State to boost SMEs via a 28bn/- injection

IN a quick response to the just released report of the Controller and Auditor General (CAG) 2016/2017 report, the government has said it expects to spend 28bn/- in the 2018/2019 Financial Year (FY) to fund Small and Medium Enterprises (SMEs).

The Minister for Industries, Trade and Investment, Mr Charles Mwijage, said here yesterday that in his budget speech scheduled for tabling on May 10, 2018, his ministry will allocate 28bn-/ to the Small Industries Development Organisation (SIDO).

In the CAG report for the year ending June 30, 2017, the audit report suggested that there was a significant risk of not adequately achieving the objectives of Tanzania’s Industrial Policy if the SMEs sector would not be given adequate attention.

The report that was tabled in parliament on Wednesday further maintained that the budget and funds allocated in the 2016/2017 FY was not enough to prioritise the activities of SMEs. “This caused setbacks in the implementation of many support services such as practical training, adequate loans and many others to SMEs,’’ said CAG Professor Mussa Assad in his report.

Following the CAG report, ministers whose dockets were involved in the various malpractices unveiled in the CAG report have been appearing before the media to give clarifications on the steps taken so far. In his recommendations, Prof Assad noted:

“It is my expectation that, as a result of my report, the government will take immediate, necessary and appropriate actions in respect of my audit findings.’’ The CAG added that this would be possible if the government would institute mechanisms such as new policies, procedures and legal frameworks,with a view to improving performance of public entities as recommended in this report.

On SMEs, the CAG report further said the poor performance of SMEs was caused by the poor technology. But yesterday, Mr Mwijage said in the much awaited 2018/2019 budget, his ministry had allocated 7bn/- for procurement of modern machines to be used in all seven regional offices of SIDO. The recent CAG report further pointed out that the growth of SMEs sector was characterized by higher rate of failure or collapsing than the rate of growth.

“For the past four years, the average of failure rate andgrowth rate stood at 8 and 5.6 percent respectively, despite increasing number of SMEs annually. The contribution of the sector to employment is currently at 40 per cent, which is below the target level of 60 percent.

The overall sector contribution to Gross Domestic Product (GDP) is estimated at 35 per cent, which is below the targeted level of 40 per cent. The CAG revelation further uncovered weaknesses at the Tanzania Bureau of Standards (TBS).

The report said at TBS, there were 3,911 original certificates of conformity from SGS that were expired. However, TBS did not investigate the matter to ensure that importers, who own the certificates, imported the goods into the country; and whether the certificates were subjected to Destination Inspection with penalties.

“I noted that there are no TBS Officers at more than eighteen entry points to establish the standards of imported goods. Although he said TBS had shortage of 260 staff, Mr Mwijage said he had tasked the TBS director general to work on the matter and provide feedback to him.

The CAG also noted that TANCOAL Energy Limited incurred expenditure amounting to 940.34m/- which was not directly related to mining and other operational activities in accordance with the Joint Venture Agreement.

“More scrutiny of the same indicated that between 2011 and 2016, a total of US Dollars 3.36 million was paid to meet expenses for mining operations for TANCOAL in Malawi (Intra Energy Subsidiary Company), consultancy fees, shipping expenses, hiring of plant, marketing, direct cash transfers to Intra Energy Malawi as well as other company’s payments whose activities do not relate to TANCOAL’s operations,’’ maintained the CAG report