DEVELOPMENT COOPERATION FORUM SUMMARY OF DISCUSSION 20 March 2007

1. Opening The Development Cooperation Forum was chaired by Mr. Phillemon L. Luhanja, the Chief Secretary. Attendance List is on Annex A. The proposed agenda was adopted and the minutes of the last meeting were amended and endorsed.

The agenda for the DCF was as follows: 1. Matters Arising/Review and Update on the Issues previously discussed in the DCF a) Core Reforms: Reports from GoT on Decentralization by Devolution b) Public Service Reform Programme Phase II c) APRM d) JAST e) Update in recent developments on the fight against corruption f) Energy 2. Mid-Year Budget Review; update on disbursements 3. Domestic Accountability a) PER b) The role of civil society organization 4. Anti-Corruption: Way forward in the Natural Resources Sector 5. Any Other Business

2. Matters Arising/Review and Update on the issues previous discussed in the DCF a) Core Reform: Reports from GoT on Decentralization by Devolution Government reiterated its commitment to continue implementing the Decentralization by Devolution (D by D) policy. Government recently reassessed 5 Ministries (Water; Agriculture, Food and Security; Education and Vocation Training; Health; and Infrastructure) and reflected on the core functions of the central Government v.s. functions to be performed by local government. In this regard, Government plans to transfer the functions to be performed by local government and corresponding financial, human resources, and other resources to the local government. This shift will be made in the FY 2007/08. Government also plans to continue rolling out this exercise to other MDAs in FY 2008/09. This recent development complements continued efforts to strengthen local government capacity by deploying human resources from central Government.

Development Partners commended the Government’s initiative on the implementation of the D by D Policy, emphasizing the importance of devolution of human and financial resources to local authorities, while noting that legal and institutional issues remained to be addressed. To this end, Government noted that the transfer of functions and resources of 5 MDAs is considered as a pilot to inform and address the legal aspects of the D by D policy, and that an inter Ministerial team is currently analyzing the legal aspects with a view of aligning sector legislations with local government agenda.

On the concerns raised on the Constituency Development Fund, Government clarified that the Fund is still an idea, essentially to facilitate and support the Members of Parliament to communicate effectively. Development Partners reiterated their continued commitment to support the local government reform programme and sought GoT’s views on financing the core reforms. Given the importance of Local Government Reform agenda, Government and Development

1 Partners agreed to have focused discussions on Local Government Reform in future DCF meetings.

b) Public Service Reform Programme Phase II Government provided a general brief on the recent status of the Public Service Reform Programme Phase II. The Phase II of the Programme will focus on (1) accountability mechanism, and (2) policy development. Building on the Phase I which focused on systems and structure, the Phase II will implement the structure by mainstreaming reforms into MDAs through MTEF. In light of implementation of the D by D policy, the Phase II will also examine the core functions of the central Government. It was also noted that the Phase II aims to involve all levels of Government (including Ministers), reflecting the need for political level engagement in the reforms.

Development Partners acknowledged the strong commitments made by the Government on core reforms, and particularly welcomed the stronger linkages between the PSRP II and Local Government Reform Programme. While coordination of core reforms may be improved, Development Partners noted that harmonizing systems in some cases may require particular attention, as uncoordinated systems may be confusing local authorities. In this regard, Government is in the process of establishing a Coordination Unit within the Chief Secretary’s Office, with a view of further improving coordination of core reform agenda. Development Partners also noted the need for particular attention on balance between expanding human resources and keeping core functions of government lean.

Development Partners also sought GoT’s views on a strategic approach to allowances and recent recommendations made by the Presidential Commission on Pay Reform. To this end, Government confirmed that the pay reform remains high on Government’s agenda, and noted that the report by the Presidential Commission on Pay Reform includes good proposals but also calls for substantial resources. Therefore, Government is currently analyzing the proposals to see how this will fit into current budget (i.e. through internal reallocation of funds, etc.). Government promised to involve Development Partners in the discussions when appropriate.

c) APRM Government briefed on the good progress made on the Africa Peer Review Mechanism (APRM). The Government has formed a 20, member National APRM Governing Council, appointing national key stakeholder members and Government officials. The APRM Secretariat has also been established. Development Partners congratulated the Government on progress made thus far and highlighted the great opportunities provided by the APRM to showcase numerous initiatives led and undertaken by the Government.

d) JAST Government provided progress report on the JAST implementation, including the official launch of the JAST, signing of a Memorandum of Understanding, translation of the JAST document into Kiswahili, and a JAST Action Plan. The Joint JAST WG also agreed on definitions of lead, active and delegating partners, which will further be reviewed in an upcoming Government meeting with Directors of Policy and Planning. Additionally, the JAST WG also agreed on quick wins. These include (1) formulation of a TA policy, (2) Division of Labour among DPs.

Development Partners commended and encouraged Tanzania to continue being in the forefront as champions in terms of aid harmonization instruments. However, while the policy instruments are in place, there remain challenges in terms of changing mindsets and encouraging behavioral

2 changes on both sides. Momentum which was built needs to be kept through implementing quick- wins and keeping pressure on both sides to push forward real changes. In this context, Development Partners expressed the need for Government to ensure awareness and engagement of sector Ministries in the JAST process. In addition, Development Partners welcomed the initiative on the TA policy, noting that strong leadership of Government is needed to start changing the way TA is provided.

e) Update in Recent Developments on Fight Against Corruption Government reiterated its continued commitment in the fight against corruption and reported that the Anti-Corruption Bill will be tabled out in the Parliament in April. New leadership has also been appointed to the PCB. Through the PCB, Government has launched a public education campaign.

Development Partners acknowledged that a number of activities have been undertaken on many fronts, while encouraging GoT to keep up the momentum. Development Partners also welcomed the developments on the Anti-Corruption Bill, in particular commending and encouraging Government to open up the consultation process around the Bill. Furthermore, Development Partners expressed keen interest in looking at the Bill in light of obligations made through International agreements. Development Partners look forward to a participatory consultation process on future legislations, such as Whistleblowers’ Bill and Freedom of Information Bill, noting the particular relevance and links of those bills dealing with issue of transparency and accountability. In this regard, Government noted that a forum is being planned to gather public opinion on Freedom of Information Bill and welcome inputs to refine the Bill.

With regard to the NACSAP II, Development Partners acknowledged the importance of awareness building, but expressed keen interest to seeing more actions and activities to implement the Bills and policies. On the status of the National Anti-Corruption Forum, Government reported that it is currently exploring different modalities to make the National Anti- Corruption Forum a permanent regular forum to discuss on strategies, future Bills and issues related to anti-corruption with stakeholders. On the issue of Governance Corruption Diagnostic Survey, Government noted the importance of self-examination and indicated that the PCB will be leading the organization of the survey.

Development Partners also noted in context of anti-corruption, the importance of implementing the Public Procurement Act, citing a case in the energy situation. To this end, the Government clarified that no law was broken in the case of Richmond procurement and that this particular case was caused by problems with contract negotiation. Government acknowledged in this context the importance of effective communication to remove any speculations and ensure transparency.

f) Energy Situation Government has continued its efforts to address the energy situation. Due to the improvement in rainfalls, Government noted good performance on energy generation. Additional power generator is in place, and efforts are underway to strengthen the existing network. With regard to the mid- and long-term plan, the financial plan for this FY, which was approved by GoT in February, included elements of increasing tariffs. Other plans and strategies (i.e. Power Master Plan, Power Sector Strategy) are being developed, and continued efforts are being made on rural energy, power security, and gas expansion.

Development Partners welcomed the continued efforts and actions taken by Government to address long-term sustainability of the energy situation, and encouraged Government to keep up

3 the sense of urgency to push through efforts and structural reform of the energy sector. Development Partners also encouraged Government to communicate more with the public as part of an overall strategy, in particular as enormous challenges are ahead in terms of structural reform of the energy sector.

3. Mid-Year Budget Review A Mid-year budget execution report indicated that the budget is on track, despite the energy crisis and fuel prices increases. Government also expressed appreciation to Development Partners for living up to their commitments on GBS disbursement. While there remain additional GBS disbursements still to be made, it was noted that 88% of GBS commitments have been disbursed, emphasizing the particular importance of early disbursement for GoT planning and budgeting.

Development Partners acknowledged the challenges around the predictability of Development Partner’s FY Q1 disbursement, noting the possible linkages to delayed release of funds in sectors such as health and local government. Particularly, the delay in local government spending was noted as having impact on overall spending and service delivery. To this end, Government noted that historically Q1 disbursement is delayed, given the late submission of cash flow submission. Government also noted the delicate nature of cash-flow management, and reported that Government in agreement with IMF is to roll out a Cash Flow Management Programme.

Development Partners also acknowledge the issue of predictability particularly around outer year, and encouraged the PER Macro’s work on scenario analysis. Additionally, Development Partners welcomed the detailed analysis of the Public Financial Management system to make the budget process more efficient and effective. The issue of disbursements will be further discussed in depth in another forum, such as PER.

4. Domestic Accountability a) Public Expenditure Review (PER) Given the shift from sector to cluster approach under the MKUKUTA, a structural change of the PER was deemed necessary in order for PER to add value to the budget process. The recent efforts made by Government on revitalizing the PER process takes into account of the difficulties faced in the cluster structure and recognizes the need for behavioral and mind-set changes. Recognizing that a functioning cluster is the key for a functional PER, Government has initiated discussions with the PER Cluster Working Groups to discuss difficulties and challenges of cluster structure.

Additionally, the PER Main meeting recently decided to expand the scope of PER to take on board issues as reforms, policy, poverty reduction, and MKUKUTA implementation. Government noted in this regard that there is emerging sense of acceptance towards this direction. In this regard, Government will be holding a series of discussions before May this year to further discuss the importance of this shift, the challenges and obstacles of cluster structure.

Development Partners welcomed this initiative by Government and noted that this is an opportunity to rationalize the process, move into dialogue under Government leadership, and strengthen domestic accountability in the context of the JAST. Development Partners also recognized enormous challenges to change behavior in order to create the atmosphere to build partnerships. In the same context, Development Partners encouraged the Government to clarify the national calendar of consultation/dialogue (i.e. PER, MKUKUTA, GBS Review, Sector

4 Review, etc.). Development Partners also sought Government’s views on the timing of the Poverty Policy Week.

b) The role of Civil Society Organizations Development Partners reiterated the shared importance that both DPs and Government attach to freedom of speech and involvement of non-state actors in the context of domestic accountability, noting that certain key agreements such as the Cotonou Agreement have explicit requirements in this regard. The increasing freeing of media is seen as the greatest achievement and part of the evolutionary process to realize freedom of speech, while noting that more needs to be done beyond Dar es Salaam. In addition, it was suggested that there need to be further discussions around the Freedom of Information Bill were also suggested in this context, given the importance of access to information in realizing freedom of speech.

With regard to the involvement of non-state actors, Development Partners raised the need for a broad principle of engagement and the importance of capacity building in this context. Government in this regard noted the discussions and agreement made in the previous DCF meeting to work closely on the issue of NGOs/CSOs accountability and reporting obligations, and urged to revive the process once again. Weak capacity of infant NGOs was also noted as potentially hindering partnership with Government, and as a result the need for building the capacity of NGOs was considered essential.

In addition, Development Partners noted the significant importance of Parliaments in domestic accountability, and emphasized the need for strengthening the capacity of parliament. DPs also congratulated the Parliament for tabling the Report of the Parliamentary Public Accounts Committee.

5. Anti-Corruption: Way Forward in Natural Resources Development Partners commended Government in particular the Ministry of Natural Resources for having undertaken jointly with Development Partners a study to address issues around resources, development and corruption in the forestry sector. The report documented some serious issues around rich resources being depleted without providing benefit to Tanzania. This was reported to be due to (1) lack of control at local level, (2) small scale corruption, and (3) some grand scale corruption. The Report indicated that there is an opportunity to substantively increase domestic revenue, if these issues were addressed. In this context, Development Partners highlighted that this requires political and institutional actions. Development Partners also noted that this issue requires active follow up on the part of GoT involving collaboration between sector Ministry, PCB, MoF, and Tanzania Revenue Authority. The report also addresses specific issues to sector, but it is reasonable to expect similar situations and possibility for similar revenue gain in other sectors. Government acknowledged the seriousness of the issue and relationship to the revenue lost due to inadequate management of natural resources. Government also emphasized the need for similar collaboration and studies in areas such as fisheries, wildlife, and mining sectors and pledged to take the message of the report seriously through collective action on the report findings.

6. Closing Government and Development Partners agreed to continue with regular DCF meeting and suggested the next DCF meeting to take place in June before the Budget session

5 Annex A The DCF was attended by the following representatives of Government and DPG members.

Government of Tanzania Development Partners Group (DPG) Mr. Phillemon L. Luhanja, the Chief Secretary (Chair- Mr. Oscar Fernandez-Taranco, UNDP Resident person) Representative and UN Resident Coordinator, DPG Co- Facilitator Mr. Abudakar S. Rajab, Permanent Secretary, Vice Ms. Satu Santala, Deputy Head of Mission, Finland President’s Office Embassy, DPG Co-facilitator Mr. Gray Mgonja, Permanent Secretary, Ministry of H.E. Frans Baan, EC Ambassador Finance Ms. Mariam Mwaffisi, Permanent Secretary, Ministry H.E. Karel-van Kesteren, Ambassador of Netherlands of Community Development, Gender Affairs and Children Ms. Tarishi M.K., Permanent Secretary, Prime H.E. Bjarne Sorensen, Ambassador of Denmark Ministers Office, Regional Administration and Local Government Mr. Arthur G. Mwakapugi, Permanent Secretary, H.E. Jon Lomoey, Ambassador of Norway Ministry of Energy and Minerals Mr. Michael Mwanda, Deputy Permanent Secretary, Ms. Judy O’Conner, Country Director, the World Bank Prime Minister’s Office Mr. Mohamed M.H. Mzale, Ministry of Foreign Mr. Allister Moon, the World Bank Affairs Professor Delase Mutahaba, President’s Office – Public Service Management Mr. Francis Malambugi, Ministry of Foreign Affairs Mr. Philip Mpango, State House Mr. Egbert Ndauka, Ministry of Planning and Empowerment Begum K. Taj, Ministry of Foreign Affairs Mr. E.P.A. Simwela, Cabinet Under Secretary, State House Mr. R.M. Mayaya, Coordinator, Good Governance Coordination Unit Mr. Jacobs Mwambegele, State House DCF Secretariat Support Mr. Francis Mwapaja, Coordinator, State House Ms. Yuko Suzuki, DPG Secretariat

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