The Maswa District Council in Tanzania has made significant strides in reducing its financial reliance on the central government and increasing its own revenues through industrialization initiatives. This was achieved through a multi-year project undertaken in collaboration with the United Nations Capital Development Fund (UNCDF) and the International Centre for Local Democracy (ICLD)

The Genesis of the Project

In the fifth phase of Tanzania's government, there was an emphasis on promoting industrialization nationally. The aim was to reduce dependence of local governments on central government financing for their development projects. However, the COVID-19 pandemic affected both the central government's finances and global financial markets. This constrained Maswa District Council's ability to raise adequate funds through markets for its newly established industries.

To address this challenge, the council devised a project with UNCDF and ICLD support. The project's objectives were two-fold:

1. Reduce Maswa District Council's financial reliance on the central government to fund local development initiatives.
2. Boost local revenues by establishing industries aligned with Maswa's resource base, thus creating jobs and incomes for residents.

Key Project Activities and Outcomes

The council set up several factories including for gypsum powder production based on available local resources. Four staff members were trained intensively to build their capacity in revenue supervision and collection. Revenue tracking was digitized and streamlined by introducing point-of-sale machines and databases.

The project team also conducted inclusive stakeholder consultations from the start, meeting with diverse interest groups. Vulnerable and marginalized groups were given opportunities for employment in the new factories. This helped create a conducive environment for those with disabilities to work as well.

After three years, the project has yielded substantial positive outcomes on multiple fronts:

• Financial dependency on the central government has reduced by 80%
• Revenue collection digitization increased from 68% to 100%
• Capacity for revenue supervision and collection rose from 85% to 100%
• New revenue streams were identified, like the gypsum industry
• Overall council revenues increased by 100% since industrialization began
• Number of registered taxpayers in the district increased from 500 to 1500
• The council's tax base expanded as more informal enterprises formalized

With the revenue increase, Maswa District Council has funded the construction and improvement of schools, roads, health facilities and water access for its citizens without relying heavily on central government grants.

Acknowledging Key Collaborators:

The council staff members who spearheaded this effort expressed appreciation to the District Executive Director Mr. Simon Berege for his support and financial assistance. They also thanked their mentor Ms. Patricia for the extensive technical and moral support provided throughout the project. UNCDF and ICLD's roles were recognized as instrumental in enabling Maswa District Council's success in boosting local industrialization and revenues.

The project provides a model for other district councils across Tanzania seeking to increase their tax bases, create employment, deliver services sustainably, and reduce dependence on the central government. It shows that with the right local leadership, technical support, and community-driven approach, indigenous industries can be leveraged to drive local revenues and development.

[1] https://icld.se/en/

[2] https://icld.se/en/international-programmes/the-programmes/itp-municipal-financing-supporting-local-development-and-local-democracy-2020/