8 June, 2017

Changing the conversation on aid and investment: Designing a new dialogue framework for Tanzania

By Alvaro Rodriguez, UN Resident Coordinator for Tanzania and Development Partners Group co-chair; and Christian Shingiro, Development Management Specialist, Development Partners Group Secretariat Tanzania

The Government of Tanzania and its development partners (DPs) recognise that the development finance landscape is changing rapidly, both globally and nationally. In 2015, Tanzania renewed its focus on its transition to a middle income country and its ambition to become a semi-industrialized nation. For decades, aid accounted for half of the country’s budget. It now stands at slightly above 10%. With Tanzania no longer aid dependent, there is an opportunity and a need for new dialogue.

Tanzania first made use of an independent group of experts to assess challenges in its aid relationship in 1995, with an arrangement later formalised in a now-discontinued Independent Monitoring Group.

Last year, a facilitation team led by Donald Kaberuka, along with Jim Adams, Steve Kayizzi Mugerwa and Mugisha Kamugisha was commissioned to provide options for new avenues for an enhanced dialogue and to discuss, at the highest levels, how to strengthen trust and confidence between Tanzania and international authorities. This ‘dialogue facilitation’ exercise entailed a full review of the existing dialogue structures and relationships, seeking to make them fit for purpose.

The case for reform

All parties are hoping the outcome of the exercise will bring about innovation and fresh ideas to ensure the private sector and non-traditional partners are better involved in and part of development initiatives in Tanzania. New financing instruments are needed to respond to investment gaps in infrastructure and other productive sectors, and to sustain gains in the social sectors. The cost of the Five Year Development Plan II (2016-21) is equivalent to TZS 107 trillion (twice the amount for the FYDP I) and is expected to rely heavily on private sector financing.

Going forward, a renewed dialogue framework should respond to alignment, predictability and transparency concerns in the delivery of Official Development Assistance (ODA). An inclusive ‘development dialogue’ that looks beyond ODA, as articulated in the Addis Ababa Action Agenda on financing for development, is necessary.

At the first development dialogue workshop in 2016, Servacius Likwelile, then-Permanent Secretary of the Treasury in the Ministry of Finance and Planning, spoke of the Kaberuka Process as an opportunity to examine the broader strategic issues of the aid relationship, and to enable the Government and DPs to discuss and identify obstacles.

“We should not run away from addressing challenges,” then-Secretary Likwelile said.

During the second development dialogue workshop in March 2017, the Honorable Minister of Finance and Planning, Philip Mpango, invited partners to “prepare to invest in a stronger relationship.”

True, effective partnership should include professional, open and constructive dialogue about shared objectives and achievements. It should also prioritise mutual accountability for linking efforts to better results. The credibility of the renewed agenda will depend on the degree to which DPs can deliver on commitments to quality and quantity of development cooperation, and on the ability to scale up innovative approaches for the development of Tanzania.

The Kaberuka Report: recommendations and roadmap

The Kaberuka Final Report of April 2017 makes concrete recommendations for better managing sensitive issues in the aid relationship and establishing effective dialogue for a possible ‘Investment in Tanzania Week’. It identifies capacity development as one of the key priorities, based on a comprehensive review of existing and forthcoming planning and implementation requirements in the medium term.

Rebuilding the momentum of an open and effective dialogue that accommodates country-specific needs, while conforming to mutual accountability requirements, remains an important priority for the coming months.

The Kaberuka Report is creating new opportunities for open dialogue. Since May 2017, the Government of Tanzania and development partners have started to draw on past achievements and recommendations from the Final Report to propose a new Development Co-operation Framework to be endorsed in July 2017.

These efforts support Tanzania’s transition to middle income status, which necessitates a new approach to dialogue with development partners, with new tools, new stakeholders and new ways of attracting funding and driving development.

DISCLAIMER: This blog is a forum for sharing the diverse views of its varied contributors on important and emerging issues of Effective Development Co-operation. The posts do not necessarily reflect the view of the Global Partnership, its Co-Chairs, Steering Committee members, or of the joint UNDP/OECD support team.