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Local Government Budgeting and Implementation in
Tanzania
Parliamentary Centre
March 2011
With funding from
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Foreword
The Parliamentary Centre is a not-for-profit, non-partisan organization devoted to improving
the effectiveness of representative assemblies around the world. The centre‟s five-year Africa
Parliamentary Strengthening Program (APSP) for Budget Oversight is designed to increase
the capacity and authority of select African parliaments (Benin, Ghana, Kenya, Senegal,
Tanzania, Uganda and Zambia) as well as their accountability to citizens in the budget
process. It is the objective of the program is to ultimately promote poverty reduction in the
select APSP countries through strengthened Parliaments in the budget process.
The APSP identifies four (4) key areas including gender equality, anti-corruption, the
environment and HIV/AIDS, as cross-cutting themes which have a direct impact on poverty
reduction. These are closely linked to effective, efficient, equitable and responsible
government spending. To help address issues of poverty reduction using the national budget
as a tool, the APSP seeks to develop and disseminate information on the national budget
cycle in partner countries while researching ways in which citizens can participate in the
budget process.
The program is particularly determined to improve the capacity of Members of Parliament,
parliamentary staff and committees through publications in the form of papers, tool kits, and
manuals to facilitate learning and improve parliamentary oversight capacity.
For the above reasons and more, the Centre under the APSP carried out this study to uncover
the status of budget implementation at the local government level in Tanzania and the
feedback mechanisms to policy planning and budgeting. The publication among others
describes the legal framework and the process for budgeting at both central and local
government level, sources of funding local government budgets, status of implementation and
lessons for stakeholders. It is the intention of the Centre that the publication will lead to
increased knowledge and awareness of budget process especially at the local government
level and an appreciation of the challenges associated with budget implementation. By this
the Centre believes will create the awareness for stakeholders to find innovative ways of
dealing with the challenges.
As we seek to contribute our quota to reducing poverty in Africa, we acknowledge the
continued sponsorship of CIDA under the APSP and the wonderful support and participation
of the partner Parliaments and their staff in our programmes. The Centre also appreciates the
contributions of its Budget Advisory Unit, particularly Anthony Tsekpo (Dr), Nicholas
Adamtey and Cynthia Ayebo Arthur (Mrs) for spearheading the team‟s effort at putting this
publication together. The research team also appreciates the support provided by Mr Beatus
Silla during their stay in Tanzania.
Dr. Rasheed Draman
Director of Africa Programs
Parliamentary Centre
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Contents Foreword ................................................................................................................................................. ii
List of Tables ......................................................................................................................................... iv
Table of Figures ..................................................................................................................................... iv
Acronyms ................................................................................................................................................ v
1.0 Introduction ....................................................................................................................................... 1
1.1 Background and a Brief History of Decentralisation in Tanzania ................................................ 1
1.2 Problem Statement and Objectives of the Study ........................................................................... 4
1.3 Methodology ................................................................................................................................. 5
1.4 Limitations of the Study ................................................................................................................ 5
1.5 Structure of the Report .................................................................................................................. 5
2.0 Legal Framework and Budgeting Process in Tanzania ..................................................................... 7
2.1 The Legal Framework for Budgeting at both Central and Local Level ...................................... 7
2.1.1 Legal basis for the budget ...................................................................................................... 7
2. 2 The Budget Process in Tanzania .................................................................................................. 9
2.2.1 Budget Formulation ...................................................................................................... 10
2.2.2 Scrutiny of Budget Proposals and Dialogue ................................................................. 11
2.2.3 Budget Execution .......................................................................................................... 11
2.2.4 Budget Monitoring and Control .................................................................................... 12
2.3 Connection between Central and Local Government Cycles................................................ 13
2.3.1 The Link between Budgeting and Planning ......................................................................... 13
2.3.2 Criteria for Strategic Budget Resource Allocations among Clusters ................................... 14
3. 0 Local Government Finance ......................................................................................................... 15
3.1 Local Government Revenue........................................................................................................ 15
3.2 Transfers and Grants from Central Government ......................................................................... 16
3.2.1 Recurrent block grants ......................................................................................................... 17
3.2.2 Sector Basket Funds and Subventions ................................................................................. 17
3.2.3 The Local Government Development Grant System (LGCDG) .......................................... 17
3.2.4 The Constituency Development Fund (CDF) ...................................................................... 18
3.2.5 Tanzania Social Action Fund (TASAF) ............................................................................... 19
3.2.6 Community Contributions.................................................................................................... 19
3.3 Local Government Expenditure .................................................................................................. 19
4.0 Budget Implementation at the local level ....................................................................................... 21
4.1 Planning and Budgeting .............................................................................................................. 21
4.2 Role of parliament ....................................................................................................................... 22
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4.3 Gender and Environment ............................................................................................................ 24
4.4 Own Source Revenue and Intergovernmental Transfers............................................................. 24
4.4.1 Issues on Local government transfers ...................................................................................... 28
4.4.2 Effects of transfers ................................................................................................................... 29
4.5 Expenditure at the Local Level ................................................................................................... 29
4.5.1 Expenditure Performance ..................................................................................................... 30
4.6 Monitoring and Feedback ........................................................................................................... 34
4.7 Capacity ...................................................................................................................................... 34
4.8 Challenges ................................................................................................................................... 34
4.9 Measures ..................................................................................................................................... 34
5.0 Conclusion and Recommendations ................................................................................................. 36
5.1 Conclusion .................................................................................................................................. 36
5.2 Recommendations ....................................................................................................................... 36
References ............................................................................................................................................. 39
Appendix ............................................................................................................................................... 41
List of Tables
Table 1 LGA Local Source of Revenue (Own sources of Revenue) .................................................... 15
Table 2 The assignment of expenditure responsibilities in Tanzania ................................................... 20
Table 3 Total LGA Own Revenues for Mainland, Tanzania (in Tanzanian Shillings)......................... 25
Table 4: Performance Ratios of some selected LGAs Own Revenues: (as percent of annual budget
plan) ...................................................................................................................................................... 26
Table 5 Comparison of LGA Own Revenues for selected Districts for 2009/10 ................................. 26
Table 6 Total Intergovernmental Transfers for Mainland, Tanzania for 2009/10 (in Tanzanian
Shillings) ............................................................................................................................................... 27
Table 7 Total LGA Expenditures for 2009/10 -Mainland (in Tanzanian Shillings) ............................. 30
Table 8 Comparison of PE, OC and Development Expenditures for selected Districts for 2009/10 ... 32
Table 9 Percentage of Recurrent Expenditure of the Sectors to Total Recurrent for selected Districts
for 2009/10 ............................................................................................................................................ 33
Table 10 Performance Ratios of some selected LGAs Recurrent and Development Expenditures (as
percent of annual budget plan) .............................................................................................................. 33
Table of Figures
Fig 1 Formal budgetary channel to address citizen‟s needs in Tanzania .............................................. 22
Fig 2 Intergovernmental Transfer and Own Revenues for Mainland Tanzania 2009/10 Q4 ................ 24
Fig 3 Recurrent Transfers and Development Grants & Funds for Mainland Tanzania 2009/10 Q4 .... 27
Fig 4 Mainland LGA Recurrent and Development Spending -2009/10 ............................................... 29
Fig 5 Mainland LGA Expenditures -PE, OC, and Development Spending 2009/10 ............................ 30
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Acronyms
APSP Africa Parliamentary Strengthening Program
ASDP Agriculture Sector Development Programme
BG Budget Guidelines
CAG Controller and Auditor General
CBG Capacity Building Grant
CDF Constituency Development Fund
D by D Decentralisation by Devolution
HSBF Health Sector Basket Fund
IFMS Integrated Financial management System
IMTC Inter – Ministerial Technical Committee
LAAC Local Authority Accounting Committee
LGAs Local Government Authorities
LGCDG Local Government Development Grant System
LGRP Local Government Reform Program
MDGs Millennium Development Goals
MoF Ministry of Finance
MP Members of Parliament
MTEF Medium Term Expenditure Framework
NAO National Audit Office
NSGRP National Strategy for Growth and Reduction of Poverty
O&OD Opportunities and Obstacles to Development Methodology
PER Public Expenditure Review
OC Overhead Cost
PE Personnel Emoluments
PFM Participatory Forest Management
PMO-MORALG Prime Minister‟s Office Regional Administration and Local Government
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PPP Public Private Partnership
SBAS Strategic Budget Allocation System
SWM Sustainable Wetland Management
TASAF Tanzania Social Action Fund
TRA Tanzania Revenue Authority
UDEM Urban Development and Environmental Management
WDC Ward Development Committee
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1.0 Introduction
1.1 Background and a Brief History of Decentralisation in Tanzania
The United Republic of Tanzania, comprising Tanzania Mainland and Zanzibar, is the largest
of the East African countries. The main stay of the Tanzania economy is agriculture which is
carried out by subsistent farmers. Manufacturing industries produce agricultural inputs
(fertilizer, farm tools), process agricultural products (cigarettes, beer, pyrethrum and shelled
cashew), or aim at import substitution such as textiles and garments. Tanzania‟s mineral
wealth includes gold, diamonds, tanzanite and other gemstones, natural gas, iron ore, coal,
spring water, phosphates, soda ash and ash1.
Tanzania is one of the few countries in Africa with a long history of political and civil
stability. Despite the civil stability, the main development challenge is widespread and
persistent poverty with about half of the population living below the basic needs poverty line.
Poverty in Tanzania is characterized by low income, high mortality and morbidity, poor
nutritional status, low educational attainment, vulnerability to external shocks, and exclusion
from economic, social and political processes. There are also important regional and gender
differences in the levels and specific dimensions of poverty2.
It is to address the development challenges of the country that the Tanzania National
Development Vision 2025, covering the period 2000 – 2025, was prepared. The vision
defines the overall long-term social-economic development goal. It calls for measures to
achieve high and shared growth to facilitate access to high quality livelihood for all
Tanzanians. It also consolidate the national socio-political environment characterised by
peace, stability and unity based on rule of law, good governance, access to high quality
education and stimulating private sector competitiveness at the regional and international
levels.
The National Strategy for Growth and Reduction of Poverty (NSGRP), 2005 -2010 known in
Kiswahili as the MKUKUTA (Mkakati wa Kukuza Uchumi na Kupunguza Unaskini
Tanzania) was approved by the Cabinet in February 2005 for implementation over five years
and is the successor to the Poverty Reduction Strategy Paper. The MKUKUTA is informed
by Vision 2025. It provides the strategic and practical framework for translating the
inspiration from this Vision into action, focusing on achieving and sustaining high rates of
economic growth and reducing poverty as the main thrust of the national development
agenda. The NSGRP also commits the country to achievement of the Millennium
Development Goals, which reflect international initiatives for reduction of poverty and
eradication of hunger, diseases, illiteracy and discrimination against women as well as
mitigation against environmental degradation.
Over the years Tanzania has moved from being a centrally planned and controlled one-party
socialist state to being a modern, multi-party democratic state with an open economy. The
post independence Tanzania put people at the centre of the country‟s development process;
1 Kabagire A.L.R. 2006 Delivery of Public Services in a Devolved System of Governance: The Tanzanian
Experience 2 ibid
2
however the structure of the public service was more of the centralised system of
government.
According to Mmari, the local government system in the post-colonial era was starved of
resources and unable to deliver adequate services to the people. „In 1972 local governments
were abolished in favour of a more centralized system of government. Central government
and line ministries were put in charge of the administration of basic government services at
the local level, including primary education and health care..... Central government
ministries, through their regional administrative offices, were delegated strong powers to
continue to direct almost all aspects of the affairs of local government. However, this system
also failed to yield the desired improvements in the delivery of local services, while stifling
local democracy, and, by the early 1990s it had become evident that fundamental reform of
the system was imperative’3.
In the mid 90s challenges confronting the local governments to effectively deliver services
were as follows:
Absence of an institutional and legal framework that clearly and unambiguously
regulates the relations between central and local government;
The limited capacity of relevant central government institutions to design and
implement policies that will enhance (rather than undermine) a strong local
government system;
Inadequate definition of roles, functions and structures of Local Government
Authorities (LGAs) themselves, whereby it was noticed that the previous systems (of
structure and functions) for all LGAs resulted in a mismatch between local needs and
available capacity;
Governance issues especially with regard to the weak (if not antagonistic)
relationships between the councils and civil society organisations on one hand, and
between political leaders and the council‟s staff on the other; and
Weak human resource capacity and management capacity within LGAs combined
with the fact that most council staff felt attached to their Ministry of origin4.
Upon identifying the challenges facing the local governments in the 90s, there were efforts by
government to reform the culture of centralized bureaucracy which had failed to deliver good
quality services to the poor, and which stifled local enterprise.
The government launched Local Government Reform Programme (LGRP) in 1997 and
subsequently published a Policy Paper on Local Government Reform in 1998. The overall
objective of the Policy is to improve the delivery of services to the public, and the main
strategy for doing so is decentralisation by devolution (D-by-D), which entails the transfer of
powers, functional responsibilities and resources from central government to local
government authorities.
The Government‟s vision is to have a local government system in which Local Government
Authorities are:
3 Mmari D.M.S. (2005) Decentralisation for Service Delivery in Tanzania
4 Susanne Hesselbarth, Finn Hansen and Hans Olsen (2007) Harmonisation and Alignment Strategies in the
field of Decentralisation and Local Governance -A Review of Country Practices and Experiences Tanzania Case
Study
3
Largely autonomous institutions, free to make policy and operational decisions
consistent with the laws of the land and government policies;
Strong and effective institutions underpinned by possession of resources (human and
financial) and authority to perform their roles and functions;
Institutions with leaders who are elected in a fully democratic process;
Institutions which will facilitate participation of the people in planning and executing
their development plans and foster partnerships with civic groups;
Institutions with roles and functions that will correspond to the demands for their
services; and
Institutions which operate in a transparent and accountable manner5.
The main goal of the local government reform programme is to devolve substantial political,
administrative and financial powers to LGAs. The government intended to create a system
that will enable LGAs to provide their mandated services to the citizens in a transparent,
accountable, accessible, equitable and efficient manner. The reform programme has six main
components and these are:
Governance: To establish broad-based community awareness and participation, aimed
at promoting principles of democracy, transparent and accountable government;
Restructuring: To enhance the effectiveness of local government authorities (LGAs)
in delivering quality services in a sustainable manner;
Finance: To increase the resources available to LGAs and improve the efficiency in
their use;
Human resource development: To improve accountability and efficiency of human
resource use at LG level;
Legal component: To establish an enabling legislation to support the effective
implementation of local government reforms; and
Programme management: To support the effective and efficient management of the
overall reform programme.6
The local government reform programme brought some phenomenal changes in the planning
and the budgeting system. That is the reform brought on its trail a system of participatory
planning and budgeting implemented by the local authorities. The Opportunities and
Obstacles to Development (O&OD) is a planning method which was adopted in 2001 by
LGRP as a planning framework at local level for the whole country. It was first piloted in
2002 in some selected districts and subsequently adopted in many other districts. The
National Framework on Participatory Planning and Budgeting recognises O&OD planning as
an instrument for facilitating „bottom-up‟ participatory development. The Opportunities and
Obstacles to Development Methodology (O&OD) have some significant features and some of
these are:
• It has a positive outlook on the community, where the community is encouraged to
identify available resources to overcome obstacles, thereby fostering self-reliance;
• It defines participatory tools, which assist with the bottom-up planning process; e.g. a
village map, transect walk, historical time lines, seasonal calendar, institutional analysis,
5 Mmari D.M.S. 2005 Decentralisation for Service Delivery in Tanzania
6 Einar Braathen, Amon Chaligha and Odd-Helge Fjeldstad 2005 Local governance, finances and service
delivery in Tanzania -Joint Report 2005 NIBR/CMI/REPOA
4
daily activities calendar by gender, household wealth ranking, focus groups and
identification of sources of income and expenditure;
• It is a Planning Model, which enables the community to identify in a logical frame work
specific objectives, opportunities, obstacles, steps for implementation, etc;
• It helps members of the communities become aware of their own resources and how to
make better use of them; and,
• It helps in data gathering which is the basis of formulating the plans. During the process,
secondary data is collected from village registers, files and institutions.
Aside the participatory planning and budgeting mentioned above, the LGRP also covered
local government finance. The main objectives of the finance component under the LGRP are
to increase the overall resources available to local authorities and increase the efficiency of
their usage through changing the incentive structure of the existing intergovernmental fiscal
system. The government put in measures aimed at restructuring the conditional grants which
fund most local expenditures to reduce conditionality (i.e. the introduction of “block grants”.)
The other main reforms include increasing the proportions of shared revenues going to local
government; introducing supplementary intergovernmental transfers; improving local
revenue collections; improving local financial management through rolling out the Integrated
Financial Management/Accounting system and training local officials.
The discussion so far shows that local governance in Tanzania covers issues related to
citizens‟ participation in formulating and implementing plans for local development. Efforts
have been made to include citizens in the planning process. The process of fiscal
decentralisation also includes reforms of the fiscal system to improve:
Revenue generation;
Efficient use of resources for service delivery at all levels of Government;
Equity in access to services, through more equitable allocation of resources; and
Transparency and fairness in allocation.
1.2 Problem Statement and Objectives of the Study
Following from the above discussions, it can be seen that the government of Tanzania has
made tremendous efforts aimed at improving the local government system to ensure efficient
service delivery. Improving the local government system to ensure improved service delivery
cannot be possible without the active role of parliament. It has been recognised that while
local government authorities collect roughly 3-5 percent of all public sector revenues, they
are responsible for over 20 percent of public sector spending7. The government must involve
7 The United Republic of Tanzania 2006 Background Paper on Local Government Finance: The Framework for
the Financing of Local Government Authorities in Tanzania
5
the key stakeholders including parliament to address the challenges confronting the local
government system.
Parliament and for that matter Members of Parliament (MPs) have played key role in local
government administration through improving the legal framework, planning and budgeting,
as well as relaying information from the local level to the national level. With MPs dual role
of working on issues at the local level as well as national level, they are looked up to as
development agents at the local level. Further, successful implementation of development
programmes at the local level can enhance the fortunes of MPs when it comes to their re-
election. MPs are therefore key stakeholders at the local government level. The systemic
issues that hinder local governance to ensure improved service delivery for citizens need to
be unpacked and addressed. There is therefore the need to understand the budget process,
citizens‟ involvement, MPs role, and feedback mechanisms at the local level.
The study would among others seek to:
Provide an understanding of the budget process at the local level;
Provide an understanding of the processes of transfers for budget implementation at
the local level;
Assess the knowledge of citizens about programs/project being implemented in their
local assembly;
Assess the feedback mechanisms to budget/policy programming at the national level;
and,
Highlight the role of MPs in the budget process and ensuring citizen‟s participation.
1.3 Methodology
The study was a combination of desk study as well as collection and analysis of primary and
secondary data. Questionnaires were prepared and administered to relevant institutions and
stakeholders some of which were Ministry of Finance, Local Government Authorities, and
Civil Society Organisations. Focus group discussions were organised with citizens and citizen
groups. The study covered six districts in two regions. Constrained by time and other
resources the research team used purposive sampling to select the two regions namely Dar es
Salam which is the relatively endowed region and Coastal Region (Pwani) being the
relatively less endowed region. The choice of districts also considered the relative
resourcefulness of districts. The districts in these regions visited were Ilala, Kinondoni,
Temeke, Mkuranga, Bagamoyo and Kibaha.
1.4 Limitations of the Study
From the methodology above, it could be observed that the research team covered six out of
the over one hundred and twenty districts. Given the narrow scope of the data gathering,
readers are cautioned not to not generalise the findings as there may be peculiar issues in
other LGAs that may not have been captured. In spite of the above limitation most of the
issues cut across districts.
1.5 Structure of the Report
The first part of the report focused on the background, objectives, and limitations of the
study. Section two looks at the legal framework and budgeting process in Tanzania, while
6
section three considers local government finance in Tanzania. Section four touches on issues
relating to budget implementation at the local level while section five finally brings out the
conclusion and recommendations.
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2.0 Legal Framework and Budgeting Process in Tanzania
2.1 The Legal Framework for Budgeting at both Central and Local Level The budget process is governed by a number of laws and policies. Understanding these laws
and policies is important as the legal framework lays out in detail the roles and
responsibilities of various government bodies while the policy framework clearly outlines the
government‟s long-term goals. The legal framework of the budget involves administrative
regulations which regulate the budget format, timing and procedures as well as the allocation
of formal powers and responsibilities and rights in the budget cycle or process
2.1.1 Legal basis for the budget
The legal basis for the preparation of budgets and the assignment of responsibilities to
various actors in Tanzania includes the following provisions:
a) The Constitution
Chapter 7 of the Constitution of the United Republic of Tanzania (1977) outlines the
legislative function and the role of various bodies involved in the management of public
finances, specifically Parliament (the Legislature), the President (the Executive) and the
Controller and Auditor General (CAG).
b) The Public Finance Act,
The Public Finance Act covers all the four stages of the budget process. Section 18 of the Act
has the following provisions.
(1) Subject to Article 137 of the Constitution, the Minister shall cause to be prepared and laid
before the National Assembly as soon as practicable before the commencement of each
financial year:
(a) estimates of the revenues, expenditure and financing requirements for the Government of
Tanzania for that year;
(b) for each vote of expenditure a statement of the classes of outputs expected to be provided
from that vote during the year and the performance criteria to be met m providing those
outputs.
The Act also covers the preparation and examination of accounts; and, audit of public
authorities and other bodies.
c) The Public Procurement Act, 2004
The Public Procurement Act, 2004 sets out rules and procedures for the procurement or
purchasing of goods and services. This Act replaced the Public Procurement Act, 2001 in
order to improve the regulation of public procurement by establishing the public procurement
regulatory authority, tender boards, the principles and methods of purchasing goods and
services, and dispute settlement. The act was also updated in 2005 to outline specific
guidelines for the selection, recruitment and payment of consultants.
d) The Annual Appropriation Act
8
The Annual Appropriation Act gives the Minister of Finance the authority to appropriate, or
obtain funds from the Consolidated Fund to cover spending by central and local government,
departments, and agencies. The Act also gives the power to Minister of Finance to borrow.
The Act states „the powers conferred upon the Minister by this section shall be in addition to
the powers of the Minister under the Government Loans, Guarantees and Grants Act, 1974‟.
e) The Annual Finance Act
The Annual Finance Act grants powers to the Minister of Finance to impose taxes. The
Annual Appropriation Act gives the Government authority to appropriate, or obtain funds
from the Exchequer Account to cover spending by central and local government,
departments, and agencies. The Act also allows the Minister of Finance to allocate money
from the Consolidated Fund to individual votes. This act grants powers to the Minister of
Finance to raise money by imposing taxes to raise funds to finance the budget. The legal base
has four fundamental principles and these are:-
No tax shall be imposed and no money shall be spent without the authority of the
National assembly;
Expenditure shall be made only for purposes authorized by Parliament;
There shall be a single fund known as the „Consolidated Fund' for receiving and
recording all revenues and expenditures, unless otherwise directed by Parliament; and
All moneys spent from the Consolidated Fund must be accounted for before
Parliament.
f) The Local Government Finance Act, 1982 (as amended in 2000) sets out requirements
for Local Government Authorities to meet while drawing up their annual estimates of
revenue (income) and expenditure (spending). This Act, along with the Local Authority
Financial Memorandum, 1997, require each council to advertise in the media and/or post
information on the council notice boards key information including: receipts of funds from
the government, expenditure statements, budgets and signed audited accounts, tender
advertised, as well as allowing the public to attend the full council meetings.
A number of taxation acts govern the way in which the government raises domestic revenue;
these are shown in the box 1 below.
Box 1 Tanzania Taxation Acts
Box 1. Tanzania Taxation Acts
The Excise (Management and Tariff) Act, 1952
The Hotels Act, 1963
The Airport Service Charges Act,1962; Port Services Charges Act, 1972;
The Motor Vehicles (Tax on Registration and Transfer) Act, 1972; The Foreign
Vehicles Transit Charges Act, 1995;
The Stamp Duty Act, 1972;
The Road and Fuel Tolls Act, 1985;
The Vocational Educational and Training Act, 1994;
The Tanzania Revenue Authority Act, 1995; The Tax Revenue Appeals Act,
2000;
The Value Added Tax Act, 1997;
9
The Land Act, 1999;
The Pools and Lotteries Act, 1963; The Gaming Act,2003;
The East African Community Customs Management Act, 2004;
The Income Tax Act, 2004
f) The Public Audit Act, 2008
The Public Audit Act intends to strengthen and increase the independence of the Controller
and Auditor General (CAG). It includes a provision requiring the CAG‟s budget to be guided
by the advice of the Public Accounts Committee, rather than determined by MOFEA alone.
With this act being in place, the CAG can undertake his own recruitment rather than
acquiring an approval from the Ministry of Finance and Economic Affairs8
2. 2 The Budget Process in Tanzania The budget process is about the annual budget cycle events and activities. Essentially it
involves the determination of resources and their uses for attainment of government
objectives. A sound budget serves as a tool for economic and financial management and
accountability and also serves as a mechanism for allocation of resources among different
needs and priorities as well as bringing economic stability and growth. Key players in the
budget process have been the Ministry of Finance; Planning commission; Public Expenditure
Review (PER) Working Groups; and the Sector or Line Ministries. Other key players include,
the Prime Minister‟s Office; Local Government; Non State Actors -NSA (NGOs, CBOs, and
the private sector); the cabinet and; the Parliament.
The Constitution of the United Republic of Tanzania accords each Local Government
Authority in Tanzania (Mainland) the status of government. This means that each local
government or council can raise funds for meeting costs of delivery of public goods and
services including financing development projects. Further a local government should have
and manage its own staff who should be accountable to it, and it should also have means of
enforcing their decisions and resolutions as well as the relevant laws and bylaws.
Local government authorities have powers to levy and collect taxes, fees and charges. Indeed,
the Local Government Finances Act No. 9 of 1982 requires the local government authorities
in Tanzania Mainland to levy taxes and other types of revenues, which will be sufficient for
meeting approved expenditure. This is a basic responsibility given to all the councils in
Tanzania.
The budget process involves stages shown below:
Budget Formulation
Scrutiny of Budget Proposals and Dialogue
Budget Execution
Budget Monitoring and Control
8 URT (2010): Medium term Expenditure Framework 2011-2013
10
2.2.1 Budget Formulation
Budget estimates are formulated in line with detailed macroeconomic forecasts on future
growth, inflation and external sector (import) trends. Donor/Government Consultations assist
the budget process by confirming donor financial commitment in the budget. These
discussions take place between Ministry of Finance (MoF)/sectors and Development partners.
Once the macro-policy and sectoral performance review and resource projections are
completed, the government then formulates goals, objectives and budget priorities which
should be achieved in the forthcoming financial year. The budget frame is also formulated
using Medium Term Expenditure Framework (MTEF) – a three-year budgeting approach.
This is prepared by a Committee which comprises representatives from the Ministry of
Finance, Planning Commission, Prime Minister‟s Office, Civil Service Department and
Regional Administration and Local Government, and which forms the basis of the budget
guideline.
Preparation of the budget begins with the issuance of national planning and budget guidelines
around December each year. The guidelines provide a review of the performance during the
just ended financial year and serve to inform Ministries, Independent Departments, Executive
Agencies, Regions and Local Government Authorities about the priorities of the Government
as spelt out in the sector policies. The guidelines also include information to councils about
levels of funding by way of grants for the ensuing year. The guidelines which are prepared by
the Ministry of Finance in collaboration with the planning commission and with close
involvement of the ministry responsible for regional administration and local government
briefly recap the sector policies and point the area which should be accorded priority in the
allocation of resources in the coming year.
The local government planning and budget cycle requires planning to start at the lowest level
of the local government hierarchy passing the various stages before final approval. This
means that the bottom-up planning approach should be emphasized. By using this approach it
is possible to ensure that people‟s priorities and felt needs are captured in the course of
developing the council‟s annual plan and budget, and that the approved plan and budget
continue to reflect those priorities and needs as perceived by the people themselves.
On receipt of the budget guidelines, the ministry responsible for local government both at
national and regional levels sets about clarifying the issues which are relevant to local
government authorities and provide guidance on how they should treat them in their plans
and budgets. This arrangement serves to obviate numerous and possibly conflicting
instructions being sent out to the local government authorities by the various sector ministries
whose policies are being implemented by the local government authorities. As a matter of
procedure, with the exception of technical matters, for all other issues, sector ministries
should get their instructions to local government authorities through and with the facilitation
of the ministry responsible for local government.
The Budget Guidelines contain:
An overview of macroeconomic performance and projections;
Priority sector MTEFs (prepared by Sector Working Groups in the Public Expenditure
Review process);
Vote expenditure ceilings based on resource availability; and
Procedures for preparation and submission of the draft budget to the Ministry of
Finance.
11
2.2.2 Scrutiny of Budget Proposals and Dialogue
i) The Inter – Ministerial Technical Committee (IMTC)
The Inter – Ministerial Technical Committee (IMTC) is a committee of all Permanent
Secretaries which has a role to scrutinize budget proposals before they are finally approved
by the cabinet. To facilitate the discussions, the MoF prepares a draft cabinet budget paper
that covers the budget frame, the financial demands after dialogue with MDAs, the
government priorities and financial implications. After a thorough review, IMTC may require
the MoF to make further technical improvements on the paper or put up recommendations for
consideration by the Cabinet.
ii) Cabinet approval of Estimates.
The Cabinet budget paper is then discussed by the cabinet after preliminary review by IMTC.
The role of the cabinet is to deliberate on the budget cabinet paper and then approve
government budget proposals for fiscal year in question before they are submitted to the
legislature.
iii) Parliamentary Sector Committees
The process of obtaining Parliamentary authorization starts with discussions by Sector
Committees; Preliminary briefs are provided by the Minister of Finance, MDA's detailed
budgets are then submitted to Parliamentary committees for scrutiny one by one.
iv) Public Debate and Authorization
After the Estimates have been reviewed by the sector committees of the Parliament, they
have to be tabled to parliament for debate and authorization. The major events during
Parliamentary debate and authorization of the government‟s budget are as follows:-
Presentation of a Public Speech on macroeconomic performance and projections by
the Minister for Finance;
Presentation of the government budget proposals to Parliament by the Minister for
Finance through a budget speech;
Parliamentary debates/discussions on sector estimates submitted by each minister
responsible;
Parliamentary approval of estimates by passing the Appropriation Bill; and
Parliamentary approval and passing the Finance Bill that empowers the Minister for
Finance to raise the money and finance the budget.
2.2.3 Budget Execution
Budget execution is an important stage of the budget process as it is at this stage that actual
revenue collections and service delivery takes place. Execution of the budget therefore is
about the collection and accounting for revenue, provision of services through the recurrent
budget and implementation of development projects. The key documents used during
implementation of the budget are Revenue and Expenditure estimates books, action and cash
flow plans and budget memorandum. Main activities are:-
Release of funds by the MoFEA;
Collection and accounting for revenue collections by Tanzania Revenue Authority
(TRA) and other MDAs. Accounting officers are appointed as receivers of revenue
and accountable officers for expenditure in accordance with the Public Finance Act,
2001;
12
Delivery of services and project implementation by institutions. This involves both
government institutions and Development Partners. Donors are required in some cases
to release funds and award of contracts;
Maintenance of proper Accounts for control and Accountability;
Reporting on budget performance (both financial and physical) and evaluation;
Project inspection and expenditure monitoring; and,
The Ministry of Finance publishes quarterly Budget Execution Reports to maintain
transparency on actual use of public funds in line with the budget estimates approved
by Parliament.
2.2.4 Budget Monitoring and Control
Budget monitoring, control and evaluation are necessary for closer supervision of work
programs and projects. This involves a continuous monitoring of the plans and budget in
order to identify achievements and bottlenecks. Basically, monitoring, control and evaluation
focuses on:-
Accountability – to ascertain appropriateness of expenditure and revenue and their
conformity to the authorities through financial reports; and,
Management assistance – for providing management with information on
performance.
Mechanisms for control and monitoring
Periodic reporting and follow up. Specific formats have been issued for budget
monitoring and follow up;
Internal Audit;
External Audit;
Parliamentary control;
Budget Review and Adjustments; and,
Project inspection.
However, the overall control and monitoring of public expenditure is now affected largely
through an Integrated Financial management System (IFMS). This is a computerized system
which links up most of the government paying stations in Dar es Salaam. Therefore most
payments are centralized and controlled. Hardly expenditure or commitment can be incurred
without financial provision from IFMS. Major outputs from IFMS include:
Monthly flash reports on revenue collections and expenditure;
Quarterly and annually performance reports;
Control of excess spending beyond approved budgets;
Specific reports based on user requirements; and,
In addition to IFMS there are sub-treasuries in all the regions for processing payments
from decentralized government Ministries and Regions. Efforts are underway to
establish sub-treasuries in all the Regions.
13
2.3 Connection between Central and Local Government Cycles The plans of villages and urban neighbourhoods are consolidated and coordinated by the
Ward Development Committee (WDC) which handles 3 – 5 villages or neighbourhoods.
The process of integration is further strengthened as more informed technical input is
provided to the plans since it is at this level that sector representatives are found. Informed
about the priorities and felt needs of the people, the WDCs prepare and submit to the District
or Urban Authorities the Ward plans which indicate the expected sources and levels of
funding. Ideally, indicative levels of funding from the council should be made available to
enable preparation of realistic plans and budgets at sub-council levels. However, it is not
always possible to follow this elaborate procedure because the information regarding levels
of funding is received by the council rather late. So, in most cases it ends up being a hurried
exercise which limits the desired benefits.
The consolidated and integrated ward plans are submitted to the District or Urban Council as
the case may be. These plans are integrated with the projects which are developed at
district/urban council level and discussed by the respective sector standing committee of the
council. The council executives prepare a draft council plan and budget and submit them to
the respective Regional Secretariat whereby sector representatives scrutinize the draft plan
and budget with the aim of establishing that sector policies as contained in the planning and
budget guidelines have been adhered to. The Regional Secretariat provides written comments
and advice on how the council plan and budget can be improved upon.
The Council Director convenes a meeting of the council which is responsible for finance and
planning whereupon the draft council plan and budget are tabled indicating how the
comments and advice received from the Regional Secretariat have been dealt with.
Finally, the draft budget is submitted to the District/Urban where it is discussed and passed at
least a month before the beginning of the financial year. The council plans and budgets in the
region are supposed to be consolidated into a regional plan and budget before submission to
the ministry responsible for local government for further consolidation and later submitted to
Ministry of Finance for inclusion in the Government Budget for Parliament approval.
Following changes that were made to the Local Government Finances Act No. 9 of 1982, the
central and local government financial years are now harmonized; they now run from July to
June. This means that the timing for the various stages in the preparation of the council plan
and budget such that they are passed by end of May.
2.3.1 The Link between Budgeting and Planning
The Budget is regarded as a tool for strategic resources allocation according to the existing
plans; resources allocation in Tanzania is guided by: The Medium Term Expenditure
Framework (MTEF), Strategic Plans and NSGRP (MKUKUTA) and Cluster interventions
also play a role as instruments to guide resource allocation, these plans ensure that there exist
appropriately sequenced stapes and properly timed resources in order to provide adequate
linkages and synergies among them. Preparation of the Budget Guidelines is guided by the
Vision 2025, MTP and NSGRP and inputs from PER process. The Plan and Budget
preparation allocation stages are summarized hereunder (URT 2005):
i. The Annual Plan and Budget process begin with the macroeconomic and sectoral
performance reviews. PER Working Group‟s outputs provide basic data and
information used in reviewing budget performance and in the preparation of the
Budget Guidelines;
14
ii. The second stage is projection of economic growth and identifying key macro-
economic and sectoral policy commitments with the view to determining a pool of
resources (both external and internal inflows) expected to be available in the
upcoming budget year and the other two following outer years;
iii. The third stage entails identification and linking of MDA‟s, Region‟s and Local
Government Authorities strategic/medium Plans with overall Medium Term Plan
objectives, NSGRP interventions, and Government policy commitments to ensure
their consistency; and
iv. The fourth stage involves costing of strategic sectoral planned activities consistent
with NSGRP Cluster interventions and then applying MTEF process to integrate
NSGRP Cluster interventions with budget activities and to link the activities with the
resource allocation as well. This activity includes preparation of the annual budget by
all MDAs.
Given the cluster dimension and outcome based NSGRP, the resource allocation process has
posed new challenges. To respond to these challenges, a software was developed to facilitate
resource allocation to the NSGRP clusters and strategies or outcomes. The developed
software namely “Strategic Budget Allocation System (SBAS)” is in two versions:
The first version is SBAS Micro; which is used by MDA‟s in outlining resource
requirements to implement NSGRP cluster strategies (targets); and,
Data from SBAS Micro is imported into SBAS Macro Version, which is used by the
centre to analyse and allocate resources to NSGRP cluster strategies and the
remaining MDAs requirements.
2.3.2 Criteria for Strategic Budget Resource Allocations among Clusters
Prioritization and sequencing of NSGRP (MKUKUTA) interventions is based on the
following considerations: the on-going programmes/activities that were initiated by original
NSGRP (MKUKUTA); new strategies that builds on ongoing activities; strategies that have
multiple effects, that is, strategies covering more people, larger or more issues; strategies that
address more than one outcome; strategies that contribute to implementation and capacity
development; strategies that address the regional imbalances; and strategies for
mainstreaming crosscutting themes. Mindful of the considerations above, the NSGRP and the
proposed interventions by actors under each cluster: Growth and reduction of income poverty
(cluster1); Improvement of life and social well being (Cluster II; and governance and
accountability (Cluster III). These clusters have been assigned relative weights to guide
resource allocation during the budgets process.
15
3. 0 Local Government Finance
Talking about local government finance, the two areas are revenue and expenditure. This
section will look at some of the areas that local government revenue and expenditure touch
on. Some of the issues that will be discussing in this section will provide the basis for the
next section.
3.1 Local Government Revenue On revenue, the Local Government Finance Act No. 9, 1982 defines the revenue sources of
local government authorities. It differs for urban authorities, district councils, township
authorities and village councils. The local government authorities have powers to tax and set
rates for levies, fees and charges by making by-laws prescribing them. The contents of the
by-laws have to be set within the limits defined by the Minister responsible for local
government in consultation with the Minister for Finance.
The local government authorities‟ sources of revenue consist of:
Local government authorities‟ own source resource collections
- Fees including taxi registration, bus stands, forestry products, valuation,
scaffolding, inoculation and ambulance;
-Licences including road, liquor;
-Property taxes and rents;
-Charges including for refuse collection, cess, hire of vehicles, markets;
-Fines; and,
-Others including sale of assets and recovery of public fund
Intergovernmental transfers including: -Formula-based recurrent sector block grants;
-Subventions and funds (e.g. sector basket funds); and,
-Development grants (e.g. LGCDG)
Local borrowing
Table 1 below lists these sources.
Table 1 LGA Local Source of Revenue (Own sources of Revenue)
LGA SOURCES OF REVENUE
1 Taxes on property
• Property rates
6 Motor Vehicles
• Vehicle license fees
• Fishing vessel license fees9
2 Taxes on Goods and Services 7 Goods, Permission to Use Goods
9 PEFA Report, 2006
16
• Crop cess (max. 5% of farm gate price)
• Forest produce cess
• Forest produce license fees
• Building materials extraction license
• Hunting licenses fees
• Muzzle loading guns license fees
• Scaffolding/Hoarding permit fees
3 Taxes on Specific Services
• Guest house levy
8 Turnover Taxes
• Service levy
4 Taxes on Goods and Services
• Crop cess (max. 5% of farm gate price)
• Forest produce cess
9 Entrepreneurial and Property Income
• Dividends
• Other Domestic Property Income
• Interest
• Land rent
5 Business and Professional Licenses
• Commercial fishing license fee
• Intoxicating liquor license fee
• Private health facility license fee
• Taxi license fee
• Plying (transportation) permit fees
• Other business licenses fees
10 Other Local Revenue Sources
• Administrative Fees and Charges.
Fines, Penalties and Forfeitures
NB: LGAs are not allowed to levy any taxes, levies or fees which are not on this list.”
3.2 Transfers and Grants from Central Government
Intergovernmental transfers can be defined as funding received from other levels of
government (typically, the central government). These transfers include recurrent sectoral
block grants, sectoral basket funds and ministerial subventions, as well as local capital
development grants. Recurrent block grants account for about two-thirds of all
intergovernmental transfers. Recurrent block grants and local capital development grants are
supposed to be formula-based and disbursed directly from the Treasury to LGAs, whereas
most basket funds and subventions are more discretionary in nature and disbursed indirectly
to LGAs by line ministries
17
Intergovernmental transfers fund roughly 90 percent of all local government spending, while
local governments' own source revenues (including local rates and other locally collected
revenue sources) account for approximately 10 percent of local financial resources. Local
borrowing only accounts for approximately 0.1 percent of local spending. For example in the
2010/2011 Government budget, local authority‟s budget allocation was 90 % of their entire
budget. The aggregate local government allocation was Tshs 1,759,114 million (equivalent
US$ 1,172.7m) while own sources was Tsh.172,582 million (equivalent to US$ 115.05m)
As with the central government, LGAs receive funds from a number of different sources. The
vast majority of funding comes in the form of transfers and grants from the central
government through a number of different channels, which are outlined below. In addition, a
small proportion of LGA funds come from local tax revenues (also called “own source
revenues”). A very small amount (0.1%) comes from LGA borrowing. Finally, an important
contribution is made by community members themselves towards the capital cost of new
investments, such as classrooms.
3.2.1 Recurrent block grants
Each LGA is allocated a certain amount to cover recurrent costs (salaries and operating costs)
in each of the key social sectors (health, education, rural water, agriculture and roads), as well
as a general purpose block grant to cover general administration costs. The size of these
block grants is decided by formula, linked largely to the size of population and to sector-
specific criteria such as the number of school-age children or number of people without
access to clean water. Salaries for teachers and health workers are paid from these grants.
There are some conditions for what this money can be spent on – for example the road block
grant can only be spent on maintaining existing local road networks, and the rural water
supply block grant cannot be spent on the running costs for rural water schemes. On average,
recurrent block grants provide just over 60% of each LGA‟s annual budget.
3.2.2 Sector Basket Funds and Subventions
These funding channels provide additional recurrent funding for key sectors direct from the
respective ministries. The Agriculture Sector Development Programme (ASDP) and the
Health Sector Basket Fund (HSBF) both provide funds to supplement the agriculture and
health block grants, TACAIDS provides funding to all councils for HIV/AIDS-related
expenditure, and selected councils get additional funds from the Global Fund. Finally, 30%
of the road fund is distributed to councils for maintenance of local roads. In total, these
basket funds and subventions provide an average of 8% of each LGA‟s annual budget.
3.2.3 The Local Government Development Grant System (LGCDG)
The Local Government Development Grant System (LGCDG) grant is designed to provide
LGAs with a significant and predictable amount of funding to spend on development (new or
rehabilitated infrastructure) according to local priorities. The council can decide whether it
should be spent on new classrooms, health facilities, rural water schemes, new roads, etc., in
line with priorities put forward by the community through the Opportunities and Obstacles to
Development (O&OD) process. It is allocated by formula, linked mainly to the size of the
local population, but only LGAs that meet certain criteria are eligible. (See below for more
details of these criteria.) In addition, all LGAs are allocated a capacity building grant (CBG)
that can be spent on activities to build their capacity so that they do meet the LGCDG‟s
eligibility criteria. From 2008/09, the primary education, water and agriculture sectors now
18
channel funding for their specific sectors through the LGCDG mechanism, with a certain
amount of funding earmarked for those particular sectors, respectively. On average, the
LGCDG system provides 17% of each LGA‟s annual budget.
In addition to development transfers under the LGCDG System, LGAs receive a variety of
the development grants limited to specific regions (area-based programmes), sectors and
purposes. These include some transfers such as the PADEP (Participatory Agriculture
Development Empowerment Project), DASIP (District Agriculture Sector Investment
Project), UDEM (Urban Development and Environmental Management), Participatory Forest
Management (PFM) / Sustainable Wetland Management (SWM) Grants, district and village
transportation grants (LGTP/VTTP), Council Premise Development Grant, and the UNICEF
support for Social Planning and Budgeting, among others. The grants provide an average of
5% of each LGA‟s budget.
The LGCDG annual assessment process measures all LGAs against two sets of criteria,
known as the Minimum Conditions and Performance Measures, both of which judge the
LGA‟s performance in financial management, planning and budgeting, procurement,
transparency, and monitoring and evaluation.
These assessments can make a big difference to how much money an LGA has available for
development. LGAs that fail to meet the minimum conditions do not receive the main Capital
Development Grant, which represents approximately 70% of the funds LGAs have available
for development. In 2008/09, 5LGAs failed to meet these criteria. The most common reasons
for LGAs failing to meet the minimum conditions are that they failed to submit financial
reports, lacked internal audit capacity, were given adverse audit reports in the Controller and
Auditor General‟s (CAG) annual audit, or had other financial irregularities. The performance
measures can reward well-performing LGAs with a 20% increase in their LGCDG allocation,
but can also punish poorly performing LGAs with a 20% reduction. In 2008/09 42 LGAs
received this bonus and 9 received a reduction. The +- 20% bonus/penalty system is under
review with some adjustments expected from 09/1010
.
3.2.4 The Constituency Development Fund (CDF)
The Constituency Development Fund (CDF) was established in Tanzania in 2009 and
allocated to it in the 2010/11 budget, and there have been a strong debate on the effectiveness
of this funding mechanism as the fund will be administered by the parliamentarians who are
also overseers of the all public funds, hence this may pose a challenge for conflict of interest
as they will be the spending agent and at the same time being an accountable unit. The CDF
provided additional resources for development at the local level by channelling money to
constituencies under the management of Members of Parliament. The CDF would thus
supplement the existing funding mechanisms for local government as it will be taken from
other sources to CDF
Funding Mechanism for CDF
The CDF is allocated in the budget of every financial year and after parliamentary approval,
the funds are disbursed to the constituencies to be spent on development projects as identified
and prioritized by local citizens. Every constituency receives funds whose exact amount is
based on a formula that includes factors like population and size of the constituency CDFs
10
URT (2005): Medium Term Strategic Planning and Budgeting Manual
19
are typically managed by committees comprised of the area Member of Parliament (MP) and
members nominated and elected by the residents of that constituency. In some instances, the
MP is the chairman of the committee and thus also the chief accounting officer of the CDF.
The CDF committee is responsible for overseeing the management of the CDF. It plays a
supervisory role and remains directly accountable to the CDF chairperson and citizens of the
area.
The CDF committee mobilizes local residents to identify community needs and priorities and
propose projects to address these community needs. The committee then reviews and
approves development projects for funding under the CDF. A CDF can contribute to speeding
up development at the local level. However, the challenges facing its implementation – see
box below – make it a highly risky venture for government to undertake. Further, evidence
from previous studies like PEFAR indicates that the poor quality of service delivery at the
local level is not due to lack of funding, but more to poor capacity, political interference, low
civic competency etc. The establishment of a CDF is likely to make this situation worse
rather than better.
3.2.5 Tanzania Social Action Fund (TASAF)
The Tanzania Social Action Fund (TASAF) is a joint Government and World Bank program
designed to provide funding for local infrastructural projects, and small temporary
employment. The Public Works Programme provides cash transfers through short-term
employment for public works at a wage rate set at 20% below the market casual labour rate –
for example, rehabilitating a stretch of road. Community Development Initiatives support the
implementation of sub-projects to improve social services, such as building schools or
improving water. Finally, the Social Support Programme provides grants to vulnerable
groups such as disabled, aged, etc. – for example training physically disabled people in bee
keeping, poultry farming and financial and business management skills. TASAF has been
billed as a means of furthering decentralization reforms, by giving more money and decision-
making power to people at the local level.
3.2.6 Community Contributions
For development expenditure in many sectors, and all expenditure under the LGCDG system,
a financial contribution from the community itself is required. Depending on the type of
infrastructure, this can range from 2.5% to 3.0% of the total cost, but is generally set at 5%.
These contributions are seen as important for sustainability – that when community members
themselves have paid for something, they will feel a sense of ownership of the new facilities,
and will therefore maintain them more effectively. These contributions are a common source
of contention at community level, particularly when community members are forced to
contribute towards the costs of new infrastructure that they did not prioritise. They can also
provide an opportunity for wealthy benefactors to develop patronage networks – a local
politician may cover a village‟s full contribution in order to gain popularity. This situation
undermines the justification for the contributions, and creates an obstacle to less wealthy
members of society who want to enter politics.
3.3 Local Government Expenditure On expenditure, the Local Government (District and Urban Authorities) Acts spell out the
functions and expenditure responsibilities of local government authorities in Tanzania. The
20
Acts contain a list of functional responsibilities and public services to be provided by district
and urban authorities, respectively. The current expenditure assignments contained in the
Local Government Acts are generally consistent with the concept of subsidiarity. In view of
the fact that the public sector is not static, the executive has the power to regularly review the
portfolio of central public expenditure responsibilities and consider whether any of these
public services could be delivered more efficiently and effectively at the local government
level. The different types of services or activities that may take place at the local level are
summarised in table 2 below.
Table 2 The assignment of expenditure responsibilities in Tanzania
Table 2
The assignment of expenditure responsibilities in Tanzania
Type of local government
function
Local government activity
Concurrent functions: locally
provided “national” public services
Primary education
Local health services
Agriculture extension and livestock development
Water supply
Local roads and works
Exclusive local government
functions
Street cleaning
Local parks
Local markets
Et cetera
Local government administration Council operations
Local planning
Local financial management
Village and Mtaa administration
Et cetera
Delegated central government
functions
Outbreaks of infectious diseases
Et cetera
Source: The United Republic of Tanzania 2006 Background Paper on Local Government Finance: The
Framework for the Financing of Local Government Authorities in Tanzania
21
4.0 Budget Implementation at the local level
Budget implementation at the local level in Tanzania to some extent can be said to be plan
implementation. Parts of the plans are extracted for implementation on annual basis for
inclusion in the budget. Budget implementation varies from district to district depending on
resource availability, information flow, and commitment on the part of officials at the local
level to ensure the budget inure to the benefit of the people. Though most of the officials at
the local level interviewed mentioned that the citizens as one of key stakeholders in the
budget process, it the officials at the local level (staff of the LGAs, ministries, departments,
and agencies) that play key role in the budget implementation. Citizens in some way
contribute toward budget implementation but over the years the contribution has been
reducing.
4.1 Planning and Budgeting Respondents mentioned that every public institution in Tanzania prepares a strategic plan,
formulates it objectives, set targets and action plans. The objectives cover both recurrent and
development budget. Staff at the local level confirmed that they use O/OD mentioned in
section 1 earlier for preparing their plans.
Policy formulation is undertaken at the national level by the various sectors. Policy priorities
identified by the sectors help guide the LGAs in their plan preparation. Other documents that
guide LGAs to set priorities are Ruling Party Manifesto, Presidential address, guidelines from
the Prime Minister‟s Office Regional Administration and Local Government (PMO –
MORALG), and Millennium Development Goals (MDGs). Ministry of Finance also plays
some role in the LGAs by ensuring that plans are prepared; budgets are within the ceilings;
budget implementation is followed according to plan; funds are disbursed to LGAs; monitor
LGA expenditure (expenditure tracking); and ensures LGA budgets are carried out according
to established procedures. MOF capture citizens view in the budget through the LGAs as
their budget process accommodates citizens‟ participation. There is also annual meeting of
non state actors on general budget support reviews where views from non state actors and
citizens could be obtained.
Heads of departments at the LGAs play key role at the local level plan preparation by
ensuring that the district plans are in line the district plans policy requirements of sectors. The
formal planning channels to gather views for the LGAs plans start from mitaa (street) or
village level through ward level to the council level. At the lower level planning process
includes formal meetings from Mitaa to WDC and then to Council. At council level all plans
from Wards are merged to form Council budget which is discussed by councillors at various
formal meetings representing the citizens. At the initial stage of project identification through
O & OD participatory planning methodology and at WDC are represented by Mitaa
Chairpersons and Ward councillor. The budget process at the local level has been described
as bottom –up approach. Citizens‟ needs are somehow reflected in the local government
budget right from Mitaa (street) level through to the national level.
22
Extension officers, Mtaa committees, and Ward committee are structures at the lower level to
ensure citizens‟ needs are reflected in the local level plans and budgets. In spite of the bottom
up approach to planning and budget, the timing of the budget is elusive to many people. One
of the solutions is putting the budget cycle and the timeframe on the notice boards or
disseminating it widely to the citizens.
The formal budgetary channel to address citizen‟s needs in Tanzania is shown in fig 1 below.
Fig 1 Formal budgetary channel to address citizen’s needs in Tanzania
Priorities in the plans at the local level are informed by
- community priorities;
- government directives and guidelines;
- donors guidelines;
- sectoral policies; and
- councils‟ priorities.
Successful formulation of local government plans hinges immensely on the quality of
facilitators carrying out O/OD as well as the level of involvement of the various stake
holders. To address the issue of quality some staffs at the local level have been trained on
O/OD. Selecting people who represent the various citizen groups is quite tedious. If the
planning process is not broad enough to include the different citizen groups the plan is not
likely to reflect the various groups in the society.
4.2 Role of parliament Article 145 (2)of the Constitution of the United Republic of Tanzania specifies that
“Parliament or the House of Representatives as the case may be, shall enact a law providing
for the establishment of local government authorities, their structure and composition,
Mitaa
Assembly
Council’s Full
Council Meeting
Ministry of
Finance
BUNGE FOR
APPROVAL
Advisory
Regional
Secretariat
Committee
Councillors’
Standing
Committees
Ward
Development
Committee
Council
Sectoral
Department
Council
Management
Team
MPs
23
sources of revenue and procedure for the conduct of their business.” The main
responsibilities of Parliament in relation to the budget process are to:
scrutinize the budget through the various standing parliamentary committees;
adopt/reject the budget in Parliament;
monitor the implementation of the budget and the performance of the MDAs; and
oversee the use of public funds.
Since the local government votes feature prominently in the national budget, the national
parliament therefore exercises some authority over local government budget. Parliament also
has some authority over the central government‟s formula based intergovernmental grant
transfers, while allowing each local government the discretion to allocate their resources
within their respective budget envelopes determined by the grant formulas.
On oversight, the constitution authorizes the Controller and Auditor General (CAG) to assist
Parliament in its oversight role over the budget and spending processes. CAG should
determine and report on whether the use of public funds by MDAs complies with the relevant
laws and regulation. MDAs must submit accounts and financial statements to the National
Audit Office (NAO) within six months after the end of the financial year. The CAG must
produce an annual consolidated audit report within nine months following the end of the
financial year. Thus, the CAG‟s report is to be submitted to Parliament by March 31 each
year and is to be tabled at the next parliamentary session. The Public Accounts Committee
and the Local Authorities Accounts Committee have responsibility for scrutinizing and
responding to audit reports by the CAG11
Members of Parliament play key role at the local government level as they are councillors in
LGA in which their constituency is located. Since MPs live in the constituency of the LGAs,
they have the opportunity to gather inputs from citizens and incorporated them in the local
government budget. In most of the LGAs, the research team was informed that MPs are
members of the planning committee who can bring their views to bear in the development of
the district. The planning committee is among one of the standing committees as shown in
Fig 1 above. The MPs do not only feature prominently in the standing committee but also the
full council meeting. They are the ones who approve the budget when it is sent to the
„BUNGE‟ –parliament. The role of MPs in planning and budgeting at the local government
level cannot be overemphasized.
The issue of capacity is crucial in ensuring that MPs play their role in budget oversight as
well as ensuring the interest of the people are reflected in the budget. Over the years, efforts
have been made to improve the capacity of Parliament and for that matter MPs to enable
them play their role effectively. For the capacity building to be relevant, it must be geared
specifically towards ensuring that budgets incorporate the interests of the people.
11 Oxford Policy Management (2005) Understanding patterns of accountability in Tanzania: Analysis
of values, incentives and power relations in the budget allocation process
24
MPs have the dual role of working at national level (including budgets) as well as local level
activities. Therefore aside capacity constraint, the time to fully assimilate the contents of
documents from the national level as well as local level to make meaningful contribution is
another challenge. At times MPs also get the documents late and there is not enough time to
go through the documents to make meaningful contribution.
4.3 Gender and Environment Gender and environmental issues have been mentioned as being cross cutting issues in the
planning and budgeting process at most of the LGAs but the way these issues are
mainstreamed in the plans and budget is difficult to ascertain. Some LGAs have gender
strategy that informs their work. There is also gender focal person at the MORALG who can
also ensure gender issues are captured in the budget process at the local level. On projects
relating to gender it was mentioned that the government is ensuring gender balance in
education. Other projects undertaken that have gender implications were provision of water,
health centres, bio gas, rural electrification, etc which relieve the stress on women who
struggle to access these facilities. It was also mentioned that during project identification
issue of gender is considered by creating the environment that enables both men and female
participate. Staffs at the local government level also alluded to the fact that representation of
disabled and other marginalized groups is taken care in planning and budgeting.
One of the comments from the staffs at the local government level was that, there have been
several initiatives on gender for them but none of consultants has been able to provide
meaningful framework to the local government institutions as to how to go about it. Some of
the staff want to get it clear on how to proceed with gender responsiveness; they want the
technicalities; they want to know how to disaggregate data, how to make plans and budgets
gender sensitive. They want capacity building in this area that will make them gender
responsive.
Aside the staffs at the local level, MPs and councillors need to have fair idea on genders
responsiveness. MPs and councillors can be change agents in promoting gender sensitivity
and responsiveness. They also need capacity building in this area that is geared towards their
role at the local level.
4.4 Own Source Revenue and Intergovernmental Transfers
From the discussion so far it can be ascertained that local government authorities in Tanzania
fund their expenditures from three main sources notably own source local revenues,
intergovernmental transfers, and local government borrowing. Own revenue are classified
into Property taxes, Land rent, Produce cess, Service levy, Guest house levy, Licences, Fees,
permits and charges, and Other own revenues. Intergovernmental transfers constitute bulk of
the revenue LGAs in Mainland -Tanzania. Fig 2 shows the relative shares of
intergovernmental transfers and own revenue for Mainland –Tanzania. About 94 percent of
the total revenue is intergovernmental transfers while only 6 percent in Own Revenue.
Fig 2 Intergovernmental Transfer and Own Revenues for Mainland Tanzania 2009/10 Q4
25
Despite the relatively low level of Own Revenues, the performance ratio12
looks promising
for all the LGAs in Mainland -Tanzania. From Table 3 the performance ratio in relation to the
budget is 90 percent. Produce cess13
and Service levy are the main components of Own
Revenue and these have performance ratio of 96.4 and 98.8 percent performance ratio in
2009/10 fiscal year.
Table 3 Total LGA Own Revenues for Mainland, Tanzania (in Tanzanian Shillings)
Budget item Annual budget plan Cumulative outcome Performance ratio (in percent)
Property taxes 10,905,966,630 7,579,584,184 69.5
Land rent 3,696,982,522 3,006,531,463 81.3
Produce cess 30,163,756,696 29,065,235,471 96.4
Service levy 24,026,220,954 23,737,095,040 98.8
Guest house levy 3,675,806,800 2,747,314,637 74.7
Licences 12,572,606,420 11,408,979,766 90.7
Fees, permits and charges
21,946,776,353 18,597,821,078 84.7
Other own revenues
23,899,211,938 21,640,944,706 90.6
Total Own Revenues 130,887,328,313 117,783,506,345 90.0
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
The performance ratios of some selected LGAs are shown in table 4 below. With some
revenue sources, the performance was 0 or less than 1 percent while in other cases the
12
The performance ratio indicates how budget implementation is performing when compared to the budget plan.
As such, the Performance Ratio is defined as (actual amount / budget amount) * 100%. If the budget is
executed exactly as specified in the budget plan, the performance ratio at the end of the fiscal year should equal
100% for every budget line. Likewise, if the budget is executed exactly as specified in the budget plan, the
cumulative performance ratio should equal 25%, 50% and 75% for Quarter 1, 2, and 3, respectively. Of course,
in reality differences may arise between budget plans and executed amount due to virements and other
budgetary changes. 13
Produce Cess is a revenue item (head) for all cesses and rates on crops, produce, and other agricultural
products.
26
collection has exceeded the budgeted amount. For example in Mkuranga the budget
performance for Fees and Charges is 3,681.1 percent. The wide variances could be due to
inadequate forecasting.
Table 4: Performance Ratios of some selected LGAs Own Revenues: (as percent of annual budget
plan)
Council Property taxes
Land Rent
Produce Cess
Service Levy
Hotel Levy
Licences Fees and charges
Other revenues
Kibaha TC 9.7 31.8 0.0 76.4 119.5 228.2 52.6 76.3 Kibaha 5.3 0.0 0.2 0.0 204.4 106.6 79.9 121.0 Bagamoyo 0.0 0.0 43.6 90.0 0.0 104.3 87.4 80.1 Mkuranga 0.0 0.0 68.1 0.0 199.7 69.5 3,681.1 131.3 Ilala MC 67.7 16.4 95.2 98.0 115.9 114.8 55.8 103.4 Kinondoni MC
86.3 0.0 0.0 88.5 99.1 79.7 152.6 235.0
Temeke MC
50.9 46.4 7.3 100.1 68.5 89.7 69.7 12.7
Mainland Total
69.5 81.3 96.4 98.8 74.7 90.7 84.7 90.6
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
The percentage of the various sources to total Own Revenue varies from LGA to LGA. For
example, Licences contributes about 91 percent of revenue own revenue in Kibaha, while
Service Levy contributes about 66.8 percent of total revenue. In Makete, Produce Cess
contributes about 65 percent of total Own Revenue but in Mkruranga other revenues
contributes about 69 percent of revenue. The percentages of Land Rent for the districts
below are below the average for the Mainland. Comparing table 4 above with table 5 below,
despite the high performance of Fees and Charges in Mkuranga the proportion of Fees and
Charges to total revenue is only 2.4 percent.
Table 5 Comparison of LGA Own Revenues for selected Districts for 2009/10
Council Property
taxes
Land
Rent
Produce
Cess
Service
Levy
Hotel
Levy
Licences Fees and
charges
Other
revenues
Kibaha
TC
0.8% 0.6% 0.0% 4.0% 0.4% 90.7% 1.2% 2.3%
Kibaha 0.1% 0.0% 0.0% 0.0% 15.9% 38.2% 15.9% 29.8%
Bagamoyo 0.0% 0.0% 2.7% 7.2% 0.0% 29.2% 44.0% 16.8%
Mkuranga 0.0% 0.0% 27.7% 0.0% 0.6% 0.2% 2.4% 69.1%
Makete 0.0% 0.0% 65.6% 0.2% 0.5% 9.9% 1.7% 22.1%
Ilala MC 16.3% 0.9% 3.8% 45.5% 2.5% 3.3% 15.1% 12.6%
Kinondoni
MC
13.6% 0.0% 0.0% 37.7% 4.3% 17.1% 14.8% 12.5%
Temeke
MC
11.3% 0.8% 0.0% 66.8% 1.8% 3.9% 13.5% 1.9%
Mainland
Total
6.4% 2.6% 24.7% 20.2% 2.3% 9.7% 15.8% 18.4%
Source: computed from data obtained from logintanzania.net
27
Intergovernmental transfers could be classified under three main headings, namely Recurrent
Block Grants, Sector Basket Funds and Subventions, Development Grants and Funds. In all,
the fund for Recurrent Transfers constitutes about 75 percent of total intergovernmental
transfers with 25 percent being Development Grants and Transfers. The share of recurrent
transfers and development grants is shown in fig 3 below.
Fig 3 Recurrent Transfers and Development Grants & Funds for Mainland Tanzania 2009/10 Q4
Table 6 provides the total Intergovernmental Transfers for Mainland, Tanzania for 2009/10.
The budget performance for intergovernmental transfers is relatively lower (80.5 percent)
than that of Own Revenue (90.0 percent). In spite of the low performance of
intergovernmental transfers, they play key role in LGAs finance since it constitutes bulk of
the funds at the local level. The performance ratio for Recurrent Block Grants is 80.6 percent,
while that of Sector Basket Funds and Subventions is 86.3 percent. The overall performance
of Recurrent Transfer is 81.3 percent, but the performance of Development Grants and Funds
is 78.3 percent relatively lower than the recurrent transfer.
Table 6 Total Intergovernmental Transfers for Mainland, Tanzania for 2009/10 (in Tanzanian
Shillings) Budget item Annual budget plan Cumulative outcome Performance ratio
(in percent)
Recurrent Block Grants
Education Grant 1,023,708,537,172 834,508,981,712 81.5
Health Grant 210,319,181,070 156,827,381,105 74.6
Agriculture
Grant
33,981,206,467 29,638,315,413 87.2
28
Roads Grant 17,248,968,464 15,652,655,026 90.7
Water Grant 19,618,584,495 15,411,867,670 78.6
General Purpose Grant
177,040,150,448 142,512,957,058 80.5
Total Grants 1,481,916,628,116 1,194,552,157,984 80.6
Sector Basket Funds and Subventions
Education Subv. 28,712,480,686 18,125,569,507 63.1
Health Subv. 69,213,023,631 67,169,508,112 97
Roads Subv. 38,219,531,744 33,650,820,445 88
HIV/AIDS Subv. 21,351,811,158 11,340,856,815 53.1
Other Subv. 34,608,648,116 35,577,024,743 102.8
Total Subv. 192,105,495,335 165,863,779,622 86.3
Development Grants and Funds
LG CDG 117,796,540,840 109,032,112,906 92.6
Education 39,872,182,429 21,820,873,597 54.7
Health 38,530,464,068 28,095,923,728 72.9
Roads 55,491,044,254 43,561,780,369 78.5
Water 78,230,578,951 66,941,089,391 85.6
Agriculture 83,241,393,494 82,067,574,770 98.6
Local Admin. 27,752,314,721 18,820,974,800 67.8
TASAF 25,121,516,305 21,082,039,939 83.9
Other Capital Funds
98,598,126,963 50,488,039,557 51.2
Total Capital Funds 564,634,162,025 441,910,409,057 78.3
Total (Recurrent plus Development) Transfers
Recurrent Transfers
1,674,022,123,451 1,360,415,937,606 81.3
Total Transfers 2,238,656,285,476 1,802,326,346,663 80.5
Source: logintanzania.net
From the above it could be observed that though LGAs are allowed to borrow, but this
method of funding is very minimal. Most of the LGAs maintained that they „public private
partnership‟ (PPP) to borrowing. Some have even taken steps to invite the private sector to
provide some infrastructure to supplement the inadequate revenue. LGAs must tread
cautiously in entering into PPP as this is a new area and are likely to be disadvantaged by
private sector operators. LGAs wanting to pursue PPP must have experts to study the
agreements carefully to ensure that maximum benefits accrue to the LGAs.
4.4.1 Issues on Local government transfers The timeliness of central government transfers varies from one LGA to another. Some LGAs
say central government transfer come on time while others say it delays. The reason for the
delay was that the transfers are made through the banks and break-up in communications
results LGAs not knowing the amount has been transferred. It is surprising some LGAs say
that they are aware some funds have been transferred to their accounts but do not know what
29
it is meant for. The MOF asserts that they publish transfers in newspapers on quarterly basis,
and also in local magazines. As the transfers are published citizens can follow up with their
respective LGAs on amount transferred.
Aside the delay, there is lag in disbursing central government transfers. Enough funds have to
be generated at the national level to warrant central government transfers and as the amount
generated are not enough (especially at the beginning of the year) the transfers delay. Budget
implementation at the local level gets stalled as there is lag or delays in central government
transfers. Contractors and those who provided services to the LGAs on credit often complain.
4.4.2 Effects of transfers One of the key effects of central government transfer is that people see local taxes as
nuisance and therefore appeal to politicians to scrap some. Through political manipulations
some of the taxes are scrapped. Some of the respondents also alluded to the fact that, central
government transfers bring about laziness, reluctance to collect own source revenue –the
LGAs tend to relax (though there were no evidence to support this assertion). There were
claims that some of the LGAs do not work hard but rather depend too much on central
government transfers. In some LGAs more funds could be generated if they strengthen and
enforce their revenue mobilization drive.
4.5 Expenditure at the Local Level The main expenditure classification is the recurrent and development spending. Fig 4 shows
the percentages of recurrent spending with development spending. Comparing the
percentages of recurrent and development transfers (in Fig 3 above) with recurrent and
capital spending (Fig 4 below) there is a difference of about one percentage point. The
difference can be considered as marginal -1 percent.
Fig 4 Mainland LGA Recurrent and Development Spending -2009/10
30
4.5.1 Expenditure Performance
Comparing the actual outcome with budgeted amount, the performance ratio for the recurrent
spending is 79.4 percent while that of development spending is 60.2 percent. The relatively
low performance of development expenditure can have implications on service delivery at the
local level as some logistics; assets, equipments, etc may be in short supply. Recurrent
spending is further reclassified into Personnel Emoluments (PE) and Overhead Cost (OC). PE
constitutes bulk of the recurrent spending with OC having relatively lower share.
Fig 5 Mainland LGA Expenditures -PE, OC, and Development Spending 2009/10
Table 7 shows the Total LGA Expenditures for 2009/10 (Mainland). Education, health,
agriculture, roads, water, and local government administration are the main expenditure
headings of the LGAs. Comparing the budget performance of the various expenditure
headings, it is could be observed that performance ratio of the recurrent expenditures are
relatively higher than the development expenditures.
Table 7 Total LGA Expenditures for 2009/10 -Mainland (in Tanzanian Shillings)
Budget item Annual budget plan Cumulative outcome Performance ratio
(in percent)
Recurrent Spending by Sector
Education Spending
1,034,568,976,934 830,441,297,311 80.3
Health Spending 228,523,191,811 179,218,240,843 78.4
Agriculture Spending
36,026,300,492 29,673,657,730 82.4
Roads Spending 21,303,777,760 17,412,520,903 81.7
Water Spending 20,330,156,936 15,749,739,883 77.5
Local Admin. 204,942,561,030 172,226,886,845 84
Other Local Spending
71,575,780,230 39,220,100,484 54.8
Recurrent Spending 1,617,270,745,193 1,283,942,443,999 79.4
Recurrent Spending: Personal Emoluments
31
Education PE Spending
789,034,003,175 666,625,373,187 84.5
Health PE Spending
173,870,440,305 131,920,663,720 75.9
Agriculture PE Spending
29,361,691,909 23,005,674,385 78.4
Roads PE Spending 9,540,710,405 8,351,597,529 87.5
Water PE Spending 8,357,796,652 6,789,031,492 81.2
Local Admin PE Spending
105,214,944,047 85,404,624,627 81.2
Other PE Spending 11,329,626,970 7,648,382,460 67.5
Total PE Spending 1,126,709,213,463 929,745,347,400 82.5
Recurrent Spending: Other Charges
Education OC Spending
245,534,973,759 163,815,924,124 66.7
Health OC Spending
54,652,751,506 47,297,577,123 86.5
Agriculture OC Spending
6,664,608,583 6,667,983,345 100.1
Roads OC Spending 11,763,067,355 9,060,923,374 77
Water OC Spending 11,972,360,284 8,960,708,391 74.8
Local Admin OC Spending
99,727,616,983 86,822,262,218 87.1
Other OC Spending 60,246,153,260 31,571,718,024 52.4
Total OC Spending 490,561,531,730 354,197,096,599 72.2
Development Spending by Sector
Education Dev. Spending
68,796,413,009 32,154,970,337 46.7
Health Dev. Spending
85,116,671,141 48,902,273,350 57.5
Roads Dev. Spending
80,511,793,108 59,753,944,336 74.2
Water Dev. Spending
76,265,378,273 27,207,507,737 35.7
Agricult. Dev. Spending
83,738,057,434 64,983,750,347 77.6
Admin. Dev. Spending
94,011,208,001 50,878,208,755 54.1
Other Dev. Spending
168,447,490,000 111,564,480,079 66.2
Develop. Spending 656,887,010,966 395,445,134,941 60.2
Total (Recurrent plus Development) Spending
Total Spending 2,274,157,756,159 1,679,387,578,940 73.8
Budget item Annual budget plan Cumulative outcome Performance ratio (in percent)
Recurrent Spending by Sector
Education Spending
1,034,568,976,934 830,441,297,311 80.3
Health Spending 228,523,191,811 179,218,240,843 78.4
Agriculture Spending
36,026,300,492 29,673,657,730 82.4
Roads Spending 21,303,777,760 17,412,520,903 81.7
Water Spending 20,330,156,936 15,749,739,883 77.5
Local Admin. 204,942,561,030 172,226,886,845 84
Other Local Spending
71,575,780,230 39,220,100,484 54.8
Recurrent Spending 1,617,270,745,193 1,283,942,443,999 79.4
Recurrent Spending: Personal Emoluments
32
Education PE Spending
789,034,003,175 666,625,373,187 84.5
Health PE Spending
173,870,440,305 131,920,663,720 75.9
Agriculture PE Spending
29,361,691,909 23,005,674,385 78.4
Roads PE Spending 9,540,710,405 8,351,597,529 87.5
Water PE Spending 8,357,796,652 6,789,031,492 81.2
Local Admin PE Spending
105,214,944,047 85,404,624,627 81.2
Other PE Spending 11,329,626,970 7,648,382,460 67.5
Total PE Spending 1,126,709,213,463 929,745,347,400 82.5
Recurrent Spending: Other Charges
Education OC Spending
245,534,973,759 163,815,924,124 66.7
Health OC Spending
54,652,751,506 47,297,577,123 86.5
Agriculture OC Spending
6,664,608,583 6,667,983,345 100.1
Roads OC Spending 11,763,067,355 9,060,923,374 77
Water OC Spending 11,972,360,284 8,960,708,391 74.8
Local Admin OC Spending
99,727,616,983 86,822,262,218 87.1
Other OC Spending 60,246,153,260 31,571,718,024 52.4
Total OC Spending 490,561,531,730 354,197,096,599 72.2
Development Spending by Sector
Education Dev. Spending
68,796,413,009 32,154,970,337 46.7
Health Dev. Spending
85,116,671,141 48,902,273,350 57.5
Roads Dev. Spending
80,511,793,108 59,753,944,336 74.2
Water Dev. Spending
76,265,378,273 27,207,507,737 35.7
Agricult. Dev. Spending
83,738,057,434 64,983,750,347 77.6
Admin. Dev. Spending
94,011,208,001 50,878,208,755 54.1
Other Dev. Spending
168,447,490,000 111,564,480,079 66.2
Develop. Spending 656,887,010,966 395,445,134,941 60.2
Total (Recurrent plus Development) Spending
Total Spending 2,274,157,756,159 1,679,387,578,940 73.8
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
The PE, OC and Development Expenditures for the various districts are shown in table 8
below. Kibaha TC and Bagamoyo spent 34, and 35 percent of their total expenditure
respectively were development spending. These districts have relatively lower recurrent
expenditure. However, 13 percent of the total expenditure of Ilala MC was on development
spending. The district has relatuively high recurrent expenditure.
Table 8 Comparison of PE, OC and Development Expenditures for selected Districts for 2009/10
Council PE OC Develop. Exp.
Kibaha TC 45% 22% 34%
Kibaha 50% 27% 24%
33
Bagamoyo 53% 12% 35%
Mkuranga 60% 14% 26%
Ilala MC 51% 36% 13%
Kinondoni MC 60% 22% 19%
Temeke MC 56% 25% 18%
Mainland Total 55% 21% 24%
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
In almost all the LGAs, the recurrent expenditure on education takes bulk of the total
recurrent expenditure of the LGAs. Table 9 shows the recurrent expenditure of the education,
health and the other sectors recurrent expenditure. The more recurrent expenditure on
education and health sectors the less the recurrent spent on the other sectors. All the LGAs
combined spent about 65 and 14 percent of the recurrent expenditure respectively on
education and health. Bagamoyo and Kibaha exceeded both the average of the recurrent
expenditures on education and health.
Table 9 Percentage of Recurrent Expenditure of the Sectors to Total Recurrent for selected Districts
for 2009/10
Council Education Health Other Recurrent
Kibaha TC 52% 15% 33%
Kibaha 69% 17% 14%
Bagamoyo 61% 16% 23%
Mkuranga 65% 15% 20%
Ilala MC 51% 13% 35%
Kinondoni MC 62% 16% 22%
Temeke MC 56% 22% 22%
Mainland Total 65% 14% 21%
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
Table 10 shows performance ratios of some selected LGAs Recurrent and Development
Expenditures. From the table Mkuranga exceeded the recurrent budget while most of the
LGAs development expenditures have been below the budgeted amount.
Table 10 Performance Ratios of some selected LGAs Recurrent and Development Expenditures (as
percent of annual budget plan)
Council Education Health Other Recurrent
Recurrent Exp.
of which PE
of which OC
Develop. Exp.
Total Expend.
Kibaha TC 69.9 67.2 77.5 71.8 64.8 92.2 72.9 72.1
Kibaha 85.4 78.1 60.5 79.5 73.2 94.5 58.1 73.1
Bagamoyo 85.1 98.8 104.9 91.2 99.6 65.9 93.5 92
Mkuranga 115.1 98 117.1 112.6 122.1 83.7 38.8 75.4
Ilala MC 102.2 51.8 85.5 85.3 83.2 88.4 50.9 78.2
Kinondoni MC
74.4 111.9 101.6 84 97 61.5 80.1 83.2
Temeke MC
89.6 93.7 84.2 89.2 95.3 78.1 40.4 73.1
Mainland 80.3 78.4 77.4 79.4 82.5 72.2 60.2 73.8
34
Total
Source: The United Republic of Tanzania Local Government Information website logintanzania.net
4.6 Monitoring and Feedback Monitoring at the local level is carried out in different ways. LGAs submit Quarterly Progress
Reports to their line ministry and MOF, and also discuss the report at formal committee
meetings and Council‟s Main Meetings. LGAs accounts are audited and the report submitted
LAAC (Local Authority Accounting Committee). Some of the LGAs visited mentioned that
they have monitoring team that embarks upon monitoring. It was mentioned monitoring
reports provide feedback to management. In some LGAs communities are provided with
checklist of what contractors are supposed to do and these have to be certified by the
community before contractors are paid. Some LGAs mentioned that every department has its
task force for carrying out monitoring for example task force for monitoring maternity
projects. From the national level, staffs of MOF do monitor the LGAs projects (Budget
Tracking Unit at MOF). It was mentioned that feedback on project implementation at the
local level has been obtained from the media and public opinion.
4.7 Capacity The capacity at the LGAs varies from one LGA to another. While some of the LGAs do not
have problem with human resource in other areas the professional staffs (statistician,
accountant, medical officers, agriculturalists, etc.) are not adequate. In some LGAs the
capacity situation has improved. LGAs in or close to the urban areas (especially the national
capital) tend to have relatively the required professional staffs as compared to those that are
remote. This could be attributed to the fact that some qualified staff do not want to be
transferred to certain areas (especially remote areas) and in some cases those in certain areas
want to leave to other areas (especially urban areas). Some of the LGAs mentioned they have
funds for capacity building but areas where professional staffs are few, the focus should be on
attracting the required professionals.
4.8 Challenges Some of the challenges facing the LGAs that were mentioned were:
Communication breakdown -especially those who understand the issues do not clarify
it to those in the villages;
Diversion of funds from one sector to another, for example, from water to say roads;
Weak enforcement of finance act at the LGAs;
Political interference/consideration in the LGAs activities; and,
Poor participation of stakeholders to project implementation
4.9 Measures
On measures that need to be put in place to ensure that the transfers to local governments
become more effective, some of the responses were:
The need for tough executives to take tough decisions not succumbing to pressures of
councillors;
35
Infrastructure must be improved in the remote areas;
Change of attitude and mind set;
Commitment to love the country and serve the people;
Take tough measures to punish those who go against legal regulations; and,
Put into practice the finance act, procurement act etc (people do not follow it).
36
5.0 Conclusion and Recommendations
5.1 Conclusion
Since mid 90s the Government of the United Republic of Tanzania has committed not only to
reform the culture of centralized bureaucracy which has failed to deliver good quality
services to the poor but also transfer powers, functional responsibilities and resources from
central government to local government authorities. Over the years measures have been put in
place to achieve the above mentioned objectives. The efforts have been commendable
especially in the area of participatory planning and to some extent transfer of resources from
the central level. In spite of the progress made at reforming the local government system, a
lot more need to be done to ensure quality service delivery as well as citizen participation and
involvement.
An analysis of the revenue structure show central government transfer constitutes bulk of the
revenue. Problems with central government revenue mobilisation can hamper efficient
delivery of services at the local level. This is likely to affect sustainability on most LGAs
development efforts. LGAs must find innovative ways to improve upon own source revenue
to ensure improved service delivery. On expenditure, the investment expenditure constitutes a
quarter of total expenditure. The main challenge is that the performance ratio of investment
expenditure is quite low compared to recurrent expenditure. There is therefore the likelihood
that shortfall in revenue will affect investment expenditure more than recurrent expenditure.
That is revenue shortfall will see lower investment expenditure.
Though almost all the districts visited complained of inadequate financial resources, the
problem is not so much with inadequate funds but rather how the funds obtained are used to
the benefit of the citizens. Inadequate capacity to ensure efficient and effective use of
resources at the local level can lead to substantial dissipation of resources to the detriment of
citizens. Though some of the district said they have the full complements of professional
staffs at the local level, the main issue is whether these professionals are putting in the right
programs that inure to the benefit of the citizens.
Political interference has been mentioned as one of the key challenges at the LGAs. MPs can
play key role in either addressing this problem or worsening it. Since MPs play key role in
LGA administration, their actions or inactions can have impact on the development of the
local authority area in which their constituencies are located. The decentralisation process
will be more effective if the MPs collaborate with LGAs to address the intractable challenges
facing their respective LGAs.
5.2 Recommendations The recommendations are:
LGAs with low spending on development expenditure should be encouraged to
increased their share of development spending;
37
Budget tracking and social audits should be vigorously pursued at the LGA level;
LGAs should find innovative ways to bring the views of the poor and illiterates into
the planning and the budget process;
There should be „easy to follow‟ and guidelines for LGAs to incorporate gender and
environment issues in planning and budget process;
The current auditing should be extended to include value for money auditing at the
LGA level;
The central government should help the LGAs to be transparent and accountable to
citizens;
LGAs must find innovative ways to increase own source revenue so as to reduce the
reliance on central government transfers;
Central government should put in measures to help the LGAs in remote areas to have
full complement of qualified staff; and,
Capacity building for MPs on systems of local governance to ensure the needs of
citizens are adequately captured in budgets and implemented
General comments from Respondents
There have been several initiatives on gender but there has been no consultant who has
been able to direct us as to how to go about it. We want to get it clear on how to go about
gender responsiveness; we want the technicalities, how to disaggregate data. There
should be capacity building at the base before we go about it. We are confused as to how
to go about it. It is difficult when going about gender responsiveness.
Talking about gender responsiveness what are the checklists, and what is the basis?
Where politicians take control of affairs it is difficult for LGAs to collect levies and the
people do not pay their taxes.
Feedback mechanism for generating information from citizens to improve service delivery
is fairly non existence.
You train technicians, councillors etc over and over again but at the end of the day it is
business as usual (it is still not working)
When it is getting to elections, the political interference is too much and everything
becomes difficult
When we have committed people taking issues from the grassroots level, this could
support the bottom up planning and budgeting
When talking about human resources paper qualification with no experience cannot help
address the capacity problem
38
The inadequate qualified staff problem could be addressed when there conducive
conditions to attract the qualified people there otherwise people will move
People see taxes and levies as nuisance therefore appeal to politicians to scrap some. For
political considerations some of the taxes have been abolished.
Central government transfers bring about laziness and reluctance on the part of some
LGAs to collect own source revenue –they tend to relax. Because of the too much
dependence on central government transfers some of the LGAs do not work hard. If some
of the LGAs could strengthen their revenue mobilization efforts they could generate more
money
There is so much lack of awareness at in many communities across the country. This makes
it difficult for government to help them. Parliament can do a lot to increase awareness and
improve education
People go to meeting for allowance –saying the same thing over and over again without
action
I believe there are challenges of having people with the requisite skills to understand the
communities and their needs so as to sift through the priorities into budget process
39
References
Einar Braathen, Amon Chaligha and Odd-Helge Fjeldstad (2005) Local governance, finances
and service delivery in Tanzania -Joint Report 2005 NIBR/CMI/REPOA
Einar Braathen, Amon Chaligha and Odd-Helge Fjeldstad (2005) Local governance, finances
and service delivery in Tanzania A summary of findings from six councils Joint Report 2005
NIBR/CMI/REPOA
HakiElimu and Policy Forum (2009): Understanding the Budget Process in Tanzania
Kabagire A.L.R. (2006) Delivery of Public Services in a Devolved System of Governance:
The Tanzanian Experience
Mashindano J. (2007): “Budgeting for Outcomes – Linking the Budget to MKUKUTA”,
Per Tidemand and Jamal Msami (2010) The Impact of Local Government Reforms in
Tanzania 1998-2008
Rangya Muro (2005) Implementation of a Community-Based Poverty Monitoring System in
Tanzania
Susanne Hesselbarth, Finn Hansen and Hans Olsen (2007) Harmonisation and Alignment
Strategies in the field of Decentralisation and Local Governance -A Review of Country
Practices and Experiences Tanzania Case Study
The United Republic of Tanzania (2005): Medium Term Strategic Planning and Budgeting
Manual
The United Republic of Tanzania (2006) Background Paper on Local Government Finance:
The Framework for the Financing of Local Government Authorities in Tanzania (by the
Prime Minister‟s Office - Regional Administration and Local Government Ministry of
Finance)
The United Republic of Tanzania (2008) Local Government Development Grant System
Manual for the Assessment of Councils against Minimum Conditions and Performance
Measurement Criteria
The United Republic of Tanzania (2010) Budget Speech 2010/11
The United Republic of Tanzania (2010): Medium term Expenditure Framework 2011-2013
The United Republic of Tanzania Ministry of Health and Social Welfare (2008) Health
Sector Strategic Plan III “Partnerships for Delivering the MDGs” Final Draft
The United Republic of Tanzania Prime Minister‟s Office Regional Administration and Local
Government and Japan International Cooperation Agency (2006) The Study on
Improvements of Opportunities and Obstacles to Development (O&OD) Planning Process
Progress Report
40
Walter Egli and Dieter Zürcher (2007) The role of civil society in decentralisation and
alleviating poverty: An exploratory case study from Tanzania
41
Appendix
Appendix 1 Regional Per Capita Income for Tanzania Mainland Regions, 2001 and
2003
Region Per Capita
Income
(TShs) 2001
Rank Per Capita
Income
(TShs) 2003
Rank
Coast 180,579 16 245,496 14
Arusha/Manyara 277,367 3 271,936 10
Dar es Salaam 554,287 1 565,425 1
Shinyanga 285,053 2 215,175 19
Kagera 149,828 20 284,084 8
Mtwara 263.901 4 341,722 3
Iringa 247,323 5 351,531 2
Mwanza 222,755 6 217,076 18
Rukwa 220,761 7 318,655 5
Ruvuma 206,646 8 323,848 4
Morogoro 205,334 9 239,864 16
Mbeya 201,583 10 270,158 11
Tanga 191,125 11 246,542 13
Lindi 184,215 12 281,556 9
Tabora 183,496 13 201,499 20
Singida 183,077 14 256,948 12
Mara 182,428 15 311,046 6
Dodoma 154,772 17 242,330 15
Kigoma 154,549 18 232,640 17
Kilimanjaro 152,004 19 299,771 7
Source: National Bureau of Statistics (NBS) Tanzania 2007
