THE Controller and Auditor General (CAG) has found out that the deductions carried out by Higher Education Students' Loans Board (HESLB), are too high and violate the recovery of Debts Act.
This comes hardly a week after the government revealed its plan to review regulations to reduce monthly deductions and loan repayment charges for HESLB beneficiaries.
The 2019/2020 CAG report tabled in Parliament in Dodoma last week revealed that Section 3 of the Specified Officers (Debt Recovery) Act No.7 of 1970 as emphasized in the circular of 2012 requires employees to be paid not less than one-third of their monthly basic salaries.
However, CAG review and examination of the payroll and related supporting documents of 10 entities for the financial year 2019/2020 revealed that 112 employees were paid (net pay) less than one-third of their basic salaries.
Furthermore, it noted that the deficiency was attributed to the application of the new rate of 15 per cent to employees, who are beneficiaries of HESLB loans instead of the eight per cent, which was being charged previously.
Besides, CAG Charles Kichere said during the current year, the number of staff receiving net pay below one-third of the basic salary has decreased from 134 to 112 staff, which is 16 per cent compared to last year, signifying that there is a slight improvement made by the government entities in that area.
Mr Kichere mentioned entities with excessive deductions on their monthly salaries as the Ministry of Industry and Trade, Ministry of Health, Community Development, Gender, Elderly and Children, Prime Minister's Office-Labour, Youth, Employment and Person with Disability and Kilimanjaro Regional Secretariat.
Others are Tanga Regional Secretariat, Commission for Mediation and Arbitration, Occupational Safety and Health Authority (OSHA), Mirembe Hospital, Isanga Institution and Tanzania Wildlife Management Authority (TAWA).
"It is my view that the payment of salaries below one-third of the monthly basic salaries to staff may affect their performance and ultimately harm the government's overall performance because of the de-motivation effects," he said.
Mr Kichere reiterated the audit recommendation by advising the Accounting Officers of respective entities to have close monitoring mechanisms that enhance the controls over authorisation of loans.
"They should also advise financial institutions not to grant loans to employees beyond the prescribed limit," he noted.
March 31, this year, the Deputy Minister for Education, Science and Technology, Kipanga Omary told Parliament in Dodoma that the review of regulations is aimed to reduce the burden of paying the loans, which the beneficiaries carry after completing their studies.
Mr Omary said this while responding to a supplementary question by Special Seats MP Halima Mdee (Chadema), who claimed that the majority of the beneficiaries of the HESLB loans have been struggling to pay the loans.
"HESLB beneficiaries have been spending years in the street without getting employment, this has been also affecting them to repay their loans on time but at the end of the day the government punishes them by increasing their payment amount through unfavourable penalties and interest rates," Mdee claimed.
The CAG report also revealed that at HESLB in 2019/20 they had a deficit which was mainly attributed to charged interests and penalties on delayed loan repayment to Public Service Social Security Fund (PSSSF) of 8.03bn/- and 14.30bn/- respectively.
Mr Kichere said servicing the outstanding debt on time was crucial to avoid accruing interest and penalties on overdue debts.
Expounding further, he said HESLB was not able to meet its target of loan collection, the performance assessment showed that the board annual loans collections against due loans calculated from cumulative figures of the collections ranged between 330bn/- (32 per cent) and 465bn/- (48 per cent) for the period of five years starting from the financial year 2012/13 to 2016/17.
During the financial year 2013/14, the final year of implementing the then Strategic Plan, only 35 per cent was collected instead of the targeted 70 per cent.
HESLB had, however, managed to achieve only 48 per cent instead of the 80 per cent targeted collections.
According to HESLB's due loans database, there were several outstanding due loans for a long time. Findings indicated that from 1994 to 2017 there was a total of 801.3bn/- of unpaid loans.