Decentralisation by devolution and Local Government Financial
Management
Exploratory Research on Tanzanian Local Government Authorities
By
Cosmas S. Mbogela
(s1736760)
E-mail: cmbogela@gmail.com
Thesis for the requirements of Double degree Master’s programme
MSc. IB & M - International Financial Management - University of Groningen MSc. Business & Economics - Uppsala University
Supervisors:
Dr. Bartjan W. Pennink Assistant Professor
Faculty of Economics and Business
University of Groningen
Ms. Rian Drogendijk
Department of Business studies
Uppsala University
SUMMARY
The research report is about financial management in Local Government authorities, the case of Tanzanian LGAs. A focus is on decentralisation by devolution policy which is geared towards recognising the participation of the local citizens in the development process of their nation. It entails devolving powers to local authorities which needs to be empowered as well in order to be in a position to exercise the devolved powers. The empowerment depends largely on the availability of adequate skilled and motivated human resource; adequate financial resources whether locally sourced or grants from the central government; and the capacity to mobilise and manage the available resources which in one way or another will also depend on the availability of necessary working equipments and good working environment. During the study four local government authorities were visited and six interviews were conducted.
The result has shown that some improvements can be observed in the councils with regards to the management of public fiscal resources. The Integrated Financial Management System- epicor is in use for many of the local authorities in Tanzania in which case manual accounting work is being replaced by the computerised accounting system. Time to time the annual reports from CAG office reveals a further improvement in the way Local authorities performs with regards to management of public resources. All these are being attributed to the implementation of the fiscal decentralisation. The results also shows the existence of challenges which need immediate attention if fiscal decentralisation is to achieve its objectives as stipulated in the Local Government Reform policy paper 1998. Financial resources are still inadequate, political interference features in most of the councils operations, lack of professional knowledge of managing public resources on the part of public servants at the village level. Thus the findings help in giving a picture of the actual situation in the local authorities and thus an alert to the government and policy makers of the action that is required of them.
Key words: financial management, decentralisation, local government authorities.
ACKNOWLEDGMENT
The writing of this piece of work has been a process of many months, in which period I received a lot of support and information from various people both from Tanzania and in the Netherlands. I would like to thank all the people who helped me in one way or the other; though some won’t be mentioned individually, but let them know that I appreciate their support very much.
This piece of work wouldn’t be holding the picture you see today without the dedication and guidance of my supervisor Dr. Bartjan W. Pennink from the University of Groningen; I appreciate his support very much. In the same line I would also like to thank my referent Ms. Rian Drogendijk from Uppsala University. I also recognize the support of all the respondents and local Government officials who helped in providing me with information for this work, be it by interviews or documentations.
I feel forever indebted to my dear wife Faraja and our lovely children Damian Cosmas and Austin Cosmas, who not only patiently endured my absence while away from home for the whole period of my study but also gave me a moral support to go on. Let them know that I sincerely dedicate this work to them.
TABLE OF CONTENTS
SUMMARY...2
ACKNOWLEDGMENT...3
LIST OF FIGURES AND TABLES...5
ACRONYMS...6
I INTRODUCTION ...7
1.1 Formulation of the Problem of the study on Decentralisation...7
1.1.1 Background Information ...7
1.1.2 Evolution of Tanzanian Local Governments ...8
1.1.3 Financial management in Tanzania ...10
1.1.4 Problem Statement ...11 1.2 Research Questions...11 1.3 Methodology ...13 1.3.1 Research Design...13 1.3.2 Cases Selection ...13 1.3.3 Data collection ...13 1.3.4 Triangulation...14 1.3.5 Data Analysis ...15
1.4 Justification of the study ...15
1.5 Structure of the report. ...16
II THEORETICAL FRAMEWORK ON DECENTRALISATION ...17
2.1 Conceptualizing Decentralization...17
2.2 Arguments for Decentralisation...21
2.3 Legal framework for fiscal resources management for Tanzanian LGAs ...22
2.4 Challenges on fiscal resources management in Tanzania...24
2.5 Decentralized fiscal relations between CGs and LGAs ...25
2.6 Conceptual Model...26
2.7 Conclusion ...28
III CASE STUDIES: THE SITUATION ON THE FOUR TANZANIAN COUNCILS...29
3.1 Fiscal Decentralisation in Tanzania: General picture ...29
3.2 Case Study Results...31
3.2.1 Mbozi District Council ...31
3.2.2 Mbeya District Council...35
3.2.3 Mbeya City Council ...38
3.2.4 Morogoro Municipal Council ...41
3.3 Cross Case Analysis: Case councils compared...43
3.3.1 Resources adequacy ...43
3.3.2 Compliance to policies and regulations ...45
3.3.3 Decentralisation achievements...46
3.3.4 Challenges facing the case councils...47
3.4 Conclusions...48
IV DISCUSSIONS AND RECOMMENDATIONS ...50
4.1 Capacity of the local authorities ...50
4.2 Policies and regulations in use for public resources management...52
4.3 Achievements from the implementation of D by D...55
4.4 Conclusions...57
4.5 Recommendations...57
References...60
LIST OF FIGURES AND TABLES
LIST OF FIGURES
Figure 1 Component of data analysis: Interactive Model...15
Figure 2 Conceptual Model ...27
LIST OF TABLES Table 1 Definition of indicators and variables...28
Table 2 Annual Assessment reports...31
Table 3 Collection of market levy increment in Mbozi district after LGRP ...32
Table 4 Capacity evaluation on the four case studies ...45
Table 5 Improvements as a result of implementation of the decentralisation policy ..47
Table 6 Challenges still facing the Local government authorities...48
Table 7 Citizens survey on information received on particular issues ...54
ACRONYMS
CAG Controller and Auditor General
CC City Council
CGs Central Governments
CPA (T) Certified Public Accountant (offered in Tanzania)
D by D Decentralisation by Devolution
DC District Council
IFMS Integrated Financial Management System
LEAT Lawyer’s Environment Action Team
LGAs Local Government Authorities
LGCDG Local Government Capital Development Grants
LGRP Local Government Reform Programme
LGSP Local Government Support Project
MC Municipal Council
MOFEA Ministry of Finance and Economic Affairs
NAO National audit Office
O&OD Opportunity and Obstacles to development
PEs Procurement Entities
PMO-RALG & MF Prime Ministers’ Office Regional Administration Local Government & Ministry of Finance
PMO-RALG Prime Ministers’ Office Regional Administration and Local
Government
PMU Procurement Management Unit
PPA Public Procurement Act
PPRA Public Procurement Regulatory Authority
PWC Price House Water Coopers
RALG Regional Administration and Local Government
TAMISEMI Tawala za mikoa na Serikali za mitaa
TANU Tanganyika African National Union
TBs Tender Boards
Tshs Tanzanian Shillings
URT United Republic of Tanzania
I INTRODUCTION
This thesis is about the decentralisation processes in Tanzania specifically on the local government fiscal management aspect. This is of interest because many of the development funds are being channelled to the lower level of the government, which is considered to be an effective way of achieving national development goals on poverty reduction. This chapter will present the formulation of the problem, research questions and the research methodology that has been used in this study.
1.1 Formulation of the Problem of the study on Decentralisation
1.1.1 Background Information
Tanzania has been in the transition process from the state of centrally controlled economy to a market based kind of economy for over 10 year now. The country has undergone a lot of political and economical transformation in order to achieve this goal; many firms that were state owned are now privatised. A lot of reforms have taken place in the government including the civil service reform and the local government reform, all being for the improvement of service provision to the populace and the creation of an environment conducive to the operation of the market economy in the country. The country is one among developing countries which is said to have implemented well the decentralisation policy as a way towards poverty reduction (Furtado, 2001).
The government of Tanzania has adopted the policy of decentralisation by devolution (D by D) where by powers are being devolved to local governments, and hence distribution of power and resources for the promotion of development in the country. Thus the central government is not dealing with solving local problems; rather the local government becomes the main agents of local changes (Grochowski 2001). Tanzania has adopted decentralisation by devolution policy so as to speed its move towards market economy (Falleti, 2004). Grochowski affirms that decentralisation can be one of the tools that can be expected to provide a rapid swing from planned to market based economies through drastic transformation in political decision making, policy making and administrative control. In realisation of this, Tanzania introduced local governments since its independence, which were later in 1972 abolished, leaving behind the regional directorates to take over the place of local authorities. But they were later re introduced in 1982. During this period, the policy was only of
delegating/ deconsecrating some responsibilities to regions or local governments; but it did not work out to improve service provisions, the central government still was in control of everything, thus there was no autonomy in local governments. With Decentralisation by devolution, now local governments have more autonomy than before. More about this evolution of Tanzanian LGAs is given below.
This research aims at looking at the challenges the local authorities are facing with respect to the policy of decentralisation by devolution specifically on the issue of financial management which is the lifeline of any organisation. With decentralisation, among other things, autonomy in financial management is considered to be one of the crucial aspects in making the devolution of powers meaningful. The implementation of the policy largely depends on the financial management aspects. Decentralisation has got three pillars, political decentralisation, fiscal decentralisation and administrative decentralisation (PMO-RALG); in this research, the focus will be mostly in the Fiscal decentralisation. This is due to the fact that financial aspect is the corner stone in the implementation of the decentralisation policy and it actually has the highest effects on the local government authorities’ autonomy (Fjeldstad, 2006) and has an impact in many other operations of the Local authorities. Not only that, but also because there is a challenge, in the capacity to manage financial resources which have recently increased at the local governments level with the new way of governance being implemented in the country.
1.1.2 Evolution of Tanzanian Local Governments
Tanzania had certain forms of local government even prior colonialism. Many societies recognised the chieftainship which was hereditary but realising local issues and representation in terms of elder’s councils. During the colonial period, the Germans used direct rule which means there were no recognition of local authorities. But during the British colonial era, native authorities were encouraged; this was because the British colonial rule used the indirect rule.
Instantly subsequent to achieving independence from Britain in 1961, the government made efforts to re establish the local authorities in an independent country as a means not only to consolidate political power but also to achieve rapid social-economic development (Max, 1991). Though the local government established was to a great extent devolved but it failed to achieve government’s prospects. Thus, the government resorted to abolishing local governments and replaced it with local administration by
central government representatives. The reorganization of local government was supposed to provide a system that gave more local freedom for both decision-making and participation in matters that were primarily of the local impact. This was not the case; instead the Parliament enacted the Decentralization of Government Administration (Interim Provisions) Act of 1972 to implement regional development policies. This act effectively abolished local government authorities established at independence. Much larger district development councils and Regional Development Councils were formed under the 1972 law. The said law also removed local representative councils and increased the ruling party's power by providing overriding power to TANU leadership and government bureaucrats. This period of decentralization lasted for ten years and was described by Oyugi as "misleading and confusing to be called decentralization" (Oyugi, 1998 cited by LEAT 1998). This period was accompanied by strong emphasis on economic planning and party domination.
This was a period when power was consolidated at the grassroots level with centrally appointed regional and district heads. And, there was as shift from centre to local levels of well-trained and qualified personnel. Max (1991) contends that during this period, the decentralized system turned the district councils into “rapid bureaucratic organizations dominated by officials" some observer argued that during this period (1972 - 1982) there was no local government system in Tanzania because the deconcentrated system introduced did not bring about expected results, that is, responsiveness and accountability in the provision of local public services. District/urban development and planning councils replaced what were regarded as true and meaningful local government system. Also, the reinstatement of local governments in 1982 did not result into better local government with regard to responsiveness to locally demanded services and accountability (LEAT, 1998).
Hence since mid 1990s the government of Tanzania embarked on the public service reforms and also later in 1998 introduced local government reforms aimed at creating effective, efficient democratic local governments based on political and financial accountability, and public participation (URT, 1998). The main principles of the Local Government Reform Policy (URT-LGRP, 1998) as printed out in the government policy paper included the following: a)Letting people participate in government affairs at the local level and elect their councillors; b)Bringing about
public services under control of the people through their local councils; c)Giving local councils power (political devolution over all local affairs); d)Improving financial and
political accountability and transparency; e)Securing finances for better public services; f)Creating a new local government administration accountable to local communities; g) Creating new central-local relations based not on orders but on
legislation and negotiations.
Principles (d), (e), and (f) are highlighted because they relate directly to the goal of this study. The Local Government Reform programme started in 38 pilot councils in 1998 and by 2004 it was mainstreamed in all councils in Tanzania. The adoption of the local government reform is described by the government as intended to install local government that restores power and voice of the local people in decision-making and managing local affairs. The local government reforms also promised to promote government responsiveness and accountability in the delivery of the local public services.
1.1.3 Financial management in Tanzania
In line with the Local government Reform programme, accountability and transparency in the management of public resources in Tanzania has become the requirement by the government and other external donors who play role in assisting the government in achieving the development goals. The effective financial management should adhere to the principles of good governance which emphasise transparency with respect to budgets and accounts which is at the heart of Local government accountability. According to the Tanzanian Local Authority Memorandum (1997), LGAs are required to publish information on revenue collections and allocation of funds and how they are spent for the public to assess. Accountability and transparency in resource utilization system are the powerful means for prevention, discovery of fraud and corruption in service delivery. To make this possible such elements as organisation and staffing of local resources administration, having an effective auditing systems and good budgeting programmes are necessary (Langlois et al 1998). The major administrative problem today for many LGAs is the accountability of council staff on resources entrusted to them.
Councils staff led by the Council Director, who is the Accounting Officer, is entrusted to spend the resources in improving public service delivery and they are, therefore, held responsible for any misappropriation of these resources. With the
implementation of the Local Government Reform Programme, the councils are benchmarked on performance of good governance on a quarterly basis as a means of Monitoring and evaluation of their performance.
1.1.4 Problem Statement
The government of Tanzania saw the need for reforms, particularly Local Government Reforms, as a gate way towards poverty reduction, promoting rural development, ensuring effective service delivery, as well as moving towards having a market oriented economy. This went hand in hand with the adoption of the Decentralisation by Devolution policy. This is due to the fact that the policy encourages local initiatives in the development process by devolving more power to the people so that they can make decisions and be involved in planning, implementation and monitoring and evaluation process. With this policy, all grants and development funds are being channelled directly to local authorities so that they can decide of the allocation of the resources depending on local needs. This is becoming an issue especially with the enormous amount of funds local authorities are granted from central government, donors, and funds that are raised within the local authorities themselves. With this situation, there need to be a well trained and motivated staff, adequate working facilities and a good working environment. It brings the question whether local government authorities have this capacity level in order to make a good management of these resources. Whether also there is a good compliance to the procurement issues, maintaining the public assets and tendering regulations; a good capacity of accountability and transparency, which means complying with accounting regulations and reporting standards up to the village level.
This research aimed at making an exploratory study on the financial management impact of decentralisation by devolution policy adopted by Tanzanian government; it makes an assessment of what the policy have had on local governance in terms of accountability and transparency on financial management and the capacity of the Local Government Authorities to manage the huge amount of funds entrusted to them.
1.2 Research Questions
The objective of this research was to explore what implication the policy of Decentralization by Devolution has to financial management practice in local
authorities in Tanzania. To meet those objectives the research answered the following main research question;
What is the impact of decentralisation by devolution policy on financial management practice in Tanzanian LGAs?
The following sub questions will be taken into consideration in this research:
1. Do LGAs have adequate capacity required by D by D to have the policy rolling?
2. How do LGAs comply with policies and regulations in managing public resources?
3. How has the practice of managing the public resources in local government changed as a result of implementing decentralization policy in Tanzania? Answering these sub questions meant answering the main research question. This involved data collection process, in which case this was done through documentary review and field visits, where six interviews were conducted with LGAs staff from four district councils namely Mbozi district council, Mbeya District council, Mbeya city council and Morogoro municipal council. Two for each, Mbeya city council as well as Mbeya district council; and one for each Mbozi district council and Morogoro municipal council. This was determined by their willingness and availability.
The first sub question intended to reveal the actual situation of the LGAs capacity to manage the funds; the intention was to see if the LGAs have enough infrastructures such as staff and especially if they have enough qualified staff for managing these funds. This was mainly achieved through having interviews. The second sub question was set purposely for revealing how LGAs comply with various regulations that regulate financial management in Local authorities in Tanzania, such as, the financial reporting standards, the government procurement regulations and any other guidelines as provided by the government of Tanzania. Data was obtained from interviews and a review of some local government documentations. The third sub question geared towards looking on the impact of the Decentralisation by devolution policy on the management of public resources. To look on what have been the achievement, with regards to the management of public resources, after the implementation of the LGRP. The data for this sub question was collected mainly through documentary review; as well as field interview subject to the willingness of the officials interviewed.
1.3 Methodology
1.3.1 Research Design
The study employed a case study design in order explore how decentralisation policy has impacted the financial management practice in the Tanzanian local government Authorities. The case study is a research strategy, which focuses on understanding the dynamics present within single settings (Eisenhardt 1989). Yin (2003) defined case study as an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident. According to Yin (2003) case studies can involve either single or multiple cases, and numerous levels of analysis. This study uses multiple cases, that is four cases because, ‘the evidence from multiple cases is often considered more compelling, and overall study is therefore regarded as being more robust’ Yin (2003).
1.3.2 Cases Selection
Selection of the case to undertake this research used a non probability sampling technique. So, in order to identify the respondent, purposive sampling and snowballs were used. In the snowball sampling, it entailed spotting a member of the population of interest and if they knew somebody else who would be of the sane calibre, they could say so that contact with that person would be done and if suitable incorporated in the sample as well (Riley 2000; Cooper & Schindler 2003). While with purposive sampling it involved identifying sample that conforms to some predetermined criteria (Baker 2003). The respondents of this study were the LGAs staff from four Local government authorities in Tanzania who were in one way or another responsible in the process of implementing the D by D policy. Four cases are within Eisenhardt (1989) criteria of four to ten cases. The respondents were mostly the LGAs staffs that are linked to the ensuring the financial management is effectively practiced in the respective LGAs; they included council treasurers, human resources department officials and economics planning department officials.
1.3.3 Data collection
The research used the two methods for data collection, primary sources and secondary sources
1.3.3.1 Primary data
Under this method, the study made use of in-depth interviews from respondents in the four case councils which were selected basing on the above description. With an in-depth interview, the respondents could share information as much as they know in an unconstrained environment (Cooper & Schindler 2003). The use of face-to-face semi-structured interviews allowed for the flexibility to vary the order and logic of questions and explore issues further, leading to a detailed set of data. Six interviews were conducted with the District treasurers from Mbozi and Mbeya DC, Mbeya CC and Morogoro MC; but also the Human resources officer in Mbeya CC and economic planning department officials in Mbeya DC. The focus was for district treasurers and human resources officers because they could provide the data that befits this study. The respondents were first told the purpose of the research and what is expected from them in the process of the interview. The entire interviews were conducted by the researcher himself, and were in Swahili language because this is the language that was convenient for both the interview and the respondents. The interviews were then recorded and the researcher will translate to an English language and make transcripts of the Interviews.
1.3.3.2 Secondary data
The study made use of the Tanzanian local government database known as LOGIN (www.logintanzania.com), and some other documentary reviews, which entails articles, and unpublished papers. All documentary review gave a due regard on the relevance of the data to the research topic.
1.3.4 Triangulation
The study used triangulation research design in order to overcome the problem of bias and validity (Blaikie 1991). This is the use of combination of methodologies in the study of the same phenomenon ( Denzin,1978 cited by Jick 1979:602, Mathison 1988) Jick (1979) argued that researchers can improve the accuracy of their judgment by collecting different kind of data bearing on the same phenomenon. In the same line of reasoning, Decrop (1999) defines triangulation as an act of ‘looking at the same phenomenon, or research question, from more than one source of data. Information coming from different angles can be used to corroborate, elaborate or illuminate the research problem’.
Researchers argue that all research methods are biased therefore the use of collection methods (multiple operationalism) reduce the effect of bias of each one. Seale (1999) argued that ‘the use of several methods at once helps for the biases of any one method to be cancelled out by those of others’. As explained above, this study makes use multiple case studies, whereas the researcher conducted six interviews. Immediately after the interview the researcher transcribed the conversations; this procedure increases the reliability and validity of the data collected.
1.3.5 Data Analysis
The data that was collected through in-depth interviews with the LGAs staff in Tanzania (as explained in part 1.3.3.1 above), have been analyzed using three sub-processes proposed by (Miles & Huberman, 1984, 1994): data reduction, data display, and conclusion drawing/verification.
Figure 1 Component of data analysis: Interactive Model
Source: Miles& Huberman (1994)
Data
Collection Data reduction
Data display
Conclusions: drawing/verif ying
Data reduction is a process of making the bulk collected data fit for analysis. It is a process of reducing data in a way that it fits a chosen conceptual framework. Data display is an attempt to create overview of the data; it is an organized, compressed assembly of information that permits conclusion drawing or action taking. A display is ‘a visual format that presents information systematically, so the user can draw valid conclusions and take needed action’ (Miles and Huberman 1994).
1.4 Justification of the study
One of the objectives of the Local Government Reform Programme is to increase the resources available to Local Government Authorities and improve efficiency of their use. It is therefore very important to assess the impact of decentralization policy on financial management on these LGAs so as to know if the objectives of the
programme are being achieved as intended. The study will also help researchers, financial institutions, policy maker and governments to understand what has been the impact of decentralization policy in Tanzania and what is to be done in case of low impact. This study also seeks to make a contribution to the body of knowledge pertaining to decentralization and downward accountability in local government in Tanzania.
1.5 Structure of the report.
In the next chapter (chapter two) the theoretical framework of the research is analysed, which culminates with designing the conceptual model of this research. Chapter three then follows, which presents the case studies. Here the results from the study are given and the cross case analysis is done. In chapter four presents the discussion and conclusions remarks, also the new directions for further studies.
II THEORETICAL FRAMEWORK ON DECENTRALISATION
The chapter presents a theoretical framework for the research into the impact; decentralisation by devolution has on the financial management in the local governments authorities in Tanzania. A review of the literature is made here under and eventually culminating with the construction of the conceptual model with which the research questions have been answered.
2.1 Conceptualizing Decentralization
In theory decentralization means decisions on issues about resource allocations planning and implementations are made at grass root levels. The Local Government Authorities are at the centre of decision making process; decisions about the development priorities and ways to cater for local populaces’ needs, as well as to carry out plans, as approved by councils, are made at the Local Government Level (Grochowski, 2001). According to UNDP (as accessed in the web in 2008);
“Decentralizing governance is the restructuring of authority so that there is a system of co- responsibility between institutions of governance at the central, regional and local levels according to the principle of subsidiary, thus increasing the overall quality and effectiveness of the system of governance, while increasing the authority and capabilities of sub national levels.”
Thus people at the grassroots being at the centre of the development decisions being made, have the influence on those decisions. It is in this case that a sense of ownership is built in the minds of the people and hence sustainability of the various development projects and programmes is attained (Robertson, 2002). Decentralized governments are expected to be more flexible, responsive and efficient. As Robertson puts it again, decentralization encourages participatory democracy which ensures accountability of elected local government officials; this in turn improves responsiveness of local authorities and enhances service provision which helps in a better revenue and local tax collection.
The sequential theory of decentralisation, defines Decentralisation as a process which includes a set of policy reforms that has a purpose of transferring responsibilities, resources, or authority from higher to lower levels of government (Falleti, 2004). According to this theory however, decentralisation policies can be administrative, fiscal or political and they should be analyses together as parts of the same process. And the successful decentralisation largely depends on the sequence in which the
three decentralisation policies have taken in the implementation process. According to the theory, in order for decentralisation to produce significant changes in the degree of autonomy of the local government officials, the political powers should be devolved first, followed by fiscal resources and then administrative responsibilities should be the last. By starting with political decentralisation, the powers and capacities of the Local government authorities’ political and public officials are enhanced, in which case they are in a good position for negotiations for the next rounds of the reforms. What the second round of decentralisation (fiscal decentralisation) does, is to empower the local authorities with financial resources that will fund the administrative responsibilities. And so administrative decentralisation comes last in the sequence of reforms, for unfunded administrative responsibilities will result into making the local authorities executives more dependent on the subsequent fiscal transfers from the central government (Falleti, 2004).
However, fiscal stability is not the only factor to determine success of decentralisation (Dillinger, 1999), in the context analysis that was used by Frerks and Otto in examining the decentralisation processes (Frerks and Otto, 1996 cited by Boon S., and Jong de Femmy, 1999), several dimensions have been considered which in one way or another might be in a position to influence the success of a decentralisation process to occur. They included seven elements in their context analysis; the historical, political, administrative, financial-economic, legal, social-cultural and physical dimension. To this, Susan and Femmy added the element of the role of donors. They emphasised these dimensions are meaningful for any analysis that intends to measure the success of any decentralisation process.
The adoption of decentralisation policy by many national states was a response to globalization where as, the world has experienced a tendency towards devolution of resources and powers from the Central Governments to the Local Government Authorities (Rodriquez-Pose and Gill N., 2003). Decentralization has already attracted a great attention in the 1950s and 1960s when British and French colonies, as a way of preparing their colonies towards independence, they devolved responsibilities to LGAs (Robertson, 2002). However after attaining their independence, many Asian and African countries had as their main goal to strengthen national unity, so decentralization policy was adopted for that purpose (Furtado, 2001). It is therefore noteworthy that many countries have this policy in operation for different reasons best to their national states. In general terms scholars have tried to identify these reasons;
while the western world takes decentralization as an alternative to the provision of effective public services, developing countries sees it as a way to cater for inefficiencies, macro economic instability and ineffective governance; For post communist countries, it is the way for a move towards market economies and democracy; for the Latin American countries it is a response to political pressure to democratise; where as for many African countries, decentralisation is also seen as a path towards the national unity (Ebel, 1998).
Just as there are various reasons as to why countries decide to decentralise, there are various forms/types of decentralisation countries can opt to go about. It is good to note here that, what some literature considers it as forms is what some considers as types. As it will be seen later in this chapter, they are meant to be the same. Owino and Munga, (1997) identify four different forms of decentralization, It can be
devolution (authority is transferred to LGAs/ units but the supervisory and financial
role retained by the central government. It involves full transfer of responsibility, decision making, resources and revenue generation to LGAs that are autonomous and fully independent of the central governments), deconcetration (the redistribution of administrative roles within the central government. It is a transfer of authority and responsibility from one level to another within the same central government while maintaining the same hierarchical level of accountability to the central government),
Privatization (functions transferred to non governmental institutions from central
government), and delegation (decision making and management authority being delegated to semi autonomous organizations).
On the other hand, another literature presents three broad types of decentralization; they include political decentralization, administrative and fiscal decentralization. They are all briefly explained below. A matching is made here with the above considered as forms of decentralisation.
Political decentralization: This involves the strengthening of the local democratic
institutions, enhancing public participation and bringing control over many important aspects of people’s daily lives nearer to the people themselves. Normally devolution is considered to a form of political decentralization (Robertson, 2002). It is assumed by advocates of this type of decentralization that participatory decision making processes results into well informed kind of decisions as well as relevant kind of decisions catering all kinds of interests in the society. It also means greater
accountability and transparency of the governance process, which means the society have a great opportunity to participate in it.
Administrative decentralization: This is simultaneous with civil service reform, and
it can either be in the form of deconcetration or delegation (Robertson, 2002). It is the transfer of responsibility such as planning, financing and management of certain public functions from the central government and its agencies to field units of government agencies, subordinate units or levels of government, semi autonomous public authorities or corporations or area wide, regional or functional authorities.
Fiscal decentralization: This involves decentralization of sub national finances by
introducing equitable and transparent revenue and capital development grants from central governments to local government authorities; it also involves giving LGAs financial powers, which involves spending powers and authority to raise appropriate local revenues. Robertson, (2002) considers this type to be the most comprehensive and traceable one as it is directly linked to budgetary practices. Fiscal decentralization is a core component of the decentralization policy because for LGAs to carry out decentralized functions efficiently and effectively, enough funds are necessary for any effective decentralisation process. Thus a balance should be sought as for the authority to raise the revenues as well as the powers to make expenditures. Fiscal decentralization can be of various forms, such as; self-financing or cost recovery through user charges; co-financing or co-production arrangements through which the users participate in providing services and infrastructure through monetary or labour contributions; expansion of local revenues through property or sales taxes, or indirect charges; intergovernmental transfers that shift general revenues from taxes collected by the central government to local governments for general or specific uses; and authorization of municipal borrowing and the mobilization of either national or local government resources through loan guarantees.
Just as it will de dealt in more detailed way in this thesis; in many developing countries including Tanzania, local governments or administrative units possess the legal authority to impose taxes, but the tax base is so weak and the dependence on central government transfers so ingrained that no attempt is made to exercise that authority. Despite this fact, today there is a strong push in favour of decentralisation in order to have improved governance, human developments and combating corrupt practices in the public funds (Furtado, 2001). Of course basing on a theoretical
grounds, there are benefits of engulfing decentralisation, and this will be explained below.
2.2 Arguments for Decentralisation
Decentralization is a concept that has been always associated with positive connotations. When one considers the failures centralism governance has brought to national states, decentralization gets popularity. The literature has identified several advantages that springs from adopting decentralization policy and especially the devolution one. These includes, bringing about increased participation of the grassroots in the planning process; the efficient and effective provision of social services to the citizens;
Decentralisation has the advantage of placing the decision making process in the hands of the local public at the grass root level (Bardhan, 1996). These are the ones with relevant information of the local needs and problems but also opportunities; Local information gives an ample room for finding proper and cheaper ways of providing public social services. Decentralization increases the participation of the citizens in the planning and in the implementation of the development projects in which case it becomes easier for these projects to prosper. Accountability and democracy in this way is enhanced because local governments are closer to people and can be easily reached or confronted than it is with the central governments. It goes without saying thus, that local representatives can easily be held accountable for their acts than national political leaders; it is easier for the public to express its dissatisfaction or satisfaction on the performance of its representatives (Turner and Hulme, 1997).
Relevance of the planning and eventually decisions made to the local needs increases effectiveness and efficiency in the provision of social services to the public. Based on the knowledge of the availability of local resources and cultural norms, local governments are in a better position to design more efficient local solutions to local problems and challenges (Boon S. and Femmy, 1999). Decisions made at the local level are quicker than those made at the central governments in which case the response to local problems becomes quicker as well. The process of preparing and implementing plans becomes more efficient as well (Conyers, 1990).
Decentralisation increases the sense of responsibility of the people at the local level to whom powers are devolved. This is based on the fact that it is easier for people to see
and make a follow up of what they do, and so this necessitates them to make use of the public resources more efficiently and diligently. On the side of the citizens, they make use of local resources in an efficient way because they have the sense of ownership to these resources. This being because they were involved in the planning process. Thus decentralization increases the efficient use of available resources and whenever possible the generation of additional resources (Boon S. and Fenny, 1999). But to have these seemingly benefits achieved by the local citizens it requires local government to spend their resources in a manner that is responsive to the needs of the local citizens. (PMO-RALGMF, 2006) Local governments should have a clear and transparent system of how the manage the fiscal matters in such a way that local citizens would be in a position to track and monitor the key local performance measures.
2.3 Legal framework for fiscal resources management for Tanzanian LGAs
Local Governments authorities in Tanzania plays a major role in the Central Government ‘s public finances, this is seen from the fact that for the fiscal year 2006/2007, a substantial share of the Government spending were done by Local government; they amounted to Tshs. 858 billion (PMO-RALG, 2007). Efficiency and sustainability of this role largely depends on the existence of a sound legal framework that guides LGAs financial management. There are quite a number of policies and regulatory as well as manuals that guide financial management in LGAs in Tanzania. These are the various guidelines such as those issued by the Ministry, the Local Government Finance Act No 9 of 1982, Local Authorities Financial Memorandum 1997, and Financial Regulation 1995, Public procurement Act of 2004 and several other manuals.
The PMO-RALG issues guidelines, as an interpretation to LGAs, of the National Plan and Budget guidelines that is issued by the MOFEA. These guidelines guide LGAs to prepare their medium term plans and budgets. It is also a requirement of the Local Government Finances Act No 9 of 1982 that LGAs prepares annual estimates of income and expenditure (budgets) and; that the district, town, municipal and city councils should approve their annual budget in a period less than two months before the beginning of the fiscal year in a special meeting convened for that purpose. The preparation of budgets helps for monitoring and control purposes.
Section 45(1) of the Act gives a requirement for an internal control system by stressing the role of an internal auditor as well as the external auditor,
“The accounts of every district council, and of every urban authority, shall be audited internally by an internal auditor employed by the authority concerned, and the external auditor for each of those authorities shall be the Controller and Auditor General.”
Another section (Sect 49) provides for the need of transparency in the financial performance of the councils.
“Every local government authority shall at its own offices and in such other manner as may be directed by the proper officer publish within its area-
(a) The annual balance sheet and statement of abstract; and
(b) Any report on the accounts made and signed by the auditor, within six months after the close of the financial year to which the accounts relate or within six months of the receipt of the report of the auditor, as the case may be.”
Further more, the Local Authority Financial Memorandum of 1997, order no.90 gives the same requirement to all the councils in Tanzania; they ought to publish their audited consolidated balance sheets, statement of income and expenditure as well as any signed audit report on accounts; at its own offices and in the local news paper within its area.
With regards to procurement transaction of the LGAs, Public Procurement Act 2004 is the principal act that guides all the Procurement Entities in the country. Public Procurement Regulatory Authority is the country’s authority responsible for making sure the Public Procurement Act 2004 (PPA 2004) is complied to, to ensure this all the PEs (Procurement Entities) including the councils are being audited to determine whether there is compliance or not. Some of the key elements these audits looks on includes the establishment and composition and functioning of the tender board and Procurement Management Unit, preparation of annual procurement plan, approval, advertisement of bid opportunities, publication of awards, time of preparation of bids, method of procurement, record keeping, quality assurance and contract implementation. All these regulations are geared towards having a good control in the financial management in the local authorities in Tanzania (www.ppra.go.tz).
2.4 Challenges on fiscal resources management in Tanzania
Given the many resources that are available in the LGAs, it is up to LGAs staffs to which these resources are entrusted to have a good way to have these resources attain the intended objectives. The public expects fiscal transparency and accountability for these resources, because it is the only way value for money can be attained. The government has as one of the objectives of the LGRP 2002, strengthening the local government capacity in financial management. Boex J.and Martinez-Vazquez (2003) indicates that Tanzanian LGAs, especially small ones has a great need of technical assistance in such areas of accounting, tax administration, data processing, and treasury. These are essential aspects in financial management for LGAs.
Tanzania faces local capacity weaknesses as a key constraint towards having an effective decentralization and sustainable development. As it can be seen from the country’s financial accountability assessment;
“...the systems put in place to ensure transparency and accountability in the management of public finances in local governments face a significant risk to their effective implementation due to the weak financial management environment in most LGAs. The LGAs financial management system…include, poor record keeping or lack of financial data, weak internal controls, poor revenue management and expenditure control, inaccurate and untimely financial reporting and general under funding. Technical capacity represents a further constraint as capacity building of the auditing and accounting functions, takes a considerable amount of time and LGAs do not usually have the remunerative incentives to attract or retain qualified staff (Government of Tanzania, 2001).
Though with time the situation is now improving.
Another challenge is based on the legal framework that guides the financial management in LGAs; the Local government Finance 1982. Although it has been amended over time now so that it can reflect the structural changes that occurs in the country, but it misses a well structured legal and regulatory framework for guiding fiscal resources management in the Tanzanian LGAs; it includes several unclear, contradictory and duplicative clauses; it has never been properly reviewed to be in line with the Public Finance Act 2001. (PMO - RALGMOF, 2006).
2.5 Decentralized fiscal relations between CGs and LGAs
In most cases fiscal decentralization is a cornerstone of decentralization policy; though it cannot be singled out for unique attention, it is a fundamental determinant of an effective decentralization. There is a need therefore for having a good and a balanced central–local government’s relationship with regards to fiscal decentralization. A balance should not only be vertical but also horizontal, i.e. not only between central government and local governments, but also amongst the local authorities themselves.
In many national states in transition economies, there are problems with regards to devolving spending responsibilities and revenue raising responsibilities. National governments in most cases only push down to LGAs spending responsibilities without regard to aspect of devolving adequate resources (Minassian, 1997). Thus LGAs ends up facing fiscal stress which will in turn have a negative impact on their efficiency. Minassian (1997) argues that any vertical imbalance in favor of the central government will entertain ex post gap filling transfers by the central government to the LGAs or to deficit financing or even to LGAs accumulating excessive debts, which is undesirable. But on the other hand it is also undesirable for having vertical imbalance in favor of LGAs which will promote excessive spending by either over manning or by being too generous in increasing wages to their employees. It is therefore necessary to have fiscal discipline at all levels of national states promoted by a broad ex ante matching of revenue with spending responsibilities. Adequate vertical balance accompanied with carefully designed and transparent equalization mechanisms will enhance the process of ensuring that there is a balance among local government authorities (Minassian, 1997).
The intergovernmental fiscal relations has to be designed in a manner that takes account of the fact that the degree of decentralizing spending responsibilities to LGAs tend to surpass that of devolving revenue raising responsibilities. This is done in the name of efficiency consideration and/ or political pressures. This goes as far as assigning the responsibility for collecting major taxes such as VAT, corporate income taxes and taxes on foreign trade to the central government. “The bases of the personal income tax and of general or selective single stage taxes can be shared between the central and the regional governments, while the property tax remains the best choice for local government taxation” ( Mainassian, 1997). With this kind of assignments of
tax collection it is beyond doubt that there is difficulty in the process of achieving the ideal vertical balance mentioned above. Local government authorities will remain dependency to central governments through the intergovernmental transfers so as to perform the decentralized public expenditures. This again calls for a stable and transparent system of transfers to LGAs which will ensure smooth and sustainable operations in the service provision responsibilities undertaken by the LGAs.
Having developed a theoretical base of the decentralisation policy, the need arise now for this research to develop a framework that will help in finding evidence in the practical/ real life situation. Since this thesis will do interviews with case councils, the part below will now give the areas that will be used to get data that will reveal what impact decentralisation policy have had to Tanzanian Local Government Authorities
2.6 Conceptual Model
In this part of the research, the conceptual framework of the study is explained so as to give a picture of what have been done in this research. The identification and definition of variables is also done. The independent variables include the “adequate capacity” and “the institutional structures”; while the dependent variables will be the improved management of public resources, effective and responsive LGAs to the local needs and improved fiscal transparency and accountability. The end result of which is having a well implemented ‘fiscal decentralisation’. Basing on the arguments for decentralisation; that fiscal decentralisation leads to efficient provision of public services and brings about increased responsiveness to local needs, accountability and participatory decision making (Kee, 2003). It can therefore be concluded that, all the dependent variables are expected to be achieved with an effectively implemented decentralisation policy.
Adequate capacity here refers to the situation of the LGAs having enough capacity to carry out the decentralised responsibilities. It is practically measured using the feedback from the LGAs officials themselves because they know the working conditions they are. It includes such indicators as enough working facilities, human resources, predictable and stable funds; the institutional structures here refer to all the legal and operational aspects in the financial management practices. It includes such indicators as the availability and functioning of the tender boards, compliance to accounting and financial rules and regulations, and good record keeping system.
The literature suggest that all the three forms of decentralisation requires adequate capacity in the level of local governments, whereby there should be capacities to analyse the needs of the local population, to set priorities and undertake strategic planning and manage the resources available in the face of new and expected challenges (Furtado, 2001, Munyonyo R., 1999).
The Public finance principal also, in line with this, states that finance should follow functions; which means when certain expenditure roles has been assigned to a lower level of government, then local authorities must have the resources to meet those responsibilities(Kee J.E., 2003). The literature further suggests that decentralisation can only be successful when local governments have sufficient resources to fulfil the tasks assigned to them; these resources must be predictable and stable (Johannes J., et al, 2004). Riitta and Kolehmaninen, (2004) emphasises the need for workforce whose staff members and mix are as appropriate as possible and whose costs are affordable. This raises the element of the need of qualified and motivated staff in the local authorities. It also include the aspects of recruitment of staff, training, experience, technical equipments, clear distribution of roles and responsibilities and the capacity to make decisions. (Johannes J., et al, 2004). But also, decentralisation cannot proceed without substantial work at the structural level, including the enactment of new registration and procedures (Furtado, 2001). Reviewing the enacted laws is also very crucial in this aspect of making sure there is compliance to these laws as well, which suggest having the legal enforceability of the enacted laws.
Figure 2 Conceptual Model
Improved Financial Management Adequate capacity Institutional structures Working equipments/ facilities Human resources Good record keeping
mechanism Accounting & Financial rules and regulations
The variables above together with the indicators have been presented in the Table below. The various indicators that are presented in the table were used in the data collection process so as to answer the research questions; to make this easy the against each research question there are various indicators that were looked upon in the field. Thus, the indicators give a picture of the type of questions that were used to interview the council staff in the field.
Table 1 Definition of indicators and variables
Research questions Variables Indicators
Do LGAs have adequate capacity required by D by D policy to have the policy rolling?
Adequate resources
Adequate number of qualified staff in the accounting/treasury department. Funds available to LGAs are highly
predictable within a budgeted financial year.
Working facilities such as computers, motor vehicles, office buildings are available.
How doLGAs comply with policies and regulations in managing public resources?
Policies and Regulations for managing public resources.
Existence if the tender boards in accordance with the requirements of the Act and Regulations.
Good record keeping and timely financial reporting.
Compliance to Accounting standards and financial reporting standards.
How has the practice of managing the public resources in local government changed as a result of implementing decentralization policy in Tanzania
Financial management after
Decentralisation
Improved financial reporting and accountability
Effective and responsive LGAs to local needs
Improved public resources management. Source: Researcher 2009
2.7 Conclusion
In this chapter, a theoretical framework of the study has been described. Decentralisation concept has been defined and seen in the context of its theoretical perspective and in the Tanzanian local government environment. The various challenges on the financial management in Tanzania have also been described. The chapter ended with giving the conceptual model with which this study is going to use. This again based on the theoretical background given prior to the conceptual framework. In the next chapter the case studies are presented and analysed.
III CASE STUDIES: THE SITUATION ON THE FOUR TANZANIAN COUNCILS
In this chapter a description of what has been studied in the field study is presented. Thus part one of this chapter presents a general picture of how the fiscal decentralisation is in Tanzania, part two of the chapter presents the interviews from the four individual case councils, giving some direct quotes where necessary. Part three of this chapter gives a cross case analysis of the four case studies.
As indicated in the chapter one, the cases were purposively selected. It was based on which council the researcher saw the possibility of obtaining the data required for the study, hence purposive selection. The plan was to have five cases but one case council could not respond positively to the researcher’s request for being interviewed, probably in fear of the consequences they thought could arise despite the anonymity promised by the researcher.
3.1 Fiscal Decentralisation in Tanzania: General picture
In order to encourage the participation of people at the grass root in the development process, the Tanzanian government adopted decentralization policy. Tanzanian government has been trying to make an effective decentralization policy in the country. The country adopted the decentralization by devolution policy, which is implemented by PMO-RALG. This is done through the Local Government Reform Programme 1999/2000 which is going on in the country. The reform of local government involves five main areas; fiscal decentralization, administrative decentralization, political decentralization, service delivery function of decentralization and changed central- local relations (Ngware 2005). Noteworthy is also that the reform aims at increasing the resources available to LGAs and improving the management of those resources. This is by improving the revenue base and developing guidelines to assist LGAs to improve the revenue collection, control and management of their financial resources.
With these devolved responsibilities and tasks, LGAs needs funds so as to finance these responsibilities; these could come from sources such as revenue from own local revenue, grants from central governments transfers and contributions from different donors (Fjeldstad, 2004), as well as from community contributions (Bhalia, 2002). Currently, the government of Tanzania has increased amount of resources allocation to LGAs from its annual budget. Over 80% of local government resources come from
these central government allocations to LGAs (Boex. J and Martinez-Vazquez, 2003). There is a special system of local government allocation being used by Tanzania Government, where as there are six sectoral recurrent local governments allocation schemes in the central budget. These include five national policy priority areas, education, health, water, roads and agriculture; as well as the allocation scheme for local administration. Each sector is further divided into Personal emoluments (PE) and other charges (OC). There is a different allocation scheme for Capital Development Funds (Boex J. and Martinez-Vazquez, 2003)
Of course, all these funds add up to the revenue collected from the LGAs themselves. These funds require a sound financial management so that they are used for its intended purpose which it is at the heart of the concept of value for money. The government of Tanzania through PMO-RALG promotes the Local Integrated Financial Management system-epicor. This is the main computerized financial management system for LGAs in Tanzania which is in use for almost 85 LGAs out of the total number of 133 Tanzanian LGAs. This was purposely for having a harmonized and computerized financial management for all local authorities in the country. However, the most recent reports by PMO- RALG indicate that the operationalisation of this system is still questionable; many LGAs are reported to not having this system full operational. In which case, the manual accounting system in still becomes dominant, thus defeating the purpose of the integrated financial management system (PMO-RALG, 2007)
In order to enhance transparency and accountability in financial management, the PMO- RALG brought about the system of quarterly reporting for all local authorities in the country. With this system all local authorities are required to report to PMO-RSLG, on quarterly basis, on their financial performances. With this, the reporting system was improved and was put in an excel system and some detailed guidelines were provided to act as instructions to these local authorities. The requirement is for every LGA to report by 15th of every month following the end of each quarter; these reports would then be reviewed and consolidated by PMO-RALG on a quarterly basis and then made publicly available in the LOGIN Tanzania (www.logintanzania.net) Generally the performance of LGAs on financial management in Tanzania is promising if assessed based on the annual assessment that are being done by PMO-RALG. These assessments are used as the basis for the eligibility criteria for LGCDG’s capital Development Grant. The recent report by PMO-RALG shows a
stable increase over time of the number of LGAs that qualify for the grant, as indicated in Table 2 below.
Table 2 Annual Assessment reports
Source: www.logintanzania.net
3.2 Case Study Results
3.2.1 Mbozi District Council
3.2.1.1 Improvement brought about by the implementation of D by D policy
Many by-laws have been revised and improved so that they can be practical and binding to all areas of local authority jurisdiction. Previously the LGA had by laws which were not well complied to, but with the implementation of the policy, and so that the powers can be brought down to the local authorities, the revision of and the improvement of the by laws has been done. This was done purposely for enhancing the process of implementing the Local Government Reform programme.
There has been an increase in revenue collection, strategies of tapping the available sources have been done and now the LGA experiences an increase of revenue. A good example is the increase of about Tshs. 700million of the produce cess being collected from coffee which is the big commercial product in Mbozi district. Revenue collections from all local market areas and some other local sources have been outsourced so as to increase the efficiency in revenue collection process. This has made the LGA to experience a large increase in revenue.
Table 3 Collection of market levy increment in Mbozi district after LGRP
Revenue before LGRP After LRGP % increment
Mlowo Market 13mil 20mil 35
Vwawa Market 6mil 11mil 45
Tunduma Market 10mil 52mil 81
Source: Researcher 2009
As far as capacity building is concerned, several council officials went for further studies. Prior to LGRP many of the officials were having the education at a level of standard seven to form four, but now many are Diploma holders and some Advanced Diploma holders. But there is still a challenge of the capacity building at the village level where most of those people responsible for with handling finance issues are still not very much acquainted with revenue and expenditure management; this becomes a challenge especially with the concept by various donors whose funds are being directed directly to the village level where there are many development projects going on, such as schools building and water projects.
3.2.1.2 Capacity of the LGA to manage public resources
The aim being to see whether the LGA has enough capacity for the implementation of the policy of devolving powers to the Local authority levels, the focus is on human resources and working facilities aspects.
Human resource: Still there is a challenge in the number of accountants in the councils, there are only 5 while for the council to be effective in managing the funds and public assets in general there should at least be an accountant for every department in the council. This is therefore a challenge facing the LGA, especially in the treasury department.
Working facilities: The LGA has enough facilities for record keeping. There are enough computers for the available staff. No enough transport facilities for making a follow up of the project in the villages as well as revenue collection.
3.2.1.3 Grants from the central government
To see how much the LGA can support its budget by use of its own sources of finance, the researcher saw the need to evaluate the capacity of the LGA to finance it budget from its own source by looking at the percentage of the funds received from the grants from the central government for financing the budget. The LGA receives funds from the central government, (of about 94% for 2007/2008 for example). There
is a challenge in the funds from the central government, the funds are not disbursed timely, an interviewee gave and example that;
“…the road funds for 2007/2008 which should have been received at the beginning of the financial year, but they were received in the second quarter of 2008/2009.”
Besides the grants from the central government, the LGA has many other sources. They include produce cess especially from coffee, maize and beans (this contributes a big percent of the local revenues); revenue from market fees; Service levy which is from corporate companies (0.3% of their revenue); Minerals extraction royalty such as limestone (Songwe area), tiles and charcoal (Magamba area) and signboards’ fees.
3.2.1.4 Compliance to policies and regulations
Since the annual financial statements are to be displayed/disclosed on the council notice boards and on the public newspapers, the council is doing all that is possible to make sure it abides to the regulations guiding the accounting and financial practice as well as the preparation of financial statements. As for now, the government does not require the LGAs to use the IFRSs for the preparation of the financial statements as well as in managing the financial transactions of the LGA. Instead, the requirement is to prepare the statements following the guidance of the Local Government Act, Local Authorities Memorandum 1997 and Financial Regulation 1995. The Procurement Manual and the Public Procurement Act 2004 are the guiding tools for the LGAs in the process of procuring public assets.
3.2.1.5 Timely reporting
The financial year of the government starts from July to June of the following year. The financial year is then divided into four segments i.e. Quarters. Since 2005 there is a requirement for all the LGAs to report quarterly about its fiscal performance, this is checked by the Integrated Financial Management system (epicor) being used by the government of Tanzania. The deadline for the reporting of the quarterly performance is on the 15th of every month following the previous quarter. There are annual assessments done for every LGA and marks are allocated according to how the LGA performs and reports its performance; grants are therefore disbursed basing on these allocated marks. So LGAs are pushed to make sure they perform well and report timely. This acts as a controlling system as well.
3.2.1.6 Is there a tender board and how do you do with procuring public assets?
The interviewee reply was as follows;
