ATTEMPS to paint former Tanzania’s president, the late John Magufuli, as a champion of boosting investments, have suffered a shattering blow following a newly released audited report by the Controller and Auditor General (CAG), Charles Kichere.
Strong evidence collected by experts from the CAG’s office shows that much of the information provided by then President Magufuli and his aides regarding an increase in new investment projects that had been registered by the Tanzania Investment Center (TIC), was fabricated for political capital.
Reporting on the use of taxpayers’ money by the government for the year 2019/2020, the CAG notes a decline in investment projects, finance draining and the closure of those that existed before Magufuli came to power in November 2015.
The report shows the existence of 420 investment projects registered with TIC when Magufuli came to power, but they decreased to 219 as of March 17, 2021.
During Magufuli’s presidency, the amount of new capital invested in Tanzania declined at an alarming rate, which economists attribute to poor policies and ineffective strategies hostile to investors.
When Magufuli came to power in 2015, Tanzania was able to attract investors capital worth Shs. 17,747,697,000,000 (equivalent to US $ 7,716.39 million). By the time he died, the capital had dropped to Shs. 4,262,981,000,000 (equivalent to US $ 1,853.47 million).
During his tenure, many jobs were suspended due to industrial closures and lack of capital investment. Fewer new jobs were created as existing ones could not be sustained, as many workers lost their positions, according to the CAG.
Many unpopular policies and the existence of “coercive security institutions” that used to interfere with tax matters rendered millions of people jobless.
When President Magufuli came to power, the CAG report shows, there were 63,223 jobs that were created through the TIC registered capital. But those jobs ceased and were terminated, as they declined to 32,115 by March 2021.
President Magufuli had created a special task force that was used for extorting money from traders and investors who were still negotiating tax issues with the Tanzania Revenue Authority (TRA).
Hardly month after Magufuli’s death, the new president, Samia Suluhu Hassan, has warned the tax collectors against this coercive approach that is killing businesses.
Several individual investors are also coming up with tales of how their businesses were confiscated and their bank accounts frozen.
“In many countries around the world, governments like to collect more tax, but they don’t use force; instead, the responsible actors do discuss with investors on the best ways of paying legitimate taxes. But with Magufuli, the situation was completely hostile. He used to order security forces to take money and close the accounts of our companies,” complains one anonymous victim, saying the task force confiscated more than TZS 670 million from him. He then decided to close business and sought greener pastures in Malawi where he established a new business.
The leader of the opposition, Freeman Mbowe, gave a personal testimony of how the authorities fabricated a political case against him, denied him bail, and then froze his bank accounts when he was in remand prison.
He also opted to invest in other countries, saying the business environment in Tanzania was unfriendly and not predictable.
The Minister of Finance and Planning, Dr. Mwigulu Nchemba, has instructed TRA to investigate all complaints and act on them.