Development and Cooperation


	Contributions from the Column Focus The EU’s performance-driven aid There is no substitute for ownership Reviewing conditionality “We will not accept aid at any terms” Relationships matter, procedures do not 07/2005		“We will not accept aid at any cost or terms” Not only the Tanzanian Government is proud of the progress the country has made in the past decade. Donors also consider the country as a model case of successful development programmes in the context of debt relief combined with Poverty Reduction Strategies. Tanzanian officials, in the meantime, have begun stressing that they want donors to transfer their assistance money into the national budget and to align with the nationally prevalent procedures. Peniel M. Lyimo, the Permanent Secretary at the Finance Ministry in Dar es Salaam, elaborated on the issue in an interview with D+C/E+Z. [ Interview with Peniel M. Lyimo ] Is there any situation, in which donor conditionalities make sense in your view? In principle externally imposed donor conditionalities have a tendency to undermine local ownership and without strong local/national ownership reforms cannot be sustained. The true test of effectiveness of conditionalities is after the project/programme period and not during implementation. When a participatory and partnership approach is adopted the same objective can be achieved with sustainability. Legislatures in rich countries often shy away from supporting the budget of poor countries because they fear corruption and other abuse of the funds. Why do you disagree? I don’t disagree at all. What I disagree with is the exaggeration that the other modes of aid delivery are not prone to the same weaknesses. There are also cases where funds have been misused outside the Government budget. And our Parliament and public are just as interested in public expenditure as are their counterparts in richer nations. Is that why you insist on funds being channeled through the national budgets of recipient countries? There are quite a number of benefits. The most important are: – enhancing local ownership of the development programme and process, – enhancing transparency and accountability of public expenditures, – enhancing contestability of expenditures, – strengthening the budget management function, – shifting accountability of recipient countries from donors to its citizens and finally – observing the law. In Tanzania, like in many other countries public expenditures are authorized by the Parliament only and off-budget expenditures will be breaking this very fundamental law. Generally speaking, poor countries depend on additional resources. Recently, I have heard you and other officials of your government say you will reject aid if donor conditions turn out to be to strict. Can you really afford to do that? Tanzania is a very poor country, but we will not accept aid at any cost or terms. The aid we accept must conform to our national development framework priorities as well as our commitments under the Tanzania Assistance strategy (TAS). Why is donor alignment such an urgent priority? Do tell us about the burden that negotiating with various donors means for your government. Tanzania is still highly donor dependent. About 40% of the budget is donor funded. So you can imagine the task of coping with a large donor community each of which is using own procedures, policies, et cetera, et cetera, and operating parallel systems as well. And as I might have already said when discussing the benefits of channelling aid through the national budget, donor alignment makes a lot of sense when you want to reduce transaction costs. Are there any reliable benchmarks to measure the success of a recipient government – and which ones do you favour? Definitely there are such benchmarks depending on the development objectives of the recipient government. In the case of Tanzania, our second generation PRS is focusing on the following three issues: economic growth and reduction in poverty, improvement of quality of life and social well being, governance and accountability. Performance benchmarks are available on all these areas. While it is essential to measure and monitor results, we must, however, also be aware of the fact that it takes time to check long-term outcomes and effects. What has been the greatest success in your country? In the recent past, I see restoration of macroeconomic stability a major success. Real economic growth has averaged five percent during 1995 to 2003 compared with an average of less than two percent during the preceding decade. Inflation has been low and stable averaging four percent since 2000 compared to more than 30 percent in the mid-1990s. Foreign Direct Investment more than tripled to $350 million per year compared to less than $100 million in the early 1990s. And what about poverty reduction? One of our key PRS targets was to increase enrolment in primary schools. The first three years of implementation of the participatory Primary Education Development Programme resulted in an increased Net Enrolment Ratio from 66% in 2002 to 90.5% in 2004 and gender equity has been achieved. Furthermore, the pass rate in primary school leaving examination has improved from almost 20% in 1999 to nearly 50% in 2004. In what sense are such success stories related to local ownership? All the reform programmes during the last decade have been anchored on local ownership and leadership. Broad based participatory approaches have featured in the formulation and implementation of the reform programmes. And we have also been able to introduce major reforms in our public sector. For instance we have introduced an Integrated Financial Management System that allows us to keep better track of what is happening with our funds. We have introduced new systems for performance management. We wouldn’t succeed with any of this if it weren’t for strong government leadership. In recent international debate, Technical Assistance has not had a good reputation. It is considered too cumbersome and incompatible with the principle of local ownership. What is your view on the matter? Technical Assistance is indeed too often supply driven. Moreover, direct execution of the tasks by donor agencies has the tendency of undermining local capacities and efforts of enhancing them. How could Technical Assistance be improved? It should be demand-driven by the recipient countries and focus more on providing advise instead of executing tasks. Tanzania has become something of a donor darling. Do you have any advice for governments who are not in favour with advanced nation administrations? I am not sure exactly what you mean. It is true that over the past decade Tanzania has undertaken major political, economic, and structural reforms including reforms in aid management. We have a proven track record of successes. It is against this background that we have established a very good and strong partnership with our development partners. Strong local leadership and ownership has been central to this success. So in my view we have earned this status. Questions by Hans Dembowski. Peniel M. Lyimo is Permanent Secretary at the Ministry of Finance in Tanzania. http://www.mof.go.tz