Dar es Salaam. President Samia Suluhu Hassan is anticipated to receive a potentially record-breaking dividend payout and other significant financial contributions from public institutions and companies where the government holds minority shares on Tuesday, June 10, pending finalization of collections and official confirmation.
This milestone is expected to mark a historic boost in non-tax revenue collections for the 2024/2025 fiscal year, reflecting improved operational efficiencies and governance reforms within these entities.
Economic experts are closely watching the event, viewing it as a critical indicator of the government’s growing fiscal strength and its capacity to leverage public investments to support national development objectives.
Significance of dividend collections
The dividend payout and associated non-tax revenues serve as a vital supplementary income stream for the government’s budget, helping diversify revenue sources beyond traditional taxation.
The Treasury Registrar, Mr Nehemiah Mchechu, on Monday expressed confidence that the dividend collections for the fiscal year 2024/2025 would surpass historical records.
This optimism aligns with observed trends of improved corporate governance, operational efficiency, and profitability among government-affiliated entities.
Trends and performance indicators
In the previous fiscal year (2023/24), non-tax revenues including dividends, mandatory contributions of 15 percent of gross revenue, and other levies amounted to Sh767.1 billion.
Early figures for the current fiscal year indicate a strong upward trajectory, with collections nearing Sh900 billion by June 2.
This pace suggests a potential hitting of Sh1 trillion by fiscal year-end, reflecting robust financial performance despite global economic uncertainties.
Economist from the University of Dar es Salaam, Prof Abel Kinyondo, attributes this positive trend to the absence of significant economic disruptions and improved operational frameworks within public institutions.
His projection of Sh1 trillion in collections underscores the growing financial viability of government investments in commercial enterprises.
Strategic implications
While rising dividend income is encouraging, experts emphasize the critical importance of strategic deployment of these funds.
Prof Kinyondo cautions against indiscriminate allocation, urging channeling revenues into sectors with measurable developmental impact.
Without such fiscal discipline, the economic multiplier effect of these funds may be diluted, limiting their contribution to poverty alleviation, infrastructure development, and economic diversification.
Dr Daudi Ndaki from Mzumbe University highlights the need for reinvestment strategies that not only sustain but grow the capital base.
His observations on governance reforms — notably the revitalization of boards and a departure from “business as usual” — suggest that institutional capacity building is central to enhancing financial returns and, by extension, the government’s fiscal space.
Dr Lutengano Mwinuka of the University of Dodoma further stresses the need for robust frameworks guiding the use of dividend proceeds.
Effective fiscal policy should prioritize allocations that align with Tanzania’s long-term development goals, such as industrialization, human capital development, and infrastructure expansion.
Operational efficiency and sustainability
Sustained improvement in institutional efficiency emerges as a recurring theme among experts.
Business expert and economist Dr Donath Olomi underscores that stringent efficiency measures are critical for maximizing profitability, which directly translates into higher dividend payouts.
This presents a dual challenge: enhancing revenue streams while maintaining public accountability and transparency.
The government’s investment portfolio, valued at Sh86.3 trillion across 308 institutions, is substantial.
Ensuring these investments yield commensurate financial returns requires continuous performance monitoring and proactive management interventions.
Regulatory framework and compliance
In addition to dividends, public institutions are legally obligated to contribute 15 percent of their gross revenue annually to the Treasury Fund, as stipulated in the Public Finance Act.
Further, some entities must remit 70 percent of surplus funds beyond the stipulated threshold.
These regulations ensure a steady flow of resources but also demand rigorous compliance mechanisms.
The upcoming award ceremony, where President Samia will recognize 14 top-performing institutions, reflects a deliberate strategy to incentivize performance and transparency.
Categories include highest dividend payers, institutions remitting the statutory 15 percent of gross revenue, entities that significantly increased their contributions, consistent contributors over five consecutive years (2020/21–2024/25), organizations demonstrating financial turnaround from loss-making to profitability, and those making exceptional or unique contributions to the Government’s consolidated fund.
Such recognition fosters a competitive environment that encourages institutional reforms and enhances fiscal outcomes.