THE UNITED REPUBLIC OF TANZANIA
TANZANIA ASSISTANCE STRATEGY
ANNUAL IMPLEMENTATION
REPORT FY 2003/04
NOVEMBER 2004
DAR ES SALAAM
TANZANIA
TAS Annual Implementation Report FY 2003/04
Table of Contents
Abbreviations
3
Purpose of the Report
5
What is TAS?
7
The International Context
8
The TAS Process FY 2003/04
10
Progress in Implementing the TAS Action Plan
13
Predictability of External Resources
14
Integrating External Funds in the Government Budget
18
Harmonization and Rationalization of Processes
21
Capacity Building for External Resource Management and
Aid Co-ordination
26
Conclusions
27
TAS Annual Implementation Report FY 2003/04
2
Abbreviations
ABP
Area Based Programme
BGC
Budget Guidelines Committee
CG
Consultative Group
CIDA
Canadian International Development Agency
DAC
Development Assistance Committee
DFID
Department for International Development
DPG
Development Partners Group
FY
Fiscal Year
IFMS
Integrated Financial Management System
IMF
International Monetary Fund
IMG
Independent Monitoring Group
JAS
Joint Assistance Strategy
LGA
Local Government Authority
LGRP
Local Government Reform Programme
MDA
Ministries, Departments, Agencies
MTEF
Medium-Term Expenditure Framework
NSGRP
National Strategy for Growth and Reduction of Poverty
ODA
Official Development Assistance
OECD
Organization for Economic Co-operation and
Development
PAF
Performance Assessment Framework
PER
Public Expenditure Review
PFMRP
Public Financial Management Reform Programme
PMS
Poverty Monitoring System
PO-PP
President’s Office-Planning and Privatization
PO-PSM
President’s Office-Public Service Management
TAS Annual Implementation Report FY 2003/04
3
PO-RALG
President’s Office-Regional Administration and Local
Government
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
SASE
Selected Accelerated Salary Enhancement
SPA
Strategic Partnership with Africa
TAS
Tanzania Assistance Strategy
UNDP
United Nations Development Programme
UNICEF
United Nations Children’s Fund
TAS Annual Implementation Report FY 2003/04
4
Purpose of the Report
This Annual Implementation Report of the Tanzania Assistance Strategy (TAS)
covers the second year in the roll out of the TAS from July 2003 until June 2004.
The TAS is a national three-year framework which seeks to enhance the efficiency
of aid, facilitate harmonization of development assistance and alignment of
Development Partner procedures with the Government, and promote
Government leadership and ownership, thus enhancing development outcomes
for the people of Tanzania. This Report sets out the major achievements and
challenges in implementing the TAS during FY 2003/04 in terms of the
realization of the broad principles of the TAS as well as the specific activities
reflected in the TAS Action Plan developed during FY 2002/03. It also indicates
the priority areas for action in FY 2004/05. The Report has been drawn up in
consultation between the Government and Development Partners as well as other
stakeholders under the auspices of the TAS Secretariat. In addition, the TAS is
monitored through the biennial assessment of the Independent Monitoring Group
(IMG), which provides an autonomous evaluation of the development partnership
in Tanzania (see box 1).
The TAS process has continued to achieve critical acclaim both nationally and
internationally for guiding major achievements in improving harmonization and
aid co-ordination in Tanzania. During the second year of TAS implementation,
there has been steady progress across most of the priority areas under the TAS.
Successes were notable particularly in terms of improving the predictability of
external resources and developing plans to rationalize the cycle of policy and
consultative mechanisms. There was a slower pace of implementation of the
objective of encouraging Development Partners to channel project finances
through Government systems and on capacity building related to external resource
management. During FY 2003/04, it became apparent that there is need for more
effective institutionalization of the harmonization process, particularly within
TAS Annual Implementation Report FY 2003/04
5
sector ministries, for a strengthened oversight role of the TAS/Harmonization
Group, and for linking harmonization and alignment to other national processes
such as the Poverty Reduction Strategy (PRS) and the Public Expenditure Review
(PER).
As the implementation of the TAS enters its final year in the current three-year
cycle, Tanzania is facing many new opportunities and challenges in the
harmonization agenda. These relate both to local issues, such as the launch of the
National Strategy for Growth and Reduction of Poverty (NSGRP), as well as
global actions on aid harmonization and alignment. At the end of FY 2003/04,
the TAS is at a demanding and promising juncture, and its future success remains
in maintaining the momentum for change.
Box 1: The Independent Monitoring Group
The Independent Monitoring Group (IMG) is a unique arrangement of impartial
assessment of the development partnership in Tanzania.
The role of
independent assessment started with the Helleiner Report, drawn up by
Professor G. K. Helleiner and a team of five independent advisors who were
commissioned in the mid 1990s to come up with proposals on how to improve the
aid relationship in Tanzania. One of their proposals was that the process of
independent monitoring should be institutionalized and carried out on a regular
basis to maintain trust between the partners and provide impetus to improving
the aid relationship. The proposal for an institutionalized IMG was carried
forward under the TAS and is now a vital element of monitoring the development
partnership in Tanzania. The first report of the IMG was issued in 2002. The
report acknowledged the progress achieved since the earlier Helleiner Report
and made recommendations for further improvements, particularly with regards
to Government leadership and capacity and Development Partners’ use of
Government systems and programme aid. The IMG has been commissioned in
2004/2005 to provide a second assessment of the development partnership. Their
report will come at a critical junction for partnership relations, and it is expected
that its recommendations will feed into the full review of the TAS and the
development of the Joint Assistance Strategy (JAS).
TAS Annual Implementation Report FY 2003/04
6
What is TAS?
The TAS, which was launched in 2002, is a national strategy to promote
Government leadership and ownership of the development agenda, improve the
effectiveness of aid, encourage harmonization and alignment, strengthen
development partnerships, and reduce transaction costs in development cooperation. The TAS is a unique initiative that resulted from a joint understanding
between the Government and Development Partners that there is an urgent need
to improve the efficiency and effectiveness of external resources in order for
Tanzania to achieve its poverty reduction goals. The core idea of the TAS is that
this should happen under the leadership of the Government and the ownership of
the people of Tanzania.
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Box 2: TAS Best Practices in Development Co-operation
Government leadership in developing policy priorities, strategic frameworks, and
institutionalized co-operation mechanisms in various areas/sectors.
Government involves civil society and the private sector in developing national
policies, strategies, and priorities.
Government prioritizes and rationalizes development expenditures in line with
stated priorities and resource availability.
Integration of external resources into the strategic expenditure framework.
Integration of reporting and accountability systems.
Adequacy in resource disbursements relative to prior commitments.
Timing of resource disbursements is responsive to exogenous shocks to the
Tanzanian economy.
Donor policies complement domestic capacity building.
Firm ODA commitments are made for longer time periods.
Improvement in public financial management by Government.
Government has created an appropriate national accountability system for public
expenditure.
Ministries, regions and districts receive clean audit reports from the Controller and
Auditor General.
Transparency in reporting and accountability at the national and sectoral levels.
TAS Annual Implementation Report FY 2003/04
7
Thus, the TAS presents the national vision of how to strengthen national
ownership and improve aid delivery. It outlines 13 principles of ‘best practice’ in
development co-operation listed in box 2.
The International Context
At the international level, Tanzania is one of the front-runners in terms of
articulating and implementing a process of improved aid delivery. Since the
inception of the TAS and even since its first year of implementation, remarkable
strides have been made at a global level in forging a consensus amongst
development partners that business as usual is no longer sufficient. Significant
steps were marked by the Monterrey Consensus of March 2002 and the Rome
Declaration on Harmonization of February 2003. These momentous agreements
set out the shared vision for an improved and harmonized delivery of vital aid
resources to all developing countries.
The first High Level Forum on
Harmonization, at which the Rome Declaration was agreed, was opened by
President Benjamin W. Mkapa, who provided an outline of the achievements in
aid co-ordination that Tanzania and her Development Partners have made in
recent years as well as the challenges that remain.
Chart 1: Applying the Rome Commitments to Tanzania
1. Ownership
(Government of Tanzania)
TAS sets
harmonization
priorities
2. Alignment
(Government-DPG)
3. Harmonization
(DPG)
Alignment
with the
PRS
Common
Information
procedures
Use of
Government
systems
Rationalised
Arrangements
sharing
Source: Adapted from OECD-DAC Explanatory Note on the Joint SPA-DAC Survey on Progress in
Harmonization and Alignment, 11 June 2004.
TAS Annual Implementation Report FY 2003/04
8
One of the central concepts of the international agenda on harmonization is that
national governments must lead the process of change. In the Tanzanian context,
the TAS provides the institutional framework to guide all partners towards this
goal. The chart above illustrates how the TAS relates to the international agenda.
The Rome Declaration on Harmonization sets out good practice standards based
on the core principles of ownership, alignment and harmonization, by which
initiatives to improve harmonization of donor assistance will be assessed.
Specifically, the Rome Declaration underscores the need for aligning development
assistance with partner countries’ national development priorities and strategies;
streamlining principles in development assistance delivery; intensifying delegated
co-operation and increasing flexibility of country-based staff to manage country
programmes; developing incentives within donor agencies to foster management
and staff recognition of the benefits of harmonization; promoting stronger
partnerships with governments and among donors in country analytical work;
using partner country systems and providing budget and sector support when
possible and appropriate; and promoting harmonization in global and regional
programmes.
During FY 2003/04, the OECD-DAC Working Party on Aid Effectiveness and
Donor Practices was established to promote, support and monitor progress on
harmonization and alignment. As well as with members of the OECD, the group
works closely with other major stakeholders such as the United Nations,
European Union, International Monetary Fund, World Bank, African
Development
Bank,
Asian
Development
Bank,
European
Bank
for
Reconstruction and Development, Inter-American Development Bank and the
Strategic Partnership with Africa. Tanzania has been involved directly with the
task teams and working groups that have been established on alignment and
harmonization.
TAS Annual Implementation Report FY 2003/04
9
These task teams have elaborated a monitoring framework organized around the
three key dimensions of the Rome Declaration (i.e. ownership, alignment and
harmonization as clarified in chart 1 above). In order to build up an international
picture of progress in implementing initiatives, a number of international surveys,
also involving Tanzania, were launched in FY 2003/04, including the SPA
Questionnaire on Alignment of Budget Support and Balance of Payments Support
with National PRS Processes as well as the Joint SPA-DAC Survey on Progress in
Harmonization and Alignment. The results from these surveys will be presented
at the Second High Level Forum on Harmonization to be held in Paris in early
2005. The surveys will also add value to the international information that is now
available on harmonization and alignment and will feed into future plans for TAS
implementation in Tanzania.
The confluence of the international with the national agenda on harmonization
presents Tanzania with important new opportunities for improving aid delivery
that would have seemed a distant goal at the time of the original conception of the
TAS. The international consensus also presents concrete challenges to the TAS
process, particularly with regards to ensuring that the leadership of the process on
the ground in Tanzania remains with the Government.
The TAS Process FY 2003/04
The institutionalization of the TAS process at all levels of Government and within
Development Partner agencies is critical for the consensus on harmonization to
transform into concrete improvements on the ground.
The institutional
arrangements for implementing and monitoring the TAS were established in FY
2002/03. Thus, FY 2003/04 was the second year of the continuing
institutionalization of the process. The implementation of the TAS is supervised
by the Joint TAS/Harmonization Group and the Joint TAS Technical Secretariat,
both consisting of representatives from sector ministries, the Vice President’s
TAS Annual Implementation Report FY 2003/04
10
Office, the President’s Office - Planning and Privatization, the Ministry of Finance
and Development Partner agencies. Both bodies are chaired by the Ministry of
Finance.
In FY 2003/04, the TAS Secretariat met seven times throughout the year and
continued to provide technical support and guidance to the implementation of the
TAS. Unfortunately, the TAS/Harmonization Group, which is a larger body than
the TAS Secretariat tasked with oversight of the process, did not manage to fulfil
their quarterly meeting requirements set out in the TAS Action Plan. This was
due to a heavy schedule of commitments within the Government. A number of
other group meetings between the Government and Development Partners acted
as de facto forums for discussion of aid co-ordination during the year, including
the Rationalization High Level Forum in September 2003, so that the
implementation of the TAS and the harmonization agenda were not affected.
However, the failure of the TAS/Harmonization Group to meet during FY
2003/04 suggests that there is need to review the institutional structure of the
TAS and other related processes to ensure more harmonization and reduction of
transaction costs.
An effective institutional structure is needed to provide guidance to the
harmonization process and ensure vital co-ordination between the TAS and the
other central mechanisms of the PRS/NSGRP and the PER. The launch of the
NSGRP in FY 2004/05 also presents new challenges for the TAS with the change
from a priority sector focus to an outcome-based approach, demanding close
cross-sector collaboration and greater inter-linkages between different NSGRP
implementing agencies.
The importance of the horizontal links between these three key national
processes, the PRS/NSGRP, the PER and the TAS, is vital for successful
implementation of each of them. Whereas members of the PRS and the PER
Secretariat also serve on the TAS Secretariat, there has been no formal mechanism
TAS Annual Implementation Report FY 2003/04
11
for the Secretariats to work together. An important step towards improving coordination at a technical level was achieved in FY 2003/04 with the first joint
meeting between the Secretariats of the TAS, PRS and PER in June 2004. Further
joint PRS/PER/TAS Secretariat meetings are planned for FY 2004/05. With the
TAS entering its final year in the current cycle, the institutional structure of the
TAS, including the composition of the Harmonization Group and the Secretariat,
will be subject to a full review.
Another area for review in the TAS institutional structure is how to ensure that
sectors are fully involved in TAS implementation. Whereas sector working groups
were active in the preparation of the original TAS document, there has been a
variable level of commitment between sectors in terms of implementing the TAS,
which is partly a result of capacity problems. There is a great need to review this
aspect thoroughly to ensure that sectors are fully integrated within the
harmonization and alignment process.
Improving awareness of the TAS process is important, not just within central
ministries but throughout the Government system and within civil society.
During FY 2003/04, a number of initiatives to raise awareness about the TAS
were launched. These include the publication of the TAS in Kiswahili and the
publication of a simplified language version with cartoons in both English and
Kiswahili.
These documents were circulated to line ministries and local
governments as well as to the general public.
Another important element in improving aid co-ordination is donor-to-donor
relations, as represented by the last slice of the triangle in chart 1. During FY
2003/04, Development Partners in Tanzania took an important step in
reorganizing and formalizing the Development Assistance Committee. Previously,
the DAC was an informal group with no terms of reference, but during FY
2003/04, comprehensive terms of reference were drawn up and the group name
changed to the Development Partners Group (DPG) to reflect its inclusive
TAS Annual Implementation Report FY 2003/04
12
structure. The purpose of the revamped group is to provide internal coherence
amongst Development Partners in the context of the TAS and the Rome
Declaration, thus reducing transaction costs for both parties.
Progress in Implementing the TAS Action Plan
The TAS Action Plan, devised during FY 2002/03, outlines the concrete steps in
implementing the TAS. The activities cover the three-year timeframe of the
current TAS from FY 2002/03 until FY 2004/05 and are grouped into four
priority areas. These are: first, improving the predictability of external resources;
second, increasing aid flows captured in the Government budget; third,
harmonizing and rationalizing processes; and fourth, improving national capacity
to manage external resources and aid co-ordination.
During FY 2003/04, TAS implementation was focused on the priority areas of the
TAS Action Plan. These priorities remain the most pertinent issues of
harmonization and alignment in Tanzania and there will be scope for a full review
of the TAS planned for FY 2005/06.
Predictability of External Resources
There were notable improvements in the predictability of external resource flows
during the first year of TAS implementation.
During FY 2003/04, further
significant advancements were achieved, particularly in strengthening the
predictability of direct budget support. All modalities of aid, including direct
budget support, basket and project funding, are subject to problems of
predictability and risk of delay or partial disbursement due to issues such as prior
actions required, transparency, data sharing, timeframes of financial commitments
as well as administrative and logistical hurdles of implementing complex projects
and programmes involving multiple stakeholders.
TAS Annual Implementation Report FY 2003/04
13
As elucidated in the first TAS Implementation Report, the success of the
development partnership and the common adoption of the PRS have promoted
an improved level of information sharing between partners. During FY 2003/04,
the system for forecasting aid flows for the budget continued with the
involvement of Development Partners and the Government.
Projections of
scheduled expenditures on projects and programmes were submitted by
Development Partners through the PER process to the Ministry of Finance. This
data was compiled and circulated to sector ministries for internal review and
verification. It was subsequently submitted as an input to preparations for the
Budget Guidelines, which were produced in December, and the MTEF and
budget formulation during the second half of the financial year.
This again
resulted in an improved level of coverage of Development Partner funded
projects and programmes, particularly in the MTEF and the Development Budget.
It was however clear in FY 2003/04 that there is still need to strengthen the
forecasting exercise in order to improve the quality and accuracy of the data.
Despite improvements, there are still weak areas in the reporting of external
resources in the MTEF and Development Budget prepared during FY 2003/04.
The problem of predicting external resources is most acute for projects and in
particular technical assistance where there is a low level of ownership within the
Government.
More effort is required to ensure that the data submitted by
Development Partners at the start of the financial year is as accurate as possible.
Also, it is important for Partners to align to Government systems. Further, sectors
need to be more stringent in reviewing and including the information in their
plans and budgets, and better co-ordination is required at the Ministry of Finance
between participating Departments.
In addition, greater detail on the actual
content of projected support in terms of whether it will be provided as cash,
goods or services (technical assistance) is needed.
TAS Annual Implementation Report FY 2003/04
14
It was proposed during FY 2003/04 that the projections exercise be moved
forward by two months in order to allow for a longer period for review and
dissemination of the data to sectors.
This should facilitate a more accurate
reflection of external resources in the Budget Guidelines. The revised timetable is
shown in table 1 below and will be implemented during FY 2004/05.
Table 1: Revised Timetable for Projections Data
Current procedure for MTEF
Proposed improvements for MTEF
Timing
Indicator
Timing
Indicator
End
Deadline for Development End August Deadline for Development
October
Partner
submission
of
Partner
submission
of
commitments
and
commitments and projections
projections data
data
November Consolidation of data and September
Consolidation and submission
review by Development
of data to sector ministries
Partners and sectors
December Submission to the Budget October
Detailed discussion with
Guidelines Committee
sectors
November
Reconsolidation
of
data
following revisions by sectors
and submission to the BGC
for input into the Budget
Guidelines
January
Budget Guidelines issued
December
Budget Guidelines issued
February - Review of data with sector January Final
revisions
by
April
ministries
February
Development Partners of
projections (budget support
and basket funds)
March Further review and changes March Consolidated data submitted
April
to the projections made by April
for inclusion in the National
Development Partners
Budget.
May
Final
submission
for
compilation of the National
Budget
In FY 2003/04, the first disbursements under the harmonized Poverty Reduction
Budget Support facility and the World Bank Poverty Reduction Support Credit
mechanism were made. This led to significant improvements in the predictability
of budget support inflows and in the actualization of commitments to front-load
budget support in order to support the uninterrupted implementation of the
budget. The previous PRBS mechanism and the World Bank Poverty Structural
TAS Annual Implementation Report FY 2003/04
15
Adjustment Credits involved an in-year assessment of indicators and performance
in order to trigger disbursement. This often caused delays in the schedule of
budget support inflows, causing in-year budget shortfalls and impacting the
smooth release of financial resources by the Government.
The new PRBS/PRSC mechanism is based on an assessment of the Performance
Assessment Framework (PAF), which sets out agreed actions to be achieved
under the reform process.
The system is designed to work such that the
assessment is completed the year before planned disbursement of budget support,
meaning that it is possible to budget for the inflows with certainty. Thus, the
PRBS/PRSC disbursements in FY 2003/04 resulted from an assessment process
that was undertaken in FY 2002/03. The system facilitates disbursements at the
beginning of the financial year, which allows the Government to realize a smooth
release of funds as the financial year progresses. The very significant practical
improvements that resulted from this new system are illustrated in table 2 below,
showing that by the end of the second quarter of FY 2003/04, 80% of total
predicted budget support had been released.
Table 2: Comparison of % of Budget Support Front-Loaded FY 2002/03 - 2004/05
Quarter
Quarter 1
FY
2002/03
Projected
52%
FY
2002/03
Actual
8%
FY
2003/04
Projected
72%
FY
2003/04
Actual
50%
FY
2004/05
Projected
72%
FY
2004/05
Actual
80%
Quarter 2
Quarter 3
Quarter 4
33%
15%
1%
54%
14%
25%
16%
11%
0%
30%
9%
11%
18%
10%
0%
?
?
?
Source: Government Budget Books, Aid Flows Database, Ministry of Finance.
As well as supporting the smooth implementation of the budget in FY 2003/04,
this system of timely and predictable release of funds mitigated the potential
unbalancing impact on the macro economy that large aid inflows can have in
terms of influence on inflation and the exchange rate.
TAS Annual Implementation Report FY 2003/04
16
During FY 2003/04, a successful assessment of actions under the PAF was made,
which triggered the release of budget support for FY 2004/05. Further, during
FY 2003/04, the African Development Bank released the final tranche of its
Structural Adjustment Loan and is now preparing its next budget support (Poverty
Reduction Support Loan – PRSL) within the PAF.
While the predictability and smooth release of budget support experienced
significant improvement during FY 2003/04, the performance of disbursements
as against projections remained variable for other modalities of aid. Whereas most
of the baskets performed satisfactorily, there was a shortfall in disbursements to
the Primary Education Development Programme resulting from delays in
submission of the required audit reports.
Integrating External Funds in the Government Budget
There is agreement amongst all partners that the Government budget is the
principle tool for the implementation of the poverty reduction strategy. External
resources continue to account for more than 40% of the national budget.
Improving the reflection of external resources in the Government budget is
therefore required in order to promote effective implementation and monitoring
of the poverty reduction strategy. The on-going strengthening of the public
financial management system and particularly the accounting and auditing of
public funds have led to increased trust in the financial system on the side of
Development Partners. This is reflected in a shift away from stand-alone projects
to direct budget support and sector baskets (see table 3). Some Development
Partners have also been moving towards using the Government Exchequer system
for channelling project funds to implementing agencies.
Table 3: Percentage of Aid Flows by Different Modalities (Excluding Debt Relief)
TYPE
Budget Support
Basket Funds
Project Funds
2002/2003
30%
16%
54%
2003/2004
38%
18%
44%
2004/2005
34%
21%
45%
Source: Government Budget Books, various years.
TAS Annual Implementation Report FY 2003/04
17
The necessary first step to increasing the reflection of aid in the national budget is
to ensure that accurate projections of external resources are included in the
Budget Estimates.
The improvements made under the TAS in capturing
projections to be reflected in this budget were maintained in FY 2003/04. Thus,
aid reflected in the Development Budget (projects and baskets) in FY 2003/04
reached Tshs 667,349 million as compared to Tshs 624,265 million in FY
2002/03. This is a notable improvement compared to the level of reflection of
Tshs 302,272 million in FY 2001/02 prior to the initiation of TAS.
Table 4: Aid Flows Reflected in the Government Development Budget in million
Tshs (Excluding Debt Relief)
FY
Projects and Basket Funds
Budget Support
Total
2001/02
302,272
283,770
586,042
2002/03
624,465
274,577
899,042
2003/04
667,349
405,047
1,072,396
2004/05
857,885
434,476
1,292,361
Source: Budget Estimates FY 2001/02 – FY 2004/05.
The primary area of activity under this TAS priority area in FY 2003/04 was to
continue to encourage Development Partners to comply with the circular issued
by the Accountant General in FY 2001/02, which sets out the process by which
Development Partner funds can be channelled directly through the Government
Exchequer system to projects and programmes being implemented at all levels of
Government. This would permit accurate and up to date accounting records to be
maintained and would support the tracking of poverty-reducing expenditures
through the Government budget.
In September 2003, seminars on channelling funds through the Government
Exchequer system were organized by the Accountant General Department in
collaboration with the Budget and External Finance Departments of the Ministry
of Finance and were attended by groups of Development Partners and respective
Desk Officers from the External Finance Department. Explanations were
TAS Annual Implementation Report FY 2003/04
18
provided on how to channel cash funds directly through the Exchequer to
projects and programmes being implemented at all levels of Government. The
seminars were attended by technical staff and accountants from Development
Partner agencies.
The seminars permitted open and frank discussions and reassurances over specific
concerns of individual Development Partners. These included issues such as extra
banking transaction costs involved in disbursement, timely outflow of funds to
implementing agencies particularly at a local government level, capacity in the
Ministry of Finance and sector ministries to deal with the extra burden if there are
substantial increases 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 the IFMS for accounting and auditing purposes, and the risks
that funds could be diverted away from the intended recipients.
On all of these issues, assurances were given that the system was operational and
functioning well. It was explained to participants that there are no extra banking
transaction costs to channelling funds through the Exchequer system, and
disbursements are achieved within the minimum time frame.
Extra capacity
requirements have also been addressed by the Accountant General Department.
Along with Denmark, Norway, Sweden and the UK, who disbursed project funds
through the Exchequer in FY 2003/04, UNDP and Ireland have started to use the
Exchequer system to disburse project funds with Canada in preparatory stage to
follow the procedures. The Government is ready to undertake further training to
Development Partners who might need further clarification on the channelling of
funds through the Exchequer system.
TAS Annual Implementation Report FY 2003/04
19
Table 5: Reflection of Aid Disbursements to Projects and Baskets in the Budget
Estimates, Exchequer System and Donor Statistical Reports (in million Tshs)
FY
1999/00
2000/01
2001/02
2002/03
2003/04
Budget
Estimates
214,943
275,476
302,272
624,465
667,349
Statement of
Development
Revenue
67,606
137,559
125,010
328,321
475,642
% of Budget
Estimates
31.5
49.9
41.4
52.6
71.3
Aid Flows
Database
317,231
457,611
424,198
504,054
622,942
% of Budget
Estimates
147.6
166.1
140.0
80.7
93.3
Source: Budget Book IV, Statement of Development Revenue (Account No. 13:99), Ministry of Finance, and
Aid Flows Database, Ministry of Finance.
Harmonization and Rationalization of Processes
In Tanzania, all stakeholders are aware of the extra costs and inefficiencies incurred in
the duplicative and burdensome cycle of processes, which exist at the national policy
level. Rationalization is recognized as essential for improved development outcomes
in both the TAS and the Rome Declaration. During FY 2003/04, various important
steps have been undertaken within the TAS process to address this issue. An
important area of on-going work under this objective concerns reducing the number
of meetings and missions that place undue burden on the Government and in some
cases are unnecessary or duplicative. In FY 2003/04, the calendar of meetings and
missions, which was launched in FY 2002/03, was drawn up again by the DPG and
the TAS Secretariat.
All DPG members, including non-resident Partners, now
actively provide information on planned missions and meetings for the calendar. The
calendar is available on the DPG website (www.tzdac.or.tz) and is used to identify
scope for shared reviews and analytical work.
Another initiative to reduce the burden of missions and meetings on the Government
was the introduction of “Quiet Times” during FY 2002/03. The idea of the “Quiet
Time” is to ensure that the Government is able to focus solely on crucial areas of
activity, particularly budget preparation, during certain periods of the year. Although
there was no baseline against which to judge its effectiveness during the first year of
implementation, the perception was that less meetings and missions had occurred
during the specified “Quiet Time” in FY 2002/03.
TAS Annual Implementation Report FY 2003/04
Following a review of the
20
effectiveness during FY 2003/04, Development Partners proposed that the period of
“Quiet Times” should be reduced from five months to two months in order to
promote its effectiveness. This proposal is still under consideration by the
Government. It was furthermore suggested that a concept of “degrees of quietness”
should be considered whereby it is accepted that while high-level management may
not be available for meetings during “Quiet Times”, other technical and local
government staff could still work closely with Development Partners during the
period. Further, it was decided that the “Quiet Times” should be monitored more
closely in order to track trends in terms of agency compliance with the initiative. The
timetable for “Quiet Times” is shown in table 6 below.
Table 6: Timetable for “Quiet Times”
Period
September - December
January - March
April - May
June - August
Activity
Consultative processes
Concluding policy, discussions,
missions etc.
Finalize budget formulation
Budget Debate and approval by
Parliament
Status
Busy
Busy
Quiet
Quiet
A major area of work in FY 2003/04 concerned proposals to rationalize the cycle of
policy and consultative mechanisms. Towards the end of FY 2002/03, the TAS
Secretariat launched a study to identify the scope for reducing unnecessary
duplication and transaction costs in the cycle of policy and consultative mechanisms
in Tanzania. The study was discussed at a PRS/Harmonization Technical Retreat
held in June 2003 and the discussions were consolidated into a paper on Proposals
for Rationalization, which was presented to a high level national forum at Karimjee
Hall in Dar es Salaam in September 2003. There were five main areas of agreement
that emerged from this forum. These were: first, the need to improve linkages
between the budget cycle and the PRS; second, promoting harmonization between
economic processes; third, strengthening linkages between sector and macro
processes; fourth, developing a Joint Assistance Strategy (JAS); and fifth, the future
role of the Consultative Group Meeting.
TAS Annual Implementation Report FY 2003/04
21
Improve linkages between the budget cycle and the
Poverty Reduction Strategy
A revised calendar of processes and consultative meetings
was devised and presented at the forum. The main
purpose of this is to ensure appropriate sequencing of key
processes and promote linkages between the budget
process and the PRS/NSGRP.
Role of the Consultative
Group Meeting
The CG is at the apex of
consultative processes in
Tanzania. Its scope and role
in providing a mechanism for
consultation needs to be
monitored to ensure that it is
an efficient mechanism for
consultation between the
Government
and
Development Partners.
Develop a Joint Assistance Strategy
A Joint Assistance Strategy (JAS)
adopted
by
all
participating
Development Partners would provide a
consolidated
approach
to
the
relationship between the Government
and the DPG as well as among
individual members of the DPG. It
could detail how external resources
could be used collectively to support the
PRS/NSGRP, thus combining features
of a traditional country assistance
strategy with a harmonized approach and
better division of labour between
Development Partners.
TAS Annual Implementation Report FY 2003/04
Promote
harmonization between
economic processes
Proposals for
Rationalizing
Processes
The
harmonization
achieved between the
PRBS and the PRSC
should be strengthened
and other Development
Partners
should
be
encouraged to harmonize
support to economic
processes.
Strengthen linkages between sector
and macro processes
Improved linkages between sector and
macro processes are essential. Sector
working
groups
led
by
the
Government
and
including
representation
of
Development
Partners and civil society have now
been established in most sectors. The
PRS/NSGRP requires strengthened
technical level co-operation across
sectors to ensure that outcomes are
achieved.
22
The outcome of the study, the technical review and the high level forum was a set
of far reaching recommendations concerning rationalization. The main proposals
for revision of the schedule of policy and consultative mechanisms involved
bringing key outputs of the PMS and PER forward in the financial year in order to
ensure that the evidence generated by the PMS about the PRS feeds effectively
into the budget process. It was also recommended that synergies between the
IMF Poverty Reduction and Growth Facility (PRGF) and the PRBS/PRSC be
maximized in order to reduce unnecessary duplication. The major output of this
process was a revised calendar of policy and consultative mechanisms in Tanzania,
which has been included as an annex to the NSGRP.
With regards to the Consultative Group meeting, the importance of the meeting
was recognized and its unique focus on overarching issues such as partnership,
PRS and governance issues were commended. However, it was recommended that
progress on the conclusions of previous CG meetings needed to be reported at
the next CG meeting.
One of the most important and promising areas of work under the TAS in FY
2003/04 has been on the proposal for a Joint Assistance Strategy (JAS). In
Tanzania, the transition from an individual Development Partner approach to a
common and coordinated approach between the Government and Development
Partners as well as amongst Development Partners is already well underway. All
Partners use the PRS and the TAS under leadership of the Government as the
basis for their support to Tanzania. Within this framework, Partners in Tanzania
have introduced common approaches in numerous arenas such as in analysis and
monitoring as well as in common financial arrangements. The new consensus
represented by the Rome Declaration and changes in the international
development partnership architecture now make it possible to move forward
inclusively to the next step of rationalization and harmonization.
TAS Annual Implementation Report FY 2003/04
23
The JAS would detail how external resources could be used collectively to support
the NSGRP, thus combining features of a traditional country assistance strategy
with a harmonized approach and a better division of labour between
Development Partners.
The JAS would address the need for Development
Partners to streamline their procedures among themselves and to have an effective
dialogue with the Government. One important way in which the JAS would
improve the effectiveness of aid and enhance Government ownership is by
introducing the principle of selectivity. Selectivity would involve the identification
of a “lead partner” for each sector who could represent other Development
Partners (“delegating partners”), thus providing more space for sector leadership
and substantially reducing the impact of uneven Development Partner support. In
principle, this entails that individual Partners concentrate only on few
sectors/activities according to their comparative advantage, so that the number of
Partners per sector and the number of activities per Partner are reduced.
The criteria for selection of the “lead partner” could, to some degree, be based on
an assessment of the comparative advantage of each Development Partner with
regards to experience within a specific sector, specialization around a particular
issue, or modality of aid delivery.
The implementation of the JAS would
therefore require significant and positive changes in the way that the Government
and particularly sectors interact with Development Partners and would also need
greater delegation of power from Development Partner head offices down to the
field in Tanzania.
Current thinking on the JAS therefore encapsulates a number of challenging and
far-reaching proposals and most Development Partners are in agreement that it
will be important to progress on an inclusive basis under Government leadership.
The process of formulating the JAS is still very much in early stages. During FY
2002/03, the TAS Secretariat began to consider the viability of developing a JAS,
TAS Annual Implementation Report FY 2003/04
24
as reported in the first TAS Implementation Report, and undertook a preliminary
survey of the status of country assistance strategies. The idea was raised and
discussed at the Harmonization Technical Retreat in June 2003. Following the
PRS/Harmonization High Level Forum held in September 2003, the DPG group
set up a JAS Core Group, whose membership includes DFID, Norway, Sweden,
Japan and UNICEF, to consider the concept of the JAS. A joint meeting between
the TAS Secretariat and the DPG JAS Core Group was held in May 2004 and a
draft JAS Concept Paper was drawn up by the Ministry of Finance and circulated
for discussion. The JAS Concept Paper, which is expected to be finalized by
December 2004, will guide the JAS development process during the second half of
FY 2004/05 (January - June 2005). The process will also benefit from the outputs
of the 2004/2005 IMG assessment as well as the ongoing work on harmonization
at the international level.
Capacity Building for External Resource Management and Aid
Co-ordination
The success of the nationally owned development process in Tanzania depends
critically on continued organizational and individual capacity strengthening at all
levels of Government and throughout civil society. The imperative for capacity
strengthening is growing given the increased emphasis across the Development
Partner community on using the Government’s own systems and structures for
implementing development programmes and the shift away from stand-alone
project structures that, it is argued, over the longer term have added to the erosion
of national capacity.
Changing modalities of aid and policy structures do not in themselves guarantee
improved capacity and strengthened national ownership. This can only occur
through the joint and continuous efforts of the Government and her
Development Partners to focus on sustainable human and institutional capacity
building. In the context of aid delivery, the Rome Declaration raises a clear
TAS Annual Implementation Report FY 2003/04
25
challenge to national governments to lead the process of harmonization.
This
also requires strengthened capacity, particularly within sector ministries, in order
to respond to the new opportunities for improved aid delivery.
The IMG report of 2002 recommended a national capacity needs assessment in
order to draw up a comprehensive national strategy on capacity building. This has
not yet been undertaken.
Nevertheless, important steps were taken in FY
2003/04 to strengthen capacity at different levels of Government. At the national
level, capacity building is being pursued through a number of programmes across
the Government, including the Public Service Reform Programme (PSRP), Local
Government Reform Programme (LGRP), National Anti-Corruption Strategy and
the Public Financial Management Reform Programme (PFMRP). The vital PSRP
continued to address capacity building in the civil service, and the Public Sector
Reform Act was passed in FY 2003/04, which will decentralize the recruitment
and promotion of staff to individual ministries. The Cabinet also gave approval of
the Medium Term Pay Policy during FY 2003/04, and four ministries, Health,
Finance, PO-PSM and PO-PP, will continue to receive Selected Accelerated Salary
Enhancement (SASE). Yet, the overall pace of pay reform strategy remains slow.
During FY 2003/04, there were also significant steps forward with regards to the
PFMRP, which was initiated in 1997 but substantially revised in FY 2002/03. A
Programme Manager and a technical Programme Coordinator were appointed at
the Ministry of Finance and Component Managers within the Ministry drew up
costed plans that have been included in the FY 2004/05 budget. Among others,
the PFMRP contains specific objectives with regards to improving capacity to
manage external resources.
Further, the organizational capacity to manage
external resources and aid co-ordination efforts within the Ministry of Finance has
greatly been enhanced by the creation of an Aid Co-ordination Section as part of
the restructuring of the Ministry’s External Finance Department during FY
2003/2004.
TAS Annual Implementation Report FY 2003/04
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Previously, at the local government level, capacity building was addressed
predominantly through the LGRP, Development Partner financed Area Based
Programmes (ABPs) and specific sector programmes in an ad hoc and often
duplicative system. In FY 2003/04, an agreement was reached between PORALG and Development Partners to harmonize ABPs and move towards
conversion of support into a unified discretional capital development grant system
for local governments. The Letter of Agreement between PO-RALG and
Development Partners states that capacity building grants from Partners to LGAs
will be based on a common assessment of capacity building devised in
collaboration with the LGRP.
The issue of capacity strengthening at a sector level, particularly within the Policy
and Planning Departments, remained a core concern during TAS implementation
in FY 2003/04.
The ability of sectors to take effective leadership of the
development partnership and to move ahead with implementing the TAS at sector
level is highly variable. Different levels of capacity and willingness to implement
change, of knowledge about the benefits of change, and of ownership of the TAS
and the development process at sector level are all factors that contribute to the
different pace of TAS implementation. There is urgent need to carry out TAS
workshops with sector ministries and Local Government Authorities as outlined
in the TAS Action Plan. There is also need to review the TAS institutional
structure to ensure that sectors are included in the TAS process on an on-going
basis. The wider issue of building up sector capacities needs to be addressed
through an approach that is systemic, holistic and sustainable.
Conclusions
As the TAS enters the final year in its three-year implementation cycle, it is clear
that considerable successes have been achieved under many areas of the TAS, and
the commitment remains strong, both from the Government and Development
TAS Annual Implementation Report FY 2003/04
27
Partners, to continue to work towards practical improvements in line with the
TAS Action Plan. It is also clear from the implementation experience during FY
2003/04 that challenges remain in terms of institutionalizing the TAS process,
strengthening sector involvement and ensuring effective support through the TAS
for implementation of the NSGRP.
The TAS now faces an important juncture with the full review of its three-year
cycle planned for FY 2005/06 and the second report of the IMG expected in early
2005. Further, the heightened pace of reform amongst Development Partners is
opening up new opportunities for TAS implementation, particularly with regards
to the formulation of the JAS. As well as the on-going implementation of the
TAS Action Plan, the key challenges for the TAS in FY 2004/05 will be:
To consider the recommendations of the Independent Monitoring Group.
To lead the development of the JAS and ensure that it remains an inclusive
process that reflects best practices of the TAS and the Rome Declaration.
To strengthen institutionalisation of the TAS and promote linkages with other
national processes such as the NSGRP and the PER. Further, efforts to
ensure that sectors play an active role in TAS implementation will be
undertaken.
The role of the TAS/Harmonization Group will also be
strengthened in order to ensure that it provides effective guidance to the
process.
To continue with efforts to encourage Development Partners to channel funds
directly through Government systems. There is need to identify the perceived
barriers to using Government systems and clarify reasons why certain project
type activities persist even though they undermine long-run capacity building
in Tanzania.
TAS Annual Implementation Report FY 2003/04
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TAS Annual Implementation Report FY 2003/04
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