How unwise spending costs govt

21Feb 2016
Our Reporter
Guardian On Sunday
How unwise spending costs govt
  • It may take over 120 years to settle Sh6.3trn
  • Government pledged annual repayment of Sh50bn

The government will continue injecting billions of Shillings into none State buildings currently hosting various ministries, departments and agencies;

President John Magufuli.

Unless it puts in place a strategic plan to oversee the construction of its own structures, a decision that will save billions of taxpayers’ money on rent.

It was also established that the situation was worse, given the government’s continual injection of billions of shillings worth rent into private buildings currently hosting various ministries, departments and agencies in the absence of a strategic plan to oversee the construction of its own structures.

Analysts consider this as inappropriate spending by the government as the huge amount could have been directed to various developmental projects.

This is happening amid the fact that office spaces in Dar es Salaam are massively expensive as real estate managers opt to peg rental charges on US dollars per rented square metre. Rental charges vary from one building to another depending on location of the building and whether there are parking lots, among other factors.

The Golden Jubilee Towers is one of the city’s distinctive buildings hosting various government ministries, agencies and departments. But available data from Knight Frank, an international property management firm, indicates that it charges $16 per square metre per month and a service charge per month per square metre is $2. The building’s 12th floor alone has 785 square metres in total fetching a total of $12,560 per month.

“Indeed, the respective government office bearer would have to pay a total of $150,720 per year on rent, an amount that would reach $753,600 (Sh1.65bn) in five years, certainly to complete a tenure of a government before the next poll,” a property management expert told The Guardian on Sunday. The amount would be enough to build a modest structure to host at least a ministry’s docket.

However, the Golden Jubilee Towers seems to be charging less compared to other high rise buildings in the city. NHC House on Samora Avenue for instance, charges between $18 - $30 per square meter per month.

In the past two years, office space rents have increased to an average maximum of $21 from $15 per square metre per month while they ranged between $16 and $10 per square metre rates in the previous five years.

When asked on Friday over whether there was a plan to save the government from incurring the otherwise unnecessary costs, Tanzania Building Agency (TBA) Director of Real Estates declined to comment saying he was not an authorized spokes person for not the agency.

TBA is government’s Executive Agency under the Ministry of Works, Communications and Transportation, with a primary mandate of providing quality accommodation to Government and public servants as well as building consultancy services for it. It was established in 2002 in accordance with the Executive Agencies Act No 30 of 1997 as a transformation of the Building Department (BD) within the Ministry.

“Unfortunately, I’m not a spokesperson. I would advise you to write down questions to the acting director general, who is mandated to speak for the agency,” an official who introduced himself as Director of Real Estates at TBA told this reporter who had been earlier referred to him by the DG’s secretary. “The Director General is currently out of office, but he will certainly be here next Monday,” he said.

However, available data indicates that the rental rates in the city are slightly lower than what is being charged in other buildings on the outskirts of the city such as the Mlimani City which is located at Mwenge. Its renting charges go at a rate of $40 per square metre per month. The motive behind rental charges increase has been attributed to the Value Added Tax (VAT) on property renting introduced some three years ago.

It’s such a lucrative market which has now convinced Turnstar Holdings, the Botswana Stock Exchange listed property investment and Management Company to embark on an expansion drive of its Mlimani City investment project.

The expansion drive is set to include additional retail and commercial space, including basement parking, additions to the Conference Centre and a Botanical Garden, the company has been quoted as saying in its recent report.

“The Mlimani City expansion is due to the fact that the Tanzanian property market is potentially a money-spinning as opposed to an oversupplied property market in Gaborone,” the Gaborone-based company states in its recent report.

On top of these renting rates, clients are forced to pay extra charges of between $2 to $4 per square meter to facilitate other expenses such as water, security, fumigation and refuse collection as well as land scarping with exception of electricity and telephone charges.

In recent years, a handful of ministries and agencies have so far managed to have their own building that saves as their offices. This includes the ministry of Natural Resources and Tourism with its permanent head offices at Mpingo House along Nyerere road in Dar es Salaam, and the Tanzania Civil Aviation Authority (TCAA) with its permanent headquarters at the Aviation House, Ukonga on the outskirts Dar es Salaam, near Julius Nyerere International Airport (JINIA).

But against the background of rental charges, it was established that the heavily indebted government that had entered into agreement with PSPF to clear the Sh6.4trn debt in annual installments of Sh50bn, had settled only Sh90bn by 2014.

But efforts to reach the government Treasurer Register, Lawrence Mafuru for comments and clarification on the rented offices, government plans and security funds repayments proved futile on Friday as phone calls to his office went unanswered.