DEVELOPMENT COOPERATION FORUM

SUMMARY OF DISCUSSION

7 November 2006

The Development Cooperation Forum was chaired by Mr. Phillemon L. Luhanja, the Chief Secretary. Attendance List is on Annex A.

The agenda for the DCF was as follows:

  1. The role of DCF and its linkages to other dialogue processes
  2. Core Reforms – exchanging views on specific and overarching bottlenecks to reform agenda
  3. Integrating the Civil Society Organization (CSOs) in development cooperation
  4. Energy Crisis
  5. Africa Peer Review Mechanism (APRM)
  6. JAST
  7. Upcoming issues to be discussed

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1.Opening

Both Government and the Development Partners reiterated the importance and relevance of the DCF and welcomed the opportunity to continue to engage in dialogue with the aim of strengthening partnership through the DCF.

  1. The role of DCF and its linkages to other processes

Development Partners welcomed Government’s initiative to re-establish the DCF, and acknowledged the DCF as an important forum for open and frank dialogue. This forum provides a mechanism for reinforcing trust and building development partnerships. In this respect, the DCF provides an opportunity for DPs to hear GoT’s views on overall quality of dialogue in support of Government leadership. It is also an important mechanism for managing risks and discussing potentially high-risk issues before they escalate.

Development Partners acknowledged that the quality of the technical/sectoral/thematic dialogue has generally been encouraging, while concerns were raised on the quality and regularity of high-level dialogue and political dialogue. Government acknowledged the concerns and noted that it might be attributed to the fact that the DCF was not as frequent as it should be. In this regard, both Government and the Development Partners agreed to activate the DCF meeting on a quarterly basis, emphasizing the contribution of regularity and predictability of DCF meetings to overall quality of dialogue.

Development Partners informed GoT about a critical assessment of the DPG architecture that is underway. GoT's guidance will be necessary for aligning the DPG structure with GoT-led dialogue structure and reducing transaction costs on both sides in a way that enhances Government and national capacity. Government is also embarking on activating regular cluster reviews, starting this Fiscal Year with major sectors, such as health, education, and infrastructure.

  1. Core Reforms

Government reiterated its commitment to continue implementing core reform agenda (PSRP, PFMRP, LSRP, LGRP, and NACSAP). Some progress has been made, however Government noted some difficulty particularly in the area of human resources and institutional capability to enhance the level of management of the reform agenda. To this end, Government is embarking on assessing capacity constraints in context of PFMRP to identify weaknesses and measures to address constraints in accelerating reforms. It was also noted that any reform agenda takes time, and hence the reform agenda requiresan evolutional process and the changing of mindsets.

Development Partners acknowledged that reforms have contributed to positive changes and improvements in MDA’s and local government’s performance over the years. It is therefore important to note the overriding significance of core reforms that have the potential for transforming Tanzania. The Development Partners have taken greater interest in the process and will continue to support Tanzania’s efforts in implementing the core reform agenda. While acknowledging substantial gains from core reforms, a concern was raised with regard to the pace of progress, suggesting that it may require a fresh look at the core reform agenda. It was noted that consolidation and simplification of the reform processesmight be considered in accelerating the pace of core reforms. DPs encouraged the GoT to consider the appropriate funding instruments for the reforms, with a view to increasing their funding through the national budjget. The Government noted that consolidation would becritical in reducing transaction costs and simplifying the processes.

The overriding importance of pay reform was noted. In this context, a concern was also raised with respect to the high level of allowances, some of which lead to various distortions. In this regard, Government noted the issue around allowance packages, which include a number of various components (pay reform, employment allowances, etc.). The Ministry of Finance is working with the IMF and the World Bank to change the mechanisms of Public Finance reporting format in order to address this issue. It was also noted that there were some mixed messages coming from Development Partners with regard to level of pay reform reaching targets on the one hand, and sustainability of wage bills on the other hand. Nevertheless, Government continues to make efforts and progress in improving pay and addressingthe issue of sustainability through economic development, tax reform, etc.

With regard to the concern raised by Development Partners on decentralization by devolution, Government reiterated its commitment to implementing the policy of decentralization by devolution and also noted substantial challenges in this respect. Empowering people is seen as the essential ingredient in meeting Vision 2025. While substantial shift of financial and human resources are being made to local government, uneven capacity at the local level for making informed decisions poses significant challenges to decentralization.Proposed amendments aim to strengthen capacity of decision makers in local government to execute power responsively and change the mindset in order to carry out reforms with national stakeholders. It was also noted that starting next fiscal year, local government reform programme would be mainstreamed into the PMO-RALG in order to accelerate further progress in this regard.

Regarding NACSAP II the recent commitment of the Goverment to consult national stakeholders, including CSOs, was welcomed as an important step by the Development Partnes.

With a view of accelerating core reforms, a second core reform conference was suggested to deepen discussions on effectiveness of reforms and reflections on modalities.

  1. Integrating CSOs in Development Cooperation

In light of the important role of CSOs in achieving MKUKUTA goals, CSOs are increasingly seen as a driving force in development cooperation. Given the fact that the CSO Sector is relatively new, and coupled with the poor capacity of existing CSOs as well as the motivation for effective decentralization, it is important to underscore the need to change mindsets for people to see CSOs and the Private Sector as partners in development cooperation. In this context, Government was particularly concerned about issues of transparency with regard to the operations of CSOs and NGOs. It was noted that the NGO Act of 2002 specified the responsibility of CSOs/NGOs to properly report on their activities to the NGO Council/Board, which provides the regulatory framework for CSO/NGO operations in Tanzania. The Ministry of Community Development, Gender Affairs and Children is responsible for a CSOs/NGOs directory, while the NGO Council is also working on ethics for the NGOs in order to address the issue of transparency, accountability and responsibility of NGOs/CSOs. Consequently, Government sought assistance from Development Partners in order to ensure CSO/NGO accountability, as a number of NGOs/CSOs receive funding/financial support from Development Partners for their operations.

Development Partners acknowledged the quest by the Government for transparency and accountability of CSOs/NGOs and noted that DPs would improve their own reporting on NGO funding. Development Partners emphasized the role of CSOs both as complementing capacity of the Public Sector in service delivery and as an important national stakeholder.

  1. Energy Crisis

Both Government and Development Partners agreed on significant impacts of the current energy crisis on the economy. Costs associated with the prolonged crisis are substantial not only in terms of loss in GDP, but also in terms of its implication on achievement of MKUKUTA goals and MDGs, as well as confidence in both public and private investments.

To this end, Government updated the group on the status of efforts currently underway, including: (1) elevating generating capacity, (2) financial recovery plan of TANESCO, (3) regulatory framework, and (4) through a task force set up in the GBS Annual Review discussion to consider a strategic direction for the energy sector, including mapping out a power system, development of a master plan and capital investment, diversifying sources of energy and enhancing Public-Private Partnerships.

Given the magnitude of the impact of this crisis, Development Partners encouraged Government to adopt time sensitive decision-making processes. While the national procurement legislation assures transparency of the procurement process, once national interest is determined, a time sensitive decision-making process is essentially critical in assuring public and investment confidence. It was also noted that a speedy transition of the management of TANESCO was critical in avoiding further crisis. To this end, Government is very much aware of this concern and there assured the group that an announcement will be made by the end of this month.

In the context of a realistic financing plan, Development Partners raises the role of tariffs in maximizing cost-effective sector strategy and policy. To this end, it was noted that the issue of tariffs need to be examined in context of the limited supply base/generating capacity of TANESCO. While acknowledging that the reliability and predictability of energy requires attention to generating capacity, Development Partners encouraged the Government to consider incentive aspects for potential power providers in examining the issue of tariffs.

Both Government and Development Partners agreed on the importance of frequent interactions and reaffirmed their commitment to work together to address this important issue.

  1. African Peer Review Mechanism

Government presented an update on progress in the APRM process indicating that that the President has appointed Government officials to serve in the Governing Council and also endorsed other members appointed by national stakeholders. Public announcements in this regard will be made shortly. It was also communicated that a focal point for NEPAD has now moved to the Ministry of Foreign Affairs and International Cooperation with support from the President’s Office - Good Governance and the Ministry of Planning, Economy and Empowerment.

Development Partners commended Government for its commitment, ownership and leadership over the process and reiterated that the APRM presents an excellent opportunity to showcase national efforts and progress made on the reform agenda. As the APRM process is closely followed by many capitals, accelerating APRM process is vital to keep Africa and Tanzania in the agenda of many Capitals as well as G-8. The benefits to be derived from the APRM process cannot be over-emphasized, and hence, the Development Partners encouraged Tanzania to seize this excellent opportunity.

  1. JAST

The JAST was approved by Cabinet on 27 October. JAST Action Plan and Monitoring Framework have also been drafted, and will be shared with DPs shortly. The Government also commented on the draft MoU, which is to be finalized shortly. Official launch of JAST and signing of MoU (with Minister of Finance) is expected by the end of November or latest by the first week of December. Government has also considered strengthening linkages of sector dialogue, such as GBS, and PER to the JAST process. As noted earlier, sector reviews starting with a few sectors are expected to contribute to strengthening sector dialogue with the JAST process.

Development Partners are encouraged by the progress and commitment made on the part of Government and expressed their continued commitment to the JAST process. Tanzania is recognized as one of the leading countries in aid effectiveness. In this regard, HQs have been closely following the JAST process. As HQ involvement and commitment will be critical in making progress in a number of areas (i.e. Division of Labour, Aid Modalities, etc.), DPs asked the Government to communicate the date of the official signing of the MoU in advance in order to facilitate HQ participation. The importance of an early official launch was likewise stressed. Development Partners continue to deepen the discussions and progress in the Division of Labour. However, Government’s guidance on the Division of Labour processes/arrangements was noted to be essential.

  1. Closing

Government and Development Partners agreed to continue with regular DCF meeting. Government also encouraged to call for a DCF meeting in a flexible manner, should critical issues arise that requires high-level dialogue.

Annex A

The DCF was attended by the following representatives of Government and DPG members.

Government of Tanzania / Development Partners Group (DPG)
Mr. Phillemon L. Luhanja, the Chief Secretary (Chair-person) / Mr. Oscar Fernandez-Taranco, UNDP Resident Representative and UN Resident Coordinator, DPG Co-Facilitator
Ms. Rose Lugembe, Permanent Secretary, State House / Ms. Satu Santala, Deputy Head of Mission, Finland Embassy, DPG Co-facilitator
Mr. Arthur G. Mwakapugi, Permanent Secretary, Ministry of Energy and Minerals / H.E.Dr. Andrew McAlister, High Commissioner of Canada
Dr. E. Bukuku, Permanent Secretary, Ministry of Planning, Economy and Empowerment / H.E. Carsten Nilaus Pedersen, Ambassador of Denmark
Mr. Vincent Lyimo, Deputy Attorney General/Permanent Secretary, Ministry of Justice and Constitutional Affairs / Ms. Judy O’Conner, Country Director, the World Bank
Mr. Gray Mgonja, Permanent Secretary, Ministry of Finance / Mr. David Stanton, Director, Department For International Development (DFID)
Ms. Ruth Mollel, Permanent Secretary, Ministry of Public Service Management
Amb. Charles K. Mutalemwa, Permanent Secretary, Ministry of Foreign Affairs and International Cooperation
Ms. Mariam Mwaffisi, Permanent Secretary, Ministry of Community Development, Gender Affairs and Children
Ms. Maimuna Tarishi, Permanent Secretary, Ministry of Regional Administration & Local Government
Dr. J. Biswaro, Director of Africa, Foreign Affairs
Ms. P.M. Magogo, Cabinet Under Secretary, State Houte
Ms. S. Mlawi, Cabinet Under Secretary, State House
Mr. R.M. Mayaya, Coordinator, Good Governance Coordination Unit
Mr. Baruti, Ministry of Planning, Economy and Empowerment
Mr. E.P.A. Simwela, Cabinet Under Secretary, State House
Mr. S. Salula, Deputy Permanent Secretary, Vice President’s Office
DCF Secretariat Support
Mr. Francis Mwapaja, Coordinator, State House / Ms. Yuko Suzuki, DPG Secretariat

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