90 percent of the 4.2trn/- spent annually goes to foreign firms
At least 90 per cent of 4.2trn/- spent annually for consultancy services in Tanzania go into the pockets of foreign firms. The amount is equivalent to 34.4 per cent of the government budget, currently standing at 11.1 trn/-.
Worse, the companies deny the government a substantial amount of revenue.
This was disclosed yesterday in Dar es Salaam by Tanzania Association of Consultants (TACO) Chairman Aloyce Mushi during a stakeholders’ workshop called to discuss and contribute to the National Consultancy Industry Council draft Bill.
The TACO boss said a study conducted by the United Nations Development Programme (UNDP) in 2000/01 showed that over 500bn/- was used to pay for consultancy services in Tanzania.
“It is generally known that foreign consulting firms carry out most of the consultancy work in Tanzania,” he said, adding that between 90 and 95 per cent of the services are done by foreign firms.
He stressed that this trend shows that local consultants are highly marginalised.
Mushi revealed also that most of the firms do not pay taxes, denying the country an important input into economic development.
“Where local consultants have managed to secure works, such assignments have either been small in value or they have been engaged as junior partners,” he added.
He further said that the consultancy industry though not visible to the wider public is a substantial foreign exchange earner.
Developed countries have strong laws and regulations that guide the industry enabling them to earn foreign exchange through export of services.
By developing national consultancy capacities, he observed, developing countries would be able to save foreign exchange spent on importing consultancy services.
He called on the government to speed up establishment of the council to help solve the challenges currently facing the sector.
Explaining the importance of the Bill, he said it would enable private consultants, ministries and public institutions and even academicians to do consultancy in a more formalised manner.
He said consultants would have a legal framework to do business in a more efficient and professional manner, contribute more to the national economy and improve their livelihoods.
Implementation of the policy has been pending for a long time because there was no instrument to operationalise it, he said.
The most important step in its implementation is to pass the Consultancy Services Bill provided for under the policy, he added.
“It must be observed that professors, researchers and investors all over the world agree that investment in human capital has the greatest rate of return on investments,” he stated.
The consultancy industry involves economic studies which are not so conspicous and therefore, not appreciated by the general public. But they encompass activities which are knowledge intensive, he said.
Citing cases, he said behind every elegant building in Dar es Salaam, for example, there must have been elaborate and knowledge intensive work done by consultants such as architects and engineers.
He said the government is committed to creating the required environment in which consulting firms can flourish, but the presence of many bureaucratic bottlenecks continues to be the major problem
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