Tanzania government’s plans to rescue struggling state-owned companies might be progressing as intended, with 1.2 trillion Tanzanian Shillings earmarked for this purpose.
On Sunday, Treasury Registrar, Nehemia Mchechu, announced that this substantial amount has been allocated to aid state corporations facing financial difficulties. Mr. Mchechu explained that this fund was established by the Treasury Registrar’s office to address the capital shortages that numerous parastatals are grappling with. This move is aligned with the government’s reform agenda for these entities.
“Lack of capital is hampering the operations of many parastatals, which is why we’ve set aside 1.2 tri/-,” Mr. Mchechu stated during his presentation at the Chief Executive Officers’ (CEOs) and Heads of Institutions Forum.
He emphasized that this step aims to help ailing parastatals withstand competition from the private sector. This development comes a day after President Samia Suluhu Hassan encouraged CEOs and Institutional Heads to manage state corporations as public enterprises separate from government entities.
President Samia underlined that this approach would allow Tanzanians to purchase shares in these agencies and institutions, ensuring their sustainability. Speaking on Saturday, President Samia expressed concern about the financial health of some state-run corporations. She highlighted that a number of them were struggling financially, with a few on the brink of being delisted.
“We hope to see these parastatals operating profitably and contributing dividends to the government,” the President remarked. However, accessing funds from the Treasury Registrar’s office won’t be straightforward for the parastatals, as outlined by Mr. Mchechu.
“We have specific criteria to consider and evaluate before approving any funding requests from these firms,” he clarified.
Mr. Mchechu challenged the CEOs of state firms to explore borrowing money from banks, provided they have viable business plans. This would allow them to tap into the 1.2 tri/- allocation. He cautioned that his office will scrutinize not only their business plans but also their performance records before they approach banks for borrowing.
Mr. Mchechu additionally shared that the Office of the Treasury Registrar is implementing significant reforms, including changes to its Act and name.
“This calls for a change in mindset among our CEOs and Institutional Heads. Business can no longer be as usual,” he emphasized.
In June of this year, President Samia issued a stern warning to underperforming government parastatals, indicating that they could face deregistration. The government is presently evaluating the performance of these state-run corporations.
These developments come amidst the government’s investment of over 70 trillion Tanzanian Shillings (tri/-) in its state entities.
