Objective One: Promote self-reliance in development and build capacity for sustaining development
Under this objective, the APRM instrument aims to assess the extent of ownership of the orientation and the design of key national development programmes and how the programmes are financed.
The NPoA prioritised two broad areas of action, enhancing capacity for mobilizing domestic resources for development and strengthening local stakeholder involvement in development process
Enhancing capacity for mobilizing domestic resources for development
The government is implementing a number of measures aimed at increasing domestic revenue collection focusing on clamping down on all forms of actions and behaviours that cause revenue leakages, widening the tax base, tackling corruption, modernising revenue collection methods to enhance real time revenue collection and management. Key ones include[1];
- Using maximum automation in order to reduce potential (negative) human influences by enforcing effective use of electronic devices and systems such as Electronic Fiscal Devices (EFDs), Electronic Revenue Collection System (e-RCS) and Government Electronic Payment Gateway System to contain revenue leakages, improving the capacity of LGAs to collect taxes and introduce modern tax revenue administration
- A system put in place mechanism to track cargo and speed up collection procedures at Dar es Salaam Port, all border posts and all inland container terminals in the country so as to curb tax evasion and avoidance.
- Developed Transfer Pricing Guidelines and built capacity within TRA to monitor transfer pricing and trade mispricing
- Developing a framework to addressing the current anomaly, whereby about a third of income tax revenue is collected from the salaries of less than two percent of Tanzania’s total number of workers.
- Expanding the tax base by including informal sector and taxing incomes that are not channelled through the payroll, property tax, mobile money payments, etc.
- Minimizing the application of tax exemptions, building on existing reforms under VAT Act of 2014, and following through on Government plans to reduce the value of tax exemptions to 1% of GDP by 2017/18 from 2014/15 level of around 1.5%.
- The Government has effected review and enactment of legal instruments for maximization of resource rent collected by government from exploitation of natural resources such as minerals. The Government is enforcing provisions in the Mining Act 2010 (as amended by Act No 7 of 2017) and its various regulations. For example, royalty which was originally paid at 3% of gross production, was raised to 4% and recently to 6%. The Natural Wealth and Resources (Permanent Sovereignty) Act 2017 (“Sovereignty Act”) and the Natural Wealth and Resources (Revenue and Re-Negotiation of Unconscionable Terms) Act 2017 (“Contract Review Act”), are all meant to increase the share of benefits by the Government and its citizens. The Mining (Local Content) Regulations 2018 and Petroleum (Local Content) Regulation 2017 will also facilitate effective localisation of mining activities and benefits therein.
The result has been a steady increase in total domestic revenue (Table 1) which has enabled a steady increase in the portion of national budget that is financed by domestic revenue. For example, National Audit Office (2018)[2] note that in 2016/17 the portion of the budget that was financed from domestic taxes and non-taxes was TZS 18,463.5 billion (62.50%) of the approved budget of TZS 29,539.60 billion which was an increase of TZS 4,465.98 billion (31.91%) compared to 2015/16.
Table 1 Total Revenue Collection (TZS million)[3]
Approved Budget
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
Tax Revenue
6 229
8 432,29
10 412,95
11 318,20
12 362,96
15 105,10
Non Tax Revenue
693
644,58
763,43
1 318,30
1 634,56
3 358,40
Actual Collection
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
Tax Revenue
6 415
8 052,29
9 289,00
10 773,22
12 463,53
14 271,30
Non Tax Revenue
720
419,56
640,95
757,57
1 613,99
2 072,90
Deficit (Approved Budget – Actual Collection)
-213
605
1 246
1 106
-80
2 119
Figure 1. Trends in resource gap
Source. National FYDP II 2016/17 – 2020/21
Despite the steady increase in domestic revenue, expenditure tended to grow at a faster rate than revenue thus increasing deficit.
As of 2015, the expenditure to GDP ratio stood at 28.8 percent, slightly above FYDP I target of 28 percent GDP.
Revenue to GDP ratio increased modestly from 11.6 percent during 2010/11 to 12.4 percent during 2014/15 and 13.6 percent during 2015/16. The FYDP I target was 14.4 percent of GDP and this was not achieved. The ratios are also low in comparison to neighboring countries like Mozambique at 22.4% and Kenya at 17.7% implying that concerted efforts are needed to improve efficiency to attain the 2020 FYDPII target of domestic revenue to GDP ratio of 19 percent.
Registration of new tax payers and VAT vendors increased rapidly from 2011 to 2013, however the rate has stalled since and requires a new push. see Table 2.
Table 2 Number of Registered Taxpayers and VAT vendors, Tanzania Mainland, 2006/07-2015/16
Year
2009/10′
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
Taxpayers( ‘000’)
618
846
1,036
1,612
1,784
1,990
2,200
Growth (percent)
26.6
36.9
22.4
55.6
10.7
11.6
10.5
Registered Vendors
13,253
16,848
17,860
21,362
24,346
25,908
27,235
Growth (percent)
22.2
27.1
6.0
19.6
14.0
6.4
5.1
Implement policies targeting improved production in sectors of Agriculture, Tourism, Fisheries, Manufacturing, Trade, Mining and Service Trade, SMEs
Under MKUKUTA II and FYDP I, the Government continued to pursue initiatives to promote productivity growth in key sectors of the economy, hence contribution to GDP and revenues. The FYDP II consolidates the objectives of MKUKUTA and FYDP I into one coherent development framework. This too has prioritised specific interventions in all key sectors of agriculture, fisheries, tourism, mining, trade, manufacturing, services and infrastructure development.
Agriculture growth (crops subsector) has underperformed over the past six years and far from the agreed Malabo target of 6 percent growth (Table 3). Fishing activity recorded a growth rate of 4.2 percent in 2016 compared with 2.5 percent in 2015, while forestry grew by 3.4 percent compared to 2.6 percent. Mining grew consistently.
Table 3 Real growth by economic activity (percent)
Economic Activity
2011
2012
2013
2014
2015r
2016p
Agriculture, Forestry and Fishing
3.5
3.2
3.2
3.4
2.3
2.1
Crops
4.8
4.2
3.5
4.0
2.2
1.4
Livestock
1.6
1.8
2.0
2.2
2.4
2.6
Forestry
3.3
3.5
4.7
5.1
2.6
3.4
Fishing
2.6
2.9
5.5
2.0
2.5
4.2
Industry and Construction
12.0
4.0
9.5
10.3
11.3
10.7
Mining and quarrying
6.3
6.7
3.9
9.4
9.1
11.5
Manufacturing
6.9
4.1
6.5
6.8
6.5
7.8
Electricity supply
-4.3
3.3
13.0
9.3
5.8
8.5
Construction
22.9
3.2
14.6
14.1
16.8
13.0
Services
8.4
7.2
7.1
7.2
6.9
7.6
Wholesale and retail trade; repairs
11.3
3.8
4.5
10.0
7.8
6.7
Transport and storage
4.4
4.2
12.2
12.5
7.9
11.8
Accommodation and Food Services
4.1
6.7
2.8
2.2
2.3
3.7
Information and communication
8.6
22.2
13.3
8.0
12.1
13.0
Financial and insurance activities
14.8
5.1
6.2
10.8
11.8
10.7
Real estate
1.9
2.0
2.1
2.2
2.2
2.4
GDP at Market prices
7.9
5.1
7.3
7.0
7.0
7.0
Source: National Bureau of Statistics, 2017[4]
Objective Two: Accelerate socio-economic objectives to achieve sustainable development and poverty eradication
Strengthen the M&E system and statistical data collection to ascertain the extent to which the country is progressing towards targets set in MKUKUTA II, MKUZA II and the MDGs (Routine ME and National Statistical Master Plan performance).
The Ministry participated in training LGA staff on Agriculture Routine Data System (ARDS) Data collection, processing, management and dissemination of administrative data on livestock and fisheries sectors (TSED, county Sat, LIMS) were facilitated to 6 staff.
The National Employment Policy 2008 is currently under review as well as the National Youth Development Policy 2007. The aim is to accommodate contemporary issues on labour and unemployment
The Government has developed National Skills Development Programme that includes apprenticeship, internship, skills upgrading and recognition and certification of skills. The objective of the Programme is to enhance relevant skills required to the labour market specifically among the youth. Through Regional Commissioners, the Government has mainstreamed youth employment issues into annual plans and budgets. Youth employment issues form part of the criteria for budget scrutiny. The Non-Citizen Act No 1 of 2015 requires those obtaining work permits from the Government to transfer skills at their work place by mentoring at least one young person.
In collaboration with the Tanzania Entrepreneurship Competitive Center (TECC) and Youth Business International (YBI), the PMO facilitated implementation of a business development pilot project that is aimed at enabling youth aged 15 – 35 years to acquire business skills to start and expand their businesses and thus contribute to job creation. About 245 youth (63% male and 37% female) from Mtwara, Lindi and Dar es Salaam regions attended training on entrepreneurship and have been linked to business mentors in order to acquire practical skills and later will be linked to financial institutions to access loans. It was expected that by April 2016, 60 youth would have started some new business. During the reporting period, 5 youth groups (8%), have started new businesses in Mtwara and Lindi.
PMO signed an agreement with the Tanzania Postal Bank on April 14 2015, aimed at enabling women joining VICOBA groups and SACCOS to access loans from the bank through Mwananchi Empowerment Guarantee Fund. About Tsh 300 million has been set aside in a fixed deposit account at the Bank to facilitate the programme. A joint plan of action was developed by the office in collaboration with TPB and same is operational.
PMO also signed an agreement with NSSF on August 25, 2015 aimed at supporting youth involved in the transport sector – i.e. ‘bodaboda business’ in Mainland Tanzania to access loans and other investment opportunities from NSSF. As a result of this programme, youth engaged in ‘bodaboda business’ will be facilitated to form SACCOS and start group savings that would facilitate accessing loans from the Fund and from other MEF guarantee. NSSF will extend loans to youth SACCOS at an interest rate of 9.32% while the SACCOS will charge a margin of 3.68 % at 13%. The loans will enable them to acquire and own motorcycles, and later on are expected to diversify into other types of businesses.
The PMO in collaboration with Cambridge Development Initiatives (CDI) volunteers in the UK facilitated successful completion of training on entrepreneurship to 17 (13 male and 4 female) Tanzanian youth from the University of Dar es Salaam and Ardhi University. While training on entrepreneurship, the youth competed in developing business plans whereby six students from two themes, Manufacturing and Urban Living and Waste, Water, Sanitation and Hygiene (WASH) emerged winners and they were awarded USD 3,000 as grant for each. The funds were for implementing their business ideas. Thereafter, further due diligence was conducted on the proposed projects before disbursement of funds.
[1]URT (2016) National Five Year Development Plan II 2016/17 – 2020/2021, Ministry of Finance and Planning Budget Speeches 2016/17, 2017/18
[2]National Audit Office Annual General Reports of The Controller and Auditor General on The Financial Statements for the Year Ended June 30, 2017 Central Government
[3] Compiled from National Audit Office Annual General Reports of The Controller and Auditor General on The Financial Statements for Central Government (various years Year Ended June, 2012, 2013, 2014, 2015, 2016 to 2017)
[4]United Republic of Tanzania, National Bureau of Statistics (2017) National Accounts of Tanzania Mainland 2007-2016.