19 April 2017

Tanzania: Why the Donor Musical Chairs Game Is Back On

Dar es Salaam — Faced with the harsh reality of inadequate financial resources to fund its own budget, President John Magufuli's administration is toning down its extreme view of donors as a stumbling block to its developmental agenda to an "unnecessary evil."

For more than a year now, the government and development partners (donors) were engaged in somewhat a cat-and-mouse game as they sized up each other.

From the outset, President Magufuli cut an image of a proud and no-nonsense nationalist who will not bow to the usual pressure from the West.

When he decided to push local tax collection with a determination not seen before, the idea to become self-reliant. "We should be able to support ourselves and avoid begging from some of the countries that we do not have to," he was quoted as saying in one of his many addresses on the topic.

It was a streak of self-determination that won the Tanzanian leader a host of local and international admirers, as more often than not, most African countries, rich in resources, squandered their own and turned the bowl on donors. Inevitably, begging by African countries has always come with conditionalities that are viewed as degrading for independent nations. That is, however, not to say that some of the conditions did not lack merit, far from it. The donor countries have leveraged on such support to check power abuse by African rulers and their bourgeoisie friends.

Tanzania has not been spared. For many years, the country has been one of the largest foreign aid recipients in Africa. The case remained so even after a successful campaign during President Benjamin Mkapa's era to have Tanzania's mounting foreign debt almost cleared by the donors in a relief campaign to tackle poverty and reward political stability.

But the love for spending more than what the country can generate has since seen the debt rise and rise again, with the government's budget in recent years depending on donor money to fund largely development projects.

President Jakaya Kikwete, a suave diplomat and darling of the West rolled out infrastructure projects ranging from roads, power supply and installation of water systems during his years in office, thanks to huge support from the donor countries. The country's donor dependency ranged from 35 to a high of 40 per cent of the domestic development plan.

On the lips of the West

So, it was no wonder then that during the Kikwete presidency, Tanzania's profile was on the lips of the West, and the then-President globe trotted to show for the good relations with the West. Tanzania was, for example, the first African country to qualify for the US development funding under the Millennium Challenge Corporation (MCC), receiving more than $700 million dollars for power and road projects. Millions more came through Pepfar and other USAID programmes. The phrase 'Kwa hisani ya watu wa Amerika' (courtesy of the American people) became common-place around the country during the Kikwete era. Many other donors were in play, and despite corruption concerns here and there, the early Kikwete years were some of the smoothest in terms of government-donor relations.

Fast forward to 2015, Dr Magufi displayed no affection for the West. He did not shy away from stating his dislike of bending backward to accommodate the whims of those he said were unduly loading it on the government. He even avoided rushing to embrace the development partners, becoming the first sitting President to skip the Sherry Party, a New Year meeting of the President and representatives of foreign countries.

He apparently made the foreign envoys queue for many months to see him while he was yet to make a single visit to a foreign country outside the East African region. When he did finally met the Western envoys, it was always on his own terms.

Two years down the line, and with the harsh reality setting in over the huge budget execution demands, the government may have changed tact. The President and development partners seem to be warming up to each.

"We have agreed to start on a new plan in our cooperation so that any issues between us does not affect the implementation of development projects," said Mr James Dotto, the Permanent Secretary for Finance, during a recent ceremony to sign a five-year Sh450 billion grant agreement with the European Union (EU).

Other than the several funding agreements with the World Bank running into hundreds of millions of dollars, the EU agreement was the first major pact with a major donor since 2014 when the development partners withheld up to a Sh1 trillion budget funding over the Tegeta Escrow scandal.

Donors also seemed to have taken a different approach when they delayed releasing funds they had pledged to support the fifth phase administration's first budget. Finance and Planning minister Dr Philip Mpango sounded the alarm bells over missed targets for the 2016/17 budget, with the revelation that the government had only met 37 per cent of the development budget by February 2017.

And with the President's tough position on external funding, it was difficult to judge how the next budget would be implemented should the cat-and-mouse games continued. The truth, however, was that government insiders were working hard behind the scenes to rescue things as it became apparent that the political grandstanding was not helping anyone.

Talks led by former Africa Development Bank boss Donald Kaberuka also thaw the icy relations.

EU head of delegation to Tanzania Ambassador Roeland Van Der Geer did confirm that the European Union and government negotiated to start on a clean slate.

Speaking during the signing ceremony of the EU funding framework, the envoy revealed the extent to which the government had gone in ceding ground to unlock donor funding. In a way, while President Magufuli continued to send the view that donors would not be allowed to dictate terms, his lieutenants were negotiating for a plan that basically retains the same conditionalities that the Head of State will continue to live under.

According to Der Geer, the signed frame work will depend on the fulfillment of agreed yardsticks. "The funds under will be made available in tranches over the coming years, with the decision to disburse depending on progress made by Government in the areas specified in the Financing Agreement," he said.


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