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THE UNITED REPUBLIC OF TANZANIA
PRIME MINISTER’S OFFICE – REGIONAL ADMINISTRATION AND
LOCAL GOVERNMENT
LOCAL GOVERNMENT LOANS BOARD

1.0 Historical background of Local Government Loans Board in Tanzania

1.1 Introduction
The Local Government Loans Board (LGLB) is the local government credit institution in Tanzania affiliated with the Prime Minister’s Office – Regional Administration and Local Government (PMO-RALG). Historically, the LGLB was originally established way back in 1953 when the Local Councils Board as it was then known, was established by the British Colonial Government under Cap 333 of the Local Government Ordinance and has gone through various transformations including abolition in 1972. On the other hand, the present Local Government Loans Board was established in 1986 derives its legitimacy from Part V of the Local Government Finances Act No 9 of 1982, Cap 290 RE. 2002. LGLB currently is therefore a single lending window that accommodates the borrowing needs of all 133 Local Government Authorities in Tanzania Mainland.

Since its inception (re-establishment) in 1986, the Board chairperson, who is normally the Permanent Secretary of the Ministry responsible for Local Governments, has been changing following reformation of ministries by the President of the United Republic of Tanzania. The LGLB has therefore been operation under different ministries as mentioned in the table below:

Table: Years with respect to Ministries that LGLB has been under operation
|Year |Ministry |
|1986- 1990 |Ministry of Local Government, Community Development, Cooperation and Marketing. |
|1991- 1992 |Ministry of Regional Administration and Local Government (MRALG). |
|1992- 1994 |Office of the Prime Minister and First Vice President. |
|1995- 1998 |Office of the Prime Minister. |
|1999- 2000 |Ministry of Regional Administration and Local Government (MRALG). |
|2001- 2004 |President’s Office, Regional Administration and Local Government (PO-RALG). |
|2005/to date |Prime Minister’s Office, Regional Administration and Local Government (PMO-RALG) |

Source: LGLB (2013)

1.2 Objectives of the Board The main objective of the Board is to provide cheap term loan capital finance to Local Government Authorities for investiment purposes in various economic activities with the ultimate aim of stimulating economic development in their areas of jurisdiction. In addition, the Board provides advisory services on various investment activities undertaken by Local Government Authorities.

1.3 Functions of the Local Government Loans Board Section 60 (1) of the Local Government Finances Act No 9 of 1982 acquires the LGLB to perform the following functions; i) To receive, administer and invest the funds of the Board; ii) To lend, out of the funds of the Board, funds to Local Authorities for the provision of development works and services; iii) To provide financial assistance to Local Authorities whether by way of grants, furnishing of guarantees or in any other way and iv) To provide and operate services on behalf or for the benefit of Local authorities.

1.4 Funding Modalities of the Board Section 62 of the Act stipulates the funding modalities to enable the LGLB to perform its mandatory functions. The sources of revenue include; i) Contributions from Local authorities, ii) Grants from Central Government, iii) Income from Investment and iv) Grants and/or donations from any person or body persons.

2.0 Vision and Mission of the Organisation
2.1 Vision Statement

To be a leading viable and sustainable Loan Capital Provider to all Local Government Authorities (LGAs) and to the grass root level of Local Government Authorities in the country.

2.2 Mission Statement
To continually provide high quality loan management services for sustainable and equitable Social and Economic Development Projects to Local Government Authorities in particular and the rest of Tanzania.

3.0 Organization (Local government loan board) Structure and Management
3.1 The Local Government Loans Board has a simple organisation structure consisting of ten (10) Board Members at the apex, appointed by the Minister responsible for Local Government. The maximum term of their tenure of office is three (3) years. The Board has a Secretary who is the Chief Executive Officer (CEO) and head of management team. He is directly under the Permanent Secretary. Its staff, are all civil servants and the Board pays only their duty allowances. The members of staff of the Board are subject to the Public Servant Act and regulations. Under this legislation, the Public Service Commission has power to hire and fire the staff of the Board. This implies that, the current staff is thus not a result of the Board’s own recruitment, but the staff appointed and posted in the way other government officers are managed.

The organisation structure of the Board as it was shown in Figure 1 comprises four support sections which form the core functions of the Board namely; Finance and Account Section, Administration and Human Resource Section, Planning and Investment Section and Procurement and Supplies Section, being headed by Principal Accountant, Senior Human Resource officer, Senior Economist and Senior Supplies officer respectively.

According to the law which created the Board of the Local Government Loans, the institution has its board members which has 7 (seven), including the chairman and vice chairman of board. Board is the executive arm of the law and the internal structure of this institution. The Board is entrusted with managing the operation of organization activities on behalf of Prime Minister.

3.2 Scope of office practice

Scope of office practice refers to the area of knowledge which covers purpose of a business office. The LGLB have a conducive working environment with sufficient offices (seven office rooms) and working tools such as office materials, machines and equipment.

3.3 Office accommodation

Office accommodation refers to the space that available for lodging office. LGLB is part of PMO-RALG having sufficient rooms for office practices, packing cars, air conditions and wash rooms which situated at Prime Minister’s Office Buildings at Railway Street.

3.4 Office furniture and equipment

The LGLB in performing its function is facilitated with various office furniture and equipment and other fixed assets including;

Office Furniture i. executive table. ii. Executive chairs. iii. Shelf for files storage

Office equipment i. computers ii. Photocopy machines. iii. Frigerator. iv. Fax machines vi. Files vii. Cars (2) viii. Other stationeries

3.5 Health and safety

The organization Staff’s health and safety services are considered at large in order to ensure that all activities are performed effectively. The staff and their family‘s health are provided with Health Insurance Services. On the other hand, the Office Accommodation is secured from fire attack using Fire Extinguisher.

4.0 Organisation Growth (Achievement of Local government loan board)

Lending is the core function undertaken by the LGLB. Effectively LGLB lending operation to Local Government Authorities started in 1996/1997. The loan term is between one year (minimum) and 5 years depending on the size of the project, the amount of loan issued and financial capacity of respective Local Government Authority to repay the loan.

A number of Local Government Authorities have been benefited from loan provided by the LGLB through implementation of various revenue as well a non-revenue generating projects. However, the priority is to provide loans on revenue generating projects such as; marketing structures, bus terminals, conference hall, electricity generation, agricultural crop production and plot (land) survey. On the other hand, non-revenue generating projects are; administration buildings, construction equipment (motor grader, wheel loader, tipping truck, etc) and transportation trucks, schooling teaching materials, building construction materials and other related materials.

5.0 Challenges faced by Local government loan board

In attaining its objective the LGLB faces a number of challenges as indicated below:

i) Increased demand for loans from LGAs vis-à-vis limited capacity of the Board due to insufficient funds (working capital).

ii) Inadequate staff in terms of number and professional capacity.

iii) How to restructure the Board so that it becomes a more attractive credit Institution to LGAs and other related Local Government Institutions.

iv) How to change the mind sets of LGAs’ Leaders and Executives so that they become more developmental in their attitudinal perception.

6.0 The way forward of organization

However, to overcome aforesaid challenges above, the Board’s strategy is to improve service delivery to customers (i.e LGAs in particular). In order to do so, it will embark on mobilizing sufficient financial resources, as a way of strengthening the LGLB’s financial capacity to provide loan capital investment to more LGAs. The transformation of the Board into a more viable and sustainable Local Government Credit Institute is also among the future plans of the Board.

7.0 Conclusion

The achievements of any organisation was influenced by various factors including internal (staff competent, office facilities, etc) and external factors (technology, political influence, etc). Not only that but also, the opportunities the organisation has and the challenges faced in performing its activities. In this regard, the institution (LGLB) seemed to be the most important financing mechanism in Tanzania that contributes in reduction of poverty at local levels, but it faces a lot of challenges that are hindering the achievement of its intended objectives. It is therefore, in order to improve LGLB operations; there is a need of formulating appropriate strategies for searching alternative sources of fund to increase the capital of the Board to meet the LGAs loans demand. In other words, to increase the supply of loans provided by LGLB may offer LGAs the opportunity to open a line of development activities, which has now not been possible due to financial constraints.
FIGURE 1: ORGANIZATIONA STRACTURE OF LGLB

Source: LGLB (2013)
-----------------------

BOARD

SECRETARY TO THE BOARD

PROCUREMENT AND SUPPLIES (Supplies Assistant)

FINANCE & ACCOUNTS (Principal Accountant)

HUMAN RESOURCE (Sen. Human resource Office)

PLANNING AND INVESTMENT (Sen. Economist

SUPPORTING STAFF

SUPPORTING STAFF

SUPPORTING STAFF

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