AFRICAN DEVELOPMENT FUND
UNITED REPUBLIC OF TANZANIA
INSTITUTIONAL SUPPORT PROJECT FOR GOOD GOVERNANCE -
PHASE THREE (ISPGG III)
OSGE
January 2016
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TABLE OF CONTENTS
Acronyms and Abbreviations
Currency Equivalents, Fiscal Year, Weights and Measures
Loan Information
Project Executive Summary
Results-based Logical Framework
Project Timeframe
I. PROJECT STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with Country Strategy and Objectives
1.2 Rationale for Bank’s Involvement
1.3 Development Partners Coordination
II – PROJECT DESCRIPTION
2.1 Project Components
2.2 Technical Solution retained and other alternatives explored
2.3 Project Type
2.4 Project Cost and Financing Arrangements
2.5 Project’s Target Area and Population: Beneficiaries
2.6 Participatory Process for Project Identification, Design and Implementation
2.7 Bank Group Experience and Lessons reflected in Project Design
2.8 Project’s Key Performance Indicators
III – PROJECT FEASIBILITY AND IMPACTS
3.1 Economic and Financial Performance
3.2 Environmental, Gender and Social Impacts
IV – IMPLEMENTATION
4.1 Implementation Arrangements
4.2 Financial Management, Disbursement and Audit
4.3 Procurement Arrangement
4.4 Monitoring and Evaluation
4.5 Governance
4.6 Sustainability
4.7 Risk Management
4.8 Knowledge-building
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal Instruments
5.2. Conditions Associated with Bank’s Intervention
5.3 Compliance with Bank Policies
VI – RECOMMENDATION
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LIST OF TABLES
Table 2.1 : Project Components
Table 2.2 : Project alternatives considered and reasons for rejection
Table 2.3 : Project Cost Estimates by Component
Table 2.4 : Sources of Financing
Table 2.5 : Project Cost by Category of Expenditure
Table 2.6 : Expenditure Schedule by year
Table 2.7 : Lessons learned from Previous Operations and Other Analytical Reports
Table 4.1 : Project Implementation Schedule
Table 4.2 : Risks and Mitigation Measures
Appendices
Appendix I. Tanzania Selected Socio-Economic Indicators
Appendix II. Bank Group Portfolio in Tanzania
Appendix III. Donor Coordination Matrix for Tanzania
Appendix IV. Lessons Learned from ISPGG II and GECSP
Appendix V. Public Financial Management: 2013 PEFA Indicators
Appendix VI. ISPGG III Analytical Work Underpinnings
Appendix VII. Map of Tanzania
i
Acronyms and Abbreviations
AfDB African Development Bank Group MEM Ministry of Energy and Minerals
ADF African Development Fund MoF Ministry of Finance and Planning
BRN Big Results Now MoU Memorandum of Understanding
CAG Controller & Auditor General MTFF Medium-term Fiscal Framework
CCM Chama Cha Mapidunzi MTR Mid-Term Review
CIDA Canadian International Development Agency NDP National Development Plan
CPI Corruption Perception Index NPS National Panel Survey
CPIA Country Policy and Institutional Assessment
CPPR Country Portfolio Performance Review PA&OB Public Authorities and Other Bodies
CSP Country Strategy Paper PAF Performance Assessment Framework
DfID Department for International Development
DPs Development Partners PBO Program Based Operation
EARC East Africa Regional Resource Centre PE Public enterprises
EIPC Energy Infrastructure Procurement Coordinator PCR Project Completion Report
EPP Emergency Power Plants PEFA Public Expenditure and Financial
Accountability
EU European Union PFM Public Financial Management
EWURA Energy and Water Utilities
Regulatory Authority
PFMRP Public Financial Management Reform
programme
FDI Foreign Direct Investment PPP Public private Partnerships
FM Financial Management PPRA Public Procurement Regulatory Authority
FYDP Five Year Development Plan PRSP Poverty Reduction Strategy Paper
GBS General Budget Support PSP Private Sector Participation
GCI Global Competitiveness Index REA Rural Energy Agency
GDP Gross Domestic Product RMC Regional Member Countries
GECSP Governance and Economic
Competitiveness Support Programme
SIDA Swedish International Development
Cooperation Agency
GOT Government of Tanzania SOE State-Owned Enterprises
IFMIS Integrated Public Financial Management
Information System
STAMICO State Mining Corporation
IPP Independent Power Producers TANESCO Tanzania National Electric supply Company
IPTL Independent Power Tanzania Limited TPDC Tanzania Petroleum Development
Corporation
IPSAS
ISPGG
International Public Sector Accounting Standards
Institutional Support Project for Good Governance
TYS Ten-Year Strategy (AfDB)
JAST Joint Assistance Strategy of Tanzania TZFO
TZS
Tanzania Field Office
Tanzania Shilling
JICA Japan International Cooperation Agency UA Units of Account
KPIs Key Performance Indicators USAID United States Agency for International
Development
LGA Local Government Authorities USD United States Dollars
MDA Ministries, Departments & Agencies VAT Value Added Tax
MDG Millennium Development Goals WB World Bank
ii
Currency Equivalents
As of November 2015
1 UA = TZS 3,026.08
1 USD = TZS 2,166.33
1 UA = USD 1.40
Fiscal Year
1st July – 30th June
Weights and Measures
1 metric tonne = 2204 pounds (lbs)
1 kilogramme (kg) = 2.200 lbs
1 metre (m) = 3.28 feet (ft)
1 millimetre (mm) = 0.03937 inch (“)
1 kilometre (km) = 0.62 mile
1 hectare (ha) = 2.471 acres
iii
Loan Information
Client’s information
RECIPIENT: United Republic of Tanzania
EXECUTING AGENCY: Ministry of Finance and Planning
Financing plan
Source Amount (UA) Instrument
ADF
12.00 million
Loan
GOT 1.33 million Counterpart Funds
TOTAL COST 13.33 million
Timeframe - Main Milestones (expected)
Concept Note approval
July 2015
Preparation
Appraisal
July, 2015
October, 2015
Project approval January, 2016
Effectiveness February, 2016
Mid-term Review June 2017
Completion December 2018
Last Disbursement June 2019
iv
PROJECT EXECUTIVE SUMMARY Paragraph Topics covered
Project
Overview
Project name: Institutional Support Project for Good Governance-Phase Three (ISPGG III)
Geographic scope: Entire country
Implementation timeframe: 2016-2018
Project cost: UA 13.33 million
Expected Outcomes and Outputs: The expected outcomes are (i) Effectiveness in the management of public finances
improved; and (ii) Business enabling environment improved. This will be achieved through the following output level
results: (i) Procurement capacity strengthened; (ii) External audit capacity enhanced; (iii) Internal audit function
strengthened; (iv) Business registration and licensing regime modernised; (v) Anti-corruption measures and capacity
strengthened; (vi) Capacity to implement the PPP framework developed.
Project direct beneficiaries: The direct project beneficiaries are: the Ministry of Finance and Planning, the Public
Procurement Regulatory Authority (PPRA), Internal Auditor General’s Office (IAGO), the Controller and Auditor
General (CAG), the Prevention and Combatting of Corruption Bureau (PCCB) and the Ethics Secretariat in the Mainland.
For Zanzibar, the beneficiaries are the following institutions: MoF, Zanzibar Investment Promotion Agency (ZIFA),
Department of Stock and Verification, the Accountant General’s Office, the Zanzibar Office of the Controller and Auditor
General, the PPP Unit and the Ministry of Trade. The indirect beneficiaries are the general population of Tanzania, who
will benefit from improved value for money in public procurement, improved service delivery arising from transparency
and accountability and enhanced economic opportunities, including employment creation, arising from stimulation of
private sector investments as a result of improved business climate. Benefits will also accrue to women as a result of the
project’s support to gender-based audits, capacity building for women’s effective participation in public procurement
activities. The private sector will also benefit from improved PFM (a competitive and transparent procurement system)
and PPP opportunities.
Needs
Assessmen
In spite of achievements in macroeconomic performance, there are still weaknesses in the implementation of policy and
institutional reforms, particularly in PFM, business enabling environment and overall public sector governance. Apart
from the need to continue the fight against corruption, stakeholders have highlighted challenges arising from lack of
appropriate reforms sequencing, poor institutional arrangements and implementation capacity constraints. Thus, under
this project, the focus of Component 1 is informed by PFMRP IV which aims to address these challenges through five
key result areas: (i) performance, scope and coverage of IFMIS; (ii) cash management; (iii) flow of funds; (iv) quality of
financial reporting and auditing; and (v) domestic revenue mobilisation and budget management. Through PFMRP, GOT
has been reforming its PFM systems over the past decade, enacting new laws (on procurement, audit and PFM), reviewing
policies and procedures , designing new systems such as IFMIS and establishing new institutions like IAGO. The full
benefits of these reforms are yet to be realised in terms of fiscal discipline, enhanced domestic resource mobilisation,
strategic allocation of resources and effective service delivery. GOT therefore designed a medium-term PFMRP to
address the challenges. The proposed project will complement implementation of PFMRP IV. In the area of the business
environment, the 2016 Doing Business Report ranked Tanzania 139/189 countries, a one step improvement over the 2015
ranking of 140/189. The same report ranked Tanzania 122/189 on the starting business score, respresenting a slippage of
7 steps from the 2015 rank of 129th position. The Government recognizes the private sector as a key engine of economic
growth, with a strong potential to play a critical role in contributing towards achieving Vision 2025. However, based on
the Government’s own assessment, the business environment in Tanzania is characterized as being cumbersome, heavily
bureaucratic, and costly and this reality is reflected in Tanzania’s relatively low ranking in global performance indices.
The Global Competitive Index for example has identified corruption and inefficient government bureaucracy as key
weaknesses, among others. This necessitated the introduction of the the Business Environment Improvement (BE)
Priority Area under Big Results Now, following the Government’s recognition of the need to create an enabling
environment for the private sector to not only effectively do business, but also to thrive and contribute towards job creation
and economic growth. Two of the six National Key Results Areas (NKRAs) are (i) realigning regulations and institutions
and (ii) curbing corruption. Three main intervention areas under BRN are (i) streamlining legal and regulatory
frameworks; (ii) modernizing processes; and (iii) building institutional and individual capacity. The choice of focus areas
of Component II of ISPGG III was guided by these priorities.
Bank’s
Added Value
The project builds upon Bank-supported capacity building and PFM reforms in Tanzania, and complements DPs’
interventions. Experience from ISPGG I and ISPGG II, and budget support operations, generated lessons which informed
the design of the project. TZFO facilitated understanding of the political context and technical issues, and this enriched
project design. In addition, the Bank is seen by GOT as a reliable and trusted partner. The strong basis for policy dialogue
built over the years makes it easy to engage with the government on critical and sensitive issues such the the fight against
corruption. The Bank’s vast experience in implementing similar projects across the continent is also a source of value
addition.
Knowledge
Management
The Project will contribute to knowledge building through skills transfers, from consultants and training providers, to
staff of beneficiary institutions. Knowledge will also accrue from appropriate study visits to sensitise public officials on
best practices in institutions in other countries. In addition, the support under PPPs will generate knowledge on best
practices in this important area, in terms of PPPs design and assessment, value for money analysis and measurement of
the risks and necessary mitigation actions. The Bank will disseminate knowledge through sharing findings of supervision
missions, progress reports, and the Project Completion Report. Lessons learned will inform future operations.
v
RESULTS-BASED LOGICAL FRAMEWORK
Country and project name: Tanzania: Institutional Support Project for Good Governance III
Purpose of the project: Promote inclusive growth and macroeconomic stability by enhancing economic and financial governance
through more effective public financial management and improved business environment..
RESULTS CHAIN PERFORMANCE INDICATORS
MEANS OF
VERIFICATION
RISKS/MITIGA
TION
MEASURES Indicator
(including CSI) Baseline
Target
IMP
AC
T
Improved economic
performance
Real GDP Growth 2013/14
7.3% 2018/19
7.8%
IMF report Risk 1:
Implementation
capacity constraints.
Weak implementation capacity within
Government.
Mitigation: Continue supporting targeted
TA interventions.
Existing PIU also to
be used to manage and
coordinate project
implementation. TZFO will also
provide
implementation support, in addition to
supervision missions
Risk 2: Fiduciary risk.
Although Tanzania has
made good progress in strengthening
institutions and
addressing corruption, weaknesses still
remain, and these will
continue to pose a risk
Mitigation: Project
support will improve
fiduciary environment.
Compliance with the
Bank’s procurement of
goods and services, annual audit reports
and training.
iii. The new
Government’s
commitment to
reforms:
It is not clear if the
newly elected Government’s reform
priorities will be the
same as those of the previous Government.
Mitigation: Persistent dialogue with the new
Government and the
key sector stakeholders.
Private Investment as share of GDP 23.9% 26% IMF report
OU
TC
OM
E
Effectiveness in the
management of public
finances improved
Accountability, control and scrutiny
of public finances (as measured by
PEFA)
% of unqualified audit opinions
2013
PI-21: D+
PI-26: C+
90%
2018
PI-21: B
PI-26: B+
95% (2018)
PEFA
CAG Annual
Report
Public Procurement compliance rate 65% (2014)
75% (2018)
PPRA annual
report
Business enabling
environment improved
Starting a business score (WB Doing
Business)
78.63 (2015) 83 (2018)
WB Doing
Business
Corruption Perception Index score 31 (2014) 34 (2018) Transparency
International CPI
Number of public procurement bids
awarded to women entrepreneurs
N/A (2014) 100 bids (2018) Progress reports
Supervision
reports
OU
TP
UT
S
Component 1: Enhancing the effectiveness of public financial management
1.1 Procurement capacity
strengthened
E-procurement infrastructure
installed
No e-
procurement infrastructure installed
(2015)
E-procurement
infrastructure
installed (2018)
Progress reports
and Supervision
reports
Number of procuring entities
strengthened through roll out of e-
procurement applications
0 (2015) 200 (2018)
Progress reports
Supervision
reports
Guidelines for monitoring and
auditing PPP projects developed and
disseminated
No
guidelines
(2014)
Guidelines
developed and
disseminated
(2016)
Progress reports
Supervision
reports
Procurement operational manual
updated
Old
Procurement
manual
(2014)
Procurement
manual
updated (2016)
Progress reports
Supervision
reports
Study on cost overruns/variations
during contract execution conducted
No study
conducted
(2014)
Study report
prepared
(2016)
Progress reports
Supervision
reports
vi
Training (including for women
entrepreneurs) (number of
beneficiaries, with at least 30%
women)
Gender policy for TANESCO
0 (2014)
No Gender
Policy in
place
(2014)
250 (2017)
Gender
Policy
prepared
(2016)
Progress reports
Supervision
reports
1.2. External audit capacity
enhanced
Audit offices equipped with hardware
and software: new offices in Dodoma
No new
installations
(2014)
Office
hardware and
software
installed
Progress reports
Supervision
reports
Audit guidelines on emerging themes
such as oil & gas, PPP
Number of
audit
manuals/gui
delines
developed
0 (2014) 4 (2016)
Training and study tours for CAG,
ZAO, including those targeting CSOs
and Parliamentarians conducted
(number of beneficiaries (with at
least 30% women)
0 (2014) 150 (20157) Progress reports
Supervision
reports
1.3: Internal audit function
strengthened
Study on the effectiveness of
governance arrangements in selected
key processes in PSOs conducted
No study
conducted
(2014)
Study report
prepared (2016)
Progress reports
Supervision
reports
Internal audit of government budget
process and payroll conducted
No audit of
conducted
Audit
conducted
Progress reports
Supervision
reports
Training for IAG staff, audit
committee members and
management teams in MDAs/LGAs
conducted (number of beneficiaries
(with at least 30% women)
0 (2014) 100 (2017)
Progress reports
Supervision
reports
IAG capacity strengthened through
enhanced connectivity
No new
LAN/WAN
installations
(2014)
LAN/WAN
installed
(2017)
Progress reports
Supervision
reports
Component 2: Creating an enabling environment for private investments
2.1. Business registration and
licensing regime modernised
Relevant business laws and
regulations on procedures to start a
business amended
Old laws in
place
Rel Relevant business
laws amended
Progress reports
Supervision
reports
Legislation to enable online license
processing developed
No enabling
law in place
Enabling law
developed
Progress reports
Supervision
reports
Online portal for licenses and
procedures established
No online
portal in
place
Online portal
developed
Progress reports
Supervision
reports
2.2 Anti-corruption measures
and capacity strengthened
Number of PCCB staff trained on
forensics, investigation techniques,
asset tracing and money laundering
(at least 30% women)
0 (2014) 300 (2017) Progress reports
Supervision
reports
PCCB district offices capacitated
through installation of Local Area
Network for district offices
No LAN for
district
offices
Integrated LAN
installed
Progress reports
Supervision
reports
vii
Develop National Anti-corruption
Policy
No anti-
corruption
policy (2014)
Anti-corruption
policy
developed
(2016)
Progress reports
Supervision
reports
Reinforce the Ethics Secretariat’s
capacity to conduct asset
verification.
No asset
verification
framework in
place 92014)
Asset
verification
framework
developed
(2017)
Progress reports
Supervision
reports
2.3 Capacity to implement the
PPP framework developed
Draft PPP Manual reviewed to
synchronise with new PPP Law
Draft PPP
Manual in
place (2014)
PPP Manual
finalised an
approved
(2016)
Progress reports
Supervision
reports
PPP feasibility studies conducted
No PPP
feasibility
studies
(2014)
2 PPP
feasibility
studies
conducted
Progress reports
Supervision
reports
PPP training (including on gender
responsive aspects) conducted
(number of beneficiaries, with at
least 30% women).
0 75 Progress reports
Supervision
reports
KE
Y
AC
TIV
ITI
ES
COMPONENTS INPUTS
Component 1: Enhancing the effectiveness of public financial management
Component 2 : Creating an enabling environment for private investments
Inputs : - Funding in million UA
ADF : UA 12 million
GoT: UA 1.33 million
Total project cost: UA 13.33 million
viii
Table 1: Project Implementation Schedule
Tanzania: Institutional Support Project for Good Governance III
Years Action By
Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Activities
Project life cycle
Loan approval AfDB
Fulfilment of conditions for disbursement GoT
Start of the project and launch AfDB & GoT
Supervision and Monitoring AfDB
Mid-term review AfDB/ GoT
Disbursement of Funds AfDB
Aubmission of annual audit reports GoT
Government completion report GoT
AfDB Project Completion Report AfDB
All Components
General Procurement Notice published GoT
Recruitment of contractors GoT
Contract local partner training institute GoT
Procurement of IT equipment and software GoT
Submission of progress reports from contractors GoT
Training and workshops GoT
2016 2017 2018 2019
1
REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD OF
DIRECTORS ON A PROPOSED LOAN TO THE UNITED REPUBLIC OF
TANZANIA TO FINANCE THE INSTITUTIONAL SUPPORT PROJECT FOR GOOD
GOVERNANCE PHASE THREE (ISPGG III)
Management submits the following Report and Recommendation on a proposed ADF Loan of
UA 12 million to the United Republic of Tanzania to finance the ISPGG III.
I. STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with Country and Bank Strategies and Objectives
1.1.1 The proposed operation is strongly anchored on the Tanzania National Strategy
for Growth and Reduction of Poverty II (NSGRP II ). The overarching objective of the
Strategy is to (i) promote growth and reduction of income poverty; (ii) improve the quality of
life and social well-being of the Tanzanian people; and (iii) enhance good governance and
national unity. For the Mainland NSGRP II focuses on three broad clusters: (i) growth and
reduction of income poverty; (ii) improvement of quality of life and social well-being; and (iii)
governance and accountability. For Zanzibar, the Zanzibar Strategy for Growth and Reduction
of Poverty (ZSGRP II) focuses on (i) growth and reduction of income poverty; (ii)
improvement of social services and well-being; and (iii) good governance and national unity.
In 2012, GOT unveiled the Long Term Perspective Plan (LTPP) operationalized through a
series of Five-Year Development Plans (FYDPs) to steer implementation of Vision 2025. GOT
has also launched the Big Results Now (BRN) initiative, to improve efficiency in the
implementation of policies and strategies. To fast track implementation of FYDP, projects
identified under BRN have been prioritized into seven National Key Results Areas: energy,
water, agriculture, transport, education, business
environment and resource mobilization. A Presidential
Delivery Bureau has been established to assess
implementation progress against performance indicators.
The proposed operation, ISPGG III, is designed
specifically to continue to contribute to, and consolidate,
the gains that have been registered in Tanzania in the
Bank’s support of capacity building in the public sector.
These gains, clearly evident in the on-going turn-around
of key oversight institutions, should be consolidated as
they are critical for successful implementation of the
country’s medium term development strategy..
1.1.2 The proposed operation is complementary to
the Government’s multi-donor supported Public
Finance Management Reform Programme (PFMRP
IV) launched in 2012 to support efforts to realise the
national policy objectives of Vision 2025, FYDP and
MKUKUTA//MKUZA II (the National Strategy for
Growth and Reduction of Poverty II). As is the case with the proposed operation, the PFMRP
IV is designed to, among other objectives, improve planning and budgeting, and promote
transparency, accountability and efficiency in the use of public resources. Thus the Bank
Group’s proposed project complements and reinforces the capacity-building support of other
development partners (DPs).
Box I: PFMRP IV Objectives
The objective of PFMRP IV, 2012/13 –
2016/17 is stated as strengthening and
improving PFM systems in a more
coordinated manner, to meet fiscal
policy challenges. It is desgned to
support MKUKUTA/MKUZA II and
Vision 2025, with 3 key elements to
achieve: (i) fiscal sustainability and
balance in the public sector; (ii)
restructuring and reallocations for
growth and poverty reduction; and (iii)
improved public sector efficiency and
effectiveness in administration for
improved service delivery and
development results for Tanzanians.
2
1.1.3 The project will complement the on-going Bank-supported PFM reforms under the
Power Sector Reform and Governance Support Programme (PSRGSP) approved in May,
2015. It will contribute to further strengthening key oversight institutions that played a critical,
and commendable role in dealing with the recent IPTL alleged corruption Case in the energy
sector. In the process, the project will focus on further strengthening compliance with financial
regulations governing use of public resources, in line with International Public Sector
Accounting Standards (IPSAS); enhance transparency, competition and professional standards
in public procurement; strengthen GOT’s capacity to oversee IFMIS transactions; and improve
fiscal control and reporting at the local level through upgrading IFMIS. Under ISPGG III,
improved oversight, compliance and controls will contribute to improved PFM environment
which, in turn, will generate increased mobilisation and effective use of domestic resources.
The proposed operation will be well co-ordinated with PFMRP IV, to avoid duplication of
effort and ensure a comprehensive framework for development partners’ dialogue with GOT,
with a view to ensuring that DP interventions are aligned with national priorities .
1.1.4 The proposed project is aligned with the Bank’s Tanzania Country Strategy Paper
(CSP 2011-2015) aimed at supporting the country achieve greater competitiveness and
more inclusive growth through two pillars: (i) Infrastructure Development and (ii)
Building an enabling institutional and business environment. It is consistent with the CSP’s
emphasis on supporting reforms and capacity development in PFM to improve the
macroeconomic and business environment, including promoting transparency in public
procurement. Through further improvements to procurement systems, corruption will be
reduced and competition enhanced, with positive impact on the business environment. By
focusing on capacity enhancement for PFM reform and business climate improvements, the
proposed project is aligned to the Bank’s Ten Year Strategy 2013-2022 (good governance and
private sector development). It is reinforced by two of the new Bank Group High-5 institutional
priorities, namely (i) Industrialize Africa (through the business enabling environment
supporting business registration and licensing, anti corruption and Public-Private-
Partnerships); and (ii) Improve the quality of life of the people of Africa (through the PFM
interventions which will help improve effectiveness in the management of public finances,
enhance economic performance and hence, the quality of life of Tanzanians). The proposed
project is also consistent with all three pillars (Public Sector and Economic Management,
Sector Governance, and Investment and Business Climate) of the Governance Strategic
Framework and Action Plan (GAP II, 2014-2018): GAP II seeks to build effective and capable
institutions, promote transparency and accountability, and improve the business climate,
thereby enhancing the quality of growth. The project is also aligned with the Private Sector
Development Strategy. In addition, by ensuring that women are deliberately given the
opportunity to benefit significantly from the capacity building activities under the project, and
by developing a gender policy and supporting gender-based auditing, the operation is
consistent with the Bank Group’s Strategy on Gender.
1.2 Rationale for Bank’s Involvement
1.2.1 The socio-economic challenges facing Tanzania require continued pursuit of
institutional capacity building in order to fight corruption, improve efficiency and
transparency in the management and utilisation of public resources, and improve the business
enabling environment. Fully achieving the GOT objectives in these critically important areas
of governance will take time, is still a works-in-progress, and requires continued Bank support.
1.2.2 Through earlier capacity building projects (ISPGG I-II), the Bank provided
support to the strengthening of public procurement, external audit and anti-corruption
functions, which contributed to improving transparency and accountability in PFM to
3
enhance quality of the budget processes. Positive results were registered in strengthening
CAG and PCCB, improving value for money audit and public procurement; and improving
procurement compliance rates. For example, PEFA (PI-26) on scope, nature and follow up on
external scrutiny of audit improved from C in 2008 to C+ 2013; CAG improved from
AFROSAI –E rating Level 1 in 2008 to level 3 in 2013; and the compliance rate of procuring
entities improved from 50% in 2008/09 to 64% in 2012/13. While these achievements are
commendable, more needs to be done. Further capacity building is required to address existing
weaknesses as well as deal with new and
emerging challenges such as the audit of oil and
gas
activities and PPP projects. The weak internal
audit function also remains a challenge, hence
the addition of the Internal Auditor General to
the list of beneficiaries under ISPGG III.
1.2.3 The proposed intervention will,
therefore, further build capacity of the
selected institutions to enable the effective
implementation of reforms in PFM, in
particular strengthening financial controls
and compliance with existing PFM systems
in accounting, IFMIS and procurement.
GOT is continuing to pursue policy and
institutional reforms to improve PFM. These
reforms need continued support. The PFM
outstanding reform agenda calls for sustained
human and institutional capacity development,
as well as plugging loopholes that cause
revenue losses. It is in this context that GOT has recognized the need to strengthen financial
controls and compliance, in order to mobilise required resources to support poverty reduction
and inclusive growth efforts.
1.2.4 The proposed operation will contribute to addressing weaknesses in PFM and the
business environment, and intensifying and sustaining capacity building efforts in
Tanzania. While improvements have been recorded in areas such as the legal environment and
budget procedures, the full benefits of the reforms are yet to be realised for optimal controls,
accountability, fiscal discipline and improved service delivery. With PFMRP IV currently
under implementation, the proposed project has identified areas for complementary support to
enhance capacity development. Recent PFM assessments, PEFA reports and other analytical
works have identified a number of weaknesses in Tanzania’s PFM systems, which have been
taken into account in the design of this project. The key challenges are summarized in Box 3.
Weaknesses also persist in the area of the business environment. The business environment in
Tanzania has long been characterized as cumbersome, heavily bureaucratic, and costly. This reality
is reflected in Tanzania’s relatively low ranking in global performance indices. Amongst the most
critical factors that negatively affect the business environment is corruption, which increases
the cost of doing business, thereby rendering Tanzanian businesses less competitive. The
project complements efforts of other DPs who are focussing on various related aspects of
governance, such as local government reform, PFM, macroeconomic management, public
sector reform and anti-corruption.(see Appendix III).
Box 2: Achievements of ISPGG I and II ISPGG I and II contributed to improving transparency and
accountability in PFM to enhance quality of the budget
processes, and support efforts to reduce fiscal deficits and
stimulate economic growth. They have helped in
strengthening oversight institutionsISPGG I contributed to
(i) improving compliance of procurement entities with the
Procurement Act 2004 from 39% in 2005 to 50% in 2008/09;
(ii) formulating anti-corruption strategy in procurement; (iii)
establishing procurement cadre in the public service; (iv)
reducing time to dispose of court cases by 400% in Zanzibar;
and (v) issuance of the audited accounts of Zanzibar on time
as from FY 2007/08. These achievements were consolidated
under ISPGG II, which represented an appropriate use of
resources for Tanzania, when the country was experiencing
worsening fiscal deficits and needed to strengthen PFM.
The operation deepened PFM reforms and mainstreamed
anti-corruption initiatives. Achievements included (i)
improved value for money audit; (ii) improved value for
money in public procurement; and (iii) improved
procurement compliance rates. In addition, GOT made
good progress in increasing implementation of CAG’s
audit recommendations.
4
1.2.5 An added value of this operation lies in the fact that the Bank is seen by GOT as a reliable
and trusted partner. Hence, the strong basis for policy dialogue built over the years makes it
easy to engage with the government on critical and sensitive issues such as the fight against
corruption. The Bank’s vast experience in implementing similar projects, both in Tanzania and
across the continent, is also a source of value addition.
1.2.6 Analytical Works Underpinning: The design of this project is guided by various
analytical and diagnostic reports as well as broad consultations during the preparation
and appraisal missions. The main analytical underpinning is provided by the PFMRP IV Mid-
Term Review Draft Final Report (July, 2015); PPRA Annual Reports; the Reforming Tanzania
Public Sector Report: An Assessment and Future Direction (November, 2013); the BRN
Strategic documents; the Public Expenditure and Financial Accountability (PEFA)
assessments; Corruption Perception Index; the World Bank June 2015 Development Policy
Operation (DPO) for Tanzania; the 2014 General Budget Support Annual Review, Final Report
(September, 2015); World Bank Doing Business Report 2015 and 2016; and World Economic
Forum Global Competitiveness Report 2014 and 2015. Discussions with other DPs on PFM,
PPP and overall capacity building have also provided a basis for the project design and
identification of complementary areas of focus. In addition, lessons have been drawn from
previous operations of both the Bank and other development partners. The lessons include the
need to: (a) further strengthen implementation capacity in PFM institutions; (b) limit the
number of activities envisaged, and conditions set, in project design, in order to avoid putting
excessive burden on GOT implementation capacity: this will assist avoid the risk of slippages
in project execution; (c) strengthen Information Management and filing systems; (d) achieve
stronger Tanzania performance in domestic resource mobilisation to finance its development
programme; and (e) implement projects and programmes within the existing GOT/DPs
coordination structures: this will enhance complementarity and avoid duplication of effort.
Box 3:.Key Challenges in Tanzania’s PFM Systems and the Business Environment
A. The updated Country Fiduciary Risk Assessment concurs with the PEFA 2013 analysis which stated that
major PFM challenges include managing the non-salary internal controls. GOT is committed to PFM reforms
through its PFM strategy and other initiatives. The required safeguards to mitigate the key risks/weaknesses,
such as non-salary internal controls, are being addressed in the PFMRP IV and are discussed annually through
a dialogue of DPs and GOT with key issues put in the Performance Assessment Framework (PAF) and the
PFMRP IV supervised annually with the Bank’s participation. The Bank has also been supporting the PFM
strategy through the ISPGG I and II operations.
B. Corruption negatively affects the business environment in Tanzania by increasing the cost of doing
business, which renders Tanzanian businesses less competitive. Government bureaucracy is also a major avenue
for bribery and corruption and could be minimized through enhancing the capacity of anti-corruption bodies
such as PCCB, and use of automation to reduce the time to process applications for business registration and
licenses. Despite the putting in place of a PPP framework, Tanzania has not succeeded in attracting significant
investment flows through PPPs. Building capacity to help operationalize the PPP framework is therefore critical.
1.3 Development Partners’ Coordination
1.3.1 Development partners’ support to Tanzania is coordinated by the Ministry of
Finance and Planning, responsible for aid mobilisation, coordination and reporting.
Development partners’ collaboration is generally good, but there is room for improvement of
the aid coordination mechanism particularly in budget support. There are mechanisms for DP
coordination, particularly through the Sector Working Groups, although these SWGs need to
be strengthened. PFM reform dialogue is conducted through the PFMRP IV framework, in
5
which the Bank participates through the Field Office, TZFO, which has been active in
institutional capacity and PFM dialogue between GOT and development partners.
1.3.2 The Ministry of Finance and Planning requested development partners to align
and coordinate their assistance for institutional support and overall capacity building in
the public sector. With technical assistance from development partners, the Ministry
developed PFMRP IV, which provides a framework for coordinated DP support. The DPs in
the Multi-Donor Trust Fund (MDTF) around PFMRP IV include DFID (UK), Canada,
Germany, Denmark, Ireland and Finland; a potential new member in the near future could be
Norway. The proposed project will strongly complement the MDTF PFMRP IV, through
targeted focus on accounting and audit, procurement and financial control, anti-corruption, and
overall support for measures and actions enhancing transparency and accountability in the
public sector. The contribution of the various DPs to capacity building in Tanzania is presented
in Appendix III.
II. PROJECT DESCRIPTION
2.1 Project Components
2.1.1 Project Objectives: The proposed project’s broad development objective is to support
GOT in promoting inclusive growth and macroeconomic stability by enhancing economic and
financial governance through more effective public financial management and improved
business environment. It will support efforts geared towards enhancing capacity, accountability
and integrity in the management of public resources by key oversight and economic/finance
institutions. It will also help the fight againts corruption; the streamlining of business
registration and licensing processes and operationalising the PPP framework.
2.1.2 Project Components: The project has two components: (i) Enhancing the
Effectiveness of Public Financial Management and (ii) Creating an Enabling Environment for
Private Investments.
Component 1: Enhancing the Effectiveness of Public Financial Management
The objective of this Component is to strengthen the procurement function through
capacity building of PPRA, particularly in new and emerging areas such as PPP and the
oil and gas sector. The training will also target women entrepreneurs to facilitate their access
to public procurement opportunities. The Component will address specific procurement issues,
conduct studies and prepare Manuals and Guidelines for effective operationalisation of the
public procurement framework, in line with the Public Procurement Act and related
regulations. It will support interventions geared towards the development of e-procurement in
Tanzania. This includes both the installation of the e-procurement infrastructure and the roll-
out of the system to procuring entities. Capacity building support will also be provided to the
Public Procurememt Regulatory Authority (PPRA) to develop appropriate tools and guidelines
that will enable the Authority to effectively perform its monitoring role, particularly in the
emerging oil and gas sectors of the economy. The review and implementation of the system for
checking and monitoring compliance will hence be boosted. In addition, this Component will
also strengthen the internal and external audit funtions, to ensure that strong control systems
are in place within the Government’s PFM system and that there is adequate accountability in
the use of public resources. Support to this function will be delivered through capacity building
and the use of ICT (both hardware and software) for more effective and efficient delivery of
the internal and external audit mandate. The training will also target gender, through capacity
building for gender-based auditing and the development of a gender policy for TANESCO,
6
which is one of the commitments under the on-going Bank-financed PSRGSP, covering policy
dialogue in public procurement, among other intiatives.
Component 2: Creating an Enabling Environment for Private Investments
The objective of this Component is to support GOT’s ongoing efforts to increase private
investments in Tanzania by creaing a more conducive environment for business activity.
This support will be channelled through three interventions. First, modernise the business
registration and licensing regime to improve the current lengthy and costly procedures to
register a business in Tanzania (particularly Zanzibar). According to the 2015 World Bank
Doing Business Report, starting a business in Tanzania requires 9 procedures and takes 26
days, placing the country at a ranking of 129th out of 189 economies on ease of starting a
business, representing a slippage of 7 steps from the 2015 ranking of 122. Secondly, address
the problem of corruption, which is not only an issue for the public sector, but for the private
sector as well, given its impact on the cost of doing business and, hence, on the competitiveness
of Tanzania as an investment destination. According to Transparency International’s 2014
Corruption Perception Index, Tanzania ranked 119 out of 175 countries, compared to 111 out
of 177 countries in 2013, a slippage of 8 steps. The recent alleged corruption scandal involving
withdrawal of funds from Tegeta Escrow account, and related controversial transfer of
ownership of Independent Power Tanzania Limited (IPTL), brought the issue of corruption to
the fore in Tanzania. Hence, this intervention will build on the achievements of support to
PCCB through earlier Bank interventions (ISPGG I and II). It will also support the Ethics
Secretariat by helping to reinforce its capacity to conduct asset verifications, among other
activities. Thirdly, the Component will support GOT efforts to operationalise the PPP
framework. The recently amended PPP Law has helped to streamline the hitherto confusing
roles of numerous entities (Prime Minister’s Office, Ministry of Finance and Planning,
Tanzania Investment Centre) involved in the PPP process. Despite the existence of a PPP
framework, capacity for PPP implementation within government remains weak and so far
Tanzania has not succeeded in attracting significant amounts of private capital through PPP
arrangements.The project will support capacity building in PPPs, particularly by focusing on
project identification, appraisal and due diligence to help ensure value for money in PPP
transactions. It will also support review and finalisation of the PPP Manual/Guidelines, and
feasibility studies on three pilot PPP projects. These three sub-components of the Business
Environment Component of the proposed project are mutually reinforcing. By helping to
modernise the business registration and licensing regime, processes will be faster and this will
minimise the need to offer bribes for speedier processing of applications. This will in turn
contribute to a reduction in the cost of doing business, hence making Tanzania more
competitive. Theincreased competitiveness will in turn attract more private investments,
including through PPPs.
Table 2.1 presents a summary of major activities under the two project Components, and
Technical Annex B.2 presents a detailed budget for both the Mainland and Zanzibar over the
3-year peiod 2016-2018.
Table 2.1: Project Components and Estimated Cost
Components Component description Estimated
Cost
(UA’000)
Component 1: ENHANCING THE EFFECTIVENESS OF PUBLIC FINANCIAL MANAGEMENT
7
Components Component description Estimated
Cost
(UA’000)
Sub-component 1.1:
Strengthening the
public procurement
function
This component will help to strengthen capacity in the areas of public
procurement, internal and external audit. The focus of the capacity building will
be on training, automation of systems and processes, development of manuals and
guidelines to help with process standardization. These interventions will
eventually help to enhance accountability, control and scrutiny of public finances,
enhance capacity to prepare and audit government accounts and improve public
procurement compliance rates.
The sub-component will undertake the following activities:-
Installation of infrastructure and roll out of e-procurement applications to
procuring entities
Guidelines for monitoring and auditing PPP projects developed and
disseminated
Procurement operating manual developed
Study on cost overruns/variations during contract execution conducted
Training and study tours
Workshops/seminars for women entrepreneurs for enhanced participation in
public procurement
2,873
Sub-component 1.2:
Enhancing the external
audit function
Through the sub-component, the project will support implementation of the
following activities:
Equipment and IT infrastructure installed for the Comptroller and Auditor
General’s Office
Training for CAG and ZAG staff
Capacity building of non-state actors (citizen engagement in the audit process)
2,005
Enhancing the internal
audit function
Through the sub-component, the project will support implementation of the
following activities:
Study on the effectiveness of governance arrangements in selected key
processes in PSOs conducted
Interna audit of the government budet process and payroll conducted
Training for IAG staff and audit committee members and management teams
in MDAs/LGAs conducted
1,792
Component 1 Sub-total 6,670
Component 2: CREATING AN ENABLING ENVIRONMENT FOR PRIVATE INVESTMENTS
Sub-component
2.1: Modernising the
busness registration and
licensing regime
This component will help to modernise the business registration and licensing
regime through automation and hence reduce the bureaucracy associated with such
processes. It will also strengthen capacity to fight corruption as well as build
capacity to operationbalise the PPP framework. These interventions will help
improve Tanzani’a overall business environment and hence attract private
investments.
Under this sub-component, the Project will support:
Amendments to relevant business laws and regulations on procedures to start a
busness
Development of legislation to enable online license processing developed
Development of a system for online business registration
1,499
Sub-component 2.2:
Capacity strengthening
for anti-corruption
Under this subcomponent, the Project will support:
Installation of Local Area Network for PCCB district offices
Development of National Anti-corruption Policy
Training and research for PCCB and Ethics Secretariat staff
Development of asset verification framework and related capacity building for
the Ethics Secretariat
2,597
Sub-component 2.3:
Operationalising the PPP
framework
Under this subcomponent, the Project will support:
Review and finalisation of the draft PPP Manual/Guidelines
PPP feasibility studies for pilot projects
Training ad technical assistance
1,347
8
Components Component description Estimated
Cost
(UA’000)
Component 2 Sub-total 5,443
Component III: Project Management
The PIU team will be handling and coordinating all activities for the beneficiaries
both in Mainland and Zanzibar. Under this component, the project will support:
Project operating costs
Project audits costs
Training activities for the PIU teams
586
Phisical contingency (2%)
& Price contingency (3%)
634
TOTAL 13,133
2.2 Technical Solution Retained and Other Alternatives Explored
2.2.1 During project preparation and appraisal, the following technical issues were
explored regarding: areas of intervention; the number of institutions to support; the scale
of investments in each area; and the modality of delivering the capacity building support.
Based on these considerations, the recommendations from analytical works, as well as lessons
from the Bank’s and other DPs’ capacity-building operations, it was agreed with GOT to
continue to utilise the tried, tested and successful arrangements under ISPGG II to consolidate
the gains that have been achieved. As highlighted in the July 2015 Project Completion Report
(PCR) for ISPGG II, the technical arrangements used under ISPGG II have delivered the
expected results. these arrangements will thus be retained for ISPGG III. They involve
continuing with provision of training and technical assistance, supply of equipment, ICT
software and hardware, and other capacity building activities, through 2 PIUs, one for Zanzibar
beneficiaries and the other for the Mainland beneficiaries. The areas of focus of ISPGG III
were carefully selected to build on the achievements of ISPGG I and II, while also providing
for support to new pertinent emerging areas such as Public-Private-Partnerships. The use of
two PIUs, one for the Mainland and one for Zanzibar, has ensured that delays in one part of the
country do not affect the other part, while at the same time provding opportunities for
experience-sharing between the two PIUs. This arrangement has proven to be successful and
will hence continue under ISPGG III.
2.2.2 In terms of the funding modality, the appraisal mission engaged in discussions
with development partners, particularly the PFMRP IV team and the World Bank, as
well as the Ministry of Finance and Planning, on synergy and complementarity issues in
order to ensure DPs’ coordination, avoid duplication and reduce transaction costs. In this
connection, consideration was given to disbursing the funds of the proposed project through
the PFMRP IV multi-donor trust fund. In the end, given the positive results obtained from the
alternative modalities utilised for ISPGG II, the appraisal team and GOT agreed to continue
with past modalities, while reinforcing the complementarities and co-ordination with the on-
going PFMRP IV.
9
Table 2.2: Project Alternatives Considered and Reasons for Rejection
Alternative Brief Description Reasons for Rejection
Basket
Funding The Government and some DPs have established a
Multi-Donor Trust Fund arrangement to pool
resources directed to support the PFMRP. The
MDTF arrangement was intended to provide the
government with flexibility in the implementation of
PFMRP. The appraisal team discussed the MDTF
modality with government and DPs, to assess the
utility and efficiency of this mode of financing. The
appraisal team concluded that it was better to retain
direct project funding.
The reasons for not using the MDTF modality
are as follows: (i) The Bank’s past approach of
direct project funding was effective and
delivered results. It was well co-ordinated with
the multi-donor PFMPR IV and hence the risk
of duplication was minimised. Hence, the team
found no reason to change the delivery
modality.
Focus
areas of
the
operation
The Government submitted a long list of capacity
building needs, ranging from statistical capacity
building to oil and gas sector capacity building.
Following thorough assessment by the team, it was
decided to strictly aply the selectivity principle,
hence the few focus areas of the project. A separate
operation will de signed next year to support other
areas, particularly domestic resource mobilization
and oil and gas sector capacity building.
It would have been difficult to manage such a
huge operation with totally unrelated
components. The selectivity principle would
not have been adhered to.
2.3 Project Type
The proposed project is an institutional support for capacity building designed as
a follow up to ISPGG II, and complementing the multi-donor PFMRP IV. It aims at
contributing to consolidating institutional reforms through a public sector investment project.
2.4 Project Cost and Financing Arrangements
The estimated total cost of the project, net of taxes and duties, is UA 13.33 million
(including 10% GOT contribution). A price contingency of 5%, and a physical contingency
of 3%, have been factored in the project cost. Tables (2.3) and (2.4) present the estimated
project cost by component and sources of finance, whereas Tables (2.5) and (2.6) present the
estimated project costs by Category of Expenditure. Details of the project cost by component
and expenditure category are also presented in Technical Annex B2. The Bank will finance
UA 12 million while the GOT contribution is UA 1.33 million.
10
Table 2.3: Project Cost Estimate by Component
Table 2.4: Sources of Financing
Table 2.5: Project Cost by Category of Expenditure
Table 2.6: Expenditure Schedule by year
%
Foreign Local Total Foreign
Component I : Enhancing transparency and
accountability in public financial management4,246.03 2,423.54 6,669.57 64%
Componant II: Creating an enabling environment
for business and private investments3,271.72 2,171.13 5,442.85 60%
Component III: Project Management 72.31 513.66 585.97 12%
TOTAL BASE COST 7,590.06 5,108.33 12,698.39 60%
Physical contingency 2% 151.80 102.17 253.97
Price contingency 3% 227.70 153.25 380.95
TOTAL PROJECT COST 7,969.56 5,363.74 13,333.30 60%
Total Cost '000 UA
Component
Foreign Local Total
ADF Loan 7,970 4,030 12,000 90.0%
GoT Counterpart funding 1,333 1,333 10.0%
TOTAL PROJECT COST 7,970 5,364 13,333 100%
% of total
amountSource of funding
Costs in Thousands UA
Expenditure Account Foreign Local Total %Foreign
Goods 2,454.83 - 2,454.83 100%
Services 5,135.23 1,914.38 7,049.61 73%
Operating Costs - 3,193.95 3,193.95 0%
TOTAL BASE COST 7,590.06 5,108.33 12,698.39 60%
Physical Contingency 2% 151.80 102.17 253.97
Price Contingency 3% 227.70 153.25 380.95
TOTAL PROJECT COST 7,969.56 5,363.74 13,333.30 60%
COMPONENT 2016 2017 2018 Total
Enhancing transparency and accountability in
public financial management3,613.52 1,851.05 1,538.48 7,003.05
Creating an enabling environment for business
and private investments2,483.25 2,040.84 1,190.90 5,714.99
Project Management 225.78 194.74 194.74 615.27
Total Project Cost (incl. contingency) 6,322.56 4,086.63 2,924.12 13,333.30
11
2.5 Project’s Target Area and Population; Beneficiaries
The direct project beneficiaries are: for the Mainland, the Ministry of Finance and
Planning, PPP Unit, the Public Procurement Regulatory Authority (PPRA), Internal
Auditor General’s Office (IAGO), the Controller and Auditor General (CAG), the
Prevention and Combatting of Corruption Bureau (PCCB) and the Ethics Secretariat.For
Zanzibar, the beneficiaries are the following institutions: MoF, Zanzibar Investment Promotion
Agency (ZIFA), Department of Stock Verification, the Accountant General’s Office, the
Zanzibar Office of the Controller and Auditor General, the PPP Unit and the Ministry of Trade.
The indirect beneficiaries are the general population of Tanzania, who will benefit from
improved value for money in public procurement, improved service delivery arising from
transparency and accountability and enhanced economic opportunities, including employment
creation, arising from stimulation of private sector investments as a result of improved business
climate. Benefits will also accrue to women, as a result of the project’s contribution to
supporting incorporation of gender-based audits, as well as provision of training for women
(with at least 30% of all training under the project explicitly allocated for women). Women
entrepreneurs will also benefit from special workshops to be organised by PPRA aimed at
capacitating them to effectively participate in public procurement activities.The private sector,
businesses and contractors, will also benefit from improved PFM resulting in a more
competitive and transparent procurement system.
2.6 Participatory Process for Project Identification, Design and Implementation
Wide stakeholder consultation was carried out with Ministries, Departments &
Agencies (MDAs), development partners, the private sector, NGOs, women associations
and civil society during project preparation and appraisal. The private sector was
adequately consulted, mainly through umbrella bodies, and views expressed guided the
selection of focus areas under Component 2. The appraisal mission held discussions within the
PFMRP IV secretariat to maximise synergies with this multi-donor basket-funding operation,
and promote harmonisation. In addition, project design benefitted from the results of earlier
extensive consultations, in which TZFO participated, that were undertaken among DPs in
preparing the PFMRP IV. The regular DP meetings on PFM and capacity development also
provided useful information and perspectives for developing the project. Meetings were also
held with key development partners currently supporting interventions in the area of the
investment climate, such as the World Bank, to ensure harmonization on Component II. The
appraisal mission also met other key PFM and business environment stakeholders, to solicit
their views on the scope and priorities of the proposed operation, and ensure complementarity
with other interventions. The important observations highlighted during these consultations
include the need for: country ownership, gender mainstreaming, sustainability, alignment with
the country’s development priority and harmonization with other DP interventions. These
observations and suggestions informed the design of the proposed project.Thus, the Project is
prepared taking into account the various potential beneficiaries’ strategic/corporate plans, and
the Bank’s CSP which are products of consultative processes. During the implementation stage,
regular consultations will continue, particularly with private sector bodies and women’s groups
to ensure that their concerns are addressed. The half yearly supervision missions, and the mid-
term review of project implementation, will ensure continued engagement with all
stakeholders, including non-state actors.
12
2.7 Bank Group Experience and Lessons Reflected in Project Design
2.7.1 In designing the proposed project, the experience and lessons from previous Bank
interventions in Tanzania were exploited. These sources of experience and lessons include
the Project Completion Reports (PCRs) for ISPGG I and II, and the budget support GECSP;
the implementation of the CSP 2011-2015; the findings of the CSP Mid-Term Review; and of
the Country Portfolio Performance Review Report. The PCRs, in particular, made a number of
recommendations, from lessons learned, which have influenced the design of this operation.
These recommendations and lessons are captured in Table 2.7.
2.7.2 As at November 2015, the Bank’s active portfolio in Tanzania amounted to UA
1,427.6 million, comprising 15 national operations of UA 1,104.5 million and 10
multinational operations of UA 225.3 million and 3 private sector operations of UA
97.8 million (see Appendix 2. for a comprehensive list of ongoing operations). The average
cumulative disbursement ratio for national operations was 30.14% at 30 November, 2015 and
the average age of the national portfolio stood at 3.82 years. The portfolio is rated as
satisfactory with a score of 2.4 (on a 0-3 scale) according to the 2015 CPPR. The portfolio has
no project at risk or commitments at risk. Key challenges facing the portfolio include the need
to improve performance in areas such as quality at entry, capacity constraints of implementing
agencies, contract management, monitoring and evaluation and fulfilment of first disbursement
conditions. These challenges are being addressed by GOT and the Bank through the
implementation of the Country Portfolio Improvement Plan.
Table 2.7: Lessons Learned from Bank Interventions in Tanzania
Lessons learned Actions taken to integrate lessons into the PAR
i. The need to strengthen implementation
capacity in PFM institutions. The lack of
capacity poses a threat to the successful
implementation of Government’s programmes
The project is focussed on capacity building and the development
of systems and processes to strengthen implementation capacity
in beneficiary institutions.
ii. Limiting the number of project
activities, to avoid putting heavy burden on
Government, which could undermine effective
project implementation
The project has been designed to focus on just a limited number
of components and activities to facilitate beneficiary institutions
focusing on specific, implementable activities within the project
timeframe. This has guided the team in the selection of focus
areas of the project
iii. The need to avoid duplication of effort Steps were taken to ensure co-ordination and alignment of the
project with the ongoing PFMRP IV as well as the World Bank’s
support in improving the business environment. Activities were
carefully selected to avoid duplication
iv. The need to support PBOs with
institutional support projects for more effective
programme implementation
Component 1 of the project supports the government efforts to
implement e-procurement. This is a trigger under the PSRGSP
which is currently under implementation.
2.7.3 Lessons learned, from other sources, which have influenced the design of the
project include (i) care should be taken in the choice of initiatives/beneficiaries to support, so
that the scope, complexity and ambition of the project or programme is managed to ensure
adequate attention to GOT priorities; (ii) in order to facilitate the measurement of the impact
of training programmes, benchmark measurements, where feasible, should be undertaken to
understand the level of staff competences prior to provision of training; These are among the
recommendations emerging from lessons learnt under the on-going PFMRP IV.
13
2.8 Project Performance Indicators
The key performance indicators identified, and the expected outcomes on project
completion, are set out in the Logical Framework.. The expected outcome from the first
Component “Enhancing the Effectiveness of Public Financial Management” is: (i)
Effectiveness in the management of public finances improved. This is measured by key
indicators, such as PEFA scores, % of unqualified audit opinions and pubic procurement
compliance rate. The expected outcome under the second Component: “Creating an Enabling
Environment for Private Investments” is an improvement in the business enabling environment
to stimulate private sector development. This is measured by the following indicators: (i)
Starting a business score (WB Doing Business ranking); (ii) Corruption Perception Index; and
(iii) Number of public procurement contracts awarded to women.
3. PROJECT FEASIBILITY
3.1 Economic and Financial Performance
The economic and financial benefits from the project will be indirect, and will be
felt across the economy, in terms of efficiency gains, contribution to reduction of
corruption and stimulation of private sector activity and private investments. The benefits
are ultimately seen in improved capacity in public procurement and in the audit function, better
performance of the PFM institutions, and greater attractiveness of the country in terms of the
business environment and stimulation of private investments. The ultimate economic
justification of the proposed project is its contribution to a better functioning government
through improved capacity. The benefits will derive from (a) improved control and
accountability in the management of public finances; (b) enhanced competition, efficiency and
transparency in public procurement; (c) improved timeliness and regularity of financial
reporting; and (d) improved business environment. The project, by contributing to the
development of human resource capacity, will also ensure that the benefits will be sustained
over time. In economic and financial terms, the project has the potential to help increase private
investments from 23.9% of GDP in 2013/14 to 26% in 2018/19. Furthermore, it will contribute
to increasing GDP growth rate from 7.3% in 2013/14 to 7.8% in 2018/19.
3.2 Environmental and Social Impact
3.2.1 Environment and Climate Change: The proposed project is classified as Category
3 in the Bank’s environmental categorization system. The project will not have a negative
impact on the environment, as its activities are limited to training, technical assistance, studies
and procurement of logistic resources, office automation and computer hardware. Project
activities that are focused on such human and institutional capacity building have no negative
impact on climate change. The project’s support to CAG has potential to contribute positively
to the environment because funds will be allocated to train its staff on undertaking
environmental audits.
3.2.2 Social Impact: The Project will contribute to strengthening governance
institutions and improving the business climate. This will eventually result in a more
effective public sector administration, reduction in corruption and an increase in private
investments. This will enhance competitiveness and further unlock the country’s economic
growth potential. The impact on poverty reduction will be indirect, but significant. The project
will promote women empowerment, through the various capacity building activities in which
at least 30% of the beneficiaries will be women, as well as the Gender Policy that will be
prepared by TANESCO. The project will create economic opportunities for women
entrepreneurs by capacitating them to take advantage of public procurement bidding
opportunities. The youth will also benefit indirectly through increased employment and
14
entrepreneurial opportunities created by an improved business climate resulting in increased
investment flows.
3.2.3 The proposed project, by supporting capacity building of public financial
management institutions, has the potential to generate substantial social benefits over the
medium-term. The support in public procurement and financial accountability will reduce
inefficient and wasteful use of resources, and result in social benefits accruing from increased
availability of resources to support delivery of social services. The envisaged training in
performance and value for money audits will assist combat corruption in sectors such as roads,
water and sanitation; while provision of training in assets tracking and recovery will generate
resources that would be available for spending in health, education and other social services.
3.2.4 The project is expected to contribute to economic growth and poverty reduction
through improved PFM systems and a more conducive environment for business. It will
contribute to strengthening transparency, accountability and efficiency in the management of
public resources. Transparent and accountable management of resources will lead to increased
confidence in government on the part of stakeholders, including CSOs, particularly in the
aftermath of the IPTL Case. The computerization of transactions and processes would lead to
better and faster public services delivery. The project will encourage private investments by
contributing to improving the legal and regulatory environment and enhancing capacity in
identification of bankable transactions in the area of PPPs. The increased flow of investments
resulting from an improved business environment will also create economic opportunities,
create jobs and contribute to poverty alleviation. No negative social impacts are expected from
project implementation.
3.2.5 Gender Impact: The project is expected to benefit women involved in
procurement, audit and accountancy assignments. Thus female staff in PPRA, CAG,
Internal Auditor General’s Department, and PCCB in the Mainland, and ZIPA, Accountant
General’s Office and the Auditor General’s Office in Zanzibar, will benefit from the training
programmes. In order to ensure wide coverage of women, nominations for training must
include women candidates in all beneficiary institutions. The project will continue, as in the
previous operation, to provide training in gender-based auditing, to help create awareness and
enhance capacity for gender-based audits. The training programmes envisaged for the
Ministries of Finance of both the Mainland and Zanzibar will also benefit a significant number
of female staff. GOT is committed to promoting gender equality to ensure that all Tanzanians
are empowered to fully contribute to, and benefit from, the country’s development. Thus, the
project will contribute to achieving this objective. Special capacity building activities targeting
women will also help them actively participate in public procurement processes. Support will
be provided to TANESCO to prepare a gender policy, which is a critical measure under the
Bank PSRGSP, currently under implementation. In addition, under the project, dialogue will
be pursued with GOT so that the on-going gender mainstreaming initiatives in the public sector
cover the project beneficiary institutions. There are no negative impacts on gender expected
from implementing the project.
4. IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 Project Executing Agency: In line with the implementation arrangements that were used
under ISPGG II, the Public Procurement and Regulatory Authority, a robust and well-endowed
national institution, will continue to be the Executing Agency of the proposed project, which
will be implemented over a three-year period. PPRA will also continue to serve as the PIU for
15
the Mainland and the activities earmarked for beneficiary institutions in Zanzibar will continue
to be managed by the PIU set up within the Ministry of Finance in Zanzibar.
4.1.2 Project Steering Committees
4.1.3 For the Tanzania Mainland Component, the overall implementation of the project
will be the responsibility of a Project Steering Committee (PSC) chaired by the Chief
Executive Officer (CEO) of PPRA. The members of the steering committee will include
representatives of each beneficiary agency, i.e. MoFEA, CAG, PCCB, IAGO, and the Ethics
Secretariat. The PSC will meet at least once every quarter to review overall progress in
implementation and take action when necessary to resolve emerging or outstanding issues. A
Project Coordination Unit (PIU) will be set up by the CEO from staff of PPRA. The PIU will
be headed by an experienced Procurement Specialist as Project Coordinator, assisted by a
Project Accountant, Administrative Assistant/Clerk and a Secretary. The PIU will coordinate
and manage the day-to-day project tasks for each beneficiary agency, particularly in respect
of matters relating to procurement, contract supervision, monitoring and reporting on project
implementation. The PCU will ensure that robust and comprehensive Procurement Plans are
prepared by each beneficiary institution, and forwarded to the Bank for discussion and approval
before Board presentation of this proposed project. Under the recently closed ISPGG II, these
arrangements were utilised and (from experience gained and lessons learnt) were found to be
fit for purpose in terms of effective project implementation. Hence, the same arrangements will
be used again for implementation of this proposed follow up project.
4.1.4 For the Zanzibar Component, a similar institutional arrangement will be deployed
for the implementation of the project. A Project Steering Committee, under the chairmanship
of the MoF Principal Secretary, will be established. Membership of the PSC will include
representatives of all the beneficiary agencies, i.e. Office of the Controller and Auditor General
(OCAG), MoF, ZIFA, the Department of Stock Verification, the Accountant General’s Office,
the PPP Unit and the Ministry of Trade. The PSC will meet at least once every quarter to review
overall progress in project implementation and take necessary action to resolve any emerging
or outstanding issues. A PIU will be set up by the Permanent Secretary MoF from staff of the
ministry. The PIU will be headed by an experienced Procurement Specialist as Project
Coordinator, assisted by a Project Accountant, an Administrative Assistant/Clerk and a
Secretary. The Project Coordinator will manage the day-to-day tasks for each beneficiary
agency, particularly in respect of procurement, contract supervision, monitoring and reporting
on project implementation. As in the case of the Mainland, the Zanzibar PIU will also ensure
that robust and comprehensive Procurement Plans are prepared by each beneficiary institution,
and forwarded to the Bank for discussion and approval before Board presentation of this
proposed project. In addition, for both the Mainland and Zanzibar, the CVs of proposed
candidates for the key positions of PIU Coordinators and Accountants, with details of their
professional qualifications and experiences, will be forwarded to the Bank for review and
approval prior to their appointment.
4.2 Financial Management, Disbursement and Audit Arrangements
4.2.1 The Financial management Specialist (FMS) has conducted an assessment of the
adequacy of the financial management system of the proposed ISPGG III covering
Tanzania Mainland and Zanzibar. The assessment based on the Bank’s FM Implementation
Guidelines-2014 concluded that the overall residual risk is “Moderate”. The proposed
mitigation measures, as per the risk table, Annex 1, when implemented will enhance the Project
ability to (i) use the funds for the intended purposes in an efficient and economical way; (ii)
16
prepare accurate, reliable and timely periodic financial reports, and (iii) safeguard the entities’
assets.
4.2.2 In line with the Paris Declaration on Aid Effectiveness and Accra Agenda for
Action, the proposed project will substantially make use of the country’s financial
management systems. The day-to-day management of the project will be as per the rules and
procedures stipulated in the Mainland PPRA and the Zanzibar MoF financial policies and
procedures. The Director of Corporate Services (head of Accounting Functions) of PPRA and
the Accountant General for Zanzibar will be the Officers responsible for overall financial
management of the Project in their respective organization/ Ministry. The Internal Audit
Departments (PPRA and Zanzibar) will audit the project financial transactions regularly. The
internal audit reports will be shared with the Bank during supervision missions.
4.2.3 Disbursement Arrangements: Disbursement will be in accordance with the Bank
Group’s Rules of Procedure for Disbursement, as stipulated in the Disbursement
Handbook (2012 Version). The Executing Agencies will each open two special accounts (one
denominated in US Dollars and the other in Tanzanian Shillings) for the purpose of this project,
at a bank acceptable to ADF. The loan resources will be deposited in the special accounts and
will be operated as a revolving fund. The ADF will replenish the special accounts at the request
of the Executing Agencies, after justifications for the use of at least 50% of the most recent
deposits and 100% of all the other older advances have been provided. The four disbursement
methods will be available for use during project implementation. The Bank will issue a
disbursement letter, which will provide specific guidelines on key disbursement procedures
and practices.
4.2.4 Financial Reporting and Auditing: The Project Coordinators will keep accurate
accounts for their respective components of the project, in accordance with sound and
acceptable accounting practices. The accounts kept should allow identification of
expenditures by Component, Category and Source of Finance. The Project will follow the
Tanzania Mainland and Zanzibar financial year of 1st July to June 30th,. and an
independent external auditor acceptable to the Fund, precluding CAG Mainland and CAG
Zanzibar, who are both beneficiaries in the project, shall carry out the audit. The audits will
be conducted in accordance with the terms of reference for Bank-financed projects. Two
separate audit reports for PPRA and MoF- Zanzibar, complete with Management Letters, will
be submitted to the Bank within six months of the end of the financial year. PPRA and MoF
executed successfully ISPGG I & II without major financial management issues, and were up
to date in the submission of audit reports, with few delays that have been addressed in the
design of this follow up project. The PIUs will make available to the selected auditor a copy of
the Bank Group’s Guidelines for Auditing Projects.
4.3 Procurement Arrangements
Procurement of ICB contracts and Consulting services for the proposed project
would be carried out in accordance with the Bank’s Rules and Procedures: “Rules and
Procedures for Procurement of Goods and Works”, dated May 2008, revised July 2012 as
amended from time to time; and “Rules and Procedures for the Use of Consultants”, dated May
2008, revised July 2012 as amended from time to time using the relevant Bank Standard
Bidding Documents, and the provisions stipulated in the Financing Agreement. For Tanzania
Mainland, procurement of NCB contracts will be carried out in accordance with the public
procurement law, the Public Procurement Act, 2011 using the national Standard Bidding
Documents. For Zanzibar, the Bank’s Rules and Procedures and documents will be used. The
17
overall project risk for procurement is moderate. The Procurement Plans, and related
procurement documents, were agreed and finalized before project Loan negotiations. Detailed
procurement arrangements are provided in Technical Annex B5.
4.4 Monitoring and Evaluation
4.4.1 The project is scheduled for implementation over a 36-month period, from
January 2016 to December 2018. This schedule is reasonable, given the scope of activities to
be implemented and project implementation capacity in Tanzania, particularly given that the
respective PIUs have had a good track record implementing ISPGG II (which had an
implementation slippage of only 4 months). The project task team on the Bank side and the 2
PIUs will be responsible for project monitoring and evaluation, using the Result Monitoring
Framework (Technical Annex B7) and the project log frame. The periodic performance
assessment and result reporting will be carried out by the task team in collaboration with the
project Coordinators and the beneficiary institutions. Quarterly and annual activity reports will
also be prepared and submitted to the Bank. The Bank will undertake monitoring of project
implementation, and the use of project resources, through regular contact with the PIUs,
frequent supervision missions and the mandatory mid-term review mission. The Bank will also
sustain regular consultations with DPs supporting GOT capacity-building under the ongoing
PFMRP IV. The Field Office, TZFO, being on the ground, will play an active role in the
coordination, country dialogue, and project supervision and monitoring. A Project Completion
Report will be prepared to evaluate progress against outputs and outcomes and draw lessons
for possible follow-up operations. Table 4.2 presents the Project Implementation and
Monitoring Schedule.
Table 4.1: Project Implementation Schedule
Task Responsible Party Start Date
Loan Approval ADF Janvier 2016
Loan Effectiveness ADF/GOT February 2016
Project Launching ADF/GOT February 2016
Procurement of goods and services GOT April 2016
Technical assistance and training program GOT June 2016
Annual Audit Report GOT March 2017
Supervision Mission ADFGOT July 2016
Mid-term Review ADF/GOT June, 2017
Project Completion Report ADF/GOT December, 2018
4.5 Governance
Financial management of the proposed project will be carried out by the PIU
under the supervision of the Chief Executive Officer PPRA for the Mainland Component. For the Zanzibar Component, this task will be carried out by the PIU under the supervision of
the MoF Principal Secretary. A Steering Committee for the Mainland Component will be
established under CEO of the PPRA, comprising representatives of the beneficiaries. A similar
Steering Committee will be established for Zanzibar under the Principal Secretary, Ministry of
Finance The 2 PCUs will prepare their respective manuals of administrative, financial and
accounting procedures. Accounting records will be kept, presenting project expenditure by
component, category and source of finance. The project accounts will be audited annually by
an external accountant acceptable to the Fund. On account of sound governance considerations,
and issues of conflict of interest, CAG is excluded from qualifying to audit the project since it
is itself a beneficiary in the project.
18
4.6 Sustainability
4.6.1 The sustainability of the proposed project will, first and foremost, be anchored on
GOT’s strong commitment to implementing policy and institutional reforms in PFM and
enabling business environment, including PPP promotion. Embedded in the design of the
proposed project is a strong capacity building and knowledge transfer dimension. This will
help ensure that adequate capacity is built across Government during the project’s
implementation phase. In addition, the proposed project will finance certain activities, such as
the development of reference Manuals, which will guide and inform the day-to-day work of
public officials. Several manuals will be developed, including on the prevention and
investigation of procurement corruption allegations,; on PPP, and on monitoring and
evaluating the PFM program. These manuals will guide and inform the work of public officials
in these areas in the short to medium term. In addition, sustainability is also addressed through
the training of trainers in the envisaged activities of some of the beneficiaries, as well as the
use of local and regional training instituions, wherever feasible.
4.6.2 In terms of cost sustainability, the project is consistent with the principles of the Paris
Declaration on Aid Effectiveness, as its implementation does not involve the creation of new
institutions or hiring of additional staff, which will add to the already heavy GOT fiscal
burden.
4.7 Risk Management
4.7.1 The potential risks and mitigation measures for the project is summarized Table 4.2.
Table 4.2 : Risks and Mitigation Measures
Risks Probability
/ Impact
Mitigation Measures
Government’s commitment to
reforms:
It is not clear if the newly elected
Government’s reform priorities will
be the same as those of the previous
Government
Probability
Low and
impact
Medium
The previous Government’s commitment to, and ownership of,
reforms is high. Recent pronouncements indicate that the new
Government is strongly committed to to undertake ambitious
governance reform including anti-corruption and effective
economic and public financial management.. Through dialogue
with the new Government the project will continue to be
implemented, together with the multi-donor PFMRP IV.
Macroeconomic risk: The GOT
macroeconomic management,
which has led to considerable
stability, may falter and
compromise the reform efforts
Probability
medium and
impact
Medium
Continued implementation of fiscal and monetary policy,
supported by an IMF program. Continued implementation of
budget support operations, as well as policy dialogue with
partners including the Bank, will help to monitor and mitigate
the macro-economic risks.
Implementation capacity
constraints: Weak institutional and
human resources capacity could
cause delays or hamper
implementation of reform.
Probability
medium and
impact
Medium
The on-going multi-donor supported PFM reform program, and
the proposed ISPGG III project, would strengthen capacity of
public officials involved in reform coordination and
implementation monitoring. The project is providing additional
project management capacity including training.
Fiduciary risks: While Government
has made notable progress in
improving PFM, there are still
weaknesses in the fiduciary control
environment as revealed by IPTL.
Medium
probability/
High Impact
Annual Audit of the project. The project requires submission
of quarterly financial reports and audited financial statements
on an annual basis. The Bank’s regular supervision missions
will also help to mitigate the risk.
19
4.8 Knowledge Management
4.8.1 The proposed project will build knowledge, and develop skills, in accounting and
cash management, various forms of audit, public procurement, PPP issues and in
investigations techniques and transparency and accountability practices in the fight
against corruption. The implementation of the project will strengthen PFM by (i) training
staff in IPSAS and IFMIS; (ii) enhancing staff skills in financial control and reporting; and
(iii) developing various important Manuals to guide and inform the work of public officials.
Knowledge will also be acquired through skill transfer by external experts, and study tours to
appropriate institutions in other countries. In addition, sensitisation and public awareness
workshops will be undertaken on issues relating to Ethics, Corruption and the role of
Parliament in accountability in the public sector. This is aimed at improving integrity,
transparency and accountability in the management of public resources. In the Component
dealing with PPPs, project support will generate knowledge on best practices in this important
area, in terms of PPPs design and assessment, value for money analysis and measurement of
the attendant risks and necessary mitigation actions. The Bank’s regular project supervisions,
the performance review at mid-term and the project completion report will also contribute to
knowledge-building and generate lessons to inform future interventions.
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal Instrument
An ADF Loan will be used to finance this proposed project, governed by a Loan Agreement
between the United Republic of Tanzania and the African Development Fund.
.
5.2 A. Conditions Associated with Bank’s Intervention
5.2.1 Conditions Precedent to Entry into Force: The entry into force of the Loan
Agreement shall be subject to the fulfilment by the Borrower of the applicable provisions of
section 12.01 of the General Conditions Applicable to Loan Agreements and Guarantee
Agreements of the African Development Fund. The Loan Agreement shall enter into force on
the date of its signature by the United Republic of Tanzania and the African Development
Fund.
5.2.2 B. Conditions Precedent to First Disbursement: The first disbursement under the
loan shall be conditional upon the entry into force of the Loan Agreement, and the Recipient
providing evidence of the fulfilment of the following conditions, in form and substance
satisfactory to the Fund:
(a) Designation of two Project Coordination Units, one for Tanzania Mainland and the other
forZanzibar (evidenced by separate letters sent to the Bank by the Mainland (PPRA) and
Zanzibar (MoF)
(b) Opening of two Special Accounts (one denominated in US Dollars and the other in
Tanzania Shillings) by each Executing Agency in a Bank acceptable by the ADF
(evidenced by two letters, one from the Mainland (PPRA) and the other from Zanzibar
(MoF) indicating that the said accounts have been opened, with the account numbers
provided)
20
5.3 Compliance with Bank Policies
This project complies with all applicable Bank policies.
VI. RECOMMENDATION
Management recommends that the Board of Directors approve an ADF Loan not
exceeding UA 12 million to the United Republic of Tanzania for the purposes of, and subject
to, the conditions stipulated in this report.
- 1 -
APPENDIX 1: TANZANIA: SELECTED MACROECONOMIC INDICATORS
- 2 -
APPENDIX 2: BANK GROUP CURRENT PORTFOLIO IN TANZANIA
SOURCE OF
FINANCE
APPROVAL
DATE
CLOSING DATE APPROVED
AMOUNT (UA mn)
DISB
RATE
Marketing Infrastructure, Value Addition and Rural Finance ADF Loan 29-Jun-2011 31-Dec-2016 40.00 42.03
SUB-TOTAL 40.00 42.03
Tanzania Road Sector Support Project I ADF Loan 2-Dec-2009 15-Dec-2017 152.00 68.30
Tanzania Road Sector Support Project II ADF Loan 5-Apr-2012 30-Sep-2017 140.00 29.95
ADB Loan 30-Sep-2015 31-Dec-2020 69.74 0.00
AGTF Loan 30-Sep-2015 31-Dec-2020 31.70 0.00
ADB Loan 26-Nov-2015 31-Oct-2021 192.50 0.00
ADF Loan 26-Nov-2015 31-Oct-2021 54.00 0.00
SUB-TOTAL 639.94 22.78
ADF Loan 15-Sep-2010 31-Dec-2015 59.00 100.00
RWSSF Grant 15-Sep-2010 31-Dec-2015 5.80 100.00
Zanzibar Urban Water & Sanitation Project ADF Loan 19-Dec-2012 31-Dec-2017 14.00 4.86
ADB Loan 16-Sep-2015 31-Dec-2020 102.84 0.00
ADF Loan 16-Sep-2015 31-Dec-2020 18.00 0.00
AGTF Loan 16-Sep-2015 31-Dec-2020 30.00 0.00
SUB-TOTAL 229.64 28.51
ADF Loan 14 Dec. 2007 31-Dec-2015 28.68 65.48
ADF Grant 14 Dec. 2007 31-Dec-2015 1.32 98.48
Iringa-Shinyanga Transmission Line ADF Loan 26-Oct-2010 31-Oct-2016 45.36 29.37
Scaling-Up Renewable Energy Program SCF Grant 20-Dec-2013 30-Sep-2016 0.50 0.00
SUB-TOTAL 75.86 44.03
Small Enterpreneurs Loan Facility (SELF) II ADF Loan 10-May-2010 31-Dec-2015 20.00 93.77
Alternative Learning and Skills Development (ALSD) II ADF Loan 29-Jun-2011 31-Dec-2016 15.00 12.60
Support to Technical Vocational Education and Training & Teacher ADF Loan 2-Apr-2014 31-Dec-2019 34.00 2.03
SUB-TOTAL 69.00 30.92
Power Sector Reform and Governance Support Program ADF Loan 20-May-2015 30-Nov-2015 50.00 100.00
SUB- TOTAL 50.00 100.00
NATIONAL PUBLIC SECTOR 1104.44 30.13
CRDB SME Partial Credit Guarantee Facility ADB Loan 22-Jul-2008 1-Apr-2016 1.39 98.60
ADB Loan 23-Apr-2014 32.35 0.00
ADB Loan 23-Apr-2014 32.35 0.00
EFC Tanzanie- Fund for Africa Private Sector Assistance (FAPA FAPA Grant 5-Jun-2012 31-Mar-2016 0.67 68.66
TZS Line of Credit to First National Bank Subsidiary in Tanzania ADB Loan 12-Dec-2012 30-Apr-2017 31.05 0.00
SUB-TOTAL 97.80 1.87
TOTAL NATIONAL (Public + Private sectors) 1202.24 27.83
Dsm-Isaka-Kigali/Keza-Musongati Railway Phase2 ADF Loan 17-Nov-2009 31-Dec-2015 1.66 75.90
East Africa Transport and Trade Facilitation (EAC) ADF Grant 29 Nov. 2006 31-Dec-2015 6.20 54.52
Transit Transport Facilitation Agency (TTFA) NEPAD IPPF 22-Dec-2010 31-Dec-2015 0.32 81.25
Arusha-Holili/Taveta-Voi Road Project ADF Loan 16-Apr-2013 31-Dec-2018 79.90 10.63
Lake Victoria Water Supply & Sanitation Programme Phase II ADF Grant 17-Dec-2010 30-Dec-2016 17.48 44.68
The EAC Payments & Settlement Systems Integration Project ADF Grant 5-Dec-2012 30-Jan-2017 15.00 17.53
Regional Rusumo Hydropower ADF Loan 27-Nov-2013 31-Aug-2019 22.41 0.09
EAC Railway Sector Enhancement Project NEPAD IPPF 29-Jun-2012 20-Dec-2016 0.82 39.24
EAC Centres of Excellence for Skills and Tertiary Education ADF Loan 3-Oct-2014 31-Dec-2019 6.25 0.48
Kenya -Tanzania Interconnection ADF Loan 18-Feb-2015 31-Dec-2019 75.29 0.00
SUB TOTAL 225.32 10.74
GRAND TOTAL (NATIONAL+ MULTINATIONAL) 1427.57 25.13
C. MULTINATIONAL OPERATIONS:
ENERGY
Electricity V Project
SOCIAL
MULTI-SECTOR
B. PRIVATE SECTOR
Bagamoyo Sugar Project
AGRICULTURE
A. NATIONAL OPERATIONS:
TANZANIA: ONGOING PORTFOLIO, 30 NOVEMBER 2015
Arusha Sustainable Urban Water Supply and SanitationDelivery
Porject
TRANSPORT
WATER SUPPLY/SANITATION
Rural Water Supply and Sanitation Programme II
Dar es Salaam Rapid Bus Transit Project
Transport Sector Support Program
- 3 -
APPENDIX 3: DONOR COORDINATION MATRIX FOR TANZANIA
Sectors/Thematic Areas AfD
B
Wo
rld
Ba
nk
IM
F
DF
ID
EU
IL
O
IO
M
WF
P
Belg
ium
Ca
na
da
Den
ma
rk
Fin
lan
d
Fra
nce
Germ
an
y
Irela
nd
Ja
pa
n
Ko
rea
Neth
erla
nd
s
No
rw
ay
Sp
ain
Sw
ed
en
Sw
itzerla
nd
UK
/Oth
er
US
/MC
C
US
AID
UN
AID
S
UN
CD
F
UN
DP
UN
EP
UN
ES
CO
UN
-F
AO
UN
FP
A
UN
HC
R
UN
IC
EF
UN
-IF
AD
UN
ID
O
UN
-W
HO
UN
WO
ME
N
Agriculture 3 3 3 3 3 3 1 3 3 2 3
Industry and Trade (includes PSD) 3 3 1 3 3 3 3 3 3 3 3 3 3 2
Energy and Minerals 2 1 3 3 3 3 3 3 3 3 3 3
Natural Resources, Environment, and Tourism 3 3 3 3 3 3 3 1 3 3 3
Infrastructure (includes Transport) 2 3 3 3 3 3 3 1 3 3
Education 3 3 3 3 3 3 3 2 3 3
Water 3 1 3 3 3 2 3 3 3 3 3
Health 3 3 3 3 3 3 3 3 3 3 3 3 1 2 3
Public Financial Management 3 3 3 2 3 3 3 1 3 3 3 3 3 3 3
Macroeconomic Management 1 3 3 3 3 3 3 3 3 3
General Budget Support 3 3 3 2 3 3 3 3 3 3 3 3 1 3
Poverty Monitoring Group 1 2 3 3 3 3 3 3 3 3 3 3 3 3 3
Governance 3 3 3 3 1 3 2 3 3 3 3 3 3
Public Sector Reform 3 1 3 3
Local Government Reform 3 3 1 3 3 2 3 3 3 3 3 3 3
Gender 3 3 3 3 1 3 3 3 3 3 3 3 3 2
Social Protection 2 3 3 3 3 3 3 1 3
Anti-Corruption 3 3 2 3 3 3 3 1
Innovation and Technology 3 ∆ 3 1
HIV/AIDS 3 3 1 3 3 3 3 3 3 2 3 3 3 3 3
Humanitarian Assistance 3 3 2 3 3 3 3 3 3 1 3
Culture 1 3 3 3 3 3 3 3 3 2
Source: Compiled from information provided by the DPG Secretariat and staff consultations.
Note: 1 Lead or elected chair in donor group.
2 Deputy lead or elected co-chair in donor group.
3 Active development partner (provides financial/technical support and/or frequently joins meetings).
- 4 -
APPENDIX 4: LESSONS LEARNED FROM ISPGG II AND GECSP
ISPGG II
Key issues (max 5, add
rows as needed) Key lessons learned
1. Strong Government
ownership of capacity-
building and
institutional
strengthening reforms
1. Ownership, leadership, and commitment of the government in the design and implementation
of the project were the most important success factors for the Institutional Support. For example,
the commitment to improve IT systems (e.g EPICOR) and procurement processes (involving
preparation of Manuals), and training manuals was important for sustainabilty. The Bank
merely played a complementary role and provided the resources for implementation of the
components.
2.Bank Group
comparative advantage
2. It is important, for project success, to focus the project on areas where the Bank has
developed a niche, such as the area of public procurement. Thus, over 50% of the project
resources were directed to strengthening public procurement processes, an area where the Bank
has a track record.
3. A simplified
approach to project
implementation
3. Project implementation success can be significantly ensured by adopting, during project
design, a simplified approach that avoids unnecessary conditions/conditionalities that could
jeopardize/delay project implementation. Under this simplified approach, supervision missions,
and mid-term review assessments, were evenly, regularly scheduled during implementation to
ensure early resolution of outstanding problems and smooth progress in implementation.
4.Strong coordination
amongst DPs avoids
duplication of efforts
4 There has been a positive impact from the Bank staff regular consultations with GOT and
DPs on progress in the implementation of the broader multi-donor basket funded PFMRP. This
regular consultation assisted minimize duplication of effort in the provision of capacity-bilding
support to Tanzania. Close coordination was an effective way to ensure efficiency in the use of
DP resources for capacity building.
GECSP
Key issues (max 5, add
rows as needed) Key lessons learned
1. Strong Government
ownership of reforms
1. Ownership, leadership, and commitment of the authorities, at the highest level, in the design
and implementation of the policy reform measures were the most important success factors for
the operation. For example, the commitment to improve and sustain macroeconomic growth
and stability was important. DPs merely played an advisory role and provided resources for
implementation of the reforms.
2.Vulnerability to
shocks and
sustainability of
reforms
2. Higher fuel prices, resulting in strong pickup of imports, was a major vulnerability (external
shock) for Tanzania, and it threatened GOT’s continued capacity to implement the reforms.
Timely provision of resources (such as the GECSP resources) is critical for enabling the
government to persevere with implementation of timely reforms needed at a time when the
country was facing a critical energy crisis, which was operating against public services delivery,
notably in the infrastructure sector.
3.Timeliness,
responsiveness and
relevance of funding
instruments
3. The GECSP resources met needs at a time the country had to boost its capacity/reserves for
importing critical inputs for the energy and social sectors as well as raw materials for the
productive sector. GECSP resources addressed effectively the needs of the country by providing
timely response based on clearly established prior actions.
4.Predictability of
Disbursements timing
4. The predictability of disbursement from year to year is highly dependent on government
performance in meeting conditions/prior actions, and meeting IMF benchmarks. Therefore, care
should be taken in discussing and agreeing conditions with government. It should be based on
sound policy dialogue, resulting in realistic conditions to underpin disbursement. This is an
important element in programme design that has important implications for the government
budget planning.
5. Strong coordination
amongst DPs avoids
duplication of efforts
and strengthens
monitoring of results
5. There has been a positive impact from the coordinated and harmonized policy dialogue
among DPs providing budget support. Government’s leadership role in coordinating
development assistance has been instrumental. The ability of the Bank to work in close
collaboration with GOT other Development Partners resulted in common results and policy
dialogue frameworks. Close coordination was an effective way to support budget planning and
execution.
- 5 -
APPENDIX 5: PUBLIC FINANCIAL MANAGEMENT: 2013 PEFA INDICATORS
2010 PEFA 2013 PEFA Internal Controls
PI-18/ M1 Effectiveness of
payroll controls
C+/D+(i) A
(ii) C/D
(revised from NR)
(iii) C
(iv) C
B▲ (i) B▲
(ii) B ▲
(iii) B
(iv) B▲
PI-19/ M2 Competition, value
for money and
controls in
procurement
NR
NR This indicator was not rated. It was
revised in 2011 and is not
comparable with previous
framework.
PI-20/ M1 Effectiveness of
internal controls
for non-salary
expenditures
C+ (i) B
(ii) C
(iii) C
D+ (i) D
(ii) B
(iii) D
PI-21/ M1 Effectiveness of
internal audit C (i) C
(ii) C
(iii) C
D+ (i) C
(ii) B
(iii) D
External Scrutiny and Audit
PI-26/ M1 Scope, nature and
follow-up of
external audit
B (i) B
(ii) B
(iii) B
C+ (i) B
(ii) B
(iii) C
PI-27/ M1 Legislative
scrutiny of the
annual budget law
C+ (i) C
(ii) B
(iii) B
(iv) B
B+ (i) B
(ii) B
(iii) A
(iv) B
PI-28/ M1 Legislative
scrutiny of
external audit
reports
D+ (i) D
(ii) B
(iii) C
D+ (i) D
(ii) B
(iii) C
- 6 -
APPENDIX 6: ISPGG III ANALYTICAL WORK UNDERPINNINGS
Component/Reform
Areas
Analytical Work Institution
Overall Strategic Context Tanzania Development Vision 2025;
and National and Zanzibar strategies for
growth and poverty reduction; and BRN
Strategic Documents
MoF
Tanzania Country Strategy Paper (2011-
2015)
AfDB and GoT
Public Service
Management
The Reforming Tanzania Public Sector
Report: An Assessment of Future
Direction (November, 2013)
GOT
Governance Governance and Corruption Survey
(2014)
GOT
Private Sector
Development
WB Doing Buisness Report 2015 and
2016; Global Competitiveness Report
2014 and 2015; President’s Delivery
Bureau: Big Results Now Background
Paper.
Public Finance
Management
PFMRP IV and Action Plan (2011) MoF
PFMRP IV Mid-Term Draft Final
Report, July, 2015
GOT and PFMRP
Secretariat
AfDB
2014 General Budget Support Annual
Review: Final Report, September, 2015
GOT
PEFA Assessments , 2010 and 2013 MoF
OPEV Joint PFM Evaluation Public
Finance Management Reform??? (2011)
AfDB
Development Policy Operation for
Tanzania
World Bank
- 7 -
APPENDIX 7: MAP OF TANZANIA
