CAG finds fault with social means
CAG finds fault with social means

CAG finds fault with social means

This is a resounding observation from the auditor and auditor general (CAG) in his fiscal 2020/21 annual report presented to parliament last week, which is now open for public scrutiny.

A major weakness that auditors discovered relates to the Mamba Miamba Ginger Factory, which in 2016, the former Local Authorities Pensions Fund (LAPF), now part of the PSSSF, entered into a pact with the Mamba-Miamba Cooperative Society to revive the ginger factory.

The factory had suspended operations due to technological challenges, and the terms of the agreement between the cooperative and LAPF, signed on September 1, 2020, said the fund would control 67 percent of the shares and society 33 percent.

On June 30, 2021, the fund had spent $ 1.71 billion on reviving the factory and other administrative expenses, but by November 2021, the factory had not started production due to a delay in the installation of the machinery.

“The PSSSF explained that the delay was caused by the transport of machinery from Chinese manufacturers in the wake of the Covid-19 pandemic,” the report noted.

Another weakness relates to the medical equipment factory in the Bariadi district of the Simiyu region, with an agreement signed on 11 November 2016 to build a medical equipment factory in Dutwa Village in the district.

The signatories included the office of Simiyu Regional Administrative Secretary, National Health Insurance Fund (NHIF), Workers Compensation Fund (WCF), Medical Stores Department (MSD), TIB Development Bank, TIRDO, TBS and the responsible agency, TMDA.

Feasibility studies conducted by TIRDO showed that the cost of the project was 69.21 billion./-, divided equally between the partners, and on 13 June 2018, they therefore registered the company to operate the factory. Its application was submitted to the Treasury on June 26, 2019, the report states.

In November 2021, the factory had not started production as it was waiting for a Treasury permit, while on 30 June 2021, NHIF and WCF had equally spent 916 million /- on the factory’s development, it confirmed.

Similarly, Mponde Tea Factory, which in January 2016 was nationalized by the Usambamara Tea Growers Association (UTEGA), which previously sold the factory but failed to operate it.

“Through an effort by the CFO, WCF and NHIF entered into an agreement in September 2019 to revive the tea factory, with feasibility studies indicating that the capital needed to revive the factory was 4.05 billion./- and its shares evenly distributed between the partners.

The government issued the permit for the development of the factory in March 2021, but in November it had not started production and awaited the purchase of machinery and renovation of the premises, the report noted.

“By June 2021, WCF had spent $ 64 million to cover the factory’s initial development costs, which included transportation and meeting costs, including unemployment benefits,” clarified CAG Charles Kichere, warning that the delay in operating the factories weakens the achievement of The objectives of the other five years’ development plan (2016 / 17–2020 / 21). Industrial production is central to its expectations, he said.

“I recommend that social security funds including PSSSF, WCF, NHIF and NSSF speed up the installation of machinery, build the relative infrastructures to enable production to begin as soon as possible in the said factories established or purchased by these funds, “he added.

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