Dar es Salaam. What would happen if the Office of the Treasury Registrar (OTR) operated more like a holding company?
This is the question that is driving a significant shift in how the OTR plans to manage state-owned entities.
With a focus on enhancing efficiency and maximising returns from the staggering Sh86.3 trillion invested in Public and Statutory Corporations (PSCs) and minority interest corporations, the OTR is determined to redefine its role and impact.
This investment encompasses a total of 309 entities under the oversight of the OTR, with 253 being purely public entities and 56 representing minority stakes.
Under the guidance of the Treasury Registrar, Mr Nehemiah Mchechu, the OTR aims to fine-tune operations of these entities by adopting a holding company model.
This approach prioritises oversight over direct management, enabling the OTR to concentrate on strategic guidance while public entities, as subsidiaries, manage their day-to-day operations.
The motivation behind this transition stems from concerns about inefficiency and the low contribution of public institutions to the country’s Gross Domestic Product (GDP).
Currently, the contribution from non-tax revenue collected by the OTR from Public and Statutory Corporations (PSCs) and minority stakes is just three percent of domestic revenue.
The ambitious goal is to increase this figure to 10 percent within the next five years, in accordance with directives issued by Her Excellency President Dr Samia Suluhu Hassan in August of last year.
To further support this transformation, the government, through the OTR, recognises the importance of granting greater independence to strategic and commercially driven entities.
By allowing these organisations to operate with increased autonomy in certain areas, OTR aims to enhance their ability to achieve their goals effectively.
This shift is not just about numbers; it’s about instilling a culture of accountability and productivity within state-owned entities.
To ensure that this newfound independence translates into tangible results, OTR will implement criteria to identify eligible institutions and measure the outcomes of this autonomy.
These criteria are already established and will be clearly defined, allowing for accountability while empowering state-owned enterprises to innovate and respond to market demands more effectively.
Through this initiative, OTR is committed to fostering an environment where these entities can thrive and contribute more significantly to the national economy.
Mr Mchechu has consistently emphasised that the OTR should not view itself merely as a regulator but rather as a collaborative partner in the governance of these institutions.
“My office needs to operate like a holding company,” he asserted recently, highlighting the need for engagement while maintaining the authority.
This model promises to foster a collaborative environment where creativity and innovation can thrive, ultimately benefiting the government and the public.
State-owned entities play a vital role in the economy, contributing to 20 percent of employment in the country.
Mr Mchechu encouraged these organisations to be proactive in enhancing productivity.
“Commercial-orientated entities should work round the clock to ensure they increase their contribution to the government coffers,” he advised, calling for a mindset shift that embraces efficiency and creativity.
In this context, Mr Mchechu commended the Tanga Urban Water Supply and Sanitation Authority (Tanga-UWASA) for their innovative use of bonds to raise Sh54.72 billion for infrastructure development.
Such initiatives not only improve access to clean water but also illustrate the potential for state-owned entities to seek alternative financing avenues.
Furthermore, non-commercial institutions are urged to enhance their efficiency and reduce dependency on government funding.
Mr Mchechu’s call to action is clear: state-owned entities must be creative and resourceful in finding new financial solutions, whether through loans or other arrangements.
Ultimately, the success of this transformation rests on the shoulders of leadership.
Mr Mchechu called on the board chairmen of public entities to uphold strict governance standards as a demonstration of support for President Samia’s commitment to fostering a conducive business environment.
This political will is crucial in attracting both local and foreign investors, and it is the responsibility of state-owned entities to complement these efforts by providing excellent services.
As the OTR prepares to embark on this new journey, the potential benefits of operating like a holding company are immense.
It presents an opportunity to enhance the effectiveness of state-owned entities, ensuring they contribute more significantly to the nation’s economy and ultimately improving the lives of citizens.
The time for change is now, and with a focused strategy, the OTR is poised to lead the way.
