Background

The Office of Treasury Registrar (OTR) has been in existence since 1959. It is entrusted by the Government of Tanzania with the main role of overseeing the operations and performance of the Public Institutions and Statutory Corporations (PISCs), commonly known as Public Enterprises (PEs). Over time, the business operations of these Government owned enterprises sometimes referred to as Parastatals, have undergone considerable transformation.

 

Following independence in 1961, the Government of Tanzania which pursued the socialist politico-economic ideology. Convinced that during the early stages of national development it was imperative for the Government to direct the development process more reliably than through the market forces. The Government assumed the entrepreneurial role and thus set national strategies for economic development. Investments of a bulk of PEs were financed through domestic savings, foreign aid and borrowing.

 

Besides, several private services, manufacturing and commercial agricultural enterprises were placed under the ownership of the Government. The operations of the PEs in Tanzania were governed by the Companies Ordinance of 1932 (Cap 212 of the Laws of Tanganyika) and the Public Corporation Act of 1969 as amended from time to time.

 

Until the mid-1970s, the objectives of setting the public sector driven socio-economic development were realized. Substantial employment was created and socio-economic development was on the upswing. However, following the economic crisis that set in since the 1973 oil crisis, it was increasingly realized that the capacity of Government to fund the large public sector from its budget was becoming unsustainable. Consequently, the performance of most of the PEs increasingly declined through experiencing enormous losses, debts and negative net worth.

 

The 1986 World Bank Study carried out on African countries including Tanzania, concluded that public ownership policies were no longer tenable for the sustainable economic growth and development. Tanzania economy by this time was experiencing socio-economic maladies that included, inter alia, stagnating economic growth, balance of payment problems, growing external debts, declining per capita income, increasing poverty, high inflation, and declining standard of living. By 1987, the annual explicit and implicit fiscal losses emanating from PEs on Government coffers were estimated at 7% of GNP.

 

It is against this backdrop that since 1985 the Government of Tanzania embarked on the economic reforms. These reforms that were spearheaded by the World Bank (WB) and International Monetary Fund (IMF) in collaboration with other donor countries, through Structural Adjustment Program (SAP). SAP emphasized economic growth through efficient allocation of resources and greater reliance on markets.

 

The economic recovery measures that were instituted included the elimination of price controls, reliance on market forces, liberalizing of trade, and restraining public sector growth. The objectives of the public sector reforms that ensued, were fourfold as follows:

 

  1. To improve the operational efficiency of PEs and increase their contributions to the national economy;
  2. To reduce the burden of loss-making PEs on the government budget;
  3. To promote the wider role of the private sector in the economy and thus permitting the government to concentrate public resources on its role as provider of basic services that include health, education, social and economic infrastructure;
  4. To increase and encourage a wider participation of private sector in the economy by providing competitive market environment.

The Parastatal sector reforms that started gradually in 1985, received a new impetus following the establishing of the Presidential Parastatal Sector Reform Commission (PSRC) through the Public Corporations Act of 1992 as ammended from time to time by repealing the Public Corporations Act of 1969.

 

Under the 1993 Act, PSRC was mandated to coordinate the implementation of the Government’s economic reform efforts through privatization of the PEs. By the time PSRC assumed this role, the Government owned a total of 455 PEs out of which 339 were commercial and 56 non-commercial.

 

Privatization of PEs was effected through complete and partial sale of assets of these enterprises to both local and foreign investors. The partial sale involved some forms of Public Private Partnerships which in most cases the Government retaining minority shares.

 

Besides, unprofitable PEs were liquidated and their assets disposed off. Strategic PEs were retained by the Government and were restructured. The objective in this endeavor, was to phase out government subsides. By 2007 when PSRC was wound up (PSRC was disestablished vide S. 1(2) of Act No.26 of 2007 and its residual responsibilities were officially taken over by defunct CHC from 01/01/2008.), a total of 299 PEs were divested. The divested PEs included 136 PEs equivalent 46% that were privatized and 115 PEs equivalent to 38% that were either liquidated, closed or placed under Loan Advancement Realization Trust (LART) in the hope of debt recovery.