Tanzanian Association Oslo

Latest World Bank report says:

Corruption still on the rise in Tanzania

’’The cost in unofficial’ payments made by a typical firm to get things done in the country during 2006 was equivalent to 2.70 per cent of sales, compared to 2003 when it was just 0.23 per cent of sales�’’

THISDAY REPORTER Dar es Salaam

FINDINGS of a new World Bank survey say that Tanzanian society is more corrupt today in some areas than it was four years ago, with many investors asserting that they have to pay substantial amounts in bribes to win lucrative government contracts.

According to the report compiled by the World Bank-commissioned Enterprise Surveys, businessmen in Tanzania said they had to pay more bribes to get things done and win contracts last year than they did in 2003.

The report says that doing business in Tanzania may require making ’unofficial’ payments to clear red tape, and offering gifts to tax inspectors or officials involved in issuing government contracts.

To measure the perception of corruption, some 419 firms were surveyed in the country with business leaders asked how much they spend to get things done.

The findings, according to the report, show that the cost in ’unofficial’ payments made by a typical firm to get things done in the country during 2006 was equivalent to 2.70 per cent of sales, compared to 2003 when it was just 0.23 per cent of sales.

Figures for Tanzania in this aspect are a fraction higher than the sub-Saharan Africa average of 2.14 per cent, the report further states.

It also notes that the ’’value of gift expected to secure a government contract’’ in Tanzania was last year found to be equivalent to 2.94 per cent of the contract, on average.

This is a slight increase from four years ago, when businessmen operating in the country reported that they had to give ’gifts’ to government authorities amounting to 2.90 per cent of the value of the contract.

However, the survey says there was a notable decrease in the number of businesses that had to give local tax officials ’gifts’ in 2006, compared to 2003.

It is reported that 14.70 per cent of companies polled in Tanzania last year said they were expected to offer some sort of ’gifts’ in meetings with visiting tax inspectors, compared to 2003 when 22.41 per cent of businesses polled said the same.

The survey, covering a total of 103 countries worldwide, showed that businessmen felt there were more instances of corruption in Tanzania than the sub-Saharan average.

Within the East African Community (EAC) bloc, Burundi businessmen paid most bribes as a percentage of sales at 4.4 per cent, while Rwandan businessmen paid the least at 2.13 per cent of sales.

The report said Ugandan businessmen paid the most to win contracts, while Rwandans paid the least at less than one per cent of the contract value. Uganda was perceived as overall more corrupt than Tanzania and Rwanda, but less corrupt than Burundi in the EAC.

There were no figures available for Kenya during 2006.

In other business-related areas, senior management time spent in dealing with requirements of government regulation was at 4.01 per cent last year, compared to four years ago when bureaucracy ate up 14.39 per cent of the time of senior management.

At the same time, it is reported that the confidence level in Tanzania’s judiciary system increased to 60.42 per cent last year, compared to just 44.91 per cent four years ago.

In 2006, security costs as a percentage of business company sales in the country were pegged at 2.71 per cent, a slight increase from 2.29 per cent recorded in 2003.

There was also a significant decrease in company losses caused by theft, robbery, vandalism, and arson, to just 0.47 per cent of sales compared to 1.94 per cent four years ago.

Delays for companies obtaining electrical connection in Tanzania was down to an average of 44.28 days last year, compared to 54.59 days in 2003.

On the other hand, delays in obtaining landline telephone connection remained almost unchanged, from 23.07 days in 2003 to 23.25 days last year.

The Enterprise Surveys focus on the many factors that shape the decisions of firms to invest, are conducted by the World Bank and its partners across all geographic regions, and cover small, medium, and large companies.

In the Tanzanian case, the survey this year lists the top 10 constraints for investment as being electricity, access to and cost of financing, tax rates, transport, access to land, crime, theft and disorder, skills & education of workers, informality, tax administration and business licensing & permits.