Sh180bn for revamping runways good, but revolving fund

A total of Sh180bn has been spent in that area over the past year or so, which helps to illustrate the work being done to ease commerce in various directions, including more rapid communication on account of improving airport runways and having more airfields around the country. It is a positive use of public funds but improvements are relevant.

While plenty of effort is being made to put to good use public revenues for improvement of the transportation infrastructure in particular, certain problems persist, partly on account of lack of reflection on these issues at the policy level.

At times such ideas are heard but don’t make much headway as bureaucracy is more comfortable with traditional ways, and are satisfied with those methods as they don’t have bottlenecks of proper handling of private sector conditions.

One is the use of agents with acceptable collateral of a certain size for such work, acceptable to banks.

There was a time that Chalinze MP Ridhiwani Kikwete made a contribution to parliamentary debate on the matter, partly on account of the need to articulate the lack of comfort in many business circles over levels of taxation and enforcement methods.

The MP said that there is no need to grossly overcharge people =- not just the main business groups but all levels of taxpayers – in which case suggesting that other means of raising funds can be applied, pointing at what is commercially known as leverages.

It isn’t a well known notion here, and never has it been used. What is helpful about leverages is that the mover of a project puts up reasonable amounts of funds so that it is creditworthy, and then issues bonds for such purpose redeemable after a certain period, where the property itself is the collateral envisaged, or a portion of its land, as the case may be.

In that context the government doesn’t have to pay all the financing for improving of transportation facilities or major infrastructures, but unites with others in financing. “There is a debt level that is also more manageable, and more funds assured to build infrastructure rapidly.

This method of financing was also being suggested by the Social Security Regulatory Authority (SSRA) when the government was sounding out social security funds to participate in an active manner in the revitalization of industries.

SSRA chief executive Irene Kisaka raised issues about the formation of consortiums for financing of new industries where pension funds would participate, to reduce their overall exposure to bad risk in so doing.

This has not quite materialized for there are no propitious conditions for the purpose but with greater policy effort that is entirely feasible.

Leveraging is helpful in building of infrastructure and other economic facilities where a bond can be placed over the property, when every –person holding land has occupancy rights of 99 years, as it was approved for Dodoma region lately.

When such a land franchise system is applicable all over the country, individuals will be able to transfer their occupancy rights to fund holders and developers, who shall then use the land for collateral to obtain bank loans.

They will be able to construct airport runways, roads, public utility buildings like schools on loaned cash that is allocated for the sector, the cash is repaid over time and it is used to loan others, as in HESLB.