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The ceremony is being held with full military honors in a heavy downpour, according to our reporter there Emmanuel Chibwana.
Khonje died on Sunday at the age of 95.
He served as speaker for 12 years between 1975 and 1987 and parliamentarian for Mwanza Central for 21 years.
Politicians, religious leaders, traditional leaders and government officials have thronged on the village to see off a man described as friendly and patriotic.
Chikolosa village is in the area of Traditional Authority Kanduku.