FINANCIAL PERFORMANCE OF PUBLIC CORPORATIONS: A CASE OF
 DISTRICT DEVELOPMENT CORPORATIONS (DDCs)
 H.P.B. MOSH14"
    INTRODUCTION
      There is widespread interest in Tanzania on the subject of public
 corporations. Politicians, academicians, managers and the general public
 have all questioned the performance of public corporations. That is u.uciei -
 standable. For within an unprecedentedly brief historical period, about
 eleven years after the Arusha Declaration in 1967, over fifty percent of the
 economy has been under the ownership and control of the state. Parastatals,
public corporations or enterprises are used interchangeably in this study to
mean, •"production and commercial organisations owned by the Government or
 with majority Government participation, run on profit basis, and whose
 accounts are not integrated into the budgets." In Tanzania they have penetrated
 each and every sector of the economy - agriculture, manufacturing, and
 commerce.
      The extent and scope of public corporations in Tanzania show the important
place they occupy in the economic development of the country. The urgency and
necessity of economic development in the Third World Countries in general, and
Tanzania in particular, demand that the corporations need not only to fulfill
their roles and objectives, but also to minimise costs with the aim of creating
and increasing surplus. It is the purpose of this study to evaluate the
performance of District Development Corporations (DDCs) in their efforts to
realise the above. In an attempt to attain the purpose of the study, question-
naires, interviews and >survey of secondary data provide for the methodology.
      Section A is devoted to a general overview of public corporations with
references to other Third.World Countries. Their roles, extent and scope, and
the reasons behind their formation are discussed. The section also discusses
the necessity of 'good1 performance on the part of the corporations in relation to
 surplus creation owing to its important contribution towards economic develop-
ment through investment. In concluding the section, the hypothesis that "Poor
performance of DDCs is due to lack of adherence to sound financial policies is
 developed.
^Research Fellow in ERB, University of Dar es Salaam,


       Section B traces the historical background to the establishment of the
DDCs. In this connection, objectives, projects undertaken and mode of
financing are discussed. Section C, discusses a case study of Kilimanjaro
Development Corporation (KID ECO). Its financial performance is analysed with
the help of financial ratios, as a way of testing and applying the hypothesis.
The second part of the section looks into the factors .contributing to the poor
performance of the DDCs, in,general - as a way of proving .the hypothesis.
       The last part of the paper - Section D, concludes the study, at the same
time, making some recommendations.
A. TOWARDS A GENERAL THEORY OF PUBLIC CORPORATIONS
        The developing countries, after attaining political independence,
realised that economic independence was the more important and urgent
requirement. To attain that end, governments resorted to the creation of
public corporations in an attempt to promote self-sustaining economies. The
fundamental differences between developing countries in socio-economic
development, size and density of population and socio-political orientation are
reflected in the range, number and scope of their public enterprises. Despite
these variations, the purpose is. basically the same - promoting economic
development. This primacy of objective arises out of the fact that colonialism
and neocolonialism have remained as the main causes of economic backwardness
of the peoples of Asia, Africa and Latin America. The creation of public
corporations could thus be seen in the light of trying to combat the above
situation. This task is important and necessarily warrants an examination of
certain basic issues relating to public corporations in the context of economic
de velopm ent.
 1. The Role of Public Enterprise
        In Tanzania, during the years after the Arusha Declaration in 1967,
public corporations assumed a new and an extremely important role in the
country's economic development effort. New in the sense of effecting socialist
reconstruction, and important because of their role as engines of economic
development. It's because of these roles that capital formation'increase has been
accounted for by the public sector. In 1965 the private sector accounted for
about 60 per cent of all monetary fixed capital formation but this share had
declined to 30 per cent by 1975. The ratio of public sector fixed capital
formation to monetary capital formation rose from 4-0 per cent to 73% during
the same period.


        A closer look at the objectives of the public enterprise system in
Tanzania elucidates the above. The objectives, according to the Arusha
Declaration, a r e a s follows:
        1)   To achieve economic justice by controlling the principal means of
             production.
        2)   To ensur-e the well-being of all citizens.
        3)   To prevent the exploitation of one person by another or one
             group by another; and
        4-) To prevent accumulation of wealth to an extent which is
             inconsistent with the existence of a class-less society.
        The above objectives are socialist in form and content. Socialist develop-
ment, first and foremost, calls for the control of the major means of production
 by the state; and this in turn determines the relations of production. State
 control, not only leads more easily to accomplishing objectives twoto four,
 but also widens the extent of planning; and thus central planning takes shape.
In compliance with the foregoing, most investment in industry was planned in
the public sector under the second Five-Year Development Plan; only 16 per
cent of the total industrial investment was left to private enterprise. The plan
document stated that "the role of the public sector has been extended considerably
as a result of Arusha Declaration", and that "the private sector cannot be
relied upon to provide the main thrust in directly productive investment",
(Vol. 1, p. 14-). To implement the above, the Government nationalised a number
of institutions, both service and "productive", acquired equity participations
in others and created specialised public corporation like Tanzania Tourist
Corporation (TTC), the National Agricultural and Food Corporation (NAFCO)
and Tanzania Wood Industries Corporation (TW1CO), prior to the new set up,
all the projects falling under the mentioned corporations were being carried
under the National Development Corporation (NDC). NDC was established in
1964- by Act of Parliament No. 69. It is the largest parastatal organisation -
holding company - in the country with assets worth T.shs 383,791,214-/- in 1976
(NDC , Twelveth Annual Report, 1976). The magnitude of these assets *in terms
of value, justify the importance of NDC, in particular, and public corporations,
in general, in the economy of Tanzania.
        So far, we have been providing an answer to the question, why public
enterprises in Tanzania? We also need to know, generally, the reasons behind
public corporations elsewhere. Among these, the most often given are these:
                                           3


        1)    Governments have specific developmental priorities        and objectives
which need public rather than private attention. The current emphasis on rural
developnent in Tanzania, for example, led to the formation of the Tanzania
Rural Development Bank (TRDB), with the primary task of financing rural
projects.   Other development priorities like the promotion of import substitution,
the Africanisation of labour force, the acquisition of foreign aid and cooperation,
and the injection of development into certain specific fields of economic activity,
necessarily     calls for government control. These are commonin many countries,
e. g. Pakistan, India, Turkey, Uganda, Kenya and Nigeria,           although ail the
priorities mentioned are not held equally in each country. For example, in
Kenya, Uganda and Nigeria,         Africanisation ranKS high on the list of priorities.
Whereas for the remaining countries the other priorities         become more
applicable.                                                                        2
         2) The Government needs to supply the developmental initiative.
 This ranges from providing the initiative for inves1ment and the promotion of
 mdustrial activity to developing infrastructure       for basic activities, e.g.,
 electricity,   transport,   communication and agricu1ture and supply the required
managerial capability to -enterprises.
         3)    Governments are able to pursue policies designed to redistribute
 incomes, create employment and establish programs of social security
 through the medium of public enterprises.        This applies well to Tanzania,
 where the First Five- Year Plan for economic and social development (1964)
 aimed "to see economic growth contributing to a more eqUl.tabIedistriPution           of
 income in Tanganyika society". The redistribution         can be effected in the
 following ways:
         a) by keeping higher salaries under check and raising w.agelevels.
              A progressive    tax system and the establishment of minimum wage
              policies are efforts toward that end;
         b)   surplus labour can be carried as a disguised means of social
              security.   This strategy tends to water down the performance of
              the corporation     for it tends to raise coSts (wages and salaries)
              at the expense of profit;
         c)    offer products at concessional prices to poor customers.
               Fertilizer  subsidies to peasants in Tanzania reflects the
               applicability of this scheme.
        4)    Public corporations are introduced as agencies of development in
an underdeveloped region. Corporations like Sudene, IRI and Konkan serve
such purposes in Brazil, Ital:r and India for their North E<J.stern, Southern and
Western Coast regions respectively.          In Tanzania the second Five Year Plan
                                               4


(1969-78) elaborates regional development through public sector investment by
stressing, "that the choice of sub-optimal location for an agricultural or
industrial project, in the interest of regional equality may involve a cost in
terms of efficiency".
         The foregoing selected reasons have shown that the governments of the
 developing countries, including Tanzania, have been inspired by general
 objectives such as the promotion of economic and social justice and the
 acceleration of the developmental process, and often favour public corporations
 as a means of achieving the stipulated goals and intentions. Countries which
 have adopted socialist policies or political inclination have viewed public
 enterprises as a principal means of achieving the transition to socialism or
 state capitalism, and they tended to subordinate private corporations to public
 enterprises in certain fields of activity in the pursuit of such national goals.
 It seems that public corporations have, and will continue to occupy an
 important and expanding position in the economic J of the Third World Countries.
 But this important and expanding role will be meaningful only if such
 corporations contribute to the economic development of the national economies.
 Unfortunately, this often has not been the case. J.O. Udoji concretises the
 difference between objective and performance:
              If the rate at which these bodies are being created and
              financed bears any relationship to the economic growth
              of the countries or the success of the bodies themselves,
              at least some of the countries would have been near the
              stage for an economic take-off. The experience, however,
              at least in West Africa, has been in the opposite
              direction. . . . (They) have done so badly that several ~
              public inquiries have been conducted into their affairs.
  The contents of the above quotation, although tending to be specific to West
  Africa, can be generalised to encompass Tanzania and the Third World Coun-
  tries in general. The purpose of this study is to attempt, to provide an answer
  to the question, "why such performance"? by looking at one suck corporation,
  the District Development Corporation,
  '^* Extent and Scope of Public Enterprise
          In Tanzania, not only has the public sector been expanding, it Iftis also
   been diversifying. According to the Second Five-Year Plan, public sector
 investment as a percentage of total investment rose from 30 per cent in 1964-
  to 70 per cent in 1973. The upward trend is reflected in the form of transfers
                                              5


to parastatals as well as in fixed f~rmation. In terms of transfers they increased
from lIII127million in 1964 to 211 millioll'in 1971 (Annual Plan for 1972/73, p. Z),.
An increase of 10.7 per cent was reali~e~;in parastatal fixed ~apital formation.
The increase was frem sirs 515. 5 million in 1973 to shs 570.8 million in 1974
(Econemic Su.rvey, 1974/75, p. 2).
          Looked at f~     another angle, total public sector capital stock continued
to rise and reached sirs 2,077 million or 70.7 per e'ent of total national stock. In
 1972, it was lIIIl,809 million, an increase of 14.8 per cent (Annual Plan for
 1976/77, p. 2). The expansion in th~ public sector,        a trend which is expected
 to continue, widens the role of the corporations i~ the~cononiic development of
  r anzania.  This is emp~asised by the point that the expansion has. penetrated a
 number of sectors in the.economy, that is, by diversifaction. To manufacturing,
 processing and mining sectors,      the traditional sectors dominated by parastatals
  have been' added other sectors like agriculture,      livestock, natural resources,
  trade and tourism, water, power, communications, and administrative. One can
  thus safely claim that parastatals    dominate the Tanzanian economic scene.
          The dominance of the public s.ector in Tanzania is a factor of the
  socialist ideology but this is far from saying that the sector does not have a
  big role to play in some other developing countries. Iran and Pakistan show
 more or less the same trend. For. Pakistan, public.sector investment rose
                                                                   4.
  from 28 per cent in 1949-1950 to 48 per cent in 1964-1965. In Iran, the sector
  accounts for 37 per cent of investments in agriculture,       42 per cent in oil and
                                ,                5             •
  gas   and 99 per cent in water and power.        The trend would tend to continue,
  perhaps at a faster rate,    given tb.e Third World Countries intentions to dis-
  tribute more evenly incomes and development efforts amongthe populous. Such
  a trend will necessarily mean an expanding role of the public sector in the
  ccollomies of thesE' cmmtries. Although it is difficult to say which proportion
  ~.,rthe economyshould be under either public or private sector, for        it depend~
  upon concrete situations prevailing in the country in question, as well as its
  political and economic aspirations,     it is worth saying that thorough planning
   should precede their establishment and/or expansion.
  3. Surplus Generation by,Public Corporations
           One of the principal components of economic development, be it
   capitalist or socialist, is investment. But investment eventually comes out of
   savings. In promoting domestic savings and ensuring proper investment,
  public enterprises hav.e an important role to play. They must operate in a
   way tlldl will raise surpluses,  which will be available for investment     In the
                                               6


   same enterprise   or elsewhere in the economy. Profit is ... n important goal,
   though not the only one, of any business organisation,    De it service or
  productive venture:    For example NDC has categorically     stated: that i:t
              is intended to function as a profit-making organisation; •
              it's charged to do all such acts and things as may be
              necessary to uphold and support the credit of the cor-
              poration and to obtain and justifY.public confi.dence, and
              to avert or minimise any loss to the corpor8,tlon (NDC ,
              1976, p. 1).
  Surplus is a crucial component of economic developlI!-entof any cou"l.try. There
  is wrong belief by politicians and some managers of public corp:.rations,       that
 profit in socialist economies is evil. We r~call an incident h 1974 when the
 manager of Mpwapwa DDC was summoned by district head:., and accus~d of
 being profit minded. 6 This is a wrong belief because fjr extend~d reproduction
 to take place in any country, reinvestment is necessary:
         The only difference between profit in caritalist   and surplus in
 SOcialist economies is the form it takes in tr.c two societies.    Profit is the
 economic law of capitalism and fhe motiv~ forre behind any type of investment.
 It thus becomes a means for and the"r.:msequence of the exploitation of laoour.
 Mor.eover, because of the antago:ustic relations of production in a capitalist
 e'20nomy, profit is appropriated by those who own anC!c":'~~'~.  01 the means of
 production. SOcialism entails the emcmcipation of the workers,        and the
 surplus that is generated is appropriated by the state to further the welfare
 of the masses.    The necessity and importance of profit remains, but its
 character differs within the two societies. The failure to recognise this fact
 may be one of the reasons behind the poor perform'ance of the public sector.
 For the survival and growth of an enterprise, surplus rre,c~ion 1S a
 necessity.  Survival takes place so long as breaKev"ll is achieved at that
point where cost equals revenue; but for j2rrwth to take place, which is the
 desired end, revenue must surpas!"    t '1;j ts.
        In an economy dominiltcd by the public sector,    as in the Tanzanian
case, surplus from 1his sector remains the most important source of public
finance after taxation, and consequently, the determinant of the rate of growth
of the economy. This role is well 'presented in Third FiVe- Year Plan where
parastatal  operations are estim'ated to have generated an income, of course a
great portion of this being surplus, of shs5,707 million betw'een 1976/77 and
1980/81. 7 Perhaps a more detailed table ,showing the contribution of
parastatals  in each sector cou~dbe more illustrative.
        The estimated income will be realised only if the sectors achieve their
expected performance.     To a great extent, e{fectiveness and efficiency on their
                                              7


part will determine the performance results.       Adverse performance will deter
the development of projects,     for one cannot invest out of nothing.
Table 1. Parastatal     Contribution to National Income, By Sector 1976/77 -
                                 1980/81, shs ('000)
Sector                                                       Estimated Income
Agriculture                                                        885,334
Livestock                                                          195,779
Natural Resources                                                    2,300
Mineral                                                            174,500
lndustries                                                      2,049,248
Trade and Tourism                                                  314,600
 Water                                                              23,965
 Works                                                             568,948 .
 Power                                                             345,262
 Communication & Transport                                         659,688
 Education                                                          29,400
 Health                                                             39,957
 Administrative & Others                                           494,240
 SOURCE: Compiled by the author. The source of data is the Third Five- Year
              Development Plan as quoted in the Daily News, Dar es Salaam,
              25 Mciy, 1978.
         Although public corporations nei2d to operate efficiently the performance
 of the public sector in West Africa, which has been summarised in footnote
 three,  which is also typical of developing countries reveals the opposite. In
 Tanzania for example, a number of studies have been carried out in the public
 sector at national level and the same picture emerged. 8 At district level,       the
 findings were that "only 46 out of 71 District Development Corporations        in the
 country can run without government grants for paying the salaries        of their
 gener~l managers and chief accountants" (Daily News, June 22, 1977). The
 two studies, the latter being the Prime Minister's     report to the budget session
 of the Parliament in 1976, reflect the poor perfonnance of some of the public
 corpor ations.
         There has been a number of explanations about this poor performance as
  regards public corporations    in developing countries.  One arguement is based
  on the allegation that they do concentrate on infrastructural    and slow-yielding
  sectors of 8c-tivity and that they operate on low profits if not on losses   as a
                                             8


matter of public policy. This could be true in only a few countries, and there
is thus no justification on the part of the government of raising false hopes in
the public that large surpluses will be generated by the sector for general
investment purpose. Again, Tanzania's public sector is so diversified that the
above argument does not apply.
        This necessitates an investigation into the cause of the poor performance
to establish whether management in general or lack of adherence to sound
financial principles - financial-management, in particular, is responsible for
Lhe poor periormance. Anotner criticism has focussed on the pattern and
nature of their relationship with multinational corporations, partnership and
management contracts, which are exploitative leading, to the drain of
                          Q
corporations' surplus.      Although the criticism could have a sense of truth
in it, it still fails to answer the question as to why most of such corporations
never realise profit. How can one talk of surplus going out if it is not being
created? It is true that some funds go out but they are not necessarily out of
the surpluses created. Tanzania Fertiliser Company (TFC) has a tendency of
paying a fixed amount of money as management fees whether or not profits
are made.
        If surplus is a function of cost and revenue, the proportion which these,
variables take depend very much upon the efficiency or inefficiency of the
operations of the organisation rather than on the above relationship. But the
two variables are part and parcel oft and are determined by, the internal
operations within the organisation. Furthermore, the performance of the
corporations, which will also affect the two variables, will depend upon how
well they are planned, organised coordinated and controlled. These are
functions of management. The criticism on relationship fails to note this
crucial factor.
        The third criticism is that of management - that bad management of the
corporations has led to poor performance. A New York based expert, while
closing a session of a seminar on "Value Analysis" in Dar es Salaam,
declared that, "poor management was the root cause of underdevelopment in,
the third world countries" (Daily News, 22 February 1978). This argument
is too general. Underdevelopment is not a consequent of poor management
 but rather of the relationship between developed and underdeveloped coun-
tries. Poor management could be seen as a root cause of inefficiency and
ineffectiveness in organisations. It is one of the most frequent stated
problems in the NDC's reports as well as in the DDCs.
         But when analysing the role and purpose of management in an
 organisation, one immediate finding is that of applying management concepts
                                            9


and principles with'the aim af achieving..maximumautputs, be it materipl ar
sacial with minimuminputs, while at the same time satisfying the needs af
the consumers. This is the essence af managing. Inputs and autputs, these
two.concepts have aneessentiq.l       element embodied in them, that is cast.
Material,    labour and averhead are input. casts.     In the prace~es    af production
the cOmbinatian and arganisatian       af the three-cast  elements lead to. autput
(praduct ar service).      The praduct has to. reach the cansumer. New <:ast
elenents arise;. transpart,      insurance etc. In any case the purpase af managing
becOmes th~t af minimizing cast. But cast minimizing rests          on the applicability
af financial management principles.
         These principles fall into. two.main categaries:-
          a)   The first and faremast principle is cast/benefit     cansciausness;
 That is, any cost dene in relatien to.'and within an enterprise,       be it service
 ar material,    striking a balance benreen cast incurred and benefit accruing _
material er secial,      shauld be a fast and hard rule.   This consciausness     Should
percelate the enterprise when pre curing funds and allocating funds. This
 becomes necessary because af ,existence af alternatives        for seurces   and
 allecatian ef funds. In erder to. achieve the above, it is inevitable that funds
 shauld be administered and evaluated. The administratian part cans far
 peliey decisian en war,!,ingand fixed capital financmg,       size and prapertions
 ef its companents. Such policies en accaunts rec;eivabl~s,        size and callection
 periad; inventary, and the mede ef financing fixed and current assets,          shart
 term ar lang term financing and at what preportians,        become majar palicy issues
          On the ethQr hand, evaluatian,    althaugh taking place simultaneausly
 with ad1l'l.inistrationaf funds, has the purpose af seeing haw well ar haw badly
 risk and cest are being avaided ar minimised with the intention af maximizing
 benefit. Financial ratie-analysis     is a taol tawards that end. Ratias shaw
 relationships    between and ameng items af financial statements.      They thus
 fadlitate   planning and cantral.   Ratias are classified into. four fundamental
types.
         (1) Liquidity ratias,    which measure the firms ability to.meet its
              maturing shert term abligations.
        (2)   Leverage ratias, which measure the extent to. which the firm
              has been financed by debt.
         (3) Activity ratias, which measure haw effectively, the firm is
              using its resources.
                                              10


       (4) Profitability ratios, which measure management's overall
            effectiveness as shown by the return generated on sales and
            investment.
Financial ratios are meaningful only when they are compared to a standard
so as to determine whether performance is above or below standard. Under
performance calls for immediate remedy. Over performance calls for more
improvement. At the same time, analysis of ratios over the past few years
is necessary so as to evaluate the position of the firm, its stability, down-
ward or upward trend and the rate of such trend.
       b)   The second but related to the first principle, is maintenance
accounts. The purpose of accounting is to provide financial information about
an economic entity. Accuracy is an important factor in recording, classifying
and summarising the financial information. In turn, it will affect the accuracy
in the process of analysis and interpretation of this information. The
accounting system thus gives rise to financial statements: balance sheet,
income statement and cash flow. They are central to planning and control;
needed by and essential to both managerial decision makers and outsiders -
owners, creditors, investors, the government and the public. Financial
statements are prepared to inform the owners, and the public in the case of
public corporations, as to how their enterprise is performing. They should,
therefore, give an accurate and informative presentation of financial position
of the enterprise. Therefore, the essence of clearness, conciseness and
accuracy come in.
       MacDonald, D.F\ , conducted research into the published financial
statements of the NDC, NAFCO, and TTC . The findings indicated the failure
of these corporations in preparing accurate and informative statements.
These results apply well to some DDCs which do not submit their reports in
time. Also, in most cases, they are not audited. Out of the 71 DDCs, only 4-6
 submitted their 1976/77 financial year reports to the Prime Minister's
                    11
Office: 26 did not.    Out of the submitted reports, only 9 have been audited.
A lot of misreporting can be expected in the unaudited reports!
       We conclude this section by an emphasis on the necessity of applying
the principles of financial management in public enterprises as a step towards
improving performance. Knowledge and application of the principles are an
aftermath of training in the field of management in general, and finance, in
particular; and their proper allocation. We now turn to a closer examination
of the DDCs to evaluate their financial performance in relation to the
principles we have just discussed.
                                         11 .


         JB.  Background to the Establishment and Objective of I)DCs
              In 1970 (Correct date is 1969) the Government" (Ministry of
              Regional Administration and Rural Development) directed
             •the District/Town Councils, or local authorities, as were
             called, to engage in productive ventures so as* to defray the
             amount of Central Government subvention.(12)
To implement this call, the local authorities created District Development
Corporations (DDCs) as their economic wings. In the early stages of their
formation, the DDCs were owned and run by either a district or a town council
or the two in collaboration with a cooperative society or union. In terms of
registration they fall under the Company Ordinance Chap. 212. The abolition
of local authorities in 1972, an aftermath of decentralisation, these corporations
came under the control of districts as stipulated in the District Corporations
Act, No. 16 of 1973. This new move equates the DDCs at district level, to
NDC at national level, as the initiator of economic development. To effect this
role, a department was established in the Prime Minister's Office to
coordinate the activities of the DDCs.
         It was thus in consonance With the directive and the stated objective
that in 1971, 1972 and 1974, 19, 21 and 27 corporations were incorporated
respectively. Four were incorporated after 1974.         Presently, we have a
total of seventy-one corporations, Nachingwea being the first to be established.
The number, seventy-one, is in unison with the total number of districts in
Tanzania, excluding new districts like Igunga, Iramba, Hai, Rudewa and so on.
          !•   Projects Undertaken;
          The activities being undertaken by the DDCs differ from one district to
 another, but fall into three broad categories - productive, commercial and
 service projects. Fifty-three are engaged in different agricultural projects,
 fifty-nine in commercial projects £nd service projects are carried on by
 fifty-two corporations. Sixty-five corporations engage in productive activities
 other than agriculture. Over 289 projects are being carried out by 69 DDCs,
 of which 117 are productive and 172 are commercial and service ventures.
 This means, 40 per cent of the total projects are productive and 60 per cent
 fall under the latter category. The commercial-bias nature of the projects
 prompted the Principal Secretary in the Prime Minister's Office to issue a
 strong statement against such a trend.      Its result can be reflected in the
 projected projects of the DDCs for the period, 1977-1980.- 178 projects are
 anticipated; of which 99 (56 per oent) are productive and 79 (44 per cent) are
 commercial. Whether this is a success or not will depend upon whether the
 projects will be embarked on and how they will perform.
                                        . 12


        The commercial bias nature of the projects could be attributed to a
tmmber of factors. Firstly, lack of capital; productive ventures require more
capital, in most cases, t'nan commercial ones. Moreover, the latter have
ouicker profits than the former owing to shorter gestation period. The second
factor could be that of political leaders; that is, while the DDCs were sorting
out what their role was supposed to be, some political leaders, starting from
Moshi, ordered the nationalisation of meat business and other leaders else-
where followed suit. Thus, a number pf private businesses were taken up
including filling stations. Whatever may have been the reasons behind the
commercial-bias, the DDCs cannot do otherwise unless some efforts are made
to rotate the wheel towards productive projects. The efforts should include
training of the required personnel, technical assistance, enough capital and
 so on.
        2.   Sources of Finance
        Banks remain the most important source of finance to the DDCs. The
 second source being equity of the government, through the Prime Minister's
Office, accounting for twenty-five per cent of the total cost of a project.
Tanzania Rural Development Bank (TRDB), leads the way in terms of bank-
finances. Others are National Bank of Commerce (NBC), Tanzania Housing
 Bank (THB) and Tanzania Investment Bank (TIB) and also Karadha Company.
In 1972/73, loans worth shs 2,151,900 were from TRDB and were extended to
 seven corporations. 87 per cent of the approved loans in 1973/74- were
TRDB's, 7 per cent were Xaradhs's, and 5 per cent belonged to TIB. In
 1974-/75, loans worth shs 11,759,600 were awaiting approval, of which 84- per
cent, 10 per cent and 6 per cent were TRDB's, THB's and TIB's respectively.
The figures confirm the fact that the TRD B remains the biggest financier of
DDCs1 ventures. Figures on Debt/owners ratio reveal some interesting
features. In 1973/74, of the total required capital (21,614,984-50) 72 per
 cent was debt and 28 per cent owners capital. That is shs 15,654-,899 and
 5,959,185.50 respectively.      This is a dangerous business practice despite
its being in line with the government emphasis on rural transformation. A
high debt ratio means that the risks of the enterprise are borne mainly by
the creditors, for owner-supplied funds provides a very thin margin of safety.
Nevertheless the latter have the advantage of maintaining control of the
 corporation with a limited investment. If the corporations were profitable,
one could argue that they are paying less in interest than the returns earned
 on borrowed funds, but this is not the case. The end result is that they are
                                          13


highly Indebted to the banks., notwithstariding the fact thaLt since most of the
DDCs Suffer from liquidity problems, the banks have either denied them credit
or withdrawn, or paidonly a part of the approved credit. Mbeya, Njombe,
Nachingwea, Newala, to tnention a few, suffered from such measures which are
necessary on the part of the banks in maintaining profitability, security and
liquidity. JPkradoxically, the banks find themselves in d position that they have
to offer more and more ciredit to this socialist'sector (parastatals, DDCs,
cooperatitres and U jamaatillage1 s) in accordance with party and government
policy. fiat this doe^ not water down the fact that the public sector needs to
operate efficiently so as to preserve and increase national assets.
        3.   Performance of DDCs
        According to a statement (Daily News, 22/2/78) issued by the Prime
Minister's Office, in 1974/75, eighteen DDCs realised profits of 3,443,355
shillings while 26 others sustained a loss of shs 5,147,785.50. In 1975/76, 13
had a profit of shs 1,631,194.00 while 16 made a loss of shs 2,579.928.00. In
1976/77 financial year r seventeen DDCs made profits totalling about 1.9 mil-
lion shillings while twenty-eight others incurred losses totalling about 5.2 mil-
lion shillings. We can observe from the above statements that the general
performance of the DDCs is po.or and, secondly, some* of them either do not
keep accounts at, all (Mbozi did not keep accounts from 1972-1975) or their
 accounts are not compiled,in time for early auditing and submission to the
 Prime Minister's Office, a factor which leads to losses owing to lack of control
 and delay in solving the problems. This tendency has been in operation since
 1969/70 and I97O/71 when nineteen corporations never submitted reports to the
 Prime Minister's Office contrary to the requirement of Section 10 (1) of the
 District Corporation's Act, No. 16 of 1973-      In 1971/72, the DDCs made a
total loss of shs 5,850,421.00. At regional level, to cite only a few examples,
Dodoma made a profit of shs'1^516,865.00; Arusha recorded a loss of
shs 1,410,947,QOj Dar es Salaam suffered a loss of shs 1,212,656.00 and
Kilimanjaro corporations faced a loss of shs 4,032,131.00 for the 1975/76
financial year (Daily News, 1/8/77). The possible causes of this poor
performance will be discussed at the end.of the. section. But the case study,
which follows might illuminate our understanding of the factors behind such
poor performance.
 C.     Kilimanjaro Development Corporation (KIDECO): A Case Study
        KIDECO       was incorporated on 18th November, 1970. It was instructed
to take over the butcheries from private businessmen in Mo=shi area. This was
                                          14


the first venture undertaken by the corporation, a project which aroused
 "follow-suit" tendency elsewhere like: Mwanza, Bukoba, Musoma, Shinyanga,
Arusha, Korogwe, Lushoto, Mbeya and Dar es Salaam. Reasons advanced as-
to why other corporations had to plunge into meat business are: 1) political
pressure, 2) lack of clear-cut objectives of the DDCs, and 3) assumed
success of KIDECO in the butchery trade.
        The truth of the matter is that KIDECO-had never made a profit. The
purported success of shs 70,000 was due to KIDECO1 s management reporting
either sales or gross profit instead of net profit, with the aim of giving a rosy
picture to the public. The truth revealed itself in 1974 when they had to close
 down with an accumulated loss of shs.996-,875.65, and this climbed to
shs 1,111,735.30 in 1975. Bukoba and Arusha had the same experience; they
incurred losses to the extent of shs 376*403.40 and shs 1.3 million respectively.
Thus, they had to hand over the butcheries to the former owners. The same
history is true of Mbeya and Musoma.
        In 1973, Kideco embarked on town bus service project. Of the twelve
buses they had in 1973, only six were operating in 1978. By 1975, losses of
shs 484,204. 70 had been incurred in connection with the venture. Overload,
frequent breakdowns and shortage of spare parts, as well as theft on the part
of the workers, have been cited as problems facing the project. These
problems are made more acute by the fact that most of the buses are old -
over 5 years.
        In 1974, Kideco was given the task of managing two nationalised farms,
Kifaru and Annahoff, of 1,158 and 738 acres respectively. When we were
conducting this study the Kifaru farm had 170 acres of maize, 40 acres of
beans and 40 acres of coffee plus 160 heads of cattle. The Annahoff farm was
planted with the same crops. Both the farms are being financed by the
National Bank of Commerce (NBC) through overdrafts. By December 1975,
shs 328,246.45 worth of over-drafts was outstanding.. In the same period,
Annahoff had a loss of shs 141,054.60. Problems facing the projects, as
observed by the management, are scarcity of farm equipments and lack of
control.
1. Financial Performance of Kideco
        This section will be devoted to an analysis of income statement and
 balance sheet items by means of calculating financial ratios; some implications
 and conclusion will be made thereafter. Kifaru and Annahoff estates have
their own accounts since they are regarded as being a subsidiary company of
Kideco; for the purpose of our study, only those relating to the transport
business will be discussedv
                                          15


         The financial ratios reveal that the corporation is in bad shape. Its
liquidity is highly questionable. On. average, the corporation can meet only
0.09 (9 per cent) of its outstanding liabilities. That is why Kideco consis-
tently.couldn't pay its outstanding loans to the lending financial institutions.
There are two, possible causes of this situation ; either the corporation is
not generating enough business, as reflected by the low activity ratios, or,
the cost of doing business is so high tftat it is" not paving at all.
         The ley.erage ratio shows an extraordinary high debt component. The
reason behind this is the very nature of the financing policy of the DDCs,
whereby the financial institutions become the main financiers. As we have
mentioned earlier, this policy not only ties the DDCs to the creditors, but
augments further the liquidity problems of the corporations through interest
on and repayment of loans. High debt-ratios in normal business practice
indicates bankruptcy and calls for liquidation. The negative working capital
portrays such a phenomena.
         Negative working capital, apart from being an indication of.bankruptcy,
leads also to a situation where some projects, at a certain point in time,
could come to a stand still or operate under-capacity due to lack of finance.
The effect being poor liquidity, activity and profitability ratios.
         Activity ratios are low for fixed assets turnover but lower for total
assets turnover. These two ratios show that the corporation is simply not
generating a sufficient volume of business for the size of its asset investment.
As a remedy to this situation^ sales should be increased, or some assets
should be disposed of or both steps should be taken.
         Profitability ratios' history is of negative percentages, meaning the
enterprise has not been operating effectively. The low rates of profit margin
on sale and return on total assets result from high costs of doing business and
low profit margin on sale, as well as from the low turnover of total assets.
On the other hand, the return on worth is not as bad as the profitability ratios
because of the high leverage ratio. That is, high debt ratio does boost the
ratio substantially. This is because whatever is gained on the borrowed funds,
 after paying off interest charges, accrues to the shareholder regardless of
their small contribution. Nevertheless, such a policy has its limitations:
1) it increases the risk of bankruptcy and 2) creditors might be reluctant +:^
offer more credit since they do bear most of the risk. This is more so in a
 situation of poor performance of which the DDCs are a part.
                                            16


  2.  Factors   contributing to the poor performance of the DDCs
          The first and foremost factor is lack of cost- benefit consciousness      on
  the part of both management and political leaders      in procurement,   allocation,
  administration   and evaluation of resources.    The bulk of DDCs' projects     are
  financed by 'debt which carries    an obligation of paying interests   apart from
 repayment of the principal.     Thus, whatever is earned finds its way to the
  creditors.   The end result of this is liquidity problems.    Funds are allocated
 to projects   which have not been thoroughly analysed in terms of economic
 viability and financial feasibility.   Project  appraisals  are either not done at
 all or, at least,   are not done thoroughly or accurately.     Such projects,   in any
 case,   end up in failure.  The incompleteness or inaccuracy      of the appraisal
 migh! be either intentional with the aim of forcing its acceptance,       or
 unintentional because the person doing it is not well trained in this field so he
 fails to know and consider all the factors pertaining to the project.      Whatever
 the case, more costs will be incurred than the accruing benefits.        Overemploy-
ment, just like underemployment of resources         - a disease of many corporations
 - leads to more costs being incurred than t4e gains because with scarce
 resources,    enough business cannot be generated to justify the over employ-
ment. This subject will be discussed in detail under the third factor - 'nature
 of projects.
          Employment of unqualified persons     also causes the same havoc in terms
 of costs.   An unqualified accountant cannot design a good and an effective
 accounting system. Likewise,      a poor manager cannot make rational decisions.
The effect of all these is poor performance.        The swelling character    of
administrative    and general expenses in a number of DDCs' financial state-
ments is a manifestation of over emplo:ymentof personnel.         Dar es Salaam
employed twice the number of the necessary         workers in the meat business
between 1971 and 1973, about 650 workers were employed by the corporation.-
Presently    the number has been reduced by half and the business still
survives.     Mbozi had employed twelve bar maids, an accountant and a
cashier in its bar business despite the fact that sales did not exceed three
cases of beer per day! Private      bars of ,the same capacity employed one or
two bar maids.
         In general,  the administration of the corporations    is highly question-
able; loans are not put into the purpose they had been requested for - the
bankers complained of this (Daily News, 19th March 1978). Cash was not
being frequently deposited in banks, causing thefts and other losses (KIDECO
had more than shs 6,500 on hand on 30th J;une 1977). Working capital' was
                                            17


 neither properly planned nor prepared well in advance resulting       in negative
 working capital, leading in turn to more losses being incurred,      as projects
 come to a standstill,   while at the same time, fixed costs are tontinuously
 being incurred (refer to the ratios).   Workers have no job description;      thus,
 in the final analysis, they work in confusion. Moreover, lack of incentives
 leaves the workers unmotivated. (None of the corporations visited had
 incentive schemes). Management hardly uses financial ratios to evaluate
 trend of events. Some ratios are so much out of proportion that one doubts
 t he capability of management. Without the use of ratios one can neither plan
 nor know the trend of his performance.
        Lack of proper and informative accounting system could be cited as a
second factor. An examination of corporations'      financial statements discloses
the failure to prepare accurate and informative statements. KIDECO, as we
have noted earlier,    had two subsidiary companies - Kifaru and Annahoff
Estates, but their accounts were not disclosed in the parent corporation
financial statements. This non-disclosure,     led the corporation into not show-
ing a correct view of its financial p<?sition(Auditor's management report,
7th April, 1978). In turn this led to a wrong guide to management in planning
and controlling the activities of the enterprise,    as well as, misleading out-
siders in evaluating the performance of such corporations.       There is a
tendency by management to create a favourable impression by reporting           sales
and/ or gross profit instead qf net profit. This is natural because financial
statements disclose their competence. The danger involved in this tendency
is that such financial reporting gives a wrong picture of the financial
position of the organization and the events of the year. This practice      was
commonin Tunduru, Mbinga, Moshi, Karagwe and Handeni, to mention just
a few. Another factor contributing to the inadequacy in the accounting system
is lack of qualified manpower. Over fifty per cent of the corporations      were
operating without proper accountants. Unaudited accounts, late preparation
and delayed suhnission of financial statements are rampant in the corporations
(refer to footnote 17). The role of an auditor is that of providing an
unprejudiced view on how management has reported the organisation's         progress. ,
so it becomes a tool of cQntrol. Late preparation of the statements not only
delays planning, but makes early attack on problems which are adversely
affecting the performance an impossibility.
        The nature of the projects is a third factor affecting performance.
The projects undertaken by the DDCs are what we might call "petty bu sine~.,
or family buSiness, for example, meat and petrol ventures.       The effert  <,).
running such projects by the DDCs is bureaucratisation:       that is, employment
                                           18


  of project managers,    cashiers,    accountants   and so on, with the end result
  that the project cannot pay because it cannot generate enough sales to offset
  the costs involved, despite the fact that in most cases, the sale price is given
  and the margin of profit in such ventures is quite marginal. Instead of striving
 to minimise costs, the opposite takes place. That was why'the "take-overs"
  were immediately followed by increasing costs, whereas, formerly they were
 making profits with limited costs: (because of the use of family labour and a
 few workers).    Where the project happened to be agricultural,         farming and
 livestock,  the acreage and the number of livestock kept did not justify the
 inputs. It was normal to come across DDCs (e. g. Mbozi) having two tractors,
  a farm manager, and a number of other workers on a farm of less than one
 hundred acres or a poultry farm of two hundred to three hundred chicks
 (e.g. Rambo)! Petty projects plus overcapitalisation,         as the above two
 examples illustrate,    affect profits adversely and they cannot enjoy the
 economies of sale.     A number of DDCs complained of competition. 19 The
 nature of competition is that of private versus public capital. Lack of
 demarcation between projects which are viable or feasible under public or
 private capital on the part of the DDCs, as reflected in the nature of projects,
 is solely responsible for the competition ..
         Projects are initiated and enunciated by political leaders who have no
trade or industrial experience,       and' yet tend to become assertive authorities
 on business matters.    The techno-professional      personnel are ultimately
 responsible for implementing them the decisions. The effect of this mode of
implementation by "panicking" has produced nothing short of losses.
Nationalisation of butcheries,      filling stations and farms which were later
put under the DDCs resulted in big losses. 20 Mbeya handed back her petrol
 business to the former owners, but the political leaders rejected the decision.
The nationalised farms being run byKIDECO incurred losses ofshs62,883.30
in 1974. These "pressured"       ventures failed because no proper research       was
 carried outqn them. On implementation, it was realised that they had neither
capital nor qualified personnel to run the projects.
         The fifth factor is that of natural disaster,    ffthirt,y-nine" DDCs deal-
ing with agriculture sustained losses because of drought". Altho1}.gh         drought
contributed to this failure,    still it fails to answer the question, "how well
were the projects being managed?" The answer is part and parcel of the already
stated factors.
         Finally, other factors like undercapitalisation      and slow paying
creditors   are not .independent of the first factor. We have opted to discuss
them separately because they appeared now and then during our visits to the
                                              19


DDCs. Prime Minister's      Office provides only twenty-five per cent of the
total cost ?f any project,   although the percentag~ has been raised to forty
with effect from July 1978; unless the corporations         are profitable,  this
problem will persist.    Meat,'petrol   and distribution businesses      have faced
the problem of debtors not clearing their bills in time. 21 This adversely
affects working capital.   Although it could be a factor of poor credit policy,
the debtors,   especially governmental institutions,      need to be blamed for net
meeting their obligations. The problem was rampant in Ngara,             Mbeya, Maswa,
XHosa, Newala and in many other DDCs. A number of DDCs resolved on 12th
Mat, 1976, not to supply petrol on credit t~rms. The action shows the serious_
ness of the credit-problem in the DDCs.
        Acts of sabotage were cited as being contributing factors to the poor
performance. Former owners removing vital equipments from the butcheries,
thefts, misuse of resources,     putting farm,s on fire and so on, were common
in some DDCs. 22 DDCs being instruments of a new ideology - socialism - are
bound to have enemies both from within and from outside. Politicisation
through political education might be a cure for the problem.
        Discipline on the part of DDC workers was very shaky.            Perhaps,    the
auditors-management report on KIDECO is quite illustrative.            "A scrutiny of
the staff files reveal that the management is not strict enough on staff
discipline. Some of the staff were being warned several times without any
improvement. We feel discipline is very necessary          to the future welfare" of
the corporation and, therefore,     stricter   disciplinary actions should be taken
as per law to maintain or bring about an acceptable behaviour which will
enable a high standard of efficiency for.... achieving the corporation goals.      II
        We have enumerated a number of problems facing "theDDCs. These
problems reveal that most of them arE!'ol'elatedto financial management. In
fact all of them have got a component of this. For example, theft is part and
parael of inadequate control system which, in turn, is related to the account-
ing system - a financial instrument. That being the case, we can rightly
relate the factOrs adversely affecting the performance of the DDCs to those
of lack of adherence to sound financial principles as discussed in section A.
Future performance of these corporations,         and the public sector at large,
win depend upon the degree and rate of adherence to these principles.
   D. Summary and Recommendations
        Public corporations have assumed from significant to         com in ant economic
and political importance in Tanzania and in the Third WorlJ Countries at
large. In Tanzania, they penetrate each and every sector of the economy.
                                            20


  There are diverse reasons for creation of these corporations.            Even in the
  same country different public corporations have been established for different
  reasons.    They range from ideological,       social wd political to pragmatic and
  situational.   Whatever the reasons might be, the public sector has an important
 role to play in the economic development of a country.
           The purpose of this study has been that of evaluating the financial
 performance of one of the public cQrporations, District Development
 Corporations.      Evaluation is a broad concept but an important aspect of
 public enterprise.      Despite its broadness,     it should refer to the way in which
 an organisation has carried out the economic and social policies of the govern-
 ment it intends to serve. The criterion         of evaluation has been that of
 flrofit ability. The yardstick has a drawback of not being a conclusive measure
 of efficiency. Monopoly practices         as well as public policies calling for low
 prices or increase in costs may affect profitso'positively and negatively
 respectively regardless       of the efficiency factor. Nevertheless,     the fact that
 the corporation ought'to conduct its activities at the lowest cost possihle
 overrides the drawback.
         'The financial performance of the DDCs, and other public corporations
in Tanzania, has been poor. Factors           leading to such performance vary from
one institution to another but they are mainly emanating from poor management
in general and financial management in particular.           Cost- benefit conscious-
ness lacks in procurement,         allocation and administration of resources.
Evaluation of the activities by management is hardly looked at. Projects            are
embarked upon without or with inadequate feasibility studies. The petty
nature of projects and bureaucratisation          multiply costs and ultimately affect
profits adversely.      Indiscipline on the part of the workers and natural
calamities were also contributory to the poor results.           Lack of proper
accounting system and the tendency on the part of management of hiding their
inefficiencies and passing blame to others have tended to aggravate the
situation.
         Given the dominance of the public sector in Tanzanian economy, the
poor performance of the sector not only indicates a destrc1yal of national
rlssets but, more important, is the fact that the rate of economic development
is slowed down. Socialist transformation with the ultimate aim of raising the
standard of living of the masses,        depends solely on the performance of this
sector.    This being the case, there is an urgent need of raising th~ performance
of these corporations. The following recommendations should be of assistance.
          1. Trainin~: Improved performance of the corporations will depend,
               to a large extent, upon the emphasis put on training. Training
                                               21


    will equip those who administer the corporations     with the
   necessary    concepts and principles underlining their field of
    business.  On the other hand, training will be meaningless
   unless it is need-based and the working environment is con-
    ducive to applicability of the learned knowledge.
2. Political Intervention:  The Party and the Government have every
   right to see thai; the corporations operate in line with the policies
   and priorities  of the country. This being the case,    guidance and
   collaboration with the management of the corporations      is what is
   expected of them. The acts of :imposingdecisions on the latter is
   contrary to the above expectation. It will only give rise to con-
   flict, a danger to good cooperation. The acts of nationalisation
   of petty businesses,   not only led to the DDCs being forced.to take
   them up, without feasibility studies,   but distorted the plans for .the
   corporations.   The end result was losses.    Such pressures   need to
   be checked.
3. Feasibility Study: It would be of :importance if feasibility   studies are
   conducted before projects are embarked on. To this effect, it is
   necessary to drop the present unprofitable commercial projects.
   The productive ones should be restudied before more commitment
    of resources  is effected. It is also nece~sary that new projects
    be undertaken only after the perfection of the ongoing ones, and
    after adequate resources    - material and personnel - have been
   secured.
4. Attitude of Managers: In March, 1978 general managers of DDCs,
   at their annual conference held at Arusha, cla:imed that the
   problems facing their corporations are" structural".      Such an
   attitude not only transfers   blame to other parties,  but hinders the
   improvement because it assumes that they (the managers) have
   nothing to do with the performance of the corporations.      They
   were blasted by a project officer from TRDB who.correctly
   observed that the poor performance of the DDes was due to "gross
   mismanagement". Unless the managers change this atrilude and
   look for ways and means of performing effectively and C'fficiC'ntl.v,
   the performance will remain poor. Avoidance of rC'sponsibilitv on
   the part of management will do the corporations m.:r,"' hnrm th,lIl
   good.
                                   22


            5.     Financial Statements: Maintenance of timely, accurate and audited
                   financial $tatements should be the legal duty in each corporation.
                   Timely and .accurate statements facilitate appropriate solution of
                   problems at their earliest by taking corrective          action before things
                   reach a point of no return.      Auditing is a cruCial instrument of
                   ensuring accountability of public enterprise.         It is also-important
                  for control. Its potentiality as a control mech~ism consist of
                  the impact it has on the managers in their financial transactions,
                  knowing that they will face it in due course.          Towards this end,
                  it is advisable that both internal and external auditing be a rule
                  in each corporation.
            6.     Lastly, introduction of clear personnel policies with regard to
                  recruiiment,     promotion, disciplinary action and termination of
                   service should be emphasized. Politicisation of the workers is
                  important not only for motivating them, but for also ensuring that
                  acts of sabotage are minilnised.
            SOcialism does not deny the existence of personal enterests.               But it
 does eliminate the selfish interests           of capitalistic   profits and the antagonistic
 opposition of one type of interests          to another., The tntroduction of incentives
in public corporations in Tanzania is necessary in order to encourage rhe
 active .and conscious participation          of the workers in the management of
production. The system of material incentives can be based on both wages
 and production bonuses; either for personal or colleCTIveachievements or
both. This call s for the setting up of personal and collective responsibility;
that'ie;,     an ir:djvidual,     as well as an enterprise      should know what is expected
('f' tllcm.    B'.lt the setting up of responsibility    schemes is meaningless unless it
i; attainable and that ways and means are devised in order to check fulfil-
ment or non-fulfihnent of this responsibility            and corrective      action taken when
required.
          The ixnplcmentati<:)ll     and sUccess of the list recommendations will
d0pcnd on the cC'oper:1tion dnu coordination between the 'Party, Government
and the ,,'orp,)r:1tions invc"!ved. Coordination and channeling of their interests
into a common course           15  a necessary   condition for an efficient management of
the economic life of the country. This is more so, under socialism, where
('very enterprise         is a part of the whole, a link in the chain of public
p'~opcrty. But it is also an independent ~nit endowed with material means and
1q~a1rights.         Just because a socialist production enterprise          is public
                                                   23


property,   it cannot draw endlessly on social resources.    Society supplies
the .enterprise with material means, but then the enterprise   must become
self-supporting,   should balance expenditure against income, and cover its
costp out of returns received from the production and sale of goods or services.
FOOTNOTES:
 1.    National Accounts of Tanzania,    1964-1972.
 2.    See Development Plans of Guatemala (1965-69), Uruguay (1965-74),
       Pakistan 0960-1965) and El-Salvador (1966-1969).
 3.    Measures for lmproving the Performance of Public Enterprises in
       Developing Countries (UN Publication, Sales No. E. 70. 11. H.1).
 4.    Measures for lmproving Performance,       op. cU.
 5.    I ran, Plan Organisation, Fourth National Development Plan,
       1968-1972 (Teheran, 1968).
 6.    Daily News, Tanzania,     18th September,   1974.
 7.    Daily News, Tanzania,     Thursday,  25 May, 1978, p. 1.
 8.    S.M. Wangwe, Excess Capacity in 1-1anufacturing: A Study of
       Selected Firms in Tanzania, ER B Paper 76.2, Economic Research
       Bureau, University of Dar es Salaam, November 1976.
 9.    See Issa G. Shivji, "Capitalism Unlimited: Public Corporations in •
       Partnership with Multi-National Corporations", The African Review,
       111(1973), pp. 304-381; Andrew Coulson, "Blood-Sucking Contracts",
       Department of Economics, University of Dar es Salaam, 1972 (M:imeo).
10.    MacDonald, DoF., "Disclosure in the Public Financial Statements of
       Tanzania Parastatals",    February 19, 1974 (Unpublished).
11.    Junior Minister in the Prime Minister's Office (Tanzania),    address to
       Members of Parliament Budget Session on June 21, 1978.
12.    C. B. Makubi, "Comparative Management Problems of Public Corporations
       in Tanzania:   The Case of Cooperative Unions and DDCs", Unpublished
       M.A. Dissertation, UniversityofDar       es Salaam, 1976.
13.    Prime Minister's   Office, DDCs department,    Dodoma, 1978.
14.    "Ujamaa Leo", No. 11, Prime Minister's       Office, Dar es Salaam,
       pp. 2-3.
15.    The calculations are authors',   data source:  Prime Minister's   Office.
16.    See The Annual Plan for 1972/73, Government Printer,        Dar es Salaam,
       p. 53.
                                         24


17.  The section reads, "Every DDC shall keep and maintain proper
     accounts and other records in relation thereto, and sha~l in respect
     of each financial: year ... prepare a statement of accounl;s in such
    manner ..
18. Moshi DDC came into existence by Government Notice No. 52, issued
    under the District Corporation (Establishment AIIUIlendment     No.2)
    Order, 1975, to replace KIDECO.
19. Moshi, Aru.sha, Lindi, Bariadi,      Sumbawanga, Mpan,daand Songea -
    complained of competition ..
20. Arusha,   Morogoro and Bukoba lost shs 1.3 million, 354,289.20 and
    376,403.40 on butcheries 'respectively.
21. Mbeya fuel debtors owe shs 500,000.00 (1975), Arus.ha meat debtors
    450,000.00 monthly G973), Musoma petrol debtors shs 375,000.00.
    Mostly to government departments and parastatals.
22. The former owners of natiO'nalised butcher)es in AClsha removed
    vital equipment. Acts of sabotage were also reported in the West
    Kilimanjqro nationalised farms. People wantonly destroyed crops,
    refused to work a~ casual labourers during ha.rvest season, etc.
                                        25