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ECONOMIC AND SOCIAL RESEARCH FOUNDATION

    (ESRF)

    ENHANCING AID RELATIONSHIPS IN TANZANIA: REPORT OF THE INDEPENDENT MONITORING GROUP

    Prepared by the Independent Monitoring Group

     nd 2 December 2002

    Report Submitted to Consultative Group Meeting, 2-5 December 2002

Table of Contents

    1.0 INTRODUCTION ................................................................................................. 3 1.1 Background to the report........................................................................................ 3

    2.0 THE PRESENT SITUATION ............................................................................... 6 3.0 THE BASIS FOR THE IMPROVEMENTS ACHIEVED ................................ 13 4.0 AREAS FOR FURTHER IMPROVEMENT - (A) THE GOVERNMENT ..... 18 5.0 AREAS FOR FURTHER IMPROVEMENT: THE DONORS ........................ 32 6.0 FUTURE MONITORING ARRANGEMENTS ............................................... 44 7.0 SUMMARY OF RECOMMENDATIONS ........................................................ 48

     APPENDIX I: Terms of Reference ............................................................................ 53 APPENDIX II: List of people consulted in preparing this report ............................ 56

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1.0 INTRODUCTION

1.1 Background to the report

    This report is an outcome of a substantial history of reviews which have examined the relationships between the Government of Tanzania (GoT) and aid donors conducted by observers independent of both sides. Relations between the two sides deteriorated to a low level in the early 1990s. In order to address this situation an independent group of experts led by Professor Gerald K. Helleiner was appointed to study the situation and make recommendations. The study was completed in 1995 and subsequent discussions between government and donors were based on that report. Based on the Helleiner report and following a change of government, concerted efforts involving dialogue between the government and donors were initiated in 1996. This was followed by an agreement in January 1997 between the GoT and her development partners to jointly set out a programme to redefine the terms of their development co-operation. The result was a set of 'agreed notes' (in the form of 18 points) stating, among other things, that there was a need to ensure enhanced Government leadership in development programming, increased transparency, accountability and efficiency in aid delivery. The elaboration of a framework for co-operation culminated in the preparation of Tanzania Assistance Strategy (TAS) from 1998/99, finally published in 2002. TAS is meant to be a framework for partnership which would also define the role of external resources for development.

    Following the GOT-donor agreement of January 1997, it was agreed that developments in implementing the agreed points would be monitored and reports on progress would be presented to the meetings of the Consultative Group in Tanzania. It is in this context that it was agreed to ask Professor Helleiner to present evaluation reports to CG meetings in December 1997, March 1999 and May 2000. At the latter meeting, it was agreed that the monitoring activity was beneficial but needed to be institutionalised. As a result, in February 2002, the GOT and donors jointly appointed the Independent Monitoring Group (IMG) to review progress in aid relationships and report to the next CG meeting.

    Our work was undertaken during the course of 2002, under the administrative auspices of the Economic and Social Research Foundation (ESRF), Dar es Salaam. The group as a whole met twice, in March and June 2002, but locally-based members of the group undertook further work between those dates and thereafter. There were formal terms of reference which were agreed between GOT and donors after several months of negotiations (Attached in Appendix I). On the basis of the TOR the ESRF made a proposal upon which our work was based, and which is set out in Appendix II. This indicated the desirability of assessing progress in GoT-donor relations, especially since the 1999 and 2000 Helleiner reports, establishing a new baseline in the light of recent developments in Tanzania, developing performance indicators on the part of government and donors, and identifying obstacles and making recommendations for overcoming these.

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The Group consisted of:

    1) Professor Samuel M. Wangwe (Chair)

    2) Mr. Goran Andersson

    3) Professor Rolf Hofmeier

    4) Professor Tony Killick

    5) Ambassador Fadhili Mbaga

    16) Mr. Emmanuel Tumusiime Mutebile:

    In addition, the group was assisted by inputs from Dr. Stergamena Tax and Mr. Dennis Rweyemamu of the ESRF.

    In addition to the study of relevant background materials, both as related to Tanzania and the wider literature, the group's approach was based on a large number of interviews with officials of departments of government and all official donors with substantial aid programmes in the country, bilateral and multilateral. We also interviewed individual representatives from the private sector and of various civil society organisations in addition to information obtained in special workshops which were organized for each of the two groups. A complete list of those consulted is set out in Appendix III. We also benefited by being able to attend meetings of the local DAC and of the Public Expenditure Review (PER), as well as other relevant gatherings held during our work. The Tanzania based members also had the opportunity to participate in the Joint GOT-Donors Sector Review Meeting

    thheld on 30 August 2002. We were fortunate in being able to draw upon the wealth of related work already undertaken by the staff of ESRF. Everyone was extremely generous to us in sparing time out of their busy working lives and in the frankness with which they offered their views. We are very grateful to them and would especially like to record our thanks to Mr. Philip Courtnadge of the UNDP, who greatly assisted ESRF, and us and provided us with invaluable briefings.

    Our report is structured as follows. Section II describes and assesses the situation as we observed it. We found it considerably improved over earlier periods so Section III presents what we consider to have been the chief factors responsible for bringing about that improvement. There remains much scope for further improvements, however, and Sections IV and V therefore examine areas for further improvement, making recommendations addressed, respectively, to the GoT and the donors. Section VI takes up the issue of performance monitoring and Section VII summarises the various recommendations made in the report.

     1Mr. Emmanuel Tumusiime Mutebile was appointed as a member of the group but, in the event, his responsibilities as Governor of the Bank of Uganda prevented him from participating in the Group's work although he was able to make inputs by way of comments in the final stages of the report.

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    As with the original Helleiner report, this report is unanimous, with each group member taking full responsibility for the entire text. In extremely summary terms, our main messages are described in the next few paragraphs.

    Overview of the Report's Basic Message

; GOT-Donor Relations have improved. By comparison with 1995 and even since as

    recently as the Helleiner report of 2000, donor-GoT relations are much improved.

    The donors now have greater trust in GOT and they have responded in various

    ways to improve their own policies and practices.

; There is still room for improvement. The improving trend should not lead to

    complacency, for there is still much room for improvement.

    (i) The GOT should reinforce donor confidence in it by measures to

    increase transparency and accountability, to strengthen public sector

    capabilities, to reduce long-term aid dependency, and to strengthen

    channels of dialogue. It should go further in insisting on ownership

    and in taking the lead in co-ordination and harmonisation of donor

    policies and practices, though the Tanzania Assistance Strategy (TAS).

    While it is a very welcome initiative of much potential value, the TAS

    could and should go much further than it does to assert Tanzanian

    ownership and to provide leadership in the development of relations

    with donors.

    (ii) Donors should go further with measures to strengthen partnership

    relationships and reduce transaction costs, including further moves in

    the direction of pooled resources and common arrangements for

    dialogue and monitoring, working more though the exchequer system,

    reducing tying and strengthening co-ordination.

    (iii) For both sides, there is a need to rationalise the plethora of dialogue

    mechanisms. Here too the GOT should take the lead, aligning

    processes more around the budget cycle and focusing efforts more

    around the PRSP and further developed budgetary processes.

    ; Future review arrangements should be essentially qualitative in some circles preference

    has been expressed in favour of moving in the direction of quantitative indicators, cover

    the government as well as donors and be more focused. Donor and GoT performance is

    too multi-faceted and qualitative for it to be fruitful to place large reliance on

    quantified indicators, although some would be useful. There should be periodic

    independent review exercises, perhaps with a more precise focus, e.g. examining

    the workings of SWAps, or the position in the Districts, or in Zanzibar.

    Independent monitoring groups could usefully be replicated in other countries.