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1
Tanzania: Local Government Fiduciary Assessment
Rakesh Rajani, PEFAR Team Member
(abbreviated version of presentation by
Parminder Brar, The World Bank)
Presented to LAAC, January 21, 2009
2
ProcessJoint Assessment:
World Bank (Co-ordinator)AfritacCIDADFIDEmbassy of FinlandEmbassy of IrelandHakiElimuODIPolicy ForumTanzania Governance NoticeboardUNDPWateraid
Conducted with the full support and assistance of the Local Government Reform Program (LGRP) and their Zonal Reform Teams.
3
Process
Seven councils chosen:• Arumeru• Rombo• Mwanza City • Muleba• Karatu• Bagamoyo• Mtwara Town
- Analysis primarily based on PEFA set of indicators - Councils selected on basis of criteria such as audit certificate, capacity,
eligibility for LGCDG, use of EPICOR, and dataset from 2003. - Teams visited each of the councils for 2 to 3 days. Discussions with
DED, DT, Departmental Heads, Councilors and other key stakeholders.
4
LG PFM: Main Findings
• Message 1: Budget Credibility– The integrity of the budget formulation process is
undermined by Central Government level changes to ceilings for block grant transfers after the budget is approved by the Local Authority.
Month Activity
Jan Issuing of budget guidelines
Feb Call from proposals from sub-village – village – ward - district
March Council Management Team (CMT) prepares draft budget
April Draft budget submitted to regional secretariat, Council standing committees. After their approval it is then passed to the full council for approval. Subject to being passed by the full council the budget is then submitted to PMO-RALG and the MoF.
May Initial discussions with MoF to try to obtain revised sectoral ceilings
June Parliament discusses national budget including transfers to LGs
July - November Receipt of final ceilings for the sectors from the Ministry of Finance. This delay is what adversely impacts the LG budget process
Source: Local Councils
5
LG PFM: Main Findings
• Message 1: Budget Credibility– Teams struggled to find the “right” budget figures
amongst competing statements in various reports.
Difference Between Budgeted 2005/06 Block Grants per MoF and Council Returns (Tsh) Council Budget per MoF Budget per LGA Difference Variation %
Shinyanga 6,692,265,600 9,105,847,198 -2,413,581,598 -36.1
Mwanza CC 6,585,874,600 4,586,451,540 1,999,423,060 30.4
Tarime 6,518,802,900 7,125,880,021 -607,077,121 -9.3
Sengerema 6,357,132,600 7,397,957,889 -1,040,825,289 -16.4
Musoma 4,838,163,200 4,077,943,673 760,219,527 15.7
Bunda 4,663,909,000 5,179,929,814 -516,020,814 -11.1
Bukombe 3,989,519,800 3,553,991,800 435,528,000 10.9
Musoma TC 2,002,271,400 3,397,621,924 -1,395,350,524 -69.7
Source: LGRP
6
LG PFM: Main Findings
• Message 1: Budget Credibility– Carry forward of unspent balances impacts the
credibility of the budget. This is partly due to late releases by Central Government and donors.
– For example, in case of Arumeru below:
Arumeru District Council – Expenditure Trends for selected grants - FY 2004/05 (Percent compared to original budget)
July Aug. Sept. Oct. Nov. Dec Jan Feb Mar Apr May June
Education (MEM)
34 34 34 36 36 36 36 38 89 156 160
Subvention - Projects
17 17 28 35 80 84 87 103 124 176 284
Road Fund 11 11 17 30 44 52 54 57 63 78 117 129
PADEP 21 21 32 45 45 45 45 51 57 62 110 114
Source: Arumeru Local Council
7
LG PFM: Main Findings
• Message 2: Planning– Bottom up planning processes do not connect
well with top down budget guidelines.– The multiplicity of planning, budgeting
requirements undermines the integrity of the whole budgeting/planning process and raises the question as to whether funds are being efficiently and effectively directed to local needs. (e.g. the LGCDF)
– Excessive donor and government reporting requirements drain limited planning capacity at Local Councils. (e.g. Karatu health)
8
LG PFM: Main Findings
• Message 3: Cash Management– The lack of reliable data is a serious impediment
to project implementation. LGCDG Disbursements to 31/12/05
Disbursement figures as per Central Government
CDG Disbursed 1st
Quarter
CDG Disbursed
2nd Quarter
CBG Disbursed 2nd
Quarter Total
AMOUNTS SHOWN BY
LGA REGION NAME OF COUNCIL (LGA) (Tshs)
(Tshs) (Tshs) (Tshs) (Tshs)
Musoma Municipal Council 46,447,500 13,860,000 60,307,500 0
Bunda District Council 118,112,500 18,260,000 136,372,500 31,146,000
Musoma District Council 151,690,000 20,350,000 172,040,000 0
Serengeti District Council 16,940,000 16,940,000 0
MARA Tarime District Council 24,585,000 24,585,000 0
Mwanza City Council 79,817,801
208,422,500 23,815,000 312,055,301 59,621,000
Ukerewe District Council
18,150,000 18,150,000 0
Sengerema District Council 86,906,781
24,915,000 111,821,781 434,533,903
Geita District Council 31,020,000 31,020,000 119,085,800
Kwimba District Council 19,965,000 19,965,000 0
Magu District Council 22,660,000 22,660,000 0
MWANZA Misungwi District Council 18,260,000 18,260,000 43,028,600
Shinyanga Municipal Council 49,142,500 14,025,000 63,167,500 0
Shinyanga District Council 25,795,000 25,795,000 0
Maswa District Council 139,810,000 19,635,000 159,445,000 0
Bariadi District Council 28,270,000 28,270,000 0
Kahama District Council 27,995,000 27,995,000 0
Meatu District Council 48,989,306
121,852,500 18,535,000 189,376,806 48,989,306
SHINYANGA Bukombe District Council 191,785,000 22,825,000 214,610,000 0
Bukoba Municipal Council 10,998,542
29,067,500 12,815,000 52,881,042 0
Karagwe District Council 180,565,000 22,165,000 202,730,000 0
Biharamulo District Council 22,165,000 22,165,000 0
Muleba District Council 20,625,000 20,625,000 0
KAGERA
Bukoba District Council 165,467,500 21,230,000 186,697,500 0 Source: LGRP
9
LG PFM: Main Findings
• Message 3: Cash Management– PE releases are made on time. Other releases are
erratic – partly due to delayed donor funds. This seriously impacts service delivery.
Cash Balance in Education Sector Account (Account No. 5)
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
July04
Aug.04
Sep.04
Oct.04
Nov.04
Dec04
Jan 05 Feb05
Mar05
Apr 05 May05
June05
July05
Aug05
Sept05
Oct 05 Nov05
Dec05
Jan 06
Arumeru District Council Rombo District CouncilSource: Local Councils
10
LG PFM: Main Findings
• Message 3: Cash Management– Local Councils are cash constrained while retaining
large surpluses.Arumeru and Rombo Cash Balances
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
1,800,000,000
2,000,000,000
July04
Aug.04
Sep.04
Oct.04
Nov.04
Dec04
Jan 05 Feb05
Mar05
Apr 05 May05
June05
July05
Aug05
Sept05
Oct 05 Nov05
Dec05
Jan 06
Arumeru District Council Rombo District Council
Source: Local Councils
11
LG PFM: Main Findings
• Message 3: Cash Management– Timely intimation of funds transfer is a real
problem.
Mwanza City Council : Bank Balances (Selected Accounts)
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
Jan 2003 June 2003 Jan 2004 June 2004 Jan 2005 June 2005 Jan 2006
Ts.
Sh
.
General Fund Development Fund Misc. Deposit LGCDG Plot Sales Cash Account
Deposit II Cash Account Education Cash Account Health Cash Account Road Fund A/c
Source: Mwanza Local Council
12
LG PFM: Main Findings
• Message 3: Cash Management– Local Councils are required to maintain between
25-40 separate bank accounts - almost all in silos.Rombo Local Council:
Cash Balances 2005 - 06
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
Gener
al Fun
d
Develo
pmen
t
Misc
Dep
osit
Area
Coord
inato
r
Wor
ks S
ervic
e
Health
Educa
tion
Wat
er
Road
Toll F
und
Land
Dev
elopm
ent
CESS Fun
d
Agricu
lture
Exte
nsion
Tanza
nia S
ocial
Acti
on F
und
Sensa
Wila
ya ya
Rom
bo
Wom
en a
nd Y
outh
Dev
elopm
ent
Rural
Financ
ial S
ervic
es P
rogr
amm
e
Lives
tock
Dev
elopm
ent
Agricu
lture
Dev
elopm
ent
Adult E
duca
tion
Aids P
rojec
t
Comm
unity
Hea
lth F
und
Distric
t Exe
cutiv
e Dire
ctor C
omm
unity
Distric
t Exe
cutiv
e Dire
ctor D
istric
t CA
Capita
l Dev
and
Buil
ding
Capac
ity G
rant
TZ
. Sh
.
JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY
Source: Rombo Local Council
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LG PFM: Main Findings
• Message 3: Cash Management– There are between 500-1000 Bank accounts in
each local council.
Org No. of Bank A/C
LG 28x1= 28
Schools 214x2 = 428
Ward 31x0= 0
Villages 134x1= 134
Dispensaries and Health Centres
31x0= 31
Hospitals (DDH) 3x1= 3
TOTAL 624
Org No. of Bank A/C LG 24x1= 24 Schools 177x2 = 354 Ward 37x1= 37 Villages 144x3= 432 Dispensaries and Health Centres
41x1= 41
Health Rehab Centres 12x1= 12 Water user associations 62x1= 62 Agriculture (PADEP) 22x1= 22 Agriculture (AMSDP - IFAD)
12x1= 12
TOTAL 996
Rombo Local Council
Arumeru Local Council
Source: Rombo Local Council
Source: Arumeru Local Council
14
LG PFM: Main Findings
• Message 4: Accounting quality– At several Local Councils there was a disconnect between
the ratings and the reality. In Arumeru cheques in excess of book balances were regularly issued this FY. In Muleba – the introduction of Epicor without adequate capacity building may have worsened FM and accountability.
Budget 05-Nov 05-Dec 06-Jan
IDARA YA FEDHAPosho ya Masaa ya Ziada 1200000 -1386000 941000 18000Posho ya kusafiri nje ya Nchi 3050000 1000000 240000 0Usafiri Likizoni 600000 450000 -450000 700000Gharama za matibabu 400000 213500 -213500 328000Vifaa vya Ofisi 6000000 -2500000 4924750 457950Majengo na Mazingira 0 -177150 0 266500Ukarimu wa Serikali 600000 -92800 15000 15000Gharama za Benki 480000 -57385.66 67614.34 147267.75Gharama za safari na Posho 600000 -669000 0 0Vifaa vya Ofisi 360000 -375000 0 0Gharama za simu 0 -166242.4 0 0Vifaa vya Ofisi 7000000 -4604735 5123800 82600Gharama za umeme 360000 -469707.85 281897.15 36547.85Gharama za maji 60000 0 24000 16000Gharama za simu 2100000 -114550.5 0 935210.01Samani za Ofisi 0 -1010500 0 0Diesel 7200000 -3813940 2511000 1847500Vipuri vya magari 0 -591600 0 1728000Majengo na mazingira 5600000 -4027815 4969350 557000Gharama za Computer 1000000 -1200000 0 0Matengenezo madogo madogo 0 -265000 0 0Ununuzi wa magari mapyaUkarimu wa serikali 2300000 -2555750 183300 467000Gharama ya uchapishaji vitabu 0 161350 -282000 0Kinua mgongo wah. Madiwani 32800000 0 0 0Ada 0 -270000 0 0
Source: Muleba and Arumeru Local Councils
15
LG PFM: Main Findings
• Message 5: Internal Controls and Audit.– At 3 of the 7 local councils visited, there was no
internal auditor. Duplicative external audits and inspections seriously strain the limited capacity of Local Councils. Feeling of “continuously being audited”.
• National Audit Office does the overall audit of the Local Council;
• National Audit Office also does a separate audit for the Road Fund;
• PWC does the audit for the Health Basket;
• Deloitte does the audit for the education sector (PEDP)
• KPMG does the audit for the Local Government Reform Program;
• Donors commission multiple audits for their own programs;
• Central government ministries conduct their own inspections and have their own reporting requirements;
• The MOF Sub-Treasury also carries out regular inspections/audits.
16
Main Conclusion
Ironically, actions to ensure accountability have led to enormously complex, multiple requirements. This makes it virtually impossible for local actors to manage the situation, to understand, plan, implements and report.
There is an urgent need for • Simplicity• Predictability• Clear reliable information• Reforms being driven from the needs of the local councils
rather than central ministries