Auditors have a key role to play as Tanzania works towards middle-income status through a policy of industrialisation, says Alexander Njombe ACCA
This article was first published in the May 2018 Africa edition of Accounting and Business magazine.
Like other East African nations, Tanzania aspires to middle-income country (MIC) status by 2025 – and experience from other parts of the world suggests this might be achieved.
MIC status requires a country to have an annual per capita gross national income (GNI) above US$1,006. According to World Bank data, in 2016 Tanzania’s per capita GNI stood at US$900 – up from US$300 in 2000. Meanwhile, GDP has increased from US$31.41bn in 2010 to US$47.34bn in 2016, with annual growth currently around 7%.
Tanzania intends to achieve its ‘Development Vision 2025’ by way of radical transformation to an industrial economy. The country’s National Five Year Development Plan 2016/17–2020/21, titled ‘Nurturing Industrialization for Economic Transformation and Human Development’, foresees a total investment need of TZS107 trillion (US$47.4bn), with 55% coming from government funding.
For an economy that is traditionally reliant on non-commercial agriculture, this is a big ask. On top of the vision, political will and leadership of President John Magufuli, it demands cohesive effort and hard work on the part of citizens and, crucially, the accountancy profession. Enabling an environment in which this transformation can take place will be key to ensuring that the economic value generation, enhancement and preservation that is expected to arise from industrialisation are achieved.
Of course, other foundations will need to be put in place to make the industrial ‘jump’. These include catch-up in technology and innovation, a supportive industrial and trade infrastructure, and leveraging of trade opportunities.
Auditors have a key part to play in the process. Many strategies and plans developed for the transformative journey must be expected to ‘pass a test’ ahead of adoption, with key components attracting independent review by the audit profession. In addition, projects will need to undergo critical appraisal before final investment decisions are made by the government, investors and other stakeholders.
Resources scheduled for deployment to various industrial sectors will call for ‘value-for-money accounting’. Auditors will then need to be contracted to attest that what has been put to use has actually delivered the set objectives. Measures designed to prevent leakages and wastage and combat corruption will need to be put in place in order to achieve cost efficiency and effectiveness and increase the flow of government revenues to support a robust and sustainable economy.
However, the audit profession faces a number of challenges that need to be addressed to ensure a robust participation. These include:
- the limited number of qualified accountants and auditors
- a need to enhance professional and regulatory capacity
- corporate governance dilemmas
- maintenance of ethics and independence
- compliance with international standards and best practice
- institutional and legislative challenges.
These need to be looked at holistically in order to devise workable solutions. Root-cause analysis geared at understanding the sources of challenges as well as active stakeholder engagement are some of the key steps that can be taken in trying to resolve them.
If we work together and remain focused, we can make a positive change in our society. I have always been led to believe that ‘where there’s a will there’s a way’. So let’s get cracking.
Alexander Njombe is an audit partner at KPMG in Tanzania. The opinions here are those of the author and do not necessarily represent those of KPMG.