million)
17 Iringa 25.6 20 2,481 1,938.57 542.80
18 DAWASA 49.2 20 101,251 41,158.87 60,091.95
19 Tabora 36.7 20 2692 1466.84 1224.81
Total 155,836 74,136 81,700
I recommend that UWSSAs reduce the levels of NRW to

the set target by installing bulk meters; metering all
customers; manage water pressure in the distribution
networks and replacing old with new distribution
networks equipment. I also recommend that UWSSAs
reduce technical and commercial water losses to the
acceptable normal loss levels.
14.2 Inadequacy Water Service Coverage

The Memorandum of Understanding between Ministry of
Water and UWSSAs requires UWSSAs to develop strategic
and business plans that link with national policies such as
Tanzania Development Vision 2025 and the Five-Year
Development Plan (FYDP II) (2016/17 to 2020/21) including
improvement on access to clean and safe water in urban
areas for more than 90%.
Over the years, the population living in the area with water
network has increased and service coverage in terms of
population directly served is still far below the standard
requirements. I noted that 10 out of 18 UWSSAs face
challenge in fulfilling their responsibility in providing safe,
reliable affordable water supply to the entire population
due to inadequacy water supply infrastructure including
existence of old pipes, outdated water distribution network
and non-operational boreholes. Most of UWSSAs are still
depending on old network in the distribution system that
causes water leakages reducing the level of UWSSAs

coverage of population with access to reliable water and
water to be distributed to customers.
These Authorities strive to get funds for replacement of

the outdated networks. However, the pace of
implementing projects using their own funds does not
match with the rapid population growth and attainment of
Five-Year Development Plan. I was not able to get data from
four UWSSAs (Tanga, Moshi, Mtwara and Tabora) and the
remaining four UWSSAs (Mwanza, Songea, Iringa and
Chalinze) were within the target. The noted UWSSA that are
far below the target are analysed in Table 40 below: -
Table 40: Inadequacy Water Service Coverage

S/N Name of Authority Water Population Directly
Service served (%)
Coverage
(%)
1 Dodoma Uwassa 52 80
2 Morogoro Uwassa 57 No Data
3 Masasi nachingwea 44 No Data
4 Bukoba 88 55
5 Babati Uwassa 75 74
6 Arusha Uwassa 74 74
7 Musoma 76 80
8 Kahama 81 55
9 Singida Uwassa 82 80
10 Lindi Uwasa 71 No Data
Source: Directors reports of 2018/19
I recommend that UWSSA in collaboration with the

Ministry of Water increase investment in water
production and distribution infrastructure water service
coverage to meet the increasing demand. This may be
done through promotion of Public Private Partnership
(PPP) in water supply projects.

14.3 Non-Compliance with Water quality requirements
EWURA Water Quality Monitoring Guidelines for Utilities of
2014 and Memorandum of Understanding between Ministry of
water and UWSSAs require all UWSSAs to have water quality
monitoring plan and conduct water quality monitoring
according to their plans.
Water quality compliance is analysed based on test

parameter of E/Coli, Turbidity, Residual Chlorine and pH and
is measured by the percentage of water samples that pass
particular water quality test for portability equal to Total
Number of sample passed divide by total number of sample
tested times 100. The recommended benchmarking
compliance is 100%.
During the current audit, I reviewed 18 UWASSAs to

determine their water quality compliance. I noted that 14
conducted water monitoring tests whereby nine complied
with quality compliance; while five did not comply. The
remaining four (4) water authorities had no data on the
quality compliance.
Based on the water quality analysis results the turbidity of

treated water for various authorities, I noted some
authorities’ bacteriological analysis revealed E. coli and
turbidity compliance % is below the EWURA Water Quality
Monitoring Guidelines for Utilities of 2014 and Memorandum
of Understanding requirements hence, indicating water
may not be safe. Analysis is shown in Table 41 below
Table 41: Water Quality Compliance Analysis

S/N Name of UWSSAs Water Quality Water quality
Turbidity (ECOLI)
Actual Actual
1 Chalinze 56 100
2 Lindi Uwasa 95 68
3 Musoma 90 90
4 Iringa 90 90

S/N Name of UWSSAs Water Quality Water quality
Turbidity (ECOLI)
Actual Actual
5 Morogoro 97 100
6 Masasi Nachingwea
7 Tanga
No Data
8 Mtwara
9 Tabora
I recommend that UWSSAs enhance and implement water

quality monitoring plan in accordance with the EWURA
Water Quality Monitoring Guidelines for Utilities of 2014
and MoU between UWASSAs and Ministry of Water.
14.4 Low Level of Debt Recovery at Water Authorities TZS

106.31 Billion
Effectiveness and efficiency in revenue collection of Urban
Water Supply and Sanitation Authorities (UWSSAs) is
analyzed through collection efficiency and account
receivable turnover.
The credit policy of UWSSAs is to recover bills due within

the following month and to disconnect from water service
any customer who has accumulated his/her bills for more
than ninety (90) days without paying. During the testing
implementation of the policy, I identified low level of debt
recovery within water authorities, as significant
receivables had been outstanding beyond the credit limits
policy. Such accumulations of account receivables balances
of TZS 106.31 billion includes TZS 35.08 billion (33%) due
from the Government and TZS 71.23 billion (67%) from
other categories i.e. commercial customers, domestic
customers, industrial customers and religious institutions.
Large outstanding balance of account receivables is mainly
caused by inadequate follow up and non-compliance with
UWSSAs policy by not disconnecting water services to
defaulting customers as required by the credit policy.

The non-recovery of debts decreases the Authority’s
liquidity and thus, forcing Authorities into unnecessary
financial constraints. Breakdown of the respective accounts
receivable with respective Authority are shown in the
Table 42 below:
Table 42: Significant Long Outstanding Account

Receivable
S/n UWSSAs Government Commercial, Total
Debt (TZS Domestic & (TZS Million)
Million) Industrial Debt
(TZS Million)
1 Arusha 643 2,068.78 2,712.25
2 Babati 193 165.78 358.78
3 Bukoba 364 422.80 786.83
4 Mtwara 1,784 51.19 1,835.22
5 Chalinze 415 479.10 894.39
6 Dodoma 2,295 3,398.10 5,692.64
7 Iringa 395 1,123.94 1,519.04
8 Kahama 186 1,329.57 1,515.20
9 Lindi 120 354.15 474.05
10 Masasi - 587.84 587.84
Nachingwea
11 Morogoro 481 1,763.77 2,245.25
12 Moshi 2,222 1,906.74 4,128.84
13 Musoma 1,227 727.96 1,954.83
14 Mwanza 1,173 3,805.80 4,979.29
15 Songea 571 797.34 1,368.73
16 Singida 288 331.09 619.38
17 Tanga 1,576 3,066.86 4,642.47
18 Tabora 817 630.45 1,447.09
19 Dar es salaam 19,417 47,482.28 66,899.28
20 Shinyanga 907 743.99 1,650.81
Total 35,075 71,237.53 106,312.21
Source: Financial Statements
The amounts are very significant and might compromise

the efficiency of the authorities operations as significant
funds are held by customers rather than being used for
implementing the authorities’ activities.

I recommend that UWSSAs develop action plans for
recovery of the outstanding receivables and use that
plan to collect the receivables.
14.5 Less Average Hours of Water Service Supply by UWSSAs

An average hour of service is one of the key performance
indicators for UWSSAs. This indicator considers hours per
day that a consumer draw water from tap at his household
connection or a public stand post. These numbers of hours
are not necessarily identical with the operations time of
treatment plants or wells, as tanks, which are part of
distributions system are used for storage. The best practice
as per EWURA is 24 hours.
I noted that 14 out of 16 UWSSAs which supply clean water

attained average service hours that are far below the
service level benchmark of 24 hours per day. The main
reasons were inadequate water productions from available
water sources compared to the water demand and low area
network coverage. UWSSAS supplies far below the
benchmark are Morogoro- 12 hours, Lindi 14 hours, Arusha,
Kigoma 15 hours, singida, Babati 17 hours, Chalinze 18
hours, Dar es salaam 21 hours, Musoma, Masasi
Nachingwea, Bukoba and Mwanza 22 hours, Dodoma and
Tanga 23 hours.
I recommend that UWSSAs enhance water production

distribution system to ensure average supplies of 24
hours as required by EWURA Directive.
14.6 Liquidity Problems Experienced by Water Authorities

A total of nine (9) out of 16 Water Authorities I reviewed
during the year experience deteriorating financial
performance leading to liquidity problems as a result of
consecutive losses rendering them unable to honour their
current liabilities when they fall due. The Table 43 below

some of the Water Authorities with deteriorating working
capital:
Table 43: Liquidity Problem Experienced by Water

Authorities
S/N Name of Loss During Accumulated Current
Authority the Year- Loss Ratio
2018/19' 'TZS TZS in Million (Recommen
In Million ded ratio
1:1)
1 Babati Uwassa 397.38 0.73:1
2 Singida Uwassa 113.11 2,732.20 0.97:1
Morogoro
3 Uwassa 68.15 9,575.36
Masasi
4 nachingwea 334.11 2,640.18
5 Lindi Uwasa 403.30 1,686.68 0.7:1
6 Chalinze 921.43 974.63 0.5:1
7 Kahama 42.57 -
8 Songea 153.66 2,750.15
9 Bukoba 914.67 1,954.18
The above noted liquidity ratios cast doubt about going

concern of the Authorities if no immediate actions are
taken to improve their financial capabilities.
I recommend that UWSSAs develop strategies such as

reassessing and strengthening on follow-up on the trade
receivables from sales of water and cut some operating
costs to rescue the liquidity problems.
14.7 Delay in Connection and Reconnection Water Customers

Rule 26 (1) (b) of the Water Supply and Sanitation (Quality
of Service) Rules, 2016 requires the licensee to connect the
new customers within 7 working days after having paid in
full. However, I noted several delays ranging from 14 to 57
days in connecting new customers in Arusha, Singida,
Chalinze and Songea UWSSAs contrary to the requirements
of cited Rule.

Further, Rule 31 of the Water Supply and Sanitation
(Quality of Service) Rules, 2016 requires disconnected
water service to be re-connected within 24 hours upon the
customer resolving the issue that led to disconnection.
However, MORUWASA took 6 to 36 days to reconnection
Most of these Authorities pointed out challenges of

materials and equipment to be the main cause for late
connections. Failure to meet new connection demands
affects UWSSAs revenue adversely as they could have
started earning revenue if they connected them earlier. In
addition, delays hinder customers from accessing clean and
safe water.
I recommend that UWSSAs ensures all materials required

for new connections and reconnections are available for
the connection services and improve water service
levels by aligning with Water Supply and Sanitation
Rules.
14.8 Raising Water Bills Without Using Water Meters

The Memorandum of Understanding between UWSSAs and
Ministry of Water requires water authorities to have a
continuous monitoring of water production and distribution
in terms of quantity and quality. Also, as per the Water
Act, the Authorities are supposed to install water meters
for the purpose of measuring the amount of water
produced and supplied to customers.
During the current audit, I noted that some UWSSAs billed

their customers based on estimated rather than the actual
water use although the customers concerned had water
meters. For instance, DAWASA estimated bills of TZS 3.82
billion for 29,832 (11% of total customers) metered
customers. These customers had estimated bills for a
period ranging from 1 to 14 years without actual readings.
Most of these fails to issue bills based on actual reading

because of insufficient staff for meter reading, and lack of
data entry clerks as well as logistical challenges.
I further noted Musoma and Songea UWSSAs did not install

meters for all their customers because lack of funds and
thus billing are based on estimates which are prone to
errors and eventually might result in commercial loss.
Estimated billing has adverse impact on UWSSAs revenue as
actual consumption might be higher than the estimates
while unbilled customers are prone to the risk of fraud as
dishonest employees might be colluding with them for
personal advantage.
I recommend that UWSSAs address the above anomalies

by instituting measures such as getting Government
support (Ministry of Water) that will ensure metering and
billing issues are resolved i.e. all customers be metered
and ensure meters are read every month in order to
issue realistic bills that are based on actual
consumption.
14.9 Inadequate Coverage of Sewerage Infrastructure

The national directives are for all UWSSAs to reach
sewerage coverage target of 40% of the population by
June 2021.
The UWASSAs infrastructure assessed during my audit was

identified with low level of sewerage coverage while
demand for connection is high. The UWASSAs inability to
keep pace with their customers demand was largely
contributed by high cost of connection and investment of
aiding infrastructure such as oxidations ponds and sludge
drying beds. Some of the sewerage facilities are obsolete
that require major rehabilitation and increased population
that require massive expansion.

For instance, DUWASA’ coverage of infrastructure is only
22% which does not meet the current and future demand
of the rapidly growing Dodoma City. This has been
contributed by Authority by not taking action in
implementing Nzunguni sewerage project while
compensation of TZS 622 million has already been paid to
the resident since 2015 to vacate. Other UWSSAs with low
level of sewerage includes Dar es Salaam (10%), Tanga
(7%), Arusha (8%), Bukoba (5%), Iringa (18%), Morogoro
(6%), Moshi (32%), Mwanza (23%) and Songea (8%).
I recommend that the mentioned Water Authorities seek

Government support to finance construction of sewerage
infrastructure so as to increase sewerage service to
achieve the national target of 40% by 2021.
14.10 Tariff Fees charged requires restructuring

Energy and Water Utilities Regulatory Authority (EWURA) is
required to examine and approve tariffs charged for the
provision of water supply and sewerage services submitted
by UWSSAs.
DAWASA has continued to charge the same tariffs to

customers even after its amalgamation with DAWASCO.
This included operator’s tariff of TZS 1,106, first new
connection tariff TZS 61 and lessor tariff TZS 496. This is
contrary to the Section 26 (c) of the DAWASA Act of 2001
that requires reviewing and issuing new tariff due to the
new arrangement where an operator and lessor is one and
the same thing.
I further noted MORUWASA delayed in submission of

application for a new tariff to EWURA by 420 days.
Application for new tariffs was made in May 2019 instead
of January 2018 required under Section 4 (2) of EWURA
Tariff Application and rates setting rules of 2017 As the
result, it used the rates that pertained to the year

2017/18. Application of old rate led to undercharge that
amounted to TZS 165.07 million.
I recommend that DAWASA communicate with EWURA so

that new tariff can be reviewed and approved to reflect
the current arrangement of lessor and operator being
one entity. Further, I recommend that UWSSAs have
procedures in place that will ensure correct tariffs are
applied as approved by EWURA.

CHAPTER 15
REVIEW OF HIGHER LEARNING INSTITUTIONS
15.0 Introduction
Higher Learning Institutions are among Public entities that
receive review subventions from the Government as a
source of revenue to finance their recurrent and
development expenditures. Assessment of operational
efficiency of higher learning institutions is vital for the
development of body of knowledge in the country and
realization of value from the investment in tertiary
education. My responsibility is to evaluate efforts
deployed by the Higher Learning Institutions to achieve
targeted objectives of promoting education in the country.
During the review of the performance of higher learning

institutions I reviewed the operations and financial
statements of University of Dar es salaam, University of
Dodoma, Mzumbe University, Sokoine University of
Agriculture (SUA), Open University of Tanzania (OUT), Dar-
es-Salaam University College of Education (DUCE), Ardhi
University (ARU), National Council for Technical Education
(NACTE) and Tanzania Engineering and Manufacturing
Development Organization (TEMDO).
During my review, I noted , anomalies in conducting Tracer

studies in higher Learning Institutions, declining trend of
students’ enrolment and delay in commercialization of
patented intellectual properties, non-accreditation of
technical institutions, password sharing between admission
and examination officer, inappropriate conditions of motor
vehicles used for driving course and inadequate
performance of the proposed organization project as
explained below:

15.1 Anomalies in Conducting Tracer Studies in Higher
Learning Institutions
One of the key targets in Mzumbe University’s Corporate
Strategic Plan (CSP) 2017/18–2021/22 was to develop and
deploy operational policies, guidelines and procedures for
quality monitoring by June, 2018. Further, the University
had targeted to conduct tracer studies for each Campus
College, School, Faculty and Institute by June, 2022.
Mzumbe University conducted one tracer study to

investigate the cause of low enrolment rates in Master of
Science Local Government Management (MSc. LGM) and
Bachelor of Local Government Management (BLGM).
Besides, there were no comprehensive guidelines or

Standard Operating Procedures (SOP) for the study to act
as authoritative reminder to the University’s management
on the importance of conducting Tracer Studies.
SUA planned to conduct six tracer studies out of 29

programmes offered by the University in its Corporate
Strategic Plan 2016/21. For a period of three years from
2016/17 to 2018/19 the University managed to produce
7713 graduates from various programmes. Out of 7713
graduates 7102 were from undergraduates which was
equivalent to 92% and 611 were from postgraduates which
accounts for 8%. During my audit, the University was
unable to provide any report on recent comprehensive
tracer studies conducted because the last comprehensive
tracer studies were conducted in 2004, which creates a gap
of 15 years. Based on Corporate Strategic Plan (CSP)
implementation, I noted that the University conducted only
one tracer study on Vocational Education Training (VET)
out of 29 programmes which were planned to be carried
out at a total cost of TZS 97.45 million out of total budget
of TZS 480 million from 2016/17 to 2018/19. I also found

that the University had no Standard Operating Procedure
(SOP) that provide guidance for conducting tracer studies.
Lack of tracer studies limits the University’s opportunity to

cope with new development in academic matters. In
addition, failure to provide funds for tracer studies
resulted in tracer studies remaining at hold and the
intended objectives for the tracer studies could not be
achieved.
I recommend that Universities develop comprehensive

operating procedures to be used as guidance for
conducting tracer studies and solicit and commit funds
for the studies.
I also, noted that Open University of Tanzania (OUT),

University of Dar-es-Salaam (UDSM) and National Institute
for Transport (NIT) did not conduct any tracer studies for
its graduants and programs. Strategic plan indicated that
OUT planned to adopt a tracer studies framework by June
2020, but six months before the timeline of the mentioned
milestone none of the mentioned activity had been
planned and implemented. UDSM did not set aside budget
to carry out the tracer studies and the last comprehensive
tracer studies were conducted in 2003, which creates a gap
of sixteen years.
NIT established Alumni portal and through this portal they

have been able to track some of their students. Currently,
the Institute is implementing the World Bank project in
which one of the key activities is to conduct tracer studies.
Through the project, four (4) academic staff have been
trained on tracer study skills which has been planned to be
conducted in financial year 2019/20.
Under this circumstance, the Universities might not be in

position to determine comprehesively whether programmes

they offer meet market requirements so as to make
informed and evidence-based decisions about
improvements in quality education and services. Similarly,
curriculum development and reviews might not be
adequately informed by a structured feedback mechanism
and thus not addressing the skills gap in the market.
I recommend that Management of Universities develop a

cost-effective mechanism for carrying out tracer studies
and set standard operating procedures that will guide in
conducting the racer studies. In addition, review of
curriculum development needs to consider tracer studies
in order to address the current needs of the market and
the industry for the benefit of the country.
15.2 Declining Trend of Students’ Enrolment in Higher

Learning Institutions
15.2.1 Postgraduate Students
According to Mzumbe University and SUA Corporate
Strategic Plans (CSPs) for the period 2017/18 – 2021/22,
Mzumbe University had a target to increase Students
enrolment by 9% for postgraduates by June 2022 and SUA
had a target to increase postgraduates from 751 in
December 2015 to 2000 in June 2021. However, I noted a
decrease in postgraduate students from 620 in 2016/17 to
576 in 2018/19 for SUA and from 1,592 students in 2014/15
to 730 students in 2018/19 for Mzumbe University as
indicated in Table 44
Table 44: Declining Trend in Postgraduate Students

University Academic No. of enrolled (%
year students Change)
Mzumbe University 2014/15 1592 0
2015/16 1546 -3
2016/17 1016 -34
2017/ 18 961 -5
2018/ 19 730 -24

University Academic No. of enrolled (%
year students Change)
Sokoine University of 2016/17 620 0
Agriculture 2017/18 813 31
2018/19 576 -29
SUA had formed a task force to analyse the decreasing

trend on enrolment of postgraduate students and the team
prepared a draft report that proposed strategies to
mitigate the declining trend. They incorporated in its CSP
strategies to expand the existing programmes and establish
new demand driven one that will help increase the number
of postgraduate students. Despite good strategies in CSP,
no funds were allocated in recast budget for
implementation of these strategies.
I further noted that the enrolment of Postgraduate

students for the University of Dar-es-Salaam decreased
from 2810 in 2016/17 to 2757 in 2017/18 to 2665 students
in 2018/19. On the other hand, even postgraduate students
who graduated declined from 1,020 reported in 2017/18 to
729 reported in 2018/19.
I am concerned that inadequate investment in outreach

and advertisement of postgraduate could lead to non-
achievement of Corporate Strategic Plans target to
increase postgraduates and this has an impact on the
institutions mandate delivery and internal revenue.
I recommend that the Universities develop a

comprehensive strategy for outreach and advertisement
by using hybrid approaches of social media and
hardcopies such brochures to meet the postgraduate
targets in CSPs.

15.2.2 Undergraduate Students
During the audit, I noted that Sokoine University of
Agriculture operates 29 undergraduate programmes in
which 8292, 8962 and 10691 students were enrolled in
2016/17, 2017/18 and 2018/19 respectively. Assessment
made based on 29 programmes for a period of five years
indicated that the enrolments were increasing, but seven
(7) programmes were declining as indicated in Table 45.
For a period of five years from 214/15 to 2018/19 there has

been a decline in enrolment in Bachelor Degrees in Science
in Bio-Processing and Post-Harvest Engineering together
with Bachelor of Science with Education (Information and
Mathematics) by 84% (from 85 to 14 students) and 48%
(from 96 to 40 students) respectively. Despite the declining
trend of students in seven programmes, the University had
not conducted a formal research to establish the reasons
for decline.
Table 45: Decline in Enrolment of Undergraduate

Students
S/ List of Undergraduate Academic year
N course 2014 2015 2016 2017/ 2018
/15 /16 /17 18 /19
1. Bachelor of Science in 95 73 20 19 42
Education (geography &
maths)
Informatics
Irrigation & Water
Resource Engineering
Bio-Processing & Post-
Harvest Engineering
Applied Agricultural
Extension
6. Bachelor of Science with 83 72 21 19 52

S/ List of Undergraduate Academic year
N course 2014 2015 2016 2017/ 2018
/15 /16 /17 18 /19
Education (Chemistry &
Mathematics)
7. Bachelor of Science with 96 87 27 20 40
Education (Information &
Mathematics)
Further, my review of the implementation of the

objectives set in the DUCE’s rolling Strategic Plan (2016-
2019/20), I noted that the College planned to attain
enrolment of 7,750 students by 2019. However, only 5,353
students were enrolled by September, 2019.
The decline in enrolment of undergraduates’ programmes

might be caused by non-marketability of the programmes
in the market and this has an impact on internal source of
revenue and on fixed cost used to operate those
programmes in terms of utilities and lecture theatres.
I recommend that SUA and DUCE review their

programmes and come up with more innovative
strategies to increase the enrolment of students.
15.2.3 Delay in Commercialization of ARU Patented Intellectual

Property
Strategic plan of ARU covering financial years 2017/18 -
2019/20 requires at least three research outputs to be
patented by June, 2019. Further, section 5.2 of the
University intellectual Property Policy 2018 requires
research activities and results that led to discoveries and
inventions to be reported to the University Organs. During
the audit I noted that only one research titled “The
Treatment of Water Using Natural Coagulant 2013” was
patented in April, 2013 but up to June, 2019 it was not
commercialized. This deficiency is partly contributed by
the lack a guideline that requires commercialization of the

intellectual properties. The failure to commercialize the
patented innovation may eliminate benefits that the
society would have obtained from deployment of
knowledge.
I recommend that ARU prepare guidelines for

commercializing patented intellectual properties and
introduce them to the public domains to enhance easy
branding of the University and to support the society.
15.3 Subsidiary Company Need Treasury Registrar Ratification

Mbeya University of Science and Technology (MUST)
registered a subsidiary company on 17th November, 2011
under the name of MIST Engineering Contractors Limited
(MISTECO) that started operations on 1st April, 2017.
During the audit I noted that MISTECO was not ratified by

the Treasury Registrar in accordance with the Government
directive issued on 9th November, 2018 through a circular
with reference number CLC.154/337/01/19.
Treasury Registrar might not have enough details about the

company as a Registrar of public entities; hence fail to
make appropriate decisions about the subsidiary companies
in public entities.
I recommend that management obtain ratification of the

newly formed subsidiary company from the Treasury
Registrar.
15.4 Non-Accreditation of Technical Institutions

Section 4 (1) (a) of National Council for Technical
Institutions (NACTE) Act of 1997 requires NACTE to register
and accredit all institutions and their departments. In
addition, Regulation 5 of Accreditation and Recognition
Regulations of 2001 requires technical institutions to be
accredited by NACTE within six months after obtaining full
registration.

However, during the audit I noted that NACTE had not
accredited 18 institutions with full registration. The council
may not perform quality assurance and regulatory functions
effectively.
I recommend that, NACTE ensure that 18 institutions are

accredited in order to perform quality assurance and
regulatory function effectively.
15.5 Sharing of Passwords among Admission and Examination

Officers
During my visit to higher learning institutions, I noted that,
admission and examination officer are sharing password in
almost all institutions that I visited. In many cases, I noted
that Admission and Examination officers who were
registered by NACTE were no longer working with
institutions or were on study leave or transferred to other
institutions. However, their passwords were being used by
other staff members who were registered by NACTE in
admission of students and uploading of examination
results.
Institutions may face difficulties in holding any person

responsible in case any problem occurs in admission and
uploading of examination results.
I recommend that, management of NACTE ensures that

passwords are not shared among admission and
examination officers so as to improve controls.
15.6 Inappropriate Conditions of Motor Vehicles Used for

Driving Training at VETA
Shinyanga VTC has been allocated with two motor vehicles,
Toyota Surf with registration No. SU 37349 and Nissan
pickup with registration No. SU 39838 manufactured in
1989 and 1999 respectively, which are used for driving
course training.

Due to old age of these vehicles, they have been fully
depreciated and their maintenance costs for the financial
years 2017/18 and 2018/19 amounted to TZS 25.87 million
and TZS 32.70 million respectively. These expenses are
huge, and the funds could be used to acquire better and
modern secondhand vehicles for the trainings.
Likewise, Mwanza RVTSC has five (5) motor vehicles that

are used in training for driving short courses. These
vehicles have been used for more than twenty years and
have been fully depreciated. These vehicles consume an
average of 1 litre per 5.1 km.
Moreover, Mwanza RVTSC owns a Minibus (Asia Comb) with

registration number SU 34755 for the purpose of training
and other operations of the office. However, the vehicle
has been abandoned for more than two years despite being
in repairable condition and used for training and other
official duties.
Management attributed the noted deficiencies to budget

limitations and restrictions on procurement of used motor
vehicles for all public institutions. Management also
explained that they continued to liaise with various
authorities/companies including TRA for
assistance/donations of used motor vehicles for training.
I recommend that VETA allocate funds for acquisition of

better and modern vehicles for better trainings at low
running costs of the vehicle used.
15.7 Inadequate Performance of Designing Projects TZS 211

Million
During the financial year 2018/19 TEMDO started to
implement two of projects of design and fabrication of a
mini crude palm oil processing plant and high-quality
cassava flour (HQCF) plant. The budgets of the projects

were TZS 30 million and TZS 181 million and during the
year under review a total of TZS 15.95 million (53%) and
TZS 34.19 million (40%) respectively were released.
Management explained TEMDO encountered unavailability

of some material for Stainless Steel 304 which delayed the
implementation of the project. Besides, shortage of funds
was the main cause for under implementation of these
projects.
I recommend that TEMDO liaise with the responsible

Ministry to release the project funds as planned and the
projects are implemented as per indicated schedule.

CHAPTER 16
MANAGEMENT OF CASH AND CASH EQUIVALENTS
16.0 Introduction
Management of cash and cash equivalents encompasses
collection, handling, and usage of cash. It also involves
assessing market liquidity, cash flow, and short-term
investments.
Public Authorities have to manage cash and cash

equivalents so as to meet daily financial obligations as they
fall due, good cash management program can significantly
influence the efficiency of operations of the Authority
since planned activities can be fully implemented when
sufficient fund to finance the budget is available.
This Chapter highlights weaknesses noted during the review

of cash and cash equivalent management programs within
the Public Authorities which involved assessment of
internal control measures for cash, management of bank
accounts, and management of cash flows.
16.1 Ineffective Utilization of Government Electronic

Payment Gateway (GePG)
The Government through the Ministry of Finance and
Planning (MoFP) established Government Electronic
Payment Gateway System (GePG) in order to improve the
revenue collection management. The system intends to
standardize revenue collection practices within the
Government and its institutions as well as increase
visibility of the transactions at all stages of collection
process.
MoFP through the Treasury Circular No. 3 of 4th September,

2017 operationalized the requirement by advising the
permanent secretaries to ensure that all government
revenues are collected through GePG.

During my assessment of the Public Authorities’ compliance
with the Treasury Circular on the utilization of GePG
system in collecting public revenues identified the
following deficiencies in various entities: -
16.2 Non-utilization of GePG at Ubungo Plaza Limited

audit,Ubungo Plaza Limited does not use GePG system in
revenue collection contrary to the requirement of the
Treasury Circular No. 3 of 4th September, 2017. The
management argued that they had already started
communication with the Ministry of Finance and Planning
and effective implementation of the system is planned to
commence on 31st March, 2020.
I recommend that Ubungo Plaza Limited make follow-up

with the Ministry to ensure that GePG system becomes
effective within its operations as planned so as to
increase visibility of revenue transactions.
16.3 Ineffective Utilization of GePG System at Dar es Salaam

Marine Institute (DMI)
Dar es Salaam Maritime Institute (DMI) had started using
GePG system in July 2018. However, during the year under
review, USD 184,750 and TZS 451 million were collected
through other Institute’s bank accounts No. 012105004460
and 011103020561 respectively not linked with GePG
system contrary to the Government directive. DMI revenues
collected by through bank accounts not linked with GePG
system.
I, therefore, recommend that Dar es Salaam Maritime

Institute (DMI) ensure that GePG system is fully used in
collecting all of its collections.

16.4 Revenue Collected Without Using GePG at KADCO TZS
19.5 Billion
KADCO had collected cash amounting to TZS 27.7 billion
from different sources like Tender Application, Medical
Charges, VIP use, Temporary Pass, Landing fee and Rent.
However only TZS 8.2 billion was collected through GePG
system and the remaining TZS 19.5 were not collected
through GePG system. Collections of revenue without using
GePG system creates loophole for misappropriation of fund
and reduces efficiency in revenue collection.
I recommend that KADCO fully apply GePG system in

collection all of its collections.
16.5 Revenue Collected Without Using GePG at DUWASA TZS

169.38 Million
Dodoma Urban Water and Sanitation Authority (DUWASA)
received revenues amounting to TZS 169.38 million from its
customers directly into different DUWASA’s Bank Accounts
without raising customer control number from GePG
system. Further, I was not availed with the descriptions of
the customers who made the payments. Refer to Table 46
below for details.
Table 46: Funds Collected Without Using GePG

Bank Name Total Collections Collections Collections
(TZS) through GePG without
(TZS) GePG
(TZS)
(A) (B) (A-B)
NMB 3,845,044,727 3,759,500,828 85,543,900
CRDB 1,275,911,578 1,197,968,321 78,539,087
NBC 21,806,731 20,431,821 1,374,910
TPB 36,006,950 32,085,550 3,921,400
Total 5,178,769,986 5,009,986,520 169,379,297

Collecting revenue out of GePG system may lead to loss of
funds which could have been collected and utilized to
implement operational and development activities.
I recommend that DUWASA ensure GePG system is fully

used in its revenue collecting procedures and make
reconciliations among PASTEL, GEPG, BANK and SBM
systems to control collection.
16.6 Dishonoured Cheques Balance at National Social Security

Fund (NSSF)
I reviewed the bank reconciliation of the Fund and noted
the balance relating to dishonoured cheques amounting to
TZS 13.9 billion (2018: TZS 11 billion). The balance relates
to contribution from members prior to April 2019 when the
Fund stopped accepting cheques as a mode of payment by
employers and members when submitting the monthly
contributions. The balances are long outstanding and ages
more than 4 years.
Further, the balance has increased from prior year by TZS 2

billion which is an indication that there are no rigorous
procedures in place by management to clear the balance.
There is a risk that the long outstanding cheques may not
be recovered from the respective employers.
I recommend that NSSF ensure proper controls are in

place to ensure that all cheques that are not cleared are
followed up from the respective employers on a timely
manner.

CHAPTER 17
MANAGEMENT OF PROPERTY, PLANT AND EQUIPMENT
17.0 Introduction
Property, Plant and Equipment (PPE) are Non-Current
assets maintained and used by an entity in the process of
provision of its services or in production of its product.
From the review management of PPE in the Public Entities I

noted that most of the Public Entities face challenges in
locations, quantity, conditions, maintenance, depreciation
and maintenance of registers for their Non-Current Assets
as detailed below;
17.1 Delay in Completion of Design and Build a berth at

Mtwara Port
On 4th March, 2017 TPA entered into Contract No.
AE/016/2015-16/CTB/W/37 with China Railway
Construction Engineering Group and China Railway Major
Bridge Engineering Group JV to design and build of One
Additional Berth at Mtwara Port at contract sum of TZS
137.39 Billion to be on in February 2019 being 21 months
from commencement date.
Up to 31st October, 2019, the project’s progress report

showed that the stage of completion was 42 percent only.
The slow implementation of the project was contributed by
substantial delay in finalizing detailed design by the
contractor since it was design and build and delay in
engaging a consultant named INROS LACKNER with contract
No. AE/016/2016-17/CTB/C/08 where the contract was
signed on 26th February, 2018 at a price of TZS 5.01 billion.
Due to this, the Port fails to attain its intended objective

of the project of increasing the port’s capacity to handle
more than 1,000,000 from 400,000 tons of imports of

mainly cement, food stuffs, and miscellaneous general
cargo and exports of unprocessed cashew-nuts.
I recommend that Management make close follow up to

ensure the project is adequately completed to the Port
Achieve its objective.
17.2 Delay in Disposing of Assets Held for Sale TZS 4.34

Billion
Assets held for sale are assets available for immediate sale
in their present condition in respect of which there is high
probability that sale exercise would have been completed
within one year from the date of reclassification. The
carrying amounts of the assets held for sale is expected to
be recovered through the sale rather than through
continuing using them.
I learnt that TANAPA and NCAA had various asset held for
sale of TZS 1.71 billion and 2.63 billion respectively making
total of TZS 4.34 billion. However, the assets have not
been sold yet. Delay in disposing of the assets means that
less amount will be realised on disposal of the assets.
I recommend that management ensure the assets are

disposed of within one year to recover high sales
revenue and to avoid possible loss from impairment.
17.3 Presence of Idle Generators at Zone Offices of TZS

614.96 Million
Tanzania Broadcasting Corporation (TBC) has a total of 16
generators at various zone offices that were purchased in
2007 at a total cost of TZS 614.96 million. I learnt that the
generators are not used as they are of high capacity thus
high rate of consumption of which costs are unbearable to
Corporation.
The generators have therefore been left idle while their

conditions and value continue to deteriorate.

I recommend that TBC liaise with the Government or any
relevant authority to chart out better ways of disposing
of these Generators.
17.4 Unintended Uses of Staff Houses TZS 570 Million

Ruaha National Parks (RUNAPA) management requested a
development project from TANAPA for construction of 4 in
1 staff houses at Nyaruu ranger post which involved a
contract price of TZS 226 million. The houses were
completed handed over to RUNAPA on 11th September,
2018. However, during a site visit I learnt that the houses
are used by MBOMIPA Community Organisation contrary to
original intention of building them. Due to this TANAPA
funds were misallocated as intended economic benefits do
not accrue to RUNAPA.
I recommend that RUNAPA ensure houses are used for

intended purposes so to achieve value for money of their
construction.
TAWIRI has 5 houses valued at TZS 344 million which are

now dilapidated due lack of regular maintenance and they
are vacant due to shortage of staff and research activities.
If the houses continue to remain in severe state of disrepair
for a long time, they may become inhabitable hence high
cost of repairing them or be condemned and then
demolished.
I recommend that TAWIRI prepare maintenance plan for

assets and implement it as required by section 14 of
Public Assets Management Guidelines, 2019; and set
funds aside to the above noted houses.
17.5 Matters Arising from Land Ownership

Landform part of entity’s non-current asset that
reports the cost of real property exclusive of the cost
of any constructed assets on it. Entities face challenges

mostly on ownership (title deeds), revaluation and
amortization. From the review of Land property, I
revealed the following deficiencies: -
17.5.1 Lack of Legal Ownership House and Land at Morogoro

Open University of Tanzania (OUT) purchased both a house
and at Plot Number 680 Block 'J' in Kihonda Area at
Morogoro Municipality for TZS 630 million and had fully
paid the seller whereby the sale agreement was signed on
1st December, 2015.
During my site visit, I found that bills for land rents still
come in the name of previous owner indicating that the
ownership of the land has not been transferred to the
University yet although about 3 years had passed since the
sale was concluded.
I recommend that the Management transfer ownership of

the land to OUT as early as possible as it is almost three
years now since the final instalment was paid.
17.5.2 Plots of Lands not Recorded in Assets Register

TPC asset register showed that the Corporation had Plots
Nos 33, 34, 35 & 36 at Makambako which are not in TPC
assets register despite the fact that TPC has title deeds for
these plots. Further, the plots were built investments
which include a guest house, shop frames and social hall by
a tenant who pays a monthly rental fee of TZS 500,000
(TZS 6 million annually) to the Corporation.
Management explained that TPC has an agreement with the

tenant and which stipulates that the tenant will handle
over investment property to TPC after recovering all of his
costs from investments without demanding time frame. I
further noted that TPC did not establish actual cost
incurred during construction and how much costs have
recovered to date after 18 years of operations.

I recommend that management of TPC establish
construction costs, amount of cost recovered to date,
time period for transferring the property back to the
Corporation and record the properties in Corporation’s
assets register.
17.5.3 Land Disputes Between HESLB and TIE

TIE holds a lease title No.49223 issued on 1st January, 1999.
According to clause No. 2 of MoU entered on 11th August,
2010, between Tanzania Institute of Education (TIE),
Higher Education Students’ Loans Board (HESLB) and
Vocational Education and Training Authority (VETA), it was
agreed that upon transferring of the property to its
ownership, TIE shall cause the property to be sub-divided
into four plots, two of which shall be under sublease
arrangement with separate sublease of HESLB and VETA.
In the same year, another lease agreement was signed on

18th October, 2010 between TIE and HESLB of which Clause
8 (b) (ii) requires TIE to surrender the main title to the
Commissioner for lands and initiate due process to get a
new title deed in the name of the Lessee, HELSB in respect
of the subject of the lease. Under both arrangements, both
VETA and HELSB were required to promptly compensate TIE
by 100% of the value of respective plot, which is TZS
769.23 million as valued by Ardhi University.
From these arrangements, there is a contradiction between

MoU which was signed on 11th August, 2010 and agreement
that was signed on 18th October, 2010 as HESLB cannot
make decisions on the plot of land because it is not clear
whether the land has been subleased based on MoU or
transferred based on the agreement signed between HESLB
and TIE.
I recommend management of HESLB and TIE work

together to resolve the land dispute as stipulated by

clause 8 (a) and (b) of the agreement by seeking
intervention of Accounting Officer (s) of the Ministry
responsible for Education and Vocational Training or by
arbitration in accordance with arbitration laws.
17.6 Delay in Implementation of Tabora Regional Office

Construction Project
On 24th July, 2014 NHIF bought a plot No. 667 Block L at
Kanyenye with 3314 square meters from Tabora Municipal
at TZS 198.84 million for the purpose of building Fund’s
regional office. The purchased land was occupied by petty
traders where according to Clause 10 of sale agreement, it
was agreed that the Fund will be required to construct
house Bandas in another place for the Petty trader so as to
relocate them there. Clause 12 require Tabora Municipal to
provide another piece of land to be used to by the Fund
build the house Bandas before it starts construction of its
own office.
During the physical verification of Plot No 667 Block L at

Kanyenye Area, I learnt that the intended construction of
regional office was yet to commence, and the plot is still
occupied by the petty traders. Moreover, construction of
House Bandas for petty traders is yet to commence and the
Land provided by the Municipal was then occupied by
intruders who run their various economic activities.
I recommend that management ensures that the

construction of Tabora Regional Office project together
with Banda house is implemented as agreed in the signed
MoU so as to avoid unnecessary costs. Also, the Fund
implement the project as planned.

CHAPTER 18
PROCUREMENT AND CONTRACT MANAGEMENT
18.0 Introduction
Procurement and Contract Management in Public Sector is
guided by the Public Procurement Act, 2011 (as amended
in 2016) and its Regulations of 2013 (as amended in 2016).
To ensure that procurement activities are undertaken

consistently to a high standard, efficiently and
economically so as to achieve economy, social and
environmental benefits, compliance with Public
Procurement Act, 2011 (as amended in 2016) and its
Regulations of 2013 (as amended in 2016) are highly
emphasized and monitored by the Public Procurement
Regulatory Authority (PPRA).
PPRA is a regulatory body established under the Public

Procurement Act. The Authority is charged with regulatory
functions and vested with oversight powers and
responsibilities on all public procurement activities carried
by all public bodies in the mainland Tanzania.
This chapter highlights weaknesses noted during the review

of procurement processes in Public Authorities and other
Bodies, the following are identified deficiencies:
18.1 Delays in Execution and Completion of Awarded Tenders

Regulation 114 (a) of Public Procurement Regulations of
2013 (as amended in 2016) states that a procuring entity
shall be responsible for the effective management of any
procurement of goods, services or works for which it is
undertaking and shall monitor the costs and timely delivery
of goods and services in the correct quantities and to the
quality specified in each contract. Further, sub regulation
(b) requires a procuring entity to monitor the progress and

timely completion of works in accordance with the terms
of each contract.
I reviewed the progress of execution of awarded contract

in Public Authorities and noted the following:
18.1.1 Delays in Supply and Commissioning pontoons USD 1.1

Million
On 07th March, 2018 Tanzania Port Authority (TPA) and M/s
Songoro Marine Transport Co Ltd entered into a contract
under Tender no. AE/016/2016-17/CTB/G/14 for Supply
and Commissioning of three (3) Units of Modulus Passenger
Landing Pontoons for Dar es Salaam Port worth USD 1.1
million equivalent to TZS 2.6 billion Delivery Duty Paid
(DDP) Dar Port. The completion date of the contract was
6th February, 2019.
I noted that the pontoons were not delivered on 6th

February, 2019 which was eleven months from the date of
contract signing and there is not extension of time. I
revealed TPA had a dispute with the contractor on the
scope of work as a result the pontoons have not been
commissioned. The contractor claims the construction is
for one unit of passenger landing pontoon with three
modules while TPA standing is on three units of passenger
landing pontoons with three modules each.
On 27th December, 2019, Management agreed with the

contractor to pay the contractor USD 783,970.68 to
construct one unit of passenger landing pontoon with three
modules instead of three units of modules type each and
deduct the supplier 10% of the original contract price
which is USD 119,709 as compensation to TPA for
fundamental breach of contract according to clause 18 SSC
(GCC Clause 17) of the contract.

Both parties agreed that contract specifications were not
very clear to the contractor and that might be the cause of
unrealistic contractor’s bid so it is unlikely to settle the
matter by forcing the contractor to construct three units of
pontoons with three modules and a fresh tender should be
invited for the remaining two units. Based on the facts
agreed by both parties, the Evaluation team should have
detected the unrealistic contractor’s bid since it reviewed
the tender documents in both aspects of technical and
financial evaluation.
On 4th February, 2020 the contractor informed TPA that the

pontoon will be delivered for inspection and acceptance on
15th February, 2020 at mooring area anchorage D as
directed via letter with referenced
SMT/ADM.3/FLOATING/19-28/13. On 20th February, 2020
the pontoon was received by TPA as per delivery note No.
SM/02/20.
I recommend TPA’s Management ensure that the

compensation on breach of contract is deducted from
the contractor’s contract fee as agreed.
I further recommend that TPA’s Tender Board emphasize

on selection of competent evaluation team which will
professionally and effectively evaluate tenders to avoid
reoccurrence of similar mistakes.
18.1.2 Delay in Supply and Installation of Rubikon Server at TPB

TZS 618 Million
On 20th August, 2018, TPB entered into a contract with M/s
Sunheralex consulting for supply and installation of Rubikon
Server for TZS 618 million for a period of 6 weeks.
I noted that M/s Sunhrelax Consulting supplied and

installed the Sever on 19th February, 2019 which was a 4
months delay from the contract end date which was on 1 st

October, 2018. The planned activities of using the server
had to be delayed for the whole period of delay in delivery
of the server by the Supplier.
I recommend that TPB emphasize on proper

management of contract to ensure execution of awarded
tenders as per terms and conditions stipulated in the
contract.
18.1.3 Delays in completion of construction of AUWASA Main

Office TZS 7 Billion
On 9th October, 2018, Urban Water Supply and Sanitation
Authority (AUWSA) entered into contract No.
AUWSA/AfDB/W/005/2017 with TANCHI Brothers
Construction Co. Ltd for construction of AUWSA main office
for TZS 7 billion for a contract period of sixteen (16)
months from 15th October, 2018 to 15th February, 2020.
I noted that as of 23rd October, 2019, the advance payment

of TZS 1 billion was already made to the contractor and
work performed was less than 10% while twelve (12)
months equivalent to 75% of the contract period had
already elapsed. Further, contract performance guarantee
and advance payment guarantee had expired on 22 nd
October, 2019.
I recommend that AUWASA’s Tender Board and

Management seek for legal advice from the Attorney
General on actions to be taken towards TANCHI Brothers
Construction Co. Ltd for delay in the implementation of
the contract.
18.1.4 Abandoned Projects in Kilosa and Dakawa TZS 549

million
a) Kilosa Project
On 7th August, 2017 of Morogoro Urban Water Supply
and Sanitation Authority (MORUWASA) entered into a

contract with M/s Nangai Engineering & Contractors
Company Limited for Construction of water pumping
scheme, supply and installation of submersible pump
at Njia Panda-Manzese Area, Kilosa Town for TZS 280
million for a contract period of 6 months from 28th
August, 2017.
During verification of implementation of the project, I

noted that, the project had been abandoned for more
than 6 months and installation of pipes and fitting for
distance of 3,647 meters had not been completed by
the contractor and the contract period for the project
had ended and no extension had been made.
Management of MORUWASA explained that, the site

was abandoned due to lack of financial capacity by
the contractor to complete the project despite being
paid in accordance with the construction contract.
b) Dakawa Project
On 7th August, 2017 MORUWASA entered into a
contract with M/s Decady Investment Company
Limited for expansion of Dakawa Water Pumping
Scheme to Mtakuja at a contract price of TZS 268
million for a contract period of 6 months from 21st
August, 2017.
During verification of implementation of the project, I

noted that the contractor failed to connect pipes and
fittings from boreholes to storage tank and to existing
distribution network; as a result, the project was
abandoned for more than 7 months.
The management stated that the site was abandoned

due to lack of financial capacity by the contractor to
complete the project and the contract was

terminated on 05th March, 2019 through letter
Referenced No.UWSS-MG.AC/18/47/08/17.
I consider that the management has failed to monitor the

project as a result the objective of providing adequate
water supply services to the residents of Kilosa and Dakawa
may not be achieved in a timely manner and value for
money of the project abandoned could not be attained.
I recommend that, MORUWASA ensure liquidated

damages are charged to contractors for breach of
contract and ensure both projects are completed so as
the objectives of the projects are attained.
I further recommend that MORUWAS’s Tender Board

emphasize on selection of competent evaluation team
which will professionally and effectively evaluate the
tender and come up with competent contractors.
18.1.5 Payment of TZS 996.56 Million for Service Affected

Before the Service Delivery at Medical Stores
Department (MSD)
On 21st August, 2018 MSD entered into a contract No.IE
009/2017/2018/HQ/NC/80 with Toyota Tanzania Ltd for
servicing MSD Toyota land cruisers at a contract price of
TZS 996.56 million for a contract period of 3 years or for
next 75,000 Kms for each vehicle from inception mileage
whichever event occurs first.
During the review of the implementation of the contract I

noted that, the management paid TZS 996.57 million to
Toyota Tanzania Ltd before receiving the services from
supplier as per clause No.4 of the contract contrary to reg.
132(2)(a) which requires the procurement entity to effect
payments for goods and services delivered and accepted.
Further the contract price exceeds the budget by 446.5

million and there was no budget for the excess amount on

this procurement. This is contrary to Para 224 of MSD
Financial Regulations 2011, which states that before any
purchase is approved the Director General shall ensure that
the proposed expenditure is sufficiently covered under a
specific approved budget allocation and the annual
procurement plan.
Furthermore, I noted that, there is no evidence of training

provided by Toyota Tanzania Ltd during the year 2018/2019
as per contract agreement. This is contrary to terms of
reference for value and service contract arrangement
No.10 which stipulates that Toyota Tanzania Ltd shall
provide a free one-off training to MSD drivers on proper
driving skills to avoid mismanagement of vehicles. Training
shall be provided in the following centers; Dar es Salaam,
Arusha, Mwanza, Dodoma and Mbeya.
I recommend that MSD ensure Toyota conducts training

to all drivers as stipulated in the contract so as they may
be able to monitor all services provided by Toyota to
enhance quality service throughout the execution of the
contract.
18.2 Failure to Clear 230 Containers for KTPIP Project at Dar

es salaam Port USD 3.5 Million
TANESCO is an implementing entity of a Project of Kenya-
Tanzania Power Interconnection Project (KTPIP) for
construction of the 400kV Singida - Namanga Overhead
Transmission Line. The project is financed by development
partners and the Government of Tanzania.
TANESCO on 7th October, 2016 entered into contracts of

Engineering, Procurement and Construction (EPC) No.
KETRACO/PT/017/2014-PA/001/2015/HQ/W/49 and No.
KETRACO/PT/017/2014-PA/001/2015/HQ/W/49 with M/s
Bouygues Energies & Services and M/s Consortium
Energoinvest-EMC Limited for contrct prices of USD

36,893,079.88 and 30,652,713.80 VAT Exclusive for Babati –
Arusha and Arusha- Namanga respectively.
However, TANESCO had failed to clear 230 stranded

containers for the projects at the port of Dar-es-Salaam
which had resulted in demurrage and storage charges of
USD 3.5 million. The situation is a result of amendments of
Value Added Tax Act of 2017 which came into force on 1st
January 2018 which requires projects to have Government
Notice (GN) in order to qualify for VAT ex-emptions. When
the new law was introduced, a number of consignments for
the project and specifically for the above-mentioned
contracts were on transit to the port of Dar es salaam and
following the changes in the law, the VAT exemptions
applications were subsequently rejected by TRA as from 1st
January, 2018 until the GN Nos 438 and 439 were released
in June, 2019.
TANESCO requested waiver of the accrued charges from

TRA on custom ware-house rent, Shippers on demurrage,
TPA and ICD on storage charges after obtaining the GN Nos
438 and 439 released in June 2019 under the name of the
contractors while the containers were ordered in the name
of TANESCO and so the waiver could not be granted.
I’m of the view that the main cause of the shortcomings

highlighted above, is inadequate coordination, cooperation
and a long of bureaucracy process that actually impedes
inter-ministerial and government agencies to cooperate in
getting the GNs and VAT exemptions.
I further noted, up to the time of audit in October, 2019,

port clearance charges for un- cleared containers stood at
USD 113,483 per day. Further delays in clearance of the
containers will impact the completion time of the projects
and cost in terms of claims from contractors for the delays
which will increase the overall project costs.

The Consultants’ second quarter report (1st April-30th June
2019) shows that, all Transmission Line Contractors have
notified their intention to claim additional costs related to
extensions. Bouygues energies & Service has already
submitted claims of USD 7,717,324 through letter with
reference No HQW49-TZ-CHO-TL-3100-A-442 of 8th October
2019 which is still under the review by TANESCO.
I recommend that Government intervene in this matter

to enable release of the containers to avoid more costs
and to enable completion of the project.
18.3 Payment of Penalties for Delay in Payments TZS 912.97

Million
On 3rd January, 2019 the Ministry of Water, DAWASA and
M/s China Civil Engineer Construction Corporation entered
into a Novation Agreement under Contract No. ME-
011/2013-2014/W/01 for Construction of the Office
Building for the Ministry of Water (Maji House) at Ubungo-
Dar-es-salaam for a price of TZS 44 billion. The Novation
agreement transfers all the rights, liabilities, duties and
obligations of the original employer (Ministry of Water) to
new employer, DAWASA taking into account the terms and
conditions agreed upon in the original contract entered on
10th November, 2014 including its addendums.
Further, Clause 40 of General Condition of Contract

requires the employer to pay the contractor the amount
certified by the project manager within 28 days of the date
of each certificate. If the employer delays the payment,
the contractor will be paid interest on the late payment in
the next payment.
An Interim Payment Certificate No. 13 dated 19th June,

2018 showed that the contractor had charged a total of TZS
912.97 million as interest on delayed payments and out of
which TZS 472.26 million were paid by DAWASA in

respective of Certificate No.12 and TZS 440.71 million
were paid by Ministry of Water.
I recommend that DAWASA avoid escalation of the

project costs by paying the contractor on time.
18.4 Weaknesses noted on the procurement process of a

Consultant for undertaking T-PESA Cashless Project for a
contract price of USD 12,000,000 equivalent to TZS
27,240,000,000 at TTCL Corporation
On 15th February, 2019 TTCL Corporation entered into a

contract with a consortium formed by Paylink Korea Inc,
Ken Hana Card and Atech T & Co. Limited for undertaking
Planning, Designing, Supplying, Installation, Testing and
Commissioning of Central NFC & POS System and Hardware
including Operation and Maintenance on T-PESA Cashless
Project at contract price of USD 12,000,000 (Equivalent to
TZS 27,240,000,000).
During the review of tender file No. PA/032/HQ/2017-

2018/G/59 I identified the following deficiencies in this
contractual arrangement:
a) Management of TTCL proceeded with the

procurement process contrary to the advice of AG
The Attorney General (AG) advised TTCL to enter into an
investment contract since the nature of contract falls
within Public Private Partnership (PPP) and does not fall
within Public Procurement Act. Further, AG advised the
management to comply with PPP’s Act and consult PPP unit
in the Ministry of Finance and Planning for further guidance
in case they opt for such an arrangement.
The tender board agreed to cancel the tender as per

advice given by Attorney General through its first Ordinary
Tender Board Meeting held on 15th November, 2018. The
Ag. Accounting Officer (Director General) through a letter

with reference number DF 5011/G/59/2017-2018, sent a
notice of cancellation of the tender to Ms Paylink Korea
Co. Ltd a successful tenderer. However, seven days later a
letter dated 28th November, 2018 with ref No. DF
5011/G/59/2017-2018 was sent to Ms Paylink Korea Co. Ltd
to revert the notice of cancellation with explanations that
the corporation was making some internal arrangement of
the matter without affecting the current stage of tendering
process. The decision to revoke the notice of cancellation
of contract was not approved by the Tender Board as there
were no minutes for such discussion and deliberation and
the Ag. Accounting Officer proceeded with signing of the
contract contrary to Section 35 (2) of the Public
Procurement Act, 2011 (as amended in 2016) which states
that, no person or firm shall sign a contract with any public
body unless the award has been approved by the tender
board.
b) Entering into contract with private party without

performance of feasibility study
Section 11(1) of PPP’s Act, 2010 requires, “Every
contracting authority to undertake or cause to be
undertaken a feasibility study where it considers that a
project may be implemented under an agreement for
purposes of assessing whether the proposed project is
feasible as PPP project.” In addition, Section 17(1) requires
the Minister responsible for finance to approves the terms
of the agreement pursuant to paragraph (d) of subsection
(1) of section 10, before the contracting authority proceed
with the procurement process.
Contrary to the cited legal requirements, TTCL did not

undertake any feasibility study on the project or approval
from the Public Private Partnership Unit and the Minister
responsible for finance. Verification of the Procurement
Requisition Form No. 2 shows comment from the
Accounting Officer indicating to have signed the document

on the understanding that TTCL will not invest the said
amount (cost estimate of TZS 12,036,000,000) rather it’s
just vendor financing to be repaid from the “project”
itself. However, PMU proceeded with the procurement
process without conducting and submitting project
feasibility study to PPP Unit and the Minister responsible
for finance for consideration and approval. This is mainly
caused by oversight by PMU on the requirements of Public
Private Partnership Act and its regulations.
c) Un-realistic cost estimates produced by the user

department and increase in project cost by TZS
15,204,000,000
TTCL Procurement Requisition Form No. 2 from the user
department (Information Services) dated 17th April, 2018
indicated total estimated cost inclusive of taxes for T-Pesa
Cashless Project was TZS 12,036,000,000. The balance of
fund available for procurement was TZS 4,400,000,000
although the confirmation for fund balance was not
approved by the responsible Head of Finance. The form
was certified to evidence submission of request by Head of
user department, signed by the Head of Procurement on
receipt of request and authorization to procure granted by
the Accounting Officer under the understanding that the
project will be vendor financed.
However, according to the Price Schedule, paragraph

3.6.2.1 of the 2nd Stage Evaluation report indicates Grand
Summary of Total price for the project as TZS
26,789,072,400 (USD 11,801,353.48) more than twice the
estimated amount by the user department highlighting
inefficiencies project cost estimation and non-performance
of feasibility study.
I further noted that the agreed price of TZS 26,789,072,400

(USD 11,801,353.48) was subject to negotiations as per the
evaluation report submitted by the evaluation committee.

Negotiations held on 2nd August, 2018 shows the price was
reduced to TZS 23,007,043,800 equivalent to USD
10,135,262 as an agreed price for contract
implementation. However, following the formation of SPVC
(consortium) that did exclude the successful bidder Paylink
Tanzania Limited, new negotiations emerged and the
agreed cost of the project rose to USD 12,000,000 (TZS
27,240,000,000) above the agreed amount with the
successful bidder by USD 1,864,738.41. There was no
supporting evidence provided to justify the increase in
project cost/invested capital by such amount.
d) Non-Evaluation of members forming a consortium

Section 72(1) of the Public Procurement Act, 2011 (as
amended 2016) states that, “the basis for tender
evaluation and selection of the successful tenderer shall be
clearly specified in the tender document, (2) The tender
documents shall specify factors, in addition to price, which
may be taken into account in evaluating a tender and how
such factors may be quantified or otherwise evaluated.”
Regulation 203(1) of the Public Procurement Regulations,

2013 (as amended 2016) states that “the tender
evaluation shall be consistent with the terms and
conditions prescribed in the tender documents and such
evaluation shall be carried out using the criteria explicitly
stated in the tender documents.”
Further, BDS Clause 3 supported by ITS clause 3.1 states

that, “Joint Venture “not” applicable. However, during the
bidding process Ms Paylink Tanzania Limited submitted a
request with intent to get in a consortium to carry out the
contract with Hana Card Co from Seoul-South Korea,
Samwon FA from Busan-South Korea, Paylink Korea Inc
from Seoul South Korea and Sinam LLC from Azerbaijan.
The request was accepted contrary to the requirement of

Clause 3 of BDS and without approval of Tender Board to
authorize the changes in tender document.
I noted that evaluation of tender documents was done for

Ms Paylink Tanzania Limited and not to all members
forming the consortium. Ms Paylink Tanzania Limited was
awarded as a successful bidder though was eliminated as
part of the partners forming the consortium.
Furthermore a post qualification was performed to the

partners forming the consortium and it was noted that the
capital of Paylink Korea Inc was 5.5 million Korean Won
(KRW) equivalent to USD 4,742.24 casting doubt on the
financial ability of the lead partner in running the
consortium to carry out the project.
I recommend that TTCL Corporation consider

termination of the contract since the award was not
approved by the tender board, nature of the contract
project is PPP and its requirements were not adhered to
as advised by AG and all the weakness noted in the
procurement process may have negative impact on the
contract implementation.
18.5 Contract not Vetted by Attorney General Involved USD

644,400
On 10th May, 2019 STAMIGOLD Company Limited entered
into contract number PA/125/2018-2019/G/04 with M/s
Shandong Huamin Steel Ball Joint – Stock Co Ltd for supply
of forged steel balls (Grinding media 100mm) for a period
of one year for USD 161,100 per quarter making a total of
USD 644,400 per year.
Reg. 59 (1) of Public Procurement Regulations 2013

(amended 2016) requires contracts whose value is one
billion or above to be vetted by the Attorney General
before the contract is signed by the parties; and Reg. 59

(5) requires an accounting officer upon receiving the
comments from Attorney General to incorporate them in
the draft contract.
From the review of procurement proceedings of the

tender, I found that the contract was signed by both
parties without being vetted by Attorney General.
I consider that, signing contract which is above one billion

without being vetted by Attorney General exposes the
entity to legal risks.
I therefore, recommend that STAMIGOLD Company

Limited ensures in future contracts above one billion
amounts are vetted by Attorney General and advice
provided is incorporated before signing contracts to
avoid legal issues that may arise during implementation.
18.6 Payment for Provision of Security Services without

Contract TZS 1.34 Billion
Regulation 233 of the Public Procurement Regulations 2013
(amended 2016) requires a procuring entity and the a
person whose tender is accepted to enter into a formal
contract within twenty eight calendar days after fulfilling
all conditions prior to the signing of contract and the
formal contract to be in a prescribed form and contain
terms, conditions and provisions set out in the tender
document.
I noted that STAMIGOLD Company Limited paid a total

amount of TZS 1.34 billion to SUMA JKT for provision of
security services for financial year 2018/2019 without
having a valid contract as the existing contract expired on
7th January, 2017.
Payment made without contractual agreement creates

loopholes for fictitious payments and may result in disputes
between the service provider and procuring entity since

there are no obligatory terms and condition in place.
Details of payment are shown in the Table 47 below:
Table 47: Payments Made to SUMA JKT

Date Code Reference Reference Descriptions Debit
(TZS)(000)
18-Jul- CASH SBM/TIB/F CBR02454 INV#4375 46,701
2018 T - 91518
18-Jul- CASH SBM/TIB/F CBR02454 INV#2792 73,299
2018 T - 91518
30-Aug- CASH SBM/TIB/F CBR02530 Payments for
2018 T - 95418 provision of 120,000
security services
24-Sep- CASH SBM- CBR02521 Provision of
2018 TIB/FT - security services 120,000
98218
12-Oct- CASH SBM- CBR02525 Payment for
2018 TIB/FT- provision of 120,000
100618 security services
7-Nov- CASH SBM/TIB/F CBR02530 Payments for
2018 T - 103718 provision of 120,000
security services
13-Dec- CASH SBM/TIB/F CBR02560 Payment for
2018 T - 109518 security services 120,000
(commitment)
22-Jan- CASH SBM/TIB/F CBR02572 Payment for
2019 t - 001819 security services 120,000
(commitment)
26-Feb- CASH SBM- CBR02589 Payment for
2019 TIB/FT- Security service 120,000
005719 ( Commitment)
26-Mar- CASH SBM- CBR02603 Security (
2019 TIB/FT- Commitment ) 120,000
09719
25-Apr- CASH SBM/TIB/F CBR02623 Security
2019 T - 103219 services - 130,000
commitment
31-May- CASH SBM/TIB/F CBR02623 Security service
2019 T - 107819 - commitment 130,000
Total 1,340,000
I recommend that Stamigold Company Limited comply

with requirements of relevant procurement laws and
regulations in managing procuments.
18.7 Claims Damages for Intention to Leasing 88 Ranching

Blocks TZS 7.21 Billion
NARCO’s Tender Board held a meeting on 1st November,
2018 in which members agreed to invite competitive bids

from bidders who are interested to lease 28 ranch blocks in
Uvinza in Kigoma, Kilosa and Mvomero in Morogoro, Siha,
Longido and Meru in Arusha and Kilimanjaro, and Handeni
and Korogwe in Tanga. The same was communicated to the
NARCO’s Accounting Officer (Director General).
However, on 15th March, 2019 management of NARCO

advertised tender under Bid No:
PA/110/2018/2019/HQ/NC/01 for leasing 88 ranching blocks
in Uvinza, Dakawa, Mkata, West Kilimanjaro, Mzeri, Usangu,
Kagoma, Kalambo, Kitengule, Missenyi and Mabale ranches.
The Tender Board minutes for the meeting held on 21st and
22nd May, 2019 show that the Tender Board was not involved
in the decision to increase the number of blocks for lease
from 28 to 88 and requested a written explanation from the
Accounting Officer.
The Tender Board cautioned the management to take into

account new bidders’ Business Plan submissions before
entering into lease contracts and review grounds for
terminating old lessees to avoid possible losses from legal
disputes after reviewing the Bid evaluation report. On 13 th
September, 2019 the Chairman of the Tender Board further
advised the Accounting Officer on more challenges regarding
this tender including the fact that some of the current
lessees whose blocks were advertised have already settled
their outstanding lease payments. The Chairman cautioned
that subdividing the leased blocks before agreeing with
previous lessees holding official titles of 33 years lease
agreements recognized by the Ministry of Lands would result
in complex legal disputes.
However, at the time of concluding my audit in December

2019 no documented disagreement to the Tender Board’s
recommendation or a reference to PPRA for review was
provided by the Accounting Officer. This is contrary to
Regulation 51 of the Public Procurement Regulations 2013

which states that “Where an accounting officer disagrees
with the decision of the Tender Board regarding application
or interpretation of any procurement method, process or
practice by tender under these Regulations, the accounting
officer has to (a) return the decision to the Tender Board for
review giving written reasons for the dissatisfaction; and (b)
where the accounting officer is not satisfied with the
outcome of the review, request for an independent review
by the PPRA stating the reasons for disagreement.
Furthermore, the intended new leasing arrangement failed

to materialize, and the procurement process ended on
evaluation stage after some of the lessees challenged the
process in court by filling Land cases in the High Court of
Tanzania against NARCO for wrongful termination of their
lease agreements. They claim damages totaling TZS 7.21
billion which has been disclosed in the financial statements
of NARCO as contingent liabilities. The lessees have also
suspended payment of rental fees pending court decision for
their filed cases and their current debt status as at 20th
December, 2019 was TZS 528.29 million as shown in the
Table 48. This is a potential loss of revenue and has an
adverse impact on the cash-flows of NARCO until settlement
of the dispute.
I recommend that NARCO take advice of the Tender Board

in Bid processing to avoid unnecessary disputes and
financial losses and make efforts in the management of
the case to ensure that NARCO defense succeed to avoid
crystallization of the contingent liability.
Table 48: Debt Status of Tenants Who Have Filled Land

Cases against NARCO
S/N Ranch Name of 2018/19 2019/20 (TZS) AS AT
Block Lessee (TZS) 20.12.2019
(TZS)
1 Usangu Highlands 106,452,500 35,945,910 142,398,410
Ranch
2 Usangu O.C. Industrial 46,760,500 42,643,315 89,403,815

S/N Ranch Name of 2018/19 2019/20 (TZS) AS AT
Block Lessee (TZS) 20.12.2019
(TZS)
Holding Ltd
3 Usangu Usangu Ranch 49,553,778 35,945,910 85,499,688
Company/Kab
olika
4 Usangu Charles Yumbu 45,877,674 38,771,590 84,649,264
Gelegele
5 Kagoma Kikundi cha 17,700,595 29,588,130 47,288,725
Wafugaji
Kihanga
6 Kagoma Kyaka Ranches (3,000) 17,788,590 17,785,590
7 Kagoma Ukurwa Ranch - 17,290,000 17,290,000
8 Kagoma Kikundi cha (49,442) 17,220,840 17,171,398
Wafugaji
Katembe
9 Kagoma Emanzi (747) 16,551,175 16,550,428
Ranching
10 Kitengu Edivedius (644) 10,252,970 10,252,326
le Ruttta Kassano
Total 266,291,214 261,998,430 528,289,644
18.8 Absence of performance security for awarded tenders TZS

631 million
Regulation 29 (1) of Public Procurement Regulations 2013
(amended 2016) requires a procuring entity to require a
successful tenderer to submit a performance security to
guarantee the faithful performance of the contract and
payment of all labourers, suppliers, mechanics and
subcontractors, if any.
However, from the review of procurement activities at

Sokoine University of Agriculture I noted the lack of
performance security for eight tenders with total value of
TZS 631 million as shown in the

Table 49. The University may suffer loss in the event of
default by a supplier or substandard works by a contractor.

Table 49: Details of Tenders Awarded Without
Performance Guarantee
S/N Tender No Description Supplier Amount (TZS)
1 PA/012/2018 Supply and Fixing of Chairs Jaffery Ind. Saini 394,879,920
- and Reading Tables at Limited
19/HQ/G/10 Lecture Theatres at SUA
5 Main Campus
2 PA/012/2017 Provision of security NEW BANTU 80,670,000
- services at Solomon Morogoro Security
18/HQ/NCS/ Mahlangu College of Science Guard Services
04 Lot No. 2 and Education Ltd
3 PA/012/2018 Provision of consultancy Hamisi Massanja 77,954,620
- services - Formulation of Malebo
19/HQ/CS/07 commiphora swynnertonii
extract products under
AESA Rise Fellowship
4 PA/012/2017 Provision of cleaning Care Sanitation 77,615,166
- services at SUA Main and Suppliers Ltd
18/HQ/NCS/ Campus – Exterior
100 Lot No. 4
Total 631,119,706
Source: Procurement tendering files
I recommend that SUA ensure in future performance

security guarantee is submitted prior to the
commencement of the projects.

CHAPTER 19
SPECIAL AND FORENSIC AUDIT
19.0 Introduction
The Controller and Auditor General (CAG) is empowered
under Section 29(2) of the Public Audit Act No. 11 of 2008
to undertake special audits upon receiving a request from a
Person, Institution, Ministries, Departments, Agencies,
Local Government Authorities and such other Bodies or as
he may deem fit to undertake any special audit.
In accordance with the provision of the Act, the Office of

the Controller and Auditor General conducted three (3)
special audits and two (2) forensic audits in four (4) of the
Public Authorities and one (1) private company with
Government investment during the year under review.
Public Entities in which special audits and forensic audits

were conducted are Tanzania Electric Supply Company
Limited (TANESCO), Promotion of Rural Initiatives and
Development Enterprises Limited (Pride), National Social
Security Fund (NSSF) and Shirika la Usafiri Dar es salaam
(UDA/UDART). A private company with a Government
investment which a special audit was conducted is Songas
Limited.
Key findings of the special audits presented in this report

are the summary of the audit observations; the detailed
findings are available in the respective reports and can be
provided by Authorities which requested the special audit,
in cases where circumstances of the matter permit
disclosure of details. The key findings in summary are as
follows:
19.1 Tanzania Electric Supply Company Limited (TANESCO)

Following the energy crises which faced the country in the
late 1990s and early 2000s, TANESCO was forced to expand

its sources of energy by contracting independent power
producers and undertake emergency measures in order to
nurture energy security. The measures taken by TANESCO
proved to be expensive and raised large amount of
liabilities to the tune of TZS 938.5 billion which include
accrued interest of USD 19.48 million from delayed
payment. Hence, in view of the situation, the World Bank
conducted an initiative to analyse the amount of liabilities
in the power sector so as to rescue the sustainability of
Tanzania Power Sector. In response to World Bank
initiatives the Permanent Secretary Ministry of Energy
requested my office to verify the existence, accuracy and
authenticity of the reported liability of TANESCO as at 31st
May, 2018. The audit noted the following issues: -
19.1.1 Disputes Invoices Amounting USD 42.83 million

TANESCO has a conflict with two (2) creditors; Pan Africa
Energy Tanzania Limited (PAET) and Tanzania Petroleum
Development Corporation (TPDC) on the nature and
amount of the outstanding liability totalling USD 42.83
million. The reasons for the conflicts are as explained in
the subsequent paragraph: -
A liability of USD 8.13 million from 29 invoices were raised

from the use of High Heating Value (HHV) by TPDC for
invoicing purpose which was considered to be higher
compared to maximum HHV stated in the gas sales
agreement between TANESCO and TPDC and on the
computation of indexation of wellhead charge.
Liabilities of USD 34.7 million from 25 invoices were raised

by PAET to TANESCO. However, TANESCO claimed that
from the invoices they noted PAET used a method of
reduced Maximum Daily quantity (MDQ) without informing
them on the change. Also, TANESCO claimed that extra
gas, hourly overtake daily excess gas and take or pay
charged was not adequately computed. PAET is also,

complaining that TANESCO did not follow the appropriate
channel to report the claims hence the liability from the
raised invoices has not been settled.
I recommend that TANESCO conduct mutual discussion

with respective creditors to resolve the existing conflicts
while considering respective gas sales agreement
clauses.
19.1.2 Un-Responded Creditors TZS 291.1 billion

TANESCO had 936 creditors which are divided in three
groups namely, big companies’ local energy suppliers,
foreign power producers and other small energy, power
and gas creditors. During the audit, I requested
confirmations of the outstanding debts from the creditors
which resulted as follows; 23 creditors with an amount of
TZS. 647.4 billion responded while 913 creditors with an
amount of TZS.291.1 billion did not respond.
Out of 913 creditors, I noted that IPTL had an outstanding

debt of TZS 102.12 billion and did not respond to my
inquiry because of the existing management challenges
facing the company.
I recommend that TANESCO establish authenticity of the

outstanding debts of which creditors did not respond to
the confirmation request.
19.2 Songas Limited

Songas Limited was established on 27th August, 1997 as a
private company with the government being among the
shareholders of the company with 40.7% shareholding. The
company was established for the purpose of generating
energy from the gas deposit discovered at Songo Songo
Island through Songo Songo gas to energy project. The
initiative named Songo songo gas to energy project was
among the measures taken by the government to mitigate

the power shortage crises which faced the country in the
years 1990s and 2000s. In July, 2018 the parliament
committee on petroleum and gas sector submitted to the
parliament its report showing that the Government does
not receive a fair share of benefits from the investment
made in Songas Limited. With that note, the permanent
secretary Ministry of Energy asked my office to assess the
effectiveness and economy of the Government’s
investment in Songas limited against five terms of
reference. My assessment noted that the government’s
investment in Songas Limited had the following issues:
19.2.1 Investment made by the Government Vs Shareholdings

obtained
The Government holds 40.7% of the Songas Limited shares
through Tanzania Petroleum Development Corporation
(TPDC) (28.69%:30,000 shares), Tanzania Electric Supply
Company Limited (TANESCO) (9.56%: 10,000 shares) and
Tanzania Development Finance Company Ltd (TDFL)
(2.45%:2,560) which is a jointly owned company between
the Government (32%) and ABC Holding (68%).
I noted that TANESCO transferred assets and liability to

Songas Limited on 8th November, 2004 the net of assets and
liability value were determined to be USD 1 million.
However, there were no evidence on how the USD 1 million
was obtained since no valuation of the assets and liability
were made during the time of transfer or afterward which
could be used as a base to determine equitability of the
shares value acquired against fair value of transferred
assets and liability.
Transferred liability amounted to USD 45.88 million which

was continued to be paid by TANESCO through capacity
charged levied by Songas as part of the monthly invoices.
The Assets transferred were part of the land at Ubungo
(i.e. Ubungo Complex) with its associated fixed assets, part

of the land (way leave) for the construction/use and
maintenance of gas pipeline from Ubungo to Wazo Cement
Factory through joint use way leave and four power
generator turbines (UGT 1,2,3,and 4).
Further, I noted that TPDC transferred part of the Songo

songo island with the associated fixed assets as outlined
under schedule 1A and 1B of the agreement, and five gas
wells namely, SS-3, SS-4, SS-5, SS-7 and SS-9 drilled
between 1977 and 1982. However, the computations or
valuation methodology used to determine the value of
transferred assets to equate with the value of allocated
shares (USD 3 million) was based on the agreement made
between shareholders of Songas Limited and the
government. The computation did not involve any
professional valuer who would have provided an
independent professional valuation opinion on the fair
value of the transferred assets. Furthermore, my audit has
determined that, the five gas wells are among nine drilled
wells at songo songo.
The government owned eight gas wells and had spent USD
90 million for exploration, drilling and maintenance of gas
well since 1970s of according to the feasibility study
volume 2 of 1992 conducted by Hardy BBT Limited and
Canuck Engineering. The study recommended that a
prospective investor in the Songo songo project should
reimburse the costs incurred after commercial production
commencement. However, I noted that the allocated
shareholding did not consider that cost incurred by the
Government.
Songas Limited urged that, the allocated shareholding to

both TANESCO and TPDC is equitable and fair to the
Government because of the electricity production cost
relief brought by the company charging TANESCO low tariff
rate of USD 0.6/kWh (TZS 135/kWh) compared to USD
12/kWh (TZS 270/kWh) charged by TANESCO to the final

consumers. However without an independent valuation of
the transferred assets, financing of transferred liability and
consideration of the incurred cost (USD 90 million) one
cannot accurately and objectively determine that, the
value of surrendered assets from both TANESCO and TPDC
is equal to the assigned total value of USD 4 million (1
million TANESCO: 3 million TPDC).
I recommend that the Government revise the signed

agreements between Songas Limited against TANESCO
and TPDC and cause, a revaluation of the transferred
assets, rationality and economy of the transferred
liability. Also, consider the cost incurred on the wells
(USD 90 million) to determine fair share of the
Government at Songas Company.
19.2.2 Unconscionable Terms of the Company/Project Financing
Songas Limited has a capital of USD 333.20 million which
comprise USD 10.45 million (3%) as equity, USD 113.16
million (34%) originally preference share then converted to
loan and USD 209.58 million (63%) as debt.
My review of the terms and benefits mentioned in the loan

agreements noted that from converted preference shares
and the loans TANESCO had paid a sum of USD 103.43
million principal amounts and USD 152.30 million as
interest payable from the preference shares up to 31st
December, 2018 as part of capacity charge incorporated in
monthly billed invoices. TANESCO also, had to pay a sum of
USD 209.58 million that was loaned to the Government by
International Development Agency (IDA), Sweden
International Development Agency (SIDA) and European
Investment Bank (EIB) as part of capacity charge
incorporated in monthly billed invoices.
Further, I noted that, the preference shares that constitute

the capacity charge were of two types A and B with
interest rates of 22% and 18% respectively, the charged

rates were far higher than the market interest rate of 7% at
the time when the shares were issued in 2004.
It would have been better off if the Government and other

shareholders financed the preference shares from the
Financial Institutions as at 31st December 2018. Hence,
TANESCO would have paid total interest of USD 44.89
million rather than USD 152.30 million.
On the loan of USD 209.58 million I consider that, since the

loan is paid by TANESCO, the Government would have
benefited more by transferring the loan as part of the its
investment (asset) instead of a liability since the
Government is both a loan guarantor and payer. However,
as part of the project agreements and terms of the loan by
the World Bank, the Government was obliged to transfer
the loan to Songas Limited on the grounds that, because of
mismanagement and huge debts crises which faced
TANESCO at the time, the Government would not be a
major shareholder of Songas Limited.
To benefit from being a guarantor and borrower of the

loan, the Government charged Songas Limited an interest
rate averaging 7% on transferred loan of USD 209.58 million
instead of the original interest rate of 1% from the lender.
The additional interest rate was paid by Songas Limited
through monthly invoices billed to TANESCO.
However, TANESCO stopped making loan portion payment

after paying a total sum of USD 12.32 million from eight (8)
months of billed invoices. It then transferred the obligation
to the Government in accordance with Loan assumption
agreement, which allows TANESCO to transfer the liability
to the Government and finance it either through setting it
off against the electricity bills owed by the Government or
making direct payment to the Government in the future. As
at 31st December, 2018, TANESCO debt to the Government

stood at USD 300.26 million from unpaid loan charges.
Following transferring of the liability to the Government,
the intended benefit from additional interest rate charges
failed to materialize since the Government is the one
making payment of the interest payable and at the same
time receiving interest income. Moreover, if TANESCO opts
to set off the loan liability against electricity bills owed [by
to] the Government, the Government will incur a loss
caused by setting off additional interest payable charges
(unrealized) against actual electricity bills owed.
The loan of USD 159.51 million issued at the inception of

Songas Limited was taken to finance the operation of the
company, which involves payment of suppliers, consultants
and contractors engaged in the project. According to para
2.1(a) ii of the loan agreement between the World Bank
and the Government of the United Republic of Tanzania of
11th October, 2001 the loan was paid directly to the project
suppliers, consultants and contractors.
This impedes shareholders from verifying the associated

costs which pose a risk of cost inflation; moreover, the
procurement process of the related suppliers, consultants
and contractors was not subjected to the Public
Procurement Act and its Regulations.
I recommend that the Government use the Natural

Resources Contracts (Review and Re-Negotiation of
Unconscionable Terms) Act, 2017 to:
a) Negotiate with the preference shares (later loan)

shareholders to revise the interest rates charged
and compensate the government for the inflated
interest paid;
b) Perform a cost and benefit analysis to determine

whether the Government can benefit from the
additional interest rates levied on loan

transferred to Songas Limited considering the
payment options granted to TANESCO;
c) Determine the accuracy and authentic of the cost

paid directly to suppliers, consultants and
contractors from issued loan at the inception of
the project; and
d) Revise the financing structure of Songas Limited

considering the liability obligation carried and
paid by the Government against the benefits
derived, given that the conditions, which
impelled the existing financing structure are
mitigated and reduced.
19.2.3 Existing Dilemma on the Sales of Energy and Ownership

of Transferred Strategic Assets After the Completion of
Songo Songo Project
Songo songo gas to electricity project was established to
revive the power shortage crises which faced the country
during 1990s and 2000s through the use of discovered gas
deposit at Songo Songo islands to generate energy. The
project started producing energy on 4th October, 2004 and
is expected to be completed by the year 2024. The project
operation and management is under Songas Limited, a
private company which is jointly owned by the Government
of the United Republic of Tanzania (40.70%) and other four
shareholders (ABC Holdings, Globeleq Holdings (Songas)
Limited, Globeleq Tanzania Limited, and Globeleq
Somanga Limited) holding a total of 59.30%.
From the review of the operation and finalization of Songo

songo project I noted that there exists a dilemma on sales
of energy between Songas Limited and TANESCO and
ownership of the transferred strategic assets after the
completion of the Songo songo project as follows:

According to para 4.1(b) and annex F of the power
purchasing agreement between TANESCO and Songas
Limited of 11th October, 2001, when Songo songo project
reaches 17 years (2021) and each year thereafter on the
request of any of parties of the agreement, TANESCO and
Songas Limited will meet and discuss on the termination of
the agreement based on the provisions provided in the
agreement. Otherwise, if the two parties failed to agree on
the proposed terms of the termination, Songas Limited will
be free to sales power to any other buyer after the project
completion in 2024. However, as at the time of issuing this
report in January 2020, the project parties (TANESCO and
Songas Limited) have not agreed on the way forward
coming to the year 2021 which activates the warrant.
My review of Songas Limited’s operation and

implementation of the project noted that, while Songo
Songo project will be completed in the year 2024, the
company articles of association does not reflect this fact
and the company is expected to continue operating for the
coming future years. There exists an ambiguity on the
ownership of the transferred assets and incurred liability
after the completion of the project. Moreover, the signed
project agreements have not disclosed on the fate of
Government’s transferred assets and incurred liability after
the completion of the project. The Government is at risk of
losing the control and ownership of transferred assets and
gas extraction rights to a private power producing company
which is not the ultimate goal and objective of the
Government. The transferred assets and rights are
strategic resources in the energy sector and should be
under the control of the Government after the completion
of the project instead of a private company.
I recommend that the management of TANESCO discuss

with Songas Limited to agree on the terms of power sales
before activation of para 4 of the power agreement, also

the Government revise all signed agreements to ensure
that transferred strategic assets (land, gas wells, and
turbines) are returned to the Government or Songas
Limited is made a public corporation.
19.3 National Social Security Fund (NSSF)

The Prevention and Combating of Corruption Bureau
(PCCB), through letter with Reference
rd
No.PCCB/HQ/ENQ/46/2016/38/OP4 of 3 January, 2019
requested my office to conduct an investigation audit on
the acquisition of the farm No. 870 at Kiluvya, Kisarawe by
NSSF. The audit focused on determining whether there
were any losses incurred by the Fund from the
transactions. The audit noted that through the acquisition,
the Fund and the Government incurred a loss detailed as
follows:
19.3.1 Inflated Prices on Purchase of a Farm TZS 2.90 billion

On 16th September 2010 following the approval of the
tender board, NSSF signed a contract for the acquisition of
277 acres farm located at Kiluvya for the price of TZS 3.32
billion. According to circular No. 1 of 14th May, 1969 issued
by the Permanent Secretary Ministry of Land, Settlement
and Water Development requires that in order to control
expenditure on the purchase, acquisition and sale of land
and buildings, the Government Parastatal and all Public
Institutions are required to obtain advice (regarding
compensation price) from the Valuation Division of the
Ministry of Land. However, I noted that, NSSF did not seek
advice from the Land Valuation Division prior to the
acquisition of the 277 acres of the farm at Kiluvya.
Valuation inquiry of the land from Temeke Municipal which
was certified by the Government Chief valuer on 28th
October, 2010 established that the value of the land as at
the time of acquisition was TZS 416.40 million.

The selling price of TZS 3.32 billion was inflated far above
the farm real value of TZS 416.40 million and therefore
NSSF was overcharged by TZS 2.90 billion. Additionally,
according to the agenda item 6.11 of the Tender Board
meeting minutes, the Board proposed that, payment for
the acquired plot be made in three instalments of 30%
upon signing the agreement, 40% upon obtaining transfer
consents and 30% upon transfer of the titles. However,
contrary to the tender board’s instructions, NSSF
management paid full amount in two instalments as shown
in Table 50.
Table 50: Payment Schedule of Acquired Farm

Actual Payments Instructed Terms of Payments
Date Chequ Amount Date Perce Amount-
e (TZS)(000) ntage (TZS)
(000)
27.09.2010 914346 997,200 16.09.2010 30 997,200
22.12.2010 855342 2,326,800 22.12.2010 40 1,329,600
00 25.01.2011 30 997,200
Total 3,324,000 Total 3,324,000
Source: NSSF payment vouchers
I recommend that the management of NSSF (a) take

prompt actions to recover the excessive amount paid
over and above the real value of the farm at the time of
acquisition; and (b) take necessary action against NSSF
management and oversight board members who through
negligence or intension caused the loss to NSSF.
19.3.2 Unpaid Stamp Duty and Interest on Capital Gain Tax of

TZS 442 Million
The acquisition of the farm transaction has attracted
payment of stamp duty tax and capital gain tax in
accordance with the Stamp Duty Act and Income Tax Act
respectively. My audit on the compliance with and
accuracy of the tax payment noted the following
anomalies.

Section 5(1) of the Stamp Duty Act revised 2006 requires
every instrument specified in the schedule (which includes
bill of sale) and which is executed in Tanzania Mainland to
be charged with duty of the amount specified or calculated
in the manner specified in that schedule. The schedule
provides that the bills of sale (absolute) will be charged
stamp duty of 1% of value in excess of TZS 100,000. The
acquisition of farm by NSSF attracts payment of Stamp
duty.
I noted that as part of the terms of the sales agreement,

the seller was required to process transfer of land and
provide certificate of tittle deeds. However, during the
processing of the document, the seller declared to TRA
that the selling price of the land was TZS 900 million
instead of TZS 3.32 billion and paid a total sum of TZS 9
million as stamp duty on behalf of NSSF which was
refunded by NSSF instead of the correct amount of TZS
33.24 million. This resulted in an underpayment of the
stamp duty by TZS 24 million.
TRA via a letter with Ref.101-208-628 of 30th November,

2010 to the Director General of NSSF disclosed that, TRA
had realized that the provided selling price of TZS 900
million was incorrect, and request payment of the
outstanding balance but up to the time of issuing this
report (January 2020). However, I was not provided with
any evidence on the payment of the remaining balance of
the underpaid stamp duty by the management of NSSF.
Furthermore, according to section 90 of the Income Tax

Act, 2004, the income derived from the sale of the farm by
the seller is required to be charged capital gain tax. On my
inquiry, TRA through a letter with reference number
Ref.AB.33/527/01/15 dated 30th September, 2019 revealed
that, TZS 89.99 million and TZS. 242.40 million were paid
by the seller as capital gain tax on November, 2010 and

28th March, 2017 respectively making a total sum of TZS
332.39 million. Nevertheless, I noted that, prior to the
second payment of TZS 242 million in March 2017, TRA
through a letter with reference number
TRA/CDR/T.30/105-029-551 dated 09 th August, 2016
informed the seller that, the Authority has discovered that
the declared selling price of the land was under declared.
Due to this underpayment of the capital gain tax and TRA
required the seller to paid for the underpaid amount which
the seller did.
However, because of the delayed payment of the

underpaid amount for a maximum period of 71 months
from December 2010 to March 2017, TRA issued a tax
assessment notice requiring payment of TZS 417. 86 million
as interest on late payment of capital gain tax which as at
the time of issuing this report (January 2020) was not yet
paid.
I recommend that the management of TRA enforce

payment of the underpaid stamp duty tax by NSSF and
unpaid interest on late payment of capital gain tax by
the seller.
19.4 Promotion of Rural Initiatives and Development

Enterprises Limited (Pride)
Pride is a company established on 5th May, 1993 to promote
rural development through promotion of rural initiatives
project. The project is a joint operation between the
Government of the United Republic of Tanzania and the
Government of Norway. From 2015 a dispute arises on the
ownership of the company between the Government and
company directors. The dispute was resolved by the court
order and consent by the directors of company
acknowledging that Pride Company is owned by the
Government. Following the consent, on 4th July, 2019 the
Ministry of Finance and the Prevention and Combating of

Corruption Bureau (PCCB) asked my Office to conduct an
audit to determine assets and liabilities of Pride Company
as at 31st October, 2019 and establish whether there is any
misappropriation of funds or losses caused by weak controls
on the company’s operations for the period of 1st January,
2017 to 31st December, 2019. My audit identified the
company’s assets and liabilities as at 31st October, 2019
and revealed fraudulent payments and misappropriation of
assets and liabilities as detailed below;
19.4.1 Misappropriation of Company’s Assets

According to its records Pride Company had total assets of
TZS 19.97 billion as at 31st October, 2019 which comprise
customers loans TZS 8.82 billion and staff loans TZS 11.14
billion. My verification of accuracy, completeness and
validity of the reported asset noted that, the reported
loans to customers and staff were misappropriated and
total reported assets was incomplete as some assets were
not included in the records.
The company offered loans to its staff as part of

employment incentives. It had an outstanding balance of
staff loan of TZS 11.14 billion as at 31st October, 2019. The
loan balance was made of three categories namely, house
loans, special loans and general loans. The Company’s loan
administration information system (DUX) and financial
reporting information system (Bankers Realm) showed that,
an outstanding balance of TZS 745.59 million represent
loans issued to 168 ex-staff from whom the Company did
not establish any mechanism of recovering the outstanding
balance, No loan deductions were being charged against 33
staff with an outstanding loan balances amounting to TZS
10.38 billion. Moreover, there were no records of staff
issued a total loan amounting to TZS 2.60 billion, the loan
was not included as part of the company’s asset.

I consider that the noted anomalies were caused by weak
controls and fraudulent practice by dishonest staff.
Other than the reported staff and customer loans,

according to the latest audit report of the company for the
financial year ended 31st December 2016, the company
owned other assets such as PPE, Shareholding investment,
fixed deposit accounts and intangible asset. However,
these assets were not included in the reported company’s
total assets as at 31st October 2019 because of a number of
anomalies. These include; an investment consisting of
shareholding valued TZS 2.31 billion at Bank M (Tanzania)
Limited, was impaired following the bank becoming
bankruptcy.
In addition, fixed deposit accounts totalling TZS 48.20

billion from CRDB, Bank M (Tanzania) Limited, and NMB
were confiscated by the banks to repay their respective
loans to the company. PPE (excluding land) and intangible
asset (operating information systems) valued at TZS 942.11
and TZS 956.46 respectively were not reported because the
availed fixed assets register did not indicate individual
costs of PPE and intangible items recorded; the register has
a block figures on which my audit could not rely upon.
Lastly, the land plot Nos 1&2 land order No. 393206 block A
at Morogoro region was valued at TZS 1.44 billion, the land
was not reported because of undetermined current value.
I recommend that the Government takes legal measures

against management and staff involved in the
misappropriation of staff loans and engage the
Government valuer to identify and determine the value
of unreported assets for their inclusion in the list of the
company’s assets.

19.4.2 Unconfirmed and Misappropriated Reported Liabilities
Pride Tanzania had liabilities of TZS 130.11 billion as at 31st
October, 2019 as detailed in Table 51.
Table 51: Outstanding Liabilities of Pride Company

S/no Detail Amount (TZS)
“in billion”
1 Loan and debt from local financial 29.90
institutions
2 Loan and debt from international 59.08
financial institutions
3 Outstanding fees and charges from 19.11
government entities
4 Trade and other creditors (suppliers) 2.02
5 Loan insurance payable (Alliance Life 0.887
Insurance)
6 Customer Deposits from Loan 8.27
application
7 Unpaid staff Salary and other 5.89
incentives
8 Saccos Staff deposits and deductions 4.95
Total 130.11
Source: Pride Records and Audit report for the FY ended 30th
December, 2016
In determining the authentic and completeness of the

identified liabilities, I noted that, five (5) out of seven (7)
loans and debt reported by Pride Tanzania from
international financial institutions of Stromme Foundation,
Incofin, ResposAbility, NMI Fund III KS, and Symbiotics with
outstanding balance of TZS 47.68 billion were not
registered with Bank of Tanzania (BOT). In that regard, I
failed to verify accuracy of the reported outstanding
balance from BOT. Outstanding balance of TZS 361.76
million from trade and other creditors was not supported
by respective invoices or/and contracts. In addition, there
is no updated records from 31st December, 2018 of un-
submitted staff deductions and deposit with respect to
Fahari Yetu Saccoss (Pride Staff Saccos association)
amounting TZS 4.95 billion as the saccos information

system had expired with no back up database or physical
records.
Furthermore, I consider that the nature of the outstanding

liabilities from Loan insurance payable (Alliance Life
Insurance) which were charged against issued loans, and
Customer Deposits from Loan application was caused by
negligence, mismanagement and misappropriations acts by
dishonest staff because if adequate controls were
undertaken by the management, the Company would have
not been liable for that liabilities.
I recommend that the Ministry of Finance determine the

accuracy and authenticity of outstanding balances which
the audit failed to confirm also legal measures be taken
against staff involved in conducting negligent practices
which resulted in creating unnecessary liabilities to the
Company.
19.4.3 Misappropriate and Fraudulent Payments TZS 4.53

Billion
Payment procedures of Pride Company are outlined in its
financial Regulations of 2005. According the regulations,
payments are required to be initiated by the requester,
processed by the accounting department and approved by
the relevant authorities which includes the head of the
unit/department where the payment request originates,
finance manager and the managing director.
I reviewed payments made by the company from 01st

January, 2017 to 31st October, 2019 to establish their
accuracy, authenticity, proper authorisation and
compliance with payments procedures outlined in the
financial regulations through interviewing key finance
personnel which included finance manager and
accountants, and information system for the period.

Through this review, I revealed that payments amounting
TZS 4.53 billion were not authorized, supported and were
made in fraudulent means as detailed in the Table 52.
Table 52: Misappropriated and Fraudulent Payments

S/N Details Amount
(TZS) in
million
1 Unapproved payments with missing 660.73

signatures, payment request and names
or title of responsible accountants who
process them.
2 Payments without supporting 1,687.00
attachments evidencing occurrence of
the payments
3 Unentitled payments made to the board 139.43
of directors and staff
4 Payment with unspecified activities and 508.37
purpose
5 Transfer of fund from the branch office 405.47
to unidentified recipient through
telecommunication networks mobile
money
6 Cash payments to inexistent creditors. 585.93
The company director and finance
manager made cash payment to creditors
whom upon audit, it was revealed that
they did not exist and had not performed
any service or supply any goods to the
company
7 Use of fake documents and 540.96
impersonation to acquire/grant loans by
dishonest staff
Total 4,528
Source: Audit field work
The anomalies noted were caused by negligence and

intentional misappropriation by dishonest staff impelled by
overriding and weak controls.
I recommend that the Government take legal measures

against the dishonest staffs involved in the fraudulent
payments.

19.5 ‘Shirika la Usafiri’ Dar es Salaam (UDA) and UDA Rapid
Transport (UDART)
UDA Rapid Transit company was founded on 19th December
2014 where it was owned by UDA and Simon Group Ltd for
99% and 1% respectively. Following the decision that was
made between the government and Simon Group Ltd on 9th
October 2019, it was agreed that UDA would own UDART by
100 percent. Since then, UDART is owned by UDA alone
which is also owned by government and Simon Group Ltd
by 85% and 15% respectively.
On 14th May, 2019, the Paymaster General asked my Office

to conduct an investigation on the authenticity of
procurements of buses and spareparts, management of
company associated loans, shares acquisition by the
parties, management of company rental properties and
compliance with the Public Procurement Act, 2011 (as
amended in 2016) and its Regulations, 2013 (as amended in
2016) in contract awarding. The audit is the continuation
of the previous conducted audit at the company. During my
audit I noted the following:-
19.5.1 Overpayments in the procurement of buses USD 14.41

Million
UDART and UDA signed three sales agreement contracts
from 10th October, 2014 to 15th July, 2015 with Xiamen
Golden Dragon Bus Co. Ltd (seller) for the supply of 140
rapid buses. As at 24th August 2015, 138 rapid buses were
delivered and received at the Dar es Salaam port. The
buses were received with three invoices of GDES-15-156A
for 56 buses, GDES-15-156B for 28 buses and GDES-15-252
for 54 buses all dated 24th August, 2015. During my
assessment of the compliance and propriety of the
procurement process, I noted the following anomalies:
According to the clauses 1 and 2.1 of the sales agreement

and the after sales services agreements respectively for 84

buses with contract sum of USD 13.37 million, the seller
will offer free spare parts equivalent to 2% (USD 267,425)
of the contract sum for 36 months with Simon Motors Ltd
being the seller’s agent. However, I noted of the officered
spare parts, only spare parts with total cost of USD 99,467
were offered by the agent as per sales agreement while
spare parts with total cost of USD 167,958 were not
provided.
From review of the invoice prices from three invoices

obtained from Tanzania Revenue Authority (TRA) and
Tanzania Postal Authority (TPA), I noted that the total
invoiced price was USD 11.24 million which is lower than
the signed contract price of USD 25.65 million. However,
the Executive Chairman of UDART instructed the company
to pay the seller as per contract price rather than the
invoiced price and therefore, overcharged UDART USD
14.41 million from the purchase.
According to the bank statement number 20110017640

(USD) and No. 20110028055 (TZS) as at 25th February, 2020,
a total of USD 22.73 million was paid to the seller with the
remaining balance of USD 4.34 million expected to be paid
in October, 2020 in respect of the procurement.
Further, I noted that the excess paid USD 14.41 million was
used by Simon Group Ltd to fraudulently procure 70 buses
from the seller through a contract signed on 30th
September, 2017 for the price of USD 17. 68 million. The
procured buses were transferred to UDART by Simon Group
Ltd for a price of USD 20.33 million which implies that
Simon Group Ltd will benefit a profit of USD 2.65 million
from the transfer payable after UDART started using the
buses.
Moreover, Simon Group Ltd and UDART did not declare

importation of the buses in the TRA importation

information system (Tancis) which led the buses to be held
for more than 721 days (February 2018 to February 2020)
and accrued USD 2.30 million of warehouse rent payable by
UDART.
I recommend that the UDART requests Simon Motors to

release the remaining free spare parts, refund or
transfer free the 70 buses allocated by Simon Group Ltd
as a compensation for the overcharged amount between
the invoice price and contract price; and take legal
measures against the Executive Chairman of UDART for
causing the company to make excessive payment on the
procurement.
19.5.2 Fraudulent Payment in Implementation of BRT Project

TZS 3.95 Billion
I identified a number of fraudulent payments made by UDA
during the implementation of Bus Rapid Transit Project as
follows:
On 18th June, 2015 UDA and UDART signed a contract with

two companies of Consultant for Resources Evaluation
Limited and Enterprise Growth Market Advisors Limited
together called consortium for the initial public offering of
UDART. On 5th October, 2015 UDART transferred TZS 550
million from bank account No 20110017710 DART PROJECT
to CRDB bank account No 01J1027103201 of Consultant for
Resources Evaluation Limited for initial public offering of
UDART which was banked on 8th October, 2015.
However, the payee company bank statement showed that

on the same day of 8th October, 2015, the payee company
transferred TZS 500 million to Equity bank account No
3004211129958 of UDA then UDA accountant withdrew TZS
442 million without providing details of the withdrawal.
Moreover, my inquiry from Capital Market & Securities
Authorities (CMSA) revealed that UDART had not

communicated with the authority on their intention of
offering shares to the public therefore; UDA had paid the
payee company knowingly that it did not intend to make an
Initial Public Offering.
In the implementation of BRT project, UDART signed a

contract with Kapsch CarrierCom Belgium NV (KCC) for the
installation of Intelligent Transportation System (ITS) and
in turn Kapsch CarrierCom Belgium NV (KCC) entered a
partnership agreement with Maxcom Africa Ltd to assist
them in executing the signed contract with UDART.
From 16th November, 2015 to 5th January, 2016 UDART had

made total payments of TZS 3.91 billion from NMB bank
account No. 20110017710 (DART Project) to Maxcom Africa
Ltd International Commercial (ICB) bank account
No.10160168505 in respect of installation of ITS system,
procurement of bus electronic cards and fixation of
emergency power electric equipment.
However, during the follow up of the payee’s bank account

from 18th November, 2015 to 5th January, 2015 I revealed
that a sum of TZS 3.45 billion was ordered and transferred
to Executive Chairman of UDART personal bank account
number 10160214306 with International Commercial Bank
(ICB). The reason provided is that the sum will be used to
pay compensation of previous owners of daladalas being
one of the activities of BRT project implementation.
On reviewing the chairman’s personal account from 18th

November, 2015 to 5th January, 2015 I revealed that, the
whole transferred amount was paid from his bank for
personal uses rather than the declared objective. Thus, out
of the total TZS 3.91 billion paid to Maxcom Africa Ltd, TZS
3.48 billion for installation of ITS system and procurement
of buses cards was ineligible payment as UDART had no any
contract with Maxcom for the activities paid for.

I recommend that the Government take legal measures
against the executive chairman of UDART and UDA
accountant for the misappropriation of UDART funds.

19.5.3 Provision of Services and Payment Without Signed
Contracts TZS 3.48 billion
According to clause 6.1 of interim service provider
agreement between DART, UDART and UDA signed on 24th
April, 2015, DART and UDART are required, after signing
the agreement, to immediately select NMB bank to be
Fund manager of the project. However, I discovered that
such an agreement was not signed and NMB was not
selected as the fund manager at the date of signing the
agreement. During the review of NMB DART INTERIM SER
FARES COLL ACC bank account number 20110021252 for
the period of three years and eight months from 16th May
2016 to 22nd January, 2020 I noted that the bank had
charged a total sum of TZS 1.78 billion as fund
management fees without any agreement with account
holder. The parties come to sign fund management
agreement with the bank on 25th March, 2019.
Simon Media Group was awarded cleaning contract for the

buses and UDART buses stations from 6th May, 2016 to 29th
April, 2017. However, my audit noted that the company
continued to provide services after expiring of the signed
contract (29th April, 2017) and a total sum of TZS 698.54
million was paid up to January, 2020. Additionally, from
22nd November, 2016 to 3rd May, 2018 UDART paid the
company a sum of TZS 1.01 billion as advertising
commission despite that the company does not have a
signed contract with UDART for the provision of
advertisement marketing.
I consider the payments made to the Simon Media Group

for the provision of services while there no signed
contracts as ineligible expenditure.
I recommend that UDART and Service Providers enter

valid contracts by complying with Procurement Act,
2011 (as amended in 2016) and its Regulations, 2013

(as amended in 2016) and be accountable for the
payment made in absence of signed contracts.
19.5.4 Acquisition of UDA shares and loan repayment using

UDART revenue TZS 4.75 billion
I noted that in acquisition of UDA shares, Simon Group Ltd
had used resources of UDART project to repay the loan
taken by the company to finance shares acquisition as
detailed below:
On 25th September, 2013 the Dar es Salaam City Council

signed a sales agreement of its 3.63 million shares of UDA
to Simon Group Ltd for TZS 5.87 billion. Following signing
of the agreement, Simon Group Ltd was granted rights over
the assets of UDA. To finance payment of the shares, Simon
Group Ltd took two loans from National Microfinance Bank
(NMB) on 9th July, 2015 and 31st March 2016 by using UDA
assets as collateral. Simon Group Ltd failed to repay the
loan and on 22nd August, 2017, the outstanding debt was
raised to TZS 6.93 billion because of the accruing interests.
The Executive Chairman and Managing Director of UDART

on multiple times instructed UDART management to pay
NMB in respect of the outstanding loan debt. I noted that
as at 31st January, 2019 UDART had paid a total of TZS 4.75
billion which include TZS 295 million paid to NMB bank
account number 20406600306 of Simon Group Ltd from UDA
rapid transit NMB bank account No 20110017639 and TZS
4.46 billion paid out of NMB UDA Rapid transit bank
account No 20110028055 to NMB bank account number
20110017722 of Simon Logistics Group Ltd.
Simon group Ltd has fraudulently used UDA assets to secure

a loan and uses UDART revenue to repay the loan.
I recommend that the Government revoke shareholding

of Simon group and takes legal measures against the
Executive Chairman and Managing Director of UDART.

19.5.5 Revenue from UDA’s Leased Warehouse not Collected
TZS 17.52 Billion and USD 1.13 Million
Simon Group Ltd signed a lease contract on 1st October,
2011 with UDA for three plots located at Kurasini Depot,
Dar es Salaam with total size of 55,037 square meters for
a contract sum of TZS 400 million per year for the period
of 10 years from 1st June, 2012 to 30th May, 2022.
However, according to records of the UDA accounts from
1st June, 2012 to latest period of 31st December, 2019.
Simon Group Ltd has not paid lease fees since

commencement of the lease contract. The unpaid period
of eight years and six months resulted in a liability of TZS
3.44 billion as at 31st December, 2019. Moreover, UDA has
not taken any measures to enforce payment or eviction of
the company from the leased plots.
Moreover, I noted that Simon Group Ltd and Simon Logistic

Group Ltd which are sister companies subleased Plot No 36
located at Kurasini owned by UDA to different companies
of Tanzania Breweries Limited (TBL), OLAM Tanzania Ltd,
Tanzania Distilleries Limited (TDL) and CMA CGM. These
companies paid a total sum of TZS 14.08 billion and USD
1.13 million in respect of the sub-lease contract.
However, I learnt that Simon Logistic Group Ltd leases the

area to CMA CGM and OLAM Tanzania Ltd without having
signed agreement with the owner of the plots (UDA). Also,
despite Simon Group Ltd receiving fees from the subleases
fees, the company has not paid out outstanding lease fees
payable to UDA.
The leased plots are not benefiting UDA but Simon Group
Ltd. Moreover, the management of UDA has not taken
relevant measures to enforce payment of the outstanding
amount or termination of the lease contract.

I recommend that the Government and the management
of UDA take relevant measures to enforce payment of
the outstanding lease fees from Simon Group Limited
and Simon Logistic Group Ltd.
19.5.6 Procured and paid for electronic ticketing system not

used TZS 6.56 billion
For the purpose of offering modern transportation services,
on 19th October, 2015, UDART contracted Kapsch
CarrierCom Belgium NV (KCC) for the provision of
Intelligent Transportation System (ITS) which offered
information system-based ticketing services. According to
clause 6 of the contract, the contract sum of the system
was Euro 3.40 million equivalent to TZS 8.55 billion (1
Euro=TZS 2,509). Installation of the system was completed
and started operational in May, 2016 with total payment
made to the contractor amounting to TZS 6.56 billion.
However, UDART stopped using the system from 18th June,

2018 and started using Local Government Revenue
Collection Information System (LGRCIS) to collect ticket
revenue while strategizing on development of a new
information system.
The Managing Director of DART explained that, they

stopped using the system because of expired ITS licence
and the system been incompatible with other operational
information systems. But the claims are disputed by the
Director of Maxcom Africa Ltd counter arguing that, the
system is compatible with other information system for
instance the system was integrated with mobile money
services for ticket payment convenience.
I view the investment of ITS system to be a substantial one

and thus, non-utilizing it leads to lack of value for money
on the investment and a loss to the government if the
information system will be discarded.

I recommend that UDART deal with the challenges facing
the ITS information system instead of developing a new
system as it has already invested a substantial amount of
resources in ITS System.

CHAPTER 20
PERFORMANCE OF EXTRACTIVE INDUSTRY
20.0 Introduction
Extractive Industry covers exploration and extraction of
raw materials from the earth to the point of making them
ready for use by diverse consumers. The industry consists
of any operations that extract resources such as metals,
minerals and aggregate oil and gas from the earth. The
industry is divided in two sub-sectors. All operations
involved in extracting natural resources from the earth are
categorized as downstream/exploration stage while
operations involved in refining and making extracted
resources ready for use are categorized as upstream and
midstream or development and production stage.
The country is known for its endowment in mineral

resources and gas deposits but there are still weaknesses
identified which might hinder realization of the value of it
to the economy.
My audit involved review of the performance and

management of the Government investments in the mining
sector and operational effectives of the midstream and
downstream regulators in the petroleum sector. It also
covered operations of State Mining Corporation (STAMICO)
with its associates which includes; Stamigold Company
Limited, Buckreef Gold Mine, Kyerwa Tin Ltd, Tanzanite
One, Kabulo Coal Mine, Kiwira Coal and Power Ltd,
Buhemba Gold Mine, Ubena Zomoni and Chigongwe
project; National Development Corporation (NDC) with its
associates which includes; Mchuchuma-Katewaka Coal
mine, Engaruka Basin Soda Ash project, Maganga Matitu
Sponge Iron project, Katewaka Coal project, Bukoba Silica
sands project, Tancoal Energy Ltd; and Energy and Water
Utilities Regulatory Authority (EWURA).

20.1 Review of Performance and Management Of Government
Investment in the Mining Sector
The Government invested in the mining sector through
Stamico, NDC and newly formed Twiga Company Limited.
Stamico and NDC operate with their respective associates,
subsidiaries, and joint ventures which includes Stamigold
Company Limited, Buckreef Gold Mine, Kyerwa Tin Ltd,
Tanzanite One, Kabulo Coal Mine, Kiwira Coal and Power
Ltd, Buhemba Gold Mine, Ubena Zomoni and Chigongwe
project, Mchuchuma-Katewaka Coal mine, Engaruka Basin
Soda Ash project, Maganga Matitu Sponge Iron project,
Katewaka Coal project, Bukoba Silica sands project, and
Tancoal Energy Ltd. During the review of the operations of
these entities undertaken over the period of three years
from 1st July, 2017 to 30th June, 2019, I identified a number
of anomalies and provide recommendations for
improvement as detailed below.
20.1.1 Initiated mining projects not operating

The government through STAMICO and NDC invested in a
number of extractive projects by the use of subsidiaries,
associates, joint ventures and project business
arrangements. STAMICO and NDC have the duty to monitor
and evaluate project performance and recommend
strategic management enhancements for the optimization
of the resources used and results achieved.
However, I noted five (5) projects undertaken by the

STAMICO and NDC, which are not operating for various
reasons as detailed in the Table 53.
Table 53: Projects which are Not Operating

S/n Name of Overview of the project Remarks
the Project
1 Buckreef The project is a joint venture The parties to

Gold Mine between STAMICO (45%) and the venture have
Tanzania American not managed to
International Development raise the

the Project
Corporation (TANZAM 2000) required capital

(55%) signed on 25th October, investment to
2011. The venture requires a start project.
total of USD 5.9 million for
the redevelopment of the
Special Mining License (SML
04/92). The project was
expected to start in 2014.
2 Buhemba The mine was formerly The corporation

Gold mine owned by Meremeta Mining has not
Limited then transferred to commenced
Stamico by the then Ministry production. The
of Minerals and Energy in Corporation is
July, 2011. The corporation developing a
target is to re-develop the business plan of
mine. The mine is estimated the project.
to have underground gold
reserve of over 441,772.29
ounces. The mine was
planned to start production
in June, 2016.
3 Ubena Stamico owns ten Primary The corporation

Zomozi mining licenses acquired in is searching for a
stone quarry 2016 at Chalinze with an prospective
aggregate estimated reserve of over investor and
project 41.5 million tons of stones. plans to start
Business plan indicates that operations in the
the project was planned to year 2021.
be completed in July 2018
and requires an initial cost
capital outlay of USD 1.75
million.
4 Liganga Iron The project is joint venture The project has
Ore and arrangement signed on 11th not commenced
Mchuchuma September, 2011 between because of the
Coal NDC and Sichuan Hongda ongoing
(Group) Co. Ltd through a investment and
founded joint company shareholding
Tanzania China international review between
mineral resources Co. Ltd the Government
(TCIMRL). The project aims and the investor.
to develop liganga iron ore
mine and mchuchuma coal
mine. The project
investment cost is estimated

the Project
to be USD 3 billion.
5 Maganga The project is implemented Parties to the

Matitu by Maganga Matitu Resource venture are
Sponge Iron Development Company reviewing project
Project Limited (MMRDL), a Joint investment and
Venture Company between financing
NDC and MM Steel Resources structure given
Public Limited (MMSR PLC) that MMSR PLC
signed on 28th October, 2019. has already spent
The project’s objective is to TZS 85.7 billion
produce sponge iron to serve after the project
the domestic steel mills and feasibility study
exportation. proved that iron
reserves at
Maganga Matitu
is not
commercially
viable and
recommended
the project to
focus on coal
production.
Delayed in implementation of the projects means that the

Government cannot achieve achievement of other
objectives including development of the extractive industry
and creation of employment opportunities. Thus, I
recommended that the managements of STAMICO and NDC
take necessary actions to ensure that the projects are
implemented.
20.1.2 Incomplete Transfers of Shareholding to STAMICO and

NDC
STAMICO and NDC are beneficiaries of a number of mines
transferred by the Ministry of Minerals or previous mine
owners. I noted that transfer of shares of Kiwira Coal and
Power Ltd and mining licence for TANCOAL Energy Limited
are not completed as intended because of a number of
reasons as detailed below:

• For the purpose of securing supply of coal, on 11th
March, 2017, the Ministry of Minerals granted
Dangote Industries (Tanzania) Limited mining licence
number PML Application No. 0062/2016 for an area
measuring 9.98km2 at Ngaka area, Mbinga District,
Ruvuma previously owned by Tancoal Energy Limited
mine owned by NDC for development and operation
of coal mine. The Dangote failed to operate the
mine and returned the licence to the Ministry.
However, the licence has not been returned to the
original owner Tancoal Energy Limited.
• TanPower Resources Limited (TPR) agreed in 2015 to

transfer 70% shareholding in Kiwira Coal and Power
Limited (KPCPL) (Being 700,000 shares) to the
Government through STAMICO for a consideration of
one shilling and payment of USD 4.74 million as
management fees. Transfer of the shareholding was
not completed because of absence of tax clearance
certificates which is required by the Business
Registration and Licensing Agency (BRELA) before
effecting the transfer of the shares. The certificate
is withheld by Tanzania Revenue Authority (TRA) due
to outstanding tax liability of TZS 2.92 billion
payable by Tan Power Resources Ltd.
The failure to transfer the shareholding and license delays

operations of mines and execution of investment decisions
by STAMICO and NDC and therefore depriving the
companies’ revenue which also impede development of
mining sector.
I recommend that the Ministry of Minerals consider

returning mining licence of part of the mining site of
TANCOAL Energy Limited and enforce TanPower
Resources Limited to make payment of tax liability.

20.1.3 Increasing Invasion at Tanzanite Mine After Stoppage of
Operations
Tanzanite mine under mining license No. 490/2013 issued
on 20th June, 2013 is joint venture owned on 50:50
shareholding by the Government of Tanzania through State
Mine Corporation (STAMICO) and Tanzanite One Mining Ltd
(TML), with TML being the operator of the joint venture
and STAMICO facilitate and liaise with the Government
authorities to ensure regulatory actions are taken in a
coordinated and a timely manner. The venture’s operations
were suspended in December 2017 whereby the operator
was subsequently required to surrender the mining license
to the Government to pave way for negotiations between
Government and the investor.
According to the supervision quarter report for the month

of September to December 2019 by STAMICO
representative at the mining site submitted on 24th
December, 2019, mining site invasion had increased
especially in the area that is close to block B bordering
small scale miners. The report mentioned six miners who
upon inquiry, explained that they were granted permission
to operate at the sites by the Ministry of Minerals without
producing any evidence to confirm their assertion.
The increase of intruders into the site depletes mineral

reserves and the unregulated operations lead to loss of
Government revenues. Moreover, the invasion of small-
scale miners reduces the value as the Government is
undergoing review of the venture with the investor.
I recommend that STAMICO ensures adequate security at

the site to stop intrusion.

20.1.4 Inadequate management of tailings reserves at
STAMIGOLD and Buhemba Gold mines
Tailings are the materials left over after the process of
separating the valuable fraction from the ore extracted
from the earth. Tailings are usually stored for either
treatment of hazardous chemicals or reprocessed to
recover small gold contents in them. My review of tailing
reserve management at Buhemba Gold Mines and
STAMIGOLD Biharamulo Gold mine both owned by STAMICO
revealed inadequate management over the tailing reserves
as detailed below:
Buhemba Gold Mine had a tailing reserve of 995,500 tons

with 1.6g/t grade with estimated gold contents of 56,885
ounces at the time the mine was transferred from
Meremeta Mining Limited in 2011. However, according to
the latest studies conducted, it was learnt that the reserve
had diminished by 20% to 796,400 tons of tailings, grading
at 1.07 g/t of gold with potential gold content of 30,433
ounces because of being eroded by rains and other
environmental factors.
According to the latest report of SEAMIC laboratories of

September 2017, STAMIGOLD Biharamulo gold mine had
tailing reserve of 8.35 million tons with 0.56 g/t grade
equivalent to a probable reserve of 151,580 ounces of gold.
However, as at the time of my site visit in February, 2020,
the tailing reserves were unprocessed and stored at the
mine site. The report further suggests that as of September
2017, after deduction of related extracting cost and
considering recovery rate of 80%, the value of the reserve
is USD 113.50 million equivalents to TZS 258.78 billion.
I consider that, unprocessed tailing reserves are at the risk

of deteriorating because of environmental factors or
misappropriation if not secured and stored adequately, also

it represent unrealized revenue which could remedy the
financial constrains faced by the mines.
I recommend that STAMICO request approval of

processing the tailing reserves from relative authorities
by first determining an environmental safety and cost-
effective method of processing them supported by a
detailed study report. Also, STAMICO consider improving
safety and storage method of the reserves.
20.1.5 Environment Rehabilitation Fund Not Provided for

Tanzanite Mine and Stamigold Mine
Regulation 206 (1) of the Mining Regulations, 2010: (Safety,
Occupational Health And Environment Protection) provides
that the Minister shall require a holder of a Special Mining
License and Mining License to provide for posting of
rehabilitation bond which shall be in any of the following
forms, Escrow Account, Capital Bond, insurance Guarantee
bond and Bank Guarantee bond.
However, during the audit I discovered TanzaniteOne

Mining Limited and Stamigold Biharamulo Mine have not
provided rehabilitation fund as required by the above
regulation. Additionally, STAMICO had mismanaged
transferred rehabilitation fund at the time of acquiring
STAMIGOLD Biharamulo mine as detailed below:
Stamigold Biharamulo mine estimated closure plan as at

30th June, 2019 with estimated rehabilitation fund of TZS
19.46 billion. However, the management disclosed that the
rehabilitation fund has not been provided and the
management is making arrangement to secure the funds to
comply with the requirements of the regulation. Moreover,
I noted that according to Para 7.2 of Transfer agreement of
the Tulawaka Mine (now Stamigold Biharamulo mine) dated
15th November, 2013 between Pangea Mineral Limited, ABG
Exploration Limited and State Mining Corporation, a sum of

USD 11. 63 million equivalents to TZS 18.96 billion was paid
by previous owner to STAMICO on 31st January, 2014
through bank account number 004 200 000320202 of TIB
Development Bank as reclamation fund. However, the sum
was utilized by STAMICO to finance the corporation and
Stamigold operational activities throughout the years and
there is no outstanding balance as at 30th June, 2019.
According to Article 9.3 and 9.4 of the Joint Venture

Agreement between STAMICO and Tanzanite One Mining
Ltd (TML) parties are to set aside 1% of the gross sales to
meet the cost of mine closure. The fund is to be kept in a
separate account managed by trustees approved by the
parties. According to Tanzania Sorting Company (Tansort)
valuation reports and gross revenue reports submitted by
the management of STAMICO, the mine had total gross
sales of USD 31.02 million as of December 2017 when the
operation of the mine ceased and therefore, a total of USD
310,280.95 was supposed to be deposited in the
Rehabilitation Fund Trustee Account.
However, the latest availed Stamico and Tanzaniteone JV-

Rehabilitation bank statement number 00111047335002 as
at 14th February, 2018 showed that the account had a
balance of USD 9,992.50 which is an under banking of USD
300,288.45.
Non-provision of environmental rehabilitation fund poses a

risk on reclamation of hazards caused by mining operations
which includes land sliding and health issues to the
surrounding population. Additionally, the Government
being the trustee of the citizen’s wellbeing will be
compelled to incur additional costs to reduce or eradicate
environmental hazards caused by the mining operations.
I recommend that the management of STAMICO and TML

ensure provision of rehabilitation fund as directed in

regulations 207 (1) of the Mining Regulations, 2010 by
using cost and risk conscience financing approach.
20.1.6 High Cost of Electricity Caused of Stamigold Use of Fuel

to Power the Mine TZS 7.9 Billion
Mines operation are inherently power dependency.
According to the management operation reports, Stamigold
Biharamulo mine operations consume an estimated KWh
1.42 million of electricity per month. The mine is not
connected to TANESCO’s National Grid electricity or
established other cheaper power generation alternative.
The mine power station therefore use seven diesel power
generators to generate the required electricity.
On average, the power station consumes around 370,423

litres of diesel per month. Considering the selling price of
TZS 2,500 per litre of diesel and other necessary power
station maintenance and operation costs, the power station
incurred at least TZS 1 billion per month.
Stamigold’s analysis of the power generation cost if the

mine was connected to a National Grid shows that the
monthly cost would TZS 337.57 million per month
therefore; the mine would have saved TZS 658.48 million
per month or TZS 7.90 billion per year. The high cost of
power production is among the costs which contribute to
the yearly financial loss reported by the mine. Management
of Stamigold explained that, TANESCO had failed to
connect the mine in the National Grid electricity because
of the high cost associated with connecting the mine to the
grid.
I consider that, if the mine is connected to National Grid of

electricity, operational cost will be minimized
substantially, and profit will be maximized. Also, Stamigold
Biharamulo Mine will be the largest power consumers in
Kagera Region therefore will increases TANESCO’S revenue.

Moreover, according to Stamigold Biharamulo mine
management paper, investment cost of TANESCO in
connecting the mine to the National Grid can be recovered
in a short period as follows: it is estimated that TANESCO
would need to invest at least TZS 2.5 billion to connect
Stamigold Biharamulo Mine to the North West National Grid
branch.
The expected revenue from this investment (before taxes)

is around TZS 277 million per month (with taxes to REA,
EWURA and VAT amounting to TZS 61 million). This
suggests a payback period (excluding running costs) of
about 9 months.
I recommend that Stamigold Biharamulo Mine develop a

project proposal which will involves both Stamigold and
TANESCO on how the two entities with the involvement
of respective mother ministries will undertake the
project of connecting the mine to the national grid of
electricity or come up with other cheaper alternative of
power generation.
20.1.7 Review of the Operation Effectiveness of Midstream and

Downstream of Petroleum Sector Regulator
Water Utilities Regulatory Authority (EWURA) is the
regulator of the midstream and downstream petroleum
sector by virtue of section 29(1) of the Petroleum Act,
2015. The midstream activities include petroleum
processing, refining, liquefaction, storage and
transportation from the point of supply or loading as a
commodity while downstream activities includes;
transportation, distribution, storage, regasification and
marketing of gas and petroleum products.
In this audit, I noted weakness in the regulatory operations

as follows:

20.1.8 Inadequate Evaluation of the Quality of Service Offered
by Power Operators
Among the function of EWURA as the regulator is to
monitor the quality of services offered by the
power/electricity operators. The authority monitors the
quality of services offered through conducting power
system reliability. According to authority’s Regulatory
Performance Report of 2017/2018 on electricity subsector,
power system reliability is analysed with respect to System
Average Interruption Frequency Index (SAIFI), System
Average Interruption Duration Index (SAIDI), and Customer
Average Interruption Duration Index (CAIDI).
SAIFI measures average number of supply interruptions per

customer per year, SAIDI measures average duration (in
minutes) of supply interruptions per customer per year and
CAIDI measures average duration of each supply
interruptions per customer who experienced the
interruption per year. In relation to the measurement, para
7 of Tanzania Bureau of Standard (TZS 1374:2011) requires
that the annual SAIFI should be less than 3 interruptions
per customer per year, the annual SAIDI should be less than
650 minutes (10.8Hours) per customer per year, and the
annual CAIDI should be less than 4 minutes (0.1hours) per
interruption event per year.
EWURA conducted power system reliability operations

during the year 2017/2018. However, the Electricity Sub
sector Performance Report for 2017/2018 did not outline in
detail the planned and unplanned outages including the
area and number of customers expected to be affected
during the period. Instead, the data were indicated in
block figures as shown in Table 54 below. The authority
explained that, they did not analyse and measure the
operators’ performance in detail as required because of
the power producers’ feeder meters incapable of producing
the number of customers per area served with such meter.

Consequently, the quality of service and power reliability
of the operators could not be measured and monitored by
the Authority.
Table 54: Electricity Distribution Outage Hours Missing

Number of Customers Affected
S/N Licensee Planned Unplanned Total outage Actual
hours hours planned and Outage
unplanned Hours
hours
2017/18 2017/18 2017/18 2017/18
1 TANESCO 19,344.00 14,217.00 33,561.00 28,224.29

2 Mwenga 49.28 145.40 194.68 194.68
3 Andoya 36.00 134.00 170.00 170.00
Source: EWURA annual performance reports 2017/2018
I recommend that EWURA ensure that power operators’

feed meters provide the number of customers per area
to facilitate evaluation of quality of service and power
reliability and take appropriate action against operators
who fail to meet such standard.
20.1.9 Inadequate Control of Liquefied Petroleum Gas (LPG)

Retail Business Operations and Pricing
According to the Petroleum (Liquefied Petroleum Gas
Operations) Rules, 2018, EWURA regulates activities
relating to Liquefied Petroleum Gas wholesale business,
Liquefied Petroleum Gas distribution business and
Liquefied Petroleum Gas retail business. Liquefied
Petroleum Gas Retail Business means an activity necessary
for storing, handling, and selling LPG to a customer
through a retail outlet.
In the current audit I reviewed the Authority’s Regulations

of the Liquefied Petroleum Gas Business I noted that,
according to rule no. 10(2) of the same Rules, for the

purpose of enforcing monitoring of the LPG operation,
EWURA issued licenses to the LPG wholesale business and
distribution business. However, the rule excluding
Liquefied Petroleum Gas retail businesses. This creates a
gap on monitoring the retail business which pose a risk on
the security, quality and standard of Liquefied Petroleum
Gas sold to the customers.
Additionally, I noted that, the Authority does not control

prices of Liquefied Petroleum Gas contrary to requirement
of section 7(b) iv of the EWURA Act, 2001 which among
others, stipulates the function of EWURA to regulate rates
and charges of the energy and water utilities. The
prevailing market are controlled and influenced by the LPG
wholesale operators. The Authority explained that, it is
unable to regulate the prices, pending commencement of
importation of LPG through the Bulk Procurement System
(BPS) which awaits the construction/modification of the
infrastructures at the Dar es Salaam port which allows for
receiving LPG consignments, and absence of accurate
information system on the importation of the LPG
consignments.
I recommend that EWURA review its application

provision of the Petroleum (Liquefied Petroleum Gas
Operations) Rules, 2018 to ensure that Liquefied
Petroleum Gas retail businesses are effectively
monitored, also expedite the establishment of Bulk
procurement process of Liquefied Petroleum Gas and
information system pursued to enable the LPG price
setting and monitoring by the Authority.

CHAPTER 21
TAX COMPLIANCE IN PUBLIC ENTITIES
21.0 Introduction
Public Entities are required to comply with tax laws
including timely remittance of tax returns. However, as
reported in the previous years, I noted that some public
entities continue to delay in remitting or not remitting
taxes deducted from their employees’ income and
withholding taxes which as a result attract fines and
penalties.
Despite emphasis to use EFD receipts, I noted that some

entities do not have EFD machines particularly those
making sales. I further noted non-compliance with the
requirements of withholding tax due inadequate translation
of Tax Laws.
The details of the anomalies relating to tax matters are

provided below: -
21.1 Watumishi Housing Company (WHC) Limited

21.1.1 Delays in Issuing Electronic Fiscal Device (EFD) Receipts
on Cash Received
Section 86 of the Value Added (VAT) Act, 2014 requires a
serially numbered and correct invoice or receipt generated
by Electronic Fiscal Device (EFD) to be issued not later
than the day on which VAT becomes payable on the supply.
However, from a sample of four (4) receipts, I identified
three (3) cases involving receipt of cash totalling to TZS
788.67 million from Electronics Government Agency (e-GA)
where there were delays in issuing EFD receipts. The noted
delay was ranging between 18 and 69 days for all the
receipts.
Such delays might result in penalty and interests that might

adversely affect WHC both financially and operationally.

I recommend that Watumishi Housing Company (WHC)
Limited make deliberate efforts to ensure that
electronic fiscal receipts/invoices are issued in a timely
manner after value added tax becomes payable on the
supply (tax point) at the earlier date of receipt of
money/consideration in whole or part.
21.2 National Housing Corporation (NHC)

21.2.1 Delays in Payment of Property Tax and Land Rent
Section 18 of the Local Government Finance Act, 1982
requires every person liable to pay rent to the collector,
i.e. Tanzania Revenue Authority (TRA). Similarly, Section
33(1) of the Land Act, 1999 requires the holder of right of
occupancy to pay an annual rent for that right of
occupancy in instalments and intervals during the year.
During the time of audit in October, 2019, the National

Housing Corporation (NHC) had overdue payments of TZS
1.05 billion and TZS 404.26 million for property tax/rate
and land rent respectively relating to the year ended 30 th
June, 2019. The payments relate to land and properties of
NHC located in different regions within Tanzania Mainland
have been overdue for more than 123 days.
Failure to make land rent and property tax is non-

compliance with laws, which could attract interest and
penalties. The expected interest using risk free interest
rate is estimated at TZS 42.59 million.
I recommend that NHC make prompt payments of land

rent and property tax to respective authorities to avoid
potential penalties and interest.

21.3 Payments not Supported by Fiscal Receipts 877.05
Million
Regulation 28 of the Income Tax (Electronic Fiscal Devices)
Regulations, 2012 requires every purchaser to demand
fiscal receipt or invoice in his possession.
However, a number of Public Authorities reviewed during

the year made various payments to suppliers without
demanding fiscal receipts. Table 55 below shows Public
Authorities that made payments without demanding fiscal
receipts:
Table 55: Payments made Without EFD Receipts Being

Issued
S/N Institution Amount
(TZS
‘Million)
1 Morogoro Urban Water Supply and Sanitation 744.07
Authority
2 Musoma Urban Water Supply and Sanitation 108.38
Authority
3 Vocational Educational and Training Authority 24.60
Total 877.05
The failure to demand EFD receipts could subject the

respective entities to possible penalties as expressed under
Regulation 24 of the Income Tax (Electronic Fiscal Devices)
Regulations, 2012. In addition, such deficiency hinders
Government efforts to collect revenue.
I recommend that management of the respective entities

ensure that they demand fiscal receipts for all payments
they made to avoid unnecessary inconveniences
associated with non-compliance with tax laws and help
responsible authorities to collect Government revenue.

21.4 Stamigold Company Limited
21.4.1 Understated revenues in the VAT Returns TZS 4.5 billion
The VAT returns of Stamigold Company Limited showed a
difference of TZS 4.5 billion between amount of revenue
declared in the VAT returns and the total revenue as per
the general ledger. The amount of revenue in the general
ledger was higher than one filed in the returns. Further, I
found duplicated invoices from suppliers totalling TZS
530.50 million during the financial year 2018/19. The
anomalies resulted in misstatement of VAT amount.
I recommend Stamigold ensure preparation of VAT

returns are accurate and reconcile their figures before
submission to avoid penalties and interests on under-
declaration of VAT amount.
21.4.2 Absence of Transfer Pricing Documentation

Regulation 7 of the Tax administration (Transfer Pricing)
Regulations 2018 provides that any person participating in a
controlled transaction has to prepare a contemporaneous
transfer pricing documentation that include records and
documents of transactions and the parties involved. It
further requires taxpayers with related party transactions
of TZS 10 billion or more to mandatorily file documents and
taxpayers with related party transactions below TZS 10
billion not to file the documentation but prepare them and
file within 30 days of TRA’s request.
I noted Stamigold does not have a transfer-pricing

document in place to justify an arm’s length dealing on
intercompany transactions amounting TZS 1.2 billion.
Stamigold is exposed to a risk of penalty of not less than
3,500 currency points (an equivalent of TZS 52.50 million)
for failure to comply with transfer-pricing documentation
requirements.
I thus recommend the Stamigold comply with the laws

and have a transfer-pricing document in place.

21.5 Tanzania Broadcasting Corporation (TBC)
21.5.1 Non-payment of VAT Liabilities during the Year
Section 66(1) of the Valued Added Tax Act 2014 requires a
taxpayer to file VAT returns and pay relevant VAT liabilities
for the month not later than 20th day of the following
month of business.
However, I noted that Tanzania Broadcasting Corporation

(TBC) did not remit in full the VAT liabilities totalling TZS
488.76 million relating to four months of July 2018, April
2019, May 2019 and June 2019.
Non-payment of VAT timely may subject TBC to pay

interests and penalties that could consume financial
resources that could have been used for other productive
activities.
I recommend that TBC ensure VAT liabilities are paid on

time following filing of VAT returns.
21.6 Tax Revenue Appeals Board (TRAB)

21.6.1 Pending Appeal and Application Cases
Tax Revenue Appeals Act, 2010 and Tax Revenue Appeals
Board Rules, 2018 require all appeals and applications
submitted to the Board to be timely, transparently and fairly
determined.
However, I revealed that appeals are not determined on

time. At the end of financial year 2018/19, the Board had
pending 881 appeals and 21 applications involving TZS
364.19 trillion and USD 79.65 million of tax disputes. Delay
in ruling the cases denies the Government its opportunity to
collect its share of tax revenue from those appeals.
I recommend that TRAB ensure all cases are determined

in a timely manner and avoid having a large number of
pending cases.

21.7 Tanzania Revenue Appeals Tribunal (TRAT)
21.7.1 Pending Appeal and Application Cases
At the end of financial year 2018/19, the Tribunal had
pending 28 appeals and applications worth TZS 1.12 billion
and USD 1.45 million of tax in disputes. The delay in
resolving the tax case is inconsistent with the Tax Revenue
Appeals Act, 2010 and Tax Revenue Appeals Tribunal Rules,
2018 that require such case to be resolved efficiently.
Delay in ruling the cases denies the Government its right to

collect its share of tax revenue from for those cases.
I recommend TRAT expedite the process to resolve

submitted cases.
In addition, Section 90 (1) (f) of the Tax Administration

Act, 2015 provides that when any person is not taxable
person but holds himself as taxable person under Value
Added Tax Act, commits an offense.
However, I noted the Institute of Finance Management

(IFM) entered into contract with two vendors/suppliers
namely M/s Self Reliance (Unit of VETA Dodoma region) and
M/s BICO (under University of Dar es Salaam).
The contracts’ prices were VAT inclusive while the

respective entities were not VAT registered. In one case,
IFM entered a contract of TZS 971.51 million with M/s Self
Reliance Unit of VETA – Dodoma Region for the construction
of classrooms, administration and library buildings at
Simiyu Region. M/s BICO for TZS 940 million to undertake
Architectural & Engineering Design for IFM School at
Njedengwa-Dodoma region.
However, the two vendors arenot VAT registered, while the

prices were VAT inclusive, thus, the conract prices for
VETA – Dodoma Region and M/s BICO, were inflated by TZS
148.20 million and TZS 143.39 million respectively.

I recommend that IFM amend the contract to reflect the
price which is VAT exclusive and claim back any amount
paid as VAT in these contracts.

CHAPTER 22
EFFICIENCY OF PUBLIC ENTITIES IN BUSINESS

ENVIRONMENT
22.0 Introduction
The Government is striving to improve business
environment through providing a wide range of appropriate
incentives and support to unleash creativity of private
sector and other stakeholders in harnessing Tanzania’s
comparative advantages and thereby boosting productivity,
enhancing innovation, and fostering economic integration
and deepening participation in the regional and global
value chains. The Government continues to improve its
strategic entities as input to the industrialization agenda.
Despite the notable milestone, while reviewing the

operational efficiency of Strategic Public Entities, I noted
scope for improvement in various strategic areas which
demands government intervention for further
improvements. My review included seven public entities
namely: -
i. Tanzania Shipping Agencies Corporation (TASAC)

ii. Land Transport Regulatory Authority (LATRA)
iii. Tanzania Bureau of Standard (TBS)
iv. Tanzania Telecommunication Corporation (TTCL
Corporation)
22.1 Land Transport Regulatory Authority (LATRA)

LATRA was established to regulate land transport and
enhance the welfare of Tanzania society by promoting
effective competition and economic efficiency of regulated
sectors; protecting the interests of consumers in relation to
costs, quality and standards of transport services; and
protecting the financial viability of efficient suppliers. My

review of operating efficiency at LATRA noted the
following deficiencies:
22.1.1 Deficiency in Monitoring Commercial Motorcycles and

Tricycles
In the financial year 2018/19, LATRA managed to issue
21,282 and 33,084 licenses for tricycles and motorcycles
respectively. However, due to lack of database, LATRA was
unable to trace the number of unlicensed motorcycles and
tricycles. I also noted that LATRA does not have visibility to
TRA systems to access the list of registered motor vehicles,
tricycles and motorcycles in the country.
To enhance effective monitoring, I recommend that

LATRA maintain database for commercial motorcycle and
tricycles. I also recommend that LATRA liaise with TRA
to have access to the TRA’s system for registered
vehicles, tricycles and motorcycles.
22.1.2 Deficiency in Management of Information Systems

LATRA has automated ICT application systems as a way of
enhancing efficiency and improving service delivery. The
Authority has six (6) ICT systems in operations namely
Electronic Document Management System (EDMS);
Passenger Service Vehicles Tracking System (VTS); Road
Licensing Information System (SURLIS); Integrated Financial
Management System (IFMIS) based on Epicor 10.2;
Integrated Payroll & Human Resource Management System;
Mobile Phones Online Inquiry System for Bus Fares; and
Time Attendance (Biometric) System. From the review of
ICT application systems, I noted the following deficiencies
which need management intervention for improvements.
(i) Lack of Segregation of Duties in Road Licensing

Information System (SURLIS)
In the SURLIS application system, there was no segregation
of duties in Road Licensing Information System whereby one

person has right to enter details of a vehicle, verifies
application details, approve and issue notification. These
weaknesses in internal control increase the risk of fraud
and errors through issuing unsupported applications.
I recommend that LATRA promote online license

applications and create a pool of license verifiers and
approvers to attend license applications.
(ii) Activity logs for ICT Administrators Not Reviewed

by Independent Security Personnel
LATRA’s ICT section has four (4) employees responsible for
system administration for the Authority’s ICT applications.
The ICT administrators have access rights to all
applications and their databases. I noted that the
application and database activity logs for ICT
administrators are not reviewed by an independent person
to verify and confirm that the administrators perform only
authorized functions in the system. Lack of ICT security
function in the Authority increases the risk of data integrity
and potential ICT related fraud.
LATRA commented that ICT department has position of

Network Administrator whose roles include development of
ICT security strategy of the Authority, conducting ICT
security awareness and review of system administrators’
logs. Management has submitted proposal to the Board for
recruitment of ICT Security Officer.
I recommend that LATRA consider delegating or

employing ICT security personnel who will be
responsible for developing ICT security strategy of the
Authority including conduct ICT security awareness and
review of system administrators’ logs.

22.1.3 Absence of Approved Strategic Plan
Strategic Plan is a document that lays out a set of strategic
objectives designed to address the needs and show the
direction of the Authority. It summarizes how the Authority
plans to operate and grow over the next three to five years
and describes the business opportunities the Authority will
pursue and how it will do so. The document must align with
the Government strategic plan of 2016/17 to 2020/21.
However, I noted absence of an approved strategic plan to

guide LATRAs operations. Strategic plan is a vital document
to show the direction of the entity and act as a base for
annual budget and operational plan. LATRA management
explained that the final document is ready to be submitted
to the Board.
I recommend that LATRA expedite review and approval

process of the strategic plan so that it becomes
operational. Also, ensure it aligns with the Government
Strategic Plan of 2016/17 to 2020/21.
22.2 TTCL Corporation

TTCL Corporation is the largest wire-line
Telecommunication carrier (fixed business) in Tanzania
providing complete range of voice and broadband services
to retail and wholesale customers. The Corporation is
responsible for managing infrastructural facility in a
manner that ensures safety, economic and commercial
viability of the strategic telecommunications
infrastructure.
TTCL Corporation is leading fixed telecommunications

market with over 98% market share while other operators
have only 2% total market share of fixed line business. On
the other hand, TTCL corporation occupies only 1% of the
total operators' subscription Market Shares (refer figure II)

Figure II: Operators Subscription Market Share
Source: TTCL Financial statements 2018/19
During the review of the TTCL operations, I noted the

following weaknesses which limits the corporation from
further expansion to attain its strategic objectives: -
22.2.1 Non-Implementation of Planned Capital Investment by

96%
TTCL Corporation Strategic Plan of 2016/17 to 2020/21
shows strategic direction in terms of value-added telecom
product offering and related ICT services to customers;
market growth; and transformation of the company into a
major player in the competitive Tanzania, Africa and
Global telecom market consistent with business objectives
and national strategic interest.
TTCL performance in the market is mainly affected by

insufficient funds for business expansion as compared to
other operators. For instance, during the year 2018/19
TTCL forecasted capital investment of TZS 671.28 billion,
however, only TZS 29.39 billion was invested which
resulted in a budget deficit of 96%. The budgeted
investments related to expansion of network
infrastructure; upgrade of existing network; and
maintenance of network infrastructure and services. The
corporation’s budget was mainly expected to be generated
through concession loan of TZS 643.79 billion under
Government guarantee.

However, no loan was granted to the Corporation the
financial year 2018/19. Further, I noted that out of the
total annual budget of TZS 831.75 billion, only TZS 131.43
billion was collected during the year. Despite the noted
financial constraints, the Corporation continued to use its
internal generated funds to perform various marketing and
promotion strategies in order to improve its market share
in the mobile telecommunication industry. The Corporation
submitted a letter together with strategic and Business
Plan to the Government on 7th December, 2018 to request
Government guarantee on concession loan.
I am concerned about the significant underperformance of

the budget in its core business which limits the corporation
from achieving its strategic objectives.
I recommend that the Corporation make close follow up

on the submitted strategic and business plan to the
Government for support on the transformation projects
through guarantee on concession loans from either
internal or external financiers. It also needs to explore
other internal sources of income to finance the planned
activities.
22.2.2 Unregulated Roaming Charges Resulting in a Loss of TZS

1.11 billion
TTCL Corporation introduced roaming as a short-term
strategy to achieve wider coverage within shortest possible
time. It is anticipated that as TTCL Corporation increases
its own coverage, the amount of roaming traffic will be
declining. During the financial year 2018/19, the
corporation entered into a contract with TIGO for national
roaming with effect from 14th July, 2018. However, from
the contract, I noted that the price per one gigabyte (GB)
is TZS 2,500 which is higher than the corporation price
charged to customers of TZS 1,500. As a result, the
corporation recorded roaming loss of TZS 1.11 billion,

resulting from roaming revenue of TZS 2.35 billion against
roaming cost of TZS 3.46 billion.
Further, I noted that roaming services between operators

are currently not regulated by Tanzania Communication
Regulatory Authority (TCRA) which results in higher
roaming cost between operators. Also, I found that the
Corporation had no strategies on roaming exit plan for
areas identified with extreme traffics. The Corporation
explained that they have re-negotiated the price of data
with TIGO and reduced data roaming rate from TZS 2500 to
TZS 1,800 per GB. However, negotiated price is still higher
than the Corporation price of TZS 1500 per GB.
I recommend that TTCL liaise with the parent Ministry

and TCRA on the need of establishing roaming price
regulations as the current practice affect the new
entrants to the industry due to the fact that giant
telecommunication operators will always offer higher
prices to limit competition in the industry due to higher
operational costs caused by roaming.
In addition, the Corporation need to search for other

telecommunication operators which can offer reasonable
price. As a long-term solution, let the Corporation
considers the possibility of seeking funds for financing
infrastructure expansions based on the roll out plan to
be developed to minimize higher roaming cost which
affect the performance of the corporation.
22.2.3 Inappropriate Management of Special Package Led to

Average Loss TZS 2.35 Billion
TTCL introduced several competing motivational packages
in the market including Boom pack (student package) and
Staff pack (restricted to staff). These packages offered at
affordable price and hence motivate staff and students to
use TTCL services.

In assessing the controls placed on the subscribers of boom
packages and staff package I noted that there is misuse of
packages offered by TTCL Corporation which led to the
average loss of TZS 2.35 billion in a year. This is caused by
invalid customers who benefit from subsidized prices of
staff and boom packages instead of normal packages. For
instance, the number of staff registered for the package is
in excess by 481 as compared to actual number of
employed staff. Further, about 16,263 customers of the
boom pack had more than one SIM card (ranging from 2 to
52 SIM cards). I consider that most of the subscribers on
those packages could be untargeted beneficiaries, hence
may indicate fraudulent actions.
I recommend that TTCL Corporation strengthen controls

to minimize the risk of registering invalid customers on
special packages offered to special targeted group i.e.
one Student and employee identity card to be used once
for one SIM Card.
22.3 Tanzania Shipping Agencies Corporation (TASAC)

TASAC was established to carry out shipping business and
enhance maritime administration to regulate ports,
shipping services, maritime environment, safety and
security and related matters in Mainland Tanzania. Its
mission is to ensure efficient provision of safe, secure,
reliable and environmentally friendly maritime and
shipping business services to contribute to socio-economic
development. During the review of the TASAC operational
efficiency, I noted the following weaknesses: -
22.3.1 Lack of Approved Policies and Manuals to Guide TASAC

Operations
COSO1 framework describes policies, procedures and
manuals as part of control environment and a base for
1
COSO refers to Committee of Sponsoring Organization of Treadway Commission.

carrying out internal control across an organization. Also it
has considered them as foundation on which an effective
system of internal control is built and operated in an
organization that strives to achieve its strategic objectives;
provide reliable financial reporting to internal and external
stakeholders; operate its business efficiently and
effectively, comply with all applicable laws and
regulations, and safeguard its assets.
During the audit, I found that TASAC had not

operationalized several policies, standard operating
procedures and manuals to guide its operations. The
related policies include ICT policy, guidelines and standard
operating procedures; Business Continuity Plan and Disaster
Recovery Plan; Staff Rules and Regulations; Financial Rules
and Regulations; ICT Steering Committee Charter; Risk
Based Internal Audit Manual; and Risk Management Policy
and Framework.
I consider that these internal policies are critical for

smooth operation of different processes of the
organization.
I recommend that TASAC expedite internal review

process of these documents to ensure they are approved
and ready for operation to improve internal control
processes.
22.3.2 Lack of Standardized Marine Tariffs for Cargoes and

Passengers Vessels
Section 12(1) (d) of the TASAC Act, 2017 mandates the
Corporation to regulate maritime transport services by
standardizing rates and charges. However, I noted that
there were no standardized tariffs for both local and
international vessels providing cargo and passenger
services. In the interim period, TASAC had developed a
draft Tanzania Shipping Agencies (Tariff) Regulations, 2019

that provides a framework for promotion of competition
and regulation of tariffs. The draft regulations is still
pending Government approval and gazetting.
Lack of approved tariff caps for cargo and passenger

services both locally and internationally opens the marine
transport users to a possibility of exploitative and unfair
charges by the providers of marine transport service.
I recommend that TASAC make follow up with

Government on the approval of the draft Tanzania
Shipping Agencies (Tariff) Regulations, 2019. Also review
the current charged fares and other charges for various
marine routes with the view to standardizing the rates
to comply with Section 12(1) (d) of Tanzania Shipping
Agencies Act 2017.
22.3.3 Deficiency in Inspection of Unregistered Boats/Vessels

Reg. 82 of the Merchant Shipping Regulations of 2005
requires annual licensing of unregistered vessels. TASAC is
required to undertake inspection of vessels before licensing
to ensure the vessel comply with the minimum safety
requirements. However, I noted the following deficiencies
in relation to the inspection of vessels:
(i) Lack of Mechanism to Ensure Completeness of

Inspection of Unregistered Vessels
According to the TASAC Performance Report for the
financial period 2018/2019 noted that only 7,423 (54%) out
of 13,729 of unregistered vessels were surveyed during the
year while 6,306 (46%) unregistered vessels were operating
without being checked for safety compliance. Further, I
found that TASAC had not developed comprehensive
database of all unregistered vessels operating in Tanzania.
Furthermore, during my visit to regional offices I noted

that the maintained manual is missing the status of the

registered vessels whether they are currently in operation
or not, the date of registration and registration numbers
are not sequential recorded to avoid duplication.
TASAC promised to engage competent authority during the

year 2020/21 to conduct a census of all unregistered
vessels operating in Tanzania mainland that fall under
TASAC’s regulation.
(ii) Inadequate Follow Up on Inspection Directives

TASAC Pre-licensing Inspection Reports performed by Tanga
office details several deficiencies of vessels inspected as
indicated in the Table 56 below.
Table 56: Weaknesses Noted During Inspection

Vessel Weakness noted
name
1. MV Aida Kondo Lack of valid documents and
certificates
2. MV Ulinzi II Lack of valid documents and
certificates
3. MV Mwambani Expired life raft, rocket parachutes and
hand flares as well as lacking valid
documents and certificate
4. MV-Elizabeth Defective expired life raft, rocket
Luhigo parachutes and hand flares and
starboard generator, as well as lacking
valid documents and certificates.
Source: TASAC Annual Performance Report
Nevertheless, I found no evidence of follow up to confirm if

the noted weaknesses were addressed by the respective
vessels. Also, I could not confirm if the respective vessels
were not in operation prior to rectification of the noted
weaknesses.
Inadequate follow up and tracking mechanism to ensure

the inspected vessels defects are fixed may impose risk of
marine accidents while lack of vessels database makes it

difficult to establish the coverage of the licensed
unregistered vessels.
I recommend that TASAC establish mechanism of

identifying all unregistered vessels operating within
TASAC’s territory with a view to establishing a
comprehensive database. This database would form a
basis of assessing coverage of the licensing operation and
ensure all such vessels are inspected. Where
deficiencies are noted, TASAC should actively follow up
on the corrective measures taken instead of waiting for
vessel owners to correct and request re-inspection on
their own.
22.3.4 Weaknesses in the ICT functions

Through audit review of application systems at TASAC, I
noted the following weaknesses:
i) Undefined Separation of Responsibilities

in the ICT Unit
Section 10.1 of the ISO/IEC27002 Code of practice for
information security management stipulates the need for
segregation of duties in the IT responsibilities to reduce
the risk of negligent or deliberate system misuse. The
following functions cannot be combined in ICT department
Programmer and database administrator; System
administrator and database administrator; Security
administrator and database administrator; and Network
administrator and database administrator.
However, I noted lack of segregation of duties within the

ICT unit. For example, four employees were employed to
assist in the development of a shipping business system and
the same staff will be involved in the live production
environment as operators of the system. This violates the
principles of segregation of duties whereby system

developers should not have access to production
environment.
ii) Unutilized Modules/Functionalities of Application

Systems
TASAC acquired ARUTI application system to manage
payroll and human resources operations. The system has a
total of eleven (11) modules, out of which, only seven (7)
are being utilized, whilst the cost of the license covers all
modules. In addition, TASAC has a financial management
system to manage financial and accounting operations but
the system does not generate all financial reports. I
consider that due to large number of transactions to be
handled, it is obvious that the quality of financial reporting
would be greatly enhanced through the use ERMS system.
Lack of segregation of duties in the ICT department may

expose the systems to risk of misuse since system
developers may have access to the live production
environment. Also, TASAC may not get assurance on
integrity and recoverability of the backup created and sent
to secondary site in case of disaster.
I recommend that TASAC (a) segregate the roles within

the ICT unit to separate roles on network and
infrastructure, system development and maintenance,
and ICT support. The four staff involved in the
development of the shipping business system should not
be assigned roles that require them to access the live
production environment; and (b) ensure ARUTI modules
are effectively utilized to improve operational
efficiency, as well as ensuring all financial reports are
generated from the IFMS Epicor.
22.4 Tanzania Bureau of Standards (TBS)

TBS was established to promote standardization and quality
assurance activities in industry and commerce in Tanzania.

I have reviewed the operations of TBS to ascertain if it
discharges its functions as mandated. I noted the following
anomalies in the operations of the TBS which need
management attention for improvement:
22.4.1 Un-witnessed Loading of Containers and Sealing with

Tamper-Proof Seals
Clause 2.3.2 (l) under Specific Requirements of general
conditions of the contracts between TBS and PVoC2 agents
(Bureau Veritas; Intertek International; and SGS) requires
the agents to witness the loading and sealing of containers
with tamper-proof seals.
During my review of the contracts between TBS and PVoC

agents assigned in Istanbul (Turkey) and Dubai (United Arab
Emirates) I found that two agents out of three available did
not witness the loading of containers and sealing with
tamper proof seals for all consignments shipped to
Tanzania mainland between 01st September, 2018 and 30th
June, 2019. One agent witnessed a container loading risky
products which they identified based on their experience.
PVoC agents indicated that clause 2.3.2(l) is too general

thus they are still waiting for TBS instructions on how
container loads and sealing should be performed because it
cannot be performed in all consignments. Respective
instructions are expected to incorporate a list of risky
products of which mandatory loading verification should be
performed. For example, there are associated costs on
verification of loading of containers and challenges of
Loose Cargo Loads (LCL) against Full Container Loads (FCL).
TBS explained that risk product profiling matrix draft is

already in place for final discussion and agreement with
the service providers in a joint meeting (PVoC technical
meetings) scheduled to be held in February, 2020.
2
PVOC refers to Pre-export Verification of Conformity to Standards

I am of the view that TBS is supposed to be proactive by
preparing and sharing instructions with all agents along the
signed contracts. Un-witnessed consignments might leave
room for importation of substandard products.
I recommend that TBS prepare and share instructions

which amplify terms and conditions stipulated in the
contract after performing risk assessment on all imports
and categorize them based on their risk profile and
decide which can be subjected to mandatory loading
verifications. Also communicate with PVoC agents and
agree on modalities suitable for smooth implementation
of contracts.

CHAPTER 23
REVIEW OF CROPS AND PRODUCE BOARDS
23.0 Introduction
Agriculture accounts a significant part of the income and
poverty reduction for population living rural areas.
According to National Strategy for Growth and Reduction of
Poverty – II, 2010, challenges encountered in agriculture
development were highlighted to be inadequate extension
services, unreliable markets and uncompetitive farm gate
prices, inappropriate financing mechanisms and poor
infrastructure to support agriculture.
Since independence, the Government has been enhancing

agriculture sector through established different agricultural
institutions that in a way were mandated to carry out
functions that would mitigate challenges stated in the
NSGRP II. The institutions include Crop Boards like Sugar
Board of Tanzania (SBT), Tea Board of Tanzania (TBT),
Cashewnut Board of Tanzania (CBT), Tobacco Board (TTB),
Tanzania Sisal Board and Tanzania Coffee Board (TCB),
Tanzania Pyrethrum Board (TPB). Other institutions
included crop research institutions like TaCRI and TaLIRI
and Crop Trust Funds like cotton, coffee and cashewnut
development trust funds which recently were dissolved,
and their functions transferred to the crop boards.
Despite formulation of the above institutions there are still

challenges encountered by the entities including
duplication of functions among the entities (like extension
and market promotion services); inadequate financing of
the entity’s functions; inadequate crop quality control
leading to the crops lacking qualities of attracting higher
prices in the market. During audit, I identify scope for
improvement in operations and financial management of
the entities as detailed below.

23.1 Delay in Official Dissolving Crops Trust Funds Following
Government Instructions
I noted that there were Trust Funds established under
different crops by stakeholders to support development of
the respective crops. The Trust Funds had functions such as
importation of agrochemicals and other inputs; finance or
support respective crops related agricultural and
extension; promote, develop and foster sustainable
agricultural growth and marketing of the crop and invest
the funds for the purposes of developing the respective
crop industry for the benefit of the industry’s stakeholders.
In the period of 2017/18, the Prime Minister instructed the

Coffee and Cotton Trust Funds to be dissolved and their
functions to be transferred to their respective Crop Boards.
Similarly, Cashewnut Industry Development Trust Fund
(CIDTF) activities were also suspended by the Minister for
Agriculture, Livestock and Fisheries via letter with
reference number CAC 65/86/01/VII/03 of 21st December,
2016. However, I observed that, the Funds were not
officially dissolved as per the instructions and for instance,
Tanzania Cotton Development Trust Fund continued to
operate.
I am concerned about time taken to implement directives

of the Prime Minister and Minister of Agriculture on
dissolution of the Trust Funds. Delayed implementation of
the directives has impact on the effective performance of
the functions that were transferred to their Boards.
Further, there are risks that, assets and liabilities that
were managed by the Funds might not be properly
controlled during this transition period. Further, resources
such as cash held in banks are tied up in the bank accounts
while they could be used in development of the respective
crop activities.

I recommend that the Boards in collaboration with the
Ministry of Agriculture expedite the process of legal
dissolution of the funds to enable smooth transfer of
their functions and assets.
23.2 Large Receivables and Payables Reported by Cotton

Development Trust Fund
In January, 2018 and December, 2017, the Prime Minister
instructed dissolution of Coffee and Cotton Development
Trust Funds and their functions be transferred to the
Coffee and Cotton Boards respectively.
While Coffee Trust Fund ceased its operations

immediately, Cotton Development Trust Fund (CDTF)
continued with its operations and prepared financial
statements for the year ended June 2019. In its financial
statements, the Fund reported increase in receivables to
TZS 38.69 billion from TZS 9.13 billion (324%) reported in
the prior year (Provision inclusive of TZS 1.65 billion in
both cases). The Fund also reported an increase in
payables from TZS 50.22 billion to TZS 25.76 billion (95%)
reported in the prior year. The reason for both increases
being pesticides procured on credit and disseminated to
farmers on credit terms.
The CDTF functions included supporting the cotton industry

in cotton research related activities, procuring and
distributing cotton inputs to farmers, provision of extension
services and data collection.
I am concerned about such significant increase in

receivables and payables at the time where the Fund was
supposed to be dissolved as per Prime Minister’s
instructions. This may also, involve risks of recoverability
of receivables which is the source for paying the reported
payables.

I recommend that the Tanzania Cotton Board and the
Ministry of Agriculture expedite careful and proper legal
dissolution of the Fund to enable adequate handling of
the assets and liabilities reported by the TCDTF.
23.3 Decline in Quantity and Prices of Exported Crops

The Tobacco Industry Act 2001 as amended by Act No. 20
of 2009 Crop Laws (Miscellaneous Amendments) Act and
the Tea Act No. 3 of 1997 mandate the Tobacco and Tea
Boards to advice the Government on the policies and
strategies for the development of the respective crop
industries and to regulate and control quality of the
produce.
Tobacco expert performance for the year showed that,

tobacco production trend for the past five years generally
decreased from 71,999 tons to 60,691 tons from year
2014/15 to 2018/2019. The continued decrease was due to
many reasons including decrease in demand of tobacco in
the world market as a result of anti-tobacco campaigns by
WHO Framework Convention on Tobacco Control and
initiation of electronic cigarettes (e-cigarette). The top
grades also went down by 7.23 tons in 2018/2019 compared
to 2017/2018. Further, the export value also decreased
from USD 132,611,000 to USD 92,927,000 million in
2017/2018 and 2018/2019 respectively.
Likewise, Tea Board reported a very small increase of 0.3%

(29,243,841Kgs) in export sales for the period of 2018/2019
as compared to 29,160,642Kgs in 2017/2018. Despite the
relative small increase in export sales, tea industry
recorded significant decrease of 29.4% in earnings from
such exports. For the year 2018/2019 total earnings was
USD 43,890,138 compared to USD 62,167,167 for the year
2017/2018. The decrease in tea export earnings was
attributed to the decrease in World tea price from an

average of USD 2.13/Kg in 2017/2018 to an average of USD
1.50/Kg in 2018/2019.
The situations above challenge agriculture for crops with

high contribution to foreign currency. The decline in price
leads to declining export value. Farmers may not realize
the value of efforts they invest in agricultural sector and
therefore, they may be discouraged.
I recommend that Crop Boards and Ministry of

Agriculture (a) implementing strategies that address the
sector challenges in order that, farmers are not
discouraged by the falling trend of prices and
production, and (b) increase sector monitoring through
value addition and increased crop quality in order to
increase both domestic and foreign markets.
23.4 Financing Challenges to Tanzania Sisal Board (TSB) and

Cotton Buyers
Since 2005 through Circular No 42 of 2005, the Government
decided to fund the operations of all Crop Boards by
removing crop levies charged to farmers for supporting
Crop Boards activities. The aim was to give cost relief to
farmers for their produce.
All Crop Boards in this regard depend mostly on

government subventions to run their activities. I noted
that, Tanzania Sisal Board (TSB) had suspended
implementation of planned activities like inspections,
promotion and training in the financial year 2018/2019 due
to budget constraints. The Board reported revenues of TZS
367.54 Million, but expenses were TZS 489.90 Million while
payables and accruals increased from TZS 702 Million to
TZS 812.65 Million for the years 2017/2018 and 2018/2019
respectively.

Further, the Cotton Board faced a situation where cotton
buyers were not able to access credit facilities from
commercial banks. This was a result of unfavorable cotton
international market prices that influenced commercial
banks hesitate extending credit facilities to cotton buyers
in some regions. As such, there was a delay in procuring
cotton seeds that had to be extended to farmers.
Consequently, the impact affected loan repayment
schedules which were planned to be in November, 2018
and May, 2019. Until the year end, the Cotton Board had
managed to repay TZS 159.6 million only out of TZS 700
million that was scheduled to be repaid in May, 2019
installment.
Financing challenges in both cases reduce ability of the

Boards to provide farmers timely with agricultural inputs
and extension services. In turn, the impact goes further to
productions and quality of the crops.
I recommend that the Ministry of Agriculture review the

scope of activities performed by the Boards to achieved
agreed objectives and allocate adequate resources to
achieve them and insuring timely remittance of funds.

CHAPTER 24
EFFICIENCY OF PUBLIC ENTITIES UNDER HEALTH SECTOR
24.0 Introduction
For the financial year 2018/19, I reviewed the performance
of health sector in terms of utilization of funds to achieve
the targeted objectives in Medical Store Department (MSD)
and Muhimbili National Hospital (MNH) and I noted items
received with shelf-life less than 80%, inadequate order fill
rate of 53.8% based on sales made from 1st July, 2018 to
30th June, 2019 non-sustainability of SADC procurement
services for medicine and health commodities, some
customers being charged wrong prices by MSD, inadequate
funding by the Government on procurement of medicine
and medical supplies, preventable delays in completion of
the project with total cost of TZS 385.91 million for 12
months. Other include Long outstanding Government
receivables that threatens MSD’s operations and Significant
rejections of Claims submitted by MNH to NHIF amounting
to TZS 2.18 billion as explained below.
24.1 Drugs Received with Shelf-life Less than 80%

Para 7.1.3 of MSD Inventory Management Guidelines of
June 2018 requires that during the receipts of the drugs
and medical equipment at the warehouse, Management
should calculate the remaining shelf life of the products to
ensure that they are in conformity with standards, that is,
the shelf life is either above 80% or two years of the total
shelf life.
During the audit, I noted that 36-line items of drugs had

remaining shelf life ranging from 3% to 65%, which were
less than the required rate of 80%. The drugs may expire in
the MSD’s warehouses before being distributed to users and
this may cause significant financial loss to MSD in terms

resources needed to replace the drug and disposal cost of
the expired drug.
I recommend that Management of MSD improve

supervision and ensure that they comply with the
requirements of the Inventory Management Guidelines
for receiving goods and also communicate with the
system developers to automate rejection of drugs with
unaccepted shelf-life.
24.2 Inadequate Order fill Rate of 53.8% Based on Sales Made

from 1st July, 2018 to 30th June, 2019
MSD targeted to achieve 75% Customer order fill rate based
on key performance indicator (KPI) indicated in MSD Annual
Business Plan for the financial year 2018/19 under the
Directorate of Customer service and Zonal Operations.
During the audit, I reviewed customer service level report

for the period from July, 2018 to June, 2019 and noted
that order fill rate for the period was 53.8% contrary to the
above requirement.
I consider the customer orders were noted fulfilled because

the items were out of stock, which indicate inadequate
demand forecast and lack of regular review of stock
against sales trend. Targeted revenues might not be met
due to non-attainment of targeted customer order fill rate.
Besides, MSD reputation may be damaged due to low
customer order fulfilment rate.
I recommend that MSD ensure the outlets have sufficient

stocks at all times and have well-established demand
forecast.
24.3 Non-Sustainability of SADC Procurement Services for

Medicines and Health Commodities
The Government through MSD signed Memorandum of
Understanding (MoU) with Southern African Development

Community secretariat (SADC) on 9th October, 2018 for
provision of the SADC pooled procurement services for
medicine and health commodities. Under this agreement
MSD agreed to manage procurement process according to
the best public procurement principles, monitor framework
contract and resolve issues related to orders placed by the
member states and then provide e-procurement services.
Review of MoU between MSD and SADC Secretariat noted

the following shortfalls: -
a) Absence of conditions which enforce SADC member

states to procure the medicines and health
commodities which have been processed and
procured by MSD. It is not mandatory for member
states to procure through MSD and this may lead MSD
to process the procurement, but not necessarily the
member states buy them since they are not obliged
to purchase MSD’s medicines and health
commodities.
b) Existence of different standards of medicine and

medical commodities by SADC member states. This
creates challenge to MSD to comply with standard of
each member state.
c) Absence of common procurement system applicable

for all member states. Currently the procurement
system is applicable in Tanzania but not yet
officiated by other member states.
d) Absence of trained personnel who will be involved

directly in procurement process at MSD.
Absence of earlier harmonization of the noted anomalies

may lead to failure by MSD to provide services to the
member states and ultimately may lead to the breach of
the agreement.

I recommend that MSD ensure that the noted anomalies
are addressed so as to make sure that the procurement
process is performed without causing negative effect to
MSD.
24.4 Some Customers Being Charged Wrong Price by MSD

The Director of Finance of MSD determines the price
catalogues of medicine and medical commodities which is
recommended by Executive Management Team and
approved by the Board in every year.
In reviewing the complaints register, I noted that Muhimbili

National Hospital (MNH) registered complaint to have been
charged prices above catalogue. For example, instead of
being charged TZS 1,880 MNH was charged TZS 22,900 per
ten amp of haloperidol injection 5mg/ml. Similar
complaint case was presented by other providers such as
Central Medical Stores Zanzibar. Although MSD
Management provide explanations too clarify some of these
cases, I consider that MSD need to strengthen control on
prices of medicines and medical equipment to ensure
correct prices are used to avoid unnecessary conflicts with
customers.
I recommend management of MSD establish adequate

controls over prices charged to customers so as to avoid
potential overcharging or undercharging of prices.
24.5 Inadequate Funding by the Government on Procurement

of Medicine and Medical Supplies TZS 260 billion
During the financial year 2018/19, MSD budgeted to receive
TZS 260 billion from the Government for the purpose of
facilitating procurement of medicine and medical supplies
for Health facilities. However, up to financial year ended
30th June, 2019 the Government disbursed only TZS 80
billion equivalent to 33% of the approved budget, leaving

the balance of TZS 160 billion equivalent to 67% not
received by MSD from Government.
The disbursement of funds from the Government show a

decreasing trend of funds released by the Government
from budgeted amount of TZS 251.10 billion, TZS 260
billion and TZS 260 billion to actual amounts of TZS 121.10
billion, TZS 80.10 billion and TZS 80 billion in financial
years 2016/17, 2017/18 and 2018/19 respectively.
In adequate funding increases the risk that MSD will not be

in a position to implement its planned procurement of
medicine and medical equipment.
I recommend that MSD make follow up with the Ministry

to ensure budgeted funds are released and widen its
internal sources of revenue which will help to cover the
procurement of medicines and medical facilities which
were required to be covered by Government funds.
24.6 Preventable Delay in Completion of the Project Worth

TZS 385.91 Million for 12 Months
Contract No IE-009/2017/2018/HQ/W/20 between MSD and
SUMA JKT dated 11th May, 2018 for the maintenance of
concrete floor at ARV and Central warehouse was expected
to be completed on 12th October, 2018 which was 5 months
from the contract start date of 11th May, 2018.
I noted that extension was granted twice for this contract,

the first extension was granted from 30th November, 2018
to 28th June, 2019 and the second extension was granted
from 29th June, 2019 to 28th October, 2019.
The annual approved budget for the project was TZS

378.90 million, but management decided to award the
contract for TZS 385.10 million, which means the project
was awarded for TZS 7 million above the approved budget.

Management of MSD explained that the project delayed
because the space to be maintained was still occupied by
goods and management had to find another space to place
the goods.
Delayed implementation of the project may lead to price

fluctuations and increase project cost. Also, the contractor
might claim damages for the delay in completion of the
contract.
I recommend that MSD find alternative locations to store

the goods and leave the concerned area open for
maintenance.
24.7 Long outstanding Government receivables that

threatening MSD Operations
Government receivables have increased by 14% from TZS
228.60 billion in the financial year 2017/18 to TZS 260.45
billion in 2018/19. Out of TZS 260.45 billion, TZS 223.6
billion of the debt relates to payments made by MSD for
clearing, storage, and distribution of various commodities
donated to the Government by development partners and
various donor communities; TZS 36.8 billion relates to
value of medicines and medical supplies supplied to various
Government Health Facilities on credit.
Management of MSD communicated with Ministry of Health

Community Development, Gender, Elderly and Children
concerning the increase in government receivables. Further
management of MSD met with Permanent Secretary of the
Ministry of Finance on 24th April, 2019 and 11th September,
2019 and the Government promised to pay the debt.
Liquidity of Department is deteriorating because the

Department depends on recovery on Government debt in
order to sustain the self-revolving fund.

I recommend that MSD continue making follow up with
Permanent Secretary of Ministry of Finance in order to
recover the outstanding Government debt.
24.8 Significant Rejections of Claims Submitted by MNH to

NHIF Amounting to TZS 2.18 Billion
Muhimbili National Hospital (MNH) billed NHIF a total
invoice of TZS 45.30 billion during the financial year
2018/19 following services provided by MNH to the
beneficiaries of NHIF. Out of the total amount billed, TZS
2.18 billion were rejected by NHIF which accounts for 4.8%
of total billed amount.
Management of MNH explained that rejections are mainly

contributed by differences in the interpretation of NHIF
benefit package and management has planned to map NHIF
benefit package with MNH billing system so that only
services and commodities in the package will be billed.
MNH incurred a loss following such rejection by NHIF.
I recommend that MNH ensure that they map NHIF

benefit package with MNH billing system so that only
services and commodities in the package will be
provided under the cover of NHIF. Also, MNH and NHIF
need to make monthly reconciliation meetings before
submission of claims.

APPEDICES
Appendix I: Analysis of Audit Opinions
SN INSTITUTIONS Opinion
1 Air Tanzania LTD Unqualified
2 Architects and Quantity Surveyors Registration Board Unqualified
3 Ardhi University (ARU) Unqualified
4 Arusha International Conference Centre (AICC) Unqualified
5 Arusha Technical College (ATC) Unqualified
6 Arusha Urban Water Authority Unqualified
7 Babati Urban Water supply and Sanitation authority Unqualified
8 Baraza la Kiswahili Tanzania (BAKITA) Unqualified
9 Bukoba Urban Water supply and Sanitation authority Unqualified
10 Capital Markets Securities Authorities (CMSA) Unqualified
11 Cashewnut Board of Tanzania Unqualified
12 CDITF-(Cashewnut) Unqualified
13 CDTF-(Cotton) Unqualified
Centre for Agriculture Mechanisation and Rural
14 Unqualified
Technology (CAMARTEC)
15 Centre For Foreign Relations (CFR) Unqualified
16 Chalinze Urban Water Supply and Sanitation Authority Unqualified
17 College of Business Education (CBE) Unqualified
18 Contractor Registration Board (CRB) Unqualified
Cooperative Organizations Audit and Supervision
19 Unqualified
Corporation (COASCO)
20 Copyright Society of Tanzania (COSOTA) Unqualified
21 Dar Es Salaam Institute of Technology (DIT) Unqualified
22 Dar Es Salaam Maritime Institute (DMI) Unqualified
23 Dar es Salaam University College of Education (DUCE) Unqualified
24 DAWASA Unqualified
25 Deposit Insurance Board (DIB) Unqualified
26 Dodoma Urban Water Sanitation and Authority Unqualified
27 Energy and Water Utilities Regulatory Authority (EWURA) Unqualified
28 Engineers Registration Board Unqualified
29 EWURA CCC Unqualified
30 Export Processing Zones Authority (EPZA) Unqualified
31 Fair Competition Commission (FCC) Unqualified
32 Fair Competition Tribunal (FCT) Unqualified

33 Higher Education Students Loans Board (HESLB) Unqualified
34 Institute of Adult Education Unqualified
35 Institute of Finance Management (IFM) Unqualified
36 Institute of Rural Development Planning (IRDP) Unqualified
37 Institute of Social Work (ISW) Unqualified
38 Iringa Urban Water supply and Sanitation authority Unqualified
39 Jakaya Kikwete Cardiac Institute (JKCI) Unqualified
40 KADCO Unqualified
41 Kahama Urban Water supply and Sanitation authority Unqualified
42 Kariakoo Market Corporation Unqualified
43 Kibaha Education Center (KEC) Unqualified
44 Kigoma urban Water and Sewerage Authority Unqualified
45 Lindi Urban Water Authority Unqualified
Masasi-Nachingwea Water Supply and Sanitation
46 Unqualified
Authority
47 Mbeya University of Science and Technology (MUST) Unqualified
48 Mbeya Urban Water supply and Sanitation authority Unqualified
49 Medical Stores Department Unqualified
50 Mkulanzi Holding Company Unqualified
51 Mkwawa University College of Education (MUCE) Unqualified
52 Morogoro Urban Water supply and Sanitation authority Unqualified
53 Moshi Cooperative University (MOCU) Unqualified
54 Moshi Urban Water Supply and Sewerage Authority Unqualified
55 Mtwara Urban Water Unqualified
56 Muhimbili National Hospital Unqualified
Muhimbili University of Health and Allied Science
57 Unqualified
(MUHAS)
58 Musoma Urban Water Supply and Sewerage Authority Unqualified
59 Mwalimu Nyerere Memorial Academy (MNMA) Unqualified
60 Mwanza Urban Water supply and Sanitation Authority Unqualified
61 Mweka College of African Wildlife (MCAW) Unqualified
62 Mzumbe University (MU) Unqualified
63 National Arts Council (BASATA) Unqualified
64 National Board of Accountants and Auditors (NBAA) Unqualified
65 National Bureau of Standards (NBS) Unqualified
66 National Construction Council Unqualified

67 National Council of Technical Education (NACTE) Unqualified
68 National Development Corporation (NDC) Unqualified
69 National Economic Empowerment Council (NEEC) Unqualified
70 National Environment Management Council of Tanzania Unqualified
71 National Examination Council of Tanzania (NECTA) Unqualified
72 National Health Insurance Fund (NHIF) Unqualified
73 National Housing Corporation (NHC) Unqualified
74 National Institute of Medical Research (NIMR) Unqualified
75 National Institute of Transport(NIT) Unqualified
76 National Ranching Company Unqualified
77 National Social Security Fund (NSSF) Unqualified
78 National Sports Council Unqualified
79 National Sugar Institute (NSI) Unqualified
80 Ngorongoro Conservation Area Authority Unqualified
81 NHC/PPF IPS Builiding Unqualified
82 Ocean Road Cancer Institute (ORCI) Unqualified
83 Open University of Tanzania (OUT) Unqualified
84 Petroleum Upstream Regulatory Authority (PURA) Unqualified
85 Public Procurement Appeals Authority (PPAA) Unqualified
86 Public Procurement Regulatory Authority (PPRA) Unqualified
87 Public Service Social Security Fund (PSSSF) Unqualified
88 Shinyanga Urban Water supply and Sanitation authority Unqualified
89 Singida Urban Water Sanitation and Authority Unqualified
90 Small Industry Development Organisation (SIDO) Unqualified
91 Sokoine University of Agriculture (SUA) Unqualified
92 Songea Urban Water supply and Sanitation authority Unqualified
93 Stamigold Company Limited Adverse
94 Sugar Board of Tanzania Unqualified
95 SUMATRA CCC Unqualified
Surface Marine Transport Authority (SUMATRA)- (Current
96 Unqualified
LATRA)
97 Tabora Urban Water supply and Sanitation Authority Unqualified
98 Tanga Urban Water Supply and Sewerage Authority Unqualified
99 Tanzania Atomic Energy Commission (TAEC) Unqualified
100 Tanzania Broadcasting Corporation (TBC) Unqualified
101 Tanzania Bureau of Standards Unqualified

102 Tanzania Cereals Board and Other Produce (CPB) Unqualified
103 Tanzania Civil Aviation Authority (TCAA) Unqualified
104 Tanzania Coffee Board Unqualified
105 Tanzania Commission for University (TCU) Unqualified
106 Tanzania Commission of Science and Technology Unqualified
107 Tanzania Communication Regulatory Authority (TCRA) Unqualified
108 Tanzania Cotton Board Unqualified
109 Tanzania Education Authority (TEA) Unqualified
110 Tanzania Electric Supply Co.LTD (TANESCO) Unqualified
Tanzania Engineering and Manufacturing Development
111 Unqualified
112 Tanzania Fertilizer Regulatory Authority Unqualified
113 Tanzania Food Nutrition Centre (TFNC) Unqualified
114 Tanzania Forest Research Institute (TAFORI) Unqualified
Tanzania Industrial Research and Development
115 Unqualified
Organization (TIRDO)
116 Tanzania Institute Education (TIE) Unqualified
117 Tanzania Investment Centre (TIC) Unqualified
118 Tanzania Investment Corporate Bank Unqualified
119 Tanzania Library Service Unqualified
120 Tanzania Marine Parks Reserve Unit Unqualified
Tanzania Medicines and Medical Devises Authority
121 Unqualified
(TMDA) former TFDA
122 Tanzania National Parks (TANAPA) Unqualified
123 Tanzania Petroleum Development Corporation (TPDC) Unqualified
124 Tanzania Ports Authority (TPA) Unqualified
125 Tanzania Postal Bank (TPB) Unqualified
126 Tanzania Posts Corporation (TPC) Unqualified
127 Tanzania Pyrethrum Board Unqualified
128 Tanzania Shipping Agencies Corporation (TASAC) Unqualified
129 Tanzania Sisal Board Unqualified
130 Tanzania Tobacco Board Unqualified
131 Tanzania Tourist Board (TTB) Unqualified
132 Tanzania Trade Development Authority (TANTRADE) Unqualified
133 Tanzania Wildlife Research Institute (TAWIRI) Unqualified
134 Tax Appeals Tribunal Unqualified

135 Tax Revenue Appeals Board Unqualified
136 TCRA-CCC Unqualified
137 Tea Board of Tanzania Unqualified
138 Tropical Pesticides Research Institute (TPRI) Unqualified
139 TTCL Pesa Limited Unqualified
140 TTCL Pesa Trust Entity Unqualified
141 Ubungo Plaza Co Ltd (UPL) Unqualified
142 Universal Communication Access Fund (UCSAF) Unqualified
143 University of Dar-Es-Salaam (UDSM) Unqualified
144 University of Dodoma (UDOM) Unqualified
145 UTT Microfinace PLC (MFI)/SELF MFI Unqualified
146 Warehouse Receipt Regulatory Board Unqualified
147 Watumishi Housing Company (WHC) Unqualified
148 Workers Compensation Fund (WCF) Unqualified

Appendix II: Entities that did not submit Financial Statements
for various reasons
S/N Details
1 Bariadi Urban Water Supply and Sanitation Authority
2 Gaming Board Tanzania
3 Geita Urban Water Supply and Sanitation Authority (GEUWASA)
4 Institute of Accountancy in Arusha
5 Kahama Shinyanga Urban Water supply and Sanitation authority
6 Karatu Urban Water supply Authority
7 Korogwe Urban Water supply Authority
8 Kyela Urban Water supply Authority
9 Makambako Urban Water Supply and Sewerage Authority
10 Marine Service and Company
11 Mpanda Urban Water Supply Authority
12 Muhimbili Orthopedic Institute (MOI)
13 Muleba Urban Water Supply and Sewerage Authority
14 Mwalimu Nyerere University of Agriculture and Technology (MNUAT)
15 Namtumbo Urban Water Supply and Sewerage Authority
16 National Institute Of Productivity (NIP)
17 National Insurance Company (NIC)
18 National Museum Tanzania
19 NGARA Urban Water Supply and Sewerage Authority
20 Njombe Urban Water supply and Sanitation authority
21 Nzega Urban Water Supply Authority
22 Procurement and Supplies Professional and Technicians Board (PSPTB)
23 Rukwa/Sumbawanga Urban Water
24 Same Urban Water Supply and Sewerage Authority
25 Sharing World
26 STAMICO
27 Tanzania Civil Aviation A uthority - (TCA-CCC)
28 Tanzania Diary Board
29 Tanzania Fertilizer Coy
30 Tanzania Fisheries Research Institute (TAFIRI)
31 Tanzania Insurance Regulatory Authority (TIRA)
32 Tanzania Investment Bank - Dev (TIB) (GBT)
33 Tanzania Meat Board
34 Tanzania National Business Council (TNBC)
35 Tanzania Railway Corporation

S/N Details
36 Tanzania Small Holder Tea Development Agency (TSHTDA)
37 Tanzania Standards Newspaper (TSN)
38 Tanzania Telecommunication Company Limited
39 Tukuyu Water Supply and Sewerage Authority
40 UTT- Asset Management and Investor Services (UTT-AMIS)/PID
41 Vocational Education And Training Authority (VETA)

Appendix III: Implementation Status of Prior Years’ Audit
Recommendations
S/ YEAR AUDIT GOVERNMENT CAG COMMENT STATUS
N RECOMMENDATIONS RESPONSE
1 2012/ Azania Bank was The Ministry has It is my Not
13 supposed to be sought advice from expectation implemente
under the control of Attorney General that the AG’s d
the Treasury (AG) to get Office will
Registrar and submit clarification on the initiate a
its financial matter. The AG process to
statements to CAG advised that amend the
for audit pursuant to section 3 of the Public Audit
Article 143 of the Public Audit Act, Act to
Constitution of URT Cap 418 should be accommodate
and Section 9 (a) iii amended to all public
& IV of the Public empower CAG to entities
Audit Act No. 11 of Audit Entity including
2008. registered and companies
established under where the
the Companies Act. Government is
Thus, "the majority
definition of Public shareholder.
Authority" is The current
amended so that it position is that
adds a further PSSSF now owns
exception, which more than 50%
holds that even if the Azania
an entity is bank.
registered under
the Companies Act,
if the majority
shareholders are
from the
Government, then
they will still
require to be
audited by the
CAG.
2 2015/ I recommended that The Fund received I noted that the Not
16 Management of NHIF a letter from the Fund continues implemente
have a written Ministry of Finance to provide d
agreement with the and Planning loans to the
borrower and obtain (MoFP) of 15 Government
a government December 2015 without written
guarantee. NHIF was with ref: agreement and
also urged to, in CJA.452/479/01 those previous
future, ensure showing the loans were not
binding agreement is intention of converted into
entered into prior to converting the loan non-cash bond
disbursement of any to non-cash Bond, as directed by
loan. used to offset all MoFP through
outstanding debts the letter with
owed by the ref:
Government to CJA.452/479/0
Social Security 1.

Schemes.
3 2015/ I recommended that Management is There was no Not

16 TPC Management requesting the evidence implemente
comply with the Government to submitted for d
relevant legal and offset the amount audit
regulatory due to TCRA of TZS verification to
requirements by 1.38 billion against confirm that
remitting the the amount used to TPC
outstanding TPC to pay EAC Management
Royalties and Annual pensioners of TZS requested the
fees amounting to 3.87 billion. Government to
TZS 1.38 billion to offset the
TCRA. amount due.
4 2015/ Lack of Progress on The important Management Under
16 Implementation of component to explanations implementa
ADS-B Phase - I TZS finalize the project are noted. I tion
3.4 Billion (TCAA) is expected to be will keep in
installed parallel view and assess
I recommended that with the new Julius fully
management carry Nyerere implementation
out a new detailed International of the
Company search on Airport radar to recommendatio
the current financial fuse the radar n in next audit.
and operational information and
capacity of COMSOFT the ADS-B
Gmbh. This might information into
need to involve the same screen
Tanzania Embassy in (monitor) to be
Germany for reliable used by the Air
information. Traffic Controller.
Management was
also advised to
assess the challenges
of implementation
of the project and
take appropriate
decisions to improve
air traffic control
activities.
5 2015/ Management of i. To increase Tariff Response has Under
16 Independent and (when using EPPs been noted for implementa
Emergency Power and IPPs) to be cost follow up in the tion
Plants (IPP's & reflective will next audit.
EPP's), and Capacity cause adverse
Charges impact to the
country’s economy.
To revive TANESCO Instead the
and make the Government has

Company perform been providing
effectively, I subsidy to the
recommended the utility in order to
following: enable it meet its
(i) Energy charge financial
tariff taking into obligations and
account those costs render required
relating to capacity services to its
and energy charges customers;
paid to IPPs and ii. The Government
EPPs. has already
(ii) The price also directed under GN
should include a No.292 of
margin 21/10/2016 for
(iii) The all IPPs to be
procurement of EPP engaged through
and IPP projects to competitive
be made on a bidding. However,
competitive basis to the Government
ensure that has insisted to
TANESCO gets IPPs emphasize on the
which are cost development of our
effective. own power
generation
projects; and
iii. TANESCO has
always been
involved
throughout the
process of
procurement,
negotiation and
awarding
processes.
6 2015/ Construction of Participation of Response has Under
16 Songwe TANESCO in been noted for implementa
Hydropower Project downstream follow up of its tion
investment implementation
(i) I recommended activities, in the next
that the especially in audit.
Government ratify mobilization of
the Convention for resources for
establishment of the project
Songwe River Basin implementation
Commission to and technical
enable the project support.
to start. We take on board
(ii) I also as well the idea for
recommended that TANESCO to
Government ensure partake in the
it involve TANESCO construction of
in the processes of lower dam and
construction of the hydropower plant
lower dam and process and to
hydropower Plant to provide technical

provide technical advice when
advice when deemed
needed. appropriate.
7 2015/ Viability of TANESCO will Management Under

16 TANESCO's Power continue to make a response has implementa
Tariff close follow up to been noted for tion
ensure that EWURA follow up.
I also recommended reviews the
that EWURA periodic tariff
critically review the adjustments at
electricity tariffs to each quarter where
include all the costs applicable.
related to the power
generation and a
reasonable return,
while allowing for
prudent capital
investments to
improve TANESCO’s
service delivery and
efficient financial
operational
performance.
8 2015/ Unpaid Lease Rent The Not
16 by Ministry of Government implemente
Energy and Minerals did not provide d
TZS 1.117 billion response to this
recommendatio
Management of n
TANESCO was
advised to put more
efforts in following
up with the then
Ministry of Energy
and Minerals to
ensure the Ministry
pays their
outstanding rent.
9 2015/ Violation of Rent Appropriate Implementation Under
16 Payment to UDSM measures are is still in implementa
underway including progress, I will tion
I recommended that invoicing of the keep track on
management of the underpaid fees, the full
University: followed by a implementation
(i) Recalculate its demand note for of my
portion of 10 per the difference recommendatio
cent as required by between the gross n.
the contract and the amount and the net
difference be amount paid to

claimed from the UDSM. At the same
lessee; and (ii) Liaise time, UDSM is
with the lessee and pursuing other
consider reviewing related matters
the contract to with MHL to
include all necessary establish a better
clauses such as way that will have
allowing UDSM mutual benefit and
internal audit more agreed level
department to of transparent to
conduct verification feature in the
of revenue and contract which is
operational costs. the operation
guiding document
for both parties in
relation to the
Mlimani City
project.
10 2015/ Assessment of MoU The Not
16 of wharfage Government implemente
collection between has not d
TPA and TRA provided
response to this
I recommended that recommendatio
TPA management n.
liaise with TRA’s on
the terms of MoU of
wharfage collections
to ensure that the
parties fulfill the
requirements of the
agreement and
ensure that TPA’s
operational
efficiency is not
impaired by the new
modality of
collection.
11 2016/ Deteriorating TANESCO has taken Management Under
17 Financial various measures response has implementa
Performance aimed at improving been noted. tion
company’s financial However, I am
I recommended that performance for waiting for the
TANESCO look for sustainable support completion of
ways to improve its of National the projects.
financial Economic
sustainability for it Transformation
to be able to support through
the National industrialization.
economic Measures taken so
transformation far include: First,
through to reduce
industrialization. generation cost
through ongoing
major investment

projects in cheap
sources of power
generation
(Kinyerezi II and
Stigler Gorge);
second, continue
with transmission
project for
extension of
National Power
Grid (Makambako -
Songea, North-West
grid) to connect
isolated branches
which use
expensive fuel
power Generation
plant: third,
improving
distribution
infrastructure in
order to reduce
power outages and
increase number of
new customers’
connection from
250,000 to 290,000
customers per year
so as to increase
revenue; fourth,
improving
collection rate
from 94% to 98%
from postpaid
customers through
LUKU rollout and
‘KA-TA’ campaign
for defaulters. Cost
cutting measures
have been
instituted to allow
for only vital
activities to be
financed.
12 2016/ Interest Payable to TANESCO has Management Under

17 Pan African Energy continued settling response has implementa
USD 10.43 million PAET liability such been noted. tion
that from July 2016 However, I
I recommended that to March 2018 a recommend
TANESCO look for total of TZS 161.84 Management
ways to resolve billion out of TZS increase effort
disputes to avoid 350.63 billion has on covering the
accumulating of such been paid. liability facing
huge amounts of Currently, the ahead.

unpaid invoices. remaining
outstanding
balance is TZS
billion 188.79 of
which TANESCO has
committed to pay
TZS 2 billion
weekly.
13 2016/ Unpaid Rent by The judgment was Management Under
17 Tumaini Hospital delivered in favour response has implementa
USD 9.4 Million of TANESCO. been noted and tion
Currently, I keep on view
I recommended TANESCO has of ongoing
TANESCO’s lodged a substitute implementation
Management ensure application for .
that the court execution of Court
decree is Decree after
implemented withdrawal of the
without any further previous
delay. application that
indicated Tumaini
Hospital as a
Judgment Debtor.
14 2016/ Contingent Liability TANESCO in Management Under
17 by SCBHK Vs collaboration with response is implementa
TANESCO USD 148.4 the Government is noted. I am tion
million in the process to waiting for the
enforce the Deed management
I recommended that of Indemnity action on its
TANESCO prepare a executed by Mr. response.
well-planned Habinda Singh Sethi
alternative source of for and on behalf
funding to cover this of IPTL and the
potential liability in Bank of Tanzania in
case local favour of the
jurisdictions decide Government of
in favour of SCBHK. Tanzania to settle
anticipated claim
by SCB HK should
TANESCO fail to
contest the ICSID
Award worth USD
148.4 million being
principal and
interest thereof.
15 2016/ Delays in TANESCO has been Management Under
17 Transferring transferring its response is implementa
Customers to their customers from one noted. I will tion
Correct Tariff Level tariff category to keep on
another in every following up on
I recommend that month especially the fully
TANESCO ensure from D1 to T1. implementation
efficient control However, in order of the
measures are in to ensure that this recommendatio
place to monitor is done effectively, n.

transfer of users into during 2018/19
their correct tariff financial year, the
rates as per their company has
consumption. planned to
Moreover, automate this
automated system process into its
could be used in system such that,
effecting prompt customers will be
changes of tariffs to transferred from
reduce risks of one tariff category
human to another without
interventions. human
intervention.
16 2016/ Absence of TBS Currently due It’s important Under
17 Officers at Border scarcity of to have TBS implementa
Stations employees, TBS has staff at border tion
stationed officers station so I
I recommendation in new borders such advise TBS
that all Border as Tunduma, Management to
Stations to be Kasumulo, put more effort
manned by TBS Kabanga, Rusumo. on recruiting
Officers to ensure Allocation of staff more staff
that only qualified to the identified members as
commodities are border stations will recommended
imported into the be done after
Country. recruitment of
more staff.
17 2016/ Delays in MWAUWASA has Management Under
17 Completion of taken measures response has implementa
Project at including making been noted. I tion
MWAUWASA TZS sure that the am waiting for
6.66 Billion component for the
water supply which implementation
I recommended that is at 90% degree of of audit
MWAUWASA ensure completion is recommendatio
that the project is completed. For n.
completed without sanitation
further delay. component
MWAUWASA
together with the
Ministry of Water
and Irrigation are
in the preparation
of Contract
termination and
invitation for new
Contractor through
Restrictive
Tendering to make
sure that the Works
are completed
before Donor
(AfDB)
Disbursement
window which was

closed by
September 2018.
18 2016/ Significant Increase During the FY The response Under

17 and Inadequate 2017/2018 has been implementa
Efforts in Debt receivables noted. tion
Collection at amounted to TZS However, the
Muhimbili Hospital 54.59 billion out of debtors’
which and TZS balance is still
I recommended that 46.63 billion were huge. The
the Hospital design collected by 30th balance as at
and employ rigorous June, 2018. Hence 30th June 2019
efforts to recover registering was TZS 33.28
the outstanding collection billion.
debts performance by
85.4%. Total
amount of debtors
was TZS 18.16
billion as of 30th
June, 2018 out of
this TZS 7.96 billion
were already billed
and TZS 9.63 was
not yet billed to
NHIF and TZS 0.56
billion was unbilled
to other credit
companies.
19 2016/ Rejected Health The Hospital has The response is Under
17 Insurance Bills TZS significantly noted. implementa
1.86 billion at MNH improved However, the tion
verification of rejection still
I recommended that billed insurance exist. I noted
the MNH investigate claims. The the amount
the rejected bills percentage of rejected during
with a view to rejected claims has the year
finding out causes of declined from 6% in 2018/19 was
their rejection and 2016/17 to 3% in TZS 2.18
take appropriate 2017/18. In billion. . I
measures. Also, MNH 2016/17 the advised
was advised to Hospital billed TZS Muhimbili
review the billing 31.7 billion and was Management to
process to identify paid TZS 29.8 further review
the available gaps billion where as in and strengthen

that might have led 2017/18 total billing process
to fraudulent billing. billed amount from with the aim of
July 2017 –to March minimising
2018 was TZS 29.45 rejected bills.
billion and paid
amount was TZS
28.45 billion).
20 2016/ Delay in Completion This project was Management Under
17 WIP TZS 1.18 billion initiated by response has implementa
at Moshi UWASSA Ministry of Water been noted. tion
and Irrigation under However, I am
I recommended that umbrella of WSDP waiting for
the Authority make and was being implementation
follow up with the financed by World of
Ministry of Water Bank and will be in recommendatio
and Irrigation for 2 phases including n.
implementation of Detailed Design and
phase two of the Tender Documents
project. preparation and
Construction.
21 2016/ TCAA Consumer TCAA CC reported Management Under
17 Consultative the matter to response has implementa
Council relevant been noted. tion
Contradiction government However, I am
between TCAA Act entities including waiting for the
and Constitution of the parent Ministry, implementation
the URT Ministry of of audit
Constitutional and recommendatio
I recommended that Legal Affairs, the n.
TCAA - CCC align AG office, CAG,
Sect 52(4) of TCAA and TCAA vide
Act (2006) with the letter with Ref. No.
provisions of Article TCAA CCC/06/181
143 of the dated 31st January,
Constitution. 2018. In addition,
we have liaised
with TCAA to
amend the Civil
Aviation Act, Cap
80 so as to align
with Article 143 (2)
(c) of the
Constitution.
22 2016/ House Purchased The Council Management Under
17 but Not Handed through its response is implementa
Over TZS 180 Advocates (G&S noted. I will tion
Million at BAKITA Associate follow up on
Advocate) has the
I recommended that added the cost in implementation
BAKITA Management case No. 175/2015 of
make follow-up on to compel NIC to recommended
the status and compensate for all in line with the
conclusion of the loss incurred in the Management
matter. court plus response, in
compensation the next audit.

(mesac profit) for
not utilizing its four
apartments.
23 2016/ Difference in Management is Management Under

17 Reported Revenues improving its response noted. implementa
TZS 607 million at control system over However not all tion
TPC its revenue by the offices
deploying systems have been
I recommended that that will be connected with
TPC connect all interfaced with the said system
Offices to the Post Global and hence
revenue system, Netsmart. reconciliation
conduct However, TPC is in was not yet
reconciliations of the process to conducted.
revenues from connect its revenue
unconnected Offices systems to the
and investigate to government
ascertain the nature electronic payment
of the noted gateway for
differences. connection.
24 2016/ Unreconciled Management has Management Under

17 Liability Due to TTCL noted Auditor’s response noted. implementa
TZS 922.05 Million recommendations I am waiting for tion
for the
I recommended that implementation. implementation
TBC make close On 14th December, of audit
follow-ups with TTCL 2017, TTCL notified recommendatio
to resolve the management n.
differences and through email that
record the they are in the
appropriate balances process of seeking
due in its books of approval to waive
account. disputed amount.
25 2016/ Impairment of Projects for Management Under
17 Uncompleted development of response has implementa
Projects TZS 1.61 New Standard been noted. I tion
billion Gauge line are consider
Capital intensive. RAHCO
I recommended that They cannot be Management

RAHCO investigate financed through need to
the nature of the revenue from communicate
projects and take normal business of with the
appropriate actions a common railway Ministry of
to ensure that the organization like Finance for
projects are RAHCO and now early release of
completed or take TRC. The only funds for those
action against all means is through internal funding
Officials involved in budget allocation projects.
causing the loss to and disbursement
the Company. from the Central
Government
through own local
source or external
financing (grant,
loan, ECA, etc.). In
this regards,
mobilization of
funds for projects
for these new
railway projects is
done by GoT
through MoFP.
RAHCO and now

TRC, being
Implementing
Agent of the
project is obliged
to furnish Technical
Inputs for financing
agreement and
execute
implementation.
Development of
those projects must
undergo at least 3
phases, namely
feasibility study,
Detailed Design and
implementation/co
nstruction. At
feasibility phase, is
when they GoT
through
implementation
Agent, TRC
(formerly RAHCO),
establishes whether
project is feasible
or not. We will
proceed to next
stage of
construction –only
if the project is

found to be
feasible and funds
have been secured.
Also, feasibility
study report is
document
necessary while
approaching donors
or investors to such
capital extensive
projects.
Lastly if GoT wants

to execute using
own local money,
details design is
one of documents
that may be
needed for
commissioning
construction. Very
unfortunately these
are Trillions of
projects, that why
studies and designs
are in Billions.
However, in future
RAHCO/TRC will
improve and work
more closely with
MOWTC to address
recommendation by
CAG.
26 2016/ Fraudulent Some of measures Management Under
17 transactions leading taken by response has implementa
to a loss TZS 130.6 Management to been noted. I tion
Million improve internal acknowledge
controls included: the internal
I recommended that (a) Segregation of control
JKCI continue Duties introduced by
following up this Currently the
case with the Police implementation of management.
to ensure that the accounting duties, However, I will
final judgement by including cash keep on
the court is receipt, cash tracking the
obtained. Further, deposit and progress of the
the JKCI was reconciliation are case in the
needed to institute being executed by subsequent
strong internal different audit.
controls that would personnel.
deter theft including (b) Job Rotation
inter alia, The Institute has
segregation of started to
duties, job rotations implement job
and internal checks. rotation as part of

internal controls.
Accounting Staff
members are
rotated from one
unit to another
after a span of at
least 12 months.
(c) Internal Checks
Moreover, in order
to ensure that
checks and
balances are in
place, the Institute
has undertaken the
following
measures;
i. Cash collection
service by NMB
Bank has been
extended from 5
days (Mondays to
Fridays) to 6 days
(Mondays to
Saturdays). A
formal agreement
has been entered
with NMB Bank to
extend the closure
time during
weekdays (Mondays
to Fridays) from
04.30pm to
10:00pm
ii. Daily verification
of cash revenue
collected against
cash deposited into
JKCI bank account
is being done on a
daily basis by a
person who is not
involved in
executing cash
collection duties.
iii. Internet
Banking. The
Institute has
acquired access
rights to utilize
internet banking
services which has
simplified the
process of
obtaining, viewing
and reconciling

reports from bank
against internal
reports
27 2016/ Fraudulent Police Tanzania and While Under

17 Payment of USD Interpol are appreciating implementa
26,356.65 and Euro cooperating to management’s tion
2,500 recover the lost efforts, I still
amount, the keep the
I recommended that investigation is in matter in my
DMI make close progress. view till the
follow up with lost fund is
cybercrime police to recovered.
get the status of the
matter and recover
the money and in
future ensure that
documents are
examined before
instructing a bank to
effect any payment.
28 2016/ Unpaid Royalties Management is Management Under
17 from the Radio making consented response has implementa
Stations and efforts to remind been noted. I tion
Television Houses the TV houses and insist on the
TZS 927.86 Million Radio stations on collection of
their responsibility unpaid royalties
I recommend that to pay royalties as from Radio
COSOTA make per invoices raised. Stations and
consented efforts to It is planned that Television
remind the TV COSOTA and Data Houses.
houses and Radio Centre will resume
stations on the the invoicing,
responsibility of monitoring,
paying the royalties collection,
distribution and
enforcement of
tariff royalties
after Data Centre
has completed
developing the
Government Owned
system for
monitoring of
Broadcasting
Organizations.
Currently, COSOTA

has joined the
Government
electronic Gateway
Payment (GePG)
System to facilitate
collection of fees.
The two joint
systems will
definitely assist in
the collection of
revenue including
the unpaid
royalties.
29 2016/ Irregularities in The Not

17 Accounting for Government implemente
Investment in did not provide d
Ngorongoro response to this
Protection Fund recommendatio
(NPF) at NCAA n
I recommended that
NCAA obtain legal
documents for NPF
to ascertain the
ownership structure
and establish its
relationship with
NCAA.
30 2016/ Payment for Land Land will be valued Management Under
17 Acquisition before the money response is implementa
Contrary to Agreed is paid. noted. I am tion
Procedures at TPA waiting for the
implementation
I recommended that of management
TPA follow the response.
requirements of
Public Procurement
Act, as relevant
procedures including
getting Board
approval and valuing
the land before
continuing with
paying of the
outstanding balance.

31 2016/ Uncertainty on the The Government Considered not Not
17 Ownership of has noted the implemented implemente
COPEC Petrol external Auditors d
Station at Makumira recommendations
(TPDC) and will act
I recommended that accordingly.
TPDC make follow
up of its ownership
in the two
companies to know
the status of its
investments and
take appropriate
actions.
32 2016/ Inadequate CCTV The agreements I acknowledge Under
17 Coverage at KADCO between KADCO the implementa
I recommended that and Agreneb management tion
Management speed Consult Ltd have effort on the
up the procurement been entered for progress made;
process and getting drawings and review of the
the most qualified preparations of progress of the
bidder to perform tender document project will be
the installation tasks for the CCTV. done in the
These are ready for next audit.
quotation by the
shortlisted firms for
the CCTV project
to start
immediately by this
week.
33 2016/ Rehabilitation The Not
17 Liability on Government implemente
Buhemba Gold Mine has not d
at STAMICO provided not
I recommended that provide
STAMICO liaise with response to this
the Ministry of recommendatio
Minerals to find the n.
solution of how to
rehabilitate the
surrounding
environment after
ceasing the
operations.
34 2016/ Absence of Title A letter with Management Under
17 Deeds for Plots TZS Ref.No.NBS/A.30/6 response noted. implementa
5.44 Billion at NBS /11 of 8th However, I am tion
February, 2018, waiting for
I recommended that written to Kigoma availability of
NBS take appropriate Regional the title deed
steps to ensure that Administrative and the one
title deeds are Secretary (RAS), available for
obtained for all land requesting him to Dar es salaam
owned by the Bureau instruct the plot was not
in order to legally Municipality to submitted for

own the assets. issue a title deed in audit
the name of NBS. verification.
Another letter with
Ref.No.NBS/R.10/1
/3 of 6th February,
2018 was written to
the Director of
Arusha
Municipality,
requesting him to
issue a title deed of
Plot No.565 located
at Kibla – Makao
Mapya in the name
of NBS.
Either the Title
Deed for the Dar es
Salaam Plot was
already obtained
with Title No.
87784 Plot No. 86
BLOCK – SURVEY
REG. PLAN NO.
61735 measuring
1929 SQ.M located
at Magogoni area.
Close follow will be
made to Kigoma
Municipality and
Arusha City
regarding the Title
deeds for NBS
buildings.
35 2016/ Loss of Rental The Management Under
17 Income on a Plot at recommendation is response is implementa
Kunduchi Beach at noted. Management noted, however tion
UDSM before the end of I am awaiting a
March 2018 was to reviewed
Since the term of 10 convene a contract which
years is approaching University Team to will
to an end, I review and accommodate
recommended that negotiate the the changes
the University contract. noted.
review the contract
so as to
accommodate the
change of the
reserved
consideration and
converting the
unexecuted
contractual
obligations into
monetary values
relative to the

rentals payable for
the lease.
36 2016/ Loans Disbursed The Not

17 Beyond Contract Government implemente
Amount TZS 6.18 did not provide d
Billion at NSSF response to this
recommendatio
I recommended that n
NSSF investigate the
reasons for over
disbursement made
to the four
Institutions and
ensure their
immediate
recoveries. Also, I
also recommended
that NSSF, in future,
ensure no excess
disbursement is
made contrary to
agreements.
37 2016/ Inadequate The University has Management Under
17 Management of established a response has implementa
Patented special unit which been noted. tion
Intellectual deals with follow up on
Properties (SUA) Intellectual implementation
Property Rights of the response
I recommended that responsible among will be done in
the University other to register all the next audit
institute controls to innovation. Two
ensure that technologies with
intellectual patents were
properties are not published in
published in the science-based
public domain journals (Indexed
without its consent journals).
and develop a According to
comprehensive business
strategy to regulations, this
commercialize them. procedure is
acceptable given
I also recommended the fact that even
that SUA liaise with patents are science
the respective publications; for
Authority to obtain public consumption
copyright of the and that they are

innovations that are supposed to be in
already in the open access.
market without Furthermore, the
patent rights and Journal Editor or
arrange to enter into Publisher is not
contract with the allowed to Publish
distributor so that the patents which
the University could are already in the
get royalty and open access
annual maintenance directory for public
fees. consumption.
Lastly in all patent
related
publications, the
publisher must
explain the new
technology. The
policy which is in
progress will
include the need to
prepare
comprehensive
strategy to
expedite their
commercialization
and the
requirement to give
incentive to
inventors as the
means of
encouraging them.
38 2016/ Inadequate Funding Management has While Under
17 of MSD Operations written on several acknowledging implementa
occasions to the the tion
I recommended that Ministry of Finance management
MSD to liaise with through MoH effort, I still
the Government to regarding the consider MSD
ensure that it pays adverse financial Management
its outstanding situation and need to liaise
receivables in order requesting for with the
to strengthen MSD’s repayment of the Government to
capital base to debt. be paid their
enhance its efficient outstanding
and effective service receivables.
delivery.
39 2016/ Non-Operational The Government Considered not Not
17 Petrol Stations and has noted External implemented as implemente
Expired Lease Auditors no evidence of d
Agreements at recommendations. progress was
TPDC provided by the
Government.
I recommended that
TPDC enter into new
lease agreements
with the tenants and

to rehabilitate and
operationalize the
dormant ones to
realize the intended
economic benefits.
40 2016/ Limitation of Scope The Not

17 for the Controller Government implemente
and Auditor General did not provide d
in the Extractive response to this
Industry recommendatio
Given the n
importance of
transparency in the
Extractive Industry
activities. I
recommended the
Government to
amend the principal
Acts to provide the
CAG an explicit and
unrestricted access
to all the financial
and non-financial
records of these
Companies to
enhance proper
accountability by
these Companies
with regard to the
natural resources
which they have
been given an
opportunity to
extract.
41 2016/ Absence of The Not
17 Regulations to Government implemente
Amplify Natural did not provide d
Wealth and response to this
Resources recommendatio
I recommended that n.
the Government
through the Ministry
of Minerals establish
regulations which
will govern
applications of
relevant provisions
of the two Acts.

42 2016/ Non-Verification of The Not
17 Mining Initial Capital Government implemente
Investment Cost. did not provide d
I recommended that response to this
the Government recommendatio
through the Mining n
Commission verify
the accuracy of the
initial and
subsequent capital
investments by all
mining companies to
ensure that correct
declarations of
investment cost are
made to enhance
fair and accurate
reporting by the
mining companies to
enable the
government to
receive a fair share
through royalty and
taxes.
43 2016/ Delays in The under
17 Explorations of Government implementa
Block 4/1B & 4/1C did not provide tion
TPDC and Ministry of recommendatio
Energy: a) develop n.
and sign a
Memorandum of
Understanding which
will govern the
exploration and
extraction activities
within these blocks;
b)ensure issuance of
exploration license
to TPDC for
successful
development of
block 4/1B and
4/1C; and
c) consult the
government and
other associated
partners to finance
the blocks
exploration
activities.

44 2016/ Redundant Seven The Not
17 Deep Sea and One Government implemente
Lake Tanganyika did not provide d
North Blocks response to this
I recommended that recommendatio
TPDC consult the n.
Government to
review the terms
and conditions in the
2013 Model
Production Sharing
Agreement.
45 2016/ Underutilization of The under
17 Natural Gas Government implementa
Processing Plants did not provide tion
TPDC to look for recommendatio
more potential n.
customers to buy the
gas to achieve the
planned processing
levels and benefit
from the advantage
of economies of
scale, in order to be
able to generate
more profit.
46 2016/ Royalty Paid Out of The Not
17 the Government’s Government implemente
Profit Share did not provide d
Through the response to this
mandate granted recommendatio
under Section 4 of n.
the Natural Wealth
and Resources
Contracts (Review
and Renegotiation of
Unconscionable
Terms) Act, 2017 I
recommended the
Government review
and amend
Songosongo PSA to
ensure that royalty
is being charged and
paid by both the
license holder and
Contractor as
stipulated under the
Petroleum Act, 2015

47 2016/ Financial Distress The Not
17 Facing TPDC Due to Government implemente
Non-Settlement of did not provide d
TANESCO Long response to this
Outstanding Bills recommendatio
TZS 248 Billion n.
I recommended that
Government through
Ministry of Finance
and Planning and
Ministry of Energy
consider assisting
TANESCO in their
efforts to settle such
long outstanding
dues which in turn
will help TPDC meet
gas purchase and
other operational
costs
48 2017/ Long Outstanding The Government Implementation Under
18 Receivables has noted the is still in implementa
auditor’s progress; tion
I recommended that recommendation. further review
NIC and AICC The management of
enforce their Rental of the institutions implementation
Policy. will be guided to will be
put up a followed up in
mechanism of the next audit.
enforcing their rent
policy
49 2017/ Incorrect Prices The Fund has Implementation Under
18 Applied on Claims improved its is still in Implementa
and Payment to membership and progress; tion
Medical Facilities contribution system further review
for Non- (AMMIS) with effect of
contributing from 1st November, implementation
Members 2018 to enhance will be
electronic followed up
I recommended that submission of
NHIF Management contribution during
strengthen controls registration and
over claims by contribution
ensuring automation payment whereby
of claims approval all non-contributors
process in the long are easily
run and increase identified during
sensitivity of the submission of
process in the contribution.
meantime. The Fund has
issued directive to
all private and
Faith Based
facilities regardless
of their level to

start using pre-
authorization
systems before
members’ access
services with effect
from 1st December,
2018.
Daily electronic
monitoring of non-
contributing
members issued IDs
and utilize service
have been
introduced from
September, 2018.
50 2017/ Significant Claims The Management The Not

18 from Ineligible Child has started to Government Implemente
Dependants implement Auditors Response d
recommendations Noted.
I recommended that in phases, first, the
NHIF Management Fund has stopped
update its database providing services However, NHIF
to identify over-aged to 85,280 ineligible has not yet
child dependants dependants who implement my
and institute are above 26yrs recommendatio
controls that will with effect from n.
ensure that they are 27/05/2019.The
no longer covered by second phase will
the insurance. involve dependants
children between
the age of 18-25 yrs
as parents has to
provide proof if
they are still at
school.
51 2017/ Untraced Loan The Government Implementation Under

18 Beneficiaries-TZS noted auditor’s is still in Implementa
1.46 trillion recommendation. progress; tion
The Board will be
I recommended that directed to engage Up to the year
HESLB engage other all available ended 30th
institutions and any sources of June 2019,
other available information which untraced loan
sources of will facilitate balance was
information to identification of TZS 987.17
identify the yet untraced billion.
untraced beneficiary to
beneficiaries enhance the loan
recovery.
52 2017/ Weakness on The Not

18 Aerodrome Government Implemente
Licensing and did not provide d

Inspection response to this
recommendatio
TCAA strengthen
inspection and
license issuing
procedures.
53 2017/ Overdependence on The Not
18 Development Government Implemente
Partners to Fund did not provide d
Core Activities response to my
recommendatio
n
I recommended that
the Government
increase subvention
to NBS.
54 2017/ Non-recognition of The Government Government Under
18 Interest Income through Treasury response is implementa
from Fixed Deposits Registrar will make noted; tion
at TIB Development follow up on the further review
Bank and UTT matter to rescue of
Microfinance of TZS the situation implementation
7.61 billion and TZS observed by the will be
962 million Auditors. followed up.
respectively. Status of the
implementation
I recommended that will be shared with
RAHCO make follow the Auditor in the
up to recover the next audit
amounts. I also,
recommended that
the Government
intervene and
institute necessary
measures to rescue
the situation as it
adversely affects
RAHCO’s operations.
55 2017/ Uncollected Rental The Government Government Under

18 Income from through RAHCO will response is implementa
Telecommunication make follow up on noted; further tion
Companies- USD the matter to review of
540,800. rescue the situation implementation
I recommended that observed by the will be
RAHCO make Auditors. Status of followed up.
necessary follow up the implementation
to recover the will be shared with
outstanding amount. the Auditor in the
next audit.

56 2017/ Public Entities The Government Government Under
18 without Board of has made response is implementa
Directors and appointment to fill noted. tion
Trustees. vacancy of board
members in various However, some
I recommended that PISC’s and Minority of the Public
the appointing take Shareholding entities such as
deliberate measures TPDC and NDC
including still do not
commencing the have the Board
appointment process of Directors.
in advance prior to
expiring the tenure Further review
of the existing of
Board. implementation
will be
followed up.

18 Adequate Government implemente
Mechanisms to did not provide d
Ensure All Imports response to this
Are Insured Locally recommendatio
by Insurance n.
Companies in
Tanzania
I recommended that
TIRA bring on board
other stakeholders
such as Tanzania
Revenue Authority
(TRA), Tanzania
Shipping Agencies
Corporation
(TASAC), Tanzania
Ports Authority
(TPA), Tanzania
Bureau of Standards
(TBS) and other
Government Bodies
which have various
responsibilities on
imported goods in
order to have a
mechanism and joint
efforts to strengthen
controls and ensure
all imports are
insured by Tanzania
Insurers.
58 2017/ Issuance of License The Not
18 for Use of Bureau’s Government implemente
Mark to Failed did not provide d
Products response to this

recommendatio
TBS investigate and
take appropriate
actions on licenses
issued to clients
whose products tests
and initial factory
evaluation report
failed and ensure
procedures for
issuance of licenses
are complied with
without exception.
59 2017/ Absence of Control The Not
18 and Ownership of Government implemente
the National ICT did not provide d
Broadband response to this
Backbone (NICTBB) recommendatio
n
I recommended that
Management of TTCL
settle and reconcile
with the
Government on full
ownership of the
NICTBB for proper
management.
60 2017/ Non-reimbursement The Not

18 of NICTBB’s Running Government implemente
Cost to TTCL TZS did not provide d
20.63 Billion response to this
recommendatio
TTCL make a close
follow-up with the
Ministry and claim
the net balance of
TZS 20.63 billion
after netting off
their outstanding
balances.
61 2017/ Non- The Not
18 implementation of Government implemente
Agreed Measures on did not provide d
Mitigating Effects of response to this
Road Accidents recommendatio
n
I recommended that
TANAPA strengthen
road accidents
monitoring measures
and also seek for
other stakeholders

such as TANROAD for
sharing road
maintenance cost at
ANAPA.
62 2017/ Air Tanzania The Not
18 Company Limited
(ATCL)
Government implement
did not ed
I recommended that provide
ATCL continue to response to
focus on improving
its profitability and this
liquidity by recommendat
increasing revenues ion.
and maintaining
costs at reasonable
level.
I also recommended
that the
Government provide
financial support to
the Company to
facilitate payment
of previous years’
obligations to relief
ATCL from interest
charges which
accounts for
significant portion of
total cost.
63 2017/ Reported Suspected The Government Government Under
18 Fraud at TFDA - through Permanent response is implementa
Northern Zone Secretary, Ministry noted; further tion
Office of Health, review of
Community implementation
I recommended that Development, will be
TFDA review on a Gender, Elderly followed up
regular basis, both and Children
preventive and requested the
detective controls. Internal Auditor
General to conduct
a Special Audit to
establish the actual
amount embezzled
and recommend
appropriate actions
to be taken. The
entry meeting for
such special audit
was held on 17th
December, 2018.
The
recommendations
that shall be issued

by the IAG will be
implemented
64 2017/ Allowances Paid The Government Government Not

18 Contrary to has noted response is implemente
Treasury Registrar auditor’s noted. d
Circulars at TBS and recommendation However, the
DAWASA -TZS 1.88 and the Treasury anomaly still
Billion Registrar will exists at
I recommended that ensure that DAWASA.
the Treasury circulars in force
Registrar to ensure regarding
that Government allowances to
circulars in force are employees are
adhered to and if adhered
specific needs arise
for some entities,
provide clear
guidance on those
particular needs.

18 Guidelines on Government implemente
Allowances Paid to did not provide d
Employees in Public response to my
Authorities. recommendatio
n
Together with the
presence of Treasury
Registrar Circular
No.
1 of 2010 dated 22
July 2010 with
reference number
TYC/T/200/583/18,
every public entity
has its laws,
regulations and
policies to guide
allowances to its
employees
Treasury Registrar
was advised to
explore all fringe
benefits paid in
different public
entities and develop
guidelines that will
assist the entities in
paying them.
66 2017/ Delay in Completion The Not
18 of NHC Housing Government implemente
Projects of TZS did not provide d
245.55 Billion response to my

recommendatio
I advised NHC make n
close follow-up with
Ministry of Finance
and Planning to get
an approval of loan
to finance the
already established
projects. I also
advised NHC ensure
feasibility study is
conducted prior to
entering into any
construction
contract.
67 2017/ Mergers of The Not
18 Government Owned Government implemente
Banks did not provide d
response to my
I advised the recommendatio
Government to n
closely monitor the
merging of
Government banks
to avoid subsequent
negative impact on
operating efficiency
of the newly formed
bank. The
Government
supposed to take
precaution so that
weaknesses of the
poor performing
banks do not spread
in the new entity
after merging
2017/ Long Outstanding The Government Under
18 Dishonoured has noted the Government implementa
Cheques at Social Auditors Response is tion
Security TZS 836.80 recommendation noted; further
68 Million. and it will review of
therefore direct implementation
The Management of the Management of will be
social security funds the Social Security followed up.
was advised to funds to come up
intensify efforts to with better ways to
recover the recover the
outstanding balances outstanding
and take necessary balances and take
legal action against necessary legal
the defaulters action against the
defaulters
69 2017/ Delays in The Government Government Not
18 Recovering Double has noted the response is Implemente

Payments from Auditors noted d
Pensioners TZS recommendation However, no
218.31 Million and it will thus evidence on
direct PSSSF to implementatio
I thus recommend seek better options n of my
that PSSSF seek to recover the recommendati
different options to remaining balance. on was
recover the provided.
remaining balance
2017/ Staff Separated The Fund has Government Under
18 from the Funds entered into response is implementa
Before Settling individual loan noted; further tion
their Outstanding repayment review of
70 Loans TZS 821.82 agreement in which implementation
Million the transferred will be
employees have followed up.
Social security funds agreed to continue
were advised to servicing their loan
intensify their through the new
efforts to recover employers. So far
the outstanding monthly
balances and take repayments are
necessary legal continuing,
action against the currently no report
defaulters. of any default.
71 2017/ Mysterious Purposes The Government Government Not

18 of Loan from Azania has noted the response is implement
Bank TZS 372.76 Auditors noted ed
Million recommendation However, no
and it will make evidence on
I recommended that follow up on the implementatio
CPB establish matter through n of my
purposes, conditions investigation. recommendati
and utilization of the on was
loan and account for provided.
its acquisition
without the Board’s
approval.
72 2017/ Long Outstanding The Government Management Under

18 Loan Balance TZS has noted the response is implement
47.40 billion Auditors noted; further ation
recommendation review of
I recommended that and it will implementation
Government therefore consider will be
consider the the possibility of followed up .
possibility of relieving DAWASA
relieving DAWASA with this burden to
with this burden to enable it continue
enable it to start provide water
providing water service smoothly
service smoothly
73 2017/ Slow Pace of Loans The Government Government Under

18 Recovery by TEA. has enhanced the response is implement
Authorities Loan noted; further ation
I recommended that collection review of
TEA enhance its loan strategies by implementation
collection method forming will be
and institute more Authorities Loans followed up.
aggressive measures follow ups
to speed up Committee, which
collection of the is responsible for
loaned funds. collections of all
overdue loans.
From July 2018 to
May 2019, the
Authority has
collected a total of
TZS
529,130,387.60.
Nevertheless, the
Government
through TEA will
continue with
implementation of
aggressive
measures to
ensure that all
overdue loans are
collected
74 2017/ Absence of National The Not
18 Sewerage Policy Government implemente
and Act did not provide d
the Government recommendatio
establish National n
Sewerage Policy and
Sewerage Act which
will guide all
sewerage matters
within the country.
2017/ Improper Evaluation The Government Government Under
18 of Tender for Re- has noted the response is implement
branding TPB Bank Auditors noted; further ation
PLC Logo TZS recommendation review of
495.75 Million and the TPB’s implementation
75 I recommended that Tender Board and will be made in
TPB’s Tender Board Management will next audit.
and Management be directed to
conduct thorough conduct thorough
due diligence in due diligence in
implementing their implementing their
duties with respect duties with respect
to procurement to procurement
activities. activities
76 2017/ Unapproved TPB’s The Government Government Under
18 Procurements TZS has noted Auditors response is implement
247 Million recommendation noted; further ation

I recommended that and the TPB review of
TPB make proper management will implementation
allocation of funds be directed to will be
and plan effectively make proper followed up.
for the allocation of funds
procurements they and plan
intend to effect effectively for the
during a year. procurement they
intend to effect
during a year.
77 2017/ Variation of The Government Government Under

18 Contract Price has noted the response is implement
without Approval Auditors noted; further ation
TZS 685.33 Million recommendation review of
I recommended that and the TBS implementation
TBS abide by its Management will will be
approved budget in be directed to followed up.
the implementation adhere with the
of procurements and Public Procurement
if need arise add Regulatory
extra funds then Authority Act No.7
seek required of 2011 and its
approval. Regulations of 2013
in procurement
process.
78 2017/ Non-compliance The Government Government Under

18 with Regulation has noted the response is implement
232(1) of PPR TZS Auditors noted; further ation
20.37 Billion recommendation review of
I recommended that and the CBT implementation
CBT always make management will will be made in
sure that copies of be directed to my next audit.
all awarded make sure that
contracts are copies of all
submitted to the awarded contracts
Chief Executive are submitted to
Officer of the above offices as
Authority, the required by Reg.
Controller and 232(1) of the
Auditor General, the Procurement
Attorney General Regulations 2013
and the Internal
Auditor General as
required by Reg.
232(1) of the
Procurement
Regulations 2013
79 2017/ Liquidated Damages DAWASA will be Not
18 Not Charged TZS directed to review Government Implement
1.98 Billion the term of contact response is ed
DAWASA and claim noted
I recommended that liquidated damage However, no
DAWASA claim for if there is any delay evidence on

the Liquidated implementatio
Damages from the n of my
contractor. recommendati
on was
provided.
80 2017/ Fictitious Payments This was for the Management Under
18 to Suppliers TZS fraudulent response is implement
2.61 Billion incidence occurred noted; further ation
I recommended that at Mara Regional review of
the relevant office in year 2016, implementation
Authority take the incidence is will be
appropriate actions under investigation followed up
against the members by PCCB.
of the staff involved
in the suspected
fraud at NHIF Mara
office.
81 2017/ Payments Made This was for the Management Under
18 Contrary to TISS fraudulent response is implement
Regulations TZS incidence occurred noted; further ation
404.93 Million at at Mara Regional review of
NHIF office in year 2016, implementation
I recommended the incidence is will be
appropriate action under investigation followed up
to be taken against by PCCB
the officers involved
for non- compliance
with TISS
Regulations.
82 2017/ Absence of Payment This was for the Management Under
18 Voucher to Cash fraudulent response is implement
Payment TZS 1.26 incidence occurred noted; further ation
Billion at NHIF at Mara Regional review of
office in year 2016, implementation
NHIF’s management the incidence is will be made in
in Mara region was under investigation my next audit.
required to provide by PCCB
justification for
these payments and
the names of
payees. Also, I
advised that
appropriate action
to be taken against
custodians of the
payment voucher.
83 2017/ Overpayment of The Government Management Under
18 Students Research will form a response is implement
Funds TZS 225.18 committee to noted; further ation
Million at UDSM investigate the review of
I recommended that matter within 3 implementation
UDSM’s Vice- months and action will be
Chancellor instruct will be taken on followed up
the CCCS’s recommendations
management to availed

observe the rates
approved by the
University Council in
the prospectus and
other directives
instead of using
personal discretion
and judgment.
84 2017/ Uncompetitive The Government Government Under
18 Procurement has noted the response is implement
Processes USD Auditors noted; further ation
112,757 at UDSM recommendation review of
I recommended that and the UDSM implementation
UDSM to ensure Management will will be
compliance with the ensure compliance followed up
requirements of the with the Public
Public Procurement Procurement Act
Act and its and its Regulations
Regulations to and make sure of
obtain value for non-reoccurrence.
money from its
procurements.
85 2017/ Institutional Fees The Government Government Under
18 Not Contributed of has noted Auditors response is implement
TZS 2.97 Billion recommendation; noted; further ation
I recommended the the respective review of
University ensure Departments at the implementation
that the research UDSM were will be
policy is complied instructed to make followed up
with in contributing payments within a
to the institutional month of all
overheads and research projects
design an effective conducted during
and rigorous the period
mechanism of according to CKD
collecting all Policy.
contributions from
all projects.
86 2017/ The Genisys The Government Management Under

18 Configurator has noted the response is implement
Software was Auditors noted; further ation
expected to recommendation review of
integrate three and NIC will be implementation
aspects of NIC directed to liaise will be made in
functions of Life with the vendor to the next audit.
Assurance, Non-Life ensure that all the
Insurance and pending issues as
Accounts functions. per Functional
I recommended that Requirement
NIC liaise with the Document are
vendor to ensure resolved and that
that all the pending the system
issues as per becomes fully
Functional functional as

Requirement intended.
Document are
resolved and that
the system becomes
fully functional as
intended.
87 2017/ UDA’s Shares Sold The Not

18 Without Approval of Government implement
the Treasury did not provide ed
Registrar response to this
. recommendatio
the returned un-
allotted shares of
UDA be allotted to
Government so that
the Government
becomes the
majority
shareholder.
88 2017/ Insufficient Number The Not
18 of Rapid buses Government implement
did not provide ed
DART accelerate the recommendatio
bidding process to n
increase new buses
to meet current
needs to provide
better quality
services.
89 2017/ Uncovered Loan TZS The Government Management Under
18 469.25 Million has noted Auditors response is implement
recommendation noted; further ation
I recommended that and currently, the review of
COSTECH take COSTECH is working implementation
proper actions on preparing Credit will be
against the Policy upon followed up
defaulters of the completion of the
loans and to recover COSTECH Act
the loaned amounts. review. Moreover,
the outstanding
loan has been
presented to the
Treasury Registrar
to see how best it

can be recovered.
90 2017/ Loss from All management Management Under
18 Acquisition of Land team, which were response is implement
TZS 4.17 Billion involved in these noted; ation
I recommended that transactions, was further review
the NSSF Board and replaced. of
Management take Prevention and implementation
necessary action Combating will be
against those who Corruption Bureau followed up
were involved in the (PCCB) is currently
whole process of investigating the
acquiring the land matter.
which resulted in a
loss of TZS 4.17
billion to NSSF.
91 2017/ Irregular Issue of The recovery of the Government Under
18 Loan to NSSF issued loan of response is implement
Members and Staff Tshs.206 million to noted; further ation
for Purchase of NSSF staff on review of
Shares in Vodacom purchasing implementation
TZS 1.86 Billion Vodacom shares will be
I recommended that continues whereby followed up
NSSF formalize the NSSF as employer
loans issued and has been deducting
specify terms and the amount to
conditions pertaining every staff with the
to the funds said loan on their
advanced for salaries every
purchasing Vodacom month.
shares. Also, Moreover, letters
rigorous measures be were sent to all
instituted to recover organization with
the advanced funds NSSF members with
to avoid loss of the the said loan i.e.
Fund’s monies Ministry of
Construction,
Transport and
Communication,
Presidents Office
(TAMISEMI),
Ministry of Foreign
Affairs and East
Africa Cooperation,
Tanzania Petroleum
Development
Corporation
(TPDC), Singida
Region, Prime
minister’s Office
and Weight
Measures Agency
(WMA); to assist in
effecting recovery
92 Non-fulfilment of The Not
Obligation in Government implement

Implementation of did not provide ed
KFW Project at response to this
SENAPA recommendatio
TANAPA and TRA
resolve the matter
to allow smooth
implementation of
the project
93 Outstanding Taxes The Government Management Under
and Duties not paid through TBC has response is implement
by Public Entities written a letter noted; further ation
Tanzania reference no. CDA: review of
Broadcasting 341/361/01 dated implementation
Corporation (TBC) 27th March, 2019 to will be
had a total of TZS TRA concerning the followed up
2.27 billion payment plan
(excluding fines and
penalties)
I recommended that
Public Entities
ensure taxes are
paid in timely
manner to avoid
fines and penalties.
94 Outstanding VAT The Government Management Under
with Respect to has noted the response is implement
NICTBB TZS 10.83 Auditors noted; further ation
billion recommendation review of
I recommended that and the issue will implementation
TTCL and the be implemented will be
Ministry resolve the having mutual followed up
issue of payment of agreement and
VAT in respect of necessary
NICTBB. regulations.

Public Authorities Other Bodies For The Financial Year 2018-2019

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Public Authorities Other Bodies For The Financial Year 2018-2019

Uploaded by

Copyright:

Available Formats

PUBLIC AUTHORITIES & OTHER BODIES

ANNUAL GENERAL REPORT OF THE CONTROLLER AND

Controller and Auditor General, National Audit Office, Audit House, 4

In reply please quote

H.E. Dr. John Pombe Joseph Magufuli,

RE: SUBMISSION OF THE ANNUAL GENERAL REPORT OF THE

In accordance with Article 143(4) of the Constitution of the

Report of Public Authorities and other Bodies 2018/19 i

(Established under Article 143 of the Constitution of the URT)

Report of Public Authorities and other Bodies 2018/19

LIST OF TABLES .............................................................. iii

Report of Public Authorities and other Bodies 2018/19 i

Report of Public Authorities and other Bodies 2018/19 ii

Table 1: Trend of Audit Opinions ................................................. 8

Report of Public Authorities and other Bodies 2018/19 iii

Report of Public Authorities and other Bodies 2018/19 iv

It is with great honour that I take this opportunity to thank His

I convey my sincere gratitude to the Honourable Speaker and

I also acknowledge with gratitude, the invaluable assistance and

I also commend the contribution of private audit firms which

Report of Public Authorities and other Bodies 2018/19 v

Finally, I must recognize important contribution of my entire

Report of Public Authorities and other Bodies 2018/19 vi

The annual General Report on the audit of Public Authorities and

In particular, the report has covered review of efficiencies in

The report has further analyzed strategic reviews of PA & OBs,

Also, I have assessed the performance and challenges being

Report of Public Authorities and other Bodies 2018/19 vii

Types and Trend of Audit Opinions

Implementation Status of Prior Years’ Audit Recommendations

Financial Performance of the Public Entities and Going

The financial difficulties facing these entities highlight that it is

Revenue Management in Public Entities

Report of Public Authorities and other Bodies 2018/19 viii

Strategic and Operational Efficiency

At TANTRADE, I noted some anomalies including lack of crucial

Management of Expenditure by Public Entities

Report of Public Authorities and other Bodies 2018/19 ix

Review of Investments in Public Entities

At Tanzania Investment Centre I noted inefficiency in dealing

Review of Tourism Sector in Tanzania

Report of Public Authorities and other Bodies 2018/19 x

Performance of Government-Owned Banks

Operations of Social Security Schemes

Administration of Loans by Public Entities

Performance of Water Authorities

Review of Higher Learning Institutions

Management of Cash and Cash Equivalents

Report of Public Authorities and other Bodies 2018/19 xii

Procurement and Contract Management

Special and Forensic Audit

At TANESCO identified dispute invoices amounting to USD 42.3

Songas Limited Special Audit was focused on determining if the

At the Pride Company the audit was aimed to determine assets

Report of Public Authorities and other Bodies 2018/19 xiii

Performance of Extractive Industry

Tax Compliance in Public Entities

I also noted at Stamigold there were understated revenues in the

Efficiency of Public Entities in Business Environment

Report of Public Authorities and other Bodies 2018/19 xiv

Efficiency of Public Entities under Health Sector

Report of Public Authorities and other Bodies 2018/19 xv

1.0 Legal Framework for Public Audit in Tanzania