TANZANIA

Tanzania is a democratic unitary republic divided between mainland Tanzania and the archipelago of Zanzibar. The president of the United Republic of Tanzania is the head of State and head of government and is directly elected for two five-year terms. The president of Zanzibar is responsible for Zanzibar's domestic affairs. Mainland Tanzania has a unicameral National Assembly composed of 394 members, of which 264 are elected (including five by the Zanzibar House of Representatives) and 10 appointed by the president. Zanzibars' legislative power is vested in the House of Representatives, made up of 82 members, of which 10 are nominated by the president of Zanzibar. The Constitutions of Tanzania and Zanzibar provide that not less than 30% of the National Assembly and the House of Representatives shall be women.

In mainland Tanzania, Articles 145 and 146 of the Constitution of Tanzania supported by the Local Government (District Authorities) Act 1982 and the Local Government (Urban Authorities) Act 1982 recognize the existence of local government authorities with functions of their own, and state that the National Assembly must provide for the establishment of local governments through legislation. In Zanzibar, the basic features of the local government system are mentioned in the 1984 Constitution (Article 128). The main legislation regarding local governments is the Local Government Act of 1992, amended in 1999, the Zanzibar Municipal Council Act of 1995 and the District and Town Council Act of 1995. The minister of State in the president's Office for Regional Administration and Local Governments (PO-RALG) is responsible for administering local government legislation in mainland Tanzania. In Zanzibar, the president's Office for Regional Administration, Local Government and Special Departments oversees enforcing local government legislation.

After being abolished in 1972, local governments were re-introduced in 1982 through several acts enacted concurrently with the amendment of the Constitution in 1984. In 1997, the Local Government Reform Program was introduced to improve the access and quality of services provided by subnational governments and aimed to promote democratic, accountable, and autonomous local governments with broad discretionary powers. It also provided them with a solid financial base with the elaboration of a specific funding mechanism, the Local Government Development Grant. This program was the main vehicle for operationalising the Policy Paper on Local Government Reform (MRALG, 1998). In 2004, the government undertook a comprehensive review of the policy framework underpinning the structure of local government financing, including the harmonisation and rationalisation of local government revenues, the introduction of a formula-based recurrent grant system, and the introduction of a capital development grant system. In 2018, however, the Local Government Development Grant was discontinued due to a lack of resources.

Currently, the government is capitalizing on the Regional and Local Government Reform Programme (RLGRP) 2020–2030 through the PO-RALG, wherein local economic development (LED) is given emphasis.

Elections for local government leaders are held every five years simultaneously to those of the president and members of parliament. The last general elections were held in October 2020 and were Tanzania's 12th elections since independence from Britain in 1961 and the 6th competitive poll since the reintroduction of multiparty politics in 1992.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2020)
Districts (Wilaya)
Average municipal size: 353 457 inh.
150			150

OVERALL DESCRIPTION: In Tanzania, there are 150 districts (139 in mainland, 11 in Zanzibar), which are the main local government units in the country.

Tanzania is also divided into 31 planning regions for administrative purpose, 26 on the mainland and five on Zanzibar. According to the amended Local Government Legislation and the Regional Administration Act of 1997, each region has a regional secretariat that facilitates relations with the central government, provides technical advice and supervises district councils at the regional, district and divisional levels. In addition, the Regional Administration Act of 1997 established consultative committees for each region and district. These committees are responsible for advising local governments on their development plans as well as monitoring and coordinating the region's overall economic development. The regional committees and offices report to the president's Office for Regional Administration and Local Governments in Mainland Tanzania.

In Zanzibar, the entire subnational system of governance is managed centrally through the ministry of State (president's Office) for Regional Administration, Local Government and Special Departments (MRALGSD). Each region has a regional commissioner appointed by the president. The functions of the regional commissioner include monitoring, supervising, and ensuring that the policies, plans and directives of the government are observed; maintaining law and order in the region in collaboration with law enforcement agencies; and ensuring that resources, both material and manpower are used for development in the economy to enhance welfare.

MUNICIPAL LEVEL: The 150 districts of Tanzania are divided into urban and rural districts, headed by local councils. Currently, there are 195 local councils operating in these 150 districts (some districts have more than one council): 53 are urban (47 on the mainland, 6 in Zanzibar) and 142 are rural (137 on the mainland, 5 in Zanzibar, also called district councils). Some of the districts have more than one council because districts vary in geographical area coverage and a higher number of local councils allows local leaders to serve people in proximity.

At the sub-municipal level, the legislation imposes that women occupy at least one-third of ward representatives and 25% of village council seats. The quotas increased the number of female councillors by 29% between 2015 and 2020, from 978 to 1 374 across all authorities. In addition, all 196 urban and district (rural) councils must set up committees in specific sectors such as finance, administration, planning, education, health, water, economic affairs and the environment. Local governments may establish other committees within the limit set for each type of local authority. Priorities for local service delivery and local development projects are discussed by the different committees established at the sub-municipal levels before being directed to the Ward Development Committee, which will coordinate and supervise project implementation. The Ward Development Committee is comprised of the elected ward councillor and the chairpersons of all village councils within the ward. It also includes members of the district council and guests from other groups involved in promoting ward development.

Approximately 83% of the national population dwells in municipalities with between 100 000 and 500 000 inhabitants. Approximately 5% of the population lives in municipalities larger than 1 million inhabitants. The top 5 largest municipalities are located in the regions of Dar es Salaam, Geita and Mwanza: Kinondoni, Temeke and Ilala municipal councils in Dar es Salaam region comprise each between 1.2 to 1.8 million inhabitants; Geita district council in the Geita region counts 807 619 inhabitants; and Sengerema district council in the Mwanza Region has 663 034 inhabitants.

HORIZONTAL COOPERATION: Although each local government in Tanzania has its own jurisdiction, the Local Government Finance Act of 2002 allows them to „invest any part of the moneys available in any fund of the authority in such investments as authorised investments“ (section 41). In Dar es Salaam, for example, four local governments (Dar City, Kinondoni, Ilala and Temeke) collaborated to establish the Dar es Salaam Community Bank (DCB), which began providing banking services in 2002. DCB is a private, publicly traded microfinance bank that was founded to serve the banking needs of the poorest of the poor in Dar-es-Salaam and its surrounding suburbs.

SUBTIONAL GOVERNMENT

As the single tier of subnational government, districts are at the interface with the people and play a critical role in delivering governance and social and economic services. Such services include infrastructure, education, health, water, security and sanitation. According to the Local Government Act No. 9 of 1982 and the Policy on Local Government Reform of 1998, districts are supposed to identify and improve local revenue mobilisation and identify potential investment areas to promote sustainable economic and social development activities in their respective jurisdictions.

In Zanzibar, the provision of services such as primary education, primary health, agricultural extension and roads, all fall under the responsibility of the central government. However, according to a 2018 Situational Analysis report, in Zanzibar, the government decided to assign substantive responsibilities to local governments in the education and health sectors, although most of the corresponding systems and financing modalities are yet to be defined.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level
1. General public services (administration)	Public buildings and facilities, Salaries and administration costs; Civil Status Register
2. Public order and safety	Facilitation of maintenance of law and order; Police; Fire protection
3. Economic affairs / transports	Roads (maintenance, constructions, lightning); Transport, Ports, Airports; Agriculture; Forests, Fisheries; Local economic Development and promotion; Trade and Industry; Tourism;
4. Environment protection	Refuse collection and disposal; Environmental protection
5. Housing and community amenities	Construction and renovation; housing; town planning; Gas service; Electricity; Water supply and sanitation; Cemeteries and crematoria; Slaughterhouses; Consumer protection
6. Health	Primary care; Hospitals, Health protection
7. Culture & Recreation	Theatre and concerts; Museums and libraries; Parks and open spaces; Sports and leisure
8. Education	Primary, Secondary, and adult education
9. Social Welfare	Kindergarten and nursery; Family welfare services; Welfare Homes; Social Security housing subsidies and benefits

Scope of fiscal data: Districts in mainland Tanzania and Zanzibar

SNA 2008

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION. As established in the Local Government Finance Act of 1982 (amended in 1999), local governments (LGs) have the power to levy taxes (property taxes) and collect rents, fees (taxi registration, bus stands, forestry products) and charges. Another bulk of local government revenue comes from sector-specific transfers from the national government and donor basket funds. Most of these resources are recurrent grants linked to line ministries responsible for education, health, water, roads and extension services, which correspond to the key services provided by LGs. Other smaller transfers take the form of development and equalisation grants.

The national government has undertaken several reforms to increase the resources available to LGs and increase their efficiency through changing the incentive structure of the intergovernmental fiscal system, albeit with meagre results. The broad government policy for LG financing is outlined in the overall LG reform policy of 1998. The policy states that the government’s objectives are to improve LG revenue, promote transparency and fairness in the allocation of sufficient funds; encourage equity in access to services; and ensure efficient use of resources for service delivery at all levels.

Subnational government expenditure by economic classification
2019/20	Dollars PPP / inhabitant	% GDP	% General government	% subnational government
Total expenditure	14	0.5%	2.9%	100.0%
Inc. current expenditure	10	0.4%	3.6%	70.4%
Compensation of employees	9	0.3%	6.9%	63.3%
Intermediate consumption	-	-	-	-
Social expenditure	-	-	-	-
Subsidies and current transfers	-	-	-	-
Financial charges (Interest cost)	-	-	-	-
Others	1	0.04%	1.0%	7.1%
Incl. capital expenditure	4	0.2%	1.9%	29.7%
Capital transfers	-	-	-	-
Direct investment (or GFCF)	-	-	-	-

EXPENDITURE. The total expenditures for LGs amounted to TZS 762.0 billion in fiscal year 2019-2020, representing 2.9% of general government expenditure and 0.5% of GDP. Current expenditure accounts for the larger share of subnational expenditure. LG recurrent expenditure is mainly focused on staff expenditure (63.3% of the total expenditure), followed by other spending to support youth and women groups which accounts for 7.1% of the total.

DIRECT INVESTMENT. In FY 2018/19, the government of Tanzania established the Strategic Project Fund (SPF) through the Ministry of Finance and Planning to support and finance LGs’ strategic infrastructure projects. According to the new issuing modalities, emphasis is made on LG investment in strategic projects that will enhance revenue generation and reduce dependence on central government grants.

Investments in education, health facilities and road construction account for the bulk of SNG capital expenditure, which represents 29.7% of all expenditure in FY 2019/20.

Moreover, the government is now moving towards an alternative project financing (APF) mechanism and has launched a strategy encouraging municipalities to fund their income generating projects with commercial long-term financing such as municipal bonds, PPPs, blended finance etc. APF was launched in May 2021 and has emerged as an important and essential mechanism to complement traditional financing methods through options available in the financial and private sectors. The aim is to reduce pressure on government budget. To reach the objective of strengthening long-term development finance, the government has put in place policy, legal and regulatory frameworks to support the implementation of APF in the country. These include the Public Private Partnership Act of 2010 (as amended in 2014 and 2018); the Public Procurement Act of 2011 (as amended in 2016), as well as the National Guideline for Developing and Financing Income Generating Infrastructure Investment of 2021. Effective and efficient implementation of APF will require the participation of all stakeholders from both public and private sectors.

ⓘ No detailed data available for this country

According to the amendment to the Local Government Finance Act of 2018, chapter 290, section 37A, the central government established the Youth and Women's Development Fund with interest-free loans totalling 10% of local council revenue and distributed among the youth (4%), women (4%) and people with disabilities (2%) sectors. The act emphasises economic empowerment to address unemployment by providing loans to vulnerable groups and eradicating poverty through private enterprise.

For 2020/2021, expenditure on youth, women, and people with disabilities was estimated to be at TZS 53.8 billion, accounting for 7.1% of the LGs' total expenditure.

Subnational government revenue by category
2019/20	Dollars PPP / inhabitant	% GDP	% General government	% Subnational government
Total revenue	14	0.5%	3.7%	100.0%
Tax revenue	6	0.2%	1.9%	42%
Grants and subsidies	5	0.2%	-	36%
Tariffs and fees	-	-	-	-
Income from assets	-	-	-	-
Other revenues	3	0.1%	-	22%

OVERALL DESCRIPTION: In Tanzania, LGs can raise their own revenue from different sources including fees (e.g., on forest products), licenses, property taxes and rents, charges and fines, depending on the availability of appropriate sources as stipulated in the Local Government Finance Act, 1982. To ensure that LGs meet their responsibilities, the government of Tanzania has made several reforms to facilitate improvement in revenue collections in the last two decades, including the Local Government Reform Programme (LGRP) and the Public Finances Reform Programme (PFRP) of 1998. Generally, local governments have a weak revenue base. To remedy the situation, the Local Government Finance Act of 1982 was amended in 1999 to allow local governments to issue licences (e.g. licences to commission agents, manufacturers’ representatives, brokers, travel agents, motor vehicle sales, import and export trade, etc).

Local governments also receive transfers from national budget allocations through different ministries. According to the auditing of 185 LGs for the financial year 2019/20, in average, own-source revenue only covers 15% of recurrent spending of subnational governments. This reflects a dependence on intergovernmental grants for recurrent expenditure. In the exceptional case of the Dar es Salaam City Council, the collection of own revenue is four times higher than its recurrent expenditure, which reveals greater independence for budget management.

From 2015/16 to 2018/19, the contribution of own-source revenue decreased from 28% to 11%, indicating that the LG dependency to central government strongly increased, due to an increased need of funding by LGs.

TAX REVENUE:Local authorities are responsible for the collection of the council property tax, a tax on crop cession, a tax on forest produce cession, a guest house tax and a service levy, among others. The property tax is levied at a flat rate on the property value by the municipal or city council. Applicable rates vary depending on the size, use, and location of the property. The property tax, sales tax and other taxes totaled TZS 320.0 billion or 42% of total LG revenue in 2019/20.

According to the 2020 Performance Audit Report on Revenue Collection from Own Sources in Local Government Authorities, most of these taxes were difficult to collect due to LGs' limited and narrow tax base. While the available sources generate low revenues, unrealistic revenue projections were among the causes of revenue collection targets not being met. Furthermore, insufficient supervision, failure to collect revenues to the full potential of available sources and a lack of effective strategies for expanding the tax base of local government authorities were identified as contributing factors.

GRANTS AND SUBSIDIES. Intergovernmental fiscal transfers are the second main sources of revenue for local governments, and they accounted for TZS 274.3 billion, equivalent to 36% of total local revenue. Transfers to local governments include earmarked transfers for five national policy priority areas, which are education (60% of earmarked transfers), healthcare (16%), water, roads and agriculture and public administration. These transfers are mainly earmarked to cover operational activities (salaries for public servants), as well as for consumption of goods and services, normal repairs and rehabilitation, and maintenance of equipment.

In addition, LGs perceive shared revenues from the national government that originate from fuel levy (30% is distributed to LGs, specifically transferred for the maintenance of roads) and from land rent (20% is distributed to LGs).

In Zanzibar, local authorities may receive transfers from the central government in the form of conditional grants, block grants, equalisation grants, State support grants, as well as donor grants.

A significant part of capital grants came from the Local Government Development Grant (LGDG) – a performance-based grant system discontinued in 2018, which was also the main vehicle for allocating development grants to local governments in mainland Tanzania. The LGDG transfers across subnational governments were made using a horizontal allocation formula, linked to performance on financial management aspects (including a set of minimum conditions and performance measures). The LGDG counted 3 types of grants: council development grant, capacity building grant and monitoring and evaluation grant.

Between 2017 and 2020, eight cities in Tanzania received targeted support from the World Bank through the “Tanzania Strategic Cities Project” to scale up infrastructure investments and promote growth. A successor project is the Tanzania Urban Development Project.

OTHER REVENUES. Revenue from other sources accounted for TZS 167.6 million, or 22% of total local revenue in 2019-2020. Fees for user services (e.g., parking, refuse collection, health facilities), administrative fees (e.g., for market stalls, auctions, land surveys), license fees (e.g., commercial fishing and liquor licenses), fines, permits (e.g., building permits) and property income are some examples. Local governments are only able to levy fees authorised by central government legislation.

ⓘ No detailed data available for this country

FISCAL RULES: With regards to budgetary accountability and reporting, the Ministry of Finance and Planning requires local governments to report quarterly on both the financial and physical progress of the resources received. The physical progress refers to a narrative report included in the Council Development Report (CDR), to highlight achievements, challenges and actions taken. On the other hand, financial progress is reported in the Council Financial Report (CFR). Reports are reviewed by local government councils before being submitted to the president’s Office for Regional Administration and Local Governments to show that funds disbursed to local governments are accounted for. As part of the annual reporting, local governments are required to prepare and publish annual performance reports on the results of activities and programmes in their strategic plans and submit them to the president’s Office for Regional Administration and Local Governments, usually by 30 September of each year.

DEBT: Local governments can borrow from financial institutions and pension funds. As per section 11 (1) of the Local Government Finance Act of 1982, a local government may only take out a loan in the United Republic of Tanzania and with the approval of the minister responsible for local government, who shall also consult with the minister responsible for finance.

In FY 2016/17, total local government borrowing amounted to TZS 381.4 million (i.e., 175 185 dollars PPP). Local governments process loan requests (for major infrastructure projects) to the president’s Office for Regional Administration and Local Governments for approval. The request is accompanied by the applicant’s own revenue for the last three years and the schedule for payment of interest and repayment of the loan.

UNCDF is providing technical support to national and subnational entities within the alternative project financing (APF) initiative, to enhance their capacity to access and mobilise funds through the capital market via subnational revenue bonds.

TERRITORIAL MANAGEMENT OF THE CRISIS: Tanzania's first coronavirus case was reported on 16 March 16 2020. In contrast to other countries in the region, Tanzania did not impose a strict lockdown. The pandemic was managed with the creation of the National Task Force (NTF), which included members from the central government, the WHO, other UN bodies, donor agencies and NGOs to advise on how to best deal with the crisis. The NTF developed a National Response Plan to manage the COVID-19 pandemic. The plan included the formation and training of National Rapid Response Teams (RRTs) in regions and districts, the development of a readiness package, the development of risk assessment tools, and of COVID-19 standard operating procedures (SOPs). In addition, the prime minister's office and the ministry responsible for health provided guidance to ministries, departments, agencies and LGs to limit and restrict private and public gatherings and adhere to social distancing, and launched an awareness campaign emphasising preventive measures, based on the recommendations of the WHO.

In April 2020, 25 officers were prepared to deliver training at the council level in four high-risk regions—Mbeya, Kilimanjaro, Arusha and Mwanza. These officers were from regional health management teams (RHMT), point of entry officers, regional and council surveillance officers, laboratory experts and clinicians, and logisticians from respective regions and councils.

In May 2020, the government launched the National Call Centre, also known as the "Afya Call Centre", for COVID-19 awareness. The center emphasised combating misinformation and advocating official health advice. In collaboration with stakeholders, all LGs were responsible for disseminating COVID-19 SOPs and public awareness messages on the mode of transmission, signs and symptoms, treatment-seeking behavior, contact tracing and follow-up surveillance, comorbidities, preventive measures, mental health and stigma.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT DIFFERENT LEVELS OF GOVERNMENT: In mainland Tanzania, growth slowed to 4.8% in 2020 from the pre-pandemic projection of 6.9%, hence, avoiding recession. The Zanzibar economy was severely hit due to a decrease in tourism but managed to avoid recession with growth calculated at 1.3% compared with 7% in 2019. The World Bank estimated that 1 million additional persons entered poverty in 2020, summing up to about 27.1% of the population, of which a large part was due to the pandemic-induced growth deceleration. According to the COVID-19 Business Pulse Survey (COV-BPS), about 140 000 formal jobs were lost and some 2.2 million non-agricultural informal workers suffered income losses in June 2020 alone. During a second COV-BPS survey in December 2020, 14% of firms reported to have laid off workers in the previous month and another 12% to have reduced working hours or salaries of formal workers. Due to revenue declines and incresed healthcare spending requirements, the fiscal situation has also deteriorated.

With the support of development partners, the central government developed the COVID-19 and Social-Economic Response and Recovery Plan (TCRP) to guide pandemic containment and promote economic activity, a plan that has been updated regularly. The TCRP includes a National COVID-19 Response Plan, which details key interventions in health, education, water and sanitation, tourism, small business support and social protection.

The World Bank approved a USD 3.8 million grant to the government in September 2020 through the Pandemic Emergency Financing Facility. The project covered both the mainland and Zanzibar, and supported the government to install seven oxygen plants in selected regional hospitals and procure 516 oxygen cylinders. The government has waived duties on raw materials in both the mainland and Zanzibar used by local manufacturers of health-related products to encourage private sector activities and will continue to work with partners to ensure that appropriate policies for virus outbreak containment are implemented.

According to the BoT annual report of 2020/21, the government’s response to the health and economic crisis caused by the pandemic included allocating 0.3% of GDP to COVID-related spending in FY2020/21. Most of this financial support was used to cover revenue shortfalls in public institutions of tourism in Zanzibar, while insignificant amounts were allocated to prevention, containment and management of the pandemic.

To reduce the impact of COVID-19 on the financial sector, the BoT cut the discount rate from 7 to 5%, lowered the statutory minimum reserve requirement from 7 to 6%, and launched a special loan facility for banks and other financial institutions to on-lend to the private sector. These measures aimed to created liquidity and boost the economic activity and therefore contributed to speeding up the recovery. LGs increased the share of their revenue reserved for women, youth and people with disabilities, in order to expand testing and treatment facilities and awareness-raising campaigns among these vulnerable groups. The BoT also eased its stance on loan restructurings, especially for industries where the crisis hit the worst. The central bank increased financial regulatory control and will closely monitor the banking sector's health. In addition, the government initiated adaptive macroeconomic and financial measures and accommodative monetary policy to ensure adequate liquidity in the banks and ensure the financial sector's stability amid a low inflationary environment.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: One of the most difficult challenges for the government relates to public budgeting and social service delivery during the COVID-19 crisis. Much like other developing economies, Tanzania experienced grave implications of the pandemic through a variety of channels: (i) disruption of the global value chains of trade due to the shutdown of factories and delayed resumption of operations; (ii) reduction of foreign financial flows; (iii) underutilisation of domestic human and financial resources, as factories are idled and people stay at home; (iv) shrinking revenue form transport and tourism, as demand declines and travel restrictions expand; and (v) droping commodity prices that harm export earnings.

According to the Bank of Tanzania (BoT) report of 2020/2021, the economy was not spared from negative effects of the pandemic, despite showing resilience due to limited lockdowns, diversified structure of economic activities and policy interventions executed to reduce the impact of the pandemic. The COVID-19 crisis had a significant negative impact on the LG operations. According to the Social-Economic Response and Recovery Plan (TCRP) report dated 20 August 2020, the pandemic increased LG spending on health in order to raise awareness about disease prevention and control measures.

While the pressure on public health expenditure increased, the cash flows in national and LG revenues declined due to a decrease in a variety of direct and indirect taxes, levies and fees, following compression in business margins, slowdown of business activities, retrenchments, salary losses and closure of income generating avenues in the informal economy. The pandemic also impacted income flows from the national government, one of the key funding sources for LGs.

ECONOMIC AND SOCIAL STIMULUS PLANS: There is no information available on long-term recovery plans in Tanzania.