91609 IDA at Work Unleashing Tanzania’s Potential: Sustaining Transition to a Free Market Economy T anzania’s average per capita income has increased since the introduction of economic reforms driven by improvements in economic performance, structural reforms, and improved service delivery. Growth in gross domestic product (GDP) has averaged between 5 percent and 7 percent, underpinning better develop- ment results. Access to primary education is improving, along with solid increases in net enrollment rates. Similarly, under-five child mortality has declined more than a third since 2000. Challenge The 2007 Household Budget Survey shows that the proportion of people living in poverty has decreased by 2.4 percentage points, to 33.3 percent in 2007 from 35.6 percent of the population in 2001. The reduction in the poverty ratio, however, has not been able to compensate for the population growth rate of about 2.9 percent per year. Consequently, the reduction in the proportion of poor translates to an increase of 1.0 million people living in poverty on mainland Tanzania between 2001 and 2007. To address the challenge of reducing poverty, Tanzania is working to make its commercial environment easier and more sustainable. However, stagnating standings in the Doing Business indicators (131th out of 183 countries in the 2010 rankings) underscore the need for further regulatory streamlining. Doing business in Tanzania is further challenged by the fact that only about 14 percent of Tanzanians have access to power and Tanzania’s transport infrastructure remains insufficiently developed to support growth and connect all Tanzanians considerable support to the government in with markets and services. Locally-managed its preparation of its first and second Poverty roads have suffered years of neglect, with Reduction Strategy Papers in 2000 and 2004. 75 percent in poor condition. The volume of To deepen the understanding and commit- goods transported by rail is stagnant and Dar ment to fiscal reform, IDA helped establish es Salaam is severely congested. an annual Public Expenditure Review to help set priorities within an overall expenditure Maternal mortality rates and fertility are ceiling, as well as to monitor progress and showing only minor or no improvement assess results. Based on this analysis, the and the unit cost of delivering basic health government implements a strategic budget services has increased. New resources will allocation system, which links budget alloca- be needed to train health workers and tions with the country’s development goals. retain them. Maternal mortality will only be In cooperation with other development part- reduced if the country invests in both staff ners, IDA helped to build understanding and and facilities to provide emergency obstetric the capacity among non-state actors with an care. Currently, only 5 percent of adults have interest in the budget process. Since 2005 the a secondary education, and only about 1 process has been widened to also include a percent a tertiary education. country financial accountability assessment and a country procurement assessment. Approach Results From 1995, the International Development Association (IDA) has provided more than Since 2003 IDA and 13 other donors have US$5.5 billion to Tanzania in loans and grants. assisted Tanzania through general budget A continuous policy dialogue with government support, combined with policy advice. This has resulted in a process of change that has approach has contributed to doubling per the potential to make Tanzania’s economy capita spending in education, health, water, take off and excel in the 21st century. More agriculture, roads, judiciary, and combating than 45 percent of IDA’s support has been HIV/ AIDS, as identified in the poverty reduc- provided through development policy opera- tion strategy. This range of support has led to tions over the last three years focusing on significant achievements: improving public expenditures, increasing growth, and improving the delivery of social IDA has channeled more than US$183 million services. IDA has also provided direct support since 2000 to improve transportation. During to the overall development program through this period the percentage of major arteries Basket funding or project funding. Part of the and trunk roads in good and fair condition has financing has supported investment projects increased along with regular funding provided focusing on private and financial sector for the maintenance of roads by local govern- development, energy, roads, rail, water, rural ments. As of March 2010, the percentage development, natural resource management, of trunk and regional roads in good and fair community and local government develop- condition had increased to 88 percent from ment, and public sector reform. IDA provided 51 percent in 2000. 2 IDA investments in education (through both from many partners, including the World individual projects and through budget sup- Bank, going to frontline health services. port) have focused on sustainable reforms to widen access to schooling, while improving IDA Contribution quality and relevance. In education, net pri- mary enrollment is up to 84 percent in 2007 As of June 30, 2010 IDA’s lending portfolio in from 59 percent in 2000/01. Bank support to Tanzania consists of 24 active projects with a series of education programs combined with total commitments of US$2.70 billion, includ- removal of school fees at primary school level ing US$16.5 million from two projects funded has played a critical role in raising enrollment by the Global Environment Facility , blended rates. The government’s share of the recur- with investment operations in various sectors rent budget devoted to the education sector including among others: roads, energy, educa- has reached 28.5 percent, higher than many tion, health, irrigation and rural development. low-income African countries. Tanzania has maintained a good portfolio IDA has supported Tanzania’s efforts to performance that stands out in the Africa increase access to and improve the efficiency region. Disbursements during fiscal year 2010 of health services, with policy advice and reached US$769.5 million (US$ 409.5 million knowledge transfers as well as financing. for investment projects and US$360 million An innovative public-private partnership has for general budget support) and the disburse- increased the domestic production and use ment ratio was 34.8 percent. of bed-nets to prevent malaria. Tanzania’s reductions in infant and child mortality are ▪▪Sector Distribution of Tanzania’s active among the greatest in Sub-Saharan Africa. portfolio (excluding a Poverty Reduction Infant mortality has fallen by nearly 50 per- Strategy Credit): cent in Tanzania, from 99 deaths per 1,000 ▪▪Sustainable Development: Water and Sani- live births in 1999 to 51 in 2010. This suggests tation—US$261.5 million (9 percent); that the country can reach the relevant Mil- ▪▪Agriculture/rural development, forestry lennium Development Goal (MDG) by 2015. and environment—US$385.8 million (15 Under-5 mortality has also declined, from percent); 146 deaths per 1,000 live births in 1999 to 81 ▪▪Infrastructure (energy, roads, urban)— in 2010, again bringing the MDG target within US$1.09 billion (40 percent); reach. The recently implemented Under-5 bed ▪▪Mining—US$50 million (2 percent) (Sector net campaign—to which the World Bank con- total: 66 percent); tributed 2.4 million nets—plus the increased ▪▪Human Development: Health, education emphasis on immunization coverage, make and social protection—US$672 million (25 Tanzania’s child health related MDG targets percent); look even more attainable. Equitable access ▪▪Finance and Private Sector Development— to health services relates to government’s US$162 million (6 percent); focus on improved primary health care; and ▪▪Economic Management and Public Sector— to the growing volume of health basket funds US$80 million (3 percent). 3 Partners Norway, Germany, Global Fund, Canada, Ire- land) provided more than 90 percent of total The governments of Tanzania and its develop- disbursements to Tanzania. The Bank plays ment partners have entered into a compact a pivotal role in Tanzania for coordination for managing development cooperation in purposes, notably in general budget support order to achieve national development and but also in sectors and JAST Working Groups. poverty reduction goals, the Joint Assistance The Bank is often the conduit between the Strategy (JAST). The JAST includes alignment government and its other partners. The Bank of support to government’s poverty reduction has a unique role in Tanzania thanks to its priorities. Tanzania’s Development Partner on-the-ground expertise (about 80 percent Group has analyzed Tanzania’s development of “Task Team Leaders” are based in Dar achievements and challenges, and adopted es Salaam), multi-sector involvement, and plans for financial and technical support financial importance. extending until 2010. The increase in aid channeled through the country’s own institu- Moving Forward tions and systems has made aid more effec- tive by strengthening Tanzania’s capacity To assist Tanzania in meeting its development to develop, implement, and account for its goals, IDA will continue to actively coordinate own policies. Following a 2000 assessment of with partners and participate in the joint IDA’s Tanzania program by the World Bank’s development dialogue with the government. Independent Evaluation Group, IDA has been Going forward, the lending program for the working to adopt the following recommenda- remainder of the Country Assistance Strategy tions: Promote balanced long-term growth; (CAS) period (the current CAS ends on June Develop strategies for private sector and rural 30, 2011) will largely focus on infrastructure development; Address social policy distor- and human development sectors. In addition tions; Strengthen financial management and the Bank will continue its strategic policy accountability systems; Improve aid coordi- dialogue through general budget support, nation. Forty-one partners disbursed overseas analytic and advisory activities, and its exist- development assistance to Tanzania from ing portfolio. Tanzania’s next CAS will be 2003 to 2007. More than half of all disburse- presented to the Board in the fourth quarter ments came from four partners (IDA, United of FY11. Consultations have begun and are Kingdom, Japan, and the European Commis- expected to be completed by November 2010. sion). Additionally, 14 partners (besides the four above-mentioned EC, United States, Last updated September 2010. Netherlands, African Development Fund/Afri- http://www.worldbank.org/ida can Development Bank, Sweden, Denmark, 4