OPENING SPEECH BY HON. BASIL P. MRAMBA (MP), MINISTER FOR FINANCE, AT THE JAS CONSULTATIVE MEETING, MOVENPICK ROYAL PALM HOTEL,

DAR ES SALAAM, 5 APRIL 2005

Hon. Directors General of the Nordic Plus Group,

Your Excellencies,

Ambassadors,

Heads of Development Co-operation,

Development Partners,

Permanent Secretaries ,

Representatives of the Civil Society,

Members of the Media,

Ladies and Gentlemen,

  1. It is my great pleasure to welcome you to this high-level Consultative Meeting on Tanzania’s Joint Assistance Strategy (JAS), in Dar es Salaam. I would like to express my sincere gratitude for accepting our invitation to attend this important meeting. I would also like to express my sincere thanks to the Directors General of the Nordic Plus Group for selecting Dar es Salaam, Tanzania, as the venue for their April 2005 meeting. I believe this consultative meeting marks another important milestone in the ongoing reforms on development cooperation in Tanzania.
  1. Important developments in the aid business are taking place internationally as well as in our own countries. Tanzania, like other developing countries, has continued to implement policies and strategies geared towards strengthening social-economic development, including promotion of effective Development Partnerships in order to achieve the Millennium Development Goals. The support of our Development Partners in this endeavour has been profound and I wish to express the appreciation of the Government and people of Tanzania for this expression of solidarity.
  1. The support that has been received since the Helleiner Report on Tanzania’s aid effectiveness in 1997 and the adoption of its recommendations, has enabled the Government to achieve tremendous progress including strengthening national ownership and Government leadership of the development process, adopting broad participatory approach in the formulation of policies and strategies as well as in decision making, increasing the predictability and integration of aid flows into the government budget system, openness and improved relationships in development cooperation, adopting more strategic approaches to public spending focusing on priorities and strengthened public financial management systems, strengthened capacity for aid coordination and external resource management, enhanced mutual accountability and more attention to governance, accountability and transparency issues.
  1. Let me update you before hand on the country’s political and macroeconomic situation. The preparation for the General Election expected in late October 2005 are underway and on track. A key innovation has been the adoption for the first time of a permanent voters register designed to eliminate or reduce electoral corruption, rigging and election petitions. We are very grateful to those of you who have co-financed this exercise. The Government is determined to ensure free and fair elections. The macroeconomic indicators are well on track:
  • Real economic growth has averaged 5% per annum during 1995 – 2003 and 6% during 2003 – 2004.
  • Inflation has been low and stable, averaging 4% since 2000 as compared to more than 30% in the mid 1990’s.
  • Official international reserves have improved to cover 8 months of imports of goods and services compared to less than 2 months during the early 1990’s.
  • FDI more than tripled to US$ 350 million per annum compared to less than US$ 100 million, per annum in the early 1990’s.
  • Domestic revenue mobilization more than tripled to Tanzania shillings 1,459.3 billion in 2003/04 compared to Tanzania shillings 448.4 billion in 1995/96.
  • Relations with development partners have been restored and strong partnerships have been established under Government leadership.
  • Major reforms in the public sector:

–Cumulatively, 724 divestiture transactions have been completed

–Public service reforms and performance management systems have been introduced.

–A public financial management system has been reformed and modernized with the installation of an Integrated Financial Management System (IFMS).

  • Impressive achievements have been recorded in primary education delivery, to wit.

–One of the key PRS targets was to increase enrollment in primary schools. The first three years of implementation of the Primary Education Development Programme (PEDP) resulted in increased Net Enrollment Ratio (NER) from 66.0% in 2002 to 88.5% in 2003 and 90.5% in 2004. Gender equity has been achieved. Furthermore, the pass rate in primary school leaving examinations has improved from 19.3% in 1999 to 48.6% in 2004.

– During the first two years of PEDP 31,825 classrooms were built against a target of 27,264. A total of 7,530 teachers houses were built against a target of 6,209. Also, 17,851 newly trained Grade A teachers were recruited. All this was made possible thanks to the bottom up participatory approach adopted under PEDP.

  • The Tanzania experience in implementing the World Bank funded people based Tanzania Social Action Fund (TASAF) and the PEDP has demonstrated the kind of service delivery that contributes to poverty reduction in the form of grassroots participatory democratic planning and operationalisation. The untapped capacity among grassroots actors is simply amazing.
  1. The Government of Tanzania is convinced beyond doubt that the continuing consolidation of the social and macroeconomic nation wide environment has laid a good ground for an effective and sustainable struggle against poverty and under-development. We recognize that macroeconomic fundamentals are a necessary, but not sufficient condition for fighting poverty. But without them, there can be no hope for sustainable growth and development. This is the hard lesson from our experience.
  1. To attain the MDGs and other commitments for poverty reduction, all players and beneficiaries have to deliver on their commitments. Effective delivery of basic services to the poor is the responsibility of national governments and all stakeholders. I would like therefore to emphasize the following factors:
  • First is the need for strong participation and empowerment of the poor people themselves in defining requirements and designing delivery systems; for strong accountability between poor people and providers; between poor people and policy makers; and between policy makers and providers.
  • Second is the importance of development partners supporting national efforts as set out in national Poverty Reduction and other Strategies, with such aid provided in a way that reinforces rather than undermines ownership and accountability. In this respect we once again urge all our development partners to channel their development assistance through the Government budget and exchequer system and to refrain from imposing parallel systems.
  • Third is the need for total disclosure of resources to the recipients for effective planning, implementation and monitoring of development programmes as well as for ensuring transparency and accountability.
  • Fourth there is a need to explore new ways to engage private finance effectively alongside public finance in supporting the provision of basic services, recognizing the important differences between countries.
  1. The Government of Tanzania greatly hopes that the international community will continue working together so as to implement the commitments made in the recent Paris declaration on aid effectiveness, including agreeing on the targets and indicators of progress by September 2005. We urge our development partners represented here today to exercise continued high-level political commitment, peer pressure and coordinated actions at global, regional and country levels to achieve these commitments. Some of the indicators are the following:-
  • One, percentage of donor capacity development support provided through coordinated programmes consistent with partners’ national development strategies.
  • Two, percentage of donors and of aid flows that use partner country procurement and/or public financial management systems in partner countries, which either adhere to broadly accepted good practices or have a reform programme in place to achieve these.
  • Three, the number of parallel project implementation units (PIUs) eliminated per country.
  • Four, percent of joint field missions and/or country analytic work, including diagnostic reviews that are undertaken.
  • Five, number of partner countries that undertake mutual assessments of progress in implementing agreed commitments on aid effectiveness including those in the Paris Declaration of March 2005.
  1. Let me now briefly reflect on these issues with regard to the Tanzania situation. Tanzania has been at the forefront in implementing the international aid effectiveness agenda for poverty reduction. Long before the first international agreements on this matter were agreed in Monterrey and Rome, Tanzania had embarked on its own initiative, the Tanzania Assistance Strategy (TAS), a national strategic framework that has been guiding development cooperation since 1997.
  1. In the past three years of implementing the TAS, considerable progress has been made. Specifically, Development Partners have increasingly aligned their support with the national Poverty Reduction Strategy. They have been reporting their aid commitments and projections for three years, in line with our budgetary Medium Term Expenditure Framework (MTEF), which has engendered better budget planning on the part of the Government of Tanzania. More aid is being channeled now through the Government Exchequer system, which has enhanced Government transparency and accountability of public expenditures. Great benefits have been reaped by Development Partners’ increasing move to General Budget Support, which is the Government’s preferred mode of aid delivery. It has strengthened Government ownership and leadership over resource allocation, budget contestability and predictability of aid, as well as enhanced Government accountability in public resource management.
  1. Taking into account the fiduciary risk associated with the new mode of aid delivery; the Government has undertaken major reforms aimed at strengthening public financial management systems. Firstly, the annual Public Expenditure Review (PER) process provides a broad based participatory forum for debate and scrutiny of public expenditures. It also provides a forum for independent evaluation of fiscal developments in Tanzania. In addition, Government budget operations are disclosed through the media while annual revenue measures are first proposed and discussed between stakeholders think tanks and the Treasury before action by the Finance Minister and Parliament.

Secondly, treasury management and accounting systems have been strengthened through the introduction of the Integrated Financial Management System (IFMS). Currently, IFMS is operational in all Ministries, Departments and Agencies and 32 Local Government Authorities. Plans are already under way to roll out the IFMS to 30 Local Government Authorities in the fiscal year 2005/06 thus bringing the coverage of IFMS in Local Government Authorities to above 50%. At the same time a new legislation on procurement (Public Procurement Act 2004) recently has been enacted to strengthen public procurement at all levels of the Government and raise it to international standards.

  1. After successful implementation of the first Poverty Reduction Strategy, Tanzania has demonstrated her strengthened leadership in the formulation of the second-generation Poverty Reduction Strategy, that is, the five year National Strategy for Growth and Reduction of Poverty (MKUKUTA), which will be operationalized in the fiscal year 2005/06. The MKUKUTA allows for a results-based focus on growth and poverty reduction. A stronger link between the budget and the strategy has been achieved with the introduction of a computerized Strategic Budget Allocation System (SBAS), which matches resource allocation with the poverty reduction outcomes.

Despite those successes, transaction costs in external resource management are still high and progress in enhancing national ownership and Government leadership and in improving aid effectiveness needs to be extended to all levels of Government, Development Partners, aid modalities, and processes.

  1. With the first cycle of the Tanzania Assistance Strategy coming to an end in June this year and the operationalization of the MKUKUTA in FY 2005/06; my Government considers it opportune to move ourdevelopment partnership to a higher level under a single, common framework for development co-operation. We are committed to bringing together all Development Partners under a born again Joint Assistance Strategy to collectively achieve Tanzania’s national development and poverty reduction goals.

The JAS is among our key primary tools for effectively supporting the implementation of MKUKUTA by consolidating and aligning all domestic and external resources within the national budget. It is expected to strengthen national ownership and to allow for more efficient and effective external resource use through joint funding arrangements; avoidance of duplication and uneven donor support; commitment to the national and international harmonisation agenda.

Key issues in the JAS which need deliberations at this meeting include; division of labour based on comparative advantage; delivery modalities of development assistance; how to make technical assistance more effective for capacity building, dialogue structure in line with MKUKUTA/ZPRP; risk mitigation, and monitoring and evaluation of our aid partnership.

  1. We believe our initiative is very much in accordance with the spirit and principles of the Monterrey, Rome and Paris Declarations on Aid Effectiveness. We are also satisfied with the considerable progress we have made in our partnership, in particular the reinforced international commitment to the key areas as concluded in the Paris Declaration early this year.
  1. Your Excellencies, Ladies and Gentlemen, I now have pleasure to declare your meeting open and look forward to a higher level of cooperation and commitment.

I thank you for your attention.

Ministry of Finance

Dar es Salaam

5 April 2005

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