8 November 2012

Tanzania: Effective Approach Needed to Fight Bribery

Photo: The Daily News
President Jakaya Kikwete addresses delegates during Chama Cha Mapinduzi elections.

PRESIDENT Jakaya Kikwete has made corruption his administration's public enemy number one, and has convinced the electorate that high on his priority of reforming the government is tackling corruption head on.

While talking to the ruling party youth wing (UVCCM) in Dodoma recently ahead of the election of their leaders, President Kikwete admonished his party followers to take concrete action to weed out corrupt practices and officials, stressing his displeasure at what he called the dangerous phenomenon which could slum our reputation as a nation.

After the election of UVCCM and CCM's parents wing (Wazazi) there is now even converse that there could be a rethinking to make a uturn on some of elections in areas perceived to have been influenced by corruption. In my view as a normal citizen who had an opportunity to work for Prevention and Combating of Corruption Bureau (PCCB), the then Prevention of Corruption Bureau (PCB) in late 1990s, briefly the challenge, however is really about how to deal with corruption, as opposed to the lack of will power to tackle corruption.

I am convinced that almost all government officials would like to be seen to be tackling corruption head on, but are a little lost on how to even begin i.e. bottom or up? A friend and a cabinet minister in this 4th government (name withheld) told me in Dodoma recently that corruption was a cultural phenomenon, suggesting that there had to be a radical paradigm shift before corruption could be curtailed in Tanzania and in particular within political parties let alone public offices.

But I recall to have jogged his memory that paradigm shifts are like a metamorphosis, they do not happen; they are driven by agents of change. Whether this might have made sense to him or not will depend on how he took my opinion. We are all aware what is happening in Tanzania when we wrestle with this issue of corruption. Some ministries and agencies have begun what we are being made to believe is a war on corruption with a good example on Tanesco saga: they are firing as many people as they can fire and creating panic in the workforce by transferring some employees aimed at disenfranchising corruption chain.

The result is partly an exacerbation of our already dire unemployment situation. It is however uncertain what the firing and hiring criteria is based on, instead of doing forensic understanding to identify who has led to the chaos. Some people are being fired because they abused their position; others because they are excesses; and still others because their positions are needed by the new appointees of the new administration to deliver the value for money that put the national interest first etc.

It remains to be seen whether this is an effective approach to combat corruption or not. Whether it is temporary or sustainable? To me it is important to critically look at the causes of corruption in Tanzania before one can embark upon any anti- corruption strategy. In one of my Public sector economics lecture at the Open University of Tanzania (October 2012), a group of my students made a discussion by making the case that a civil servant whose minimum necessary cost of living for any month was very low had vulnerability rate to corruption.

The point was that this employee would have to make up the extra necessary sum to survive during the given month. The extra income could easily come from payment from family and friends, petty trade or some other sources. It could also well be from corrupt practices. Wherever it comes from, the fact that the government does not pay a living wage to this employee makes it highly (92 per cent) probable that this employee will be corrupt.

Will you fire this employee for doing the necessary to stay alive, if you don't pay him or her living salary? Will his or her replacement settle for the same salary without being so vulnerable to corruption tradition? These are key issues we need to look at as we wedge a war against corruption attitude in Tanzania.

If corruption is blamed largely on our culture, then the fact that comes to mind is that like our local employers and government, our international partners are also guilty of creating and fostering an environment that necessitates corruption practices because most of them pay below the living wage threshold, as they mostly design their compensation plans to match what is obtaining in the market, rather than a consideration of the prevailing economic realities necessary in the computation of any remuneration package.

Fighting corruption in Tanzania has to take a holistic approach, well crafted from the onset before actual implementation. Begging for time is not the argument here. However, one would have thought that any government coming into office would have by now some sort of framework for dealing with corruption.

Key in this strategy would be restoring the dignity and humanity of the labour force while simultaneously demanding greater accountability and efficiency. The two have to go hand in hand. Leaving out one makes the one left out (or deferred) in a precarious situation which creates a time bomb that is bound to explode sooner or later. Running a government is not like running a private business enterprise.

The former is responsible for keeping unemployment at an acceptable level and ensuring the welfare of the citizenry, while the latter could care less since their primary objective is to maximize their returns on investment. Firing people just for the sake of reducing cost and maximizing net revenue is not a justified public economic policy.

However, if employees must be fired to enhance efficiency and effectiveness and curb corruption, then a viable income redistribution mechanism must exist to transfer income from the employed to the unemployed. There should also exist a private sector capable of absorbing the fired or redundant employees. An easier and more realistic alternative not necessarily mutually exclusive with that in the preceding outlook considering our circumstances in Tanzania could be a redundancy package sufficient to promote micro enterprises.

This could be facilitated in collaboration with our international partners and local banks, and designed with a monitoring component and other business support mechanisms to increase the success rate of such a programme. Additionally, those remaining in employment cannot be left to receive the same insulting salary packets that reduce them to the sub-humans that they have been reduced to.

Instead, budgetary allocations should prioritize paying civil servants a wage that reflects their qualifications and skills, their level of responsibilities, and the economic realities in the country. Of course this would require sacrificing other priority programmes, and also a funding source adequate to keep the government solvent. Inflation will also be a factor to consider, and the burden on monetary policy is surely to increase.

However, it is vital to note that by prioritizing salaries, fiscal policy will be expansionary, and will directly affect every sector of the economy. No doubt, an expansionary fiscal policy is necessary for our economy because the economy has contracted over the unwise use of natural resources to a level today that is unacceptable and unreflective of the needs of the electorate.

The government and her partners accept that an expansionary fiscal policy is necessary to rebuild the country reputation, but so far that expansion is not being immediately directed to improve the welfare of the voters, but rather being targeted at building roads and other (important) programmes such as education, health and debt repayment.

The current Tanzania budget cannot support a normal civil servants wage bill while at the same time fund these other programmes. However, our global partners are already greatly involved in all the programmes that the government also needs to address. Since the government cannot address these programmes adequately even if it chooses not to pay salaries, some sort of collaboration and coordination should be worked out with our partners so that the government concentrates on those budget items that our partners will not assist us with, leaving the partners to assist in the sectors that they are comfortable with.

For example, most of our partners will not pay the Tanzanian civil servants wage bill because their rules do not allow them to do so. Their rules however will allow them to support the health programmes, education programmes in Tanzania. Some sort of bilateral arrangement, even if it requires some matching contribution in whatever form, could be worked out. This way, the government could do some things properly such as paying normal salaries.

This argument emphasizes the need for better communication and coordination between the supporter community and the government. The benefactor community needs to align their strategies and objectives with those of the government, and seek a greater collaborative effort in the implementation of their programmes. In theory paying normal salaries will however lead to inflation and some currency exchange difficulties.

However, with a robust monetary policy response, the possible overheating of the economy can be contained. For instance, monetary policy could be tightened. The government could also require that all salaries be paid directly into bank accounts for employees to help manage the quantity of money in circulation. Here deliberate incentive could be provided to banks to open more ATM branches while TRA provide incentive for more fiscal devise machines to be circulated to business of all levels.

Think! Tanzania informal economy and the money that changes hands in Tanzania daily is colossal. In addition, through the finance ministry in collaboration with commerce and trade ministry, some sort of price control could be imposed on essential goods and services, just the way fuel and gas is examined. The central bank could also become more proactive in the currency exchange market. Why?

In a typical Keynesian fashion, one would expect the increased demand due to increase in the purchasing power of the electorate to encourage more investment in the country and therefore lead to improvement in the supply side of the economy. Micro enterprise has already been mentioned as a programme that can be tied in to the civil servants wage bill reform although problem such as lack of capital, entrepreneurship training, and lack of partnership, technology and marketing strategy remains a challenge to take SMEs to graduate.

More substantial investment activities will also follow suit, especially if the environment is made to be conducive. Having made the case I hope for prioritizing the reform of the civil servants wage bill in the strategy to combat corruption, the other focus could be on ensuring that the intent and spirit of PCCB is fully supported to ensure that PCCB succeeds.

However, the results framework expected to make that effective approach to yield result includes an identification of all government revenue sources and untapped revenue sources options, an expansion of the revenue base through creative thinking without necessarily increasing the cost of doing business with the government, ringfencing the revenues through proper internal controls and accountability systems, and a customer service programme that will ensure customer satisfaction.

The expenditure side of the coin should look at the predetermination and prevalidation of government expenditure, an expenditure reasonableness and allowability analysis, and a funds availability certification process before expenditure transactions are entered into. In such a system, one would expect a requirement for adequate audit trail and appropriate documented authorization of all expenditure. Of course the procurement system would be critical to the process as it must be seen to be open and fair, giving the best value to the government.

The rule of law component to any anti-corruption approach cannot be overemphasized. The culture of impunity has always been heralded as a prime factor for the complete disregard for good governance and accountability. Not only must the judiciary be empowered to carry out their constitutional functions, proactive mechanisms must be put into place to ensure accountability.

PCCB already has provisions for an anti-corruption mission clothed with the authority to investigate and prosecute alleged corrupt officials. Anti-corruption measures published in the local newspapers are well known but not enough. It is important that the public is kept informed of these anti-corruption programmes and a healthy debate encouraged promoting greater awareness.

In a nutshell, confronting corruption in Tanzania in my view requires an approach that will be effective since otherwise it will continue to cost the nation substantial resources. Firing people just because they are not very busy or because they were hired by the previous management is not enough excuse. A thorough analysis of the conditions making corruption a necessary part of life is required, and these conditions need to be adequately addressed in any anti-corruption strategies.

Delaying the reform of the civil servants wage demand for payment, while implementing other programmes to combat corruption risks creating a situation that could lead to even greater deterioration of the economic welfare of the electorate. Anti-corruption efforts must be well planned and coordinated, with sufficient support mechanisms in place to eliminate the downside to what otherwise could be very good intentions.

President Jakaya Kikwete is doing what he can to make corruption attitude a history as recently reported while addressing CCM youth in Dodoma a day before the election of their leaders. What are you doing at your level to deal with corruption behaviour? God bless Tanzania. l Dr Hildebrand Shayo, BA (Hons), MSc, PhD (Economics)-UK, is a Senior Lecturer (Economics) at the Open University of Tanzania and Certified Nominated Transaction Advisor & Investment Advisor.

He can be reached on number 0765 764 553.

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