Magufuli's Magic: How Loss Making State Firms Now Turn Into Profitability in Tanzania

By Special Correspondents, Dar es Salaam and Nairobi 

22^nd MAY, 2019: THE ongoing great transformations being made by the Fifth Phase Government under His Excellency John Pombe Magufuli in Tanzania are providing Africa with one of the greatest lessons on leadership and change for the rest of his willing peers to emulate.

President Magufuli holding the dummy cheque for the TZS 2.1 dividend

A number of once loss making and ailing national companies in Tanzania are now back to profitability. One such best practice is the Tanzania Telecommunication Company (TTCL).

The company that was known for loss making for over 15 years in a row, last year, three years after President Magufuli started to reform the company, the firm declared its first ever profit score.

“This company was making losses for 15 years. When we decided to implement a number of reforms; ranging from government’s intervention in dismantling the previous partnership with Bhart-Airtel, capitalizing the firm and making management changes, effective from last year, we have started realizing profit and issued our first dividend to the government,” said Waziri Kindamba, the TTCL youthful CEO.

Last year TTCL issued about TZS 1.5 billion to the government and this year the amount increased to TZS 2.1 billion. “I’m very happy to witness the fruits of our efforts here today. We will surely keep the reforms and spread the lessons to many other state firms,” said President Magufuli who attended the dividend issuing ceremony in Dar es Salaam.

                                  

                          More Magic Reforms

Air Tanzania's new Airbus

Forget about the human rights gag used by the opponents to these reforms, President Magufuli’s management efficiencies and reforms are not restricted to TTCL and they are not temporary but real ones; and are far reaching to many parastatals. Like TTCL, several state firms were known for loss making prior to Magufuli regime; few were profitable but could still not share anything to the government in terms of dividend.

Speaking during the second function to hand over TTCL’s dividend to the President, in Dar es Salaam this week, the Treasury Registrar, Mr. Athumani Mbuttuka, discloses that due to renewed zeal, instilling management efficiencies and capitalization under Magufuli administration, apart from TTCL, many other state firms or other entities where the government had minority shares were now making rightful billions of money to State Coffers. Estimations up to June expect record high contributions this year.

Mr. Mbuttuka pointed out that until April 30, 2019 the Treasury Office had collected a total of TZS 602 billion, being  101 percent of the estimates for the year 2018/19, which were TZS 597.76 billion worth of dividends.

What exactly can we learn in Tanzania? President John Pombe Magufuli, result oriented leader, walks on this weary road, given the long and challenging development trajectory in Africa, gigantic achievements that he envelops along the way confirm the validity of the strategy he pursues. 

The strategy for developing Africa is clear. It is never aid. If Aid was effective, be sure the aided money comes from your own resources. Tanzania and Africa now understand that strong economy emanate from effective harnessing and prudent allocation of resources.

TTCL Corporation’s success was deliberately planned. The government bought back all 60% shares previously owned by Bharti Airtel international. A strategy worked. When TTCL Corporation was now wholly owned by the Government, President Magufuli appointed the new Board Chairman and Management. The new Chief Executive Officer (CEO), a Tanzanian and reform minded young executive Waziri Kindamba was also installed.

Dr Magufuli did not wait to give the company performance targets. He provided key performance indicators which included proven work efficiency, increased profitability and payment of dividend in the span of two years of operation. 

It all happened. The corporation which in 2016 had the smallest subscriber base of nearly 300 with a recorded loss of Sh16 billion in 2013, widening to Sh19 billion loss in 2016, had a complete turn-around after Dr Magufuli’s intervention and the great work of the new Board and the new CEO.

An accomplished mathematician, a branch of the world renowned Professor Albert Einstein, Dr Magufuli believes in local solutions to Tanzania poverty in hard work and prudent application of scarce resources. It works. TTCL proved it so. 

               Making things happen, The Magufuli way

There are yet many things Magufuli did them the different ways, the businesses unusual ways. Now forget about what Magufuli and CEO Kindamba did for TTCL. There are many tales for Africa to emulate. 

For the past 10 years, despite its huge potential, the old Tanzania-Uganda own “Belt and Road” corridor featuring Dar Port, and railway route to Mwanza, in Tanzania to Port Bell in Uganda could not ferry goods to Kampala. Goods were transported by road which is expensive and riskier.

A vividly great partnership of three more Magufuli’s executives, Deus Kakoko for the Tanzania Ports Authority, Masanja Kadogosa for the Tanzania Railway Corporation and Eric Khamis for the Tanzania Marine Services Company, changed things for good. Cargo wagons through the central railway to Lake Victoria started last year.

Resumption of this abandoned route between the two sister countries would boost business, continued to improve economy of the two East African nations and enhanced relations. All this could not come as simple but lots of efforts and, above all, top leadership that is result oriented in the Magufuli administration contributed.

As Kenyans ponder on their multi-billion Chinese loaned slow-engine diesel Standard Gauge Railway (SGR) train, in Tanzania Magufuli is using his own coffers to deliver a speedier, electric SGR rail and train, that miles longer than the Kenya, but less costly. Pure magic.

On the other front, Tanzania is constructing Africa’s fourth largest hydro power dam; the 2,115 megawatt power project which is yet again managed under own government sources. Africa can save to fund some of its mega projects than wait for years to queue on the highly conditioned loans from western banks/partners.

The almost defunct national airliner, Air Tanzania, is another case study for Africa to learn on Magufuli efficiencies. In 3 years, he used own state funds to revamp the ailing company into one of Eastern Africa’s efficient airliner now with six new planes, donating his own private presidential jet into the seventh fleet. Two more are coming this year.

“This is the untold story of what is actually happening in Tanzania. This is what Africa must watch other than the negative politically charged cries on human rights and political confrontations. Tanzania is rising and shining,” says Dr. Mumbi Seraki, a Kenyan, social media analyst on African affairs, who had to travel to Tanzania to witness the massive progress in the East Africa’s fastest growing economy.

See some more of Dr. Mumbi's airings on transformations happening in Tanzania:

  https://youtu.be/hApddONF3cA

https://youtu.be/Vyc3DCVGhY8

https://youtu.be/m3U5VJub36k