GBS Coordination Group Meeting

GBS Coordination Group meeting

26th September 2006 at the PRBS Secretariat: 08:00-11:30 am

Minutes

Attending

Martin SaladinSwiss Cooperation (Chair)

Sarah FurrerSwiss Cooperation

Jacqueline MahonSwiss Cooperation

Trond Augdal Norway

Ian ShapiroDfID

Paul WhittinghamDFID

Kevin QuinlanDFID

Jacob dal WinterEmbassy of Demark

René Van-NesEC - Delegation

Erik JonssonEmbassy of Sweden

Shireen MahdiEmbassy of Ireland

Machiko TsuburaEmbassy of Japan

Marko NokkalaEmbassy of Finland

Allister MoonWB

Nicolai RugeEmbassy of Denmark

Britta OltmannKfW / Germany Development Cooperation

Shunichiro HondaJICA

Yuko SuzukiUNDP/DPG Sec

Therese SmoutUN Resident Coordinator’s Office

Neema SiwingwaCIDA/CHC

Oswald LeoGBS Secretariat (Minutes)

Pauline MrossoGBS Secretariat

Agenda

1. Adoption of Agenda and Minutes of the Previous Meeting

2. Preparation of the Annual Review 2006

(a)Updates from the TWG Leads and presentation of key issues arising from the TWGs

(b)Discussion of key issues for the Annual Review 2006 and agreement on a recommendation to HoC on 29 September 2006 on 5-7 key issues.

(c)MKUKUTA Annual Implementation Report

(d)Other Issues

3. AoB

1. Adoption of Agenda and Minutes of the Previous Meeting

The proposed agenda was adopted and minutes of the last Coordination meeting were endorsed as accurate records.

1. Preparations for the Annual Review 2006

The main objective of the CG session was to identify 5-7 KeyIssues for the Annual Review in the format of a recommendation to the HoC. TWGs had previously submitted their key issues to the Secretariat and a compiled version was circulated to the Group on Friday 22 September. Next steps following today's CG meeting are:

-Friday morning (8am), 29 September: Extraordinary HoC meeting to discuss the recommendation from the CG and agree on key issues to be put forward to Government.

-Monday, 2 October Joint Secretariat meeting between DPs and government: Agree on a Joint recommendation in the form of an official letter to the PS-MoF and the Heads of Cooperation for official endorsement/agreement. Government is expected to conduct a similar internal process of prioritization prior to this Joint Secretariat meeting on October 2.

From a preliminary view of the key issues submitted by the TWGs (see attached list), it was noted that some issues were distilled several times in different TWGs: Local Government Reform (TWG 2, TWG 3, TWG 5, Joint TWG6/4); Energy (TWG 1, Joint TWG 6/4); and Sustainability of wage bill (TWG 3 and Joint TWG 6/4)

Few points were raised and clarified before entering the process of identification:

• For key issues not selected, these would still have space for presentation and discussion at the pre-review plenaries and these would be fully reflected in the Annual Review Final Report.
• It was suggested to limit the number of Key issues selected in order to tactically allow more space for additional Key Issues from the Government's side.

The proposed process for the CG session:

• Presentation of Key Issues by TWG Leads with an indication of priority were possible;
• Discussion;
• Consensus building on the top Key Issues.

a) Updates from the TWG Leads and presentation of key issues arising from the TWGsincluding discussions:(See attached compilation of summaries of all key issues presented by the TWG Leads)

TWG1Lead: The process in TWG 1 is not entirelysatisfactory. The last joint TWG meeting on 22 September was poorly attended by the GoT side. The report submitted by GoT was not satisfactory. There will be full TWG meeting on 27th September. The overall assessment of progress in the area of the PAF of TWG 1 is however satisfactory. Issues presented were Energy; Infrastructure; Agriculture Sector Development Programme; Business Environment; and Commitments to EAC/SADC.

TWG2Lead:The TWG2had a joint meeting on 25 September. The representation from the Government was good except for the education sector. The overall work in this TWG is considered satisfactory. The Joint meeting agreed on six key issues which cut across all sectors. The issues presented were:resource allocation, predictability and commitments in the medium term;local government capacity (human and financial);performance monitoring (M&E) at sector level; institutional arrangements, coordination, responsibilities, and links to MDAs; human resources (quality and quantity); domestic accountability. The TWG Lead was not able to give a prioritization since this had not been discussed in the group. Two temporary actions, environment and social protection, will be rolled over. It was considered that generally the Government is on the right track in terms of improving the quality of life and well being of its people.

TWG3Lead: The full TWG3 only met once, with a fair turn-out from the Government side albeit the notableabsences from the GGCU and the PCB. The discussion took place on draft DPs assessment note with the Government producing a thin report. Orally both GoT and DPs had agreed on the key issues with some changes proposed for the wording. However, the subsequent report by GoT was thin. Currently there are discussions among DPs and the Government to find agreement. The issues discussed include:legal sector reform;sustainability of wage bill and allowances;local government reform, fight against corruption,weak domestic accountability.The Lead also indicated three general issues from the group: coordination of the core reforms, quality of dialogue and domestic accountability.

In terms of priority of issues, the TWG Lead suggested priority should be given to issues shared with other TWGs, i.e. wage bill, local government reform, and domestic accountability. It was suggested to have a more regular dialogue on these issues throughout the year.

Certain linkages and possible contradictions across different issues were highlighted – for example, for key issue local government reform in the form presented by TWG 3 may not address the same sub areas as the issue of weak financial and human capacity of local government identified by TWG 2.

TWG46Lead: There may be a proposal coming forward to formally merge TWG 4 and 6. The formal TWG process is yet to be completed and there is no joint list of key issues agreed with the Government. The full TWG 4 will meet this afternoon, 26 September. DP Key Issues presented were: Dialogue and functioning of the PER (including elements of strengthening links with M&E systems, satisfactory review processes etc); energy, sustainability of wage bill and allowances; and local government reform.

Again potential linkages and interferences between the key issue of lack of human resources from TWG 2 and the sustainability of the wage bill frp, TWG 3, 4, and 6 were highlighted.

TWG5 Lead: Only one joint meeting took place but DPs have met bilaterally with a number of GoT representatives. GoT is yet to finalize the report. It was observed that there is potential for improving the capacity of PPRA at the NAO. Particularly it was observed that currently the Executive Director of PPRA is stationed at the PPF tower and the PPRA is currently in the process of recruiting 51 new staff with the the newly appointed CAG giving a good impression.Four issues were initially identified but only two issues were retained as key issues. The two issues of external auditing and procurement were dropped for this Annual Review as there is currently sufficient evidence of progress.Two joint key issues presented are: local government reform; and viability of PFMRP.

b)Discussion of key issues for the Annual Review 2006 and agreement on a recommendation to HoC on 29 September 2006 on 5-7 key issues

.

After discussions on complementarities of the different key issues presented, the CG distilled four key issues from the TWGs for the “key issue plenary sessions” of the Annual Review. These are:

i)Energy/Infrastructure (joint TWG 1, 46): It was recommended to address energy in the wider context of the issue of infrastructure, merging the two key issues from TWG 1 and integrating elements from TWG 46.

ii)Sustainability of the wage bill and progress on the medium-term pay strategy/ allowances /new staff (joint TWG 3, 4&6);it was recommended to take into consideration the issue of human resources (human and financial) as highlighted in TWG 2.

iii)Local Government Reform: This joint issue from a number of groups would include elements on budget allocations and sector budgets, public service regulations as well as capacity of local government both in human and financial terms (joint TWG 2, 3, 4, 5, 6).

iv)Planning and Budgeting: This key issue would draw from a number of key issues from TWG 2 and from TWG 46 and includes dialogue around the PER process, performance monitoring at sector level, issues of resource allocation, predictability and commitments in the medium term at sector level and elements of domestic accountability. The session would also be the opportunity to share and discuss the guidance note on satisfactory sector review developed by the Satisfactory Sector Review Task Force (joint TWG 2, 46).

Discussions were conducted on whether to include the quality of dialogue between DPs and GoT and domestic accountability as Key Issues. Given the sensitivity of the issue it was recommended to raise the issue as a "topic" in the "closed door" high level meetings.

The question of including "corruption" as an issue was debated given that the HoC on 3 July, 2006 had identified this as a potential key issue. Again it was recommended for this issue to be raised as a "topic" in the "closed door" high level sessions.

Topics recommended for the high level sessions:

• Quality of dialogue between development partners and government including possibly elements of domestic accountability not sufficiently covered in the key issue plenary sessions;
• Corruption based on findings from TWG 3.

The following persons will take the lead in drafting briefing notes for HoC to be ready by Thursday, 1pm, 28 September, 2006:

-Kevin Quinlan (TWG 1) –Energy/Infrastructure

-TWG 3 through Denyse Morin /Denis Biseko with consultation with TWG 2- Wage Bill/allowances/new staff and Human resources

-TWG 3 through local government DP leads with consultations and inputs from TWG 2 members- Local Government Reform

-Allister Moon (TWG 4) with support from Jacqueline Mahon (TWG 2) - Planning and budgeting

-The PRBS Secretariat- quality of dialogue/accountability

-TWG 3 through Lead- Corruption

The briefing notes/recommendation will be circulated to HoCs by Thursday 1pm and discussed by HoCs on Friday, 8am, 29 September 2006.

Key Issues for plenary sessions:Energy/Infrastructure; Sustainability of the wage bill and allowances; Local Government Reform and Planning and Budgeting

Topics for high level closed door meetings: Accountability/Quality of Dialogue and Corruption

c)MKUKUTA Annual Implementation Report

The Chair informed the meeting on follow-up measures undertaken by the Ministry of Finance with reference to the letter from MoF to MPEE reminding the tight deadlines for the Annual Review and concerns over timelines. A written response was received by MoF from MPEE on 20September, explaining the process and timelines. The MPEE response asserts that the full report will not be ready in time but committed that some information will be made available and shared in time for the Annual Review.

The meeting was informed that MPEE conducted an open session on the new software which is being introduced in order to produce MKUKUTA Annual Implementation Reports on a regular annual basis, integrated with other government systems such as the SBAS and the IFMS. Feedback on the session was very positive.

The draft information from the MKUKUTA AIR would be made available prior to the AR 06

d) Other Issues

no discussions

1. AoB

The next Coordination Group meeting was scheduled for Tuesday 3rd October 2006 at 8:00 am

______

Summary of Next Steps:

Key Issues recommended: Energy/Infrastructure; Sustainability of the wage bill and allowances; Local Government Reform and Planning and Budgeting

Topics recommended: Accountability/Quality of Dialogue and Corruption

One page briefing notes to be prepared for the following issues:

-Energy/Infrastructure-Kevin Quinlan (TWG 1);

-Sustainability of the wage bill and allowances-TWG 3 through Denyse/Denis with consultation with TWG 2;

-Local Government Reform-TWG 3 through local government DP leads with consultations and inputs from TWG 2 members

-Planning and budgeting around the PER-Allister Moon (TWG 4) with support from Jacqueline Mahon (TWG 2)

-Quality of dialogue/accountability-The PRBS Secretariat

-Corruption-TWG 3 through TWG Leads

The notes should be prepared along the following lines:

i)Background

ii)Justification

iii)Specific points and expected outcomes

iv)Expected Representation in the key issue plenary

1

Annex 1: Preliminary List of Key Issues – Annual Review 2006

21 September 2006

Key Issues / DPs / Joint TWG
TWG 1 – Economic Growth and Reduction of Income Poverty

1. Inadequate planning and lack of consistent implementation of policies in Infrastructure:

Dialogue around the current Transport Sector Investment Programme (TSIP) has improved considerably over the last year but now needs to: (1) better provide for maintenance expenditures and to be more realistic and less ambitious regarding the scale of investment; (2) better prioritise the TSIP (currently $5.6bn or 45% of 2005/6 GDP) including enabling the optimal use and inter-connection of all modes of transport (rail, water, road and air); (3) provide a stronger framework for private participation in infrastructure. Energy is a long term business the short-termism decision making of recent years is inimical to coherent investment and participation by the private sector. With the right policy framework there are opportunities to mobilise further private sector participation in energy given the scarcity of public infrastructure investment funds. / X

1. Energy policy, strategy and governance is incomplete and inconsistent.

We recognize GoT is making enormous efforts to address the crippling energy situation. To address the root causes of the crisis GoT is urged to: (1) Address governance of the sector with clear roles for the Ministry of Energy and Mining and the Board, and the Management of TANESCO. TANESCO needs freedom to operate commercially at arms length from Government. Effective management arrangements (when the Network Solutions management leave in Dec 2006) and financial recovery are critical in turning TANESCO into a commercially viable entity and implementing the large capital investment program. (2) Ensure that TANESCO acquires in-house or outsourced experienced capacity to manage its capital investment program which is of the order of 10.4% of 2005/6 GDP. (3) Immediately implement electricity tariffs that recover the operation, maintenance and investment costs. TANESCO’s tariffs are amongst the lowest in Africa. (4) Strictly adhere to the least cost power development plan (for increased reliability) if donor support in the sector is to continue. / X

1. Agriculture Sector Development Programme (ASDP) resources should be fully integrated into the Agriculture ministries’ MTEFs

The progress in establishing the ASDP is commended. However, GoT urged to fully integrate ASDP in the Agriculture ministries’ MTEFs and therefore end the perception ofseparate sources of funds. This needs a prior open dialogue with stakeholders on the entire agriculture sector budget regardless of funding source. This has not happened to date. / X

1. Business environment – Inadequate and inappropriate legal and regulatory framework for Savings and Credit Cooperatives (SACCOs)

GoT’s progress in provision of a regulatory and enabling framework for microfinance is recognized. However there is gap in the development of an appropriate regime for supervising Savings and Credit Cooperatives (SACCOs) which handle large volumes of poor people’s money. It is recommended that GoT addresses this issue as a priority using available DP resources as necessary (either from the Second Generation Reform Basket Fund or the Financial Sector Deepening Trust Basket fund). / X

1. A clear statement on Tanzania’s commitments to EAC and SADC, focusing in particular on GoT’s position on the development of a Common External Tariff in SADC and the establishment of a Common Market in EAC.

Fully recognizing Tanzania’s sovereign right to determine its regional priorities, DPs would welcome a clear statement on this issue. There is a fundamental conflict in any country being at once a member of more than one trading block. Clarity is needed to programme effective interventions in the trade, regional integration and supply-side areas. Stakeholders need some clarity on the medium-term objectives of regional economic groupings and their members. Recent statements suggest that Tanzania may not be ready to start negotiations on an EAC Common Market, scheduled to begin this year. This would mean that either EAC integration is put on hold or Kenya and Uganda should initially go forward alone. EAC is an important source of political and economic stability in East Africa and the Great Lakes region / X
TWG 2 – Improvements of quality of Life social well being

1. Resource allocation, predictability and commitments in the medium term

Resource allocation and predictability of external flows have remained a challenge for many of the MKUKUTA cluster 2 actors. For instance Health budget it seen as substantially big due external component. However close scrutiny will reveal that most of the external funds in Health are earmarked, which has been distortive. This situation has lead to non allocation/inadequate budgetary resource allocation. Secondly, unpredictability of external resource flows has made it difficult to plan for interventions in many of the cluster 2 sectors. Third issue is erratic external flows during the first quarter of each fiscal year. This has caused problems in budget execution and non accomplishment for planned activities. Inadequate financial resources, in water sector for example, results into prolonged implementation of schedules for water projects and as a result higher cost of implementation.
Health & AIDS: Large, earmarked external funds for AIDS result in commitments which must be sustained in the long term (i.e., patients cannot come off ARVs), but (i) the sustainability of these funds is very unpredictable, and (ii) as AIDS spending equals 50% of the routine health spending, these funds distort health sector spending and crowd out discretionary funding for health.