Taking account of rural development in public expenditure management the case of tanzania

Rural Development and Public Expenditure

The Government of Tanzania in recognition of the problems facing the rural sector has prepared the Rural Development Strategy The main objective of the Strategy is to provide a strategic framework that will facilitate the coordinated implementation of sector policies and strategies with significant impact on the development of rural communities. In the rural sector, the poverty reduction objectives will be achieved through Rural Development Strategy (RDS) and a complementary Agricultural Sector Development Strategy. The RDS strategy covers all elements of poverty reduction in the rural areas including agriculture, non-farm economic activities, social services and economic infrastructure. The Strategy also coordinates the operationalisition of the Rural Development Policy and enhances the realiazation of the Poverty Reduction Strategy, as well as the Tanzanian Development Vision 2025.

2. Poverty Reduction Strategy

The strategy is an integral part of the on-going macro-economic and structural reforms supported by the Government’s development partners. The Strategy is an approach developed by government to support the pro-poor sectors such as health, education, water, legal and judiciary system, agriculture, rural roads and HIV/Aids control. The government fiscal policy has been refocused towards pro-poor spending.

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1 Household Budget Survey conducted in 2000/0

The Strategy is an on-going process which is reviewed periodically with updates responding to feedback and broad based evaluation. The PRS is based on a long-time perspective, reflected in the National Vision 2025 and the National Poverty Eradication Strategy, it has sought to translate long-term goals into annual targets covering a three-year horizon in the framework of Medium Term Expenditure Framework (MTEF).

The Agricultural Sector Development Strategy (2001)

The Poverty Reduction Strategy recognizes that agriculture is critical to poverty reduction. The Strategy has been designed with the objectives of increasing profitability and productivity of agriculture as a means to reducing rural poverty through improvement of farmer’s incomes and promotion of food security. The strategy includes a set of innovative approaches, which are considered critical to agricultural development in Tanzania. These are:-

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  The focus on agricultural productivity and profitability
  

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  The promotion of private/public sector partnerships.
  

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  The implementation of the Agricultural Sector Development Strategy through District Agricultural Development Programmes.
  

Practically, the Strategy can only address some of the many issues that constrain the performance of agricultural sector and lead to continuing rural poverty. Basing on the resource envelope, the Strategy focus on:-

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  Strengthening the institutional framework
  

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  Creation of a favourable climate for commercial activities
  

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  Clarifying public and private roles in improving support services.
  

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  Marketing inputs and outputs and
  

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  Mainstreaming planning for agricultural development in other sector.
  

Donor Cooperation and Assistance in Rural Development

The Government and the development partners have made substantial efforts to improve policies and procedures for effective management of external resources. Through a broad based participatory approach the Tanzania Assistance Strategy (TAS) was formulated. The TAS initiative provides a broad strategic national framework for managing external resources to achieve Tanzania’s development objectives as contained in the Vision 2025, the Poverty Eradication Strategy and the Poverty Reduction Strategy. TAS seeks to promote goods governance, transparency, accountability, capacity building and effectiveness in and delivery.

New Approaches in Development Cooperation

The Government has embarked on more dialogue with development partners on harmonization and partnership. In addition there have been a shift to new approaches of financing mechanism as follows:-

1. Poverty Reduction Budget Support

There has been a shift towards direct budget support through Poverty Reduction Budget Support (PRBS) and basket funding. The Poverty Reduction Budget Support has eleven participating partners, is now the single most important form of budget support on poverty reduction strategies in Tanzania. RPBS is also an effective instrument for donor coordination.

The basket funding through the Government Exchequer has been introduced in the Health Sector and the Primary Education. The Primary Education Development Programme (PEDP). Basket has about USD 65 million pooled from Canada, Ireland, Sweden, Finland, Norway, and Netherlands. The World Bank is providing direct budget support is providing direct budget support of about USD 150 million to PEDP over 3 years.

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   Sector – Wide Approaches (SWAPS).
   

The Governments has also adopted Sector-Wide Approaches SWAPS. A few sector programmes are under implementation in the country for example the Health Sector and Education Programmes. The Agricultural Sector Development Programme is under preparation. The rationale behind the sector-wide approach is that the government should:-

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  control its own development
  
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  be accountable to the public for its performance
  
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  enhance ownership by stakeholders and
  
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  facilitate capacity building.
  

3. Joint Funding Mechanism

In further efforts to improve aid delivery and reduce transaction costs some development partners have adopted joint funding mechanisms. These initiatives include support to Local Government Reform, Tax Administration Project and Poverty Monitoring etc.

Project Funding

Project funding conforming to poverty reduction strategy remain important in most of the sectors. There are some development partners who prefer this approach. Total project funding is projected at USD 907 million in 2002/03.

The best practice lesson emerging from development cooperation programmes.
The Government and the development partners are committed to support and implement the basic principles of the Tanzania Assistance Strategy (TAS). However, development cooperation depends on the progress reached in:-
i) Government leadership in developing policy priorities and strategic frameworks including institutionalized implementation mechanism.
To date Tanzania has developed the Vision 2025, the National Eradication Strategy, Poverty Reduction Strategy, Tanzania Assistance Strategy and Sector Development Strategies/Programmes for most of the sector. The big challenge is implementation.
ii) Government creates a framework for effective and data reporting and analysis
An agreement on the methodology has been made and the database is being coordinated by Ministry of Finance. EU and UNDP are providing assistance on capacity building.

iii) Government involves Civil Society in developing national policies strategies and priorities.

Already this is happening but need to strengthen the process.
iv) Government rationalizes and priorities development expenditures in line with stated priorities and resource availability.
The Government has also established the multi year macro-fiscal framework and budget which is guided by the Public Expenditure Reviews (PER) which is embedded in a Medium Term Expenditure Framework (MTEF).
The Public Expenditure Review (PER) process is the single important national forum where macro and sector analytical work on public resources and expenditures is undertaken with continous dialogue with a wide range of stakeholders. The government has been able to make significant improvements in strategic resource allocation and budget execution. Also the projections of foreign resource inflows have improved although more work need to be done, in terms of predictability of external financing for development as well as harmonize Poverty Reduction Strategy targets with those of Public Expenditure Review.
There is good progress. A lot of achievements has been made on this aspect through (PER) process:
v) Government takes the lead in coordinating all development cooperation matters.
So far the Government has taken leadership in the Public Expenditure Review process and Consultative Group meetings.
vi) Improvement in Public Financial Management, specifically transparency in procurement clean audit reports and general reporting on development expenditure
vii) Channel external resources through the Government Budget
Work is underway in improving public Financial Management System, consultation between the Government and donors on the use of the exchequer system as well as harmonization of PRS/PER/Budget preparation and Management.
viii) Untie aid and increase the capacity of national technical assistance and reduce tied technical assistance
ix) Timely disbursements and suitable response by donors to exogenous shocks to the Tanzania economy.
This involves timely submission of requests of proposals and flexibility of donors.
To-date some of the resources committed five years back have not been disbursed
x) Promotion of Regional Integration
xi) Harmonize Procurement Procedures
Under this aspect Government and donors are to agree on the use of Government Procurement procedures. This needs more consultation
xii) Enhance and promote Joint Country Portfolio Performance Reviews, Annual Consultations Sector Reviews.

xiii) Adequacy in resource disbursements relative to prior commitments

xiv) Donor policies complement domestic capacity building
xv) Firm ODA commitments are made for longer time periods.

Areas for further improvement

The Government and development partners are committed to continued cooperation however further work need to be done to improve aid delivery and therefore increase aid effectiveness. Areas demanding more work include:

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  Sustainability of financing of the priority areas in particular predictability of external assistance. As noted during the first three quarters of 2001/02 fiscal year there was shortfalls in disbursement of external resources.
  

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  Improvement in the exercise of integrating external resource into the government budget system to reduce transaction costs.
  

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  Government/Donor to increase comunication to cross and complete information on project/programmes and disbursements.
  

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  Donors to speed up disbursements from their capitals and the Government to expedite releases of donor funds to projects and programmes.
  

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  Constant dialogue between Government and Donors on development cooperation issues.
  

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  Continue exercising prudence and flexibility in preparing resource forecasts projection for 3 years.
  

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  Development Partners to relate aid delivery to the poverty reduction.
  

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  Constant reporting on aid delivery especially technical assistance.
  

Improvement of the effectiveness of development Cooperation – EC and Member States.

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  EC and Member States should as much as possible work together in delivery aid. The idea should be to complement one another in extending aid. This can be achieved through harmonization of activities and where possible joint financing can be pursused
  

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  EC and Member States should as much as possible avoid bureaucratic procedures and process of aid delivery. As far as possible EC and Member States should decentralize decision making to the Embassies/Delegation in Tanzania.
  

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