The budget discussions touched upon proposed fiscal reforms, including the contentious issue of levies on gasoline. Photo: Courtesy
Tanzania’s Budget Approval Masks Fiscal Risks: Critics Warn of Mounting Debt and Misallocation
By Adonis Byemelwa
Tanzania’s Parliament has approved a monumental budget of Sh49.35 trillion for the fiscal year 2024/2025, marking a significant milestone in the nation’s economic trajectory. The budget, endorsed by a substantial majority in parliament, underscores Tanzania’s commitment to economic revitalization and social welfare enhancement.
Central to this budget is the long-awaited settlement of outstanding debts owed to local contractors, a move aimed at jumpstarting economic activities nationwide. Finance Minister Dr. Mwigulu Nchemba emphasized the government’s determination, stating, “We are committed to clearing these debts, which are crucial for fostering economic growth and supporting local businesses.”
In tandem with efforts to bolster economic activities, the budget addresses critical social welfare concerns, particularly concerning pension benefits. Minister Deogratius Ndejembi announced significant reforms aimed at improving retirement security for public sector employees.
“Retirees will now receive higher lump-sum payouts, ensuring better financial stability in their retirement years,” he declared. These adjustments are part of broader reforms to strengthen social protection frameworks and enhance the well-being of Tanzania’s aging population.
Infrastructure development emerges as another cornerstone of Tanzania’s economic strategy for the upcoming fiscal year. A substantial allocation of funds is earmarked for essential projects in roads, energy, and water supply systems.
Minister Nchemba highlighted the government’s redirection of resources towards these critical sectors, emphasizing their role in stimulating economic growth, improving public services, and creating employment opportunities across the country.
One of the focal points of the budget is the support for local industries, particularly in agriculture. Prof. Kitila Mkumbo, Minister of State for Planning and Investment, outlined ambitious plans to boost domestic sugar production through investments in irrigation infrastructure and high-quality seed varieties.
“We aim to increase national sugar production capacity significantly,” Prof. Mkumbo projected. He detailed allocations totaling Sh7.2 billion for seed development and Sh12.5 billion for irrigation infrastructure in key agricultural regions like the Kilimanjaro Valley.
These investments are crucial for reducing dependency on sugar imports, stabilizing prices, and ensuring food security within the country.
Amidst these economic initiatives, Minister Nchemba addressed concerns over currency use and fiscal discipline. He reaffirmed the government’s commitment to reinforcing the Tanzanian Shilling (TZS) as the primary legal tender for domestic transactions.
“We are enacting stringent measures to ensure compliance with domestic currency regulations,” Minister Nchemba asserted. These measures are designed to safeguard Tanzania’s financial sovereignty and promote economic stability amidst global economic uncertainties.
The budget discussions also touched upon proposed fiscal reforms, including the contentious issue of levies on gasoline. Minister Nchemba acknowledged the public and parliamentary concerns regarding the proposed Sh385 levy on gasoline, which sparked debates over its potential impact on inflation.
He assured stakeholders that the government would carefully consider feedback and expert opinions before finalizing any legislation affecting fuel prices. This cautious approach reflects Tanzania’s commitment to balancing revenue generation with economic stability and affordability for its citizens.
Recently, Anatropia Theonest, Special Seats MP from Karagwe District, Kagera region, has ignited a storm of debate with her scathing critique of Tanzania’s budget priorities. Known for her outspokenness and commitment to fiscal accountability, Theonest has sharply criticized what she sees as the misallocation of funds towards vehicles for district councils, rather than crucial development projects vital for Tanzania’s economic growth.
“A staggering Sh880 billion has been allocated for vehicles that do not provide commensurate value for money,” Theonest declared. “This expenditure fuels economies abroad, neglecting urgent needs to bolster our own infrastructure and social welfare.”
Her critique, resonating widely on social media, underscores broader concerns over the balance between recurrent expenditures and developmental investments in Tanzania’s fiscal planning. The ones argued adamantly for a significant realignment of budget priorities, proposing that at least 68% of the budget should be dedicated to development projects, with the remainder allocated to recurrent expenditures. This, she believes, would better serve Tanzania’s long-term economic resilience and social stability.
Theonest’s scrutiny extends to historical trends in budget allocations, highlighting substantial sums devoted to vehicle purchases in recent fiscal years across various administrations. She pointedly questions the efficacy of such spending, particularly in light of Tanzania’s pressing developmental needs.
Finance Minister Mwigulu Nchemba, responding to Theonest’s criticisms during the presentation of the 2022/23 National Budget, defended the allocations as necessary for administrative efficiency but acknowledged the need for balanced fiscal management. Theonest’s stance resonates deeply with many Tanzanians who share concerns about fiscal transparency and effective resource allocation.
As Tanzania navigates through global economic uncertainties and strives for sustainable growth, Theonest’s critique serves as a poignant reminder of the importance of prudent financial management and prioritization of developmental imperatives over administrative conveniences. Her advocacy for a more balanced approach to budgeting reflects widespread calls for transparent governance and accountable fiscal policies.
In response to Theonest’s impassioned call for reform, stakeholders across Tanzania are now calling for greater scrutiny and public consultation in future fiscal planning. Her critique has not only brought attention to fiscal discrepancies but has also galvanized public support for a more equitable distribution of resources aimed at fostering long-term prosperity and resilience.
As Tanzania charts its course towards economic self-sufficiency and global competitiveness, Theonest’s bold stance signals a potential turning point in fiscal policy. The debate sparked by her advocacy underscores the critical need for accountable governance and strategic allocation of resources to achieve sustainable development goals.
Yes, Tanzania’s Parliament has approved a monumental budget of Sh49.35 trillion for the fiscal year 2024/2025, signaling a commitment to economic revitalization and social welfare enhancement.
However, Anatropia Theonest’s critique highlights a critical challenge: without heeding calls to prioritize developmental needs over administrative conveniences, the risk remains that the budget could perpetuate inefficiencies. Ignoring such advice risks perpetuating current trends, potentially leading to further economic challenges and exacerbating national debt, currently standing at Sh91.7 trillion and potentially higher.
