How to hold accountable public funds embezzlers

The advice was said over the weekend in Dar es Salaam by Former CAG Ludovick Utouh currently the Executive Director at Wajibu Institute of Public Accountability, during Policy Forum’s Breakfast debate that focused on "The CAG's Report 2021/22: What should be done to improve accountability in the country?''

He further urged that Tanzania Revenue Authority (TRA) should adopt a service delivery approach in tax collection which is in line with its Clients’ Service Charter.

Retired CAG further suggested that in the preparation of the Fiscal Forecast, the Ministry of Finance and Planning should include all relevant fiscal indicators considered in government decisions about taxation and submit the same to the Parliament for scrutiny purposes as recommended in the WAJIBU’s the Country's Annual State of Financial Accountability Reports [CASFAR] 2022 and Public Expenditure and Financial Accountability [PEFA].

In order to address Red flags of corruption and fraudulent issues, Utouh has urged the government to enact a Fraud Act for holding accountable any person implicated with fraudulent practices. Religious institutions emphasize ethical and integrity behaviour to the society.

All Management Letters of Public Entities to be made public documents; the Prevention and Combating of Corruption Bureau (PCCB) report which is submitted to the President on or before 31st of March, as it is with the CAG reports, should be presented to Parliament and once tabled should be made public.

With regards to the Country’s financial reporting framework, former CAG has said that in the spirit of the government embracing technology in its operations and its determination to transform itself into an e-government, WAJIBU is strongly advocating for the reduction in the country’s financial reporting timeframe from the current nine months to six months.

This will avail more time to the Parliamentary Oversight Committees to scrutinise the CAG reports, which will be an input to the country’s next year’s budget preparations.

Such reduction in reporting time will augment well with the World Bank’s PEFA Assessment requirement and WAJIBU’s CASFAR 2022 recommendation.

Despite the Government initiatives of improving the public financial management system in the country including revenue mobilisation, among other things, there are significant challenges related to transparency and accountability in financial management among public officials in the country.

Major challenges are non-compliance with public sector regulatory frameworks which results in misuse, corruption and embezzlement of public funds.

Talking on the audit opinions, Utouh said that quality of Audit opinions in both ministries, departments agencies [MDAs] and local government authority (LGAs] and public authority and other bodies [PA&OBs] has greatly improved (96.3%, 96.2% and 92.5%) respectively have been issued with unqualified audit opinions.

This is an indication that overall there is a substantial improvement in the quality of financial statements and reports prepared in the public sector over the years, for example compliance to the international accounting standards (IPSAs/IFRSs) which are the basis for the preparation of financial statements in the public sector.

In spite of the improvement in audit opinions, there is rampant embezzlement of public resources which is a result of public officers flaunting with impunity procedures of payments and procurement.

On the implementation of Audit Recommendations, the CAG’s reports for 2020/21 have vividly reconfirmed the low rate implementation of the CAG/PAC and LAC recommendations.

"We are seeing a low implementation rate of as low as 5 percent of fully implemented recommendations in MDAs, 36.3 percent of fully implemented recommendations for LGAs and 34. 5 percent of fully implemented recommendations for PA&OB."

This low rate of implementation of audit recommendations could be one of the reasons for the continuous embezzlement by public officers of the county’s public resources.

With regards to the revenue management, Utouh has commended TRA saying that the trend shows that in the year 2021/22 the government collected beyond budgeted amounts. This can be a result of promoting voluntary tax payment and the use of diplomatic approach to obtain more concessional loans.

There is a significant shift in percentages of the actual total collections to the approved national budget in the five years. This indicates the national budget is prepared out of unrealistic revenue projections and assumptions and there is a possibility of existence of untapped potential for revenue collection.

Analysis of tax collection reports from TRA shows that most of the tax is collected from Large Taxpayers and Customs and Excise.

On Tax - to - GDP ratio, among the East African Countries, Tanzania scored poorly, only 13.4 percent; Burundi 13.0 percent; Uganda 14.2 percent, Kenya 15.4 percent and Rwanda scored 15.6 percent. All these scores are below Sub-Saharan Africa 16.5 percent; and the OECD member countries, which is 34.0 percent.

“Research from the IMF and World Bank indicates that tax-to-GDP ratios lower than 15% are insufficient to finance the most basic state functions.”

Commenting on the Expenditure Management, he said that in-spite of the increase of revenue collection for the year 2021/22, still there are existing challenges on how the money has been spent due to the large number of questionable Expenditures specifically in the following areas: Procurement and fruitless (Nugatory) expenditure.

Also, he said in-spite of the increase in revenue collection for the year 2021/22, still there are existing challenges on how money has been spent due to a large number of questionable expenditures specifically in the following areas; A total of Tsh 1,194.06 billion has been questioned by CAG in relation to procurement; and fruitless (Nugatory) expenditures Tsh 434.94 billion.

For his part, Policy Forum’s Executive Director, Semkae Kilonzo, who was one of the discussants during the debate has concurred with former CAG by urging the government to take stern measures to officials who have been using their positions to steal public funds for their own benefits, starting with embezzlers at the grassroots rather than punishing only directors, executive directors and politicians.

Makumba Mwemezi, Policy Analyst Program Manager - Research and Policy at HakiElimu has also called upon appointing authorities to take immediate measures and hold accountable officials embezzling public resources.

Advocate Fortunata Kitokesya has also urged the government to take stern measures against public funds embezzlers as per CAG report.