Economists hail SOEs’ performance as catalyst for budget self-reliance

DAR ES SALAAM: ECONOMISTS have praised the rising dividends and contributions from State-Owned Enterprises (SOEs) as a crucial step toward Tanzania’s financial self-reliance.

They said that the trend will significantly strengthen the government’s capacity to fund the national budget using domestic resources and reduce dependency on external borrowing.

Their remarks come following a record-high collection of over 1.028tri/- in dividends and contributions from SOEs in the concluding 2024/2025 financial year, a 68 per cent increase from 767bn/- recorded during the same period last year.

The development comes as the Ministry of Finance prepares to table the 2025/2026 national budget estimates today at the National Assembly in Dodoma.

Speaking to the ‘Daily News,’ economist and investment banker Dr Hildebrand Shayo described the surge in SOE dividends as a significant milestone with positive economic and fiscal implications, especially as Tanzania works to rely more on internal resources.

He noted that this upward trend may be reflected in the budget to be presented to Parliament today, showcasing how President Samia Suluhu Hassan’s administration is prioritising domestic revenue mobilisation.

“The collections that have increased this financial year (261bn/-) will enable the government to fund its priorities without turning to loans or external aid,” Dr Shayo said.

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He added that the increasing SOE contributions will help reduce the budget deficit, finance essential public services such as education, health and water, and gradually minimise the country’s dependence on foreign aid and debt.

“This initiative aligns with the goals outlined in Vision 2025 and the Third National Five-Year Development Plan (FYDP III),” he added.

Dr Shayo also said that a robust domestic revenue base will help Tanzania avoid costly commercial borrowing and exposure to foreign exchange volatility, while also easing the tax burden on citizens.

He further noted that improved macroeconomic indicators, backed by consistent SOE performance, are likely to attract foreign investment and enhance Tanzania’s credit rating. Dr Shayo argued that continued reforms, modernisation and adequate funding for SOEs could unlock even greater returns.

“If government expenditure from SOE dividends is channeled into infrastructure, job creation and private sector development, the ripple effects will drive GDP growth and contribute to poverty reduction,” Dr Shayo said.

However, he cautioned that while the increase is encouraging, attention must be given to ensuring the longterm sustainability of SOE contributions.

“A 68 per cent increase in dividends is a commendable milestone, but we must ensure good governance and efficiency in SOEs operations to maintain this momentum,” he warned.

Professor Kitojo Wetengere from the University of Arusha (UoA) commended the high performing SOEs for supporting the government’s domestic revenue agenda.

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He noted that institutions like the Tanzania Ports Authority (TPA), which topped this year’s list with 181.5bn/- , up from 153bn/- last year, are reducing their reliance on central government funding, unlike struggling SOEs that remain financially dependent. Prof Wetengere urged the government to appoint competent directors with strong academic and practical backgrounds to lead SOEs and boost efficiency.

He also advocated for privatisation of non-performing public entities to improve service delivery and sustainability.