Revenue Self-Sufficiency for Local Governments

Local Government Authorities (LGAs) in Tanzania need to collect to become self-sufficient in executing their projects without relying on funds from the central government, we need to consider the following factors:

1. Current Revenue and Shortfalls:
   • For the fiscal year 2023/2024, LGAs were projected to collect TZS 1.14 trillion, but as of March 2024, they had collected TZS 848.14 billion.
   • For the fiscal year 2024/2025, the projected revenue is TZS 1.60 trillion.
2. Dependence on Central Government:
   • LGAs currently receive substantial funding from the central government for both recurrent and development expenditures. This support is crucial for covering the gap between locally collected revenues and the total budget required for their activities.
3. Total Budget Requirements:
   • To estimate the total budget requirements for LGAs, we should consider both their recurrent and development needs.

Assuming that the total budget required by LGAs for the fiscal year 2024/2025 can be inferred from the overall budget allocated to TAMISEMI and its sub-entities, we have:

• Total Budget for TAMISEMI and its sub-entities for 2024/2025: TZS 10.125 trillion
  • This includes salaries, other recurrent expenditures, and development projects.

Estimation for Self-Sufficiency

Calculation Approach:

1. Estimate the portion of the total budget that pertains to LGAs specifically.
   • Since TAMISEMI oversees not only LGAs but also other institutions and regions, we need to apportion the total budget accordingly. For simplicity, we can assume that a significant portion of the TAMISEMI budget is directed towards LGAs.
2. Current Revenue vs. Required Budget:
   • If LGAs need to match the projected budget and avoid central government dependency, they should aim to collect an amount closer to the total TAMISEMI budget or at least a significant portion of it.
3. Projected Self-Sufficiency Target:
   • If we assume LGAs need to be responsible for around 60-70% of the total TAMISEMI budget to cover their essential functions and projects independently, this can provide a rough estimate.

Calculation:

• Total TAMISEMI Budget for 2024/2025: TZS 10.125 trillion
• Assumed LGA Proportion (60-70%):
  • 60% of TZS 10.125 trillion = TZS 6.075 trillion
  • 70% of TZS 10.125 trillion = TZS 7.0875 trillion

Therefore, to achieve self-sufficiency, LGAs would need to aim for revenue collection in the range of approximately TZS 6.075 trillion to TZS 7.0875 trillion.

Hence, to be self-sufficient and execute their projects without relying on funds from the central government, LGAs in Tanzania would need to significantly increase their revenue collection to the range of TZS 6.075 trillion to TZS 7.0875 trillion annually. This represents a substantial increase from the current revenue collection figures and would require enhanced revenue generation strategies, improved efficiency, and effective local economic development initiatives.

Implementation Strategy:

• Enhanced Revenue Generation: LGAs should explore and implement strategies to boost local revenue collection. This could involve improving tax compliance, exploring new revenue sources, and optimizing revenue collection mechanisms.
• Efficiency Improvements: Streamlining operations and reducing inefficiencies can help stretch existing budgets further.
• Local Economic Development: Encouraging economic growth within local jurisdictions can increase the tax base and overall revenue potential.

TAMISEMI Budget Implementation and Planning: 2023/2024 Review and 2024/2025 Projections

Revenue and Expenditure

Revenue:

• The budget allocated for TAMISEMI for the fiscal year 2023/24 was TZS 9.18 trillion.
• As of March 2024, the total revenue collected was TZS 6.99 trillion, which is 76.18% of the approved budget.

Expenditure:          

• Of the collected revenue, TZS 4.47 trillion was used for recurrent expenditures, including TZS 3.66 trillion for salaries and TZS 810.77 billion for other expenses.
• Development projects received TZS 2.52 trillion, comprising TZS 2.06 trillion from domestic sources and TZS 456.39 billion from external sources.
• Additionally, TZS 848.14 billion was generated from local government revenue, with TZS 501.98 billion spent on other expenditures and TZS 226.05 billion on development projects​​.

Successes and Challenges in Budget Implementation for 2023/2024

Successes:

1. Local Government Elections Preparation:
   • TZS 12.00 billion was allocated for local government election preparations, of which TZS 5.6 billion was received by March 2024.
   • Activities included verifying administrative areas, drafting regulations, and conducting stakeholder meetings​​.
2. Education Sector:
   • TZS 1.72 trillion was allocated for primary and secondary education through grants from the central government and development partners.
   • TZS 1.26 trillion was received by March 2024, facilitating various educational activities.
   • The primary education program registered 19,863 students, and significant achievements were noted in national exams with improved pass rates​​.

Challenges:

• Delays in fund disbursement affected the timely execution of some planned activities, especially those involving procurement processes.

Budget Plan for 2024/2025

Revenue and Expenditure

Revenue Projections:

• The Office of the President - TAMISEMI, along with its subordinate institutions, 26 regions, and 184 councils, plans to collect a total of TZS 1.601 trillion from domestic sources in the 2024/25 fiscal year.
• Breakdown of the revenue projections:
  • Office of the President - TAMISEMI: TZS 188.96 billion
  • Institutions: TZS 55.43 billion
  • Regions: TZS 315.94 million
  • Councils: TZS 1.356 trillion​​.

Expenditure Allocations:

• The total budget request for the 2024/25 fiscal year is TZS 10.125 trillion.
  • Of this amount, TZS 6.71 trillion is allocated for recurrent expenditures, including TZS 5.52 trillion for salaries and TZS 1.18 trillion for other expenses.
  • The development budget is TZS 3.41 trillion, with TZS 2.26 trillion from domestic sources and TZS 1.15 trillion from external sources​​.

Key Priorities for 2024/25

1. Enhancing Local Government Administration:
   • Significant investments in administrative infrastructure and housing for leaders to improve governance and service delivery.
2. Improving Primary and Secondary Education:
   • Allocation of funds to ensure better educational facilities and resources, aiming to enhance the quality of education and student performance.
3. Investing in Health Services:
   • Funds allocated for primary healthcare, social welfare, and nutrition programs to improve public health outcomes.
4. Infrastructure Development:
   • Investments in road construction and maintenance, information systems management, and economic empowerment of citizens to foster sustainable development​​.

These allocations and priorities reflect a comprehensive approach to addressing the needs of various sectors under TAMISEMI's jurisdiction, aiming to enhance overall service delivery and development outcomes in the regions and councils.

Local Government Authority Revenue

Revenue for the Fiscal Year 2023/2024

• Approved Revenue: TZS 1.14 trillion
• Actual Revenue (up to March 2024): TZS 848.14 billion

The revenue for Local Government Authorities increased from TZS 625.32 billion in March 2023 to TZS 848.14 billion in March 2024, indicating an increase of TZS 222.82 billion​​.

Revenue Projections for the Fiscal Year 2024/2025

• Projected Revenue: TZS 1.60 trillion

For the fiscal year 2024/25, Local Government Authorities aim to collect a total of TZS 1.60 trillion, which is an increase of TZS 456.89 billion or 39.93% compared to the approved revenue of TZS 1.14 trillion for the fiscal year 2023/24​​.

Challenges in Budget Implementation for 2024/2025

Based on the budget implementation of the fiscal year 2023/2024, several challenges could impact the budget execution for 2024/2025, focusing on Tanzania's economic growth:

1. Delays in Fund Disbursement:
   • Delays in the release of funds have historically affected the timely implementation of planned activities. This could continue to hinder progress, particularly for development projects that rely on timely funding.
2. Revenue Collection Shortfalls:
   • Despite efforts to improve revenue collection, actual revenues have often fallen short of projections. For 2023/2024, the revenue collected by Local Government Authorities was TZS 848.14 billion out of an approved TZS 1.14 trillion, showing a significant shortfall. Achieving the ambitious revenue target of TZS 1.60 trillion for 2024/2025 could be challenging.
3. Economic Growth and External Shocks:
   • Tanzania's economic growth could be impacted by external factors such as global economic conditions, commodity price fluctuations, and international trade dynamics. These factors can influence domestic revenue generation and economic stability.
4. Inflation and Exchange Rate Volatility:
   • Inflationary pressures and exchange rate volatility can affect the cost of goods and services, impacting both recurrent and development expenditures. This can lead to increased costs for government projects and services.
5. Capacity and Efficiency in Public Administration:
   • Enhancing local government administration requires significant investments in infrastructure and capacity building. Inefficiencies in public administration and management could impede the effective use of allocated funds and the execution of planned activities.
6. Infrastructure and Service Delivery:
   • Infrastructure development, especially in transportation and communication, remains a critical challenge. Inadequate infrastructure can limit economic growth and the delivery of essential services, affecting sectors such as education, health, and economic empowerment initiatives.
7. Corruption and Governance Issues:
   • Corruption and poor governance practices can undermine budget implementation by diverting funds away from intended projects and services. Strengthening transparency and accountability mechanisms is essential to mitigate these risks.
8. Climate Change and Environmental Factors:
   • Climate change poses a significant risk to Tanzania's economic growth, particularly in sectors such as agriculture, which is highly sensitive to weather patterns. Environmental degradation and natural disasters can disrupt economic activities and infrastructure.

Budget Execution Challenges and Economic Growth in Tanzania with a Focus on Industry and Trade for the Fiscal Year 2024/2025

Significant Budget Increase:

• 2023/2024 Budget:
  • Total Approved: TZS 92,348,837,623
  • Ordinary Expenditures: TZS 66,698,567,623 (Salaries: TZS 57,443,610,685, Other Charges: TZS 9,254,956,938)
  • Development Expenditures: TZS 25,650,270,000
• 2024/2025 Budget Request:
  • Total Requested: TZS 110,899,722,000 (an increase of TZS 18,550,884,377)
  • Ordinary Expenditures: TZS 81,115,206,000 (Salaries: TZS 68,352,946,000, Other Expenditures: TZS 12,762,260,000)
  • Development Expenditures: TZS 29,784,516,000

Allocation and Utilization:

• 2023/2024 Funds Received (by March 2024):
  • Regular Expenditures: 76.03% of approved budget (Salaries: 75.56%, Other Charges: 79.09%)
  • Development Projects: 38.09% of the allocated budget

Strategic Focus:

• Increased allocations reflect a strategic emphasis on industrial and commercial growth, aimed at enhancing infrastructure, supporting SMEs, and improving the business environment.

Challenges in Budget Execution:

• Underutilization of Development Funds: Only 38.09% of development funds were received, indicating challenges in project implementation, bureaucratic delays, or inefficiencies.
• Increased Funding Requests: Justifying and securing approval for a 20% budget increase in a competitive fiscal environment may be challenging.
• Allocation Discrepancies: Variances between allocated and received funds suggest potential issues in financial planning and execution, affecting operations and project timelines.
• Project Implementation and Oversight: Effective management and oversight of development projects are crucial to avoid delays, mismanagement, and corruption.
• Economic Impact and Sustainability: Ensuring that increased investments lead to sustainable economic benefits like job creation, productivity enhancement, and global competitiveness is essential. External economic shocks or misalignment with expected outcomes could pose additional challenges.

Key Insights for Economic Growth:

• The Ministry's efforts and increased budget aim to boost Tanzania's industrial and commercial sectors, critical for economic growth.
• Emphasis on improved infrastructure and business support is expected to enhance productivity, create jobs, and improve livelihoods.
• Strong justification and strategic planning are required to secure and effectively utilize the increased budget for 2024/2025.

Figures:

• 2023/2024 Budget (Approved):
  • Total: TZS 92,348,837,623
  • Ordinary Expenditures: TZS 66,698,567,623
  • Salaries: TZS 57,443,610,685
  • Other Charges: TZS 9,254,956,938
  • Development Expenditures: TZS 25,650,270,000
• 2024/2025 Budget (Requested):
  • Total: TZS 110,899,722,000
  • Ordinary Expenditures: TZS 81,115,206,000
  • Salaries: TZS 68,352,946,000
  • Other Expenditures: TZS 12,762,260,000
  • Development Expenditures: TZS 29,784,516,000

Challenges of Dependence on Mineral Revenues in Tanzania's Economic Growth for the Year 2024/2025

The heavy reliance on mineral revenues poses significant risks to Tanzania's economic stability and growth due to market volatility and global uncertainties. Ensuring diversified and stable revenue sources, managing high expenditure needs, and addressing regulatory and geopolitical challenges will be crucial for the successful implementation of the Ministry of Minerals' budget for 2024/2025.

Revenue and Expenditure Overview for 2023/2024

1. Approved and Revised Budget:
   • Approved Budget: TZS 89,357,491,000.00
   • Revised Budget: TZS 163,008,241,000.00
   • Other Expenditures: TZS 45,877,443,000.00
   • Salaries: TZS 20,307,498,000.00
   • Development Projects: TZS 96,823,300,000.00
2. Revenue Collection Target:
   • Total Target: TZS 1,006,705,169,300.00
   • To Treasury: TZS 882,128,205,000.00
   • Ministry's Institutions: TZS 124,576,964,300.00

Achievements in Mineral Revenues

• Mineral Sector Tax Revenues:
  • 2022/2023: TZS 3,143,212,216,996.76 (13.9% of total tax revenues by TRA)
  • Year-on-Year Increase: 50.3% from TZS 2,091,256,445,986.27 in 2021/2022

Key Challenges

1. Dependence on Mineral Revenues

• Volatility: Mineral revenues are highly susceptible to global price fluctuations. The 2023/2024 mineral tax revenue was significant but subject to change due to market instability.
  • Example: Diamond prices dropped by 19% between July 2023 and March 2024, influenced by geopolitical events like the Russia-Ukraine war.

2. Global Market Uncertainties

• Economic Downturns: Global economic instability can significantly affect mineral prices and demand, impacting Tanzania's revenue projections.
• Geopolitical Conflicts: Such conflicts can create market uncertainties, leading to unpredictable revenue streams.

3. High Expenditure Needs

• Budget Allocation:
  • Total Revised Budget for 2023/2024: TZS 163,008,241,000.00
  • Development Projects: TZS 96,823,300,000.00
  • Salaries: TZS 20,307,498,000.00

4. Infrastructure and Capacity Building

• Investment Requirements: Enhancing geological surveys, supporting small-scale miners, and building institutional capacity require significant investment in equipment and training.

5. Regulatory and Management Issues

• Implementation Challenges: Effective administration of new regulations (e.g., CSR guidelines) requires coordination among stakeholders, which can be complex and resource-intensive.

6. Geopolitical and Environmental Factors

• Impact on Stability: Unforeseen geopolitical and environmental events can disrupt economic stability, affecting revenue projections and expenditure needs.

Figures and Estimates

• Revenue Collection Target for 2023/2024:
  • Total: TZS 1,006,705,169,300.00
  • To Treasury: TZS 882,128,205,000.00
  • Ministry's Institutions: TZS 124,576,964,300.00
• Mineral Sector Tax Revenue for 2023/2024: TZS 3,143,212,216,996.76 (13.9% of TRA's total tax revenue)

Challenges in Implementing Tanzania's 2024/2025 Budget Due to Anticipated Revenue Collection Shortfalls

Tanzania's 2024/2025 budget faces significant challenges due to anticipated revenue collection shortfalls. In 2023/2024, the Ministry of Finance aimed to collect TZS 39.79 trillion but only managed TZS 32.49 trillion (82% of the target). For 2024/2025, the revenue projection is TZS 44.19 trillion, with TZS 29.42 trillion expected from the Tanzania Revenue Authority (TRA). However, given the previous year’s shortfall, meeting these targets may be difficult. The total proposed expenditure is TZS 18.17 trillion, with TZS 13.13 trillion allocated for debt servicing. High debt servicing costs and substantial expenditure requirements further complicate budget implementation.

Revenue Collection Trends:

• In 2023/2024, the Ministry of Finance projected a total revenue collection of TZS 39.79 trillion but only managed to collect TZS 32.49 trillion by April 2024, achieving 82% of the annual target.
• The Tanzania Revenue Authority (TRA) collected TZS 21.31 trillion against a target of TZS 26.73 trillion, and the External Finance Department collected TZS 4.92 trillion against a target of TZS 5.47 trillion.

Projected Revenue for 2024/2025:

• For 2024/2025, the Ministry of Finance expects to collect TZS 44.19 trillion.
• This includes TZS 29.42 trillion from the TRA, TZS 5.13 trillion from grants and concessional loans, TZS 9.60 trillion from commercial loans, and TZS 45.01 billion from non-tax revenue.
• Given the 2023/2024 collection shortfall, achieving these targets may be challenging.

Debt Servicing:

• Debt servicing for 2024/2025 is projected at TZS 13.13 trillion.
• In 2023/2024, TZS 8.48 trillion was spent on debt servicing out of an allocated TZS 10.48 trillion.
• The high cost of debt servicing significantly reduces the funds available for other expenditures.

Expenditure Requirements:

• The total proposed expenditure for 2024/2025 is TZS 18.17 trillion, with TZS 17.63 trillion allocated for recurrent expenditure, including TZS 13.13 trillion for debt servicing and TZS 946.45 billion for salaries.
• Development expenditure is projected at TZS 544.05 billion, which is a modest decrease from TZS 556.38 billion in 2023/2024.

Comparison with Previous Year’s Performance:

• If the revenue collection efficiency of 82% from 2023/2024 continues, the Ministry would only collect approximately TZS 36.24 trillion out of the projected TZS 44.19 trillion for 2024/2025.
• This shortfall would exacerbate the challenges in meeting the proposed expenditure of TZS 18.17 trillion.

Economic Growth and External Factors:

• Economic growth rates influence revenue collection. Any slowdown in Tanzania's economic growth could hinder the ability to meet revenue targets.
• External factors like global commodity prices, inflation, and foreign exchange rates can further impact revenue collection and expenditure.

Institutional Capacity:

• Efficient budget implementation requires strong institutional capacity. Any weaknesses here can lead to inefficiencies and mismanagement of allocated funds.

Implementation Review of the Ministry's Plan and Budget for 2023/24

Expenditure Trends up to April 2024

Total Approved Budget: TZS 15.87 trillion for both recurrent and development expenditures.

• Recurrent Expenditures: TZS 15.31 trillion, including:
• Other Recurrent Expenditures: TZS 13.62 trillion (including TZS 10.48 trillion for government debt servicing and TZS 1.69 trillion for salaries).
• Development Expenditures: TZS 556.38 billion (comprising TZS 482.55 billion from domestic sources and TZS 73.82 billion from external sources)​​.

Revenue for the Ministry for 2024/25

For the fiscal year 2024/25, the Ministry of Finance has detailed its expected revenue collection and sources:

Total Estimated Revenue: TZS 44.19 trillion

• Tanzania Revenue Authority (TRA): Expected to collect TZS 29.42 trillion.
• Grants and Concessional Loans: Expected to bring in TZS 5.13 trillion.
• Commercial Loans from Domestic and External Sources: Estimated at TZS 9.60 trillion.
• Non-Tax Revenue: Expected to be TZS 45.01 billion.
• Revenue from the Office of the National Audit Office: Estimated to collect TZS 850 million from office rental income across various regions in the country​​.

Budget Estimates for 2024/2025

• Total Proposed Expenditure: TZS 18.17 trillion
  • Recurrent Expenditure: TZS 17.63 trillion
  • Debt Servicing: TZS 13.13 trillion
  • Salaries: TZS 946.45 billion
  • Other Recurrent Expenditures: TZS 937.30 billion
  • Main Fund Services: TZS 2.61 trillion
  • Development Expenditure: TZS 544.05 billion​​.

Implementation of Ministry Priorities

Collection and Search for Total Revenue of TZS 39.79 Trillion

Expected Revenue Collection for 2023/24:

• The Ministry of Finance was estimated to collect a total of TZS 39.79 trillion out of the government's overall revenue collection target of TZS 44.39 trillion for the fiscal year 2023/24.
  • Breakdown of Revenue Collection Targets:
  • Vote 21: Expected to collect TZS 39.74 trillion
    • Tanzania Revenue Authority (TRA): TZS 26.73 trillion
    • External Finance Department: TZS 5.47 trillion
    • Government Debt Management Department: TZS 7.54 trillion
  • Vote 23: Expected to collect TZS 60 billion
  • Vote 50: Expected to collect TZS 300 million

Actual Revenue Collection up to April 2024:

• By April 2024, the ministry successfully collected a total of TZS 32.49 trillion, achieving 82% of the annual target.
  • Breakdown of Actual Collections:
    • Tanzania Revenue Authority (TRA): TZS 21.31 trillion
    • External Finance Department: TZS 4.92 trillion
    • Government Debt Management Department: TZS 6.18 trillion
    • Revenue through Vote 23: TZS 79.23 billion
    • Revenue through Vote 50: TZS 950 million​​.

Expenditure for 2024/25

The Ministry of Finance has requested an approval for total expenditures of TZS 18.17 trillion for the fiscal year 2024/25, which includes both recurrent and development expenditures for eight budgetary votes (mafungu).

1. Recurrent Expenditures:
   • Total: TZS 17.63 trillion.
   • Government Debt Servicing: TZS 13.13 trillion.
   • Salaries: TZS 946.45 billion.
   • Other Expenses: TZS 937.30 billion (for ministry and its institutions).
   • Main Fund Services: TZS 2.61 trillion.
2. Development Expenditures:
   • Total: TZS 544.05 billion.

National Audit Office (Fungu 045)

• Total Requested: TZS 112.73 billion.
  • Recurrent Expenditures: TZS 101.26 billion.
  • Development Expenditures: TZS 11.47 billion.

Challenges in Budget Implementation for 2024/2025 Considering Tanzania's Economic Growth

Budget Implementation in 2023/2024

In the fiscal year 2023/2024, the Ministry of Finance of Tanzania faced several challenges in implementing its budget. Key figures from this period include:

• Total Revenue Collected: TZS 32.49 trillion
  • Tanzania Revenue Authority: TZS 21.31 trillion
  • External Finance Department: TZS 4.92 trillion
  • Government Debt Management Department: TZS 6.18 trillion
  • Various Other Revenues (Votes 23 and 50): TZS 79.23 billion and TZS 950 million respectively​​.

Projected Challenges for 2024/2025

Given the economic context and the performance in 2023/2024, several challenges may impact the implementation of the budget for 2024/2025:

1. Revenue Collection Shortfalls:
   • In 2023/2024, the ministry achieved 82% of its annual revenue target. If similar trends continue, it may face difficulties in meeting revenue projections for 2024/2025.
2. Economic Growth Rate:
   • Economic growth influences revenue collection. Any slowdown in Tanzania’s economic growth could impact the ability to meet revenue targets. The projected economic growth needs to be robust to support revenue targets.
3. Debt Servicing:
   • The Ministry spent TZS 8.48 trillion on servicing government debt, out of the allocated TZS 10.48 trillion. This high expenditure on debt servicing limits the funds available for development and other essential services​​.
4. Expenditure Management:
   • Managing the allocated budget effectively across different sectors remains a challenge. In 2024/2025, the Ministry has proposed a total expenditure of TZS 18.17 trillion, with TZS 17.63 trillion for recurrent expenditure, including TZS 13.13 trillion for debt servicing and TZS 946.45 billion for salaries. Ensuring these funds are utilized effectively is crucial​​.
5. External Factors:
   • External economic factors such as global commodity prices, inflation, and foreign exchange rates can impact both revenue collection and expenditure.
6. Institutional Capacity:
   • The ability of various government departments to implement and manage the budget efficiently is essential. Any weaknesses in institutional capacity can result in budget implementation challenges.

Ministry of Minerals' 2024/2025 Budget Amid Economic Growth Uncertainties

The Ministry of Minerals faces significant challenges in implementing the 2024/2025 budget due to economic growth uncertainties. In 2023/2024, mineral sector tax revenues reached TZS 3.14 trillion, a 50.3% increase from the previous year, contributing 13.9% of total tax revenues. The revised budget for 2023/2024 was TZS 163 billion, with TZS 96.8 billion allocated for development projects and TZS 20.3 billion for salaries. However, dependence on volatile mineral revenues and global market instabilities, like the 19% drop in diamond prices, pose risks. Ensuring stable revenue sources and managing high expenditure demands will be crucial for the successful implementation of the 2024/2025 budget.

1. Revenue and Expenditure for the Year 2023/2024

• Approved Budget: TZS 89,357,491,000.00
• Revised Budget: TZS 163,008,241,000.00
  • Other Expenditures: TZS 45,877,443,000.00
  • Salaries: TZS 20,307,498,000.00
  • Development Projects: TZS 96,823,300,000.00
• Revenue Collection Target: TZS 1,006,705,169,300.00
  • To be Submitted to Treasury: TZS 882,128,205,000.00
  • To be Used by Ministry's Institutions: TZS 124,576,964,300.00​​.

2. Implementation of Ministry Projects for 2023/2024

• Major Projects:
  • Construction of a large and modern Multi Metals Processing Facility at Buzwagi Special Economic Zone​​.
  • Continued issuance of export permits, increasing from 10,318 in 2022 to 11,258 in 2023 due to higher demand for gemstones and coal​​.
  • Revenue from mineral sector taxes increased to TZS 3,143,212,216,996.76, which is 13.9% of total taxes collected by TRA, showing a 50.3% increase from the previous year​​.

3. Achievements and Challenges for 2023/2024

• Achievements:
  • Significant increase in mineral sector tax revenues.
  • Expansion and increased regulation of the mining sector.
  • Successful issuance and management of mining permits​​.

4. Plan and Budget Estimates (Revenue and Expenditure) for 2024/2025

• Guidelines Considered:
  • National Guidelines for Budget Preparation 2024/2025
  • CCM Election Manifesto 2020
  • Five-Year National Development Plan 2021/2022 – 2025/2026
  • Mineral Policy of 2009
  • National Development Vision 2025​​.
• Planned Expenditures:
  • Enhance revenue collection and increase the contribution of the mineral sector to the national GDP.
  • Develop strategic minerals and promote investment.
  • Continue geological research and support small-scale miners​​.

5. Work Plan for 2024/2025

• Key Implementation Areas:
  • Strengthen revenue collection and sector contribution.
  • Develop key and strategic minerals.
  • Promote investment and value addition in minerals.
  • Conduct extensive geophysical surveys and support small-scale miners.
  • Build capacity in institutions under the Ministry of Minerals​​.

Significant Increase in Mineral Sector Tax Revenues

• Total Revenue for 2022/2023: TZS 3,143,212,216,996.76
  • This accounted for 13.9% of the total tax revenues collected by the Tanzania Revenue Authority (TRA).
• Revenue Increase: 50.3% from the previous year.
  • Previous Year's Revenue (2021/2022): TZS 2,091,256,445,986.27

Challenges in Implementing the 2024/2025 Budget Considering Tanzania's Economic Growth

Focusing on the review of the 2023/2024 budget implementation and the 2024/2025 budget estimates, several challenges might affect the successful implementation of the 2024/2025 budget:

Economic Growth and Revenue Collection

1. Dependence on Mineral Revenues:
   • The 2023/2024 budget reported significant tax revenues from the mineral sector, totaling TZS 3,143,212,216,996.76, which was a 50.3% increase from the previous year. However, the reliance on mineral revenues can be volatile due to fluctuating global prices and demand​​.
2. Global Market Uncertainties:
   • The global market for minerals, such as diamonds, has shown instability. For instance, from July 2023 to March 2024, diamond prices fell by 19% due to economic downturns triggered by geopolitical conflicts like the Russia-Ukraine war​​.

Budget Allocation and Expenditure

1. High Expenditure Needs:
   • The planned expenditures for development projects, salaries, and other operational costs remain high. For 2023/2024, the total revised budget was TZS 163,008,241,000.00, with significant allocations for development projects (TZS 96,823,300,000.00) and salaries (TZS 20,307,498,000.00)​​.
2. Infrastructure and Capacity Building:
   • There are extensive plans for capacity building within the Ministry and its institutions, including enhancing geological surveys and supporting small-scale miners. However, these initiatives require substantial investment in equipment and training, which can strain the budget​​.

Implementation and Administrative Challenges

1. Regulatory and Management Issues:
   • The implementation of new regulations, such as the CSR (Corporate Social Responsibility) guidelines, has shown to be challenging. Ensuring compliance and effective administration of these guidelines requires coordination among various stakeholders, which can be complex​​.
2. Geopolitical and Environmental Factors:
   • Unforeseen geopolitical events and environmental factors can impact economic stability and growth, affecting revenue projections and expenditure needs.

Figures and Estimates

• Revenue Collection Target for 2023/2024: TZS 1,006,705,169,300.00
  • Submission to Treasury: TZS 882,128,205,000.00
  • Usage by Ministry's Institutions: TZS 124,576,964,300.00​​.
• Revenue from Mineral Sector Taxes for 2023/2024: TZS 3,143,212,216,996.76, accounting for 13.9% of TRA's total tax revenue​​.

Significant Budget Increase and Strategic Focus on Industrial and Commercial Growth in Tanzania for 2024/2025

Revenue and Expenditure for the Year 2023/2024

Approved Funds:

• The Ministry of Industry and Trade was allocated a total of TZS 92,348,837,623.
  • TZS 66,698,567,623 for regular expenditures, which includes:
  • TZS 9,254,956,938 for Other Charges (OC).
  • TZS 57,443,610,685 for salaries.
  • TZS 25,650,270,000 for development projects​​.

Received Funds:

• By March 2024, the Ministry received:
  • TZS 50,376,084,589.17 for regular expenditures (76.03% of the approved budget).
  • TZS 7,069,975,635.15 for Other Charges (79.09% of allocated OC).
  • TZS 43,306,108,954.02 for salaries (75.56% of allocated salary budget).
  • TZS 9,770,269,727.63 for development projects (38.09% of the allocated development budget)​​.

Financial Requests for 2024/2025

Overview

For the fiscal year 2024/2025, the Ministry of Industry and Trade is requesting approval from the Parliament for a total of TZS 110,899,722,000.

Breakdown of Requested Funds

• Total Requested Funds: TZS 110,899,722,000
  • Ordinary Expenditures (Matumizi ya Kawaida): TZS 81,115,206,000
  • Salaries: TZS 68,352,946,000
  • Other Expenditures: TZS 12,762,260,000
  • Development Expenditures (Matumizi ya Maendeleo): TZS 29,784,516,000

These funds are intended to support both the regular operations of the Ministry and its development projects aimed at boosting industrial and commercial growth in Tanzania. The ordinary expenditures cover the salaries and other necessary operational costs, while the development expenditures focus on strategic projects and initiatives to enhance the industrial and commercial sectors.

The 2023/2024 and 2024/2025 budgets for the Ministry of Industry and Trade reveals a strategic emphasis on expanding and improving the industrial and commercial sectors.

The increased allocations for both ordinary and development expenditures reflect the Ministry's commitment to fostering economic growth through better infrastructure, enhanced business environments, and stronger support for SMEs. These efforts are crucial for boosting the contributions of these sectors to Tanzania's economy, ultimately leading to sustainable development and improved livelihoods for the Tanzanian population.

Budget for 2023/2024

• Total Approved Funds: TZS 92,348,837,623
  • Ordinary Expenditures: TZS 66,698,567,623
  • Other Charges (OC): TZS 9,254,956,938
  • Salaries: TZS 57,443,610,685
  • Development Expenditures: TZS 25,650,270,000

Budget for 2024/2025

• Total Requested Funds: TZS 110,899,722,000
  • Ordinary Expenditures: TZS 81,115,206,000
  • Salaries: TZS 68,352,946,000
  • Other Expenditures: TZS 12,762,260,000
  • Development Expenditures: TZS 29,784,516,000

Key Insights Focus on Economic Growth

1. Increase in Total Budget:
   • The total budget requested for 2024/2025 shows a significant increase of TZS 18,550,884,377 from the previous year.
   • This increase reflects the Ministry's commitment to expanding its operations and development projects, indicating a more aggressive push towards industrial and commercial growth.
2. Ordinary Expenditures:
   • There is an increase in ordinary expenditures from TZS 66,698,567,623 in 2023/2024 to TZS 81,115,206,000 in 2024/2025.
   • This increase, especially in salaries and other expenditures, suggests a focus on strengthening the operational capacity of the Ministry, ensuring better service delivery, and improving employee welfare.
3. Development Expenditures:
   • Development expenditures have increased from TZS 25,650,270,000 in 2023/2024 to TZS 29,784,516,000 in 2024/2025.
   • The increase in funds allocated for development indicates a strong emphasis on infrastructure projects and strategic investments aimed at boosting the industrial sector.
4. Contribution to Economic Growth:
   • The increased budget allocations highlight the importance of the industrial and commercial sectors in driving Tanzania's economic growth.
   • Enhanced infrastructure, support for small and medium-sized enterprises (SMEs), and improvements in the business environment are key focus areas that will contribute to higher productivity, job creation, and overall economic development.
   • The Ministry's efforts to attract new investments and support existing businesses are expected to enhance Tanzania's competitiveness on a global scale.

While the budget for 2024/2025 signals a proactive approach towards advancing industrial and commercial sectors in Tanzania, challenges related to budget execution, allocation management, project oversight, and economic impact assessment will need close attention to ensure effective implementation and optimal use of resources:

1. Budget Execution Challenges: The Ministry of Industry and Trade received 76.03% of its approved budget for regular expenditures in 2023/2024 by March 2024. While this indicates a significant portion was disbursed, it also suggests potential challenges in fully utilizing allocated funds, particularly for development projects which received only 38.09% of the allocated budget by that time. This underutilization could stem from bureaucratic processes, delays in project implementation, or inefficiencies in financial management.
2. Increased Funding Requests: The request for TZS 110,899,722,000 in 2024/2025 represents a substantial increase compared to the approved budget of TZS 92,348,837,623 in 2023/2024. Securing parliamentary approval for this increased budget amidst fiscal constraints or competing priorities could pose challenges. It will require strong justification and strategic planning to convince stakeholders of the necessity and effectiveness of the additional funds.
3. Allocation Discrepancies: Despite increased allocations, discrepancies between allocated and received funds for specific expenditures (e.g., salaries, development projects) indicate potential discrepancies in financial planning or execution. These gaps may lead to operational challenges, such as delayed payments affecting employee morale or project delays impacting economic outcomes.
4. Project Implementation and Oversight: The focus on development expenditures highlights a strategic push for industrial and commercial growth. However, effectively managing and monitoring these development projects is critical. Challenges may arise in ensuring projects are completed on time, within budget, and with the intended impact. This requires robust project management capabilities and effective oversight mechanisms to prevent mismanagement or corruption risks.
5. Economic Impact and Sustainability: While increased budget allocations are intended to bolster economic growth through improved infrastructure and business support, the actual economic impact needs careful assessment. Ensuring these investments translate into sustainable economic benefits, such as increased productivity, job creation, and enhanced competitiveness, will be crucial. Challenges may emerge if outcomes do not align with expectations or if there are external economic shocks impacting the sectors.

Fiscal Health and Strategic Management: Revenue, Expenditure, and Economic Growth in Tanzania

In fiscal year 2024/2025, Tanzania's revenue collection reached TZS 28.12 trillion by March 2024, comprising TZS 20.76 trillion from taxes, TZS 2.54 trillion from non-tax sources, and TZS 1.19 trillion from local governments. Meanwhile, expenditures totaled TZS 30.19 trillion, with TZS 20.75 trillion allocated to recurrent costs and TZS 9.44 trillion to development projects. Notably, TZS 4.24 trillion of development spending was domestically financed, while TZS 5.20 trillion came from foreign sources. Despite a budget deficit of TZS 2.07 trillion, strategic measures aim to enhance revenue through improved tax administration and broaden the tax base, while prioritizing infrastructure and controlling recurrent expenditures to stimulate sustainable economic growth.

Revenue Collection

1. Total Revenue Collection:
   • Up to March 2024: The total revenue collected by the government amounted to TZS 28.12 trillion. This represents a significant achievement in the government's efforts to enhance revenue collection and ensure fiscal stability​​.
2. Breakdown by Revenue Sources:
   • Tax Revenues: TZS 20.76 trillion
   • Non-Tax Revenues: TZS 2.54 trillion
   • Local Government Authorities (LGAs) Own Source Revenues: TZS 1.19 trillion
   • Grants and Loans: TZS 3.63 trillion​​.

Expenditures

1. Total Expenditure:
   • Up to March 2024: The government expenditure reached TZS 30.19 trillion. This includes both recurrent and development expenditures​​.
2. Breakdown by Expenditure Type:
   • Recurrent Expenditure: TZS 20.75 trillion
     • Salaries and Wages: TZS 9.83 trillion
     • Interest Payments: TZS 4.45 trillion
     • Other Recurrent Expenditures: TZS 6.47 trillion
   • Development Expenditure: TZS 9.44 trillion
     • Domestically Financed: TZS 4.24 trillion
     • Foreign Financed: TZS 5.20 trillion​​.

Key Issues in Revenue Collection and Expenditure

1. Revenue Collection Challenges:
   • Tax Evasion and Avoidance: Despite efforts to enhance revenue collection, tax evasion and avoidance remain significant challenges. This affects the overall tax base and reduces potential revenues.
   • Inefficiencies in Revenue Administration: Issues such as outdated systems, lack of capacity, and corruption can hinder effective revenue collection. Improving these systems is essential for boosting revenues​​.
2. Expenditure Management Issues:
   • Budget Deficit: The expenditure surpassing revenue by TZS 2.07 trillion highlights a budget deficit, indicating a need for borrowing or adjustments in expenditure to balance the budget.
   • High Recurrent Expenditure: A substantial portion of the budget is allocated to recurrent expenditures, particularly salaries and interest payments. This limits the funds available for development projects, which are crucial for long-term economic growth​​.
   • Debt Servicing: Interest payments constitute a significant portion of recurrent expenditures. This underlines the burden of debt servicing on the national budget, necessitating prudent borrowing and debt management strategies​​.

Strategic Measures

Tanzania's ongoing efforts to manage revenues and expenditures effectively. While there are challenges, particularly in revenue collection and expenditure management, the government's strategic measures aim to address these issues and ensure sustainable economic growth. By enhancing revenue collection, prioritizing development expenditures, and managing debt prudently, Tanzania can improve its fiscal position and support long-term economic development.

1. Enhancing Revenue Collection:
   • Strengthening Tax Administration: Modernizing tax administration systems, enhancing the capacity of tax authorities, and implementing stricter measures against tax evasion.
   • Broadening the Tax Base: Introducing new taxes, improving compliance, and formalizing the informal sector to increase the tax base​​.
2. Expenditure Rationalization:
   • Prioritizing Development Expenditures: Focusing on high-impact development projects that can stimulate economic growth and generate future revenues.
   • Controlling Recurrent Expenditures: Implementing measures to control the growth of recurrent expenditures, particularly in areas like salaries and operational costs​​.
3. Debt Management:
   • Prudent Borrowing: Ensuring that new borrowing is sustainable and directed towards projects that can generate economic returns.
   • Debt Restructuring: Exploring opportunities to restructure existing debt to reduce interest payments and extend maturities​​.

Impact of the Budget Plan on Tanzania's Economic Growth

The budget plan outlined for the fiscal year 2024/2025 includes several key measures aimed at promoting economic growth in Tanzania. Below is an analysis of how these measures, backed by specific figures, are expected to support and enhance economic growth:

Revenue Enhancement Measures

1. Improving Tax Collection:
   • Total Revenue Target: The government has set an ambitious total revenue target of TZS 28.12 trillion up to March 2024. Achieving this target would enhance the government's ability to fund development projects and public services, which are essential for economic growth.
   • Tax Revenue: TZS 20.76 trillion, which forms the bulk of the total revenue, underscores the importance of efficient tax collection mechanisms. Improved tax administration and compliance can lead to a stable revenue stream, facilitating economic stability and growth​​.
2. Non-Tax Revenue:
   • Non-Tax Revenues: TZS 2.54 trillion, collected from various fees, fines, and charges, diversifies the revenue base. This helps in reducing dependency on tax revenues alone and ensures a steady inflow of funds for public investment​​.

Expenditure Allocation

1. Total Expenditure:
   • Expenditure Target: TZS 30.19 trillion, with a focus on both recurrent and development expenditures. This balanced approach ensures that immediate needs are met while also investing in long-term economic projects​​.
2. Development Expenditure:
   • Total Development Expenditure: TZS 9.44 trillion, which includes:
   • Domestically Financed: TZS 4.24 trillion
   • Foreign Financed: TZS 5.20 trillion
   • Impact: Development expenditure focuses on infrastructure projects, such as roads, bridges, and energy projects, which are crucial for economic growth. By improving infrastructure, the government aims to facilitate trade, reduce transportation costs, and attract foreign investment​​.
3. Recurrent Expenditure:
   • Recurrent Expenditure: TZS 20.75 trillion, covering essential services like salaries (TZS 9.83 trillion) and interest payments (TZS 4.45 trillion). Properly managed recurrent expenditure ensures the smooth operation of government services, which is necessary for maintaining social stability and supporting economic activities​​.

Key Issues and Strategic Measures

The implementation of the 2024/2025 budget plan, with its targeted revenue collection and strategic expenditure allocation, is designed to foster economic growth in Tanzania. By focusing on infrastructure development, improving the investment climate, and managing public sector reforms, the budget aims to create a conducive environment for sustainable economic growth. The key figures presented illustrate the government's commitment to achieving these goals through prudent financial management and strategic investment in critical sectors.

1. Budget Deficit Management:
   • Deficit: With expenditures exceeding revenues by TZS 2.07 trillion, there is a need for prudent borrowing and efficient use of funds to avoid excessive debt burden.
   • Strategic Borrowing: The government plans to ensure that new borrowing is sustainable and directed towards projects with high economic returns. This approach aims to leverage debt for growth rather than burden future budgets​​.
2. Enhancing Investment Climate:
   • Investment Policies: Completion of a new investment policy and strategy to attract more foreign and domestic investment. This includes incentives for investors and improved regulatory frameworks.
   • Special Economic Zones: Developing and managing special economic zones to attract businesses, create jobs, and boost exports. This initiative is expected to stimulate industrial growth and enhance economic diversification​​.
3. Public Sector Reforms:
   • Reforming Public Enterprises: Identifying and reforming underperforming public enterprises to improve efficiency and reduce fiscal drain. Efficient public enterprises can contribute to economic growth through better service delivery and reduced operational costs​​.
4. Sector-Specific Investments:
   • Agriculture and Industry: Focus on boosting agriculture through modern techniques and supporting industrial growth via infrastructure improvements. These sectors are crucial for job creation and economic stability.
   • Tourism and Services: Enhancing the tourism sector by improving infrastructure and marketing. The services sector, including financial services, is also targeted for growth, contributing to a diversified economic base​​.

Driving Tanzania's Economic Renaissance: The Impact of Strategic Budget Investments on Growth, Investment, and Employment

The implementation of the 2024/2025 budget plan, with its focused investment in infrastructure, incentives for foreign and domestic investments, and strategic expenditure on development projects, is designed to drive economic growth, create jobs, and enhance investment in Tanzania. By improving the investment climate, increasing employment opportunities, and diversifying the economy, the budget plan aims to foster a sustainable and inclusive economic growth trajectory for the country.

Investment (Uwekezaji)

1. Foreign Direct Investment (FDI):
   • Capital Inflows: The Tanzania Investment Centre (TIC) registered investment projects with significant capital inflows, including 181 projects with a total capital of USD 535.90 million in a past period. The continued attraction of such investments is expected to contribute substantially to economic growth by introducing new technologies, creating jobs, and expanding industrial activities​​.
   • Special Economic Zones (SEZs): Expansion of SEZs such as the Buzwagi and Kilimanjaro Industrial Park aims to attract more investors. These zones provide incentives and infrastructure that make it easier for businesses to operate, which in turn stimulates economic activities and growth​​.
2. Public Investment Projects:
   • Development Expenditure: With a total development expenditure of TZS 9.44 trillion, the government is investing heavily in infrastructure projects such as roads, bridges, and energy. These investments improve the business environment, reduce operational costs, and attract both domestic and foreign investors​​.

Employment (Ajira)

1. Job Creation through Investments:
   • Employment from TIC Projects: Investment projects registered with the TIC have created numerous jobs. For instance, the average number of jobs created annually highlights the positive impact of these investments on employment. This not only reduces unemployment but also improves the standard of living for many Tanzanians​​.
   • Infrastructure Projects: The development expenditure on infrastructure projects is expected to generate employment opportunities both directly and indirectly. For example, construction projects require a large workforce, and improved infrastructure can lead to more business activities, which further creates jobs.
2. Public Sector Employment:
   • Recurrent Expenditure on Salaries: TZS 9.83 trillion allocated for salaries ensures that public sector employees are adequately compensated. This helps maintain a stable and motivated workforce that is essential for delivering public services and supporting economic activities​​.

Economic Growth (Uchumi)

Tanzania's 2024/2025 budget plan focuses on leveraging foreign and domestic investments, enhancing infrastructure, and boosting key sectors like agriculture and industry to foster sustainable and inclusive economic growth. The plan not only aims to increase GDP through efficient use of funds but also prioritizes job creation and economic diversification, thereby improving overall economic conditions and living standards in the country.

1. GDP Growth:
   • Increased Revenues: With total revenue collection targeted at TZS 28.12 trillion, the government has more resources to invest in critical sectors such as health, education, and infrastructure, which are vital for economic growth​​.
   • Efficient Use of Funds: By ensuring that development expenditures are efficiently used in high-impact projects, the government aims to achieve higher GDP growth rates. Improved infrastructure, for instance, enhances productivity and economic efficiency, leading to overall economic growth.
2. Diversification of the Economy:
   • Sectoral Investment Distribution: The distribution of investment projects across various sectors (e.g., agriculture, industry, services) helps diversify the economy. Diversification reduces dependence on a few sectors and mitigates economic risks, making the economy more resilient and robust​​.
   • Support for Key Sectors: Specific focus on boosting agriculture through modern techniques and supporting industrial growth via infrastructure improvements ensures that these key sectors contribute significantly to economic growth. For example, modernizing agriculture can increase productivity and exports, while industrial growth can create jobs and stimulate other economic activities​​.
3. Investment (Uwekezaji):
   • Foreign Direct Investment (FDI): Significant capital inflows from foreign investment projects, totaling USD 535.90 million, are expected to drive economic growth. These investments bring in new technologies, create jobs, and expand industrial activities.
   • Special Economic Zones (SEZs): Expansion of SEZs like Buzwagi and Kilimanjaro Industrial Park aims to attract more investors by offering incentives and necessary infrastructure, thereby stimulating economic activities.
4. Employment (Ajira):
   • Job Creation through Investments: Investment projects registered with the Tanzania Investment Centre have created numerous jobs, thereby reducing unemployment and improving the standard of living.
   • Infrastructure Projects: Heavy government investment in infrastructure such as roads, bridges, and energy projects not only improves the business environment and reduces operational costs but also generates employment directly through construction and indirectly through increased economic activities.
5. Economic Growth (Uchumi):
   • GDP Growth: The government's targeted revenue collection of TZS 28.12 trillion enables significant investment in critical sectors like health, education, and infrastructure, which are essential for sustained economic growth.
   • Diversification of the Economy: Investment distribution across agriculture, industry, and services sectors aims to diversify the economy, reducing dependency risks and enhancing resilience. Specific support for agriculture and industrial growth through infrastructure improvements is expected to boost productivity and stimulate economic activities.