Page  1
 
 
 
 
 
 
 
 
TANZANIA 
 
 
COUNTRY PORTFOLIO PERFORMANCE REVIEW 
 
 
ANNEX II  
 
 
PROJECT PROFILES 
 
 
 
April 3-4, 2003 
 
 
 
 
 
 
 
 
The Government of Tanzania 
 
The World Bank 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27939 
vol. 3
Page  2
 2
National Agricultural Extension Project – Phase II (NAEP II)  
 
Credit No.  2899-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
July 11, 
1996 
Oct. 8, 1996 
Dec. 31, 
2003 
2 SDR 
21.5m 
$ 31.1m 
 
$ 26.1m 
33.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: Support : 
Rural development; Agricultural Extension & Research; 
Decentralization; civic engagement. 
 
 
Project’s Development Objectives: 
 The project aims to: improve delivery of Extension 
services to smallholder farmers by focusing on the enhancement of the technical and 
administrative capacity of the local authorities (LAs) to provide such extension services. This is 
intended to be achieved through: the formulation of a Vision/Strategic Framework for Extension 
for the next decade, consistent with ASDS and ASDP; building capacity in LAs; training of 
Extension staff, including in participatory skills, to deliver extension services in a demand-driven 
and decentralized environment; development of extension system that responds better to farmers’ 
needs, through a variety of pilots; and, strengthening of research-extension-farmer linkages to 
disseminate technological packages appropriate for farmers and women.  
 
Project Components/Activities: 
The project consists of five components: Institutional 
Strengthening, Education and Training, Communications Support, Pilot Initiatives, and Zanzibar 
component. After some problems in the initial years (e.g. civil service reform, decentralization), 
and a restructuring in early 2000, the project is now making satisfactory progress. Vision for 
Extension for 2010 has been finalized, and is currently being operationalized; the capacity of 56 
selected LAs is being strengthened following completion of Needs Assessment reports; 
household surveys have been completed, which show that the project is beginning to have some 
positive impact (but absence of good quality rural roads seriously affects farmgate prices of 
crops), but capacity building at the LAs’ level will take a long time. 71 staff have completed 
MSc/BSc degrees; several hundred front-line extension staff have been “retrained”, or trained in 
PRA techniques; over 42,000 farmers’ have benefited from residential and on-site training; 
project is facilitating preparation of 3-5 district agricultural development plans by LAs; 
research/extension/farmer linkages continue to be strengthened (e.g. research and extension 
projects pooled their resources to provide Grey Leaf Spot- resistant maize seed to farmers in 
Southern Highlands in 2001, where yields had been seriously affected in earlier years); and, 
Zanzibar has been provided with about US$ 2.5 million for its extension and adaptive research 
activities. This project has led to closer coordination/cooperation (which IDA facilitated) 
between mainland and Zanzibar.  
 
Page  3
 3
Overall Status & Implementation Progress: Satisfactory 
 
 
Key Issues & Challenges for : 
 
• 
Government : 
Consider strengthening capacity of LAs by ensuring that projects in 
different sectors initially provide support in same, selected districts, with initial 
phases of projects being in districts that are in close proximity to each other. A wide 
geographic spread causes a major drain on resources through Operating Costs 
consuming a large chunk. Bulk of funds in projects (85-90%) should be for benefit of 
farmers and communities.  Vision for Extension 2010 – its operationalization should 
be consistent with Ag. Sector Dev. Strategy (ASDS), PRSP, and Ag. Sector Dev. 
Program  (ASDP). Seriously consider merging Livestock subsector with Ministry of 
Agriculture and Food Security (MAFS) again, as current split is not an efficient way 
to handle extension research on crops and livestock. 
• 
Bank:
 Coordinate with donors closely, to respond to GOT’s request for longer term 
commitment to future research and extension program, in light of current research 
and extension projects closing in next 14-20 months. Involve more farmers/groups in 
preparation of follow on projects. Keep Research and Extension as a stand-alone 
investment project, outside PRSC I. 
• 
Other Stakeholders:
 Closer coordination amongst all donors active in Ag. Sector is 
critical. 
 
Way Forward: 
A Workshop on the Future of Research and Extension was held by GoT in May, 
2002. GoT is setting up a Task Force of officials from key ministries and local governments to 
initiate preparation of a follow on project for Research and Extension, in close consultation with 
IDA and other donors. A donor round table on ASDP was held in November 2002. The Bank, 
IFAD and AfDB have agreed to collaborate in the formulation of future support to agricultural 
research and extension (sub-program B of ASDP).
 
 
 
 
 
 
 
Page  4
 4
RIVER BASIN MANAGEMENT AND  SMALLHOLDER IRRIGATION 
IMPROVEMENT PROJECT (RBMSIIP) 
 
CREDIT No. 2900 
         
Dates 
Data 
Board Effective-
ness 
Closing No. 
of 
Extension
s 
Credit 
Amount 
($m) 
Total Disb. As of  
03/03/2003 
Total Project 
Cost ($m) 
07/11/1996 12/05/1996 12/31/2003
1 
26.30 
$19.5 
m 
26.30 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
 
Sectoral Context:
 The project supports the GOT objective to create higher growth and 
economic opportunities for the poor and to build capabilities through the creation of 
decentralized financially autonomous water boards. The project also supports the CAS objectives 
to improve the livelihood of the rural poor and to increase the effectiveness of public service 
delivery by putting in place appropriate mechanisms and incentives for transforming water from 
a source of conflict and stagnation, to an opportunity for poverty reduction, food security and 
sustainable rural growth. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Project’s Development Objectives: 
 RBMSIIP aims to (i) strengthen the GOT’s capacity to 
manage water resources and address water related environmental concerns both at the national 
level, and in the Rufiji and Pangani basins; and (ii) improve irrigation efficiency of selected 
smallholder traditional irrigation schemes in these two basins.
 
Project Components/Activities: 
The project consists of: (i) the River Basin Management (RBM) 
component and (ii) the Smallholder Irrigation Improvement (SII) Component. 
Overall Status & Implementation Progress: 
Under the RBM
 component, a National Water 
Policy (NWP) has recently been adopted by Cabinet. The NWP embraces the Dublin principles for 
water resources management (WRM), and prioritizes water allocation to (i) basic human needs in 
adequate quantity and acceptable quality (ii) the environment to protect the ecosystems (iii) 
international obligations based on the principal of equitable use (iv) all other uses. It further 
introduces the concepts of water use and discharge permits, abstraction and pollution fees and 
penalties, and it separates the roles of water resource management from service provision and 
regulation. On the basis of the NWP, a new institutional framework of the Department of Water 
Resources and legislation are being prepared. 
 
With agricultural water abstractions accounting for as much as 80% of all water abstractions, 
increases in irrigation efficiency will likely result in significant increases in overall basin water 
availability. The SII
 component aims to increase irrigation efficiency by rehabilitating irrigation 
schemes. Twelve of these have so far been completed. Delays in construction have lead to a scaling 
down of the number of schemes to be rehabilitated from 24 to 15. Water users associations have 
been established, and members have received extensive training in irrigation management.  
Page  5
 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Issues & Challenges for: 
• 
Government: 
With the innovative NWP now adopted by Cabinet, focus should now turn 
towards operationalizing the notion of water as a social, environmental and economic resource. 
Sound WRM requires continued efforts to establish an incentive structure for a more rational 
water management. Autonomous basin boards will provide credibility, legitimacy and, 
ultimately, sustainability to this process. In terms of irrigation, an enabling environment needs 
to be established to ensure that stakeholders capitalize on investments in infrastructure through 
higher output levels and rural growth.
 
• 
Bank: 
WRM according to the Dublin principles is relatively new in the region. As 
Knowledge Bank, the Bank needs to remain engaged by providing access to international 
experience, lessons learned and best practices. 
• 
Other Stakeholders: 
The NWP provides a platform where stakeholders negotiate water 
allocations. Stakeholders need to take up this challenge and perceive these platforms as a 
relevant forum for defending their interests. Payment of water charges will be an important 
litmus test. 
Way Forward: 
The RBMSIIP closing date is December 31, 2003. A national workshop was held 
at the end of January 2003 to develop a strategy for scaling up the contribution of rational WRM to 
poverty reduction, food security and sustainable rural growth. This will require expanding the 
incentive framework for efficient water management at a national level, closely involving other 
water related sectors.
 
Page  6
 6
Tanzania Agricultural Research Project – Phase II (TARP II)  
 
CREDIT No.  3036-TA 
         
 
Dates 
Data 
Board Effectivene
ss 
Closing No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
Jan. 29, 
1998 
June 11, 
1998 
June 30, 
2004 
1 SDR 
15.9m 
$ 21.8m 
 
$ 14.8m 
23.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: Support : Rural development; Agricultural Research & Extension; 
Decentralization; Rural Policy and Institutions 
 
 
Project’s Development Objectives: 
 The project aims to support: demand-driven, client-
oriented research, focusing on needs of smallholders; institutional development of National 
Agricultural Research System; decentralizing financial resource management and operational 
decision making to Zonal Research Centers (ZRCs); privatization of research and establishing 
competitive Zonal Agricultural Research Funds (ZARFs); human resource development; 
strengthening zonal research management, and M&E. 
 
Project Components/Activities: 
The project consists of three components: Institutional 
Development, Research Programs, and Resource Development and Management. The project 
continues to make good progress. ZRCs have been strengthened, and the facilities improved; a 
large number of staff have been trained in various fields (PhD and MSc programs), with many 
staff benefiting from training through short courses; ZARFs have been successfully set up in all 
seven zones, and Local Governments, private sector and donors are contributing to them; a 
number of new, high yielding varieties have been released to farmers; a number of institutional 
and technical studies have been completed and formulation of the Medium Term Plan (MTP), 
which will become the basis for future Bank/donor support for research has started. Research has 
been privatized for coffee, tea, tobacco and sisal.
 
Overall Status & Implementation Progress: Satisfactory 
 
 
Key Issues & Challenges for : 
 
• 
Government :
 Strengthen decentralized management of research; research-
extension-farmer linkages; create endowment fund for sustainability of research 
activities; ensure MTP is consistent with Ag. Sector Dev. Strategy (ASDS), PRSP, 
and Ag. Sector Dev. Plan (ASDP). Seriously consider merging Livestock subsector 
with Agriculture ministry again, as current split is not an efficient way to handle 
research on crops and livestock. 
Page  7
 7
• 
Bank:
 Coordinate with donors closely, to respond to GOT’s request for longer term 
commitment to future research and extension program, in light of current research 
and extension projects closing in next 14-20 months. Involve more farmers/groups in 
preparation of follow on projects. Keep Research and Extension as a stand-alone 
investment project, outside PRSC I. 
• 
Other Stakeholders:
 Closer coordination amongst all donors active in Ag. Sector is 
critical. Contributions to Zonal research funds to sustain demand-driven agricultural 
research activities. 
 
Way Forward: 
A Workshop on the Future of Research and Extension was held by GoT in May, 
2002. The workshop recommended that a unified program for research and extension be 
formulated rather than separate projects. The follow up program will be based on Extension 
Vision 2010 and MTP for research (to be completed in April 2003). GoT is setting up a Task 
Force of officials from key ministries and local governments to initiate preparation of a follow 
on project for Research and Extension, in close consultation with IDA and other donors. 
 
 
 
 
 
Page  8
 8
FOREST CONSERVATION AND MANAGEMENT PROJECT  
 
CREDIT No.  3604-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
02/26/02 05/29/02 
06/30/07
0 
$31.1 
$1.4m 
$40.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sectoral Context: 
The project supports the GOT objective of managing the country’s forest 
resources sustainably to contribute to national development and towards equitable sharing of 
benefits between shareholders. The project also supports GOT’s objectives of conserving unique 
ecosystems and biological diversity, considering the needs of local populations and appropriate 
methods of management and use.  The project seeks to address the constraints of weak oversight 
for forest and woodland management, the need for decentralization of forest administration, to put 
in a sound system for revenue collection and to strengthen institutional mechanisms for forestry 
sector development. 
Project’s Development Objectives: 
 The project aims to respond to the priorities outlined in the
new forestry Policy and the National Forest Program and provide resources for implementation o
f
 
the policy.  In particular, the project aims to develop a framework for long-term sustainable 
management and conservation of Tanzania’s forest resources, strengthening the role of individuals,
communities, villages and the private sector in management and conservation of forests and
implementing this framework on a pilot scale. 
 
Global Environmental Objective
is to develop and implement an integrated biodiversity
conservation strategy for the Eastern Arc Mountains and support community based pilot 
interventions in priority conservation areas.  The Global Environmental Facility is also supporting
the establishment of a permanent  conservation financing mechanism to support the long-term 
conservation and management of the resources of the Eastern Arc mountains.  The fund will
provide long-term funds for research, ecological and  monitoring, community activities related to
biodiversity conservation,  and environmental education and awareness programs. 
 
Project Components/Activities: 
The project consists of three components: (a) institutional change
and improvement in service delivery; (b) private sector involvement in the management o
f
industrial plantations; and (c)Eastern Arc forests conservation and management. 
Page  9
 9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Overall Status & Implementation Progress: 
The Credit was declared effective in May 2002 and 
the project was officially launched on June 25, 2002 at a national workshop which was attended by a 
wide range of stakeholders from national as well as district and local level. The Project coordinator 
and Component Leaders have been appointed and project staff have been recruited based on a 
competitive process. An Annual Work and Procurement Plan has been prepared and reviewed by the 
N
ational Forestry Program Steering Committee.  A draft five year work plan is being finalized. The 
process to establish the Tanzania Forest Service (TFS) has been initiated and a nine member 
Executive Agency Implementation Team has been appointed.  Awareness raising programs are 
underway to ensure ownership of the TFS. Other activities include plans for construction of TFS 
Headquarters and training for newly recruited project staff. 
Key Issues & Challenges for : 
 
• 
Government
- The successful establishment of a TFS that is endorsed by all relevant 
stakeholders; effective functioning of forest and woodland operations in forest reserves 
within designated districts and villages 
• 
Organizing benefit sharing arrangements with villages and communities and improving 
revenue collection and distribution 
• 
Development of sustainable mechanisms for financing biodiversity conservation, 
including guidelines for establishment and management of trust funds and other financial 
mechanisms 
• 
Acceptance by government at the highest level of principles of sustainable forest 
management and biodiversity conservation to complement village based forest 
management. 
• 
Bank
- Bank needs to be engaged in providing timely access to the client with 
international experience and best practice with effective management of forests that is 
also compatible with the needs of local stakeholders and compliance with environmental 
and social safeguards. 
• 
Other Stakeholders-
The National Forestry Program provides a platform where 
stakeholders can debate about the progress of the project and its implementation to be in 
line with the National Forestry Policy and recurrent issues in the districts and villages. 
The Participatory Forest Management supported under the first component of the project 
also provides input by a wide range of stakeholders.
 
 
Way Forward:  
The reform of forest institutions in Tanzania is expected to improve their capacity to function as 
service delivery institutions, particularly to provide communities services related to the establishment 
of Village Forest Reserves, the strengthening of traditional natural resource management strategies 
and the adoption of locally appropriate tree cultivation and management strategies. GOT needs to 
ensure that these reforms are endorsed by stakeholders, so that reform measures will be accepted and 
owned by the national as well as the district and community level. Activities supported by the project 
should also complement local government reform measures and the broader poverty reduction 
agenda of GOT.  With increasing interest of bilaterals in supporting the implementation of the 
N
ational Forestry Program, the potential for assessing basket funding arrangements has become an 
attractive proposition.  This will be in keeping with GOT’s emphasis on greater harmonization and 
lowering of transaction costs. 
Page  10
 10
LOWER KIHANSI ENVIRONMENTAL MANAGEMENT PROJECT 
 
(CR 35460 - TA)
 
Dates 
Data 
Board Effectiveness Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
July 3, 
2001 
Sept 18, 2001 
Dec 31, 2006 
N/A 
6.30 
712,707.10 
6.40 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Issues & Challenges for: 
 
(a) Government
.  The project poses a doubled edged challenge.  On the one hand, it has to 
support a rationale process for establishing a final water right for the LKHP with adequate 
mitigation measures in a way that maintains the integrity of the provisions of the new water 
policy of Tanzania, and on the other hand, to do it in a manner that minimizes the impact on 
energy  production and the economy. At the project level, the most critical problem is 
unavailability of the counterpart funds to cover the incremental operating costs, which is 
seriously impacting project implementation, particularly payments for civil works and  
operating costs.   
 
Project’s Development Objectives: 
 The LKEMP aims to put in place a series of medium term 
measures to ensure the long-term conservation of the Kihansi Gorge ecosystem and upstream 
catchment areas; and, support the development of a coordinated and consistent legal and 
institutional framework for environmental and water resources management and strengthening of 
ecosystem monitoring and assessment functions of environmental institutions in Tanzania.   
 
Project Components/Activities: 
The project consists of four components: (1) Habitat and 
Species Conservation and Management, (2) Establishment of the Final Water Right, (3) 
Implementing an Updated Environmental Management Plan, and (4) Institutional Strengthening 
and Capacity Building.
 
Overall Status & Implementation Progress:
 
Project became effective on September 18, 2001 
and actual implementation commenced in April 2002 with the recruitment of the National Project 
Coordinator (NPC) and annual work plan and budget for 2001/02 was finalized in May, 2002.  
Overall implementation progress to date has been satisfactory.
  
Mitigation measures implemented 
under IREM are so far effective in maintaining the Kihansi spray wetlands and the Kihansi Spray 
Toad (KST).
  
In early October, 2002 studies estimated the population of KST in the Upper Spray 
Wetland to be 12,185, which is the highest levels since the commissioning of the LKHP.  
However, there are inherent risks of failure associated with artificial sprinkler systems located in 
remote areas. 
 
Page  11
 11
 
 
(b) Bank
. Given the threats to a highly sensitive ecosystem this is a high corporate risk project 
for the Bank. Its success will hinge on many factors including the establishment of the final 
water right (a legal covenant of the project to be satisfied) by December 31, 2003.  A high 
priority must be given to the maintenance of the spray system and to the intermittent high flow 
studies and associated ecological studies as these will provide a rational and scientific basis for 
granting TANESCO the final water right.   
 
(c) Other Stakeholders
.  In order to minimize disruption and loss of power generation, the high 
flow studies will be carried out in close coordination with TANESCO.  
Coordination/collaboration required to enable stakeholders to participate in updating and 
implementing environmental management plan. 
 
 
 
 
 
 
Way Forward: 
In order to restore the integrity of the LKHP and the new National Water Policy, 
it is critical that the GOT provides appropriate support (including counter part funds) to ensure 
that the high flow studies, ecological studies, monitoring programs, environmental management 
plan and capacity building efforts are undertaken and implemented in timely manner.  Close 
coordination between many sectors will be central to achieving a successful outcome. 
 
 
Page  12
 12
RAILWAYS RESTRUCTURING PROJECT 
 
CREDIT No. 2267-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
06/13/91 04/30/92 
12/31/02 
3 
76.0 
$64.82m* 
165 
* $11.255m also cancelled 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S U 
 
Sectoral Context: 
The railways provide an essential means for long distance freight transport in 
Tanzania.  Until Mwanza is connected by paved road to Dar es Salaam, the railways also provide 
essential long distance passenger services.  Even with a paved road, there will be areas still 
largely dependent on rail e.g., Kigoma.  During the 1980s, TRC’s  was poor and showed little 
improvement. 
 
 
Project’s Development Objectives: 
 The project aims to create a commercially viable railway, 
with the capacity to meet the demands of the growing economy and to handle transit traffic.  
While some success was achieved, the GOT took the decision to concession TRC and the Project 
was amended to provide financial support for the concessioning process. 
 
Project Components/Activities: 
The project consists of: track rehabilitation, equipment 
provision and TA.  In addition, assistance is being provided for the concessioning of TRC 
 
Overall Status & Implementation Progress: 
The project was closed on 12/31/01, with the 
exception of the support for the concessioning process being implemented by PSRC.  The 
bidding documents were issued to the pre-qualified bidders, with bids to be submitted by January 
20.  However, PSRC did not move forward with associated support, such as counseling and 
retraining redundant staff, nor has much progress has been achieved in privatizing the Marine 
Services Company, which is a wholly owned subsidiary of TRC.  
 
 
Way Forward: 
It is possible that PSRC will only receive one bid for the concession.  It should 
have in place firm plans to handle this situation, and an agreed set of minimum conditions for 
negotiations with a single bidder.  The labor issue must be resolved as it has the potential to 
derail the concessioning process. 
 
 
Key Issues & Challenges for : 
Government: 
to complete the concessioning process, resolve the issues regarding the 
equitable treatment of retrenched workers, establish the Reli Asset Holding Company and the 
regulatory agency SUMATRA.  PSRC must negotiate a new contract with CIE, for the period 
subsequent to the project closing
 
Bank: 
agree to PSRC’s request for continuing support of the concessioning process, 
under the Privatization Project.  Move forward with GOT on the preparation of the Railways 
Rehabilitation Project..
 
Other Stakeholders: 
TRC management to maintain effective control of operations 
and staff and commence the retrenchment of the identified surplus staff
 
 
Page  13
 13
 
SECOND INTEGRATED ROADS PROJECT 
CREDIT NO.  25980 
 
Dates 
Data 
Board Effectivene
ss 
Closing No. 
of 
Extensi
ons 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
04/07/1994 02/10/1995  06/30/2004 
1 
170.20 
$61.03m 
 
 
General:
 
 
The Bank has been supporting the road sector in Tanzania for the last 30 years. In this country, as in 
Uganda, the road transport is considered to be the most important sector for the development and  
integrity of the country. Recently completed Transport Master Plan Study confirmed that as well. At 
present, we are implementing 
the Integrated Roads Project II Credit
, which followed the Integrated 
Roads Project I. Under the Integrated Roads Project IRP II, the Bank is providing assistance to Tanzania 
(including Zanzibar) for: (i) institutional support and strengthening of the road management capacity of 
the Ministry of Works (MOW) and the now established National Road Agency (TANROADS); (ii) policy 
and institutional support; (iii) road upgrading/ rehabilitation and maintenance; (iv) rural/village transport 
with transport pilot program; (v) resurfacing of Kilimanjaro airport, and as of recently in Zanzibar: (i) 
emergency rehabilitation of Zanzibar airport, (ii) emergency rehabilitation of Mkoani Mutahaliwa Road 
in Pemba island,(iii) institutional and capacity building for Ministry of Communication, and Transport. 
The project development objectives are to restore Tanzania’s truck and regional road networks, develop 
MOW’s institutional capacity to manage the network and to support the Government’s economic 
recovery program by reducing transport costs and improving accessibility to economically productive 
areas. The overall cost of the sector program is approximately US$600 million, out which IDA’s 
contribution was US$170.2 million (IRPII Credit). 
 
In addition, with the establishment of the National Roads Agency (TANROADS) in July 2000, the Bank 
has started with the preparation of an
 Urgent Roads Rehabilitation Support Program (URRSP)
 in 
magnitude of US$ 157.5 million, out of which IDA will finance about US$144 million. The program and 
its implementation are needed urgently as the road situation in the country has deteriorated rapidly and 
basically the network is in the same state of disrepair as 10 years ago. This is in spite of the massive 
intrusion of donor funds by all participating in the sector. TANROADS has taken over from the Ministry 
of Works (MOW) the responsibility for planning and management of national roads and related 
maintenance works, but its operation and functioning is not satisfactory. The major reasons are related to 
the concept used (against the Bank's recommendations) in recruiting its professional staff (initially by 
transfer of all the required staff from the MOW) and as result of huge financial gaps between the 
requested financing for the networks and the funds available. The funding is provided under an earmarked 
road users fund, which provides 
only about 35% of the required funds for the sector
.  To improve its 
operation, Government has recently established a separate and dedicated unit in TANROADS, for 
management and operation of IDA and other donor funded projects
. 
But 
regrettably, the Dedicated Unit 
still appears to be used for other services and its performance is not satisfactory. 
 
Zanzibar, on the 
other hand, due to its leadership and commitment, has been successful in all its operations.  
Lending is provided through the mainland, from the existing IRPII Credit.  
 
However, the new Dedicated Unit in TANROADS has completed, with delays, the major sectorial studies 
necessary for development of the sector: National Transportation Masterplan (all modes of transport), 10 
Yr Road Sector Investment Program, Sectorial Guidelines for Environmental management and operation, 
Land Commission study on regulation of the sector and Transport Sector Policy. These studies will serve 
as basis for the already identified prioritized works under the URRSP (mentioned above), concessioning 
of Tanzania Railway Cooperation, Privatization of National Bus Company and of Machinery Hire 
Page  14
 14
Company-PEHCOL. GOT is now planning a major donors conference, which will highlight the country's 
needs, country commitment for development and ask for funding for maintenance, which was initially 
supposed to be done entirely with GOT funds. 
 
 
Following an agreement with the Bank in September 2001 and March 2002, the GOT and the 
Bank have cancelled an allocation of US$ 70 million form the IRPII Credit, earmarked for financing 
rehabilitation of the middle sections of the country's most priority central transport corridor (Singida 
Shelui and Singida Babati roads) due to the impracticality of completing the civil works in the time 
remaining before closure of the Credit. The Credit has already been extended 2 times and will be closed, 
after 10 years of implementation, by June 30,2004. Considering the great strategic importance of the 
central corridor for the economy of the country and the integrity of the road network, the Bank has agreed 
in principle to consider financing of the central corridor if and when the detailed designs and all related 
studies will be completed. The preparation of this new "special" 
Central Transport Corridor Road 
Credit
 have commenced and the program could be on the board by September 2003.
  Total amount of 
this Credit  will be US$80 million.  To date the detailed design for the Singida-Shelui Road have not 
been submitted to the Bank. 
 
Details:
 
A. 
SECOND INTEGRATED ROADS PROJECT, IRPII (Cr. 2598-TA) 
1. 
The Second Integrated Roads Project was approved by the Board in 1994, made effective in 
1995, restructured on August 6, 1998. The Credit Agreement was amended on August 7, 1998.  The Mid-
term analysis carried out in November 1999, indicated that substantial improvements have been made in 
management of the Credit, therefore the Bank granted the needed extension of the credit on December 28, 
1999. The agreed date for the closure of the credit, set to June 30, 2004, took into consideration also 
implementation of the additional components added to the project as a result of saving achieved in the 
restructured project. In this light, the project categories were reallocated to include: Emergency 
Rehabilitation of Zanzibar Airport, Emergency rehabilitation of Mkoani-Mtuhaliwa Road in Pemba Island 
and MOCT institutional capacity building for Zanzibar; Feasibility study for Tunduma- Sumbawanga 
Road, Supply of culverts and pipes for use in emergency rehabilitation of trunk and feeder roads; and 
purchase of Revenue Accounting system and Passenger Reservation Terminals for Air Tanzania. A 
further amendment to the DCA on May 24, 2000 provided for reallocation of funds under category 4 of 
the Credit by breaking down this category to Category 4(a)- operating costs (to be financed at 90% by 
IDA as of May 1, 2000), and Category 4(b) - training/ workshops/institutional support (to be financed 
100% by IDA). 
 
The emerging needs in the sector expressed in a GOT’s request dated July 2000 for an additional credit to 
finance rehabilitation of the country’s major transport corridors – Urgent Roads Rehabilitation Support 
Program-URRSP, recent institutional development related to the establishment of the National Road 
Agency TANROADS, and the Government’s decision on reallocating the funds earmarked for PEHCOL, 
created a new situation resulting in a GOT request for the new reallocation of the IRP II funds, which the 
bank approved on  January 30, 2002. 
 
2. 
The Mid Term Review (MTR) carried out in March 2002 reaffirmed viability of data provided for 
the recently approved reallocation of the proceeds of the Credit to enable implementation of the new 
components, all within the original development objectives of the project and indicated the need to cancel 
about US$ 70 million from the credit as result of a substantial delay in design of one of the major 
component, Singida- Shelui Road rehabilitation (for which the credit had for actual implementation of 
civil works an  allocation of US$ 50 million with  associated contingencies of US$ 20 million).  
3. 
Mid Term Review (MTR) also highlighted very slow implementation and low disbursement ratio 
all along implementation of the project, as a result of (i) numerous changes in management, (ii) changes 
related to institutional set up of the implementing agencies, (iii) inadequate contractual and procurement 
capacity of the implementers. The recent transition of management of the project from MOW to 
TANROADS also critically influenced implementation of the project and 
unless
 the recently agreed 
Page  15
 15
implementation set up involving establishment of a Dedicated Unit for implementation of IDA and other 
specific donors funded projects 
is maintained and staffed with qualified staff already identified 
within TANROADS, 
the implementation of the project will continue to suffer and remaining parts of the 
credit will not be effectively used. The dedicated Unit was established on September 20,2001 at 
Government request, but its efficiency is not yet fully satisfactory because the allocated staff was not fully 
dedicated as agreed, therefore the Government in their letter dated February 20, 2002 to the Chief 
Executive of TANROADS, copied to the mission, reiterated its commitment to the agreed action in this 
respect and confirmed the allocation of staff dedicated to implementation of IDA funded and other 
specific donors funded projects.   
4. 
Further, the MTR highlighted the issue related to 
substantial delays
 in design of the two 
components of the Project; Rehabilitation of Singida-Shelui Road and Emergency rehabilitation of 
Zanzibar airport; which not only critically influence the timely and orderly closure of the credit by June 
30,2004, but also results in cancellation of substantive amount of the credit  
5. 
Road Financing and Management Reforms
: During FY01, the Road Fund was able to address 
only about 30% of the total assessed road maintenance requirements.  The Road Fund Board contracted a 
study to review road user charges, for which the draft report was published in July 2001.  The study made 
the following recommendations to address the financing gap:  
• 
Increase the level of current instruments, while ensuring that they remain affordable; 
• 
Divert revenues from existing charges not accruing the Road Fund, where justified; 
• 
Introduce new instruments; 
• 
Reduce the Road Fund’s road network responsibilities; and 
• 
Arrange for interim financing through donors. 
 
The Bank suggested that the Government propose specific measures to ensure that road maintenance 
needs are met in light of the study recommendations, including a time-bound action plan for its 
implementation. 
 
The study also identified a number of issues requiring immediate attention: (a) delays in collection of the 
agreed road user charges because of cumbersome procedures; (b) accumulated debts incurred by the 
MoW; (c) existence of a huge backlog of road maintenance; (d) inefficient practices followed in the use 
of funds by the Councils. The Mission would like to receive a specific proposal from the Government on 
how to address these issues. 
 
Page  16
 16
SUMMARY
 
 
1. 
The Bank has been investing considerable effort and resources in the sector.  
However, the implementation capacity of the TANROADS is not adequate for 
major investment operations. 
2. 
The newly established IDA/Special Projects Unit, although managed with capable 
staff, is not adequately staffed with experienced professionals.  Currently, only 2-3 
staff are operating on continuous basis, the fact that seriously slow down the 
planned operation. 
3. 
Current program in the road sector comprise of: 
IRP-II under implementation;  
Central Transport Corridor Road Credit, under preparation, in magnitude of US$80 million, expected in 
FY2004; and  
Urgent Road Rehabilitation Support Credit, under preparation, in magnitude of US$160 million, expected 
in FY2005. 
4. 
Major issue is related to very limited absorbing capacity of TANROADS and 
therefore immediate strengthening and fully dedication of its staff and the newly 
established IDA Project Unit are essential for timely and orderly implementation 
of the sector. 
5. 
Better communication between MoW, Special Projects Unit and MOCT and 
TANROADS is very necessary, in trying to optimize resource use and operational 
capacity in the Country. 
 
Page  17
 17
Urban Sector Rehabilitation Project (USRP)  
IDA Credit No. 2867-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
05/23/96 
05/06/97 
06/30/2004 
None 
105.00 
$78.03 m  
141.3 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: 
Recognizing the large unfulfilled demand for urban infrastructure services, 
the Government initiated the preparation of the Urban Sector Rehabilitation Project in 1990 
through the IDA assisted Urban Sector Engineering Project (USEP, IDA Cr. 2291-TA).  The 
project is in line with the IDA Country assistance strategy (CAS) of 1994 and is in agreement 
with the three primary thematic objectives contained in the CAS of (i) capacity building and 
improved public sector management, (ii) private sector development, and (iii) environmentally 
sustainable investment. 
 
 
Project’s Development Objectives:
 The project development objectives are sustainable 
economic development and urban poverty alleviation through (i) rehabilitation of basic 
infrastructure and expansion into high priority , under-served areas and (ii) improvement of 
urban local government management and financing capacity  by (a) strengthening the financial, 
technical and overall operations of the urban local authorities through training and technical 
assistance, and (ii) encouraging private sector and community involvement in urban service 
delivery and O & M. 
 
Project Components/Activities:
  The project has the following four components: 
 
(i) 
Rehabilitation and select expansion of infrastructure services in the eight project 
towns and Dodoma 
(ii) 
Dar es salaam community based infrastructure upgrading and water supply 
rehabilitation; 
(iii) 
Institutional strengthening consisting of technical assistance, training, and equipment 
for the municipal councils’ and UWSAs’ organizational and management capacity 
improvements in the eight project towns, Dar es Salaam and Dodoma; and  
(iv) 
Future project preparation in the urban sector. 
 
Overall Status & Implementation Progress: 
The project’s development objective of 
infrastructure rehabilitation and expansion is being fulfilled with satisfactory completion of all 
planned major civil works contracts for roads and drains and water supply and sewerage.  The 
rehabilitation of the infrastructure has a demonstrated and visible impact on improvement of 
services in all the project towns. Regarding the other development objective of improvement of 
urban local government management and financing capacity by strengthening the financial, 
technical, and overall operations of the Municipal Councils (MCs) and Urban Water and 
Sewerage Authorities (UWSAs), the implementation of a rationalized capacity building effort 
Page  18
 18
that include training, technical assistance and provision of equipment is well underway through 
implementation of an Institutional Strengthening Strategy.   The strategy is being implemented 
satisfactorily according to plan.   
 
Key Issues & Challenges for : 
 
Government:  
Even though the project is achieving its objective of infrastructure rehabilitation 
and expansion, and management and technical capacity has been/is being  built through the 
project in the Municipal Councils and Urban Water and Sewerage Authorities in the project 
towns, sustainable service delivery is still a challenge that requires effective maintenance of the 
investments.  This requires sustained enhancement of the revenue base of local authorities and  
improvement of  overall accountability.  The PO-RALG through its Local Government Reform 
Program (LGRP)  needs to develop and implement a strategy for achieving this.  Future project 
preparation studies being carried out under the project focus specifically on water supply and 
sewerage expansion  in selected towns.  The GOT needs to explore sources of  financing for 
implementation of the proposals of these studies.  
 
Bank:  
The Local Government Support Program, which is being prepared with support from 
IDA  and other donors supporting the LGRP, is conceived as an appropriate vehicle for capacity 
building and provision of capital grants to local authorities to support improved service delivery, 
and is as such perceived as a logical follow on project to the USRP.  The objective of this 
program to improve the performance and accountability of local authorities in the area of 
planning, financial management and project implementation.  The challenge for the Bank is to 
ensure the proper design and successful implementation of this program.  
 
 
Other Stakeholders:  
Donors
 
supporting the LGRP have contributed towards the preparation of 
the LGSP from the common basket fund.  The challenge for them is to go further and participate 
in the financing of the program, which is a successor program to the USRP.   
 
Way Forward: 
As the government moves forward with the implementation of the Local 
Government Reform Program, the logical way to support local authorities in improved service 
delivery is through a program such as the LGSP.  
 
 
Page  19
 19
 SONGO SONGO GAS DEVELOPMENT AND POWER GENERATION PROJECT 
CREDIT NO. 3569-TA 
         
Dates 
Data 
Board 
 
 
Effectiven
ess 
 
 
Closing 
Date 
 
No. of 
Extensions 
 
Credit 
Amount  
Total Disb. 
As of 
03/03/2003 
 
Total Project 
Cost 
 
10/9/01
 
1127/01
 
3/31/06
 
None
 
$183m
* $18.57 
m 
295$m
 (cost 
savings of $70 mn 
envisaged)
 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: 
The provision of
 
least-cost power to satisfy Tanzania’s electricity 
requirements through the development of indigenous gas resources which will substitute for 
more expensive imported fuel.  In addition to mobilizing US$72 million in foreign equity, the 
gas infrastructure system will be constructed and owned by the private sector, and the Ubungo 
Power Plant will be converted to gas firing and privatized.  The project will provide cheaper and 
more affordable electricity and fuel for industrial use and expansion
. 
 
Project’s Development Objectives: 
 to develop Tanzania’s natural gas reserves to produce 
least-cost power generation for domestic and industrial use in an environmentally sustainable and 
efficient manner.  It will promote private sector ownership and management in the gas and power 
sectors.  Also, it will encourage increased access of the poor to electricity supply by developing 
financially and institutionally sustainable rural energy schemes to unserved areas along the 
pipeline corridor. 
 
Project Components/Activities: 
The three main components are: (a) Songas: establishment of a 
private power and gas utility, and installation of a 232 km pipeline, a gas processing plant, and 
conversion of the Ubungo Power Plant to gas-firing (US$273.5 mn – US$70 mn cost savings 
likely due to lower bid prices than expected); (b) MEM Capacity building component 
(US$8.2mn); and (c) Social and Environment Component including Wayleave Village 
Electrification Scheme (WVES), Resettlement Infrastructure and MEM monitoring and 
compliance of the main Songas component (US$13.5 mn). 
 
Overall Status & Implementation Progress
:  Satisfactory progress on implementation of main 
Songas component, but serious delays in MEM establishing and staffing Project Monitoring Unit 
(PMU) and in the provision of counterpart funding requirements, thus jeopardizing capacity 
building efforts and the WVES and resettlement infrastructure components; WVES being 
overseen by TANESCO is behind schedule (in particular finalizing the limited environmental 
assessment and business plans). 
Page  20
 20
 
Key Issues & Challenges for : 
Government.  (a) 
While most all procurement packages for the main Songas component have 
been signed or are expected to be signed by end 2002, the MEM capacity building and WVES 
components are experiencing significant delays.  While there has been procurement  progress 
on the MEM component, it and the WVES components remain jeopardized without a 
counterpart funding budget and adequate staffing of the MEM PMU – for which urgent action 
is required by November 30, 2002; 
(b)
 continued improvements in TANESCO performance 
and satisfactory progress on power sector reform program; 
(c) 
Govt. to prepare term sheets to 
spell out transportation fees and booking for excess pipeline capacity use with PanAfrican 
Energy and Songas, and to review necessary changes to the Contractual Agreements, by 
December 15, 2002. 
Bank.  
To amend Development Credit and Project Agreements to take into account revised 
project costs and financing plan and Government booking of excess pipeline capacity and send 
to Govt. for countersignature by November 30, 2002. 
Other Stakeholders.
  
(a) 
Songas/PAE/AES/CDC to review Contractual Agreements and 
propose amendments to take into account Government booking of gas for excess pipeline 
capacity use; 
(b)
 possible sale of AES stock being contemplated; AES to prepare note and 
justification. 
 
Way Forward
:  Actions sought on issues noted above, by all parties. 
 
*Cost savings of US$70 million is possible due to lower than expected bids. 
Page  21
 21
RURAL WATER SUPPLY AND SANITATION PROJECT 
IDA CREDIT 3623-TA 
 
Dates Data 
Board:
 
Effectiveness
 
Closing
 
Credit 
Amount 
Total Disb. As 
of 03/03/2003 
Total Project 
Cost ($m) 
26 
March 
2002 
26 June 2002 
30 June 2006 
US$ 26.0 
million 
$1.12 m 
US$ 27.7 million 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
• 
  
 
 
 
 
 
 
 
 
Sectoral Context:
  The Project would support the CAS objective of reducing povert
y
and improving the health condition of vulnerable groups in rural settlements, and in
particular the objectives of the Government of Tanzania’s (GOT) Poverty Reduction 
Strategy Paper (PRSP) and the Tanzania Assistance Strategy (TAS) with regards to
increase in RWSS services coverage.  It would also support GOT’s decentralization
policy under the Local Government Reform Program; it is anticipated that, over time, 
funding of RWSS projects would be fully integrated within the overall
intergovernmental fiscal framework. 
Project’s Development objectives:
 The Project development objective is to ensure
access to improved and sustained water and sanitation services in rural communities i
n
 
Tanzania.  This would be accomplished through the implementation of the new Rural
Water Supply and Sanitation (RWSS) sector policy and the preparation of a National
RWSS Program.   
Project Components/Activities:
   
• 
Establishment of the district implementation model. 
This component would 
initially start in the three districts of Rufiji (Coastal Region), Mpwapwa (Dodoma
region), and Kilosa (Morogoro Region) and gradually expanding to about 12 out o
f
Tanzania’s 113 districts.   
• 
Construction of RWSS community sub-projects. 
This component would consist 
of sectoral conditional grants to about 250 communities located in 12 districts to
improve the WSS service; this would include the construction or the rehabilitation
of existing dug or drilled wells, boreholes equipped with handpumps or powered
p
umps, spring tapping, piped systems, household latrines and community sanitation
facilities.   
Institutional strengthening and development of  a National RWSS Program
.  This 
component would include: (a) the support to stakeholder consultative process on the 
strategy for scaling up towards a National RWSS Program; (b) technical assistance to 
the preparation of the National RWSS Program; (c) the development of a management 
information system (MIS) for tracking lessons learned from the proposed Project; and 
(d) assistance to the restructuring of RWSS sector institutions within MWLD and the 
building of the capacity of key stakeholders (MWLD, NGOs, consultants, contractors, 
suppliers of equipment and service providers).  This would include dedicated RWSS 
sector capacity building support to IDA-financed Tanzania Social Action Fund 
(
TASAF
)
 
p
ro
j
ect district. 
Page  22
 22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Issues and Challenges for: 
 
Government:
 Tanzania is a fairly large country with over 50% of the rural population 
without improved water supply and sanitation (WSS) services.  The main challenge is
establish the platform and capacity for sustained delivery of WSS services to those without
services as well as maintaining the coverage of existing systems – currently 30% of existin
g
 
systems are non-functional.  The capacity of both local governments in planning and
management is currently weak and so is the capacity of the private sector to provide goods
and services on the scale that will hel
p
 Tanzania meet its Millennium Development Goal o
f
halving the number of those unserved.   
 
Bank:
  The Bank is new to the water sector in Tanzania and is also limited in experience on
large scale rural water and sanitation programs in large countries.  The Bank need to make a 
quick adjustment to the preferred government strategy of budget support which will allo
w
p
arallel implementation of rural WSS programs in all districts at the same time.  This also
means re-alignment of procurement and financial management systems from project-
b
ased 
rules to government rules.  The convergence in procurement rules under the new Procurement
Act as well as the introduction of the new Integrated Financial Management System in all
districts will help smoothen the transition. 
 
Way Forward:
  Over the next two year, under the leadership of the Ministry of Water and
Livestock Development and with support form the Water Sector Technical Advisor
y
Committee, a National RWSS Program will be prepared under the Project.  The Program will
bring together all bilateral programs under a “Sector Wide Approach” implementation
framework.  The project will transition from the 12 districts to all the 113 rural districts
largely through injection of additional HIPC linked budgetary resources.  The Project will be 
restructured into a rural WSS sector support program for strengthen local government WSS
planning and management capacity. 
Page  23
 23
SECOND FINANCIAL INSTITUTIONS DEVELOPMENT PROJECT  
 
CREDIT No. 3279-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
8/31/1999 9/6/2000 
12/31/2003 
0 
27.5 
$11.54 
m 
32.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context:  
The project (FIDP II) supports the Government’s policy of strengthening the financial sector so 
that the sector can effectively support the acceleration of broad-based private sector growth that 
is essential to reduce poverty.  A key factor in strengthening the financial sector is the 
Government exiting from ownership of financial institutions and allowing private investment in 
the sector.  
 
Project’s Development Objectives: 
 The project aims to increase the soundness and 
competitiveness of the financial sector and improve access by small savers and micro 
enterpreuners to the formal financial system. This is a follow-on project designed to complete the 
FSD agenda initiated under FIDP I. 
 
Project Components/Activities: 
The project consists of: (i) restructuring and privatizing state-
owned banks including transforming National Microfinance Bank (NMB) into a private 
microfinance bank; (ii) strengthening the supporting financial infrastructure including enhancing 
the capacity of BOT to supervise banks, improving the efficiency of the national payments 
system, establishment of a Credit Information Bureau and support for revisions to the Land Act 
of 1999; (iii) increasing savings and investment opportunities by promoting the development of 
contractual savings (pensions and insurance) and capital markets   
 
 
Overall Status & Implementation Progress: 
The project is meeting is development objectives 
though the pace of implementation is slower than anticipated. The major component of 
restructuring and privatizing state-owned banks is progressing satisfactorily. NBC privatization 
was completed in 2000. NMB has been stabilized and has shown profitability beyond the 
business plan projections. Its microfinance loan roll out is now over Tshs 2 billion in just 2 years. 
A privatization advisor has prepared a privatization strategy and presented it to government. 
NMB sale is expected to be completed by September 2003. The GOZ has made a decision to 
privatize PBZ based on a diagnostic study carried out last year. Diagnostic studies are about to 
be carried out for TIB and TPB.  Consultants have prepared recommendations on the divestiture 
of NIC and a government decision on the matter is awaited. 
 
 
Page  24
 24
 
 
Capacity building in banking supervision, Capital Markets and Securities regulation, insurance 
supervision and payments system issues through training both locally and abroad is also moving 
satisfactorily. Over 80% of banks and NBFIs were inspected in 2001 and all insurance firms and 
securities/brokerage firms were inspected at least once in 2001. 
 
 
 
 
 
 
 
 
 
 
 
 
Key Issues & Challenges for :
 
• 
Government: 
The need to make decisions in a timely manner on NMB and NIC 
privatization. Increase the rate of absorption of credit proceeds as project closing is fast 
approaching (faster preparation of procurement documentation). Tanzania Bankers 
Association to decide on the formation of a Credit Information Bureau. This has dragged 
on for too long. Review of the pension sector and formulation of a national policy for the 
sector is overdue.  
• 
Bank: 
Increased monitoring and evaluation of project activities; faster response time on 
procurement requests. 
• 
Other Stakeholders
: Effective coordination of the various donor programs in the 
financial sector to ensure maximum impact and minimize duplication of efforts. 
Way Forward:
 While financial institutions have generally been strengthened, there is still a 
problem of access to financial services especially for the poor and in rural areas. There is also 
limited medium and long term finance to support small and medium scale enterprises. 
 
A round table of stakeholders should be organized to formulate a roadmap for a future financial 
sector development agenda. The following should be included among the topics for discussion:
 - creation of low-cost sustainable financial intermediaries at the grass root level to act as a link 
between the formal financial system and the ordinary Tanzanians 
- creation of economically viable institutions to provide medium and long term finance 
- formulation of a national policy for the pension sector, including an appropriate regulatory 
framework. A well-functioning pension system is a major source of term finance funds.   
 
Page  25
 25
 
PUBLIC SERVICE REFORM PROJECT  
 
CREDIT No.  3300-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
12/02/99 03/21/02 
12/31/04 
None  US$41.2  $8.79 
m 
US$91.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: 
 Improve progress in the fight against poverty by raising growth performance 
and extending access to basic social and economic services through sector development 
programs (SDPs) and other programs aiming at improving the performance of Ministries, 
Departments and Agencies (MDAs). 
 
 
Project’s Development Objectives: 
 The project aims to improve accountability, transparency 
and resource management for service delivery.  The public service will deliver efficiently and 
effectively the Government’s economic and social programs on a continuous and sustainable 
basis. 
 
Project Components/Activities: 
The project consists of: the following components: (1) 
Performance Improvement; (2) Restructuring and Private Sector Participation; (3) Executive 
Agencies Program; (3) Management Information Systems; (4) Leadership, Management & 
Governance (including Ethics and Gender sub-components); and (5) Program Coordination, 
Monitoring and Evaluation.
 
 
Overall Status & Implementation Progress:  
Overall, the Government’s Public Service 
Reform Program is moving well.  Therefore the supporting IDA project is progressing well in its 
implementation although more slowly than anticipated.  The program is ambitious but well 
thought through.  The main component is the installation of performance management in the 
MDAs through a strategic planning exercise.  The process has been started but has not yielded 
major results yet.  Another important aspect is pay reform that is being carefully implemented.  It 
could lead to better governance if it were accelerated.  However, it has to be implemented in a 
way that is acceptable both politically and economically.  Other measures to reestablish a 
meritocratic environment are being put in place: independent public service commission; open 
performance appraisal system; integrated payroll and personnel system and others.  All of these 
elements aimed to put in place a better equipped public service that will be in a position to 
deliver better services to the population of Tanzania.  CSD needs to pay particular attention to 
the monitoring and evaluation aspects of the program, monitoring particularly whether the 
citizens are receiving better services and whether they are satisfied with the services they are 
receiving.  For the time being this is a weak aspect of the PSRP implementation.
 
 
Page  26
 26
 
Key Issues & Challenges for: 
 
• 
Government: 
Need to have better linkages among the main reforms: public finance, 
local government, public service and legal sector.  Need to bring back development 
partners to support the PSRP as it was the case originally.  Need to pay more attention 
to the issue of pay enhancement.  Monitoring and Evaluation of the program needs to 
receive greater attention.  Need to align more closely PSRP with the Poverty 
Reduction Strategy.
 
• 
Bank:  
Continue to support the program (12-year adaptable program loan) but 
looking for more flexible arrangements for disbursement and procurement.
 
• 
Other Stakeholders:
 To be supportive of the reforms and provide adequate financing 
to help move the program forward.
 
 
Way Forward: 
Government needs to remain in the driving seat with the Civil Service 
Department clearly spearheading the program as it has done so far.  More information, 
communication and education activities to strengthen ownership among all the Executive and 
also the Legislative arms of government. 
 
 
Page  27
 27
 
RURAL AND MICROFINANCIAL SERVICES PROJECT  
 
CREDIT No.  3278-TA 
 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensi
ons 
Credit 
Amount 
($m) 
Total Disb. As 
of  
03/03/2003 
Total 
Project 
Cost ($m) 
08/26/1999 06/15/2000  12/31/2003 
1 
2.00 
860,296.72 
2.00 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context:  
The goal of the Rural and Micro-financial Services (RMFS) Project is to contribute to the 
development of a diversified and sustainable rural and micro-finance system with wide outreach 
so as to contribute to broad-based growth and poverty reduction through expansion of financial 
intermediation to small scale rural and urban clients. 
 
 
Project’s Development Objectives: 
 The project aims to foster the development of a common 
policy framework, based on internationally recognized best practices, for Rural and Micro-
finance in Tanzania which will establish an enabling environment for rural and micro-finance 
and increase the quality and returns of the many follow-on investments planned by Government 
agencies and other donors.  The project will also seek to increase the level of knowledge and 
skills within the industry and institute a program of systematic tracking and analyzing all 
initiatives against common criteria.  The lessons derived from that analysis will be fed back to 
the industry and other stakeholders. The effectiveness of this initiative will be measured by 
monitoring Government and donor compliance with the policy framework and the quality and 
quantity of new investments in the sector. 
 
Project Components/Activities: 
The project consists of the five following components: (i) 
Development and approval of a National Microfinance Policy; (ii) Design of an appropriate 
legal, regulatory, and supervisory framework for microfinance; (iii) Preparation of operational 
standards/guidelines for Government and Donor support to rural and microfinance; (iv) Capacity 
building to a) enable the Bank of Tanzania (BOT) to coordinate, monitor, and evaluate 
development activities in the microfinance industry and b) ensure that the Ministry of 
Cooperatives is fully equipped to engage in the policy formulation and regulatory review process 
as one of the key stakeholders in the industry; and (v) Microfinance industry knowledge and 
skills building.
 
 
Overall Status & Implementation Progress:  
Implementation of most project components is progressing satisfactorily. Tanzania’s adoption of 
a National Micro-finance Policy that is internationally recognized as best practice has been a 
major achievement under the project. The establishment of an appropriate legal, regulatory, and 
Page  28
 28
supervisory framework, and development of monitoring and tracking capacity within BOT are 
progressing. The design of operating guidelines for Government and donors, as well as 
operational guidelines and standards for Savings and Credit Cooperative Societies (SACCOs) 
are, however, substantially behind schedule in their implementation. Thus far, only terms of 
reference have been drafted for both activities.   
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Way Forward:  
The project is setting the foundations of what micro-finance will look like in the future in 
Tanzania. It is, thus, extremely important that all stakeholders including Government, donors, 
and practitioners be actively involved in its implementation. 
Access to finance by the poor remains one of the key goals of the project and can be greatly 
enhanced with a legal and regulatory framework that is supportive and will contribute to rather 
than repress the development of sustainable rural and micro-finance in Tanzania.   
 
 
Key Issues & Challenges for : 
 
• 
Government: 
The need for BOT and the Directorate of Microfinance (DMFI) to be 
more proactive with other stakeholders, and especially the Ministry of Cooperatives, 
as well as other donors and practitioners in implementation of project activities. 
• 
Bank: 
Increased monitoring and evaluation of project activities.
 
Other Stakeholders: 
The need for the Ministry of Cooperatives to be more actively engaged 
so as to benefit from the technical assistance included under the project. 
Page  29
 29
 
TANZANIA TAX ADMINISTRATION PROJECT 
 
CREDIT No. 3128-TA  
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
March 30, 
1999 
November 3, 
1999 
December 
31, 2004 
0 40.0 
$12.18 
m 
40.0 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context:  
 
 
Project’s Development Objectives: 
 The project aims to assist the Government of Tanzania in 
raising its tax revenues without increasing tax rates by:  (1) improving the legal framework; (2) 
broadening the tax base; (3) strengthening the Tanzania revenue Authority (TRA) to increase the 
efficiency and effectiveness of tax administration; and (4) improving the administrative 
infrastructure. 
 
Project Components/Activities: 
The project consists of: five components as follows:-- 
1. Improving the Legal Framework by updating, amending, consolidating and, where 
necessary, enacting laws and regulations for taxes and customs; introducing a regulatory 
framework for the Taxpayer Identification number (TIN) and supporting the 
establishment of harmonized appeals machinery. 
2. 
Broadening the Tax base by increasing the number of registered taxpayers, rationalizing 
the number of deductions, exemptions and concessions granted by the tax laws; and 
identifying new sources of revenue and new areas expanding the tax base.
 
3. 
Strengthening TRA by introducing modern management systems to all departments, 
improving training and revisiting the incentives and performance structure.
 
4. 
Improving the Administrative Infrastructure by rehabilitating, refurbishing and equipping 
existing tax offices/customs facilities and by constructing a limited number of new 
facilities.
 
5. 
Project Coordination and Implementation.
 
 
Overall Status & Implementation Progress
: Tax Administration has been improving steadily 
with TRA slightly exceeding its revenue targets for FY02.
  
Implementation has been progressing 
steadily though with a lag compared to original projections.   
 
Key Issues & Challenges for : 
 
Page  30
 30
• 
Government.  
To quicken the pace of project implementation and to enhance the 
capacity within Ministry of Finance and TRA to analyze and revise tax policy so as to 
strike the appropriate balance between the revenue needs of Government and the 
development of the Tanzanian economy. 
• 
Bank  
To enhance the efficiency of our support to project implementation, to provide 
stronger technical input into tax policy issues, and to strengthen coordination and 
collaboration among the many donors supporting tax reform. 
• 
Other Stakeholders
.  Donors to strengthen their collaboration in supporting tax 
reforms in Tanzania. 
 
Way Forward: 
A Mid-term review for the project will be carried out early in 2003.  This will 
provide an opportunity for all stakeholders to take stock of the effectiveness of their efforts to 
date and to improve on both policy reform and project implementation in the future. 
 
 
 
 
 
 
 
 
 
 
Page  31
 31
HEALTH SECTOR DEVELOPMENT PROJECT 
 
CREDIT NO. 3380 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
06/15/00 09/29/00 
12/31/03 
0 
22 
$11.88 
m 22 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: 
 
The 1997 CAS aimed at stabilizing and reversing the downward trend in the social indicators 
through measures that this project undertakes- decentralize responsibility, increase local resource 
mobilization and rational expenditures. Health-specific objectives supported by the project are 
to: i) increase effectiveness of public sector health expenditures by shifting resources to 
preventive and primary care including maternal and child health care. Through a sector-wide 
approach (SWAP), the project supports the government’s role in priority setting and coordination 
of donor activities, to strengthen government’s leadership  and ownership of the health 
development agenda, as well its desire to re-design partnership relationships for more effective 
and efficient use of aid resources, moving towards budget support.  
 
 
 
Project’s Development Objectives: 
The project aims to improve resource management and 
quality of health services through sector reforms and institutional capacity building. 
 
Project Components/Activities: 
The project consists of:  
1. Strengthening health service delivery ( $12.9): 
a) strengthening district health services   
b) strengthening level 2 and 3 hospitals  
c) strengthening public/private mix   
2. Strengthening MOH and central support systems ($4.7) 
3. Health care financing ($2.4) 
4. National HIV/AIDS Fund ($2)
 
 
 
 
 
 
 
 
 
 
 
Overall Status & Implementation Progress:  
 
1. 
Strengthening of health service delivery
: The health sector reform program has been 
extended to 82 of 114 or 73% of all councils with noticeable improvements in district health 
services planning /budgeting, capacity building and delivery of an essential health package.    
2. 
Strengthening of MOH and central support systems
:
 The MOH has: i) revised health policy 
(draft) ii) implemented HSR program of work ( POW ) 1999 - 2002 iii) instituted common 
working arrangements to improve coordination of the sector program under the SWAP  
 
 
Page  32
 32
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iv) established a Basket Fund for central and district funding iv) Strengthened planning at the 
central level to consolidate information of external resources v)  developed legal and regulatory 
framework for decentralization and private practice vi) developed strategies to rationalize training 
institutions to improve efficiency and quality of human resources with appropriate skills mix vi) 
strengthened the capacity of pharmaceutical procurement, management and distribution and vii) 
established joint account, disbursement/reporting mechanisms including joint monitoring and 
evaluation systems 
 
3. Strengthening of health financing
: The MOH has i) established health PER/MTEF process and 
ii) introduced modest cost-sharing but protecting the poor and vulnerable groups ( community 
health fund, drug revolving fund and national health insurance fund). 
 
4. National HIV/AIDS Fund:
 The MOH has: i)  agreed for TACAIDS to coordinate the national 
HIV/AIDS multi-sectoral response ii) to have TACAIDS manage the $2 million under the project 
iii) restructured its internal organization to undertake HIV/AIDS coordination and management in 
the health sector iv) has started preparing its health HIV/AIDS strategy to be finalized by March 
2003 and vi) prepared a draft health/medical waste management plan 
 
 
Key Issues & Challenges: 
i) 
The urgent need to strengthen the regions to support districts effectively under a
decentralized arrangement to improve the quality of service delivery ii) furthe
r
strengthening resource management to get a health  MTEF to cover all sources of funds
coming to the sector  iii) strengthening performance measurement in terms o
f
developing a HMIS that will provide timely and reliable information on availability o
f
resources at facility level, utilization of the facilities and  service delivery coverage rates
for the essential interventions iv) addressing the impact of  HIV/AIDS on the health
personnel and on the workload in the health sector v) assessing the impact of the cost-
sharing initiatives  on the poor and the vulnerable groups vi) revision of health sector 
targets (eg performance indicators on maternal/child deaths, immunization coverage,
health service coverage etc ) for realism and in line with the PRSP. 
Way Forward:  
i)
Provide support to MOH to prepare the next health sector program of work (2003- 2006) 
ii)Support the MOH to finalize the health HIV/AIDS strategy 
iii)Support MOH to prepare the next health PER/MTEF ( 2003-2006 ) 
iv)Support MOH to prepare the next phase of the health sector development program ( 2003-2007)
v)Assess progress made in implementing actions during March 2002 joint health sector review  
vi)Finalize preparations for the next joint health sector review scheduled for March 2003 
vii) Support MOH/PORALG to extend the health sector reform program  to the remaining local 
government authorities  (31 councils) 
viii) Review the impact and benefits of the cost sharing arrangements on the poor 
 
Page  33
 33
 
Page  34
 34
HUMAN RESOURCES DEVELOPMENT PROJECT 
 
CREDIT No.  29910-TA 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
0303/2003 
Total 
Project 
Cost ($m) 
10/07/97 02/98 
O6/05 
0 
20.9 
$17.91m 
24 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
HS HS 
 
Sectoral Context:  
At the time when this project was prepared the main sector issues were low enrollments and poor 
quality of primary schooling, low secondary school enrollments, low spending on education, and 
inadequate school-level management and little accountability to parents and communities. 
 
Project’s Development Objectives: 
 The project aims to strengthen the GOT’s education sector 
by (a) raising enrollments and learning outcomes of primary education by increasing parental 
and community participation, school-based planning, and improved support for schools at the 
district level; and (b) expanding educational opportunities at secondary level for girls from low 
socio-economic background; and (c) building through these programs at the district and school 
level. 
 
Project Components/Activities: 
The project was developed as a pilot and consists of the 
following components: A) Community Education Fund ( CEF), a matching grant program for 
primary schools, designed to increase enrollment, improve the quality of schooling and increase 
parental and community involvement in school performance and management. Implementation 
of the component phased out in 2001. B) A Girls Secondary Education Scholarship (GSES) 
program, to support girls from poor households to complete their secondary education. (O levels 
and A levels, depending on their achievement levels). C) Capacity Building, aimed at developing 
capacity to implement CEF and GSES at all levels and to help MOEC formulate and implement 
innovative solutions to problems in primary and secondary education; and D) Policy 
Development, Planning and Research, aimed at strengthening MOEC’s capacity to plan for the 
sector, improve statistics systems and management of student achievement testing at MOESC 
Statistics Unit and the National Examination Council of Tanzania, respectively. 
 
Overall Status & Implementation Progress:  
The project started with a few districts – 5 for CEF and 8 for GSES, and expanded to 16 districts 
in 1999.  The Project had a slow start, but after the mid-term review its implementation improved 
considerably. To date 87% of the credit has been disbursed, and the CEF and GSES programs 
have had a highly satisfactory performance. The Project has also created capacity for the 
implementation of both programs at the district and school level in the 16 districts where it has 
been implemented. As a pilot, the project has fully met its objectives and lessons learned from 
the CEF program have been taken into account in the design of the PEDP. 
Page  35
 35
 
Key Issues & Challenges for : 
 
• 
Government 
Lessons learned from the CEF were integrated in the PEDP design.  The issue now is 
how to integrate lessons from the GSES to Secondary Education within the ESDP 
context.  An ongoing impact study of the project will provide recommendations for this.   
• 
Bank 
To disseminate lessons learned from the impact evaluation of the project 
• 
Other Stakeholders 
To integrate lessons to be learned from the project into current and future sector 
programs 
 
 
Way Forward:  
The results of the impact evaluation will be available in June 2003.  
A supervision mission conducted in October 2002 agreed on a work program for 2002-2003, 
taking into consideration the phased out CEF Component and continuation of support to GSES 
until 2005 when the last group of girls currently enrolled in the program finish their
 
A levels.
 
 
 
 
Page  36
 36
PRIMARY EDUCATION DEVELOPMENT PROGRAM (PEDP)  
CREDIT No.  3570-TA 
 
Dates 
Data 
Board Effectivene
ss 
Closing 
No. of 
Extension
s 
Credit 
Amount 
($m) 
Total Disb. 
As of 
03/03/2003 
Total 
Project 
Cost ($m) 
10/9/2001 01/02/2002 10/31/200
4 
None US$150 
$50.00 
m  US$ 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
 
Sectoral Context: 
Education is one of the priority sectors specified by the Government of 
Tanzania towards poverty reduction. Within this context, an Education Sector Development 
Program (ESDP) is being prepared by the government in close collaboration with all 
stakeholders.  Within the ESDP context the  Government of Tanzania developed the Primary 
Education Development Program (PEDP) which started to be implemented in January 2002.  
 
Project Development Objectives: 
PEDP aims at contributing to poverty reduction by reforming 
the delivery of  primary education within the broader context of Education Sector Development 
Program (ESDP).
  
Specifically, PEDP seeks to improve education quality, expanding school 
access, and increasing school retention at the primary level.  The objectives would be achieved 
through measures to increase resource availability, improve resource allocation and utilization; to 
improve educational inputs; and to strengthen institutional arrangements for effective primary 
education delivery 
 
 
 
Project Components/Activities: 
The PEDP includes (a) payment of capitation and development 
grants to primary schools; (b) further development of educational inputs for quality improvement 
in the areas of  Pre-service and In-service Training of Teachers to include community based 
professional development of teachers; reviews of the examination and curriculum system,  
increased textbooks and teaching materials,  (c) institutional capacity building at central, district, 
and school levels for efficient operation of primary education system. 
 
 
 
Page  37
 37
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Overall Status and Implementation Progress:
 
The IDA operation is providing the 
Government, in the form of Sector Adjustment Credit, with three tranches of USD.50
million each between fiscal year 2002 and 2004 to support the reform of primar
y
 
education system through PEDP. First tranche was released on January 16, 2002. The
second tranche of  50 Mill. USD is expected to be released as soon as we receive from the
Government progress report of implementation of the Agreed Actions.  
 In addition to the IDA Credit of 150 million USD, the United Republic of Tanzania and
the International Development Association (acting as administrator of grant funds
provided by The Netherlands Minister for Development Cooperation)  has signed a Grant 
Agreement  of   USD. 50 mill. provided by The Netherlands Minister for Development
Cooperation dated October 4, 2002 . IDA is the administrator of the fund. First tranche o
f
the Grant amounting to US$ 10,000,000  was  released to the Government in November 
2002.  
 
PEDP has been well received at school and community levels and progress o
f
implementation is highly satisfactory.  Government has provided necessary guidelines an
d
support  for implementation at community and all levels.
By March 2002, actual 
enrolment of children aged 7-10 years to grade I was 1,659,847 pupils compared to
1,140,554 pupils of the same grade in March 2000. The enrollment  in 2002 was above
the planned target of 1,500,000 indicated in the PEDP. Right after the first tranche release 
b
ecame effective,  the Ministry of Finance disbursed funds directly to the Education
Account number 5 of each district Council . This followed immediate disbursement o
f
Development and Capitation Grants to all school accounts in February 2002.  In general, 
Development and Capitation Grants  seem to be progressing effectively. 16,000 new
classrooms have been built  out of the 13,868  target for 2002. This has included
construction of school toilets and purchase of school furniture, teaching and learning 
materials. The funds were also used  for  constructing some teacher houses in hard to
reach areas towards effective implementation of  teacher deployment. In order to cope up
with  enrollment expansion,  6,000 new  primary school teachers were recruited by June 
2002. Teacher deployment was implemented and a total of 3,422 teachers were
transferred to places that had serious shortage of teachers. The Government introduced an
ii
k
f
h
d
l
Issues and Challenges: 
 
In order to strengthen and sustain the gained momentum in implementing PEDP it is 
important that: 
• 
A Capacity Building Strategy  at all levels is in place. Initial preparations of the 
strategy has started and need to be finalized for implementation 
 
• 
More effort be provided towards finalizing the quality designs for immediate 
implementation 
 
Page  38
 38
TANZANIA SOCIAL ACTION FUND (TASAF) 
 
CREDIT NO.  34049 
         
 
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
08/22/00 11/09/00 
06/30/05 
0 
60 
$29.42 
m 70 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Sectoral Context: 
The major goal of CAS is to reduce poverty, stimulate growth, and protect 
vulnerable groups – these objectives are supported by this project. The project supports CAS’s 
objective by (i) strengthening community participation and resource mobilization at local level; 
(ii) improving the social and economic infrastructure and (iii) creating a social safety net through 
a self-targeting, low-wage public works-program 
 
 
Project’s Development Objectives: 
 To increase and enhance the capacities of community and 
stakeholders, to prioritize, implement and manage sustainable development initiatives and in the 
process improve socio economic services and opportunities.  This will lead to poverty reduction 
by (a) providing extra resources for the creation of community assets at the village level 
(schools, bridges, clinics, water points, etc., (b) targeting incomes to very poor households 
working on public assets like roads, forest lots, and small dams, and (c) addressing institutional 
development issues at the community level, districts, and central government for sustainable 
poverty reduction interventions
. 
 
 
Project Components/Activities: 
The project consists of: i)  Community development initiatives  
ii) Public works Program and iii) Institutional Development
 
 
 
Overall Status & Implementation Progress:  
1. community Development Initiatives
 (CDI) component (S).  To date 896 applications from 
communities have been received, 639 are under implementation, with 48 completed.  Slow 
progress under this component has been caused by (a) the inadequate size of the Special Account 
(SA), and (b) differing interpretations of both the Development Credit Agreement DCA) and the 
Operational Manual. However, the DCA has been amended to increase the SA to increase the SA 
amount from $1 million to $4 million   
 
2. 
Public Works Program
 (PWP) component (S).  To date 142 sub-projects have been 
approved, 103 are under implementation, and 20
 
have been completed.  Good work in progress. 
 
Page  39
 39
3. 
Institutional Development
 component (S). A working group has been constituted to review 
the institutional arrangements, including the functions of TASAF staff; once this has been agreed 
to, changes to the functions will be implemented.  The management information system (MIS) is 
producing good data  which is being used to monitor progress with respect to indicators that need 
to be tracked. The information, education and communication (IEC) activities have been 
successfully integrated into the CDI and PWP components.  
 
 
4.
 
Pilot Support to Cope with Rising Vulnerability:
  Four districts have been identified for 
the piloting of a program aimed to respond to the vulnerable (orphans, chronically ill, etc.).  
TACAIDS has provided funding to support extended-PRAs in these districts, and the facilitation 
will clearly describe that support will have to go through CBOs/CSOs/NGOs that have 
experience tackling the problem, and are endorsed by the community.  US$1 million will be 
notionally allocated from the CDI budget once a strategy has been prepared and approved by the 
Bank. 
.
 
Key Issues & Challenges for : 
i) 
Need to speed up pace of implementation  
ii) 
The need for TASAF to provide support to vulnerable groups and the HIV/AIDS 
response 
iii) 
Lack of clarity in operational manual leading to a lot of misinterpretations 
iv) 
Need for more transparent dissemination of information about the project funds to 
districts and communities. 
   
Way Forward:  
i)  Revise operational manual in line with the DCA and experiences from the pilot phase and the 
completed sub-projects 
ii) Review the institutional arrangements, including establishing a personnel performance 
management system (PPMS). 
iii) Allocate funds to districts, so that districts know the funding limitations with clear indicators 
for intra-district allocations. 
iv) Develop  a strategy within TASAF principles to address vulnerable groups including  
community HIV/AIDS response 
v) Pilot some activities  for vulnerable groups including community HIV/AIDS response.
 
 
 
 
Page  40
 40
PROGRAMMATIC STRUCTURAL ADJUSTMENT CREDIT  (PSAC I) 
CREDIT NO.  3379-TA 
       
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/032003 
Total 
Project 
Cost ($m) 
07/15/00 08/01/00 
06/30/03 
1 
190 
$107.65 
m  
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Macro Context: 
The PSAC is based on the Government’s medium term strategy for policy and 
institutional reforms aimed at supporting private sector development in Tanzania. This strategy seeks to 
reduce poverty through accelerating economic growth more generally and private sector development 
more specifically. PSAC supports the Government’s efforts to sustain macroeconomic stability, deepen 
the implementation of the privatization program, improve competitiveness and transparency of markets, 
strengthen the state environment, and further reduce barriers to internal and international trade.
 
 
 
Development Objectives: 
 The principal objectives of the PSAC are to encourage increased private 
investment; induce greater efficiency of the private sector by reducing the cost of doing business and 
enhanced competition; increase private sector participation in the economy through faster divestiture of 
key public enterprises particularly in infrastructure services; and improve the effectiveness in the delivery 
of supportive public services.  
 
Credit Components/Activities: 
The PSAC consists of the effectiveness tranche ($30 million) and four 
floating tranches ($40 million each) namely: (1) Economic governance tranche; (2) Business environment 
tranche; (3) Short term tranche; and (4) Privatization and regulation tranche. 
 
Overall Status & Implementation Progress: 
The overall performance and progress with the 
implementation of the program supported by the credit is rated as highly satisfactory. USD 29.32 million 
was released upon effectiveness in August 2000 and the economic governance tranche (USD 39.17) was 
released in August 2001. The Government has also achieved satisfactory progress towards meeting 
conditions for the release of the remaining three floating tranches. Four out of five actions required for the 
release of the short term tranche are done. The remaining action which relates to bringing DAWASA to 
the point of concession is in progress and conclusion of the concessioning is expected in 
November/December 2002. Similarly, six out of the seven conditions required for the release of the 
business environment tranche have been done. The release of this tranche is being held back by partial 
fulfillment  of the agreed action to approve and implement a proposal to relax restrictions on foreign 
portfolio investment in the Dar es Salaam Stock Exchange, with appropriate safeguards. The release of 
the business environment tranche is also expected during November/December 2002. In the case of the 
regulation and privatization tranche there have been significant delays in meeting the related conditions 
partly because of a too optimistic schedule for privatization of some key parastatals which involve 
difficult legal processes and serious social issues/concerns. The conditions for the release of this tranche 
are expected to be met by April 2003.
 
 
Page  41
 41
 
Key Issues & Challenges for :  
 
• 
Government: 
(i)
 
Need to pay particular attention to the fact that the next Bank operation 
(PRSC I) aimed at providing support to the implementation of the Poverty Reduction Strategy 
(PRS) and expected to disburse at the beginning of 2003/04 upon effectiveness, is conditional 
on prior full disbursement and closure of the PSAC. It is therefore important to increase 
attention to the remaining actions under the privatization and regulation tranche, particularly 
the decision on the multi-sector regulatory framework to cover the balance of the sectors still 
to be decided upon; seeing to it that concessioning of TRC proceeds as scheduled and putting 
in place sector laws for regulating electricity; and (ii) Commitment to sustaining the reform 
drive and continuing to build and consolidate a national consensus for reform to avoid back-
tracking as the country moves toward the 2005 general elections 
• 
Bank: (i) 
Scale up budget support to underpin Government implementation of the PRS; and 
(ii) Ensure proper
 c
oordination and consistency in the policy reform advice given by the 
Bank across sectors, while continuing to work very closely with “champions of reform” 
within the Government. 
• 
Other Stakeholders: 
(i) Acknowledge good progress made by the Government so far and 
continue to support the reform drive; (ii) Development partners need to honor their promised 
resource commitments and disbursement schedules in support of the Government budget and 
implementation of the PRS; and (iii) more coordination among donors. 
 
Way Forward: 
Continued dialogue between the Government and the Bank to resolve outstanding issues 
in the way to timely closure of the PSAC.  
 
 
Page  42
 42
PRIVATIZATION AND PRIVATE SECTOR DEVELOPMENT PROJECT 
CREDIT No.  3304-TA 
       
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/032003 
Total 
Project 
Cost ($m) 
12/14/99 07/20/00 
09/30/04 
0 
45.90 
$12.67 
m  
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S 
 
Page  43
 43
REGIONAL TRADE FACILITATION PROJECT 
CREDIT No.  3491-TA 
       
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
04/03/01 
02/05/02 
06/30/11 
0 
15.00 M 
$3.75 m 
 
 
 
Last Now 
D.O. Rating  
S U 
I.P. Rating  
S U 
 
 
 
Project’s Development Objective 
 
The Regional Trade Facilitation Projects (RTFP) principal objective is to contribute to poverty 
alleviation through private sector led growth in participating countries by improving access to 
financing for productive transactions and cross-border trade. 
 
The Common Market for Southern and Eastern Africa ( COMESA) initiated the RTFP as an 
important complement to its regional integration activities, in particular the introduction the of a 
free trade area on October 31, 2000.  The project will initially cover seven countries (Burundi, 
Kenya, Malawi, Rwanda, Tanzania, Uganda, and Zambia), and can be extended to cover all 
African countries, in order to broaden the development impact of the project as much as possible. 
 
Financing for productive activities in Africa is presently severely constrained  by a perception of 
high risk in the region as a whole, and in individual countries in the region.  Interviews with 
market players indicate that a significant element of this perception is associated with risks cause 
by caused by government behavior and political events, significant element of this perception is 
associated with risks caused by government behavior and political events, such as war and civil 
commotion.  In many countries, however, this perception is not justified by current 
circumstances.  The same is true for the perception that Africa as a region would be inherently 
more risky than other regions or continents. 
 
There are significant gaps in the private political risk insurance market when it comes to the 
assumption of political risk in cross-border transactions involving African countries, which 
hinders growth of productive activity in Africa.  Political risk cover from commercial sources or 
export credit agencies is not available at all for some African countries, and where cover is 
available it is usually very costly and on unfavorable terms.  In particular, import of essential 
capital goods into African countries. 
 
The project aims to address this problem by bringing together a group of countries that are 
willing to address the market perception by setting up a credible insurance mechanisms against 
losses caused by political risks.  The governments of these countries would agree to be the 
ultimate risk takers in the insurance mechanism, thus creating a strong disincentive to cause 
Page  44
 44
claims.  This type of insurance is currently not available from the private market, particularly for 
medium-term transactions (over one year) 
 
As a result of the public sector addressing political risk through the RTFP, the private insurance 
sector will have the ability to extend its activities in the region.  International export credit 
insurance, in cooperation with local financial institutions, will use the political risk insurance 
facility to offer commercial risk insurance, which will result in comprehensive export credit 
covered being available to the private sector in Africa. 
 
The project will thus widen the scope for private sector activity, in particular by extending the 
maturities at which credit is available, creating a more stable business environment by ensuring 
the availability of coverage on a consistent and predicable basis, and, by improving the risk, 
lowering the risk premium.  Participating countries will reap earlier and more substantive 
benefits from improved policies, as the private sector will increase its activity without having to 
wait for long track of policy and political stability. 
 
 
Achievement of the overall Development Objectives must be assessed in relation to progress 
registered in the other 6 country credits. 
 
Implementation has been delayed due to downturn in the insurance market following the events 
of September 11, 2001 and in the volume of trade flows to African counties.  However, the 
demand on ATI’s produce is still much lower than months after all DCA under the project 
became effective.  The lack of performance is the consequence of (i) a lack of correlation 
between the product and the  demand, (ii) poor management of the project (i.e: poor marketing , 
lack of management of the underwriters team by ATI’s chief Executive, lack of drive by ATI’s 
team to achieve results since no insurance policy has been issued over a ten months period) and 
(iii) the consequence of the macro economic downturn.  It is not yet clear which contributes the 
most to the observed shortcomings, but all will be addressed in the context of the next meeting 
with stakeholders. 
 
To this effect, the outlook for achievement of the Development Objectives translates into a 
change from  “S” to “U” Similarly, the lack of demand lowers the probability to meet the 
Performance Indicators.  Consequently, the IP rating is changed from “S” to “U”, with the Low 
demand risk changed from “S” to “H”.  Since Project Management is one of the caused of the 
slow take-off of the facility, the rating is changed from “S” to ”U” 
 
In considering a possible upgrade of the DO ratings, the following factors will be looked at: (i)  
materialization of the demand, (ii) issuance of insurance policies.  Upgrade of the IPs  would be 
triggered by a clear business plan issued by ATI leading to efficient marketing of the product.  
Implementation has been delayed due to downturn in the insurance market following the events 
of September 11, 2001 and in the volume of trade flows to African countries.  However, the 
demand on ATI’s  product is still much lower than expected, and no insurance policy has been 
bound yet.  This trend was still confirmed as of December 2002, i.e.  9 months after all DCAs 
under the project became effective.  Its is not clear at this stage whether this lower demand is the 
consequence of (i) a lack of correlation between the product and the demand (ii) poor 
management  of the project (i.e.: poor marketing, lack of management of the underwriters team 
by ATI’s Chief Executive, lack of drive by ATI’s team to achieve results)  or (iii)  the 
consequence of the macro economic downturn. 
 
Page  45
 45
To this effect, the outlook for achievement for achievement of the Development Objectives 
translates into a change from “S” to “U” Similarly, the lack of demand lowers the  probability to 
meet the Performance Indicators.  Consequently, the IP rating is changed from “S” to “U”, with 
the Low demand risk changed from “S” to “H”.  Since Project Management (that of the 
Implementing Unit which is ATI) might be one of the causes of the slow take-off of the facility, 
the rating is  changed from “S” to “U”. 
 
 
GENERAL PROGRESS AND OPERATIONAL ISSUES 
 
ATI has been successful in setting up an institution in a difficult post-September –11 business 
environment.  ATI is now fully staffed. 
 
ATI has been operational and able to receive inquiries and issue policies of insurance since end 
of March 2002.  However, it was not until the 5
th
 June that the first formal application for cover 
was received from an applicant. 
 
This result is significantly below expectations as projected during the appraisal, and the trend 
was confirmed as of December 2002. 
 
While other institutions such as MIGA and Investment Guarantee Facility in Bosnia also 
experienced slow take –offs (MIGA took two years before the first policy was issued and nine 
months for IGA to issue it first policy), the situation is now calling for emergency measures. 
 
An emergency meeting – to be held in Nairobi in February 2003 – has been called by WB.  This 
meeting invites all borrowers under the respective DCAs to reflect on the poor results registered 
by ATI and to make suggestions as to (i) an improvement in the product and/or (ii) possible 
changes in the governance structure.  This meeting will be supported by results of demand 
survey currently carried out in France and the UK assess the correlation between the product and 
the demand. 
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 46
LAKE VICTORIA ENVIRONMENTAL MANAGEMENT PROJECT 
CREDIT NO.  2908-TA 
       
Dates 
Data 
Board Effectiveness 
Closing 
No. 
of 
Extensions 
Credit 
Amount 
($m) 
Total Disb. 
As of  
03/03/2003 
Total 
Project 
Cost ($m) 
07/30/96 
03/05/97 
06/30/04 
1 
10.10 m 
$8.95 m 
 
 
 
Last Now 
D.O. Rating  
S S 
I.P. Rating  
S S