tanzania poverty reduction support credit 9 · web view2016/11/09 · the gross register tonnage...

Document of The World Bank

Report No: ICR00003771

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-50720, IDA-52100, AND IDA-53960)

ON A

CREDIT

IN THE AMOUNT OF SDR 64.5 MILLION, SDR48.8 MILLION, AND SDR55.5 MILLION

(US$ 100 MILLION, US$75 MILLION, and US$85 MILLION EQUIVALENT)

TO THE

UNITED REPUBLIC OF TANZANIA

FOR A

TANZANIA POVERTY REDUCTION SUPPORT CREDIT SERIES 9 - 11

September 27, 2016

Macroeconomics and Fiscal Management Global Practice - GMFDRCountry Management Unit - AFCE1Africa Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective as of June 30, 2016)

Currency Unit = Tanzania Shilling (T Sh)US$ 1.00 = 2185.1 T Sh

FISCAL YEARJuly 1 to June 30

ABBREVIATIONS AND ACRONYMS

AEOs Authorized Economic OperatorsBoT Bank of TanzaniaBRELA Business Registrations and Licensing Agency CAG Controller and Auditor GeneralCAS Country Assistance StrategyCCRO Certificates of Customary Right of OccupancyCEM Country Economic MemorandumCEOs Chief Executive OfficersCPI Consumer Price IndexCSOs Civil Society OrganizationsCWG(s) Cluster Working Group(s)DfID Department for International DevelopmentDPs Development PartnersDPO(s) Development Policy Operation(s)DRC Democratic Republic of CongoDSA Debt Sustainability AnalysisEAC East African CommunityEIA Environment Impact AssessmentEITI Extractive Industries Transparency InitiativeEPZ(s) Export Processing Zone(s)EPZA Export Processing Zones AuthorityESW Economic and Sector WorkEU European UnionFDI Foreign Direct InvestmentFIAS Facility for Investment Climate Advisory ServiceFY Fiscal Year (Financial Year)FYDP Five Year Development PlanGBS General Budget SupportGDP Gross Domestic ProductGNI Gross National IncomeGoT Government of TanzaniaHBS Household Budget SurveyHIPC Heavily Indebted Poor CountriesICRR Implementation Completion and Results ReportICT Information and Communication TechnologiesIDA International Development AssociationIFC International Finance CorporationIFMIS Integrated Financial Management Information SystemIMF International Monetary FundIT Information Technology

ii

JBCs Joint Border CommitteesKRA Key Results AreaLGAs Local Government AuthoritiesLGRP Local Government Reform Program M&E Monitoring and EvaluationMAIR MKUKUTA Annual Implementation ReportMDAs Ministries, Departments and AgenciesMDGs Millennium Development GoalsMDRI Multilateral Debt Relief InitiativeMEM Ministry of Energy and MineralsMKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umasikini TanzaniaMoF Ministry of FinanceNAO National Audit OfficeNBS National Bureau of StatisticsNKRAs National Key Result AreasNPS National Panel SurveyOECD Organization of Economic Cooperation and DevelopmentOSBPs One-Stop Border PostsPAF Performance Assessment FrameworkPBGs Planning and Budget GuidelinesPDBPDO(s)

Presidential Delivery BureauProgram Development Objective(s)

PEFA Public Expenditure and Financial AccountabilityPEFAR Public Expenditure and Financial Accountability ReviewPER Public Expenditure ReviewPFM Public Financial ManagementPFMRP Public Financial Management Reform ProgramPHDR Poverty and Human Development ReportPIM Public Investment ManagementPIP Public Investment ProgramPMO Prime Minister’s OfficePOPC President’s Office Planning CommissionPMO-RALG Prime Minister’s Office—Regional Administration and Local

GovernmentPPIAF Public-Private Infrastructure Advisory FacilityPPP(s) Public Private Partnership(s)PPPFU Public Private Partnership Finance UnitPPRA Public Procurement Regulatory AuthorityPRBS Poverty Reduction Budget SupportPRS Poverty Reduction StrategyPRSCs Poverty Reduction Support Credit(s)PS Permanent SecretaryPSI Policy Support InstrumentPSCP Private Sector Competitiveness ProjectPSIA Poverty and Social Impact AnalysisPSM Public Service ManagementREPOA Research on Poverty AlleviationSADC Southern African Development CommunitySEZ(s) Special Economic Zone(s)TIC Tanzania Investment CentreTPA Tanzania Ports AuthorityTRA Tanzania Revenue AuthorityUNDP United Nations Development Programme

iii

VAT Value Added Tax

Senior Global Practice Director: Carlos Felipe Jaramillo Country Director: Bella Bird

Acting Practice Manager: Kevin CareyProject Team Leader: Emmanuel A. Mungunasi

ICR Team Leader: Mamadou Ndione

iv

COUNTRYOperation Name

CONTENTS

A. Basic Information.......................................................................................................iiB. Key Dates..................................................................................................................iiiC. Ratings Summary......................................................................................................iiiD. Sector and Theme Codes...........................................................................................ivE. Bank Staff..................................................................................................................viF. Results Framework Analysis......................................................................................viG. Ratings of Program Performance in ISRs..................................................................ixH. Restructuring.............................................................................................................ix1. Program Context, Development Objectives and Design.............................................12. Key Factors Affecting Implementation and Outcomes...............................................43. Assessment of Outcomes.............................................................................................94. Assessment of Risk to Development Outcome.........................................................185. Assessment of Bank and Borrower Performance......................................................196. Lessons Learned........................................................................................................217. Comments on Issues Raised by Borrower/Implementing Agencies/Partners...........22Annex 1 Bank Lending and Implementation Support/Supervision Processes..............23Annex 2. Beneficiary Survey Results............................................................................24Annex 3. Stakeholder Workshop Report and Results...................................................25Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR......................26Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders........................28Annex 6. List of Supporting Documents.......................................................................30MAP...............................................................................................................................31

A. Basic Information Program 1

Country Tanzania Program NameTanzania Poverty Reduction Support Credit 9

Program ID P112762 L/C/TF Number(s) IDA-50720ICR Date 06/17/2016 ICR Type Core ICR

i

Lending Instrument DPL BorrowerUNITED REPUBLIC OF TANZANIA

Original Total Commitment

XDR 64.50M Disbursed Amount XDR 64.50M

Implementing Agencies: Ministry of FinanceCofinanciers and Other External Partners Program 2


Program ID P110836 L/C/TF Number(s) IDA-50720,IDA-52100ICR Date 06/17/2016 ICR Type Core ICR




Implementing Agencies: Ministry of FinanceCofinanciers and Other External Partners Program 3


Program ID P120536 L/C/TF Number(s) IDA-52100,IDA-53960ICR Date 06/17/2016 ICR Type Core ICR




Implementing Agencies: Ministry of FinanceCofinanciers and Other External Partners

ii

B. Key Dates Tanzania Poverty Reduction Support Credit 9 - P112762

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 06/27/2011 Effectiveness: 04/20/2012 Appraisal: 01/23/2012 Restructuring(s): Approval: 03/15/2012 Mid-term Review: 11/12/2012 11/12/2012 Closing: 06/30/2013 06/30/2013

Tanzania Poverty Reduction Support Credit 10 - P110836






C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Moderately Satisfactory Risk to Development Outcome Significant Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating

Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: NA

Overall Bank Performance Moderately Satisfactory Overall Borrower

Performance Moderately Satisfactory

iii

C.3 Quality at Entry and Implementation Performance Indicators Tanzania Poverty Reduction Support Credit 9 - P112762

Implementation Performance Indicators QAG Assessments

(if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA) None

Problem Program at any time (Yes/No): No Quality of

Supervision (QSA) None

DO rating before Closing/Inactive status

Moderately Satisfactory

Tanzania Poverty Reduction Support Credit 10 - P110836Implementation

Performance Indicators QAG Assessments (if any) Rating:







Tanzania Poverty Reduction Support Credit 11 - P120536Implementation

Performance Indicators QAG Assessments (if any) Rating:






D. Sector and Theme Codes Tanzania Poverty Reduction Support Credit 9 - P112762

Original ActualSector Code (as % of total Bank financing) Central government administration 50 50 General industry and trade sector 16 16 Public administration- Industry and trade 34 34

iv

Theme Code (as % of total Bank financing) Other Private Sector Development 17 17 Public expenditure, financial management and procurement

17 17

Regulation and competition policy 33 33 Tax policy and administration 17 17 Trade facilitation and market access 16 16

Tanzania Poverty Reduction Support Credit 10 - P110836Original Actual

Sector Code (as % of total Bank financing) Central government administration 70 70 General industry and trade sector 30 30

Theme Code (as % of total Bank financing) Debt management and fiscal sustainability 20 20 Public expenditure, financial management and procurement

36 36

Regulation and competition policy 15 15 Tax policy and administration 14 14 Trade facilitation and market access 15 15

Tanzania Poverty Reduction Support Credit 11 - P120536Original Actual

Sector Code (as % of total Bank financing) Central government administration 35 35 General energy sector 10 10 General industry and trade sector 15 15 General public administration sector 20 20 Ports, waterways and shipping 20 20

Theme Code (as % of total Bank financing) Administrative and civil service reform 15 15 Debt management and fiscal sustainability 10 10 Other Private Sector Development 20 20 Public expenditure, financial management and procurement

40 40

v

Trade facilitation and market access 15 15

E. Bank Staff Tanzania Poverty Reduction Support Credit 9 - P112762

Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Bella Bird Mercy Miyang Tembon (Acting)Sr. Practice Director Felipe Carlos Jaramillo Practice Manager/Manager: Albert Zeufack J. Humberto Lopez

Task Team Leader: Yutaka Yoshino Yutaka Yoshino ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione

Tanzania Poverty Reduction Support Credit 10 - P110836Positions At ICR At Approval

Vice President: Makhtar Diop Makhtar Diop Country Director: Bella Bird Philippe DongierSr. Practice Director Felipe Carlos Jaramillo Marcelo Giugale Practice Manager/Manager: Kevin Carey Albert Zeufack

Task Team Leaders: Yutaka Yoshino and Emmanuel A. Mungunasi

Yutaka Yoshino and Emmanuel A. Mungunasi

ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione

Tanzania Poverty Reduction Support Credit 11 - P120536Positions At ICR At Approval

Vice President: Makhtar Diop Makhtar Diop Country Director: Bella Bird Philippe DongierSr. Practice Director Felipe Carlos Jaramillo Marcelo Giugale Practice Manager/Manager: Albert Zeufack Albert Zeufack

Task Team Leader: Emmanuel A. Mungunasi Emmanuel A. Mungunasi ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione

F. Results Framework Analysis

Program Development Objectives (from Program Document)

vi

Revised Program Development Objectives (as approved by original approving authority)

Indicator(s) see last page

Tanzania Poverty Reduction Support Credit 9-11

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1. Domestic revenue as percentage of GDP 16.5 18 19 20.8

Date achieved 6/30/11 6/30/11 6/30/13 5/30/15

Comments

Met and exceeded (109.5 percent). GDP was revised after the appraisal of the last operation and reflected in Annex 2-Policy and Results Matrix of the Project Document of P120536. The actual number is calculated by applying the nominal growth of the rebased GDP to the old GDP.

Indicator 2. Time taken before publishing an annual EITI payment reconciliation report after the end of relevant FY

20 16 17

Date achieved 6/30/11 6/30/16 6/30/16

Comments

Not met. The delay in the publication of the report is shorter that the EITI requirement which is 18 months. The program target has been achieved by 94.1 percent. Non tax revenue collection form the extractive sector increased from US$330 million in 2011 to US$750 million in 2014.

Indicator 3. Number of new public investment projects appraised in a year based on economic and financial analysis as outlined in operational manuals prepared by POPC as a percentage of total new public investment.

0 50 0

Date achieved 6/30/11 6/30/16 6/30/16

CommentsNot met. The PIM institutional building process has taken more time than initially anticipated. The regulations and guidelines have been adopted and ready for implementation.

Indicator 4. No of PPP projects signed after ex-ante value for money and affordability reviews and with ex-post monitoring of fiscal risk by MoF.

0 3 0

Date achieved 6/30/11 6/30/16 6/30/16

CommentsNot met. The PIM institutional building process has taken more time than initially anticipated. The regulations and guidelines have been adopted and ready for implementation.

Indicator 5. Approved budget broadly in line with policy objectives (MKUKUTA, FYDP, sectors policy priorities)

75% 100% 67.7%

Date achieved 8/31/11 6/30/16 6/30/16

CommentsNot met. The share of budget allocated to MKUKUTA declined partly due to an increase in debt service which is accounted as non-MKUKUTA allocation, even if the borrowed amount financed priority sectors.

Indicator 6a. Proportions of MDAs that are connected with IFMS that have effective interconnectivity

100 100 100

vii

Indicator 6b. Proportion of Regions that are connected with IFMS that have effective connectivity

100 100 100

Indicator 6c. Proportion of LGAs that are connected with IFMS that have effective interconnectivity

0 100 79.3

Date achieved 6/30/11 6/30/16 6/30/16

Comments Not met. 134 LGAs out of 169 were connected to the Epicor IFMS. The 35 LGAs without connectivity were recently established.

Indicator 7. Open budget index 45 55 46Date achieved 6/30/11 6/30/16 6/30/16Comments Not met.Indicator 8. Average compliance rate of MDAs and LGAs with internal audit guidelines

0 70 38

Date achieved 6/30/12 6/30/16 6/30/16

Comments

LGAs issued with unqualified opinions increased from 112 (80%) in the year 2012/2013 to 150 (92%) in 2013/2014 while LGAs issued with qualified opinions decreased from 27 (19%) to 13 (8%) in the same period. Similarly, MDAs issued with unqualified opinion increased from 85 to 166 entities in the same period, representing an increase of 95 percent while MDAs issued with qualified opinion decreased by 70% from 30 to 9.

Indicator 9. Number of operating investors in the existing special economic zones

39 80 140

Date achieved 6/30/11 6/30/16 5/30/16

CommentsMet and exceeded. These companies have invested capital worth over US$ 1.3 billion and have created over 36,000 direct and 120,000 indirect jobs. The total value of exports from industries under the authority exceeded US$ 1.1 billion.

Indicator 10. Average time taken for operators to get the license within the zone

7 3 3

Date achieved 6/30/12 6/30/16 5/30/16

Comments Met. As of April 2015, 140 companies were registered against of the target of 80 companies

Indicator 11a. Average container dwell time at the Port of Dar es Salaam

12 5 4.9

Date achieved 12/31/12 6/30/16 12/30/15

Comments

Met. Overall, transit activity increased by 15 per annum between 2011 and 2014, pulled mainly by transit to DRC and Zambia. The gross register tonnage (GRT), which is second best indicator of activity, declined slightly by 1.2 percent, from 31.9 million tons in 2014 to 31.5 million tons in 2015, due to lower commodity prices, and growing stability in the region.

Indicator 11b. Average container ship turnaround time at the Port of Dar es Salaam

8 4 1.9

Date achieved 12/31/12 6/30/16 12/30/15

Comments Met. Transit activity increased by 15 per annum in 2011 - 2014 while GRT declined from 31.9 million tons in 2014 to 31.5 million tons in 2015.

Indicator 12. Average time taken for trucks to cross the main border posts

2 0.5 1

viii

Date achieved 12/31/12 6/30/16 3/30/16

CommentsNot met. The number of police checkpoints along the corridor to Rwanda was reduced from 54 to 15. In 2016 the new President reduced it to 3.

G. Ratings of Program Performance in ISRs


No. Date ISR Archived DO IP

Actual Disbursements(USD millions)

1 12/31/2012 Moderately Satisfactory Moderately Satisfactory 99.71


No. Date ISR Archived DO IP

Actual Disbursements(USD millions)

1 04/16/2014 Moderately Satisfactory Moderately Satisfactory 73.85

H. Restructuring N/A

ix

1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

1. Macroeconomic and structural background. According to the information available at the appraisal of the first operation of the program (PRSC-9), Tanzania recorded strong economic growth over the decade preceding the program, but performance in terms of poverty reduction remained weak. GDP growth averaged 6.8 percent in 2001-2011, while the poverty headcount at national poverty line declined only marginally from 35.7 percent in 2000 to 33.6 percent in 2007, according to the Household Budget Survey (HBS 2007), yielding a very small growth elasticity of poverty. The robust economic growth has not translated into a corresponding improvement in the quality of life and social wellbeing for millions of citizens. The unevenly distributed growth explained the weak record of poverty reduction during the high growth period. Economic expansion was mainly driven by the public sector and a few private activities including mining, telecommunication, and construction. Thanks to debt relief initiatives (HIPC and MDRI), the public sector (total expenditure and net lending) expended from 15 percent of GDP in mid-1990s to 27 percent of GDP in 2011. In contrast, the credit to private sector stalled around 12 percent of GDP. The size of formal private sector remained small compared to the informal sector that provides employment and livelihoods to the majority of the population. With low levels of productivity, the agriculture sector has not transformed to contribute to the needed job creation. There has been remarkable progress in enrolment in primary and secondary schools, but challenges remained in the quality of learning outcomes.

2. In this context, Tanzania needed to maintain the robust economic growth while increasing the growth elasticity of poverty, in a context shrinking fiscal space. Foreign aid was declining in percentage of GDP as the country finished enjoying the debt relief initiatives and fiscal expansion in the previous years, including during the fuel price hikes, have reduced significantly the country’s fiscal buffers. For example, a fiscal stimulus package was implemented in 2009 and sustained throughout 2010 and the first half of 2011, to mitigate the effect the global food, fuel and financial crisis. By end FY10/11 the fiscal and current account deficits were respectively at 6.9 percent and 9.8 percent of GDP, while the level of foreign reserves at 4.4 months of imports. In addition to the expansion of the fiscal space, Tanzania needed to diversify its economy away from the capital intensive sector including mining, to create more jobs, in a context of rigidity in the business regulatory environment.

3. Rationale for Bank assistance. The PRSC program was well aligned with the FY12–15 Country Assistance Strategy (CAS) for Tanzania. The PRSC series, through its focus on Tanzania’s competitiveness as a regional transit hub, aimed to contribute to the CAS outcome 2.2 (increased access to and quality of transport services), while its focus on domestic revenue mobilization was directed to contribute to the CAS outcome 2.4 (improved management and delivery of urban services). The cross-cutting emphasis on transparency through revenue and budget transparency was expected to contribute to the governance and accountability foundation of the CAS. In addition to the direct contribution to the CAS pillars and foundation, the series was expected to provide a platform for policy dialogue and support critical structural reforms. The CAS also expected the PRSC series to continue to be a platform of multisectoral approach in the Bank’s work program.

4. Taking into account the context at appraisal and complementarity with other Bank’s and donors’ operations, the program focused on creating fiscal by leveraging private sector financing through better Public Investment Management (PIM) and solid PPP framework while strengthening Domestic Revenue Mobilization (DRM). Building on the lessons learned from previous series, the program shifted away from broad business environment type of reform to focus on selected areas where low hanging fruits were perceived in terms of value added and job creation. The PRSC series focused on areas that were not directly covered by other investment

1

lending projects in Tanzania or by regional operations. As a result, the program operation did not directly cover issues related to agriculture, energy, or health and education.

1.2 Original Program Development Objectives (PDO) and Key Indicators

5. The Program Development Objectives (PDO) of the series were clearly stated at the outset of the program. They were to: (i) improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects; and (ii) ensure macroeconomic stability and safeguard shared growth through sound management of public finance. The program put emphasis on harmonization and ownership and was organized around the National strategy for Growth and Poverty Reduction (MKUKUTA) and the Five Year Development Plan (FYDP).

6. The results indicators of the program were established as follow:

(i) Domestic revenue as a percentage of gross domestic product (GDP); (ii) Time taken before publishing an annual Extractive Industries Transparency Initiative

(EITI) payments reconciliation report after the end of the relevant fiscal year; (iii) Number of new public investment projects appraised in a year based on economic and

financial analysis as outlined in the operational manuals prepared by the President’s Office Planning Commission as a percentage of total new public investment projects started by ministries, departments and agencies (MDAs) in the same year;

(iv) Number of public-private partnership (PPP) projects signed after ex-ante value for money and affordability reviews by the Ministry of Finance;

(v) Approved budget broadly in line with policy objectives (MKUKUTA, Five Year Development Plan, sectors’ policy priorities);

(vi) Proportions of MDAs, regions, and local government authorities that are electronically connected to the financial management information system;

(vii) Open Budget Index (OBI); (viii) Average compliance rate of MDAs and local government authorities with internal audit

guidelines; (ix) Number of operating investors in the existing SEZs; (x) Average time taken for operators to get the license within the zone; (xi) Average container dwell time and ship turnaround time at the Port of Dar es Salaam; and (xii) Average time taken for trucks to cross the main border posts.

1.3 Revised PDO and Key Indicators, and Reasons/Justification

7. The project development objectives were not revised. However, the number of outcome indicators have been reduced from 15 to 12. Under the PRSC 10, six indicators were dropped, three added and three other modified. The table below summarizes the modifications to the outcome indicators.

Changes in the Outcome IndicatorsOutcome Indicator Change

2

Time taken by the Business Registrations and Licensing Agency (BRELA) to register a company.

Dropped

Aggregate value of total investments (foreign and domestic) in a year.

Dropped

Total capital invested in the special economic zones per year.

Dropped

Average time taken for operators to get the license within the zone.

Added

Average time taken for a container from off-loading until clearing from port

Average container dwell time and ship turnaround time at the Port of Dar es Salaam

Percent of country covered by land-use management plan

Dropped

Tax exemption as percentage of domestic revenue.

Dropped

Time taken before publishing an annual EITI payment reconciliation report after the end of relevant FY.

Added

Appraised public investment projects based on economic and financial analysis as outlined in operational manuals prepared by POPC as a percentage of total new public investment projects by ministries, departments and agencies (MDAs) and central ministries implemented in a year

Number of new public investment projects proposed in a year based on economic and financial analysis as outlined in operational manuals prepared by POPC as a percentage of total new public investment projects started by ministries, departments (MDAs) and agencies in the same year.

Expenditure outturn deviation compared to original approved budget

Dropped

Average compliance rate of MDAs and LGAs with internal audit guidelines

Added

Proportions of ministries, departments, and agencies (MDAs), Regions and local government authorities (LGAs) that are connected with integrated financial management system (IFMS) that have effective interconnectivity.

Proportions of ministries, departments, and agencies (MDAs), Regions and local government authorities (LGAs) that are connected with financial management information system.

1.4 Original Policy Areas Supported by the Program

8. The operation has two pillars (investment climate and public finance) which maps out into seven policy areas:

i. Sound legal framework for business environment and private investment; ii. Effective institutions for promoting and regulating special economic zones (SEZs);

iii. Tanzania’s competitiveness as a regional transit hub;iv. Effective implementation of land laws and policies;v. Enhancing domestic revenue mobilization with transparency;

vi. Sound public investment management including public private partnerships (PPPs); andvii. Improved quality of budgets and a stronger public financial management (PFM) system.

1.5 Revised Policy Areas

3

9. Under PRSC-10, two policy areas (the first and fourth) were dropped since they were being programmed under other parallel operations. The table below summarizes the modifications to the policy areas.

Change in Policy AreaPolicy Area Change Reason for Change

Sound legal framework for business environment and private investment

Dropped Provide more focus under the investment climate pillar.

Effective implementation of land laws and policies

Dropped Provide more focus under the investment climate pillar and avoid overlap with other program/projects.

Enhancing domestic revenue mobilization with transparency

Enhancing efficiency and transparency in domestic revenue mobilization

To improve clarity

1.6 Other significant changes N/A

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance

10. As seen in the table below, all the prior actions1 were met. All three operations were implemented on schedule, and preparation was to the extent possible, aligned with the General Budget Support (GBS) framework and the government’s budget preparation cycle. All operations were approved by the Board in the third quarter of the Government’s fiscal (budget) year and funds disbursed during the same quarter.

Prior Action under PRSC-9 Status PDO1. Improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects1. The Recipient has submitted to Parliament the Business Laws (Miscellaneous Amendments) Act

which amends the: (i) Business Names (Registration) Act, (ii) Companies Act, (iii) Tanzania Trade Development Authority Act, (iv) Merchandise Act, and (v) Urban Planning Act, all said amendments designed to establish a sound legal framework for the business environment and private sector investments.

Completed

2. The Recipient has enacted the Economic Zone Laws (Miscellaneous Amendments) Act which amends the Export Processing Zones Act and Special Economic Zones Act so as to promote a common regulatory regime for both types of zones.

Completed

3. The Recipient has issued a government circular reducing the number of permanent police checkpoints along the Dar es Salaam-Rusumo corridor from 54 to 15 with a view to facilitating faster and safer movement of goods and promoting interagency coordination.

Completed

PDO2. ensure macroeconomic stability and safeguard shared growth through sound management of public finance4. The Recipient’s Controller and Auditor General has issued a report clarifying the discrepancy in

the Recipient’s first Extractive Industries Transparency Initiative payments reconciliation report. Completed

5. - The Recipient has established in the Ministry of Finance a functional public private Complete

1 The order of the prior actions have been rearranged per pillar to maintain a same feature for the three operations.

4

partnership unit to be responsible for fiscal risk allocation and other financial matters relating to public private partnerships.

d

6. The Recipient has published a citizens’ guide to the budget, prepared in collaboration with civil society organizations, designed to improve transparency and public access to budget information.

Completed

7. The Recipient has implemented a time-bound action plan for FY10/11, based on the recommendations of its national audit office, to address the identified weaknesses in implementing its integrated financial management system.

Completed

Prior Action under PRSC-10 StatusPDO1. Improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects1. The Recipient has adopted the Special Economic Zones Regulations 2012 which provide an

operational framework for implementing the Special Economic Zones Act.Completed

2. The Recipient has established Joint Border Committees at border posts with high traffic volume as a prelude to the establishment of One-stop border posts under the Roadmap on the Improvement of the Investment Climate in Tanzania.

Completed

PDO2. ensure macroeconomic stability and safeguard shared growth through sound management of public finance

3. The Recipient has prepared, jointly with other members of the EITI’s Multi- Stakeholders Working Group, its second EITI payment reconciliation report and submitted said report to the EITI Board with a view to obtaining EITI compliance status.

Completed

4. The Recipient has introduced a nil-band in the Recipient’s presumptive income tax system, as applied to small enterprises, with a view to enhancing the said system’s equity.

Completed

5. The Recipient has taken the following measures to strengthen planning and monitoring of public investment projects in FY2012/13 budget: (a) budget proposals for strategic public investment projects were assessed and approved in line with guidelines issued by POPC, and (b) directives were issued for the Recipient’s ministries, departments, and agencies and local government authorities (LGAs) to prepare actions plans, cash-flow plans, and quarterly progress reports for their development expenditures and submit them to POPC for the latter’s scrutiny and making recommendations to the Ministry of Finance regarding actual release of funds on a quarterly basis.

Completed

6. The Recipient has strengthened MOF’s internal audit department’s operations by adopting a risk-based internal audit Methodology based on international internal audit standards.

Completed

7. The Recipient has connected the LGAs with the central government through EPICOR. Completed

Prior Action under PRSC-11 StatusPDO1. Improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects1. The Recipient has established a single one-stop services center of MDAs for SEZs’ investors and

has developed operational guidelines for public private partnership (PPP) arrangements for SEZs. Completed

2. The Recipient has taken measures to improve port efficiency including: (a) strengthening implementation of custom regulations which require manifest to be lodged electronically 24 hours before arrival of the vessel by effecting penalties for non-compliance; (b) starting to implement the Action Plan to move Tanzania Port Authority (TPA) to landlord status, including completion and adoption of feasibility study for berths one to seven with options for public private partnerships (PPPs); and (c) developing and implementing action plan to merge cargo management and clearance under the new automated custom system (TANCIS).

Completed

3. The Recipient has issued an operational manual for border trade and has widely disseminated the manual to traders to increase their awareness of required procedures for trading across the border.

Completed

5

PDO2. ensure macroeconomic stability and safeguard shared growth through sound management of public finance

4. The Recipient has drafted legislation institutionalizing the Extractive Industries Transparency Initiative (EITI) and providing a sound framework for EITI’s operation in its territory and has completed stakeholder consultations on the draft legislation.

Completed

5. The Recipient’s Cabinet has approved a bill to enact the Tax Administration Act and said bill has been finalized by the Attorney General’s Chamber.

Completed

6. The Recipient: (a) has drafted a bill to amend the Planning Commission Act; and (b) has initiated development of a public investment operational manual to provide guidance for the ministries, departments, and agencies and the local government authorities to carry out economic and financial analysis of public investment projects.

Completed

7. The Recipient’s Cabinet has approved amendments to the PPP Act No. 18 of 2010 to: (i) streamline the number of approvals required for PPP projects; (ii) create the PPP facilitation fund; and (iii) establish rules for unsolicited proposals.

Completed

8. The Recipient has: (a) through its Internal Auditor General issued public sector audit committee guidelines to improve effectiveness of audit committees MDAs and LGAs; and (b) facilitated implementation of the Procedures Manual for the QAIP and of the Guidelines for Developing Institutional Risk Management Framework (IRMF) in Public Sector, issued by the Internal Auditor General.

Completed

9. The Recipient has: (a) completed and published the MTDS, which recognizes as central government debt off-budget liabilities, including from pension funds and other parastatals; and (b) submitted to its Cabinet proposed amendments to the Government Loans, Grants and Guarantees (GLGG) Act CAP 134 R.E. 2004.

Completed

10. The Recipient has published on the MoF website: (a) guidelines for the preparation of the annual plan and budget for FY2013/14 by December 2012; (b) the executive budget proposal for 2013/14 as submitted to its Parliament by June 2013; (c) the approved budget for FY2013/14 by September 2013; (d) the citizens’ budget for FY2013/14 by November 2013; and (e) the year-end report on preliminary budget outturn by November 2013.

Completed

2.2 Major Factors Affecting Implementation:

11. Successful implementation of the PRSC program is a combination of various factors, ranging from government ownership to monitoring of progress.

12. Sound Analytical Underpinning . There were a large number of analytical pieces that informed and supported the two pillar of the program. The importance of domestic revenue mobilization, Public Investment Management (PIM), PPPs, and value-for-money analysis has been highlighted by a number of recent analytical products by the Bank as well as others partners, including a series of IMF TA reports, IFC work on tax policies and administration in EAC, Tax Modernization Project, the Tanzania Revenue Authority’s informal sector study, the annual PER and Public Expenditure and Financial Accountability Review (PEFAR) reports, the 2010 PER, the PEFA reports, etc. in the business climate pillar, the Bank study on SEZs in Africa featured Tanzania as one of the cases and developed a framework of the reform agenda. The PER process provided analytical basis on domestic revenue mobilization, especially on tax exemption and on public investment management. The Bank study (FY13) on political economy of port reform in Tanzania estimated cost of inefficiency in the Port of Dar es Salaam for both Tanzania and for neighboring countries. The recent Bank’s economic and sector work (ESW) report Reshaping Economic Geography in East Africa (FY12) also informed the dialogue on the regional transit hub. The CEM will strengthened the dialogue process on SEZs and regional transit hub.

13. Focus and flexibility . The PRSC program was designed taking into account the lessons learned from the previous PRSC series. The IEG review of the ICRR for the previous

6

PRSC series recommended a more selective approach in designing the operation while incorporating some flexibility in the policy design. Thus, the PRSC 9-11 series focused on two pillars and five policy areas with high prospects for better reform traction contrary to the previous series which encompassed a wide range of reform areas. This allowed the Bank to introduce adjustments during the course of the series, which was largely instrumental in achieving all prior policy actions. Complementarity with other investment lending projects in Tanzania and regional operations facilitated the focus. As a result, the program operation did not directly cover agriculture, energy, health, and education.

14. Target setting. While the outcome indicator were clear and well defined, the program established too ambitious or unrealistic targets for some indicators (OBI; projects signed after ex-ante value for money and affordability reviews by the Ministry of Finance; Approved budget broadly in line with policy objectives (MKUKUTA, Five Year Development Plan, and sectors’ policy priorities), Number of new public investment projects appraised in a year based on economic and financial analysis as outlined in the operational manuals prepared by the President’s Office Planning Commission as a percentage of total new public investment projects started by ministries, departments and agencies (MDAs) in the same year), mainly on the second pillar of the program.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:

15. M&E Design. The program included a results matrix with clearly defined and measurable outcome indicators. The series describes the M&E arrangements but it was not clear how the various frameworks would interact to ensure coherent reporting. According to the program documents, the PRSC series was monitored through the harmonized framework for the GBS in Tanzania. The Partnership Framework Memorandum for GBS was signed in June 2011 between the Government and 12 DPs2, including the Bank, to support the Government’s implementation of MKUKUTA II. Under the framework, the Government and partners jointly decide on indicators for measuring performance in poverty reduction. The indicators are compiled into the Performance Assessment Framework (PAF) developed for each of the three MKUKUTA II clusters as well as on macroeconomic management and public financial management. While the PRSC result matrix remained broadly the same, the PAF has been modified over the implementation of the program, weakening dramatically the linkage between the two frameworks. The number of outcome indicators has been reduced from 33 in the PAF for 2012 to only 12 in the PAF for 2014 to focus on key priorities and policy issues. At the end, the PAF for 2014 included only one outcome indicator of the PRSC program: the domestic tax and non-tax revenue as share of GDP. Also, the program target and the PAF target were different for the outcome indicator measuring the approved budget broadly in line with policy objectives (MKUKUTA, 5YDP, sector policy priorities). The target for the PAF remained at 75 percent, the program target was set at 100 percent.

16. As only part of the policy actions and outcome indicators for the program were taken from the PAF, the others were agreed upon between the Government and the Bank, outside the GBS framework, and monitored during supervision missions. The outcome indicators selected to

2 The 12 DPs participating in GBS are African Development Bank, Canada, Denmark, European Union, Finland, Ireland, Japan, Germany, Norway, Sweden, United Kingdom, and the World Bank. The total foreign aid includes both grants and concessional loans but does not include the concessional parts of the loan from Chinese Export Import Bank to finance the gas pipeline.

7

monitor the program were clear and measurable. However, with the rebasing of the GDP, it was difficult to track performance in tax to GDP ratio.

17. M&E Implementation. MKUKUTA Secretariat produced MKUKUTA Annual Implementation Reports (MAIR). The reports consolidated key achievements, challenges and lessons learned during MKUKUTA implementation. The reports were printed and circulated to stakeholders and also uploaded on Ministry of Finance’s website. The government held Annual Review (AR) of the GBS each year during the implementation of the PRSC program. However, the AR was not sufficient to monitor the PRSC program and additional information were produced/collected to complement the AR reports. The primary responsibility of data collection was with the Government. Most often, government data are reliable but data were not centralized within one government entity. Since data is not centralized in one government entity, a lot of effort went into collecting them. External sources such as the Rapid budget analysis led by the Bank and the IMF supported PSI reviews are used to monitor the macroeconomic and budget framework.

18. As only part of the policy actions and outcome indicators for the program were taken from the PAF, the others were agreed upon between the Government and the Bank, outside the GBS framework, and monitored during supervision missions. The number and duration of PRSC missions were increased to 4 per year and 3 weeks per supervision mission to ensure adequate time for consultations and supervision. The outcome indicators selected to monitor the program were clear and measurable. However, with the rebasing of the GDP, it was difficult to track performance in tax to GDP ratio.

19. The GBS framework was complemented by regular bilateral dialogue between the Bank and the Government.

20. M&E Utilization. The most important use of the M&E system is the Annual Review (AR) which is usually held in November. The AR is an event for dialogue between the Government and Budget Support partners and an opportunity to assess how the Budget Support funds have been used by the Government, and whether this has produced expected results in poverty reduction or not. The rating of the Performance Assessment Framework (PAF) is the basis for the review. Based on the Annual Review, Development Partners make their initial commitments for Budget Support payments for the following financial year. It is also a unique occasion to discuss future plans and development targets. The Bank in agreement with the Government used also existing information to adjust the program under PRSC 10 to provide more focus and clarify the expected outcomes.

2.4 Expected Next Phase/Follow-up Operation:

21. The Bank is currently finalizing a first Systematic Country Diagnostic (SCD) that will be followed by a new Country Partnership Framework (CPF). The latter will outline support for Tanzania in the coming four or five years. Although there is no planned programmatic series following the PRSC9-11, the Bank has a number of other DPOs at various stages of preparation to ensure continuity of Bank support to Tanzania. These include: (i) Pension reforms, (ii) Business environment for job creation with specific focuses on agribusiness and tourism, (iii) Power and Gas, (iv) Open Government and Public Finance Management. The business environment for jobs DPF series and the open government and PFM DPF series closely follow up on the reform agenda supported by PRSC 9-11 series.

8

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

22. Relevance of Objectives. The objectives of PRSC 9-11 program were important and are still relevant and consistent with the country’s current development priorities. They were aligned with the CAS, MKUKUTA, and FYDP, as well as the programs of other donors, with an appropriate focus on shared growth, economic governance, and income poverty reduction. The program built substantially on the important lessons learnt from prior series PRSC 1-3 and PRSC 4-8. The relevance of the objectives is rated substantial.

23. Design and Implementation. The relevance of the program design was appropriate. The PDOs were underpinned by relevant policy areas that addressed various aspects of government’s reform agenda. The program included several innovations. For example, the program shifted support away from broad business environment type of reform to focus on selected areas where results are more likely to be achieved. Also, the support fiscal space creation, the program encouraged leveraging private sector financing through PPP and efficiency in public spending through better Public Investment Management (PIM). Prior actions were in many cases logically linked to the objectives and were paving the way toward delivering the outcomes expected by the operation. The causal chain, reflected in the policy matrix, linked objectives to policy actions and outcomes in most cases. The results framework was functional and well-articulated. However, the targets for some outcome indicators (share of MKUKUTA in the budget, Number PPP projects signed with ex-ante evaluation, and OBI) were too ambitious to be achieved in the tree year horizon of the program timeframe. During implementation, the design was modified to keep the objectives fully relevant and adjust to new circumstances, though the above mentioned ambitious program targets were not adjusted. Nevertheless, the relevance of the design is rated high.

3.2 Achievement of Program Development Objectives

24. The Program Development Objectives (PDO) of the series were clearly stated at the outset of the program. They were to: (i) improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects; and (ii) ensure macroeconomic stability and safeguard shared growth through sound management of public finance. These two objectives are consistent and complementary and focus both on safeguarding shared growth, which was substantially achieved. Economic growth was robust and stable for Tanzania during the period 2012-2015, with real GDP growth averaging 6.6 percent per annum. The Tanzanian economy continued to grow faster that other EAC countries. The fairly high growth rate was supported by rapidly growing services such as hotels and restaurants, finance, trade, as well as construction, energy and mining. However, the agriculture sector, where two-third of Tanzanians derive their income registered relatively slower growth in the period. Agricultural productivity improvements remained modest. According to the WDI (2015), the agriculture value added per worker increased by only by 1.3 percent between 2011 and 2014, or 0.4 percent per annum in the program period. Robust growth was accompanied decline a steady decline in the inflation rate during the period covered by the program. From a peak of almost 20 percent in December 2011 to 6.1 percent in June 2015 at the closure of the program. The Shilling has been stabilized in the second half of 2015 and the real exchange rate is close to the equilibrium level from an initial overvalued point. The current account deficit improved from 10.7 percent of GDP in 2013/14 to around 8.7 percent of GDP in 2014/15 reflecting low global oil prices and good performance in manufacturing and tourism exports. Aid inflow declined in the period but was compensated by higher FDI, mainly in extractive industries, and external non-concessional borrowing, putting the overall balance of

9

payments in a stable position. Tanzania consistently reduced its fiscal deficit from 6.8 percent in 2011/12 to 3.3 percent of GDP in 2014/15. However, this was at the expense of development expenditure cuts and arrears accumulation.

25. Despite faster economic expansion and lower inflation, Tanzania’s extreme poverty level (43.13 percent in 2012, using the international poverty line) was higher than African countries at similar income level. According to the poverty assessment (2015), the economic expansion has benefited the poorest segments of the population during the five years that preceded the PRSC series, but around 12 million Tanzanians continued to live in poverty in 2012. Poverty remained particularly prevalent in rural areas, as most of the decline in poverty occurred in Dar es Salaam where most of the economic growth was concentrated. The growth elasticity of poverty was estimated at -1.02 in the poverty assessment, a level higher, in absolute value, than in the Project Performance Assessment Report4 (PPAR) for the first two series PRSC 1-8. Overall inequality has also declined to a level comparable with most Sub-Saharan Africa and less developed countries, but the pattern of growth has led to increasing inequalities between geographic regions.

26. Though there is no new household data available for Tanzania, the projections5 made the World Bank poverty team indicate a decline in poverty rate at $1.25 PPP terms from 43.1 percent in 2012 to 39.9 percent in 2015. The projection uses the median regional elasticity for SSA of -1 as an assumption, which is very close to the latest estimate of growth elasticity of poverty for Tanzania. The fact that the growth patterns have not changed in Tanzania support the assumption.

27. What is the PRSC program’s contribution to these outcomes? The contribution of the PRSC program to the achievement of shared growth was expected from the two pillars of the program: (i) improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects; and (ii) ensure macroeconomic stability and safeguard shared growth through sound management of public finance. The first pillar was expected to increase the growth potential and encourage job creation by leveraging agglomeration effect and geographical advantage while the second pillar was expected to encourage shared growth and more equal distribution through sound public finance management.

PDO-1. Improve the investment climate in selected strategic areas for competitiveness and shared growth in the country by leveraging its geographical advantage and facilitating agglomeration effects

Rating: Satisfactory

28. To leverage Tanzania’s geographical advantage and facilitating agglomeration effects, the PRSC program focused on two policy areas: (i) effective institutions for promoting and regulating special economic zones (SEZs) and (ii) Improved investment climate as a regional transit hub. The policy actions supported were expected to have positive effect on investment climate and shared growth through industrial agglomeration and economies of scale from regional integration, leading to larger downstream development impacts on production, employment, and transfer of skills and technology. Progresses were monitored by the following

3 The poverty headcount of 43.1 percent in using the international poverty line ($1.25 per day per adult equivalent) is around 15 percentage points higher than the poverty headcount using the national poverty line which is estimated at 28.2 percent in 2012.4 Independent Evaluation Group, Report No: 78188, June 14, 2013.5 The projection use the Median Regional Elasticity for SSA (which is -1), with a pass-through equal to 0.63 based on GDP at constant prices.

10

indicators: (1) number of operating investors in the existing special economic zones; (2) average time taken for operators to get license within the zone; (3) average container dwell time and ship turnaround time at the Port of Dar es Salaam; and (4) average time taken for trucks to cross the main border posts.

Three out of four outcome indicator targets are met. Significant progress has been made for the remaining indicator (average time taken for trucks to cross the main border posts) but the program target was slightly missed.

29. Effective institutions for promoting and regulating special economic zones (SEZs). Substantial results have been achieved in this area. The number of operating investors in the existing EPZ/SEZs continues to increase over the period of the program. As of April 2015, the EPZ authority had registered 140 companies against of the target of 80 companies ; of which 31, 13, and 25 were licensed in 2013, 2014 and 2015, respectively. Among the investors, 44 percent are local, 14 percent are joint venture companies between local and foreign investors, and 42 percent are foreign companies. These companies have invested capital worth over US$ 1.3 billion and have created over 36,000 direct and 120,000 indirect jobs. The total value of exports from industries under the authority exceeded US$ 1.1 billion. The authority has earmarked EPZ/SEZ sites in 19 regions where each site is in the magnitude between 500 – 9,000 hectares. These results were achieved in a context of still difficult overall business environment. Tanzania’s overall business environment has not improved during the program implementation period. The distance to frontier (DTF) score of the country declined from 55.38 in the DB2011 to 51.62 in the DB2016. Tanzania is ranked 139 th in the DB2016 well behind Rwanda (62), Kenya (108) and Uganda (122). According to the World Investment Report, Tanzania is among the top five recipients of FDI6 in Africa in 2014, with US$2.1 billion. This amount is significantly higher than the level of US$640 million that flowed into the country between 2005 and 2007. Though this achievement is primarily due to gas discoveries in Tanzania, the improved operating of SEZs contributed.

30. Policy actions supported by the program contributed to the achievement of the outcome. Under PRSC-9, the Government began to implement the intended policy objectives of the series by amending the EPZ Act and the SEZ Act so that both programs will be administered by one regulatory authority. The amendments were intended to rationalize roles and functions of the EPZA and to effectively place the two parallel regimes under one institution to be regulated by EPZA, thereby eliminating the existing overlap between the two regimes. Those amendments also allows EPZA to issue derivative right to investors, similar to the function that Tanzania Investment Centre (TIC) are doing. Such function enhances EPZA capacity to better regulate zones through performance contracts with investors. This action was accomplished by Parliament through amendment and adoption of the Economic Zone Laws (Miscellaneous Amendments) Act of 2011, in June 2011.

31. In order to operationalize the legal framework for SEZs new regulations were adopted to distinguish the roles of developer and that of regulator of zone, with the Government being the regulator in most cases rather than the developer. Also, the regulations set forth selection criteria for developing SEZs with emphasis on economic and social impacts while providing guidance

6 The top five recipients were Mozambique ($4.9 billion, down 21 per cent), Zambia ($2.5 billion, up 37 per cent), the United Republic of Tanzania ($2.1 billion, up by 1 per cent), the Democratic Republic of the Congo ($2.1 billion, down by 2 per cent) and Equatorial Guinea ($1.9 billion, a gain of 1 per cent).

11

on the process of issuing and regulating licenses for developing and operating SEZs. Further, the regulations encourage private sector participation in the development, operation, maintenance, and promotion of SEZs in Tanzania through Public Private Partnerships (PPPs). As a follow-on under PRSC – 11 trigger, the EPZA developed operational guidelines on PPP arrangements for SEZs consistent with the SEZ, EPZ, and PPP Acts.

32. Another important reform supported by the program was the implementation an effective operational one stop services center for SEZ investors and to build capacity for managing PPP contracts as stipulated in the regulations as part of PRSC-11 trigger. To this end, the Government has established a special desk at key MDAs such as Labor Office, Immigration, and TRA for fast tracking provision of SEZ related services. To date, these services have included streamlining administrative procedures in those zones, especially in the areas of licenses, taxes, customs, work permits, visas, residence permits, and land matters. As a results, the average time taken for operators to get a license within the zone, the time has been reduced considerably; from 2-3 months in 2011 to just 3 days in 2015 after the investor has completed all licensing procedures .

33. Improved investment climate as a regional transit hub. Dar es Salaam port has a capacity of 4.1 million (dwt) dry cargo and 6.0 million (dwt) bulk liquid cargo. The Port has a total quay length of about 2,000 meters with eleven deep-water berths. The port handles about 95% of the Tanzania international trade and is strategically placed to serve as a convenient freight linkage to Malawi, Zambia, Democratic Republic of Congo, Burundi, Rwanda and Uganda. According to the Tanzania Port Authority (TPA) annual report for FY13/14, 15.4 million tons of cargo were handled in 2013/14, compared to 13.7 million tons in 2012/13 equivalent to a 12.4 percent increase in activity. Transit represented 35 percent of the traffic in 2013/14, compared to 21 percent in 2003/4. Overall, transit activity increased by 15 per annum between 2011 and 2014, pulled mainly by transit to DRC and Zambia. Transit to Uganda quadrupled between 2012 and 2013 and is expected to grow even further in the coming years. Comparable data are not yet available for FY 2014/15, but there are indications that activity has at best, stagnated due to lower commodity prices, and growing stability in the region, Burundi in particular. The gross register tonnage (GRT), which is second best indicator of activity, declined slightly by 1.2 percent, from 31.9 million tons in 2014 to 31.5 million tons in 2015.

34. These outcomes came following improvement in cargo clearance process and off-take from the port, the harmonization of working hours with other stakeholders (all 24/7) together with reduction in ship turnaround time. Ship turnaround time and waiting time was cut to 1.9 day in December 2015, down from 8 days in December 2012 and against a program target of 4 days . At the same time, the average container dwell time has been reduced to 4.9 days in December 2015, down from 12 days in December 2012 and against a program target of 5 days . In addition, the elimination of unnecessary non-tariff barriers, has reduced the time to cross the borders to 1 day in June 2015 compared to 2 days in December 2012 and against a program target of 0.5 day.

35. Policy actions supported by the program contributed substantially to the achievement of the outcome. The reforms supported by the program have been successful in fostering the establishment of Joint Border Committees (JBCs) for domestic border post integration, thus facilitating simplification and coordination of border clearance formalities, as part of PRSC 10 prior action. Further, the reforms have ushered in the establishment of one-stop border posts under the framework of the Government Roadmap on the improvement of the investment climate in Tanzania, as follow-on prior action for PRSC 11. This reform has been hailed by the business community in both Tanzania and neighboring countries. In order to improve the

12

investment climate further, the Government has established a core module of New Customs Automated System at the Port of Dar es Salaam to reduce customs clearance time at the port. Further, the Government has developed an operational manual for border trade and has disseminated the manual to traders in order to increase their awareness of required procedures for trading across the border in fulfillment of PRSC 10 and 11 policy actions. The translation of the manual into Kiswahili is also an added advantage, especially to informal traders and women entrepreneurs who will understand more fully border-crossing process and procedures.

36. Also, the PRSC support has been successful in reducing the number of police checkpoints along the corridor between Dar es Salaam and Rusumo (border posts with Rwanda) from 54 to 15. In 2016 the newly elected President of Tanzania reduced the police checkpoints to 3 (Rusahunga, Singida and Vigwaza), citing unacceptable hindrance to competitive trade due to rent-seeking behavior of officials in those checkpoints. All these reforms, coupled with other innovations such as the introduction of advanced electronic customs systems, an electronic cargo tracking system that monitors a truck’s journey from start to finish, and elimination of unnecessary non-tariff barriers, has reduced the time to cross the borders to 1 day in March 2015 compared to 5-7 days in 2010 and transport costs to business, which will ultimately lead to increased wealth and reduced poverty in Tanzania as well as have spill-over effects in neighboring countries.

PDO-2. Ensure macroeconomic stability and safeguard shared growth through sound management of public finance

Rating: Moderately Unsatisfactory

37. The program document for PRSC-10 indicated that the series would contribute to the government’s objective of ensuring macroeconomic stability and safeguarding shared growth through sound management of public finance and outlined three areas one which the program will focus, namely: (i) enhanced efficiency and transparency in domestic revenue mobilization, (ii) sound public investment management (PIM) including public private partnerships (PPPs) and (iii) improved quality of budgets and stronger public financial management (PFM) system. Progress was monitored by the following 8 indicators: (1) domestic revenue as a percentage of gross domestic product (GDP); (2) time taken before publishing an annual Extractive Industries Transparency Initiative (EITI) payments reconciliation report after the end of the relevant fiscal year; (3) number of new public investment projects appraised in a year based on economic and financial analysis as outlined in the operational manuals prepared by the President’s Office Planning Commission as a percentage of total new public investment projects started by ministries, departments and agencies (MDAs) in the same year; (4) number of public-private partnership (PPP) projects signed after ex-ante value for money and affordability reviews by the Ministry of Finance; (5) Approved budget broadly in line with policy objectives (MKUKUTA, Five Year Development Plan, sectors’ policy priorities); (6) proportions of MDAs, regions, and local government authorities that are electronically connected to the financial management information system; (8) Open Budget Index (OBI); and (7) average compliance rate of MDAs and local government authorities with internal audit guidelines. The progress was substantial in the first policy area, modest in the second area and mixed in the third area.

Two program targets out of eight have been met (indicators 1 and 6). Significant progress has been made on two other indicators (2 and 7) but the program target was partially met. Progress has been slow for the remaining four indicators (3, 4, 5, and 7), due mainly to overambitious program targets. As a result, there were significant shortcomings in the achievement of the objectives of this pillar.

13

38. Enhanced efficiency and transparency in domestic revenue mobilization. The country was successful in improving efficiency and transparency in domestic revenue mobilization, with the program’s contribution coming through its support to the EITI reporting and compliance and the harmonization of the tax procedures. Tax to GDP ratio increased by at least 2.7 points regardless of the GDP base7 used. Recalculating the tax to GDP ratio using the old GDP by applying the nominal growth of the new GDP yield a tax to GDP ratio of 20.8 percent compared to a target of 19 percent. Both tax (+3.2 percent of GDP) and non-tax revenue (+1.2 percent of GDP) contributed to the increase. This result is robust to the change of method of calculating the GDP, the baseline or the target.

39. Reforms supported by PRSC 9-11 series were less successful in curtailing revenue loss emanating from tax exemptions. After the GDP rebasing, domestic revenue performance has been lower than expected by the government. On average, revenue fell at two percentage points of GDP below the government target, due to still high level of tax exemptions (2.1 percent of GDP compared to a target of 1 percent), challenges in rolling out electronic billing machines, lower than projected demand for excisable products, and lower custom duties due to growing imports from the East African Community (EAC).

40. Furthermore, progress was also evident in the series support to institutionalize EITI and providing a sound framework for EITI’s operation in the country. Previously there was voluntary-based EITI which benefited from good participation among existing companies. The series supported new EITI legislation which is in line with international best practices, enshrining transparency and accountability principles along the value chain for all extractive industries – which is a critical achievement for the country to increase efficiency and transparency in the extractive industry. However, the target of the outcome indicator (the time taken before publishing an annual EITI payment reconciliation report after the end of relevant FY) was missed by one month only. The report for 2013/14 was published in November 2015, 17 months after FY2013/14 against a target of 16 months. Nevertheless, the focus on EITI contributed significantly to the increase by 1.2 percentage of GDP in non-tax revenue. The number of companies participating to the EITI increased from 29 enterprises in the third reconciliation report, which covered the period from 1 July 2010 to 30 June 2010 to 59 enterprises in the sixth reconciliation report which covered the period from 1 July 2013 to 30 June 2014. Revenue from the extractive sector the government increased from US$330 million in 2011 to US$754 million in 2014.

41. Sound public investment management (PIM) including public private partnerships (PPPs). Progress was modest in the area of Public Investment Management (PIM) and PPPs. At the beginning of the series, the management of public investments in Tanzania was located in different institutions i.e. Ministry of Finance (MoF), President’s Office, Planning Commission (POPC), Prime Minister’s Office (PMO) and government Ministries, independent Departments and Agencies (MDAs) and Local Government Authorities (LGAs). The lack of a central mechanism to guide the translation of plans into strategic, prioritized public investments generated inefficient allocation of public funds. Though economic and financial analyses of projects and programs are critical for objective selection, prioritization, and ensuring value-for-money of public funds, no framework existed to conduct them properly. Therefore, the policy actions supported by the series were expected to contribute to the establishment of strong

7 Tanzania’s GDP was revised to 69.8 trillion Tanzanian shillings (41.3 billion US dollars) in 2013 after the rebasing, up from a previous estimate of 53 trillion shillings. The rebasing was completed in November 2014, after the adoption of the PRSC-11. The target for the tax to GDP ratio was not recalculated using the new GDP.

14

institutions of PIM, including in PPP projects, through which increased numbers of public investment and PPP projects are selected properly through economic and financial assessments and with clearer linkage between FYDP and annual budgets. The outcome indicators were (1) number of new public investment projects appraised in a year based on economic and financial analysis as outlined in an operational manual prepared by POPC as a percentage of total new public investment projects started by MDAs in the same year, and (2) number of PPP projects signed after ex-ante value of money and affordability reviews of the Ministry of Finance (MoF).

42. With the support of the PRSC series, the government publishes a new PIM operational manual to guide MDAs, Regional Secretariats (RSs), and LGAs to prepare standard project proposals that will be included in the budget. The manual sets the standard framework for evaluating public investment projects in the country. It includes procedures and regulations and methods/tools of economic, financial, social and environmental analyses of public investment projects. It has developed a framework to assess risk and identify mitigating measures as part of investment design. The operation manual provides reference for potential Public-Private Partnership (PPP)-based investment interests and Development Partners in the entire context of public expenditure management. The POPC will play a central role in strategic prioritization and coordination of development projects/programs.

43. However, the expected number of new public investments appraised using the manual was not met. Part of the reason lies in the program design which initiated the drafting of the PIM operational manual under PRSC-11, the final year of the program series. However, despite the completion of the drafting of the manual as scheduled by the policy action, it was published and distributed to MDAs in February 2015, four months before the end of the program. However, the Government has instructed all MDAs to use the manual for evaluating public investment projects beginning fiscal year 2016/17.

44. With regards to Public-Private Partnerships (PPPs), the PRSC series observed some weaknesses in the PPPs’ system, including lack of clarity on and complexity of the approval process, the approach to unsolicited bids, and managing fiscal risk associated with PPP, which make further support and regulations necessary. Thus, the series supported the Government to amend the PPP Act of 2010 as a PRSC-11 prior action. The amendments in the new PPP Amendment Act 2014 (the Amendment Act) included among other: (i) streamlining the number of approvals for PPP projects; (ii) creating PPP facilitation fund; (iii) establishing rules for unsolicited proposals; (iv) establishing procurement rules for PPP projects under the PPP Act (and not under the Procurement Act); (v) clarifying the management of contingent liabilities resulting from PPP projects; and (vi) combining the two current PPP Units in TIC and MoF into a single PPP center in the MoF. It was considered merging of the two PPP units will simplify and speed up the approval process of PPP projects while ensuring more focused ownership within Government. The new PPP regulations that will implement the amended PPP Act have been adopted by the Government.

45. The PPP institutional building process has taken more time than initially anticipated. As a result, no PPP projects was signed after ex-ante value for money and affordability reviews and with ex-post monitoring of fiscal risk by MoF against a target of 3. The MoF had identified 4 projects, which is in itself a good step in the right direction.

46. Improved quality of budgets and stronger public financial management (PFM) system. The policy actions supported by these series were expected to contribute to improved quality in budgets through sound budget planning and execution. The policy actions were also expected to lead to establishment of a stronger PFM system with transparency, in order to

15

improve the quality of budgets and the efficiency of uses of public resources with better value for money. The outcome indicators were: (1) approved budget broadly in line with policy objectives (MKUKUTA, FYDP, sector policy priorities); (2) proportions of ministries, departments, and agencies (MDAs), regions, and local government authorities (LGAs) that are electronically connected by financial management information system; (3) Open Budget Index (OBI); and (4) average compliance rate of MDAs and LGAs with internal audit guidelines.

47. The average budget allocation to priority sectors in 2012-during the 3-year series period was 70.5 percent versus an unrealistic target of 100 percent . The share of budget allocated for implementing priority projects and programs defined by the MKUKUTA declined by 5 percent compared to 2013/14, partly due to an increase of 3.0 percent in debt service which is accounted as non-MKUKUTA allocation, even if the borrowed amount financed priority sectors. However, despite declining share on MKUKUTA allocation, the Government continued to focus on human development, which was allocated 45 percent of priority expenditures in the 2014/15 budget, almost a 10 percent increase compared to 2013/14 – the main beneficially sectors being education (56%) and health (23%) of the resources.

48. With regards to the coverage of the financial management information system (IFMS); substantial progress has been made with support from the program and other Development Partners (DPs). The Government uses Epicor – an IFMS software system. The 2010 external audit review of the Epicor showed that good progress has been made in rolling this system out to all central government ministries and two-thirds of LGAs. However, by the end of the program series in early 2015, all MDAs and 134 (79.3%) of the LGAs were connected to the Epicor IFMS . The 35 LGAs without connectivity were recently established. Currently, there is ongoing process to connect the new LGAs. The virtual connection between LGAs and the Central Government with Epicor has substantially improved the capacity of the Central Government to monitor expenditure management by LGAs, which absorbs more than 20 percent of the Government’s budget.

49. With regards to the Open Budget Index (OBI), the PRSC series emphasized budget transparency and access to information. This focus was addressed through timely publication of budgets, as well as wider public disclosure of data and statistics generated by the Government. The Government has increased the amount of budget information made widely available to the public. For example, the budget presented to the Parliament in the form of the budget speech (and accompanying four volumes of the budget books as submitted to Parliament) by the Minister of Finance was immediately made available on the MoF website during all the 3 years of the series, as required by the policy actions. Citizen budgets are also published regularly as well as in-year reports. However, OBI concluded that the Government of Tanzania provides the public with limited budget information in its 2015 raking. Tanzania scored 46 in the OBI 2015, virtually the same as in 2012, against a target of 55. In addition to budget information, the OBI survey examines the extent of effective oversight provided by legislatures and supreme audit institutions (SAI), as well as the opportunities available to the public to participate in national budget decision-making processes.

50. With regards to the compliance rate of MDAs and LGAs with internal audit guidelines, much progress has been achieved. Under PRSC 10 and 11, the Government took measures to strengthen audit functions including through rolling out risk-based internal auditing to all MDAs and LGAs. Further, the Internal Auditor General (IAG) finalized the public sector audit committee guidelines, including stakeholders’ consultations as agreed under PRSC-11. Also, IAG developed procedures manual for the quality assurance improvement and an internal audit manual and conducted training on the tools. The manuals and guidelines complement the use of

16

IFMS, which alone cannot provide a full guarantee that expenditures comply with internal audit procedures.

51. Progress is evident also on compliance rate of MDAs and LGAs with internal audit guidelines. CAG audited report for the year ending June, 2014 shows visible improvement in the types of opinions issued to LGAs. The number of Unqualified Opinions 8 increased from 112 (80%) in the year 2012/2013 to 150 (92%) in 2013/2014 while the number of Qualified Opinions decreased from 27 (19%) to 13 (8%) in the same period. Similarly, there has been a significant improvement in audit opinions for MDAs. MDAs issued with unqualified opinion increased from 85 to 166 entities in the same period, representing an increase of 95 percent while MDAs issued with qualified opinion decreased by 70% from 30 to 9.

3.3 Justification of Overall Outcome Rating

Ratings: Ratings: Moderately Satisfactory.

Overall ratings by operations for the series as wholeHeading PRSC9 PRSG10 PRSG11 ProgramRelevance Relevant Relevant Relevant RelevantDesign Moderately satisfactory Moderately satisfactory Moderately satisfactory Moderately satisfactoryOutcome Moderately satisfactory Moderately satisfactory Moderately satisfactory Moderately satisfactoryOverall Moderately satisfactory Moderately satisfactory Moderately satisfactory Moderately satisfactory

52. The program is rated moderately satisfactory. As noted in section 3.1, the objectives and design were highly relevant to the country’s circumstances and development priorities as presented in the MKUKUTA II and FYDP I. The PDO-1 was substantially achieved while PDO-2 was modestly achieved based on the assessment of the outcome indicators. All three operations successfully contributed to shared growth through (i) leveraging agglomeration effects and positioning Tanzania as regional transit hub; and (ii) improving transparency and efficiency in domestic revenue mobilization and expenditure execution. Tough no PPP contract was signed and no project economic assessment was conducted at the closure of the program, the series contributed to the upgrading of the Public Investment Management Framework, including PPPs which remains to be implemented.

3.4 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

53. There were no measured poverty and gender specific impacts in the PRSC program. However, the robust economic growth recorded during the implementation of the program is expected to reduce poverty further as explained in the discussion of the PDO outcome. In addition, the Government continued to prioritize spending on cluster II (quality of life and social wellbeing) of the MKUKUTA, which was allocated 45 percent of priority expenditures in the 2014/15 budget, almost a 10 percent increase compared to 2013/14 – the main beneficiary sectors being education (56%) and health (23%). Since these two sectors have a high gender

8 An unqualified opinion is issued when the independent auditor believes that the company's financial statements are sound; that is, the statements are free from material misstatements. This is different from a qualified opinion which is issued when the independent auditor discovers something in the financial statements that is subject to major concern.

17

http://www.investopedia.com/terms/q/qualifiedopinion.asp

http://www.investopedia.com/terms/f/financial-statements.asp

http://www.investopedia.com/terms/f/financial-statements.asp

http://www.investopedia.com/terms/a/auditor.asp

parity component (in education almost equal at primary and secondary school level), gender is indirectly supported by the Bank’s PRSC series.

(b) Institutional Change/Strengthening

54. There has been substantial institutional development under the program. The program enabled the Government to reform its tax administration structure by ushering in a New Tax Administration Law, amending the VAT structure, strengthening the institutional framework for improving the port of Dar es Salaam, legislating and institutionalizing the Extractive Industries Transparency Initiative (EITI) and providing a sound framework for EITI’s operation in in the country, as well as fostering effective institutions for promoting and regulating special economic zones (SEZs), and institutional reforms for enhancing PPP operations. These Bank’s supported institutional reforms have laid a solid long-term foundation for improving the country’s investment climate by fostering improvement in public resource management, transparency, and accountability; thus enhancing the country’s future growth prospects – especially by positioning Tanzania as a regional transit trade hub of choice by the eight neighboring countries as well as preparing the country to better manage, coordinate and realize the benefits from the expected extraction of natural gas and other natural resource endowments. PPP unit, OSIS at SEZ, regulatory framework for SEZ (Amended SEZ Act), OSBP, TPA capacity/Dar Port improvement program, SCT, Port Community System etc. Overall, six laws were enacted or amended: (i) the Tax Administration Act; (ii) the introduction of a nil-band in the Recipient’s presumptive income tax system as applied to small enterprises; (iii) the amendments to the PPP Act (2010); (iv) the amendment of the Planning Commission Act of 1989; (v) the legislation institutionalizing the Extractive Industries Transparency Initiative (EITI) and; (vi) the Economic Zone Laws (Miscellaneous Amendments) Act. Several regulations and guidelines have been adopted including the PIM operation manual and several other process streamlined.

(c) Other Unintended Outcomes and Impacts)

None.

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

55. The government, with support from the TMEA STaRT Data Support Facility (DSF) carried out a User Satisfaction Survey on the Dar es Salaam port users in order to collect opinions on the assess the current quality of services. The study sets the baseline for future studies. A sample of 182 drivers were interviewed over a period of 5 days. 179 drivers were Tanzanians and remaining 3 drivers were Zambian. This confirms that the majority of the drivers are local. 86 percent of the drivers were handling import cargo destined for Tanzania and other countries and 14 percent were handling export cargo. Overall, 81 percent of the truck drivers (86) were very satisfied or satisfied with the services at the port while 11 percent were dissatisfied, and 4 percent neutral. Furthermore, 55 percent of the drivers felt the port operations have improved over time, thank to better time management and faster cargo handling at the port. However, 80 percent of the truck drivers have not noticed improvements on the road network outside the port. The following reasons were cited as the main reasons for delays: traffic jam on the road (24 percent), TRA system delay (19 percent), congestion and long queue (17 percent), TICTS system delay (17 percent), bad roads (11 percent), and delay in document processing (11 percent).

18

4. Assessment of Risk to Development Outcome

Ratings: Substantial

56. A fundamental risk that could affect the development outcome of the PRSC 9-11 program is Tanzania’s shrinking fiscal space. These include significantly high level of domestic payment arrears, low domestic revenue mobilization, and higher expenditure requirement for economic infrastructure and social service delivery. The expenditure requirements have put pressure on debt service, though risk of debt distress remains low according to the last DSA. Tanzania’s total public debt has increased to US$ 19 billion in June 2015, equivalent to 39 percent of GDP, driven by commercial borrowing from domestic and international markets. The share of external commercial debt in total public debt has quadrupled from 6 percent between 2010/11 and 2014/15 to reach 27 percent of GDP. Similarly, debt service as a share of domestic revenue has increased from about 10 percent in 2009/10 to about 25 percent in 2014/15. The third Medium Term Debt Strategy (MTDS) prepared during PRSC-11 concluded that a strategy that finances the budget through the issuance of an international bond was the least attractive and suggested a shift towards semi-concessional borrowing that yields the most attractive cost and risk outcomes. Leveraging private sector financing through PPP is an alternative promoted by the government with the support of the PRSC program. However, Public Investment Management (PIM) and PPP frameworks require increased capacity, especially at the MDAs and LGAs.

57. Another important risk to development outcome is related to China’s economic slowdown and the ending commodity prices super cycle that could affect the positioning of Tanzania as transit hub and country’s objective of leveraging agglomeration effects. China’s slowdown may have sizable knock-on effects on the Tanzanian economy as well as on the neighboring countries via slower exports from or transiting in to Tanzania. China accounted for more than 10 percent of Tanzania’s total exports value and was the third major export destination in 2014 after India and South Africa. In addition to the trade channel, a slower than expected growth in China could spill over indirectly into Tanzania and neighboring countries, via the commodity prices channels. China weighed heavily on most commodity prices, with metal prices dropping sharply. A protracted drop in commodity prices would reasonably slow Tanzania’s rapid economic growth as well as the regional economy, which in turn will have negative effect on transit activity in Tanzania. The traffic in the Dar es Salaam port have already been affected in 2015.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Ratings: Moderately Satisfactory

58. The PRSC program was highly participatory in its design to ensure better synergy with joint analytical programs with the Government and technical assistance activities by the Bank, IMF and other Development Partners (DPs). The design team made particular efforts to ensure better alignment with poverty reduction efforts of the Government as well as the harmonized General Budget Support (GBS) in Tanzania where DPs coordinate their policy dialogues with the Government through a structured Cluster Working Groups and Sector Working Groups,

19

guided by the annual Performance Assessment Framework (PAF) agreed between the Government and the GBS donors. This participatory nature of the design eventually paid off in terms of achieving the desired program results. The design was grounded on strong analytical work lessons from the preceding series.

59. One major strength of the design is the focus on a relatively small number of pillars (2) and policy areas (5), and prior actions (24) and indicators (12). This conforms to best practice. The selective approach has shown to have good prospects for better reform traction. The outcome indicators and prior policy actions were carefully designed but some program targets were too ambitious. The operation was aligned to the government’s budget calendar that allowed funds to be disbursed timely before the end of the government’s fiscal year.

(b) Quality of Supervision

Ratings: Moderately satisfactory

60. Overall, coordination with the government and the major development partners was good. The location of very senior staff and core task management, sector specialists in the country office ensured a year round consultation and coordination with the Government team, development partners and also with other non-state stakeholders. Team members were actively involved in the monitoring of the progress of the prior actions. Bank team members were participating in sector working group meetings to discuss policy issues and the progress reports. The Bank team participated in annual GBS review sessions at the end of which annual assessment reports were prepared. Two ISRs were prepared during supervision missions but the results were not used to adjust the program targets. Some of the outcome indicators were impossible to meet. For example, the share of the budget allocated to MKUKUTA was expected to reach 100% while several important public expenditure such as debt services, security expenditure are not included. Based on this, quality at entry is rated Moderately Satisfactory.

(c) Justification of Rating for Overall Bank Performance


61. Since performance of both quality at entry and quality of supervision are rated moderately satisfactory, the overall performance of the Bank is rated as Moderately Satisfactory.

Heading PRSC9 PRSG10 PRSG11 ProgramQuality at Entry Moderately

SatisfactoryModerately Satisfactory



Supervision Moderately Satisfactory




Overall Bank performance





5.2 Borrower Performance

(a) Government Performance


20

62. The Government performed well in terms of putting together a detailed program of activities under the umbrella of the MKUKUTA II and the FYDP-I. The government strategy was prepared in a participatory manner with wide consultations with civil society groups, representatives of the private sector, academia, think-tanks and development partners including the Bank. This ensured full ownership of the development agenda. The Government through the GBS Secretariat organized meetings with the various sector working groups to prioritize issues. However, the GBS PAF has been modified over the implementation of the program, weakening dramatically its linkage with the PRSC results framework. As only part of the policy actions and outcome indicators were taken from the PAF, the others were agreed upon between the Government and the Bank, outside the GBS framework, and monitored during supervision missions. At the end, the PAF for 2014 included only one outcome indicator of the PRSC program: the domestic tax and non-tax revenue as share of GDP. Moreover, some implementing MDAs appeared to have low traction for the reforms and were slower in the implementation. A good example is the lengthy Parliamentary debates on the new constitution which delayed the passage of the new Tax Administration Law (but which was eventually enacted due to the flexibility enshrined in the design). Another example is the delay in the publication of the EITI report for 2012/1. Tanzania was suspended by the EITI Board in September 2015 as a consequence of missing the deadline for the publication of the report on 30 June 2015. The Board decided to lift the suspension in December 2015 as the report was published together with the report for 2013/14.

(b) Implementing Agency or Agencies Performance

Ratings: Not applicable

(c) Justification of Rating for Overall Borrower Performance

Ratings:

63. The overall borrower performance is rated based on the combined ratings of the Government’s performance and the Implementing agency. As these two are indistinguishable, the Moderately Satisfactory rating for Government performance as stated in section 5.2(a) above is also the rating for the Overall Borrower Performance.

6. Lessons Learned

64. Lesson 1. DPF series that focuses on a few, well-researched, jointly designed and monitored reform agenda, has good prospects for better reform traction . The PRSC 9-11 series focused on two pillars and five policy areas with high prospects for better reform traction contrary to the previous series which encompassed four pillars and a wide range of reform areas. This made easier the implementation and monitoring of the program and facilitate timely adjustment of the program during the course of the series, which was largely instrumental in achieving the outcomes. The move from broad business environment reforms to streamlining processes in selected areas has yielded better outcomes.

65. Lesson 2. Narrowing of focus, while facilitating a concentration of effort in fewer areas, was prone to over ambitious targets. The outcome indicator should be achievable both as a result of the program and as a measure of realism. While the outcome indicators of the PRSC 9-11 program were clear and well-defined, some of the program targets were set too high (share of MKUKUTA to reach 100%, or number of signed PPP project at 4) and became a source of

21

demotivation. A key reason for over-ambition was the drawing of targets from long-term development plans and strategies so as to align with the government’s objectives, but these targets were then somewhat isolated in a DPF series more oriented to the budget cycle.

66. Lesson 3. The interaction of the programmatic series with analytical work was beneficial. The Tanzania PRSC 9-11 program were informed by a large amount of analytical work not only during the design but all during the implementation period. The studies went beyond identifying the key reform areas to propose how the reform can be implemented. A programmatic series of economic update covered almost all the policy areas supported by the series while the annual Rapid Budget analysis and the PER process helped to regularly inform the country’s fiscal policy debate.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/Implementing agencies

(b) Cofinanciers

(c) Other partners and stakeholders

22

Annex 1 Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

P110836 - Tanzania Poverty Reduction Support Credit 10

Names Title Unit Responsibility/Specialty

Lending Sanjeev Ahluwalia Consultant GGODR

Sherri Ellen Archondo Senior Operations Officer AFTFE - HIS

Denis Maro Biseko Sr Public Sector Spec. GGO19 Parminder P. S. Brar Country Manager AFMSL

Josaphat Paul Kweka Senior Economist AFTP5 - HIS

Yue Li Senior Economist SARCE Donald Paul Mneney Consultant GGODR Emmanuel A. Mungunasi Senior Economist GMF07 Yutaka Yoshino Senior Economist GMF07 Paolo B. Zacchia Program Leader AFCF1 Supervision

(b) Staff Time and Cost

23