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It is no doubt that whether you read articles or analyses related to extractives industry of Tanzania you will be bombarded with banal phrases such as ‘Tanzania is endowed with immense resources including hydrocarbons and solid minerals like gold, diamond, iron, tanzanite and natural gas.’ The main challenge for the country, however, has remained management of the revenues emanating from the extractives sector.

The 2017 Resource Governance Index which assesses quality of governance in licensing, taxation, local impacts and state participation reported that Tanzania performed poorly in the revenue management of oil and gas sectors by scoring 40 out 100.

Reflecting on what should be done by the stakeholders and government to improve governance of the extractives revenue, transparency and accountability, Policy Forum and HakiRasilimali joined efforts to organize a morning debate dubbed as the ” The Extractives Revenue Management in Tanzania : Where are we with Transparency and Accountability?”. The debate which took place in Dar es Salaam in the early hours of July 26, 2019 included Dr Genuine Martin from University of Dar es Salaam as the main speaker and Hon. Zitto (MP) as the discussant.

Speaking during the discussion, Hon. Kabwe argued that there is a problem in the management of extractives revenue in many developing countries including Tanzania by illustrating the current loss of revenues in the sector. He said for the financial year 2019/2020, the government is expecting to collect Shs 315 billion from the extractive industry despite being able to only collect Shs 230 billion as royalties from the mining sector in the financial year of 2017/2018.

He cited that between 2016 and 2018, the total mining revenue collapsed by 32%, from Shs 1.3 trillion as a total collection from the mining sector to Shs 867 billion. This goes in line with 11% drop in exports of gold or 10% drop in exports of other minerals.

Hon. Kabwe explained the drop in the exports of gold contributes to a loss of forex revenues of around US $ 200 million between 2016 and 2018 which can be calculated to the loss of the tax revenues of around Shs 433 billion. He emphasized that the loss is more than what the government is expecting to get from the settlements with the Barrick Gold Corporation.

He said the loss of revenues in the extractive industry calls for a thorough and critical “but objective” analysis of the last three years (from 2017 to 2019) to look at the impact of the changes brought in the extractive legislative framework. If government accepts an independent investigation on the gains and losses of its makinikia intervention (the ban on exportation of mineral sands to be smelted outside Tanzania), we can learn from such decisions”. He insisted that if the government doesn’t, “I call up on the CSOs to see the possibility of bringing together a team of experts to investigate the three years of the makinikia saga and come forward with recommendations so that we do not repeat mistakes.”

“The government aimed the interventions for optimal benefits for the country but the outcomes have not been great. What is the problem?” Hon Kabwe asked.

According to Hon. Kabwe, the interventions that were taken by the government were wrongly applied as it did not address the most critical fundamental problem in the extractive industry which is the international taxation system.

He claimed that if the developing countries are not addressing the issue of international taxation system, they will continue to lose from their natural resources. It is through the international taxation system that multinationals end up deciding where to pay taxes. He said this is not a problem exclusively faced by Tanzania and that we should cooperate with other countries to address the issue of where the taxes are being paid by multinational corporations. He advised the government to sign the Conventional on Mutual Administrative Assistance in Tax Matters (CMAATM) which provides for administrative co-operation between states (member states) in the assessment and collection of taxes, exchange of information and recovery of foreign tax claims.

The report which probed transparency and accountability in the extractives sector presented by Dr Martin shows the disclosure of mining contracts is minimal. The publicly available contracts are only three Production Sharing Agreements (PSAs) of (2004, 2008, 2013) out of 26 PSAs on Tanzania Petroleum Development Corporation (TPDC) website. However, speaking during the EITI Global Conference, the Minister for Minerals Hon. Dotto Biteko (MP) said that the government is in the process of establishing a portal for mining contracts which will be displayed on the Ministry of Mineral website. The portal will enable the government to publish and annotate mining contracts.

Successful implementation of Agenda 2030 for sustainable development requires partnerships and multi stakeholder approaches. This was said today by the Hon. Ambassador Mero when officiating the Tanzania side event entitled “SDGs Audit: In Focus Africa Experiences from Africa on Institutionalization Partnerships, inclusivity and accountability” to share experiences on implementing SDGs in Africa, exploring findings, recommendations and a discussion on how to institutionalize implementation efforts across African countries. The event was coordinated in partnership between Policy Forum, Hivos, Africa Philanthropic Foundation, Tanzania Sustainable Development Platform, and UNA Tanzania.

Speaking further about these partnerships, he recognized the role of CSOs to contributing to the first Voluntary National Review (VNR) in Tanzania and involvement of other stakeholders towards the realization of Sustainable Development Goals (SDGs).

“Learning collectively is important in ensuring the challenges faced in implementation of SDGs are addressed effectively because it takes two tango,” he said. Finishing by urging stakeholders to adequately reflect on SDGs and partnerships that can support the proper implementation of the goals.

One of the panelists, Martin Tsounkeu noted the importance of domestic resource mobilization in financing SDGs. He urged African countries not to rely on a single source of financing considering the vast natural resources the continent is endowed with.

This side event was held parallel to High Level Political Forum under the auspices of Economic and Social Council of United Nations it has a central role in the follow-up and review of the 2030 Agenda for Sustainable Development the Sustainable Development Goals (SDGs) at the global level.

To demonstrate commitment to achieve the SDGs, the government of the United Republic of Tanzania registered interest to present its Voluntary National Review at the upcoming HLPF in 2019. This is going to be the first time for Tanzania to undertake a VNR, but it is anticipated that this process will continue in the future on a regular basis towards 2030. VNR serves as a dashboard that maps the status of implementation of SDGs nationally, regionally and globally, and its process has proved to solidify collaboration amongst different stakeholders and build momentum towards achieving the SDGs.


The Government of Tanzania has made commitments to provide and safeguard human rights such as the ratification of several core human rights conventions as well as put in place national policies favoring a human rights-based approach to development but there are challenges in concretizing them in practice. When it comes to children’s rights, enforcement also seems to be a shortfall.

Human rights stakeholders at a morning debate had therefore recommended that there should be meaningful enforcement of the Child Act 2009 to ensure that different rights of a child are protected. On the same note, CSOs and the government were advised to continue raising awareness on the children’s rights from family level up to community level.

Moreover, advocacy for the amendments of the Marriage Act should continue to ensure full protection of the girl child from harmful impacts to their development like early pregnancies and parents were advised to spend more time with their children to better understand the challenges that they face.

The recommendations emanated from the current findings of the  Tanzania Human Rights Report, a study conducted by Legal and Human Rights Center (LHRC) on the Human Rights situation in Tanzania at the Policy Forum Breakfast Debate held on 28th June 2019 under the theme  “Tanzania Human Rights Report: Are the Policies for Protecting Children Rights Effective?”

Advocate Wazambi from LHRC stipulated that violence against children (VAC) is a key issue affecting human rights in Tanzania Mainland. For the year 2018, the report  exposed children’s freedom from violence to be the most violated human right, mainly caused by growing incidences of VAC.

Significantly the report highlighted increase in VAC in different parts of Tanzania Mainland, e.g. Mpwapwa-Dodoma, Chunya-Mbeya, Misungwi-Mwanza, Hai-Kilimanjaro and Tarime-Mara whereas the analysis of incidents of violence against children which was conducted by LHRC stated that 91% of the violence is sexual violence and 9% physical and psychological violence.

Moreover, police data for the first six months of the year 2018, indicate increased magnitude of the problem showing an increase of VAC incidents from 4,728 incidents by mid-2017 to 6,376 incidents by mid-2018. Furthermore, Ms. Amina Ally from Children’s Dignity Forum (CDF) anticipated that the Perpetrators of VAC are people who the abused children are mostly comfortable with such as  family members, community members such as motorcycle riders.

She furthered the discussion by stating the contributing factors that promote VAC are witchcraft beliefs, lack of proper care and children being left alone for long periods which makes it difficult to notice violence promptly. She continued saying that, there is lack of cooperation from the parents in testifying against the perpetrators since they are usually the people that the children are comfortable with such as close relatives.

Children’s rights in Tanzania are protected at international, continental and domestic levels. They are guaranteed and protected under the UN Convention on the Rights of the Child (CRC) of 1989 and the African Charter on the Rights and Welfare of the Child (ACRWC) of 1990, which require Tanzania to take all appropriate measures to protect children within its territory from all forms of abuse such as torture; violence; inhuman or degrading treatment; and especially sexual abuse and exploitation; 407 and to protect female children from harmful practices that affect their welfare, dignity, normal growth and development, such as female genital mutilation and child marriage.

Although Tanzania has ratified several international treaties such as the United Nations Agenda 2030 on Sustainable Development which aims at “Leaving No-one Behind” , the  discriminatory ban of students who become pregnant impacts the lives of thousands of young girls , forcing them to end studies abruptly and the laws and policies that are supposed to protect the child’s right are non liquet, such as The Marriage Act.  

The debate calls upon all the responsible stakeholders and the general public to play their roles in addressing children’s rights challenges.

Links to download the Tanzania Human Rights Report;

The creative and cultural sectors face policy challenges that lead to inconsistent engagement between sector players and relevant ministries/institutions, subsequently apparent unbalanced development of creative and cultural sector; disorganized, mismanaged, fragmented associations in creative and cultural industries, low entrepreneurship skills and non-existent funding mechanisms for the sector. These challenges result from weak and non-existence of appropriate creative and cultural policy.

This was said during a recent Policy Forum monthly breakfast debate held on the 31st of May 2019 which was dedicated to discussing a report titled “ Assessing Creative Industries for Policy-Making in Tanzania”.

A presentation by Dr. Charles Ruyembe from CHIMABA, focused on the theme “Industrialisation for Economic Transformation: What are the Policy Reforms Required to Achieve the National Industrialisation Agenda?”  highlighted that there is a need of reviewing policies related to creative businesses, which includes, review of existing cultural policy, Intellectual Property Law and relevant public policies such as education, tourism and environment or trade.

Furthermore, to clearly define the role of the government in supporting young people to build a portfolio of core arts, culture, heritage, technical and digital technology inclusion in their future creative occupations, the government should establish a sustainable mechanism which will develop career management skills for all young people aspiring to join and work within the creative workforce.

Dr. Ruyembe accentuated that the social transformation or change must be connected to learning and performance to equip young people and women with adequate knowledge and skills, so that, as they graduate, they will have the ability to participate fully in creative jobs as active members in the Tanzanian society. Learning and performance are influenced by the culture but at the same time, shapes rather expectations of young people’s bright future and makes them able to create new ideas and contribute to the country’s economic development.

Significantly, the Executive Director of Copyright Society of Tanzania (COSOTA), Ms. Doreen Sinare said the main aspect of Copyright and Neighbouring Rights Law (IPRs) need to be strategically addressed in the public policy documents due to the fact that all creative industries are subject to Intellectual Property Law. The current Copyright and Neighbouring Rights Act is out-dated and needs amendment and thorough enforcement. It seems that there is lack of understanding the importance of Copyright and Neighbouring Rights Law Number 7 of 1999 on national economies, the arts, culture, heritage and creative industries business and creative sectors contribution to GDP and creative workforce opportunities.

Nevertheless, Ms. Sinare alleged that the policy has to come up with clear statements on the role of creative entrepreneurs, the local community or civil society with a vision to improve access and availability of modern apprenticeships all linked to the sustaining of creative and cultural provisions.

Similarly, Dr. Ruyembe insisted that the policy has to come up with a clear statement on the role of parents, guardians, teachers and the civil society on how the identification, measuring and profiling of current and future skills embedded in the creative capital of young people in Tanzania will be done. The evidence-based survey found that the government and the society have ignored nurturing the creative skills of young people, promoting creative jobs and putting clear opportunities in the creative industries for talented young people to see and join the creative industries and creative jobs and businesses of their interest.

However, the issue of inter-ministerial coordination needs to be addresses by the National Cultural Policy. The government with relevant ministries, agencies and institutions under their respective ministries and the private sector need to be mobilised to enliven the relationship between the creative sector and structure of the Tanzania’s public policies. Hence, there is no clear inter-ministerial coordination to connect policy making, planning, programming and establishment of a framework for policies that cut across Ministries for systematic implementation and positive outcomes.

In conclusion, through enhancement of “cultural resources” embodied in people’s creativity, skills and talents (creative workforce) creates a knowledge-based society which refers to: social relations (mobilize local communities and the Government to materialize and advance social change) , there should be a facilitation of young people and women to learn new things as they are the targeted group of this sector. Reinforcement of  old ideas (cultural heritage) to enable young people to create their own artistic language and contribute to their global development (innovation) and advertisement of the tourism industry should also focus on the creative industry.

The 2017/2018 CAG’s report has indicated areas of corruptive and fraudulent transactions amounting to TZS 207.12 billion. The amount is derived from weakness in the management of transit goods TZS 7.975 billion, human resources and pensions 2.59 billion, procurement and contract management TZS 133.17 billion, the expenditure management and budget execution TZS 54.48 billion and in management and collection of own source revenues TZS 8.66 billion. This was accentuated during the Policy Forum’s April Breakfast Debate entitled “2017/2018 CAG’s Report: Current Financial Accountability Trends in Tanzania” presented by Yona Kilaghane from Wajibu Institute of Public Accountability (WIPA).

Kilaghane highlighted that the National debt amount excludes Government obligations with Pension Funds of TZS 4,588.39 Billion. There is an increase of the national debt by 10.5% compared to previous year. Even though the national debt is sustainable, it will impact the society/development due to, servicing of the national debt is a first charge in government spending, which reduces funds for development expenditure and domestic borrowing is too expensive and that the Government should strive to target concessional debts.

Dr. Richard Mushi from the University of Dar Es Salaam tinted that the Financial Year 2017/18, the CAG’s report highlighted that the Parliament of the United Republic of Tanzania approved a budget of TZS 31,711.99 billion against actual revenue collection of TZS 27,695.96 billion resulting into under collection of TZS 4,016 billion (12.7%). And also, the total amount issued from the Consolidated Fund amounted to TZS 26,947.41 billion against total receipts of TZS 26,531.56 billion resulting in a deficit of TZS 415.844 billion.

KIlaghane uttered poor utilization of project funds in Local Government Authorities that hindered the implementation of development projects. The Government released only 51% of the LGAs budgeted development funds of which 34% was utilized and 17% was not utilized by Local Governance Authorities.

He also stressed on Public entities without board of directors and trustees stating that the CAG noted an increase trend of public authorities without board of directors from 20 entities reported last year to 27 entities in 2017/2018. This weakens internal oversight functions.

Although the word “Udhaifu” created a saga between the Parliament of United Republic of Tanzania and the Controller and Auditor General. The Former Controller and Auditor General Mr. Ludovick Utouh intervened by describing the word as a technical term which is utilised in different institutes to accentuate weaknesses and not a term used to suppress individuals nor organizations.

Recommendations that emanated from the debate;

  1. The Management of Ministry, Departments and Agencies should strictly ensure procurement complies with the Public Procurement Act 2011 to promote competitiveness and to obtain value for money for the goods and services.
  2. Compliance with the procurement law and its regulations, WAJIBU is recommending for the amendment of the procurement regulations to enhance transparency in the procurement process (e.g. publication of received tenders on the website, publication of the original and final cost of concluded projects) and law enforcing organs should be more pro-active in taking action on non-compliance with the procurement law.
  3. The law enforcing organs including PCCB, DCI, DPP to enforce the implementation of the amended Sect. 27 of the Public Audit Act No. 11 of 2008. In addition, Public Auditors need to adhere to the requirements of ISSAI 1224.
  4. The accountancy profession needs to review the basis of auditing and financial reporting in the public sector in view of issuing of audit opinion (financial and non-financial considerations).
  5. The CAG to give more explanations on the short-deposited funds in the Consolidated Fund and the overpayment from the Consolidated Fund.
  6. The TRA should increase its efforts in widening the Tax base and improving Tax compliance in order to increase the Tax/GDP ratio.
  7. Government to institute and establish a documented Fraud Prevention Plan & Fraud Risk Management

Despite the improvement in the audit opinions issued, accountability is still a challenge with regards to observations made in the Controller and Auditor General’s reports.

Monthly breakfast debates allow participants from various fields to debate issues, brainstorm on new ideas, discuss different perspectives on problems and exchange views with likeminded colleagues from different organizations. The aim of these debates is to deepen and broaden public discussion and participation in key contemporary development issues.


The tax system can directly reduce inequality by redistributing income from rich to poor, by taxing the rich more heavily and giving the government revenues to spend on public services. In Tanzania, there is a challenge of a large and increasing informal sector which has often gone untaxed hence subjecting a higher tax burden on the few within the formal sector. This in a way contributes to inequality because the informal sector partly constitutes relatively High Net Worth Individuals (HNWIS) whose incomes are not often subjected to tax.

Also, inequality may be rising because those within the informal sector have often been subjected to a presumptive tax which may at times be higher than what they actually earn. Due to the largeness of the informal sector, a smaller section of the population has been subjected to a huge burden of tax thus encouraging growth of the inequality gap in Tanzania.

Informal sector in Tanzania is among the strategic sector yet contributes marginally to tax revenue generation. It consists of micro, Small and Medium Scale Enterprises. Main characteristics of the sector includes: semi-organized and unregulated activities undertaken largely by the self-employed people, minor and decreasing barriers to entry thus, creating a potential base for rapid expansion once the opportunities and incentives are present and it is relatively more labor-intensive and can generate more jobs with smaller capital.

Trend of informal sector in Tanzania

There is a significant increase in the number of people engages in informal sector activities in the country. The number of people employed increased from 1,682,383 in year 2006 to 4,344,580 in 2014 and estimated to be 5,416,107 people in year 2017. It is estimated that informal sector employs to about 31.2 percent of currently employed persons in the country. Retail trade is the dominant industry that composed of many of the informal activities accounting for 47.9 percent of total informal employment in the country. However, the presence of highly growing informal sector in Tanzania has been viewed as the challenge for taxation, regulation, financing, reforms, and provision for social services with efforts to alleviate poverty overtime. Many operates in retail trade (41%), manufacturing (14%), and accommodation and food service activities (12%). The critical masses are business owners, managers, operators and have basic (primary and secondary) education and limited entrepreneurial education, training, and other skills. Majority SMEs activities are increasing located in urban centers and many operate their business activities in the rented areas. Most of SMEs start their businesses with minimum capital investments of less than 5 million Tshs with moderate capacity utilization and profit levels.

Revenue collection from informal sector using presumptive tax system

The government of Tanzania encourages informal SMEs to fully enter the formal sector through registering for and paying taxes. Through presumptive income tax it promotes the culture of compliance and sets the stage for the firms to grow and become a bigger taxpayer. Presumptive tax system in operation is a special tax measures or tax preferences and pervasive element in the income tax system of Tanzania. It has made sense in the Tanzania environment where the otherwise desirable income tax base is difficult for the tax authorities to measure, verify, and monitor. The general objectives for the presumptive income tax are: to create a culture of taxation and the regularization of the rule of law, provide education and training on how to monitor business activities, increase the size of the formal sector and promote growth.

The overall impact and effects have been significantly improvement in the domestic revenue mobilization, introduction of some tax incentives, increase accounts preparation awareness among the informal sectors and improvement of tax collection strategies have contributed to the persistent increase in both kinds of tax payers. However, while presumptive income taxes for the first category has been high suggesting that TRA has instituted tax incentives to encourage firms preparing and keeping formal accounts, it is true for the second category that the presumptive tax system has not been very effective and significant enough to change the behavior of the informal sector.

For many micro and small entrepreneurs in developing economies, the choice to pay tax or remain in the informal sector is a socio-economic complex decision. Most firms will choose to stay in the non-tax paying informal sector by default since the perceived short-term and temporary benefits outweigh the perceived immediate costs.  If compliance costs both financial and time are added into a firm’s cost-benefit analysis of paying taxes, the disincentive to comply with tax requirements becomes even stronger.


The size of informal sector is growing overtime and it is owned by mostly youths and adult groups. This implies that, government revenue collection base gets narrowed hence increase the burden of tax to the formal sector and government itself to cover the provision of public services.

The government should strengthen the formalization process of informal sector in the country as the way of increasing tax base. The government and other stakeholders should invest in the provision of business education to the business operators. Education system and curriculum should be improved by giving room for graduates who are job creators and not seekers. The government through the small and medium industries should continue to promote SMEs development through the provision of advisory services, infrastructure facilities, market access, financial support and many other supporting services. Civil Society Organizations (CSOs) and other related stakeholders should improve the provision of further entrepreneurial education, skills, seminars and workshops to the business operators.






The Policy Forum (PF), a network of 79 civil society organisations brought together in their interest in public money accountability, has prepared this position statement to stimulate and inform ongoing discussions on the 2019/20 budget. The submission, with inputs from member organisations coordinated by the network’s Budget Working Group (BWG), focuses on the implementation of the Five-Year Development Plan (FYDP II 2016/17 to 2020/21) whose theme is ‘Nurturing Industrialisation for Economic Transformation and Human Development’ will culminate in the next financial year (2020/21). Soon thereafter, the longer-term National Development Vision 2025 whose aspiration was that of transforming the economy into middle income and semi-industrialised state, will also have concluded.

This brief analysis, therefore, takes stock of what has been accomplished since the inception of the FYDP II in 2016/17 and tries to capture information on priority areas addressed in the annual plans, allocations and disbursements based on both domestic revenue and external sources and implementation progress in some selected sectors. The submission puts forwards some key policy recommendations that warrant policy makers’ attention if some desired objectives of the current plans are to be realised.

An Overview of the Budget at the National Level

From 2016/17 to 2019/20, the national budget has been gradually increasing between the range of 2% to 7% with the highest increase of 6.8% observed in 2017/18 (TZS 31.7 trillion from TZS 29.5 trillion in 2016/17) and the lowest increase of 1.9% observed in the proposed 2019/20 budget (TZS 33.1 trillion from TZS 32.5 trillion in 2018/19).  A similar gradual trend is observed when the budget is further broken down into development and recurrent expenditures. See figure 1 for these allocations.


Tax Revenue (bil)

Non tax Revenue (bil)

Domestic & External Borrowing

Grants and Concessional loans (bil)

Total Budget (bil)

























Table 1: Sources of Funding from 2016/17 to 2019/20

Revenue Collection and Disbursement Trend

During this period (2016/17 to 2018/19), tax revenue has remained the only source of funding that has been performing well compared to others. External borrowing, assistance and General Budget Support have, on the other hand been inadequate, calling for strategic measures of improving domestic resource mobilisation. In the 2016/17 budget of TZS 29.5 trillion, for instance, the government managed to collect TZS 25.3 trillion with tax revenue collecting over 90% of the target and external borrowing, assistance and General Budget Support contributing 53.5% of the target.

Tax revenue has over the years seen consistent growth both as share in the budget and in collection. Generally, tax revenue constitutes over 50% of the funding. Other sources of funding (non-tax revenue, domestic and foreign borrowing and grants and concessional loans) to the budget show an inconsistent pattern. Table 1 shows the contribution of different sources to the budget over the period under review.

Despite the continuous increase in the budget from 2016/17 to 2019/20, levels of disbursements have not been encouraging. This to a large extent is attributed to missing revenue collection targets from both domestic sources and foreign ones. The development side of the budget has been the mostly affected expenditure category in terms of disbursement.

While the 2016/17 budget for development expenditure almost doubled from TZS 5.9 trillion in 2015/16 to TZS 11.5 trillion, actual expenditure by the end of the year was only TZS 4.2 trillion representing 52% of the targeted expenditure[1].

According to the report by the Controller and Auditor General for the year ending June 2018, the government managed to collect TZS 27,696 billion for its 2017/18 budget. This represents 87% revenue collection performance from both domestic and foreign sources. This revenue collection was realised from tax revenue, non-tax revenue, domestic borrowing, grants, external concessional loans and external non concessional loans at the rate of 89%, 55%, 92%, 88% 89% and 109%, respectively.

While the government had planned to collect TZS 20,894.6 billion as domestic revenue in its 2018/19 budget, until January 2019 it had collected over 50% of the target (TZS 11,005.6 billion). On the other hand, during the same period grants and concessional loans had been received to the tune of TZS 125.4 billion, which is only 5% of the target (TZS 2,676.6 billion).

In terms of disbursement during the financial year 2018/19, until January 2019 the government had released TZS 1,034.8 billion. Out of this, TZS 10,962.1 billion was for recurrent expenses (which is 53.6% of the target) while development expenditure had received TZS 2,788.5 billion which is only 23% of the allocation (TZS 12,007.3 billion).

The recent report by the Controller and Auditor General for the financial year ending June 2018 continue to manifest serious problems in the use of public resources. It is also noted that in terms of working on the recommendations to improve financial discipline, there are inadequate improvements compared to last year owing to the inadequate management follow-up to address the outstanding audit recommendations.

Based on previous years budget allocations and disbursements, the estimates for 2019/20 seem to be a bit realistic. It is high time that our government plans based on resources it can potentially and realistically collect. An increase of a merely 2% of the budget can be realised if we keep enhancing mobilisation of domestic resources by closing all revenue leakage loopholes.

Trend in some selected sectors

  1. The Allocation Trend of Education Sector Budget

The government has for a while now taken the sole responsibility of financing basic education in the country through fee-free policy. By this decision, stakeholders and the general public would expect the budget for the sector to increase significantly. Surprisingly, for the past three financial years, the trend of allocation in the education sector has declined.

The education sector budget in the last three FYs has dropped from TZS 4,770 billion in 2016/17 to TZS 4,706 billion in 2017/18 and now to TZS 4,628 billion in this (2018/19) FY.  This drop is equivalent to TZS 142 billion (equivalent to 3%) from TZS 4770 billion allocated in FY 2016/17 to TZS 4628 billion allocated and approved for FY 2018/19 expenditures. 

Further, the proportion of education sector budget has declined from 17% in 2015/16 to 14% in 2018/19. This decline has not only lessened education sector’s position in government’s sectors priority lists but has also been short of regional and international commitments such as the Dakar commitment to allocate at least 20% (inclusive of the national debt) of the national budget to education sector.


[1] Report of the Controller and Auditor General for the year ending June 2017.

(Source: Budget books & citizen budget for 2016/17 – 2018/19)

It is important to note that during the financial year 2016/17 and 2017/18 Science, Technology and Innovation (STI) was not amongst the government priorities in the education sector, and as such no specific allocations were made toward this area. In the 2018/19 budget however, there was 0.6% of the budget for the education sector set for STI. Although it is a small amount, but we commend the government for this step; hoping that it will attract more resources in the future.

Budgeting for fee-free effect

Fee free policy has led to increased enrolment in both primary and secondary schools by 17% and 12.6% respectively.  With an increasing enrolment and decreasing budget, the education sector is haunted by several challenges including but not limited to shortage of classrooms, latrines and teachers’ houses.

According to the Controller and Auditor General (CAG)’s Audit Report for FY 2016/17, Primary schools have 85% classrooms shortages, 83% pit latrines shortage, 66% teachers’ houses and 14% students’ desks shortages. Further, secondary schools have 52% shortage of classrooms, 84% laboratories, 86% desks, 85% teachers’ houses, 88% dormitories and 53% pit latrines shortage. Therefore, with these challenges, it is indeed imperative that the government consider proper and adequate financing for the sustainability of the sector.

Key recommendations to the government:

  1. On the employment of Teachers: A teacher is a fundamental pre-requisite for students’ learning. The government in FY 2018/19 employed 4,840 for primary and secondary schools and in February 2019 announced to employ around 4,549 at different levels. The government is reminded to implement a promise of employing 10,140 primary teachers as stated in 2018 in the upcoming FY.
  2. While applauding the government’s decision of removing Value Added Tax (VAT) for disposable female’s sanitary pads made during the 2018/19 budget, we strongly recommend setting a mechanism of implementing such decision. We further suggest that the VAT deduction shouldn’t not only be in disposable pads but to reusable pads that are widely used too.
  3. There is a need to visibly stipulate innovation fund in the budget, instead of indirectly reflecting it in another ministries’ budgets. Also, the fund should be used to accumulate internal sciences, technology and innovation (STI) capabilities through investing in human capital and institutions as well as strengthening innovation system.


  1. Water Sector

Tanzania, being a member of the United Nations signed and thus has accountability to the Sustainable Development Goals (SDGs) which cover a wide range of drivers across the three pillars of sustainable development, and include a dedicated goal on water and sanitation (SDG 6) that sets out to ensure availability and sustainable management of water and sanitation for all. SDG 6 expands the MDG 7 focus on drinking water and basic sanitation to now cover the entire water cycle, including the management of water, wastewater and ecosystem resources, with water at the very core of sustainable development.

Trend of Funding for the past three years (2016/17-2018/19)

While the development budget for the water sector during the last three years has largely depended on internal sources, the development budget for the irrigation sector has on the other hand depended largely on external sources. See table 2 below.


Total Development Budget (Water sector exclusion of irrigation)

Internal sources


External sources



























Table 2: Development Budget sources of funding:

 Source: 2016/17-2018/19 Water and Irrigation budget speech                                           

Budget disbursement in the sector

Based on the implementation of the 2016/17, 2017/2018 and 2018/19 budgets, the gap between allocations and actual disbursement potentially affect aspirations of addressing key gender sensitive challenges in the sector. For instance, only 56% of the total development budget for the 2017/18 fiscal year had been released by March 2018.

In 2015/2016 and 2016/17 only 28% and 27.7% of the budgeted money was disbursed, respectively. In the last financial year only 22% of the budget was disbursed by March 2018. This confirms that despite an increase of about 5% in the 2018/2019 FY, the challenge remains on the release of this budget to address challenges on the ground even though the increment may suggest the commitment of the government to address challenges in this sub sector.

Dependence on foreign funding sources comes with its challenges. In many occasions, there are experiences of delays in disbursement. A typical example is in the construction, rehabilitation and extension of water projects in district headquarters, towns and national level projects. In 2016/17 a total of TZS 47 billion were set from internal sources and TZS 33 billion from external sources. While up until March 2017, TZS 13 billion of internal funds were disbursed and nothing was disbursed from external sources during the same period. (See Sub vote 3001 of FY17/18 Budget).

General observations in the water and irrigations sector budget for the past three years (2016/17-2018/19

  1. There is lack of strategic gender mainstreaming and sex-disaggregated data in most budget speeches and reports which limit the integration of gender into budgeting documents.
  2. The water sector budget is broadly aligned to sector policy priorities but the delays in disbursement of development funds to LGA are set to persist. 
  3. There is no doubt that the budget set for water sector for 2017/18 is too low as compared to the magnitude of the problem. On the other hand, there is no reason to come up with an unrealistic budget that cannot be realized. It is far better to plan and implement small than being overambitious beyond what the country can afford.

Our key recommendations:

  1. The government must establish timely and sufficiently allocation and disbursement of water sector budget particularly for development projects in order to meet policy targets by 2020 and 2025 as well as the Global Agenda by 2030.
  2. The government needs to establish separate budget lines and allocate enough funds for scaling-up investments on sanitation and hygiene for households/community, schools and health.
  3. The government to improve and harmonise gender disaggregated data on water and sanitation sector with a very strong and real database informed by a Monitoring and Evaluation Framework to inform evidence during planning and budgeting process.


  1. Health Sector

Share of the health sector in national budget

For the FY 2018/2019, the Government of Tanzania has allocated TZS 2,054 billion for the health Sector, which is 8.9% of the National budget exclusive of Consolidated Funds (CFS) or 6.1 inclusive of CFS[1]. The overall allocation for Health Sector has gone down by 8% (TZS 2,222 billion in 2017/18 to TZS 2,054 billion in 2018/19) and is almost even with the allocation for 2016/17 of TZS 2,055 billion.

[1] Calculations of health as a percentage of total government budget are made using total government budget figures inclusive of consolidated funds services, which includes mandatory debt repayments, government contribution to pension funds, and other non-discretionary expenditures.

The Health Sector Budget allocation trend has not been in line with the increasing demand based on population growth and high disease burden. Figure 5 shows a declining trend, which is far from attaining the Abuja target (15%) of which the Government is a signatory.

Budget Allocation vs. Strategic Plans

The fourth Health Sector Strategic Plan (HSSP IV) has estimated financial resources required to enable its implementation in improving health and wellbeing of citizens. However, there is a notable financing gap as the trend of fiscal budget allocation to the health sector has been lower than the annual targets by about 50% as shown in figure 6. This financial gap directly affects the public per capita allocation; therefore, significant policy and systemic implementation measures need to be undertaken to cover this gap.

Compositions of Health Sector Budget (Development Vs. Recurrent)

The increase in trend of development budget allocations for the years 2015/16 to 2017/18 indicate efforts towards increase in the use of technology, decrease of manpower and attaining the LMIC status (Figure 7).  The slight decrease of 2018/19-budget development share calls for attention to attain the 2025 goal.

Compositions of Health Sector Budget (Domestic vs. Foreign)

Composition of health sector Budget (Domestic Vs. Foreign) shows an increase in domestic contribution by 5% from previous year and by 10% since 2015 in real terms.  The domestic budget allocation for FY 2018/19 is TZS 1,736.1 Billion, which is equal to 85% of the total budget. The increase in domestic allocation is a realization of continued efforts made by different Stakeholders who advocate for increased domestic share for the health budget. Equally, it demonstrates commitment by the Government to allocate more domestic resources to finance the Health Sector.

Key recommendations:

  1. Budget allocation should consider population growth and increasing disease burden.
  2. Future budget plans should take into consideration strategic documents, which have been developed by different stakeholders and the Government itself.
  3. It is important to close the funding gap in the costing of HSSP IV to ensure that the country remains on track to complete the objectives set in the plan, which ends in 2020.



Share of the sector in the national budget

Agriculture financing in the country experiences challenge of meagre resources allocation as compared to other sectors. The declining trend of agriculture sector financing clearly indicates its low priority in the current administration (Figure 8). Based on this, the agriculture transformation and industrialization agenda that have impact on economic growth and poverty reduction will be a mere dream.


  1. Development vs recurrent budget

Low budget allocation to development expenditure over time is observed, however it is important that the government plans what it can realistically be able to implement.



Budget Estimates (TZS)

Recurrent Expenditure

Development Expenditure


















Table 3: Development VS Recurrent budget figures

Sources: MoA (Vote 43) 2017/18 to 2019/20


  1. Development Partners (DPs) commitments in financing in agriculture


The issue of honouring commitments is a challenge to both government and Development Partners, which in turn affect project implementation.
















Table 4: Development Partners (DPs) Commitments to the Agriculture Financing (2014/15-2017/18)

Source: MoA

  c. Financing through the Agricultural Development Bank (TADB)

Despite its potential to transform the economy and its contribution to GDP, the agricultural sector in the country is still largely underfinanced. The Agricultural Development Bank (TADB), however, was established in 2012 to strengthen the agriculture financing value chain including the facilitation of rural lending.

According to the CAG report of report 2016/17, TADB experienced challenges early on during the delivery of this mandate. It was reported to have invested a significant part of its funds in fixed deposits instead of issuing loans to farmers (CAG report 2016/7). According to the report, as to the end of 2016, the bank placed TZS 54.7 billion in fixed accounts, which is equivalent to 91% of the total advance towards share capital. The report also highlighted that, out of total loan portfolio of 3.95 billion, loans and advance to staff stood at TZS 1.71 Billion while TZS 2.23 Billion went to farmers as loans.

In order to implement recommendations made by the CAG, TADB proceeded to develop a pipeline of agricultural projects for financing. The bank adopted the clustering and value chain financing approach which has identified eight clusters and respective value chains of focus which are in consonance with the country’s agri-ecological zones defined by the ASDP II programme.

In terms of outcomes, TADB financed 91 projects in eight of the clusters (21 regions) with loans worth TZS 712.9 billion advanced to over 1.7 million farmers. TZS 600 billion of total loans were advanced to finance the off-taking of cashew in the 2018/19 season while 112Billion have been advanced to other crop value chains.

Disbursed loans increased from TZS 662 million in March 2016 to TZS 2.65 billion in December 2016 and rose to TZS 10.49 billion by the end of 2017. In 2018, disbursed loans rose by TZS 284.0 billion and reached TZS 295.04 billion by the end of the year. TZS 428.9 billion was disbursed in 2019 to make cumulative disbursements reach TZS 712.9 billion by March 31, 2019.

In addition to lending, TADB is managing the Smallholder Credit Guarantee Scheme which incentives – through risk sharing – commercial banks to increase lending to smallholder farmers. The scheme is implemented in partnership with five commercial banks. Loans worth TZS 3.34 billion were issued to 871 smallholder farmers in various regions as of March 31, 2019.


  1. Prioritize the agriculture as an important development agenda through enough budget allocation to key investment areas such as irrigation, extension services, markets, research, inputs subsidies and climate mitigation.
  2. Both government of Tanzania (GoT) and Development Partners (DPs) financing agriculture need to honour their commitments/pledges for agriculture projects undertaking.

Summary of our key policy recommendations:

  1. Keep enhancing mobilisation of domestic resources to improve budget credibility. This could among others be done through improving the business environment and registering eligible tax payers those that are not in the tax net yet.
  2. Improved mobilisation of domestic resources without financial discipline will not get the country to any positive stride. It is encouraged to improve management in the use of public resources and work on the recommendations provided in the audit reports.
  3. There is a need to promote research, development and innovation in order to achieve industrialization given the roles of such parameters in influencing industrial growth.
  4. The government should improve and harmonise gender disaggregated data on water and sanitation sector with a very strong and real database informed by a Monitoring and Evaluation Framework to inform evidence during planning and budgeting process.
  5. Call for increased allocation and disbursement trend of the education and health sectors’ budget especially development budget including the sector’s development budget disbursement challenges being addressed.
  6. Deliberate efforts and strategies are needed to ensure enough investment in health in terms of planning, allocation, disbursement and efficient execution of resources.

UPDATE: After publication of this Pre-Budget Position statement in The Guardian newspaper of the 29th of April, 2019. The Agricultural Development Bank (TADB) contacted Policy Forum with updates on their implementation of the recommendations of the Controller and Auditor General’s report of 2016/17. The update provides a more realistic representation of the status of loans provided to-date and hence warranted inclusion herein.

The agriculture sector section of this Pre-Budget Position statement which makes reference to TADB has hence been updated and the full rejoinder from the bank is included below.


In order to implement recommendations made by the CAG, TADB proceeded to develop a pipeline of agricultural projects for financing. The bank adopted the clustering and value chain financing approach which has identified eight clusters and respective value chains of focus which are in consonance with the country’s agri-ecological zones defined by the ASDP II programme.

In terms of outcomes, TADB financed 91 projects in eight of the clusters (21 regions) with loans worth TZS 712.9 billion advanced to over 1.7 million farmers. TZS 600 billion of total loans were advanced to finance the off-taking of cashew in the 2018/19 season while 112Billion have been advanced to other crop value chains.

In addition to lending, TADB is managing the Smallholder Credit Guarantee Scheme which incentives – through risk sharing – commercial banks to increase lending to smallholder farmers. The scheme is implemented in partnership with five commercial banks. Loans worth TZS 3.34 billion were issued to 871 smallholder farmers in various regions as of March 31, 2019.

Other achievements recorded include growing the bank’s service outreach by operationalising three zonal offices; TADB Eastern Zone office in Dar es Salaam, TADB Lake Zone office in Mwanza and TADB Central Zone office in Dodoma. TADB is at final stages of opening its Southern Highlands Zone office in Mbeya and a liaison office in Kigoma. Additionally, the bank has trained over 20,000 smallholder farmers and livestock keepers in numerous regions.

TADB has made profits for three consecutive years and posted TZS 5.9 billion in retained earnings which among other factors, contributed to growth in shareholder’s funds by TZS 7.5 billion to TZS 67.5 billion by the end of the first quarter of 2019.

Going forward, TADB is implementing its Funding Strategy which aims to raise resources to facilitate the transformation of the agriculture sector. Priority projects include irrigation projects, nucleus farms and agro-processing projects, construction of modern storage facilities, establishment of farm clinics and mechanisation centres, and aggregating smallholder farmers into commercialised producer groups and then training them and linking them to markets.

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[1] Report of the Controller and Auditor General for the year ending June 2017.

[2] Calculations of health as a percentage of total government budget are made using total government budget figures inclusive of consolidated funds services, which includes mandatory debt repayments, government contribution to pension funds, and other non-discretionary expenditures.

The 2017 -2020 strategic plan (SP) of Policy Forum focuses more on strengthening the Monitoring, Evaluation and Learning (MEL) practices within the network by fusing Results Based Management with ‘Process Tracing’ to deepen the understanding of the impact of the advocacy and policy influencing work that PF facilitates and help strengthen the ‘contribution claims’ by examining the processes where change is thought to have occurred and improve the credibility of the claims. Currently, Policy Forum is gathering evidence of the dynamics, causal links, the positive or negative changes and lesson learned throughout the two years of implementing the new SP for program improvement. Embedded is a video showcasing a positive result of the morning Breakfast Debate coordinated by PF as a platform for its members and other stakeholders to discuss systemic policy issues.


Back in 2006, the Integrated Labour Force Survey (ILFS) noted that the number of informal sector operators in Tanzania was growing fast and their share to the GDP was significant with implications on Government loses in revenue if they were not taxed.

A recent study by Policy Forum in 2018 corroborates this observation but stresses that in order to adequately determine the extent of revenue losses, an appropriate measure of the size of the informal sector is needed. The report “The Nexus between Taxation of the Informal Sector and Inequality in Tanzania,” notes that it depends on how the concept of informality is treated, operationalized, managed and what empirical information is relevant and available to enhance policy.

To this end, it was useful for stakeholders to meet and discuss this topic on informal enterprises and what it means to a Tanzania striving to become a middle-income country. The Policy Forum’s March Breakfast Debate entitled “Transforming Trade and Industry in Tanzania: Facilitating the Formalization of Micro-enterprises” convened on micro-enterprises to air their views on how policy issues impacting small firms.

Dr. Olomi from IMED (Institute of Management and Entrepreneurship Development) stressed that youth and adults participate in the informal sector as a way of generating income and opportunity for self-employment. Through self-employment, there is more employment opportunities creation, technological progress, and increase in per capital income as well as reduction of absolute poverty, (Tanzania Human Development Report, 2014). Informal Sector entrepreneurs can also mobilize their own savings. This reduces its vulnerability to external shocks compared with the levels faced by the formal sector.

In Tanzania, the informal sector includes non-agricultural enterprises owned by individuals or households that are not constituted as separate legal entities independent of their owners, have limited set of accounts and produce some of their goods and services for sale, (Integrated Labor Force Survey, 2014). It consists of mainly the registered, unregistered and hard-to tax groups such as micro scale traders, street vendors, retailers and in rare cases wholesalers who trade in products such as food, clothes and electronic appliances, small manufacturers, craftsmen, individual professionals and other small-scale businesses.

Specifically, on youth, he continued to say that the government recognizes them as a significant group in national development strategies. Several programmes are targeting youth entrepreneurship  and  transformation  to  formal  sector  that  can  be  more  sustainable  and  enable  government collect tax.

More broadly, Tanzania has piloted several approaches to formalize the micro enterprises. Faraji Mbulalina from President's Office Regional Administration and Local Government said that entrepreneurs have been provided with special areas to conduct their businesses and continued by noting that PORALG, through H.E John Magufuli, has initiated the process of providing the informal sector with identity cards in order to recognize their businesses.

Ambassador of Denmark to Tanzania , H.E. Einar Jensen stressed informal businesses are an untapped resource. The reality of substantial, important and valuable economic activity taking place in small firms has not yet been reflected in the legal, regulatory and policy framework to any great extent. Both the TRA and the local government authorities are more preoccupied with the short-term objective of maximizing revenue from small firms than in strengthening their performance in the regional, national and local economy, the source of long-term prosperity.

Japhet Makongo, Policy Forum’s Board - Chairperson stressed that government should use all participatory best practices in the current small-business formalisation drive in Tanzania. The government, through the small and medium industries should continue to promote SMEs development through the provision of advisory services, infrastructure facilities, market access, financial support and many other supporting services. This may help a number of Small and Medium Enterprises program to develop with the vision of improving the competitiveness at the market and at the end be formal business.

Furthermore, in the process of formalization, it is upon the government to revise the business registration processes by reducing the cost of registration imposed by BRELA and smoothen the registration requirements so as to attract more informal business to register their business. This will improve processes of registration and incentivize entrepreneurs and business operators to register their business and enhance formalization

One of the participants from the SMEs commented that when the government introduced the tags, they were sold but asked whether they are any services provided to facilitate the ease of doing business and also suggested that SMEs should be involved in making and implementing the PORALG business manual.

The Embassy of Switzerland in Dar es Salaam through the Swiss Agency for Development and Cooperation (SDC) has launched the third phase of its Social Accountability Programme (SAP) which provides support to key national Civil Society Organizations (CSOs) who are working to improve accountability in Tanzania.

Switzerland is committed to further its support towards enhanced responsiveness and accountability of public authorities for better services to women, men and youth in Tanzania. Switzerland will contribute USD 7.64 million (TZS 18 billion) over the next four years to key accountability organizations: The Foundation for Civil Society (FCS), Policy Forum, and Twaweza.

The Embassy of Switzerland is proud to be partnering with these CSOs who are key policy actors working for the betterment of the lives of ordinary Tanzanians. Switzerland firmly believes that a vibrant civil society is key to Tanzania’s ambitious development agenda of becoming a middle income country by 2025.

SAP complements Switzerland’s support to key accountability actors of the Government of Tanzania, including a long standing partnership with the Prevention and Combating of Corruption Bureau (PCCB) in enhancing its investigative capacity, as well as the Swiss contribution to the Good Financial Governance (GFG) programme. The GFG programme, implemented by GIZ, provides capacity building and technical support to the National Audit Office, the Internal Auditor General Division and select local government authorities for improved financial governance and increased domestic resource mobilization.

Switzerland has supported bilateral and regional projects in Tanzania since the early 1960s and continues to provide around USD 22 million in assistance annually, covering the health, employment and income, and governance sectors. 

About FCS

FCS is a grant making and capacity building organization, supporting grassroots CSOs across the country. FCS provides grants and capacity support to an average of 150 CSOs annually under their key thematic focus areas. For more information:

About Policy Forum

Policy Forum is a national policy advocacy network with a membership of 79 CSOs focusing on an accountable use of public resources in various sectors. For more information:

About Twaweza

Twaweza is a regional CSO focusing on citizen agency and civic space. Twaweza works to protect civic space, enable citizen voices to be taken seriously in decision-making and showcase citizens solving their own problems. For more information:

Photo credit to Reinout



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