THE UNITED REPUBLIC OF TANZANIA
TANZANIA ASSISTANCE STRATEGY
IMPLEMENTATION REPORT
FY 2002/03 - 2004/05
NOVEMBER 2005
DAR ES SALAAM
TANZANIA
……………………………………………………………
List of Abbreviations
AU
African Union
BGC
Budget Guidelines Committee
CAG
Controller and Auditor General
CAS
Country Assistance Strategy
DAC
Development Assistance Committee
DADP
District Agricultural Development Plan
DANIDA
Danish International Development Agency
DCF
Development Co-operation Forum
DDP
District Development Programme
DFID
UK Department for International Development
DPG
Development Partners Group
EAC
East African Community
EC
European Commission
GBS
General Budget Support
ECOSOC
Economic and Social Council (of the United Nations)
FY
Financial Year
HIV/AIDS
Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome
IFMS
Integrated Financial Management System
IMF
International Monetary Fund
IMG
Independent Monitoring Group
IPSAS
International Public Sector Accounting Standards
JAS
Joint Assistance Strategy
LGA
Local Government Authority
LGRP
Local Government Reform Programme
LSRP
Legal Sector Reform Programme
MDA
Ministries, Departments, Agencies
MDGs
Millennium Development Goals
MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania
MTEF
Medium-Term Expenditure Framework
NACSAP
National Anti-Corruption Strategy and Action Plan
NGO
Non-governmental Organisation
ii
NEPAD
New Partnership for Africa’s Development
NPES
National Poverty Eradication Strategy
NSGRP
National Strategy for Growth and Reduction of Poverty
ODA
Official Development Assistance
OECD
Organisation for Economic Co-operation and Development
O&OD
Opportunities and Obstacles in Development
PAF
Performance Assessment Framework
PEFAR
Public Expenditure and Financial Accountability Review
PER
Public Expenditure Review
PFMRP
Public Financial Management Reform Programme
PIU
Project Implementation Unit
PMS
Performance Management System
PRA
Participatory Rural Appraisal
PRBS
Poverty Reduction Budget Support
PRGF
Poverty Reduction and Growth Facility
PRS
Poverty Reduction Strategy
PRSC
Poverty Reduction Support Credit
PRSL
Poverty Reduction Support Loan
PSRP
Public Service Reform Programme
RAS
Regional Administrative Secretary
RGZ
Revolutionary Government of Zanzibar
SADC
Southern Africa Development Cooperation
SASE
Selected Accelerated Salary Enhancement
SPA
Strategic Partnership with Africa
SWAp
Sector-Wide Approach
TA
Technical Assistance
TACAIDS
Tanzania Commission for AIDS
TAS
Tanzania Assistance Strategy
TShs
Tanzania Shillings
UNDP
United Nations Development Programme
UNFPA
United Nations Population Fund
URT
United Republic of Tanzania
iii
Table of Contents
1. Purpose of the Report ……………………………...……………………………………………. 1
2. What is the TAS? …………………………………………………………………………......… 1
3. Background to the TAS ……………………...………………………………………………..… 4
4. Tanzania’s aid relations in the international context ………………………………………….….4
5. The TAS Process FY 2002/03 – FY 2004/05 …………………………………………………….6
5.2. TAS Institutionalisation…... ……………………………………………………………...… 6
5.3. TAS Monitoring and Evaluation ……………………………………………………….…… 7
6. Progress in Implementing the TAS Action Plan .…………………………………………..…… 9
6.1. Predictability of External Resource Flows ………….………………………………….…… 9
Aid commitments …….…………………………………………………………………… 10
Aid disbursements …….………………….……………………………………………….. 11
6.2. Integrating External Funds in the Government Budget and Exchequer System .………..… 13
6.3. Harmonisation and Rationalisation of Processes...…………………………...…….…....… 17
Harmonisation of processes around the PRS and national budget ……..………….…….… 17
Harmonisation of Development Partner reviews and missions ……..….………………..… 19
Development of a Joint Assistance Strategy ……..……………………………………...… 20
6.4. Capacity Building for External Resource Management and Aid Coordination ..…..……… 21
Institutional capacity building ……..…………………………………………………….… 22
Human capacity building ……..…………………………………….……………………… 24
Development Partner support in capacity building ……..…………………………………. 25
7. Main Challenges Ahead and the Way Forward .……………………………………………..… 26
Annex 1: Presentation of Government Financial Statements Using IPSAS …………..… 30
Annex 2: Procedures for Channelling External Resources through the Exchequer ……... 31
Glossary of Terms ……………………………………………………………………..… 32
iv
1. Purpose of the Report
This is the third and final Implementation Report of the Tanzania Assistance Strategy
(TAS). It covers the entire period of the TAS cycle from FY 2002/03 to 2004/2005. The
Report, which is the output of a comprehensive review of TAS implementation since its
launch in 2002, outlines the major achievements and challenges encountered by the
Government of Tanzania (Government) and its Development Partners in implementing
TAS ’best practices’, articulated in the TAS Document, and the priority areas of the TAS
Action Plan. It also indicates the challenges ahead in further enhancing Tanzania’s aid
effectiveness agenda. The full TAS review was conducted under the leadership of the
Government in consultation with Development Partners and other stakeholders.
2. What is the TAS?
The TAS is a national medium-term framework for managing external resources and
guiding development co-operation between the Government and its Development
Partners. It seeks to promote national ownership and Government leadership of the
development process and to enhance aid effectiveness through increased aid
coordination, harmonisation, and reduction of transaction costs, greater transparency,
accountability and alignment. It aims to achieve national development and poverty
reduction goals as articulated in the National Vision 2025, the National Poverty
Eradication Strategy (NPES) and the Poverty Reduction Strategy (PRS), which are
broadly in line with the Millennium Development Goals (MDGs).
The TAS outlines 13 ‘best practices’ in development co-operation for both the
Government and Development Partners (see box 1). Main areas of focus are national
ownership, Government leadership, involvement of other stakeholders in the
development process, improvement of public financial management and accountability,
Development Partner alignment with Government priorities and systems, as well as
increasing aid predictability.
1
Box 1 . TAS ‘Best Practices’ in Development Cooperation
1. The Government takes leadership in developing policy priorities, strategic
frameworks and institutionalised cooperation mechanisms in various areas and
sectors.
2. The Government involves civil society and the private sector in developing
national policies, strategies and priorities.
3. The Government prioritises and rationalizes development expenditures in line with
stated priorities and resource availability.
4. Resources are integrated into a strategic expenditure framework.
5. Reporting and accountability systems are integrated.
6. Resource disbursements are adequate relative to prior commitments.
7. The timing of resource disbursements is responsive to exogenous shocks to the
Tanzanian economy.
8. Development Partner policies complement domestic capacity building.
9. Firm aid commitments are made for longer time periods.
10. Public financial management is improved.
11. The Government creates an appropriate national accountability system for public
expenditure.
12. Ministries, regions and districts receive clean audit reports from the Controller and
Auditor General.
13. Reporting and accountability at national and sectoral level is transparent.
The TAS Document is complemented by a TAS Action Plan, which specifies concrete
actions in four priority areas (see box 2) to be undertaken by the Government of Tanzania
and Development Partners during the three years of the TAS cycle. It also lists
monitoring tools and targets for achieving objectives in each area.
2
Box 2: Four Priority Areas of the TAS Action Plan
1. Improving the predictability of aid flows
2. Integrating external resources in the Government
budget system
This priority area concerns the timely provision of aid
commitments over a rolling three-year MTEF period as
well as timely disbursement in line with commitments.
Incomplete and late information on expected aid inflows
as well as funding delays or even complete nondisbursement of committed funds undermines national
budget planning and execution.
Integrating external funds into the Government budget
concerns both ex ante and ex post budgeting. Ex post, it
entails recording expected aid flows in the national budget
estimates in order to obtain a comprehensive picture of the
anticipated resource envelope and thus facilitate more
strategic and comprehensive Government budget planning.
Ex post, it means the channeling of external resources
through the Exchequer system in order to allow the
Government to fully capture actual expenditures of external
finance, to account for them and assess their impact.
TAS PRIORITY AREAS
3. Harmonising and rationalising processes
4. Capacity building for aid coordination and external
resource management
Multiple and overlapping processes, missions, reviews,
meetings and studies place undue burden and increase
transactions costs on both the Government and
Development Partners. Under the TAS, the Government
and Development Partners aim to harmonise and
rationalise their processes around the national budget and
the Poverty Reduction Strategy.
Capacity building for aid coordination and external
resource management has been recognised as a key area to
enable the Government and domestic stakeholders to take
effective ownership of the development process. TAS
addresses capacity building throughout the Government at
national, regional and local levels as well as across society.
3
3. Background to the TAS
The establishment of the TAS has been a major outcome of the Government’s and its
Development Partners’ efforts to improve partnership on the basis of national ownership,
Government leadership, aid harmonisation and alignment. Following a period of strained aid
relations in the early 1990s, both sides have since then taken measures to make their relationship
more fruitful and supportive in achieving national development and poverty reduction goals.
The first major step towards a more effective development partnership was marked by the
adoption of the recommendations of the ‘Report of the Group1 of Independent Advisors on
Development Co-operation Issues’ in the ‘Agreed Notes’ in 1997. The agreed principles included:
national ownership and Government leadership of the development process; Government to set
out a clear vision and national priorities for development; greater transparency; strengthening
public financial management systems, improving accountability and enhancing the effectiveness
of the budget management process; as well as involving other stakeholders in the management of
the development process. On the part of Development Partners, aid coordination, rationalisation
and harmonisation of their processes, alignment of their support with national priorities and
systems; as well as increasing the predictability of external resource flows were agreed.
Tanzania’s aid architecture was further guided by independent assessments undertaken by
Professor Helleiner in 1997, 1999 and 2000. One of the key outcomes of implementing his
recommendations was the development of the TAS in a broadly consultative process. The process
began in the late 1990s and was completed with the launch of the TAS in 2002.
4. Tanzania’s aid relations in the international context
At the international level Tanzania has in many ways been considered as a front-runner in
articulating and implementing a process of improved aid delivery and management. The TAS and
the aid effectiveness agenda in Tanzania have predated most of the global initiatives and thus
1
The group was commissioned in mid 1994 to undertake an independent evaluation of development co-operation issues
between Tanzania and its aid donors and recommend measures to improve it. It was led by Prof. Gerald Helleiner and
released its report in 1995.
4
provided lessons and experiences to the international community. During the TAS cycle,
significant progress were made at the international level in reaching consensus between partner
countries and among donors on setting up practical steps for improving aid effectiveness on the
ground. The major agreements include the New Partnership for Africa’s Development (NEPAD2001), the Monterrey Consensus on Financing for Development (2002), the Rome Declaration on
Harmonization (2003), the Marrakech Memorandum on Managing for Results (2004), and the
Paris Declaration on Aid Effectiveness (2005). The TAS process has been a key instrument in
translating these international initiatives at the national level.
Throughout the TAS cycle, the Tanzanian experience has been shared many times with the
international community, among others at the First High Level Forum on Harmonisation in Rome
in February 2003 and most recently at the Second High Level Forum on Aid Effectiveness in
Paris in March 2005, at which the Paris Declaration on Aid Effectiveness was adopted.
In recognition of Tanzania’s considerable progress in establishing effective development
partnerships and the lessons that it offers to other countries, Tanzania was chosen as the host of
the Africa Regional Workshop in preparation of the Paris Forum. At the workshop, held in Dar es
Salaam in November 2004, participants from several African countries, bilateral and multilateral
donor agencies, and Africa-based civil society organisations commended Tanzania for its
achievements and drew extensively in their discussions on the Tanzanian case of enhancing
country ownership and aid coordination, harmonisation and alignment.
Tanzania also served as a case study in the SPA-DAC Survey on Progress in Harmonisation and
Alignment, which was presented at the Paris Forum. It has furthermore shared its experience at
the international level on a continuous basis through the Government’s participation in the
OECD-DAC Working Party on Aid Effectiveness. In July 2005, Tanzania’s experience in aid
effectiveness was presented at the annual United Nations Economic and Social Council
(ECOSOC) meeting.
While providing inputs into international debates and initiatives of ownership, harmonisation,
alignment and managing for results, Tanzania has itself received additional impetus from them to
accelerate progress on implementing its national aid effectiveness agenda. The importance of
5
international aid effectiveness commitments for national action is among others reflected by the
Government’s translation of the Paris Declaration into Kiswahili and its dissemination to all
levels of Government and civil society. The Government has thereby aimed to raise domestic
stakeholders’ understanding of the international context in which national efforts to improve aid
effectiveness take place and thus to enable them to better hold the Government and Development
Partners to account for implementing their commitments.
5. The TAS Process FY 2002/03 – FY 2004/05
5.1. TAS institutionalisation
Success in implementing the TAS has depended crucially on the Strategy’s institutionalisation at
all levels of the Government and within Development Partner agencies. For this purpose, an
institutional structure for overseeing and monitoring TAS implementation - a Joint TAS
Secretariat and a Joint TAS/Harmonisation Group - was set up in the first year of the TAS cycle
and continued to be strengthened during the three years of TAS implementation. Both bodies
consist of representatives from the Ministry of Finance, which chairs both bodies, the Vice
President’s Office, the President’s Office - Planning and Privatisation, sector ministries, as well as
Development Partner agencies. While the role of the TAS/Harmonization Group has been to
advise and oversee the implementation of TAS, the TAS Secretariat has provided technical inputs
and support to the TAS process. Some of the major activities undertaken by the Group and its
Secretariat during FY 2002/03 – FY 2004/05 have been the formulation of the TAS Action Plan
and a rationalised calendar of policy and consultative processes including a period of ‘quiet time’.
As outlined in the TAS Action Plan, the two bodies were scheduled to meet on a quarterly and
monthly basis respectively. The meetings have however become less regular over time, as TAS
related issues have been sufficiently addressed in other processes, most notably the PRS, PER and
GBS, as well as in Quarterly Sector Review Meetings and the reinstituted Development Cooperation Forum. In addition, functions of the TAS Secretariat have increasingly been integrated
in a newly created Aid Coordination Section in the External Finance Department of the Ministry
of Finance. The TAS agenda has thus been implemented smoothly without interruptions.
6
The integration of the TAS process in existing Government operations and structures has however
remained variable at sector, regional and local level. Sector ministries, Regions and LGAs’
involvement in the TAS process have remained weak, partly due to awareness and capacity
limitations and partly due to difficulties in changing mindset of executive and technical officers to
adopt the TAS agenda. To enhance MDAs’, Regions, LGAs’ and the general public’s
understanding of the benefits and requirements of TAS implementation, the Ministry of Finance
conducted intensive TAS awareness campaigns including the publication and wide circulation of
the Kiswahili version of the TAS as well as of a simplified language version with cartoons in
English and Kiswahili and the dissemination of annual TAS Implementation Reports, which are
also posted on the website of the Ministry of Finance. It furthermore conducted TAS training
during the FY 2004/05 to 235 LGA officers (accountants, budget and planning officers) from 20
regions.
Despite the wide information sharing, there is still need for stronger involvement of relevant
stakeholders in implementing Tanzania’s aid effectiveness agenda. Non-state actors in particular
need to be brought more on board so as to achieve better coordination of Government and nonstate actor activities in development.
On the Development Partner side, institutionalisation of the TAS agenda has been facilitated by
the reorganisation of the local Development Assistance Committee (DAC) in FY 2003/04 into a
formal Development Partners Group (DPG). The DPG has an inclusive structure and clear and
comprehensive terms of reference. It has been set up in order to complement the Government’s
coordination efforts by promoting internal clarity and coherence amongst Development Partners
in the context of the TAS and international aid effectiveness initiatives. The DPG has played an
important role in promoting dialogue among Development Partners and with the Government. It
has aimed to improve aid effectiveness in support of the national development and poverty
reduction agenda and to move beyond information sharing towards actively working with the
Government to seek and develop best practices in aid coordination, harmonisation and alignment.
Nevertheless, Development Partners that have been very active in supporting Tanzania’s aid
effectiveness agenda and the TAS process have at the same time been slow or reluctant in giving
up old processes, systems and procedures of aid delivery. This rigidity is constraining the
7
Government’s ability to build the required capacity to efficiently and effectively implement the
changes, as it has had to deal with both the old and new processes, systems and procedures at the
same time.
5.2. TAS Monitoring and Evaluation
Progress in implementing the TAS has been monitored and evaluated on a continuous basis by the
Government and Development Partners under the guidance of the TAS Secretariat. It has been
based on the 13 ‘best practice’ indicators of the TAS, the four priority areas as well as the targets
and monitoring tools laid out in the TAS Action Plan. The broader objective of assessing the
impact of aid on development and poverty reduction has been beyond the scope of TAS
monitoring and evaluation as it has being addressed through the PER/MTEF and the PRS
processes.
The annual TAS review has utilized to a large extent the existing national processes and the
information generated therein, including the PER, PRS and the GBS (PRBS/PRSC/PRSL)
reviews. Findings have been documented in annual TAS Implementation Reports, which sets out
achievements, challenges and the way forward. Overall, the regular monitoring and evaluation
process has allowed the TAS to be continuously informed by on-going national and international
debates and to absorb new ideas and initiatives on best practices.
In addition to the joint Government-Development Partner exercise, an Independent Monitoring
Group (IMG), commissioned by the Government and Development Partners, has undertaken
biennial independent assessments of the development partnership in Tanzania, including the
implementation of TAS. The appointment of this Group, consisting of local and international
consultants, has followed a recommendation of Professor Helleiner to institutionalise the
independent monitoring activity carried out by him between 1994 and 2000 in order to facilitate
regular neutral assessments of mutual performance of the Government and Development Partners.
So far, the IMG has been engaged twice and released two reports in 2002 and in 2005
respectively. While the 2002 IMG Report has been influential in providing inputs to the
implementation of the TAS and PRS, the 2005 IMG Report has offered important advice for the
8
implementation of the second-generation PRS, the National Strategy for Growth and Reduction of
Poverty (NSGRP – popularly known in its Kiswahili acronym MKUKUTA) and the development
of the Joint Assistance Strategy (JAS). It has also served as important input to the full TAS
review. In both cases, the IMG’s findings and recommendations have been disseminated to all
stakeholders and have been discussed openly and widely. The IMG has therefore played an
important role in stimulating dialogue on development co-operation between the Government,
Development Partners and non-state actors. This in turn has offered the possibility for civil
society to hold the Government to account. Placing Development Partners under the same degree
of scrutiny to which they subject the Government has also helped to enhance mutual
accountability between the Government and Development Partners.
6. Progress in Implementing the TAS Action Plan
Throughout the TAS cycle, TAS implementation has been focused on the four priority areas of
the TAS Action Plan in the context of the 13 ‘best practices’ of the TAS Document. The full
review of the TAS has therefore also concentrated on the implementation of the 13 ‘best
practices’ under these four priority areas.
6.1. Predictability of External Resource Flows
External resources are among the major sources of Government finances. They have been funding
around 40% of the national budget, 80% of the development budget, and 20% of the recurrent
budget. Thus, the timely availability of reliable external resource commitments and disbursements
in line with the national budget cycle is of vital importance to the Government’s ability to
effectively implement its development plans. Lack of timely and reliable information, funding
delays, and partial or non-disbursement of committed funds undermines the integrity of the
national budget planning and implementation process. During the three years of TAS
implementation, considerable progress has been made in increasing the predictability of external
resources, both with regards to available information on aid commitments and in terms of more
reliable aid disbursements.
9
Aid commitments
Prior to the TAS process, external resource commitments were provided by Development Partners
in the form of confidential pledges at the annual Consultative Group Meeting. Since then,
commitments and projections2 data have been shared among Development Partners, and with the
Government and other stakeholders as part of the routine activities of the annual PER process. In
addition, the timing of data submission was revised in FY 2003/04, moving the deadline for initial
reporting of commitments and projections from end October to end September in order to allow
the Government more time to review the data. Development Partners report their commitments
and projections for the three-year MTEF period to the Ministry of Finance, which circulates the
data to MDAs and Regions for internal review and verification. Thereafter, the data serves as an
input to the preparation of the Budget Guidelines and subsequently the MTEF and the national
budget estimates. Detailed steps are explained in table 1.
Table 1: Timetable for External Resources Projections Data
Timing
End September
October
November
December
January -February
March - April
Activity
Deadline for Development Partner submission of commitments and
projections data
Consolidation and submission of data to sector ministries
Detailed discussions with sectors, and reconsolidation of data
following revisions by sectors and submission to the BGC for input
into the Budget Guidelines
Budget Guidelines issued
Final revisions by Development Partners of projections (budget
support and basket funds)
Consolidated data submitted for inclusion in the National Budget.
Development Partners’ adherence to this process and timeframe and hence the availability and
quality of information on expected resource inflows have improved substantially over the past
three years, thereby increasing the level of external resource coverage in national budget estimates
2
Commitments refer to expected amounts of external finance for the coming financial year, whereas projections are
projected amounts for the second and third year of the MTEF period. They are usually less certain than aid
commitments for the next financial year.
10
(see section 6.2.). Besides a better system for gathering projections information; greater
transparency, and increased trust and cohesion in the development partnership have contributed to
this progress. Another facilitating factor for increased information sharing has been the adoption
of the Poverty Reduction Strategy (PRS) by all stakeholders, which has provided an improved
framework for dialogue and encouraged a more integrated approach to different sources of
funding. Within the Government an improved dialogue between the Ministry of Finance and other
MDAs and Regions has helped to strengthen the data review and consolidation exercise.
Nevertheless, there is room for further enhancing the quality and accuracy of aid commitments, in
particular for direct to project funds, the modality which is most associated with reporting
problems. The existence of parallel systems of resource delivery and project management has
made it difficult for MDAs, Regions and LGAs to obtain full and accurate information on
expected aid flows and subsequently to verify and include project aid information in their plans
and budgets and to account for them. Furthermore, Development Partners need to make more
progress in providing complete and reliable projections data for the second and third year of the
rolling MTEF period. More detail on the content of aid delivery with regards to goods,
services/technical assistance or cash as well as information on Development Partner funds to nonstate actors is also needed. The latter is important for allowing the Government to allocate own
resources more strategically at sector or programme level, taking into account activities of nonstate actors.
Aid disbursements
The performance of disbursements as compared to commitments has improved significantly,
particularly for GBS, which is provided by eleven bilateral and three multilateral Development
Partners. It has been facilitated by the adoption in FY 2003/04 of the common Performance
Assessment Framework (PAF), which is designed such that the assessment is completed prior to
the fiscal year in which GBS disbursements are due. The process is thus aligned with the
Government budget cycle and makes it possible to budget for the inflows with certainty.
Previously, GBS involved an in-year performance assessment in order to trigger disbursement,
which often caused delays or reduced disbursements relative to committed GBS funds, resulting
in in-year budget shortfalls.
11
The new GBS review process has significantly contributed to improvements in the adequacy of
external resource disbursements relative to prior commitments and has allowed for increasing
front-loading of disbursements at the beginning of the financial year. GBS disbursements since
FY 2002/03 have always been 100% relative to commitments, with more than 60%, 80% and
90% of the total committed amount being disbursed during the first half of the financial year in
FY 2002/03, FY 2003/04, and FY 2004/05 respectively (see table 2). First quarter disbursements
have increased from 8% in FY 2002/2003 to 78% in FY 2004/2005. Disbursing GBS in the first
quarter of the fiscal year to allow a smooth release of Government funds as the year progresses is
increasingly becoming a common feature of GBS. This has helped to reduce the overall fiscal risk
for the Government and the economy.
Table 2: Comparison of % of Budget Support Front-Loaded FY 2002/03 - 2004/05
Quarter
Q1
Q2
Q3
Q4
FY
2002/03
Projected
52%
33%
15%
1%
FY
2002/03
Actual
8%
54%
14%
25%
FY
2003/04
Projected
72%
16%
11%
0%
FY
2003/04
Actual
50%
30%
9%
11%
FY
2004/05
Projected
72%
18%
10%
0%
FY
2004/05
Actual
78%
18%
4%
0%
Source: Government Budget Books and Aid Flows Database; Ministry of Finance
Whereas GBS has done well, the performance of disbursements as against commitments has
remained variable for basket funds and has been most problematic for direct to project funds.
Irregularities in fund disbursements have been caused among others by attaching resource
disbursements to various reporting and prior action requirements, involving in-year performance
assessments, as well as by low levels of ownership and leadership of the relevant implementing
MDAs, Regions and LGAs.
Lastly, a mechanism to allow for a timely response of resource disbursements to exogenous
shocks in the Tanzanian economy, as aimed for in the TAS ‘best practices’ and the TAS Action
Plan, has not yet been established.
12
6.2. Integrating External Funds in the Government Budget and Exchequer System
The national budget is the principle tool for implementing the country’s development and poverty
reduction strategy. With external resources continuing to account for more than 40% of the
national budget, it is paramount that external resources are adequately integrated in the
Government budget and Exchequer system. This relates to both capturing of expected external
funds in the national budget estimates and to channelling funds through the Government
Exchequer system. Obtaining a reliable picture of the expected external resource envelope allows
the Government to plan more comprehensively and allocate own funds more strategically for
implementing national development strategies and programmes. Channelling funds through the
Exchequer system conforms to the country’s legal requirement (i.e. the URT Constitution and the
provisions of the Public Finance Act 2001) and makes it possible to maintain accurate and up to
date expenditure records in the Integrated Financial Management System (IFMS). This in turn
enables the Government to account for received external finance to domestic stakeholders and
more easily monitor and evaluate the performance of external assistance in supporting national
development and poverty reduction efforts.
Development Partners’ increasing provision of GBS (see table 3) has played the most important
role in increasing the integration of external funds in the national budget and exchequer system.
This is because GBS is not only fully captured in national budget estimates and disbursed through
the Exchequer system, but also is allocated by the Government according to national priorities
and subjected to the same degree of scrutiny and contestability as other public resources in the
national budget process. It thus provides for greater transparency, national ownership and
domestic accountability than other aid modalities and facilitates the further strengthening of the
national budget process.
Table 3: Percentage of Aid Flows by Different Modalities (Excluding Debt Relief)
TYPE
General Budget Support
Basket Funds
Project Funds
2002/03
30%
16%
54%
2003/04
38%
18%
44%
2004/05
34%
21%
45%
Source: Government Budget Books, Various years, Ministry of Finance.
13
2005/06
38%
20%
42%
With regards to basket and project funds, ex ante budgeting has been strengthened through
improved systems for sharing information on projected expenditures, as explained under section
6.1. Throughout the TAS process, there have been considerable continuous improvements in the
reflection of basket funds and projects in national budget estimates. They have risen substantially
from TShs 302,272 million prior to the initiation of the TAS to TShs 1,015,144 million in FY
2005/06 (see table 4). Nevertheless, there are still considerable amounts of direct to project funds
that are not recorded in the Government budget. This is mainly due to a lack of information on the
part of the responsible MDAs, Regions and LGAs resulting from their weak ownership over the
respective projects.
Table 4: Aid Flows Reflected in the Government Budget in Million Tshs (Excluding Debt Relief)
Fiscal Year
Project and
Basket Funds
General
Budget
Support
Total
2001/02
302,272
2002/03
624,465
2003/04
667,349
2004/05
2005/2006
857,885 1,015,144
283,770
274,577
405,047
434,476
616,165
586,042
899,042
1,072,396
1,292,361
1,631,309
Source: Budget Estimates FY 2001/02 – FY 2005/06, Ministry of Finance.
Channelling external resources through the Government Exchequer has been particularly
challenging for direct to project funds. The use of the Exchequer system for project funds has
been impeded among others by the nature of project design and agreements that provide for the
use of parallel systems on aid disbursements. While most basket funds pass through the
Exchequer, only some Development Partners have started to use the system for disbursing project
funds (see table 5). They have done so partly due to the continued strengthening of the public
financial management, auditing and accounting systems and partly in response to the Exchequer
training that was provided by the Ministry of Finance to Development Partners during the FY
2003/04. The training explained the procedures (see annex 2) for channelling funds directly
through the Exchequer to projects and programmes implemented at all levels of the Government.
It also addressed specific Development Partner concerns, such as extra banking transaction costs
involved in disbursement; timely outflow of funds to implementing agencies particularly at local
government level; capacity in the Ministry of Finance and sector ministries to deal with the extra
burden of a substantial increase in aid flows passing through the Exchequer to projects; the
requirements of some projects to receive funds in foreign currencies; the type of reports generated
by IFMS for accounting and auditing purposes; and the risks that funds could be diverted away
14
from the intended recipients. On all of these issues, assurance was given that the system was
operational and functioning well.
Development Partners using the Exchequer system have reported a very positive experience and
confirmed that the system functions efficiently, ensuring timely receipt of funds by spending
agencies.
Table 5: Project funds channelled through the Exchequer in 2003/04 and 2004/2005
Development
Partner
CANADA
Denmark
GLOBAL FUND
IRELAND
NORWAY
SWEDEN
Project Title
Government
Implementing
Agency
Ministry of Health
1. Care and Treatment of
HIV/AIDS
1. Health Sector Development
Ministry of Health
Programme
2. ASP – DADPS Programme
RAS Iringa and Mbeya
3. Natural Resources and Tourism Ministry of Natural Resources
and Tourism
4. Participatory Forestry
RAS Iringa and Mbeya
Management Resources
1. Global Fund for HIV/AIDS
TACAIDS
1. Coastal Zone Conservation and RAS Tanga - Tanga Municipal,
Development Project
Muheza and Pangani District
Councils
2. Local Government Reform
President’s Office – Regional
Programme
Administration and Local
Government
3. ISHI Youth Programme
TACAIDS
4. NATNETS Programme
RAS Morogoro – Kilosa, Ilonga,
5. Eastern Zone Client Oriented
Ulanga District Councils
Research and Extension
6. National Malaria Control
Programme
Ministry of Health
7. Support to Ilonga Agriculture
Ministry of Agriculture and
Research Institute
Food Security
1. Management of Natural
Ministry of Natural Resources
Resources Programme
and Tourism
2. University of Dar es Salaam
Ministry of Science, Technology
Development Programme
and Higher Education
3. TAN 091 – SUA – Focal
Ministry of Science Technology
Programme
and Higher Education
1. Institutional Support
National Audit Office
Programme
15
Development
Partner
Project Title
2. Teacher’s Education Project
3. Antiquities Capacity Building
4. National HIV/AIDS Care and
Treatment
5. District Development
Programme (DDP)
UK
UNDP
UNFP
1. Enabling Business
Environment Deregulation
2. National HIV/AIDS initiatives
1. Population and Development
Policy Programme
2. Poverty Eradication Initiative
Project
1. Advocacy and Gender
Government
Implementing
Agency
Ministry of Education and
Culture
Ministry of Natural Resources
and Tourism
Ministry of Health
President’s Office – Regional
Administration and Local
Government
Presidents’ Office - Planning and
Privatization
TACAIDS
President’s Office – Planning
and Privatization
Vice President’s Office
Ministry of Community
Development, Gender and
Children
In summary, Table 6 below shows project and basket funds as captured in the national budget
estimates, in the Exchequer system, and in the Ministry of Finance’s aid flows database, which is
based on Development Partners reporting. It shows that over the period of TAS implementation
both the amount of project and basket funds included in national budget estimates and those
passing through the Exchequer system have increased. At the same time, out of the funds that are
recorded in the budget estimates, an increasing share has been captured in the Exchequer system.
However, disbursements as reported by Development Partners and captured in the Ministry of
Finance aid flows database differ both upwards and downwards from the relevant budget figures
and have been substantially higher than those channelled through the Exchequer system. The
share of project and basket funds going through the Exchequer system has since 2002/03 been
greater than those that bypass the system, thus marking a notable improvement to the period prior
to the TAS. As mentioned in section 6.1.1., the discrepancies between actual disbursements (as
reported by Development Partners) and those included in the national budget as well as between
disbursements captured in the Exchequer system and those that are not can mainly be explained
by the reporting weaknesses of MDAs, Regions and LGAs due to parallel systems associated with
direct to project funds.
16
Table 6: Reflection of Aid Disbursements to Projects and Baskets in the Budget Estimates,
Exchequer System and Aid Flows Database (in million TShs).
Fiscal
National Disbursements Disbursements Disbursements
Aid Flows
Year
Budget
Captured in
Captured in
Captured in
Database as
Estimates the Exchequer the Exchequer
Aid Flows
% of Budget
System
as % of Budget
Database
Estimates
Estimates
1999/00 214,943
67,606
31.5
317,231
147.6
2000/01 275,476
137,559
49.9
457,611
166.1
2001/02 302,272
125,010
41.4
424,198
140.0
2002/03 624,465
328,321
52.6
504,054
80.7
2003/04 667,349
475,642
71.3
622,942
93.3
2004/05 857,885
631,966
74.0
986,046
115.0
Source: Budget Book IV, Statement of Development Revenue (Account No. 13:99), and Aid Flows
Database, Ministry of Finance.
6.3. Harmonisation and Rationalisation of Processes
Prior to the TAS process, numerous policy and consultative processes existed with only limited
coordination among them. In addition, multiple and often overlapping reviews, missions, studies
and meetings for preparing, delivering and monitoring development assistance placed a heavy
burden to the Government having to deal with each Development Partner, single process and
procedure separately. With the TAS implementation, Tanzania has made significant
improvements in minimising duplicative and parallel processes and in implementing its
harmonisation and rationalisation agenda.
Harmonisation of processes around the PRS and national budget
In FY 2002/03, the Government and Development Partners under the leadership of the TAS
Secretariat carried out a joint study to identify the scope for rationalising and harmonising the
cycle of policy and consultative processes. This provided a decisive turning point for the
harmonisation agenda in Tanzania. As an output of the study, a revised calendar of processes was
adopted that rearranged the timing of existing processes around the core national processes of the
PRS and the national budget so that their output effectively and timely feeds into the other
processes. The calendar also identified a five-month period of ‘quiet time’ from April to August
(see table 7) in which Government-Development Partner interaction are minimised in order to
17
provide the Government with adequate time for national budget preparation and debate in
Parliament.
Table 7: Timetable for ‘Quiet Times’
Period
September December
January - March
April - May
June - August
Activity
Consultative Processes
Status
Busy
Concluding Policy, Discussions, Missions etc.
Finalise Budget Formulation
Budget Debate and Approval by Parliament
Busy
Quiet
Quiet
Following the harmonisation/rationalisation study, both the Government and Development
Partners re-affirmed their commitment towards the harmonisation and rationalisation of processes
and have increasingly adopted the calendar. Despite interruptions, most Development Partners
have also taken concerted efforts to adhere to the specified ‘quiet time’ (see chart 1). In general,
even Development Partners that have not been active and strong participants in the harmonisation
agenda have adapted their operations to it and have thus facilitated its progress. Steps towards
harmonising central and local government processes have been undertaken through the alignment
of the local government budget cycle with the central government fiscal year in FY 2004/05.
Chart 1. Adherence to ‘quiet times’ by Partners in 2003 and 2004
Source: TAS Secretariat
The recommendation of the harmonisation/rationalisation study to make the Consultative Group
meeting more effective and efficient to reduce transaction costs and feed into on-going policy
dialogue has been taken up through replacing it by existing processes under the PRS (Poverty
18
Policy Week), the PER annual consultative meeting and the Development Co-operation Forum
(DCF), which was revived in FY 2004/05.
In addition to the joint harmonisation/rationalisation study, the PRS, PER and TAS Secretariats
met in June 2004 to discuss how to achieve better coordination among the three processes to feed
into the budget process. Nevertheless, the proposal to have regular joint meetings of the three
Secretariats has not materialised and linkages between the three processes and the national budget
need to be further strengthened. Also, other processes need to be further harmonised with each
other and around the PRS/MKUKUTA and the national budget, in particular the IMF’s Poverty
Reduction and Growth Facility (PRGF) process and on the Government side the various sector
policies and strategic plans as well as local government plans. This requires raising further
awareness of the harmonization agenda among MDAs, Regions and LGAs.
Harmonisation of Development Partner reviews and missions
On the Development Partners’ side, progress in harmonisation has been greatest under the GBS
modality. Development Partners that are providing GBS through the PRBS/PRSC/PRSL facilities
have adopted a common PAF as a basis for their funding decisions and have been carrying out
joint reviews. There has however been scope for further rationalization of the PAF, in particular
due to its numerous indicators and two reviews per year. This has been addressed under the new
GBS arrangement starting FY 2005/06, which includes a rationalized PAF matrix, a new
Memorandum of Understanding and a single annual GBS review to be held in October to allow
for firm GBS commitments to be made on time to feed into the Budget Guidelines preparation. In
addition, Technical Working Groups for the GBS review have been rearranged in line with the
new structure of the PER, which in turn is organized around the MKUKUTA clusters.
Even though Development Partners still maintain a large share of ODA outside the GBS
modality, they are nevertheless supporting the harmonisation process through the use of SWAps
and basket funds with harmonized procedures and systems for participating Development
Partners, thereby avoiding multiple and parallel meetings, missions and reviews. In May 2003, the
World Bank and the United Nations System held a joint review of their development assistance to
the country. In order to encourage more joint missions and meetings, the DPG in collaboration
19
with the TAS Secretariat drew up a calendar of missions and meetings in FY 2002/03 in which
DPG members, including non-resident donors, can enter information on planned missions and
meetings on an ongoing basis. The calendar is posted on the DPG website and allows for
collective monitoring and a more effective use of peer pressure for the reduction of individual
Development Partner missions and meetings.
Progress has also been made with regards to harmonised analytical studies. In FY 2004/05,
Ireland and the UNDP undertook a joint study on the use of the Exchequer system. The External
Public Expenditure Management and fiduciary risk assessments which were previously carried
out independently have since FY 2004/05 been combined to a single instrument – the Public
Expenditure and Financial Accountability Review (PEFAR), which is undertaken as part of the
PER process.
Despite the progress made, Development Partners need to further improve their contribution
towards the harmonisation agenda. There is still a significant amount of aid delivered through the
project modality, with associated individual reporting, accounting, auditing and review
procedures. Moreover, despite the harmonisation benefits associated with basket funds, they have
been problematic by creating parallel implementation structures and systems to those of the
Government, hence affecting sustainable capacity development.
Development of the Joint Assistance Strategy
One of the main reasons for insufficient progress in the harmonization and rationalization of
processes has been the existence of Country Assistance Strategies (CAS) for each Development
Partner with different areas of focus, timeframe, reporting requirements, review processes, etc.
Aiming to overcome this impediment to further harmonisation, the Government and Development
Partners proposed as part of the joint harmonisation/rationalisation study in FY 2003/04 to unify
the different CASs through the development of a Joint Assistant Strategy (JAS) for all
Development Partners. The JAS specifies how to use external resources collectively for growth
and poverty reduction under the MKUKUTA/ZPRP.
20
Numerous consultations on the development of the JAS have been carried out within and between
the Government and the Development Partners Group as well as with non-state actors. A JAS
Sector Group on the Government side and a JAS Core Group of the DPG have been set up to
guide the joint development of the Strategy. A draft JAS Concept Paper, prepared by the
Government during 2004 and shared widely with all stakeholders, explains the rationale and the
concept of the JAS and has guided the formulation of a full JAS Document. In May 2005, the first
draft JAS Document was prepared by the Government. It was distributed widely to all MDAs,
Regions, LGAs and Tanzanian High Commissions, to the DPG and to non-state actors. Besides
the views received from these stakeholders, the JAS has also taken up the 2005 IMG Report
recommendations. In addition, the development of the JAS has received useful inputs from
international aid effectiveness initiatives, most importantly the Rome Declaration on Aid
Harmonisation (2003) and the Paris Declaration on Aid Effectiveness (2005).
Although the JAS is still under development, the concept has been broadly welcomed both within
the Government and among domestic and international Development Partners. Key issues of the
JAS include among others a new division of labour based on comparative advantage, use of
technical assistance for capacity development, a greater move towards general budget support,
improved involvement of non-state actors, and an enhanced dialogue structure.
The development of the JAS has been taking place over an extended period of time in order to
allow for extensive and broad-based consultation and thus for gaining understanding and
involvement of all stakeholders, which is crucial for the Strategy’s successful implementation.
The implementation of the Strategy is expected to start in FY 2006/07.
6.4. Capacity Building for External Resource Management and Aid Coordination
Capacity building at all levels of Government and across society for external resource
management and aid coordination has been one of the priority areas for action in the TAS Action
Plan. It has aimed to promote and enhance national ownership and Government leadership of the
development process and to increase the effectiveness and efficiency of development assistance.
21
Key areas for capacity building under the TAS have been institutional including Government
structures, systems and processes, as well as human capacities.
Institutional capacity building
Throughout the TAS implementation period, the Government has continued to strengthen its
institutional capacity including structures, systems and processes, in particular in the area of
public financial management. Institutional capacity building has primarily been addressed through
the Public Financial Management Reform Programme (PFMRP) and at local government level
through the Local Government Reform Programme (LGRP). Progress in implementing these
programmes has led to increased trust in the Government system on the side of Development
Partners.
The PFMRP, which had already started in 1997 and revised in FY 2002/03, has aimed to reform
the budgeting process, to improve the quality of public expenditures and mechanisms for
monitoring and controlling the budget, and to strengthen procurement, accounting and auditing
systems. It has also laid out objectives and activities for improving external resource management
and coordination.
In the budgeting process, a major improvement has been made with the adoption of the
computerised Strategic Budget Allocation System (SBAS) in all MDAs in FY 2004/05, as it has
facilitated more strategic resource allocation in line with the MKUKUTA. MDAs’, Regions’ and
LGAs’ capacity in budgeting has also been strengthened through continuous MTEF training,
conducted by the Ministry of Finance. Further, Government transparency and accountability to
domestic stakeholders has been enhanced by the participation of all domestic stakeholders in the
PER, PRS and other national processes. Despite the considerable progress made, further
strengthening in budget formulation and management is needed both at sector ministry and local
government levels, and MTEFs need to be made more consistent with strategic plans and sector
policies.
To improve the management of public finances, a computerized Integrated Financial Management
System (IFMS) for recording, managing and controlling expenditures has been established under
22
the PFMRP. It has been installed in all MDAs, Sub-Treasuries and Regional Administrative
Secretariats (RAS) as well as in 32 LGAs. Work is underway to extend the System to another 45
Councils and to Tanzanian High Commissions abroad. The System has permitted the introduction
of standardised coding for resource and expenditure items, which allows for accurate and instant
expenditure tracking. It is able to produce automatic expenditure reports on a daily basis. IFMS
has furthermore made possible the consolidation of bank accounts into one common bank account
for the entire Government. Overall, the introduction of the Integrated Financial Management
System (IFMS) has enabled the Government to greatly enhance transparency, control, timely
release and accountability of public finances, including external resources that captured in the
Exchequer system.
Capacity building in accounting and auditing has been facilitated by the preparation of manuals in
line with the Public Finance Act of 2001, the conduction of training, and the establishment of
Audit Committees throughout the Government. It has also been addressed by the adoption in FY
2004/05 of the International Public Sector Accounting Standards (IPSAS) for the preparation of
Government Final Accounts and of international standards for financial and performance audit of
the financial statements of MDAs. Since then, the Government has conducted training in
preparing financial statements according to these standards for all Chief Accountants, Chief
Internal Auditors, Regional Accountants, Heads of Sub-Treasuries and Officers from the NAO.
Despite substantial improvements in financial management and accountability, there is still a need
to further strengthen these capacities, particularly in councils where IFMS is not yet installed and
at service provider level, e.g. schools and health centres. Also, LGAs that are already using IFMS
need further training in the System and the production of reports in order to be able to use the
System effectively and efficiently.
The development of an effective and efficient decentralised procurement system as provided for
in the Public Procurement Act 2004 has been addressed by both the PFMRP and the LGRP.
Training in the implementation of the new procurement regulation has been undertaken at all
levels of Government. Capacity has been built in district and village procurement, so that many
district councils and even villages now undertake their own procurements.
23
Organisational capacity to manage aid coordination efforts has greatly been enhanced at national
level by the creation of an Aid Coordination Section in the Ministry of Finance in FY 2003/2004.
An aid flows database has been set up and is maintained by the Section to record aid projections
and disbursements data as reported by Development Partners. At sector and local government
level, institutional capacity in aid coordination remains however weak.
Human capacity building
Human capacity building has been addressed across a wide range of Government reform
programmes, supported by Development Partners, most notably the Public Service Reform
Programme (PSRP) and the LGRP.
The PSRP, which started in 2000, has addressed improvements in human capacity of public
servants to deliver high quality services by creating an incentive structure for recruiting and
retaining high-quality civil servants. It has introduced a Performance Management System (PMS)
in all ministries, which is now planned to be rolled out to local governments. A Public Service
Reform Act was passed in 2003/04 in order to decentralise the recruitment and promotion of staff
to individual MDAs, Regions and LGAs. Furthermore, a Medium Term Pay Policy was approved
by Cabinet in 2003/04, and four ministries (Health, Finance, PO-PSM and PO-PP) have received
a Selected Accelerated Salary Enhancement (SASE). The overall pace of pay reform has
remained however slow.
The LGRP has aimed to increase the quality, access and equitable delivery of public services at
local government level, to improve the qualification of civil servants in LGAs, and to achieve
effective and efficient decentralisation. Some progress has been made in the competence and
service delivery role of local governments (e.g. qualified officers have been recruited and
received on-the-job training), but has occurred rather slowly. Still limited human and financial
resources, tools and equipments to deliver services constitute great impediments to the effective
and efficient operation of LGAs. Furthermore, more support by central and sector ministries to
delegate responsibilities and ensure a financial resource base of LGAs is needed in order to make
the on-going process of decentralisation by devolution a success.
24
The LGRP has also addressed the planning capacity of councils and local communities. Progress
has been facilitated by the adoption of the O&OD methodology. Villages now prepare their own
plans, which are included in district plans. This has helped to strengthen local ownership. O&OD
still remains however to be extended to all councils and further training is required in those
councils that have already started using it. Also, despite the improvements, district plans need to
better reflect national and sector policies and strategies as well as cross-cutting issues and need to
be brought in line with the MKUKUTA. This requires better coordination between central and
local government in policy and strategy formulation and implementation. Besides the local level,
planning capacity also needs to be strengthened at the regional level. In addition, the ability and
systems of LGAs and Regions to effectively monitor and evaluate their plans and provide routine
data for the Poverty Monitoring System needs to be improved.
Development Partner support in capacity building
Development Partners have played an important role in supporting Tanzania’s capacity building
efforts through financial and technical assistance to core public sector reforms and other national,
sector and local government programmes and projects. They have contributed to enhancing
government and community capacity through involving and training them in project
identification, design, management, and monitoring and evaluation. Nevertheless, parallel Project
Implementation Units (PIUs) continue to undermine national capacity development and project
sustainability. Furthermore, several Development Partners continue to use their own (e.g. PRA)
methods to identify community needs rather than relying on existing O&OD reports. This places
an extra burden on communities and LGAs and delays project implementation. Also, in order to
be able to formulate and implement sustainable development activities and prevent failures in
counterpart contributions, Development Partners and local governments need to be more realistic
about possibilities and limitations in local resource mobilisation.
In order to achieve a more equitable distribution of Development Partner assistance and thus
facilitate more equitable capacity development, the Government and Development Partners
agreed in FY 2004/05 to phase out Area-Based Programmes, which had led to a geographically
skewed distribution of funds. They have been replaced by a formula-based system of allocating
capital development and capacity building grants to local governments. However, some
25
Development Partners do not adhere to the agreement and continue to fund Area-Based
Programmes.
Progress in re-orienting technical assistance (TA) from gap filling to a focus on capacity
development and from being allocated according to Development Partner priorities to being
demand-driven and untied from the source of finance is still very mixed. Some cases exist of
pooling technical assistance funds, for example in PER studies. However, the Government still
remains to take full leadership over the recruitment, management and performance assessment of
technical assistants. In addition, most TA is deployed off-budget, preventing the Government
from having an accurate picture of the resource envelope and undermining expenditure planning
and accountability.
7. Main Challenges Ahead and the Way Forward
Three years of TAS implementation have shown that Tanzania’s aid relations have greatly
benefited from institutionalising ‘good practices’ in development co-operation within a national
framework for external resource management, complemented by a concrete action plan that
prioritises Government and Development Partner actions in the short-term. The joint adoption of the
TAS has helped the Government and its Development Partners to deepen their partnership and to
progress together on the national and international aid effectiveness agenda. Joint and independent
monitoring mechanisms have served as valuable tools for guiding the implementation of the TAS
framework and for facilitating mutual accountability of the Government of Tanzania and
Development Partners.
This final TAS Implementation Report has revealed that substantial progress has been made since
the inception of the Strategy in strengthening national ownership and Government leadership, in
increasing aid predictability, in integrating external resources in the national budget and
Exchequer system, in harmonising and rationalising various Government and Development
Partner processes, and in building national capacity in aid management and coordination.
Nevertheless, several challenges still lie ahead.
26
On the Development Partners side, it has been notable that most improvements in aid
predictability and integration in the Government budget system have occurred under the GBS
modality. The increasing shift towards GBS, encouraged by strengthened public financial
management, has in turn facilitated further improvements in public financial management and
accountability of the Government to domestic stakeholders. GBS has also been the most
beneficial instrument for enhancing Development Partner harmonisation. Basket and in particular
project funds have remained problematic in all these respects. Challenges for GBS lie however in
implementing the further rationalised GBS process under effective and efficient Government
ownership and leadership and a structure that is in line with the PER and the MKUKUTA
processes.
Considering that GBS is the preferred aid delivery modality of the Government and that it has
demonstrated advantages over other modalities in the past three years, it would be beneficial for
Tanzania’s development and the achievement of its aid effectiveness agenda if Development
Partners shifted more of their resources to GBS. With regards to basket project funds,
Development Partners should work to allow for greater Government ownership of projects and
programmes at the respective levels of MDAs, Regions and LGAs, to integrate
project/programme management in existing Government structures, to disburse funds through the
Government Exchequer, and to rely more on Government systems and procedures for
procurement, monitoring, reporting, accounting and auditing.
Development Partners also need to pay greater attention to local capacity needs and re-think their
use of technical assistance for capacity development. Necessary reforms in technical assistance
include the provision of transparent information on the value of TA, further untying of TA from
the source of finance and increased Government ownership and leadership with regards to TA
demand, procurement, management, and performance assessment. The formulation of a national
TA policy by the Government of Tanzania to specify capacity priorities and arrangements of TA
selection and management could offer useful guidance to Development Partners.
On the Government side, ownership and leadership of the development process have been
strengthened significantly. This is demonstrated among others by the Government leadership in
the development of the MKUKUTA, JAS and the move towards GBS. Nevertheless, Government
27
capacity to take effective ownership and leadership of the development process including external
resource management needs to be further strengthened, in particular at sector, regional and local
levels. This would benefit greatly from a faster move towards GBS, as the Government would no
longer be required to build additional capacity for managing other aid modalities.
In addition, stronger linkages of the TAS/JAS with the MKUKUTA and the national budget as
well as with other processes and greater integration of the aid effectiveness agenda in all MDAs,
Regions and LGAs are needed. MDAs, Regions and LGAs also face a major challenge in aligning
their policies, strategies and plans with the MKUKUTA, in successfully implementing and
monitoring their contribution to the MKUKUTA, and in participating effectively and efficiently
in the new outcome- rather than sector-based working group structure of the PER, which has also
been adopted by the GBS review process. This requires among others improved cross-sectoral
collaboration and coordination with more comprehensive and timely information sharing.
Furthermore, linkages between the on-going public sector reforms, such as the PSRP, PFMRP
and LGRP, need to be enhanced and the programmes be further mainstreamed into the normal
structures and systems of MDAs, Regions and LGAs.
More harmonisation is also needed between the Government of the URT and the Revolutionary
Government of Zanzibar (RGZ), in particular in terms of their development and poverty reduction
strategies, resource allocation and their relationship with Development Partners. Under the TAS,
the issue was not addressed, as the Strategy was only adopted by the Government of the URT.
With the movement towards the JAS, however, it will be a key area of concern, as the JAS will be
implemented by both Governments.
Lastly, the Government’s efforts to improve aid relations and the impact of external resources on
national development and poverty reduction could gain from receiving inputs and learning lessons
from other countries through stronger regional co-operation and harmonisation. In particular, the
AU, SADC and EAC could be useful fora for generating more joint work in the implementation
of the Paris Declaration.
Besides the Government and Development Partners, non-state actors need to be brought on board
of Tanzania’s aid effectiveness agenda. This includes closer co-operation between the
28
Government at the respective levels and non-state actors as well as increased transparency and
accountability of non-state actors with regards to their activities and finances in line with the laws
of their incorporation. More information sharing by non-state actors with the Government on their
plans, activities and finances would allow for better harmonisation of Government and non-state
actor efforts in development and poverty reduction. Non-state actor organisations also need to
better harmonise their activities and strengthen coordination among each other. In addition, their
capacity to effectively play their role in development, participate actively in policy dialogue, and
act as a monitor on Government and Development Partner performance needs to be enhanced
through joint efforts of the Government, non-state actors and Development Partners.
Other domestic stakeholders that need to be included in Tanzania’s aid effectiveness initiative are
Parliamentarians and Councillors. They play a key role in holding the Government to account for
its use of public resources and its performance in achieving development results and thus in
strengthening national ownership and domestic accountability.
Overall, the end of the TAS cycle is marked by both considerable achievements and several
challenges ahead. It is also marked by major new opportunities, which present themselves under
the second phase PRS - the MKUKUTA - and the JAS. The JAS aims to address all outstanding
challenges and to be more comprehensive in tackling issues of ownership, leadership, alignment,
harmonisation, managing for results, mutual and domestic accountability in line with the
MKUKUTA/ZPRP and the Government’s and Development Partners’ commitment to the aid
effectives agenda. It will also be more inclusive by constituting a national framework for
development co-operation for both the Government of the URT and the RGZ and by bringing on
board Parliamentarians, Councillors, politicians and non-state actors. Further advancement on
Tanzania’s aid effectiveness agenda in line with national and international commitments depends
crucially on the timely and broad-based adoption of the JAS by all partners.
29
ANNEX 1: Presentation of Government Financial Statements using IPSAS
Under IPSAS, the Accounting Officers should state the basis of accounting policies applied and
other requirements followed during the preparation of financial statements. He or she should state
clearly:
1. Whether financial Statements have been prepared and presented based on the Cash Basis
of Accounting pursuant to Public Finance Regulation 53 and additional details have been
included to promote understanding and comprehension of the data as required and in
compliance with the International Public Sector Accounting Standards for the Cash Basis
of Accounting;
2. Whether they have applied accounting policies consistently throughout the reporting
period;
3. Whether the procurement of goods, works, consultancy and non-consultancy services to
the extent that they are reflected in their financial statements have complied with the
Public Procurement Act No.11 of 2004;
4. Whether financial statements have been prepared in accordance with the IPSAS on
financial reporting under the Cash Basis of Accounting and they comply with the
requirements of the Public Finance Act No. 6 of 2001.
30
ANNEX 2: Procedures for Channelling External Resources through the Exchequer
1. External resources are included in the national budget estimates.
2. Development Partners initially deposit funds in Account Number 13:99 (Development
Revenue), which is held at the Bank of Tanzania, Dar es Salaam.
3. Development Partners then notify the Treasury of the deposit made. This notification will
be copied to the relevant Ministry of the implementing agency and will indicate:

The project/programme account number

The name of the project/programme

Any other relevant details
4. The notification will prompt the relevant Ministry to submit to the Budget Division of the
Ministry of Finance a TFN 358 Form duly filled. This form is a request to transfer funds
from Account 13:99 to the relevant Ministry where the project is located.
5. The Budget Division, after confirming with the Accountant General Department on the
availability of funds, will issue a release warrant. While the Budget Department needs to
be informed of the availability of funds as a matter of procedure, ceilings are normally not
set on the release of Development Partner project/basket funds and the release warrants
are issued without reference to a ceiling limit.
6. Upon receipt of the release warrant, the Accountant General Department will cause a
transfer of funds to be made from Account 13:99 to Account 17:28 (Exchequer
Development Account) from where an Exchequer Issue Notification will be issued to the
relevant Ministry. This action ensures that aid flows are entered in the IFMS. For the up
country, the Treasury is responsible for processing all the forms on behalf of the
beneficiaries and transfer funds directly to the respective Council Accounts. It takes about
two to five days for the funds to reach the beneficiaries.
31
GLOSSARY OF TERMS
In the context of development partnership in Tanzania, the below listed terms has the following
meaning:
Basket Fund: A basket fund is a funding modality under which more than one Development
Partner collectively funds a country’s development programme or sector as a whole with
harmonised procedures, processes, etc.
Development Partners: Development Partners are members of the Development Partners Group
(DPG) and other bilateral or multilateral agencies that provide official development assistance to
Tanzania.
Domestic accountability: Domestic accountability refers to the responsibility and answerability
of the Government to its citizens for its decisions and actions including the use of public
resources, the provision of public services and the implementation of its commitments to the
attainment of development results.
Exchequer System: The Exchequer System is a system for capturing and accounting all
resources available to and expenditures by the Government. It involves the depositing/channelling
of all public financial and non-financial resources through the Government Consolidated Fund
and appropriation from it by the Act of Parliament and accounting for them by the Minister for
Finance. The current Government Exchequer system is managed in a computerized Integrated
Financial Management System.
Financial Year (FY): The financial year of the Government of Tanzania starts on 1 July and ends
on 30 June.
General Budget Support (GBS): GBS is an aid delivery modality which provides financial
assistance to the overall national budget (Government Consolidated Fund). It is allocated by the
Government according to its legal and budgetary process and hence subjected to the same degree
of contestability as domestic resources.
32
Leadership (of the Government): Government leadership refers to the Government’s
responsibility to effectively guide and manage the country’s development process and its
precedence over other stakeholders in deciding development priorities, policies, strategies and
actions.
Medium-Term Expenditure Framework (MTEF): The MTEF is the Government’s budget
planning tool, providing a resource framework for three financial years on a rolling basis.
Monterrey Consensus: The Monterrey Consensus on Financing for Development, agreed by
donor agencies and developing countries at the United Nations International Conference on
Financing for Development in Monterrey, Mexico, in March 2002, emphasises among others the
importance of developing countries to take the lead in managing their development process and of
developed countries to provide increased and more effective aid.
Mutual accountability: Mutual accountability refers to the responsibility and answerability of
both the Government and its Development Partners to domestic stakeholders and to each other for
their actions in fulfilling their shared commitments in development co-operation.
National Poverty Eradication Strategy (NPES): The NPES, prepared in 1997, spells out
Tanzania’s long-term poverty reduction targets. It provides a guiding framework for coordinating
and supervising the formulation, implementation and evaluation of policies and strategies for
poverty eradication and identifies three areas for strategic intervention: (1) creation of an enabling
environment for poverty eradication; (2) capacity building for poverty eradication; and (3)
poverty eradication.
National Strategy for Growth and Reduction of Poverty (NSGRP/MKUKUTA): The
MKUKUTA is Tanzania’s second-generation PRS. It is the central coordinating framework for
growth and poverty reduction initiatives in the country. It is set out for five years and adopts an
outcome-based rather than a sector-oriented approach, based on three broad clusters: (1) growth
and income poverty reduction; (2) improvement of the quality of life and social well-being; and
(3) governance and accountability.
33
National Vision 2025: The National Development Vision 2025, formulated in 1998, is
Tanzania’s overall development framework that lays out long-term national social and economic
development goals. It envisaged that by the year 2025, Tanzania will have graduated from a least
developed country to a middle income country with a competitive economy capable of producing
sustainable growth and shared benefits, a high quality livelihood, a well educated and learning
society, peace, stability and unity, as well as good governance.
New Partnership for Africa’s Development (NEPAD): NEPAD is a strategic framework for
achieving sustainable political and socio-economic development in Africa. It was adopted at the
37th session of the Assembly of Heads of State and Government in July 2001 in Lusaka, Zambia.
Its primary objectives are to eradicate poverty; place African countries, both individually and
collectively, on a path of sustainable growth and development; halt the marginalisation of Africa
in the globalisation process and enhance its full and beneficial integration into the global
economy; and accelerate the empowerment of women.
Non-state actors: Non-state actors are local communities, civil society organisations (CSOs)
including
non-governmental
organisations
(NGOs),
community-based
and
faith-based
organisations, academic and research institutions, the private sector and the media.
O&OD planning methodology: The Obstacles & Opportunities for Development (O&OD)
approach is a community-based planning methodology that consists of a comprehensive
assessment of community needs and capacities in a particular council, which can be updated
periodically. It is the Government’s approved planning methodology at local government level.
Ownership (national): National ownership means that citizens through their Government take
responsibility in managing the country’s development and poverty reduction processes according
to national priorities and citizens’ needs. It includes the active participation of citizens in
formulating, implementing, monitoring and evaluating the country’s development and poverty
reduction policies, strategies and programmes. It also means that citizens hold the Government to
account for the use of public funds and its commitments, including the provision of public
services and the attainment of development results.
34
Performance Assessment Framework (PAF): The PAF consists of a range of performance
indicators for the Government. It is used by GBS partners as a basis for deciding their provision
of general budget support for the next financial year.
Paris Declaration 2005: The Paris Declaration was adopted at the Second High Level Forum on
Aid Effectiveness in Paris in March 2005. It commits donors and developing countries to take farreaching and monitorable actions to reform the ways in which aid is delivered and managed for
greater aid effectiveness. The Partnership Commitments of the Declaration focus on national
ownership, harmonisation, alignment, managing for results, and mutual accountability.
Performance Management System (PMS): PMS is a planning and monitoring framework that
links institutional plans to individual responsibilities by relating what individuals do to what
institutions aim to achieve. It was developed in 1999 during the first phase of the PSRP and
includes the following components: service delivery surveys, self assessments, MDA strategic
plans, operational and action plans, client service charters, an Open Performance Review and
Appraisal System, and a Monitoring and Evaluation System in the Policy and Planning
Departments of MDAs.
Participatory Rural Appraisal (PRA): PRA is a methodology used to identify community
needs and priorities. It is participatory in the sense that community members themselves are
supposed to take ownership and leadership over the exercise and its outcomes, whereas
‘outsiders’ only take the role of facilitators.
Poverty Reduction Budget Support (PRBS): PRBS is the general budget support facility of
eleven bilateral Development Partners and the EC in Tanzania.
Poverty Reduction Strategy (PRS): The PRS is the national medium-term framework for
poverty reduction. The country’s first PRS, the Poverty Reduction Strategy Paper, was drawn up
in 2000 in the context of the enhanced HIPC Initiative covering a period of three-years. It focused
its interventions for poverty reduction on seven priority sectors (Basic Education, Primary Health,
Water, Rural Roads, Judiciary, Agriculture Research and Extension, and HIV/AIDS).
35
Poverty Reduction Support Credit (PRSC): PRSC is the general budget support facility of the
World Bank.
Poverty Reduction Support Loan (PRSL): PRSL is the general budget support facility of the
African Development Bank.
Project Implementation Unit (PIU): A PIU is a dedicated management unit designed to support
donor funded projects or programmes. Parallel PIUs are created outside the existing structure of
the national implementing agency or duplicate or recreate ministry functions and capabilities.
Rome Declaration 2003: The Rome Declaration on Aid Harmonisation was adopted at the First
High Level Forum on Harmonisation in Rome in February 2003. It commits developing countries
and donors to taking action to enhance developing country ownership in the development process
and to improve the management and effectiveness of aid by implementing a range of good
practice principles and standards for development cooperation. These include among others
ensuring that harmonisation efforts are adapted to the country context and that donor assistance is
aligned with the development recipient's priorities and systems; expanding country-led efforts to
streamline donor procedures and practices; reviewing and identifying ways to adapt institutions'
and countries' policies, procedures, and practices to facilitate harmonization; improving
transparency, accountability and predictability of aid including the use of national financial
systems in aid delivery; providing budget, sector and balance of payments support; as well as
strengthening the capacity of aid recipient governments.
Strategic Partnership with Africa (SPA): The SPA was established in 1987 to mobilise
financing required by low-income, debt-distressed African countries to implement economic
reforms. It was originally a membership-based forum for major bilateral and multilateral donors
providing assistance to Africa. Its membership now however also includes the UN Economic
Commission for Africa, the Secretariat of NEPAD and a number of African governments. The
SPA aims to support poverty reduction in Africa by encouraging donors to increase development
assistance to Africa and by monitoring their performance in doing so as well as by supporting
improvements in the quality of aid through its alignment to national poverty reduction strategies.
36
The SPA consists of a Plenary (which meets once a year), two Working Groups (one engaged in
aligning budget support to national strategies, the other engaged in aligning sector and other
forms of support), and a Coordinating Forum (responsible for linking the work of the two groups
and being a forum for discussion of emerging issues). The SPA Secretariat is located at the World
Bank.
Sector-Wide Approach (SWAp): A SWAp is a mechanism for organising dialogue between the
relevant Government agency, Development Partners and non-state actor stakeholders around a
particular sector and its policies, strategies and programmes. A SWAp is not a funding instrument
and all aid modalities (GBS, basket and project funds) can be used under it.
Technical assistance (TA): TA is defined as the provision of local or foreign personnel for
advisory or consultancy services, of equipment, training, research and associated support with the
aim to share, adapt and develop ideas, knowledge, skills or technologies.
37