Is ‘Earned Autonomy’ the key to improving public sector entities?

TANZANIA: THE government, through the Office of the Treasury Registrar (OTR), has initiated a significant reform aimed at transforming the way public sector entities operate in Tanzania.

At the heart of this reform is the concept of “earned autonomy”, a system where Public Sector Entities (PSEs) gain increased operational independence based on their performance and ability to meet specific criteria.

This strategic shift seeks to reduce reliance on the central government, enhance public sector efficiency and foster greater contributions to the national economy.

As Treasury Registrar Mr Nehemiah Mchechu recently pointed out, the government is carefully monitoring StateOwned Entities (SOEs) before granting them greater autonomy. “We want the public entities we oversee to operate efficiently, reducing their reliance on the central government and increasing their contributions to the consolidated fund,” he explained.

The OTR oversees 309 government institutions, corporations, agencies and companies in which it holds minority stakes. Moving towards earned autonomy is a pivotal step in reforming the management of public entities in Tanzania.

What Does “Earned Autonomy” Mean for Public Sector Entities?

Earned autonomy is not granted automatically; it is earned over time based on an entity’s ability to meet rigorous criteria.

These benchmarks are designed to ensure that institutions are prepared to operate independently while contributing to national development. To qualify for earned autonomy, public institutions must first demonstrate alignment with Tanzania’s national objectives.

They are expected to contribute to broader national goals, such as economic growth, social welfare and national security, while supporting the country’s long-term development agenda. These entities must prove their capacity to generate nontax revenue.

This would significantly reduce their reliance on state funding and allow them to make meaningful contributions to the government’s coffers. Certain services, particularly those related to national security and public safety, require close oversight.

Only entities capable of managing such critical functions independently will be considered for greater autonomy. Public entities must also demonstrate the ability to operate commercially, competing both domestically and internationally without relying on government subsidies.

Operating effectively in a competitive market is crucial to ensuring long-term financial sustainability. Moreover, the services provided by these entities should have a multiplier effect, benefitting multiple sectors of the economy and contributing to broader economic growth.

Their positive impact must extend beyond their immediate functions. “Through these benchmarks, the government aims to ensure that only the most capable and efficient public sector entities are granted operational independence,” emphasised Mr Mchechu.

This, in turn, he explained, will lead to improved efficiency, innovation and financial sustainability, ultimately contributing to Tanzania’s long-term prosperity.

The overarching goal of earned autonomy is to empower public sector institutions with greater decision-making authority, with the expectation that this increased flexibility will result in better performance and stronger contributions to national development.

Balancing autonomy with accountability

While earned autonomy allows public institutions more operational freedom, it is not without oversight. According to Mr Mchechu, the real challenge lies in balancing autonomy with accountability.

“The government will not grant autonomy to any institution without monitoring its performance closely,” he asserted.

To ensure these entities stay on track and align with national goals, result-based management tools will be introduced. These tools will help track outcomes and ensure the entities are positively impacting the economy and society.

This balance between autonomy and oversight is often referred to as the “paradox of autonomisation”, the idea that institutions can become more efficient with increased freedom, but only if they are held accountable for their results.

Learning from highperforming organisations

The concept of earned autonomy is not entirely new. It mirrors practices seen globally, where high-performing organisations are granted greater operational freedom after demonstrating competence. A study by the UK-based think tank Demos, in the article System Failure: Why Governments Must Learn to Think Differently, suggests that successful organisations should be rewarded with fewer regulations and less oversight.

In contrast, underperforming entities are provided with enhanced support to improve their operations. If these efforts fail, more aggressive interventions, including leadership changes or funding cuts, are introduced.

This performance-driven approach offers a way forward for Tanzania’s public sector. By rewarding high-performing institutions with greater autonomy, the government can foster an environment where efficiency and innovation thrive.

The future of Tanzania’s public sector

As Tanzania moves forward with this reform, earned autonomy holds considerable promise for improving the public sector.

However, the success of this approach will depend on the careful implementation of the criteria and the ongoing monitoring of institutions as they work towards greater independence.

Public entities that meet the required criteria will be granted more operational freedom, potentially leading to more efficient and self-sustaining organisations.

These entities will not only reduce their dependence on the government but also contribute more significantly to national development, creating a healthier, more competitive economy.

If the government can successfully balance granting autonomy with maintaining accountability, earned autonomy could indeed become the key to a more efficient, independent and prosperous public sector in Tanzania.

● Prepared by The Office of the Treasury Registrar