The Division of Labour in Tanzania

The Division of Labour in Tanzania

A Discussion Paper

by the Joint Assistance Strategy Core Group

of the Development Partners Group

April 2005

I. The Need for Better Division of Labour

The Joint Assistance Strategy (JAS) between the Government of Tanzania (GoT) and its development partners (DPs) is a national process aimed to make aid more effective. Building on the earlier Helleiner report, The Tanzania Assistance Strategy, and the report of the Independent Monitoring Group (IMG), the JAS recognises distortions and inefficiencies in the present provision of development assistance. The full JAS document,[1] to be circulated soon, will pinpoint actions by partners that are expected to lead to major gains in aid effectiveness, and faster progress on Tanzania’s national Poverty Reduction Strategy, Mkukuta.

2. The JAS sees a sensible division of labour (DOL) as a crucial step in making more effective use of external resources to reduce poverty. The new thinking about DOL originates from GoT and DPs, reinforced by the JAS Consultative Meeting hosted by GoT in Dar es Salaam in April 2005. However, Tanzania’s work also reflects global thinking, notably the Rome and Paris Declarations on aid effectiveness, as well as the OECD’s paper on good practice.[2]

3. The Paris Declaration commits governments and DPs to “eliminating duplication of efforts, and rationalising donor activities to make them as cost effective as possible (para 3iv). As far as governments are concerned “partner countries commit to provide clear views on donors’ comparative advantage and on how to achieve donor complementarity at country or sector level” (para 34). DPs, for their part,undertake to “intensify our efforts to…rationalise the often excessive fragmentation of donor activities at the country and sector levels” (para 6) and to “make full use of their respective comparative advantage at sector or country level by delegating, where appropriate, authority to lead donors for execution of programmes, activities and tasks” (para 35). The above commitments establish a clear, common agenda. GoT has expressed its wish to lead the DOL exercise through the JAS - an initiative that DPs welcome.

4. This is a discussion paper, not a position paper. It therefore aims to provide constructive input from DPs into GoT-led discussions on DOL, but not to predetermine outcomes or to undermine GoT leadership. It seeks more to inform the script for the next phase of the aid partnership (i.e. outlining the main issues to be addressed, and their sequencing) rather than casting of roles (i.e. determining which DP should do what). The remainder of the paper is structured as Section II: The Rationale for DOL; Section III: A Definition of DOL; Section IV: A Possible Methodology; Section V: Challenges and Risks; and Section VI: Conclusion.

II.The Rationale for a New DOL

5. The reconfiguration of DOL under the JAS can be expected to bring the following benefits:[3]

i)Increased national ownership of the development process, and strengthening of national systems (e.g. budget management, public expenditure review, Mkukuta, and the poverty monitoring system)

ii)Simpler and more open dialogue, and more transparent use of external resources

iii)Lower transaction costs for GoT by rationalising multiple DP processes and procedures (e.g. procurement, monitoring and review missions, reporting and auditing)

iv)Lower transaction costs for DPs through specialisation, and less trying to ‘do everything’

v)Better TA and capacity development for GoT, with fewer off-budget or parallel initiatives

III.A Definition of the Division of Labour

6. The terms “DOL” and “comparative advantage” have entered Tanzania’s development lexicon without being properly defined. DOL means the optimal allocation of responsibilities and tasks between GoT and DPs to maximise Tanzania’s progress towards the MDGs. This however requires an understanding of the concept of comparative advantage. Comparative advantage may be defined as the area of activity in which an agency is considered to be at its most effective in relation all other activities in which that agency is engaged. All agencies therefore have a comparative advantage (i.e. the thing itself and others consider that it does best). Competitive advantage is defined as a pre-eminent strength of any single agency in a particular activity, in comparison to other agencies engaged in the same or similar activity. Therefore, whilst all agencies possess a comparative advantage, not all necessarily possess competitive advantage.

7. An effective DOL balances the need to exploit competitive advantage for the collective good, whilst also ensuring quality dialogue, effective teamwork, and a manageable workload for the group of agencies as a whole. It is also important to recognise that an effective DOL is closely interconnected with the choice of funding modality (i.e. use of money) and the provision of policy advice and technical support (i.e. expertise).

8. Funding modality is especially relevant in the context of Tanzania. The JAS will advocate a continued transition from project funding to sectoral funding, and from sectoral funding to general budget support. It might also anticipate a switch from the past emphasis on central government policymaking and national funding of sectors, towards more regional funding of sectors through block grants from central government.

9. All this requires a redefining of partnerships, to provide clear leadership for groups of DPs supporting the same development outcomes, and to differentiate the role of each partner within such groups. Much depends on reaching a better understanding of the comparative value of dialogue and funding around general budget support (GBS), core reform programmes, sectors and projects, and agencies’ comparative and competitive advantage within these categories.

10. A study by DCI[4] observes that certain sectors and thematic areas in Tanzania appear over-represented by donors. For example, 23 DPs are engaged directly in the health sector, 20 in education, 18 in water, 17 in governance, and 16 in HIV/AIDS. The burden on GoT of coordinating these activities is therefore high, particularly where different funding modalities are used simultaneously by each DP. The sheer number and diversity of partners can preclude constructive dialogue, and suggest efficiencies for GoT and DPs in rationalising both the number of donors per sector, and the number of sectors per donor. This should reduce wasted effort, especially where DPs’ current activities or skills do not match the needs of the national programme.[5] However, a large number of DPs in a particular sector is less problematic provided there is transparency in policy and resource allocation, and clarity of roles.

11. It is also important to recognise that policy dialogue, planning of interventions and monitoring of results need not be achieved only through sector-specific SWAps. Where good dialogue is established through SWAps or sector baskets, this can and should continue, even as aid modalities shift towards GBS. The optimum number of DPs may in fact vary from sector to sector, with some MDAs able to manage multi-donor programmes more effectively than others. Nonetheless, some rationalisation under new types of partnership is needed to streamline DPs’ interface with GoT, to enhance coherence with national policy, and to simplify procedures.

12. Lead partnerships are the most commonly cited type of partnership in the JAS draft documents. Under these arrangements, one DP appoints another to speak on behalf of the DP group as a single focal point for policy dialogue with GoT. These arrangements might include pooling of DP funds, either bilaterally between two partners, or in a larger basket. In cases where project-based funding prevails, lead partner arrangements tend to be less viable, since project dialogue is usually still required on a bilateral basis. Lead partner arrangements already exist in Tanzania in health and education, and in the Elections Basket. They are closely linked in many cases to silent partnership arrangements, whereby one or more partners agree to remain silent, delegating authority to another agency to speak partly or entirely on its behalf.

13. Delegated cooperation is a formal cooperation agreement in which a DP channels its funds through another DP. Delegation may also apply to specific, non-financial parts of the programming cycle where efficiencies can be realised (e.g. through joint consulting or analytical work, monitoring and review). Sometimes all functions are delegated. The PRBS in Tanzania provides an example, through the use of multidisciplinary technical teams that work for the group as a whole.

14. Complementarity is another closely related concept. It implies that a single DP may opt to step out of a sector entirely, on the understanding that another DP or DPs can adequately fill the gap. This requires good communication and understanding both within and between DPs, and their respective headquarters. This requires commitments from DPs to retain technical and staff resources in a given sector over the long term, but has high potential in rationalising aid. Finally, lead, silent and delegated partnerships can be applied regardless of the aid modality. GoT and DPs should not conclude that effective policy debate by DPs presupposes their engagement in sector support.

Key Questions:

• Is improved allocation of lead, silent and delegated partnerships in SWAps or sector baskets enough to achieve the required operating efficiencies between DPs? Or is there still an imperative to enhance complementarity as well, reducing the number of DPs operating in any sector?

• DPs will be expected under the JAS to shift greater proportions of their support to GBS. Will they be persuaded that the quality of policy dialogue around the central budget is a good enough for them to disengage from given sectors, delegating that responsibility to lead agencies in SWAps or sector baskets?

• Is there a need for more defined lead, silent and delegated partnerships in the management of the PRBS mechanism itself?

IV.A Possible Methodology

15. Achieving a more effective DOL will be complex, requiring high levels of trust and transparency between GoT and DPs. Issues will need to be addressed on a sector-by-sector basis, and to be carefully sequenced.

16. The long-term goals are to simplify aid arrangements. However this will involve a transition period in the short and medium-term as agencies negotiate and agree the new DOL, accommodate new procedural requirements, and realign their portfolios. The new aid architecture must be reinforced through GoT practice, and DPs’ corporate policies both at HQ and in Tanzania. This must be achieved without undermining existing partnerships or MTEF commitments, to avoid any unexpected financing gaps.

17. A clearer picture – informed by quantitative data and backed up with evidence - of how to establish these new partnerships and to redeploy development assistance is identified in the latest IMG report, in the UN’s Joint Strategic Review, and in the DCI report. The actions for DOL reform fall into three categories:

18. Reinforcing GoT Ownership: GoT counterparts from MDAs, central and line ministries collectively identify the required funding modalities, finance and TA that they believe will bring about the desired improvement in aid effectiveness. GoT and DPs jointly define the parameters for medium and long-term assistance to Tanzania through the JAS, which becomes the country strategy of all DPs. The JAS defines DOL based on a composite picture, comprising the reputation of each DP, its historical engagement, and its future capacity in terms of organisational commitment, policy leadership, coordination functions, and long-term staff expertise. It should be recognised that these strengths are not necessarily linked directly, or at all, to the volume of funding support provided by each DP.

19. Self-Assessment by DPs: DP headquarters determine their organisational mandate in Tanzania, in terms of the mix of GBS, core policy reforms, sector or project[6] engagement under the JAS. HQs also indicate their readiness to work in lead, delegated or silent partnerships. Lead agencies in particular sectors might seek to enhance staff continuity by lengthening the term of contract for key expatriate staff from, say, three to five years.

20. Striking the Right Balance for Aid as a Whole: This exercise will bring together parts one and two above. It will calibrate GoT and DP perceptions at a sector-by-sector level with a collective analysis that seeks to establish a balance of skills, diversity, equitable sharing of work, and adequate leadership and coordination functions. This exercise should would review the total number of sectors supported by each DP, and the total number of partners present in each sector, to ensure that overall efficiencies and simplification are achieved. It should also ensure synergy in individual DPs’ portfolios between upstream and downstream programmes, and in funding modalities.

V. Challenges and Risks

21. A number of risks should to be taken into consideration. These include:

i)Slowness of Change: The DOL must be expertly managed and sequenced. The pace of change is constrained by an already full GoT agenda, and by sometimes cumbersome HQ procedures and programme lifecycles amongst DPs. It is important that DPs honour existing MTEF commitments, and to avoid any net decline in aid to Tanzania as a result of rationalisation.

ii)Overcomplicating Sector Engagement: The quality of sector management arrangements, and GoT’s capacity to implement them, may be just as critical as the number of donors and partnership modalities adopted. Some basket fund arrangements do not make for easier programme management, and hence disempower the MDA. These must be simplified.

iii)Ignoring National Systems: It is important in the long term to strengthen national processes and enhance GoT’s accountability to Tanzanian institutions, rather than merely to DPs - especially on budget and sector management.

iv)The Need to Simplify TA: Progress in aid effectiveness depends not only on more effective DOL, but also on better provision of TA. Much TA is still provided by DPs off-budget, unaligned with national plans. Options for TA arrangements that strengthen GoT systems and capacity might include a pooled TA fund, managed by GoT, to gain the full benefits of DOL.

v)Not Reaching Consensus: Fewer DPs operating in specific sectors, or in Tanzania as a whole, may signify to some DPs a loss of agency visibility, flexibility and financial independence. This might also feel threatening to ministries that in the past received significant off-budget project or sector-based funding. Are MoF’s views on DOL reflected across GoT as a whole? Will DPs agree to specialise in this way?

vi)The Political Cycle: Concerns over voter registration and Presidential elections already occupy much DP attention. Can DPs focus on longer-term issues in an increasingly charged political environment? Also, although many DPs do not extend support to Zanzibar, the harmonisation of Mkukuta and the Zanzibar Poverty Reduction Strategy may eventually create a single programme of support. Can lead partnerships for sectors agreed for the mainland be extended to Zanzibar?

VI. Conclusion

22. With GoT willing to exercise determined leadership, and DPs prepared to fulfil their obligations under the Paris Declaration, Tanzania is very well placed to undertake ground-breaking reforms. The sensitivities and challenges on both sides associated with these new arrangements cannot be underestimated. Yet with adequate preparation, analytical work and discussion around agreed criteria, we can deliver a step change in our partnership, making aid more effective and efficient.

JAS Core Group, April 2005

1

[1] The latest version of the JAS is the Concept Paper (3rd draft) by GoT of March 2005..

[2] ‘Harmonising Donor Practices for Effective Aid Delivery’, OECD, 2003, Chapter Six: ‘Delegated Co-operation’.

[3] OECD discussion, February 2005 (

[4] “Mapping Exercise of Interventions of the Likeminded DPs in the Context of the Tanzania Joint Assistance Strategy (JAS)”, DCI paper, October 2004. The study identified 1,220 ‘projects’ funded by 42 partners and considered issues in rationalising them.

[5] “Aid proliferation: How responsible are the Donors?” Moore (IDS), October 2003

[6] Some sectors are more suited to certain aid modalities than others (e.g. infrastructure lends itself readily to project finance).