LAAC Committee chairperson Halima Mdee. Photo: Courtesy
By Adonis Byemelwa
Dodoma--Tanzania’s Parliamentary Standing Committee on Local Government Accounts (LAAC) On October 29, 2024, uncovered extensive financial mismanagement across local government authorities.
In a critical review of audit reports by the Controller and Auditor General (CAG) up to June 30, 2023, the committee identified that 130 local authorities had failed to collect Sh 61.15 billion from essential revenue sources for over a year.
Other issues included unauthorized expenditures amounting to Sh 5.16 billion, non-compliance in using electronic receipts for Sh 7.42 billion in payments, and outstanding debts to contractors and employees totaling Sh 47.03 billion.
The committee further revealed that 47 municipalities had misappropriated Sh 21.85 billion loaned by the Ministry of Lands, Housing, and Human Settlements for the Land Planning, Surveying, and Regularization Program.
This prompted LAAC to demand immediate follow-up by the President’s Office for Regional Administration and Local Government (PORALG) and regional administrative secretaries to track all cases involving these funds with the Prevention and Combating of Corruption Bureau (PCCB). Additionally, an unaccounted Sh 6.17 billion collected through POS machines was ordered to be deposited into the bank by June 30, 2025.
Committee Chairperson Halima Mdee also criticized Kisarawe District Council for its failure to collect Sh 6.02 billion from Yapi Merkez, the firm constructing Tanzania’s Standard Gauge Railway, dating back to 2021.
The committee instructed the government to update the taxpayer database to include all eligible business operators, ensuring compliance with service levies by March 30, 2025. Mdee emphasized the need for accurate raw sales data from the Tanzania Revenue Authority (TRA) to enable local councils to levy appropriate service taxes.
The government has been urged to enforce the proper collection of Sh 5.65 billion owed by 12 councils, conduct debt reconciliation in the Local Government Revenue Collection Information System (LGRCIS), and prevent non-electronic payments, as mandated under the Tax Administration Act of 2019. The committee also called for the return of Sh 5.16 billion that was misappropriated and the recovery of Sh 1.95 billion overspent in escrow accounts by June 30, 2025.
Outstanding liabilities of Sh 17.13 billion owed to employees and Sh 29.9 billion to contractors across 55 councils must also be cleared, according to CAG’s report. The committee further demanded the repayment of Sh 21.85 billion loaned to 47 councils under the Land Planning Program back to the Ministry of Lands, Housing, and Human Settlements.
As well, the committee recommended a review of the penalties charged by the Public Service Social Security Fund (PSSSF) on delayed contributions, which has resulted in a financial burden of TSh 32.07 billion in fines.
Local government investment in the Dar es Salaam Community Bank (DCB) has also come under scrutiny, with Mdee noting that the value of DCB shares has dropped from Sh 1,000 at inception to Sh 140, with the resulting underperformance costing local councils in Dar es Salaam a loss of Sh 16.7 billion from their Sh 26.89 billion investment.
Consequently, the committee urged legislative amendments to transfer DCB oversight to the Treasury Registrar, removing it from the private bank category.
The implication of this financial saga has far-reaching consequences, exposing systemic vulnerabilities and highlighting the urgent need for governance reforms across Tanzania’s local authorities.
The committee’s recommendations highlight the need for transparency, accountability, and tighter financial oversight to restore public trust and ensure local government resources genuinely serve the citizens.