The Transfer of PRIDE shares to private firm irritates CAG

“I reiterate my recommendation that the Treasury Registrar should make close follow up on the shares previously held by the Government in Pride Tanzania to establish its legality and transfer modalities from Government to a privately owned company,” he explains in a report.

In his annual general report for 2014/2015 financial year presented before the National Assembly in Dodoma recently, the CAG noted that since 1993, all shares of Pride Tanzania were being owned by the Government of Tanzania.

Prof Assad reached such conclusion according to the Treasury Registrar’s statement of government investments and public interest as at June 30, 2008. However, the CAG noted, the Statement of Treasury Registrar for the year ended June 30, 2012, omitted Pride Tanzania from the list of public entities being overseen by him.

“The justification for removal from the list of government investments and interests could not be ascertained,” Prof Assad stated in the report on the audit of public authorities and other bodies.

Furthermore, he stated, pursuant to Section 31 of the Public Audit Act No.11 of 2008, any public authority or body shall submit its financial statements to the CAG within three months after the end of the financial year to which it relates.

“Pride Tanzania has never submitted its financial statements for audit as required by the law,” remarks the CAG.

Despite government response that the company ceased arrangement of getting funding from the Government of the Kingdom of Norway and Tanzania in 2005, the CAG revealed that it had not been made clear how the shares of the company were transferred to private owners. Pride Tanzania was incorporated on May 5, 1993, under Cap.212 as a company limited by guarantee.

The main purpose of establishment of this entity was to provide credit to small and micro-entrepreneurs in Tanzania. It has been claimed, however, that Pride Tanzania was being burdened by loans it has allegedly obtained from financial institutions.

The CAG cites an example of 5.3bn/- obtained from the Tanzania Investment Bank (TIB), which has not been repaid yet. Prof Assad stated in his report that the bank has provided advances to Pride Rural Finance Window, which had an outstanding balance of 5.3bn/- as at December 31, 2014.

“These advances are largely secured against receivables book of Pride meaning that in the event of default by the company, the bank may only recover the outstanding balance by collecting from Pride borrowers,” the CAG states.

Such type of security, according to him, was considered inadequate and increases the risk of loss to the bank. The CAG has advised the bank’s management to increase efforts to ensure that this loan is repaid and should give loan to borrowers with adequate security to recover the loans in the event of default.