5 November 2012

Tanzania: World Bank Loans U.S. $255 Million to Local Authorities

Dar es Salaam — An average of 18 local authorities have been given a World Bank credit to improve financial management and strengthen their ability to deliver urban services.

The World Bank said in Dar es Salaamt its executive boards approved an International Development Association (IDA) credit of $255m for a new initiative to improve financial management performance of 18 local governments and strengthen their ability to deliver urban services to 2.6 million Tanzanians.

According to WB, the Urban Local Government Strengthening Program (ULGSP) will use the bank's new financing instrument known as Program-for-Results (P for R) that directly links disbursement of funds to verified development results.

The program will deliver a range of improvements in urban services, including construction of small bridges, installation of street lights, and improved waste management among others, the statement availed to East African Business Week last week said.

"The capacity-building component will support urban planning, revenue mobilization, strengthening of procurement practices and improved management of human resources," the World Bank Country Director for Tanzania, Mr Philippe Dongier said.

Tanzania is urbanizing rapidly and 25% of Tanzanians are already living in cities, a number that is expected to rise to over 40% of the country's population by 2030.

"Urban areas will play an increasingly important role in driving economic growth and meeting poverty reduction targets. Improving access to services in urban areas is critical for improving the quality of life of ordinary Tanzanian citizens and reducing poverty," Dongier said.

The urban local governments include municipal councils of Tabora, Morogoro, Shinyanga, Sumbawanga, Moshi, Musoma, Songea, Singida, Bukoba, Lindi and Iringa. The town councils include Kibaha, Geita, Babati, Korogwe, Mpanda, Njombe and Bariadi.

According to latest estimates, roughly six percent of the country's total population of 42 million people resides in these areas.

Under the Program, the participating urban local government authorities will be assessed annually on progress made across a set of institutional and infrastructure implementation indicators and funds will only be disbursed once results are verified.

The program will decentralize responsibilities to the participating cities including procurement and contract management. "In this way, the projects seek to build capacity through 'learning-by-doing' for urban infrastructure development," the Task Team Leader of the project, Barjor Mehta said.

"The Bank will support the implementation of the program to strengthen institutional systems and improve local governance," Mehta added.

Despite Tanzania's stable macroeconomic performance, poverty remains widespread.

While urban areas in the country have been growing at twice the rate of growth in rural areas, investments in urban infrastructure have not kept pace with the population growth, resulting in poor or declining access to urban infrastructure and services.

The new program is intended to address these challenges in the overall context of the National Strategy for Growth and Poverty Reduction (MKUKUTA II), the decentralization policy, and two of four key fundamentals of the Government's Vision 2025, namely; strengthening and establishing well-functioning institutions and markets; and the provision of infrastructure.

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