DIVIDEND DAY 2024:Samia stresses reforms

DAR ES SALAAM: PRESIDENT Samia Suluhu Hassan has urged state owned enterprises to embrace reforms as a crucial step to stimulate economic development in Tanzania.

Addressing the nation during the Dividend Day 2024 event held at the State House in Dar es Salaam on Tuesday, Dr Samia emphasized that the agenda of reforms in public organisations is irreversible.

“Let’s embrace reforms because our country has grown economically from a Least Developed Country to a Lower-Middle Income country, where this year or next year we will be assessed to see if we graduate to the middle-income status,” President Samia stated.

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She highlighted that once Tanzania attains middle-income status, certain benefits, such as the 2.5 billion US dollar soft loan (equivalent to 6.6tri/-) from Republic of Korea with an interest rate of 0.01 per cent, will no longer be accessible.

“Therefore, while we are proud to enter middle-income status, it is important to understand that it comes with consequences,” she noted.

The president warned that without significant efforts from both individuals and organisations to produce and export, the country could face challenges that might result in reverting to LDC status.

“If we do not strive, and our organisations do not strive to produce and export a lot to earn money, the middle income status will pose challenges, and we may return to LDC status, and I am not ready for that,” she said.

During the event, President Samia received dividends from ten (10) selected private companies in which the government holds minority shares, as well as from public institutions legally required to provide dividends.

She announced that there will be an annual special day for receiving dividends, providing organisations with the opportunity to present their dividends within the required timeframe and allowing for proper evaluation.

The government, she said, is dedicated to strengthening the economy and improving social services by creating a conducive environment for businesses and implementing business-friendly policies.

This framework enables organizations to operate, make profits and provide dividends.

“I congratulate the executives and board chairpersons for utilising the conducive environment to operate profitably,” she remarked, highlighting that the largest dividends came from companies where the government has a minor share.

This, she noted, indicates that the private sector is the main contributor, unlike government companies that tend to rely on government bailouts rather than striving for profit.

She said time is up for state-owned enterprises to learn from the private sector’s determination and innovative business strategies.

“There is a target of 11 per cent for dividends, but we are currently at 3 per cent, the same as last year.

However, I believe that next year we will progress if the 159 organizations that have not given anything this year put in the effort to ensure they contribute,” President Samia said.

Although many organisations have not provided dividends, she acknowledged that changes are occurring, urging board chairpersons to oversee these transformations. She called on leaders of all organisations that have not given dividends, or have given below the required level, to ensure compliance.

The Registrar of the Treasury has set a target of 850bn/- for this year. President Samia encouraged organisations to innovate, explore funding sources and grow their operations.

“If you can grow an organisation, that is your legacy, and you must treat it as your own, not waste funds but instead increase efficiency,” she said.

She also stressed the importance of organisations striving for self-reliance, at least starting to pay their own salaries, so that government funds can be allocated to other matters.

Dr Samia reiterated her long-standing call for interoperable systems to ensure transparency in financial operations by December this year.

The president mentioned completion of the Treasury Registrar Act, urging Members of Parliament to review and provide feedback to ensure the law passes and offers clear guidance. Additionally, she proposed the establishment of an investment fund for 100 per cent government-owned organisations to secure safe capital.

“The way we are moving now is encouraging but not very good. What I want is economic transformation within our country,” she remarked. Minister of State, President’s Office (Planning and Investment) Professor Kitila Mkumbo said that the report “Bringing the State Back” emphasizes the growing global discourse on the importance of the state’s role in the economy, particularly through public organisations.

He noted that 30 per cent of the world’s largest companies are state-owned enterprises. Beyond China, state-owned enterprises contribute significantly to GDP in various countries, ranging from 1.5 per cent to 15 per cent. For instance, in Indonesia, state-owned enterprises account for 15 per cent of GDP.