Bank of Tanzania can do without performance audit of its board

The exercise is likely to include a few top officials who are executive directors at the central bank and those who are non-executive in order to give a clear picture to the management whether its structures are properly functioning.

There is more to it that the notice may have conveyed, and definitely there are policy issues that are being knotted.

The question is whether any policy ends with regard to organization and functions of the central bank requires an audit of its board of directors, and indeed to what end.

That method has greater resonance if it is an independent central bank, but there are some who might wish to assert that BoT is independent in setting lending rates to commercial banks, etc, but the point is that the central bank’s independence is a function of the state in place.

No central bank has better structures than the state it is structured to serve, as that would imply a conflict of interest between itself and its supervisor.

For instance, when the fifth phase government came into office and gurus at the Ministry of Finance and Planning moved to remove public sector deposits in various commercial banks, BoT was either skipped or merely asked for technical precisions on what that entailed.

The mainstay of the issue was with the government and not even the Treasury for that matter, but the State House or the presidency as such, and that is how the government has always operated.

Evaluating the performance of central bank directors has to include matters such as this one, thus it is of no avail.

The central bank initiative is a reflection of routine corporate mentality in the country that the public sector can organize and evaluate performance of its staff in like manner as large private companies, which is erroneous.

The reason is that state corporate entities carry out government policy in that sphere, and are responsible to their employer and single shareholder, as different from large private companies that operate competitively in the market.

They adequately respond to challenges in markets to prove their worth, unlike public sector bureaucrats regulating markets.

Errors of policy or weak regulatory regimes that often express that malaise in huge expansion of money supply via credit to the government have in the past been a blessing for BoT staff, praised for performance while the broad public suffered.

This situation expresses from time to time clear public hostility to image building statements on central bank performance, and in 1980 a BoT bus was stoned while passing in Mwananyamala following a hefty BoT bonus.

The background was the post-war situation of massive shortages and collapse of the purchasing power, while BoT staff praised themselves for excellent work reflected in enhanced lending to the government!

At the Ministry of Energy and Minerals a few years back, a permanent secretary became a heroic figure among staff in the ministry after parliamentary opprobrium of adding zeros to staff allowances of Sh80,000 so that they read Sh800,000, and the ministerial boss knew where the other sums would go. Ministry staff chuckled and applauded knowing precisely what was going on.

Put together, there is first a syndrome of the same thing in the current evaluation, where existing economic drawbacks among the public take a spin and tremendous performance of BoT staff or directors is indicated.

At the same time there is an effort to circumvent limitations on inessential use of public funds by creating a needless consultancy, not on BoT policies, but on the performance of its directors!

Strictly speaking, the governor ought to be able to tell any inquiry about that, just offhand, so no cause exists to hire expensive consultancies just to be told next to the obvious.