Dar es Salaam. Across Tanzania, a sweeping reform effort is underway, fostering a pro-business environment and targeting the country’s public sector and its state-owned enterprises (SOEs).
These commercial public entities, which have traditionally struggled to balance service delivery with financial sustainability, are now being restructured to operate more efficiently and profitably.
At the forefront of this transformation is the Office of the Treasury Registrar (OTR), under the leadership of Mr Nehemiah Mchechu.
“Our intention is to make commercial public institutions adopt a corporate mindset, so they can offer better services, attract more customers, and eventually become profitable,” Mr Mchechu explained recently.
His office is guiding the transformation process, focusing on improved governance, enhanced operations, and long-term sustainability for these entities.
Redefining the role of public enterprises
Historically, majority of Tanzania’s public institutions with commercial faces have been reliant on government subsidies, often perceived as a burden on the national budget.
However, the reforms aim to reduce this dependency by transforming these institutions into profit-driven entities that still serve the public good.
The government does not intend to compete with the private sector but seeks to build the capacity of these entities to operate effectively, sustainably, and profitably.
To achieve this, leadership within public institutions will be strengthened.
Mr Mchechu emphasized that going forward, directors, board members, and chairpersons of state-owned enterprises must possess relevant sector-specific expertise.
These leaders will be tasked with driving the institutions towards higher performance, embracing efficiency, and meeting profitability goals while adhering to the core principle of public service.
“The government’s goal is not to do business but to help state-owned enterprises become more efficient and self-reliant, contributing to the economy,” said Mr Mchechu.
The OTR has plan on cards to oversee these institutions by acting as a holding company, which would ensure they meet performance targets while allowing them the autonomy to manage their daily operations effectively.
Economists back the vision
Economists are largely supportive of the reforms, seeing them as crucial for the country’s economic growth.
Dr Lutengano Mwinuka, an economist from Dodoma University, recently stressed the importance of adopting private-sector management practices to increase efficiency and competitiveness in public institutions.
“There is a misconception that the government should not engage in business,” said Dr Mwinuka.
“However, the reality is that public institutions need to incorporate business practices in order to be efficient and effective.”
For these institutions to reach their full potential, Dr Mwinuka advocated for collaboration with the private sector.
“Public institutions cannot do it alone. They need the expertise, resources, and global best practices that the private sector can provide,” he said.
This emphasis on collaboration highlights a broader perspective shared by Dr Donath Olomi, a business expert and an economist, who argued that public enterprises have the potential to make a significant economic impact.
“Even though the main goal of public institutions is to deliver services, they must operate with efficiency, quality, and innovation to have a positive impact on the economy,” Dr Olomi explained.
Shifting to a results-oriented approach
The reforms also emphasize a shift in how public institutions are managed and evaluated.
Dr Olomi pointed out the need for a results-oriented approach to governance, where the focus is on outcomes rather than just inputs.
Public entities should be held accountable for the quality of their services and the impact they have on citizens.
“To achieve the desired outcomes, the leadership of public institutions must be competitive and focused on results,” Dr Olomi stated.
“There should be robust performance indicators and greater autonomy in decision-making to ensure that these entities operate efficiently and effectively.”
Prof Abel Kinyondo, an economist from the University of Dar es Salaam, also supports this shift but adds a crucial caveat.
While public institutions should adopt businesslike practices, he emphasized that their primary objective should remain ‘the maximization of service delivery’, not profit generation.
“Public institutions should not be driven by profit maximization at the expense of citizens,” Prof Kinyondo warned. “The focus should always be on delivering efficient, quality services.”
A path toward financial independence and national growth
With 309 entities in operation—comprising 253 institutions, corporations, and government agents, Tanzania is investing heavily in these enterprises, which collectively contribute to 20 percent of employment in the country.
The government has invested Sh86.3 trillion to these entities, and the new reforms aim to ensure that this investment yields significant returns.
The transformation of public institutions is not just about improving profitability—it is also about reducing the financial burden on taxpayers.
By becoming more efficient, these institutions will require fewer government subsidies and will be able to contribute to the national budget, potentially paying dividends to the government.
These reforms are designed to help state-owned enterprises thrive without relying on state funding, creating a more sustainable and efficient public sector.
As Prof Kinyondo pointed out, public institutions can serve as a model of efficiency, providing high-quality services while still making a positive impact on the economy.
A vision for the future
The ongoing transformation of Tanzania’s public sector has the potential to redefine the role of state-owned enterprises in the economy.
With their contributions to employment, public service delivery, and national development, these entities are a critical part of the country’s growth story. However, their ability to generate real economic impact depends on how effectively they can adopt a businesslike approach, improve service quality, and maximize efficiency.
By implementing these reforms, Tanzania is positioning its public enterprises to become not only self-sustaining but also key drivers of economic growth.
As state-owned enterprises become more businesslike, focusing on outcomes and results, they will better serve the public and contribute to the national economy.
In this new era, public institutions can achieve both profitability and public value, ensuring a brighter future for all Tanzanians.
