THE UNITED REPUBLIC OF TANZANIA
MINISTRY OF FINANCE
GENERAL BUDGET SUPPORT (GBS)
2007 ANNUAL REVIEW REPORT
Prepared by
Prof. Samuel Wangwe
Mr. D.P. Mutalemwa
Mr. Godwill G. Wanga
DAIMA ASSOCIATES LIMITED
{Development & Management Consultants}
Makumbusho Street, Kijitonyama
P. O. Box 75027, Dar es Salaam
T A N Z A N I A
Telephone: +255-22-277 1954
Facsimile: +255-22-277 1949
27th DECEMBER 2007
Table of contents
1EXECUTIVE SUMMARY
1.1Introduction and Context
1.2Main Findings from CWG Assessments against the PAF
1.2.1Growth and Reduction of Income Poverty
1.2.2CWG-2 Quality of Life and Social Well Being
1.2.3CWG-3 Governance
1.2.4CWG-4 Public Finance Management and Accountability
1.2.3CWG-5 PER Macro Group
1.3Dialogue on Five Key Issues
1.3.1Growth
1.3.2Human Resource Management
2.4.2Public Finance Management
2.4.3Monitoring and Evaluation
2.4.4Governance
1.4Concluding Remarks and Observations
2INTRODUCTION AND CONTEXT
2.1 Context
2.2 Objective and Key elements
3THE MAIN FINDINGS OF CWGs
3.1CWG 1: Growth and Poverty Reduction Progress
3.1.1Summary Assessment
3.1.2Detailed Assessment
3.2CWG 2: Progress Report Against the PAF
3.2.1Summary Assessment
3.2.2Detailed Assessment
3.3CWG 3 Progress Report against the PAF
3.3.1Summary Assessment
3.3.2Detailed Assessment
3.4CWG 4: Progress Report against the PAF
3.4.1Summary Assessment
3.4.2Detailed Assessment
3.5PER Macro Group Progress Report against the PAF
3.5.1 Summary Assessment
3.5.1Detailed Assessment
3.6Assessment of the Performance of GBS Partners
4PLENARY SESSION MINUTES- LAUNCH OF GBS REVIEW
4.1Introduction
4.2The Opening Session
4.2.1Welcoming Note by the Permanent Secretary – Ministry of Finance
4.2.2Opening Statement by the Minister of Finance
4.2.3Statement by the British High Commissioner
4.3Overview of MKUKUTA results
4.3.1Presentation on highlights from the MKUKUTA Annual Implementation Report
4.3.2Remarks by the Chair of the GBS Partners Group
4.4Discussions
4.4.1GBS process
4.4.2Results
4.5Progress of Cluster Working Groups against the PAF
4.5.1CWG 1: Growth and Reduction of Income Poverty
4.5.2CWG 2: Improvement of Quality of Life and Social Well-being
4.5.3CWG 3: Governance and Accountability
4.5.4CWG 4: Public Financial Management
4.5.5Presentation by the PER Macro Group: Macroeconomic Stability & Resource Allocation and Budget Consistency
4.6Closing
5PLENARY SESSION- MINUTES ON KEY ISSUES
5.1Key Issue 1: Towards Coherent Growth Strategy and Equitable, Broad-Based Growth (By Laston.T. Msongole – MPEE and Frederic Woringer, EU and Yuzuru Ozeki – JBIC)
5.1.1Presentation
5.1.2Commentary by Yuzuru Ozeki (JBIC)
5.1.3Discussion
5.1.4Closing
5.2Key Issue 2: Human Resource Management- How to Attract and Retain Human Resources in the Public Service (By Mathias Kabunduguru – PO PSM and Stephen Potter, CIDA)
5.2.1Presentation:
5.2.2Commentary by CWG 2 Co-Chair (Stephen Potter, CIDA)
5.2.3Discussion:
5.2.4Closing
5.3Key Issue 3: Public Financial Management: Budget Issues (Part 1) and Structured Responses by GoT and CAG and Public Financial Management Reform Programme (Part 2)
5.3.1Presentation on Budget Issues (Part 1)
5.3.2Presentation on Public Finance Management2:
5.3.3Discussion (Overall)
5.3.4Closing
5.4Key Issue 4: Results – Monitoring and Evaluation
5.4.1Presentations:
5.4.2Discussion:
5.4.3Closing:
5.5Key Issue 5: Governance
5.5.1Presentation:
5.5.2Discussion:
5.5.3Closing
6WRAP- UP SESSION
6.1Statement by Prof. Samuel Wangwe (GBSAR 2007 Facilitator)
6.2Summary Statement by David Stanton (DFID Head)
6.3Closing remarks by the Permanent Secretary – Ministry of Finance
6.4Summary Conclusions by the British High Commissioner
6.5Joint Press Release
7ANNEXURES
7.1ANNEX II: ACRONYMS AND ABBREVIATIONS
7.2ANNEX III: GBS ANNUAL REVIEW PROGRAMME
7.3ANNEX IV: PARTICIPANTS TO THE GBS ANNUAL REVIEW
7.4ANNEX V: SUMMARY OF PROGRESS AGAINST PAF
7.5ANNEX VI: PAF FOR ANNUAL REVIEW 2008
1EXECUTIVE SUMMARY
1.1Introduction and Context
The Government of the United Republic of Tanzania and 14 Development Partners (DPs) that provide aid to Tanzania in form of General Budget Support (GBS) had a successful meeting from 29th October to 2nd November, 2007 in which they reviewed the General Budget Support (GBS) arrangements. The review meeting which took place in Dar es Salaam was attended by senior Government officials as well as representatives of GBS contributing partners. Other members of the Development Partners (DP) Group and a number of non-state actors, including some members of the media, also attended. The Minister for Finance, Hon. Mrs. Zakia Meghji (MP), opened the review meeting and attended a large part of the discussions. His Excellency Philip Parham, the High Commissioner of UK also made an opening statement on behalf of the Development Partners and co-chaired some sessions.
GBS is a major source of financing for the implementation of MKUKUTA and MKUZA. It has increased progressively over the past few years, from TShs 274.6 billion in 2002/03 financial year to TShs 804.5 billion in 2006/07. In this financial year (2007/08), GBS is expected to be around Tshs 881.3 billion (about 38% of all aid to Tanzania). Other external funding modalities are basket funds and project funds. The increasing share of GBS in total aid to Tanzania is an indication of the confidence that GBS Partners have in the Government in its commitment to achieving development goals by managing public resources more effectively and responsibly. During the review, the government reiterated its determination to make GBS a dominant funding modality, as this modality is fully aligned to national public finance management systems and is more consistent with achieving government and national ownership and leadership in the development agenda.
The GBS annual review in 2007 presented a fitting occasion for the Partners and the Government to reflect upon performance and results in respect of the joint commitments during the past year and to chart the way forward. This year’s review consisted of presentations of the work of five joint DP-GoT Cluster Working Groups which started their work earlier than was the case in previous years as one way of deepening the dialogue process. The CWGs had been meeting to review progress against the PAF and identify key issues from each cluster. Five key issues were identified which became the focus of the discussions during the Annual review.
The GBS Annual Review 2007 was characterized by high quality, more open and frank dialogue between the Government, Development Partnersand non-state actors. The Review resulted in a range of shared observations and agreed next steps. Government and DPs recognized the need for better demonstration and communication of results,continued emphasis onmonitoring budget flows andcontinued efforts tocombat corruption.
The 2007 Annual Review of GeneralBudget Support aimed at monitoring and assessing Government and GBS Partners’ performance in meeting their commitments as agreed in the GBS Partnership Framework Memorandum (PFM) of January 2006, as well as toassessprogress against the Performance Assessment Framework (PAF)andthe dialoguestructure at cluster andsector levels over the previous 12 months. The AR provided the opportunity for Government of Tanzania and its GBS partners to take stock of results and progress as well as prioritizing and agreeing targets for the next 12 months.
The Annual Review 2007 concluded thatthere was good progress in some sectors and priority areas,but in others, agreedPAF targets had not been met fully.The MKUKUTA implementation wasconsideredgenerally on track. An assessment of the PAF shows that out of 22 underlying processes 14 were judged satisfactory, 2 fairly satisfactory, 5fair moving and one could not be assessed and anew process was proposed instead for the next Annual Review. Out of 24 outcome indicators 14 were considered on track, 5 were achieved,for 2data werenotavailableand 3 were considered at risk. Out of 21 temporary process actions 8 were achieved, 3 were on trackand 10 were delayed butwith progressmade.
DPs and Government notedthat the quality of the dialogue at Annual Review 2007 was a marked improvement.Government and DPs however identified severalaspects thatrequire further improvement to make the AR process more effective in future. This included: the need for a simpler and less cumbersome AR process, more consistent dialogue between partners throughout the Annual Cycle; the need for greaterengagement byMinisters and Permanent Secretaries with theSector Working Group Leads; and to undertake sector reviews in a timely manner.
GBS Development Partners’ (DPs) performance has shown varying degrees in meeting their GBS commitments. Three GBS-DPs improved their performance compared to the previous year, eight remained at the same level (with seven of them now having reached the best possible score), and performance deteriorated for three GBS-DPs.
Our joint assessmenttherefore is that overall the Review was moderately satisfactory. Government and DPsrecognizethe need to build on this year'sachievementsto further improvepreparationforthe Annual Reviewin 2008.
1.2Main Findings from CWG Assessments against the PAF
Five Cluster Working Groups (CWGs) presented their respective reports. The key messages of the CWGs are as in the following account.
1.2.1Growth and Reduction of Income Poverty
Overall Assessment on this cluster is generally satisfactory. The underlying processes consist of Annual Reviews, and have been generally satisfactory except for the delayed Agriculture Review. Temporary process actions in the different sub-clusters vary between ‘on track’ and ‘delayed but good progress’, especially in energy and agriculture where key legislative actions such as the Electricity Act and Crop Board Act amendments are pending. All outcome indicators are on track, except for the ‘rural accessibility’, for which data was not available and which was hence proposed to be changed, and the reduction of income poverty in the rural population, which is considered ‘at risk’. Key areas of good performance are to be found in infrastructure (with a major increase in maintenance funding), energy (with the reorganization of TANESCO), an improved business environment, TRA modernization and improved tax collection. Key areas of weak performance are to be found in the energy and infrastructure sectors, with the delayed approval of the Road Safety Policy and Strategy and the delayed conversion and buy-out of the IPTL plant.
1.2.2CWG-2 Quality of Life and Social Well Being
The overall assessment is fairly satisfactory. Underlying processes have been assessed as follows:
“Satisfactory” for Environment and HIV/AIDS
“Fairly Satisfactory” for Health and Education
“Fair-Moving” for Water
Generally speaking, review of progress this year in cluster two sectors has been complicated by the timing, and last-minute scheduling of reviews in the larger sectors. In addition, in several sectors the quality, frequency, and completeness of performance information are insufficient to support an adequate assessment of sector performance. Only one out of five temporary process actions for the cluster has been achieved. In the sectors in question, the Government and DPs have reached agreements on how to improve the situation over the next year.
PAF outcome indicators are generally on-track or have been achieved (in the case of basic education enrolment targets and child immunization coverage). There are concerns in the case of health and quality of education.
Good performance has been recorded in increasing budget allocations to the social sectors, increased allocations directly to LGAs for social services delivery and improvements in pay administration, particularly for teachers (salaries now paid into accounts in a timely fashion). Continued strong commitment to environment, demonstrated by increased recurrent budget allocation to the DoE and some policy actions related to wetlands preservation, increased awareness-raising activities. Good performance was also found in increased mainstreaming of HIV/AIDS in MDAs and LGAs, and introduction of systems and tools to support ongoing mainstreaming. Improvements in health are demonstrated by sustained implementation of Integrated Management of Childhood Illness approach, contributing to reduction of Infant and Under-Five Mortality rates between 1999-2005, implementation of tuberculosis control program, the decline in cholera cases in Dar es Salaam and the revised National Health Policy. In education good performance was found in continued increases in enrolment across the sector and increase in transition rate from Standard VII to Form I. Also, adoption of a sector-wide approach and establishment of a financing mechanism for the Water Sector Development Program and submission of National Water Sector Development Strategy to Cabinet was appreciated.
Concern was expressed in the Planning and Managing by Results, Front-Line Delivery of Social Services and in adequacy, sustainability, and predictability of funding for Government priorities.
1.2.3CWG-3 Governance
The CWG-3 Report on covers public service, local government, legal sector, anticorruption and domestic accountability. Performance assessment in these areas is constituted around two questions, namely: (i) Is good governance and the rule of law ensured in Tanzania? (ii) Is GoT accountable to the people? The report concludes that GoT has delivered well against most of the areas in the CWG3 PAF and that the overall assessment of CWG 3 against the PAF matrix is basically satisfactory. The report, nonetheless, flags certain challenges and areas of weak performance. They relate to wider governance issues such as the Public Service Reform Programme (PSRP), the legal sector reform, areas of good performance were observed in (i) The establishment of the Law School of Tanzania, (ii) Streamlining and civilianization of the prosecution service, (iii) Modernization and strengthening of the investigation system, (iv) Improvement of performance of the Judiciary and access to justice, and Consultations on Legal Sector Policy. The GoT has delivered well against most of the areas in the CWG3 PAF and concludes that the overall assessment of CWG 3 against the PAF matrix is largely satisfactory, though challenges and areas of weak performance relating to wider governance issues are also recognized and the way forward has been agreed despite differences in overall assessment by DPs and GoT. The weak areas were found particularly in addressing existing financing and human resource constraints. This programme overall is slow moving.
The Local Government Reform Programme (LGRP) evaluation review was held in April 2007. The findings and recommendations have been submitted to the GoT and the DPs who are supporting LGRP. A common response is being discussed as the report did not meet the objectives of the evaluation. Encouraging progress has been registered in the areas of fiscal decentralisation and harmonization and integration of the LGCDG system into the national budget needed to ensure sustainability, although further work is still needed. The application of formulae in the allocation of grants for recurrent expenditure is still facing problems mainly due to decisions that are made at Central Government level regarding staffing levels and posting of staff.
The LGCDG assessments shows overall local capacity is increasing as evidenced by the increasing number of LGAs qualifying for LGCDG funds. Although some progress has been made, the flow of funds to LGAs is still difficult to monitor (e.g. in health or education sector). However, efforts are being made to make the budget more transparent. In view of this trend of consolidating district funding, DPs expressed the need for more information on the Constituency Development Fund (CGF): how it complements existing funding and decision-making processes.
The area of governance has attracted many interests among stakeholders. Yet, Government and Development Partners recognize continued difficulty in assessing this underlying process in its current formulation which lacks a clear definition and agreed methodology for assessment. Progress was reported, notably in following examples: (a) The openness in the country that enables the media to publish and discuss openly alleged grand corruption cases, (b) Approval to conduct the National Governance and Corruption Survey, and (c) Enactment of the new Prevention and Combating of Corruption Act in June 2007. Despite the progress indicated earlier, there are concerns over a number of unconfirmed allegations of corruption, including notably in Natural Resources management.
1.2.4CWG-4 Public Finance Management and Accountability
Under Public Finance Management (PFM), two processes underlie the review, namely: (i) The Public Expenditure Financial Accountability Review (PEFAR) and the Public Financial Management Reform Programme (PFMRP). The PEFAR 2006/07 can be judged as satisfactory, although the expanded scope of the process raised a number of challenges, in particular management of the assessment exercise and follow-up of the recommendations. As for the PFMRP, despite a better performance than last year, it has continued to suffer from the same weaknesses as previous years, including poor coordination and strategic framework. The PFMRP 2006/07 can be described as fair moving. The new PFMRP strategy refers directly to the PEFAR as a key input to PFM reforms, highlighting the growing, integration between the two underlying processes.
Areas noted for good performance were continued strengthening of oversight bodies (PPRA and NAOT) to enhance value for money and accountability in public sector; PFMRP strategic plan revised; establishment of substantive internal audit positions at all MDAs to strengthen the internal audit function and formation of Audit Committees at all MDAs.
PPRA particularly made good progress with the implementation of Procurement Capacity Building Strategy (PCBS) and the installation of a System for Checking and Monitoring Procurement (SCMP).
1.2.3CWG-5 PER Macro Group
Key areas of good performance noted by the PER MACRO embraced ongoing strengthening of the Planning and Budget Guidelines, the measures taken to strengthen the link between MKUKUTA (policy) and improve resource allocation through for instance cluster-based expenditure programming. For instance, the approved budget 2007/08 is broadly in line with policy objectives (MKUKUTA, sector policies), partly due to SBAS’ innovative experiment in translating policy into budgets.
Nonetheless, some weaknesses remain in this area, as noted in the PEFAR 07 Aide Memoire and the draft 2007 PEFA indicators.
It was noted that the Budget Guidelines (BGs) for the MTEF 2007/08 – 2009/10 were delayed but this was mainly due to the expanded stakeholder consultations including involvement of Parliament.
Nonetheless, the DPs have highlighted the divergence between the BGs and the final budget for FY2007/8. Also there were divergences between MDA requests for funds and the proposed budget ceilings. For FY 2008/9 a draft timetable for the entire cycle has already been prepared, and it is hoped to avoid the delays of last year. In addition, for FY 2008/9, the Planning and Budget Guidelines Committee has committed to undertake ‘Scenario Analysis’ with the primary aim of indicating clearly what increased resource availability would be applied for.
1.3 Dialogue on Five Key Issues
In order to enrich the dialogue it was decided to focus on five key issues. The five key issues are: (i) Towards a coherent growth strategy and equitable broad-based growth. (ii) Human resource management especially how to attract and retain human resources in the public service, in particular in underserved areas. (iii) Public finance management. (iv) Monitoring and Evaluation. (v) Governance.