BUSINESS CORRUPTION IN TANZANIA

Published by the EUROPEAN BUSINESS ANTI-CORRUPTION PORTAL

Corruption is pervasive throughout Tanzanian society and is a serious problem across all sectors of the economy. The most affected sectors are government procurement, land administration, taxation and customs.
Petty corruption in dealings with traffic, customs and immigration officers deters investment.
Corruption is criminalised under the Prevention and Combating of Corruption Act (PCCA), which covers attempted corruption, extortion, passive and active bribery, money laundering and bribery of a foreign official.
A range of legislations cover other corruption offences, but anti-corruption laws are applied inconsistently and are poorly enforced.
Gift-giving and the use of facilitation payments for the purpose of inducing corrupt behavior are illegal under the PCCA.
However, companies should note these practices can be commonly encountered when doing business in Tanzania.

TANZANIAN JUDICIAL SYSTEM

The Tanzanian judicial system is tainted by corruption and is subject to executive influence. The judiciary is underfunded, corrupt and inefficient, especially in the lower courts. Court clerks and magistrates are known to accept bribes to open/misdirect cases or to altogether determine a case’s outcome, respectively (HRR 2013). Accordingly, the degree to which the system can provide an expeditious and fair trial is questionable (BTI 2014). Companies should be aware the corruption and inherent inefficiency within the judiciary pose a hindrance for settling commercial disputes in Tanzania (ICS 2013). Equally, companies do not consider the Tanzanian legal framework to be efficient in settling disputes or in challenging government regulations (GCR 2014-2015).

TANZANIAN POLICE

Corruption and impunity are pervasive in the Tanzanian police force (HRR 2013).
Foreign companies have identified petty corruption among traffic police as an obstacle to investment (ICS 2013). Additionally, companies identify Tanzania as performing insufficiently in relation to the reliability of police services to protect from crime (GCR 2014-2015).

TANZANIAN PUBLIC SERVICES

Bureaucratic procedures for licenses and permits in Tanzania are burdensome, time-consuming and prone to corruption. There are instances of businesspeople paying bribes to public officials in return for expedited processing (ICS 2013).
Additionally, businesses consider the prevalence of irregular payments and bribes within public utilities in Tanzania as one of the worst in the world (GCR 2014-2015).
Corruption within the state-run Tanzania Electricity Supply Company (Tanesco) is endemic (BTI 2014).
Nevertheless, accessing public services (such as electricity) in Tanzania is still considered less burdensome than the regional average (DB 2015).

TANZANIAN LAND ADMINISTRATION

The land administration in Tanzania can be subject to corrupt behaviour. There are different laws in Tanzania that recognise and enforce secured interests in property, both movable and real, but there is no single comprehensive law to secure property rights in Tanzania (ICS 2013).
Even though property rights and property acquisition are legally guaranteed in principle under different laws, corruption and inefficiency within the land administration and the judicial system limit their enforceability (BTI 2014). There also exists an informal system of land distribution in urban areas, leading to increasing numbers of disputes. This environment can potentially trigger opportunities for corruption in this sector.

In the latest corruption scandal within the Tanzanian government, the Land and Housing Minister was dismissed for wrongly accepting a large sum of money from a businessperson (BBC News, Dec. 2014).

TANZANIAN TAX ADMINISTRATION

Officials in the Tanzanian tax department reportedly solicit bribes when assessing taxes. Companies single out irregular payments and bribes in annual tax payments as a significant issue in Tanzania, with the country ranking among the worst in the world in the category (GCR 2014-2015). The Tanzania Revenue Authority (TRA) has recently stepped up anti-corruption efforts through the development of strict and practical controls to improve revenue collection and service delivery (Daily News, Mar. 2015). In 2014, Tanzania made paying taxes more complicated for companies by introducing an excise tax on money transfers (DB 2015).

TANZANIAN CUSTOMS ADMINISTRATION

Customs clearance in Tanzania is marred by corruption, and foreign companies have identified petty corruption among Tanzanian customs officers as an obstacle to investment (ICS 2013).
Tanzanian transport companies pay almost USD 13,000 a month in bribes to authorities such as police and customs officials to avoid unnecessary delays, harassment and payment of penalties (TI & EAT 2012).

Companies should note that time-consuming bureaucracy related to trade across borders opens the way for public officials to demand bribes in Tanzania (GETR 2014). Trade is impeded by customs procedures that lack efficiency, and importing and exporting requires time-consuming paperwork to clear goods at the border; corruption and bribery in these processes sometimes occur (GETR 2014). However, in 2014 Tanzania made trading across borders easier by upgrading infrastructure at the port of Dar es Salaam, thereby slightly countering the risk of corruption (DB 2015).

TANZANIAN PUBLIC PROCUREMENT

Tanzanian public procurement is rife with corruption. Businesses point to government officials often favouring well-connected companies and individuals when awarding contracts, and public funds are sometimes diverted to companies, individuals or groups due to corruption (GCR 2014-2015).

In response to a recent string of corruption and abuse of office in the absence of a clear definition of conflict of interest, Tanzania is working on a new law to ban elected leaders and civil servants from holding jobs in the private sector (Business Insider, Oct. 2014). In a 2015 crackdown, the director of Tanzania’s port authority was suspended for for violating procurement procedures (Africa Report, Feb. 2015).
Additionally, in late-2014, Tanzania’s Public Procurement Regulatory Authority (PPRA) barred 19 firms from competing for government contracts after the firms were found to have engaged in corrupt practices (All Africa, Oct. 2014). To combat corrupt and counterproductive practices, the Tanzanian government joined the Construction Sector Transparency Initiative (CoST) to enhance accountability and transparency within the sector. Firms are recommended to use a specialised public procurement due diligence tool to mitigate corruption risks associated with public procurement in Tanzania.

TANZANIAN NATURAL RESOURCES

The mining sector in Tanzania, closely tied to matters over land and investment, is prone corruption (BTI 2014). Most corruption investigations by the Prevention and Combating of Corruption Bureau (PCCB) have been into government involvement in the mining and energy sectors (HRR 2013).
A 2014 corruption scandal rocked the Tanzanian government following revelations that over $120m in public funds were siphoned off and directed to off-shore accounts held by businesspeople and public officials through the award of energy contracts (Guardian, Nov. 2014).
Tanzania’s regulatory capacity in the mining sector is undermined by state functionaries who are involved in rent-seeking networks. In addition, there is a significant lack of transparency around the confidential Mining Development Agreements between foreign companies and the government, often involving preferential treatment (U4, Mar. 2014).

Corruption allegations have recently resulted in Tanzania’s energy minister to resign from office, the third to lose job over the same scandal involving the fraudulent transfer of public funds to a private company (Reuters, Jan. 2015).

TANZANIAN LEGISLATION

Tanzania’s comprehensive legal framework to counter corruption is poorly enforced. The Anti-Money Laundering Act combats capital flight and financing of terrorism activities. The Prevention and Combating of Corruption Act (PCCA) criminalises attempted corruption, extortion, passive and active bribery, money laundering and bribery of a foreign official. Corruption is designated as an economic offence, and provisions exist for imprisonment, but there are no financial penalties for economic crimes except for the recovery of assets.
Other legislation also regulates against corruption, including the National Elections Act, the Political Parties Act, the Public Finance Act and the Election Expenses Act. The Public Leaders Code of Ethics Act and the Economic and Organized Crime Control Act attempt to curb abuse of power by public officials. Tanzania is a member of various international anti-corruption institutions, governed by different legal frameworks. No mechanism requires public officers to disclose their assets, and there are no restrictions on the positions public officials can hold in the private sector. Tanzania does not have a right to information act, which is paramount for transparency of government through free public access to information (HRR 2013).
The Public Services Act 2011, which, among other things, requires every institution to make enforceable codes of conduct for its employees (LHRC 2011).

Tanzania has ratified the United Nations Convention against Corruption and the African Union Convention on Preventing and Combating Corruption. See ISS Africa’s overview of Tanzanian corruption legislation or access the Lexadin World Law Guide for a collection of legislation in Tanzania.

TANZANIAN CIVIL SOCIETY

The Constitution of Tanzania provides for freedom of speech but does not explicitly provide for freedom of the press (FitW 2014);
17 laws encourage self-censorship and limit the ability of the media to function effectively (FotP 2014).
Some instances of harassment towards journalists investigating sensitive subjects, such as corruption and abuse of power, have been reported. Furthermore, some journalists accept bribes either to publish or to ignore certain information. However, the media on the mainland is active and is said to express a wide range of views, while most media outlets on Zanzibar are controlled by the government (HRR 2013).
Tanzania’s press environment is considered ‘partly free’ (FotP 2014).

http://www.business-anti-corruption.com/country-profiles/sub-saharan-africa/tanzania/show-all.aspx

 

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