Document of The World Bank FOR OFFICIAL USE ONLY Report No. 60269-TZ INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY ASSISTANCE STRATEGY FOR THE UNITED REPUBLIC OF TANZANIA FOR THE PERIOD FY 2012-2015 May 9, 2011 International Development Association Eastern Africa Country Cluster 1, AFCE1 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Last Country Assistance Strategy: March 1, 2007 (Report No. 38625-TZ) CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2011) Currency Unit = Tanzania Shilling (TSh) US$1.00 = TSh 1,509 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activity Program AF Additional Financing ESW Economic and Sector Work AfDB African Development Bank EU European Union AFREA Africa Renewable Energy Access FSDRP Financial Sector Development and Program Regionalization Project AFSP Accelerated Food Security Project FSSP Financial Sector Support Project AMSME Africa Micro, Small, and Medium Scale FY Fiscal Year Enterprises Finance Program GBS General Budget Support ASDP Agricultural Sector Development GDP Gross Domestic Product Program GEF Global Environment Facility ATIP Accountability, Transparency and GIZ Deutsche Gesellshaft für Internationale Integrity Project Zusammenarbeit BEST Business Environment Strengthening HBS Household Budget Survey Program HD Human Development BOT Bank of Tanzania HIV/AIDS Human Immunodeficiency Virus/ CAADP Comprehensive Africa Agriculture Acquired Immunodeficiency Syndrome Development Program HSDP Health Sector Development Project CAS Country Assistance Strategy ICT Information and Communication CASPR Country Assistance Strategy Progress Technology Report IDA International Development Association CCM Chama Cha Mapinduzi IDF Institutional Development Fund CEM Country Economic Memorandum IEG Independent Evaluation Group CoST Construction Sector Transparency IFC International Finance Corporation CPIA Country Policy and Institutional IMF International Monetary Fund Assessment JAST Joint Assistance Strategy for Tanzania CPPR Country Portfolio Performance Review JICA Japan International Cooperation Agency CRW Crisis Response Window JSAN Joint Staff Advisory Note CSO Civil Society Organization JSDF Japan Social Development Fund CTCP Central Transport Corridor Project KfW Kreditanstalt für Wiederaufbau DANIDA Danish Development Agency LGA Local Government Authority DB Doing Business LGDG Local Government Development Grant DFGG Demand for Good Governance LGSP Local Government Support Project DFID United Kingdom Department for LKEMP Lower Kihansi Environmental International Development Management Project DHS Demographic and Health Survey LSRP Legal Sector Reform Program DMDP Dar es Salaam Metropolitan LVEMP Lake Victoria Environmental Development Project Management Project DP Development Partner MACEMP Marine and Coastal Environmental DPO Development Policy Operation Management Project EAAPP East Africa Agricultural Productivity MCC Millennium Challenge Corporation Project MDA Ministries, Departments, and Agencies EATTFP East Africa Trade and Transport MDG Millennium Development Goal Facilitation Project MDTF Multi-donor Trust Fund EAC East African Community M&E Monitoring and Evaluation EITI Extractive Industries Transparency MEAC Ministry of East Africa Community Initiative MIGA Multilateral Investment Guarantee ESMAP Energy Sector Management Assistance Agency MIS Management Information System SADC Southern African Development MKUKUTA Mkakati wa Kukuza Uchumi na Community Kupunguza Umaskini Tanzania SAGCOT Southern Agricultural Growth Corridor (Growth and Poverty Reduction Strategy of Tanzania for mainland Tanzania) SATTFP South Africa Trade and Transport MKUZA Mkakati wa Kukuza Uchumi na Facilitation Project Kupunguza Umaskini Zanzibar SDR Special Drawing Rights (Growth and Poverty Reduction Strategy SEDP Secondary Education Support Project for Zanzibar) SIDA Swedish International Development MoFEA Ministry of Finance and Economic Authority Affairs SME Small and Medium Enterprise MoHSW Ministry of Health and Social Welfare SMMRP Sustainable Management of Mineral MoW Ministry of Water Resources Project MSME Micro, Small, and Medium-Sized STATCAP Statistical Capacity Building Project Enterprise STHEP Science and Technology Higher NAIV National Agricultural Input Voucher Education Project Scheme SWAP Sectorwide Approach P4R Program for Results SWG Sector Working Group PAF Performance Assessment Framework TA Technical Assistance PEFAR Public Expenditure and Financial TANESCO Tanzania Electric Supply Company Accountability Review TASAF Tanzania Social Action Fund PEPFAR President’s Emergency Plan for AIDS TEDAP Tanzania Energy Development and Relief Access Project PER Public Expenditure Review TF Trust Fund PFM Public Financial Management TMP Tax Modernization Plan PHRD Japan Policy and Human Resources TRA Tanzania Revenue Authority Development TSCP Tanzania Strategic Cities Project PMS Performance Management System TSMP Tanzania Statistical Master Plan PPIAF Public-Private Infrastructure Advisory TSSP Transport Sector Support Project Facility UNDP United Nations Development Program PPP Public-Private Partnership UNFPA United Nations Population Fund PRG Partial Risk Guarantee UNICEF United Nations Children’s Fund PRSC Poverty Reduction Support Credit USAID United States Agency for International PRSP Poverty Reduction Strategy Paper Development PSCP Private Sector Competitiveness Project UWSA Urban Water and Sewerage Authority PSIA Poverty and Social Impact Analysis WBG World Bank Group PSM Public Sector Management WBI World Bank Institute PSRP Public Service Reform Program WHO/AFRO World Health Organization Regional PRAP Performance Results and Accountability Office for Africa Project WSDP Water Sector Development Program RCIP Regional Communications Infrastructure WSP Water and Sanitation Program Project WSSP Water Sector Support Project RGoZ Revolutionary Government of Zanzibar ZUSP Zanzibar Urban Services Project IDA IFC MIGA Vice President Obiageli Katryn Ezekwesili Thierry Tanoh Izumi Kobayashi Director John Murray McIntire Jean Philippe Prosper Ravi Vish Task Team Leader Steffi Stallmeister Dan Kasirye Conor Healy COUNTRY ASSISTANCE STRATEGY FOR THE UNITED REPUBLIC OF TANZANIA Table of Contents Executive Summary ......................................................................................................................... i  I. Country Context ...........................................................................................................................1  A. Economic and Political Context ............................................................................................. 1  B. Economic Developments and Prospects................................................................................. 2  Economic Developments......................................................................................................... 2  Poverty, Human Development, and Demography .................................................................. 4  The Outlook for Shared Growth.............................................................................................. 7  Debt Sustainability .................................................................................................................. 8  C. Key Development Challenges and Opportunities .................................................................. 9  D. Tanzania’s Poverty Reduction Strategy ............................................................................... 11  E. Development Partner Support .............................................................................................. 14  II. Implementation of the Tanzania Country Assistance Strategy and Lessons Learned .............15  IDA, Trust Funds, and Analytical and Advisory Activities .................................................. 15  The International Finance Corporation ................................................................................. 17  Lessons Learned .................................................................................................................... 18  III. Country Assistance Strategy in Tanzania ................................................................................19  A. CAS Objectives and Outcomes ............................................................................................ 19  B. Proposed CAS Approach...................................................................................................... 19  C. Cross-cutting Issues .............................................................................................................. 22  D. IDA Resources in the CAS .................................................................................................. 24  E. CAS Instruments and Financing Modality ........................................................................... 25  IV. Proposed CAS Objectives and Expected Results ....................................................................28  A. Objective One: Promote Inclusive and Sustainable, Private Sector-led Growth ................. 28  B. Objective Two: Build Infrastructure and Deliver Services .................................................. 33  C. Objective Three: Strengthened Human Capital and Social Safety Net ................................ 38  D. Objective Four: Promote Accountability and Governance .................................................. 42  E. Implementing and Monitoring the Country Assistance Strategy ......................................... 43  V. Risks and Mitigation .................................................................................................................46  Tables: Table 1: Tanzania Key Macroeconomic Indicators, FY05-10.........................................................3 Table 2: Macroeconomic Projections (Percent) ...............................................................................7 Table 3 : Summary of CAS Outcomes and Results .......................................................................16 Table 4: Indicative Lending Plan FY12-15 .......................................................................................... 26 Table 5: Indicative Non-Lending Plan FY12-15 ................................................................................. 27 Boxes: Box 1: Tanzania and the Millennium Development Goals in 2015.................................................5 Box 2: Decentralization through Devolution ...................................................................................6 Box 3: World Bank Support to Zanzibar .......................................................................................21 Box 4: Reducing Gender Inequalities in Tanzania ........................................................................23 Box 5: Leveraging Climate Change for Development ..................................................................31 Box 6: Extractive Industries Transparency Initiative ....................................................................33 Box 7: Construction Sector Transparency Initiative ......................................................................36 Annexes: Annex 1: Country Assistance Strategy Results Framework ..........................................................47  Annex 2: Tanzania At a Glance .....................................................................................................57  Annex 3: Key Economic Indicators ...............................................................................................60  Annex 4: Key Exposure Indicators ................................................................................................62  Annex 5: Operations Portfolio (IBRD/IDA and Grants) ...............................................................63  Annex 6: Selected Indicators of Bank Portfolio Performance and Management ..........................64  Annex 7: Trust Fund Portfolio .......................................................................................................65  Annex 8: IFC’s Operations Portfolio .............................................................................................66  Annex 9: World Bank Client Survey .............................................................................................67  Annex 10: CAS Consultations .......................................................................................................68  Annex 11: Development Partners – Division of Labor .................................................................70  Annex 12: Regional Integration .....................................................................................................71  Annex 13: CAS Completion Report ..............................................................................................75  Map of Tanzania (IBRD 33494 R1) ............................................................................................142  EXECUTIVE SUMMARY i. Political Context. The United Republic of Tanzania was formed in 1964 by the unification of mainland Tanganyika and the isles of Zanzibar. It has a long coastline and borders with eight countries, of which five are landlocked—it could become a regional commercial hub. Its land is rich in biodiversity and natural resources, including sizable deposits of natural gas. It has a history of political stability and a multiparty political system, although one party, the Chama Cha Mapinduzi, has dominated politics since independence in 1961. ii. Economic Developments. Tanzania has experienced high growth, averaging between 5 to 7 percent, over the past decade, owing to sound macroeconomic policy, economic liberalization, and an expanding public sector. Due to the global economic crisis, growth slowed to 6.0 percent in 2009 from 7.4 percent in 2008. iii. Poverty, Human Development, and Demography. Despite the country’s high growth rate, surveys suggest that income poverty has not declined as much as expected, especially in rural areas. Tanzania is on track to meet targets for three of the seven Millennium Development Goals: reducing infant and under-five mortality, combating HIV/AIDs and malaria, and addressing gender inequality. Fertility rates remain high, making it difficult to achieve sufficient per child investments in health and education, and lowering the country’s savings rate. iv. Economic Prospects. In the medium term, annual GDP growth is expected to rise to 7.5 percent or higher due to an expanding mining sector, particularly gold, and growth in exports. Sustained high growth depends, however, on a favorable global economic environment, infrastructure investments, and structural reforms, especially to improve the business climate. v. Development Challenges. To sustain high growth and to make growth more inclusive to reduce poverty, Tanzania needs to address infrastructure bottlenecks, improve the business environment, increase agricultural productivity and value addition, improve service delivery to build a healthy and skilled workforce, and manage urbanization. Slower population growth is needed to reap a demographic dividend. The country needs to continue to fight corruption and strengthen transparency and accountability across sectors and all levels, especially in the context of future exploitation of natural gas reserves. vi. Government Strategy. In November 2010, the Government of Tanzania finalized a new five-year (2010/11-2014/15) national strategy for growth and poverty reduction, known as MKUKUTA II (MKUZA II in Zanzibar). MKUKUTA II and MKUZA II focus on three clusters: (i) growth and reduction of income poverty; (ii) improvement of quality of life and social well- being; and (iii) good governance and accountability. vii. Implementation of the World Bank’s Tanzania Country Assistance Strategy (CAS). Executive Directors discussed the Joint Assistance Strategy for Tanzania (JSAT), one of the first joint multidonor strategies of its kind, in April 2007. The JAST comprised four parts: a national medium-term framework for development cooperation, a joint country analysis, a joint program document, and the World Bank Group CAS. The CAS Completion Report rates Bank achievements as moderately satisfactory. Lessons identified by the CAS Completion Report and incorporated into the 2012-2015 CAS include: (i) ensure that CAS outcomes are realistic, measurable, and linked to Bank interventions; (ii) increase attention to monitoring and i evaluation, which remains a challenge at all levels; (iii) in a slow policy reform environment, narrow the size and scope of Poverty Reduction Support Credits and target IDA to high impact areas where there is clear government commitment; (iv) increase governance support at the service delivery level; and (v) focus on on-the-ground mechanisms for aid effectiveness rather than on development of joint assistance strategies. viii. CAS Objectives and Results. The World Bank Group’s CAS, aligned with Tanzania’s MKUKUTA II and MKUZA II and with the recently completed Africa Strategy, will help Tanzania address binding constraints to growth and make growth more inclusive. It provides a framework for World Bank Group support for five years (FY12-15). The CAS focuses on four strategic objectives and eleven outcomes: Promote Inclusive and Sustainable Private Sector-Led Growth. There are three outcomes: (i) improved business environment and financial intermediation, (ii) improved productivity and commercialization of agriculture, and (iii) enhanced sustainability and improvement management of natural resources. Build Infrastructure and Deliver Services. There are four outcomes: (i) increased access, quality, and sustainability of electricity; (ii) increased access to and quality of transport services; (iii) increased access to and quality of water and sanitation services; and (iv) improved management and delivery of urban services. Strengthen Human Capital and Safety Nets. There are three outcomes: (i) improved access to and quality of education, (ii) improved access to and quality of health care delivery, and (iii) improved access to safety nets. Cross-cutting: Promote Accountability and Governance. There is one outcome: improved accountability and efficiency of public management. ix. Proposed CAS Program. IDA resources under the FY12-15 CAS are estimated at about SDR1.61 billion (US$2.47 billion equivalent). This estimate is indicative; actual annual IDA will depend on Tanzania’s performance-based allocation. Tanzania could also potentially access IBRD funding for enclave projects. The Bank will prepare a CAS Progress Report in mid-2013, or earlier if required, to update and adjust the CAS program as needed. x. Partnership. The CAS follows the Africa Region’s Strategy by using partnerships as a means for implementation, building on the core partnership with the government. The Bank, as a key development partner in Tanzania, will continue to increase aid effectiveness through partnerships with the domestic and international private sector, civil society, and development agencies, including non-traditional donors. xi. Risks. Risks for CAS implementation include weakening public financial management, which reduces the impact of public spending; prospects for hydrocarbon development, which could negatively impact governance and fiscal discipline; weak implementation capacity at the local government level, which impedes service delivery; increasing inequality, which could affect growth and stability; and exogenous risks, such as weather, international prices, and natural disasters. To help mitigate risks, the CAS addresses governance, the framework for natural gas, local government capacity, rural development, and social safety nets. ii COUNTRY ASSISTANCE STRATEGY FOR THE UNITED REPUBLIC OF TANZANIA I. COUNTRY CONTEXT A. Economic and Political Context 1. The United Republic of Tanzania is among the most politically stable nations of Sub-Saharan Africa. It was formed in 1964 by the unification of mainland Tanganyika, the first East African state to gain independence in 1961, and the isles of Zanzibar.1 Julius Nyerere, President of Tanganyika and then Tanzania from 1961 to 1985, formed the Chama Cha Mapinduzi (CCM, Revolutionary Party) as the sole legal political party for Tanzania. Nyerere adopted socialist economic policies that resulted in slow economic growth, but his social policies forged a strong Tanzanian national identity that takes priority over ethnic, regional, or linguistic identities. 2. In the mid-1990s, Tanzania transitioned to a multiparty system and accelerated market-based economic reforms. The first multiparty elections were held in 1995. The newly elected government began pursuing macroeconomic stability and structural reforms, building on economic liberalization policies of the 1980s. Pro-market reforms triggered inflows of investment and foreign aid that helped to spur growth, making Tanzania one of the fastest growing economies in Africa. 3. The country’s fourth multiparty elections took place October 31, 2010. The incumbent president, Mr. Jakaya Mrisho Kikwete, was reelected with 61 percent of the vote to a second and final term. Tanzania’s constitution limits presidents to two terms in office. The CCM, which has dominated politics since independence, won 70 percent of the seats in parliament. 4. Tanzania’s geographical location is conducive to trade. It borders with eight countries of which five are landlocked, has a long coastline, and two major inland lakes. If Tanzania can remove infrastructure bottlenecks and improve its investment climate, it could become a regional hub for the increasing trade between Africa and Asia and the Middle East. 5. Tanzania is rich in natural resources and biodiversity. Forestry, fisheries, and wildlife, though declining, continue to be dynamic and important sectors. Wildlife, national parks, and coral reefs make Tanzania an up-market tourist destination. Mineral resources, which include gold, diamonds, base metals, and gemstones are already being exploited, but new deposits are expected to be discovered. Agriculture provides a livelihood for about 80 percent of Tanzanians. The use of these abundant natural resources is characterized by low productivity, unsustainable resource management, and the wealth has not translated into economic well-being for more than a small minority. 6. Corruption and accountability emerged as important themes during the 2010 election campaign. The president made strong commitments on both issues in his inaugural 1 Zanzibar has retained a semi-autonomous status, with its own president, legislature, and bureaucracy that preside over non-union matters. 1 address. Seven high-level corruption cases involving an estimated US$1 billion took place between 2000 and 2008, tainting Tanzania’s reputation. The government took decisive actions that helped restore confidence, but definite solution of some of the cases remains a matter of concern. Renewed government commitment on these issues would help address the perception of increasing corruption. B. Economic Developments and Prospects Economic Developments 7. During the past decade, Tanzania has experienced high rates of economic growth, due to economic liberalization, sound macroeconomic policy, and an expanding public sector. Growth accelerated from 3.5 percent on average in the 1990s to 7 percent on average in the 2000s (see table 1 for macroeconomic indicators for 2006-2010). Growth in tax revenues, foreign aid, and debt relief created space for an expansion in public spending, which increased from less than 16 percent of gross domestic product (GDP) in 2000 to almost 28 percent in 2009. Inflation was low from 2000 to 2005 but picked up pace in the late 2000s. The fiscal deficit has been on the rise, but overall fiscal policy has remained largely prudent and the public debt burden remains sustainable. 8. The recent global economic crisis slowed Tanzania’s growth in 2009 to 6.0 percent, down from 7.4 percent the previous year, although government policies tempered its impact. The crisis affected Tanzania mainly through the export channel—tourism, cash crops, and manufactures—and through lower capital flows—foreign assistance and private investment. Financial contagion effects were not large because Tanzania’s financial markets are not strongly tied to global markets. The government preserved expenditures as budgeted, de facto providing a moderate fiscal stimulus.2 The Bank of Tanzania (BoT) continued with an accommodative monetary policy to sustain economic activity and ease the pressure of budget financing. GDP growth rebounded to 7 percent in 2010, up by 1 percentage point from 2009. Annual inflation fell to 7.2 percent in 2010 from 12.1 percent in 2009. 9. Fiscal and current account deficits have increased. The fiscal deficit after grants increased from 4.5 percent of GDP in FY08/09 to 6.4 percent in FY09/10, mainly due to the government’s counter-cyclical measures to mitigate the impact of the financial crisis. The continued expansion of the fiscal deficit – it is projected to be 6.5 percent in FY10/11 – is of concern, because the sources of funding are shifting from non-debt-creating (domestic revenues and grants) to debt-creating (domestic debt and non-concessional financing). The current account deficit, which has grown since 2006, is no longer fully covered by foreign aid and is increasingly so by foreign direct investment flows. Tanzania’s flexible exchange rate management and the high level of foreign reserves put the country in a good position to manage its external balance.3 2 World Bank support to help mitigate the global financial crisis included a US$220 million Accelerated Food Security Program approved in June 2009 and a Supplemental Financing of US$170 million to the PRSC-7 approved in December 2009. 3 By end-June 2011, gross international reserves are projected to be US$3.9 billion, more than 4.7 months of current year imports of goods and services, partly reflecting solid export growth, IMF balance of payment support under the Exogenous Shock Facility, and the SDR allocation. 2 Table 1: Tanzania Key Macroeconomic Indicators, FY06-10 Indicator 2006 2007 2008 2009 2010* Output and prices GDP growth 6.7 7.1 7.4 6.0 7.0 Annual inflation (CPI, period average) 7.3 7.0 10.3 12.1 7.2 Money Private credit to GDP 11.0 12.9 14.6 16.8 17.1 Balance of payments Current account balance to GDP -8.0 -9.3 -11.1 -10.2 -8.6 Official reserves in months of imports 4.1 4.1 4.2 4.5 5.1 Exchange and interest rates Exchange rate (T Sh/US$, period average) 1,182.9 1,280.5 1,201.6 1,264.4 1,337.5 Interest rate (T-Bills, period average) 13.5 14.4 12.8 12.3 7.4 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11* Fiscal developments Domestic revenue to GDP 14.1 15.9 16.2 15.4 16.1 Overall budget deficit to GDP (after grants) -4.9 0.0 -4.5 -6.4 -6.5 Domestic borrowing to GDP 1.2 -1.5 1.0 1.8 1.0 Source: Tanzanian Authorities, World Bank, and IMF staff estimates. * Estimates 10. The drivers of growth over the past decade have been mining, construction, communications, and the financial sector. Manufacturing, transport, and tourism have also posted solid growth rates. The service sector constitutes 47 percent of total value-added in the economy, compared to 36 percent in 1990. This stands in contrast to the agricultural sector, which has seen its share in the economy decline from 48 percent in 1990 to 28 percent in 2010. 11. Exports of goods and services have expanded in real terms, grown as a share of GDP, and diversified out of traditional agriculture. The share of goods and services exports of GDP has grown from 13.4 percent in 2000 to 23.2 in 2009, and is projected to reach 26.2 percent in 2010. In 1998, minerals and non-factor services, mainly tourism, accounted for 47 percent of exports, while they rose to 66 percent by 2010. At the same time, the share of traditional agricultural exports declined from 60 percent of total exports in 1998 to 12 percent in 2009, replaced mostly by tourism and minerals such as gold. Manufacturing exports have grown by about 17 percent annually since 2005, but account for less than 5 percent of GDP and 25 percent of total merchandise trade. 12. About 80 percent of Tanzanian households depend on agriculture as their primary economic activity. Agricultural GDP grew at around 4 percent per year since 2000, or only around 1 percent in per capita terms, with acute droughts in 2004 and 2006. Yields of staple crops, which are the livelihood of small farmers, appear to have been flat or declining, with agricultural growth primarily driven by extension of cultivated areas, along with modest shifts in the composition of crop production. 13. Despite the recent growth, the volume of private sector investment remains small. Private investment stalled at 10-12 percent of GDP in the early 2000s, and between 14-18 percent over the last five years. The expansion of banking services, stimulated by privatization of public banks from 1994 to 1998, stimulated growth of credit to the private sector, which has increased from 11.3 percent of GDP in June 2006 to 17.9 percent in June 2010. The size of 3 private investment remains small by international standard. For example, Malaysia and Thailand had levels of private investment averaging between 25 and 30 percent of GDP before the Asian economic crisis. 14. Tanzania has a large informal sector. Household enterprises provide a significant source of urban income earning opportunities, and employ a larger share of the urban labor force (40 percent in 2006) than wage employment. They are increasingly seen as an alternative to agriculture as a source of cash income. Policies, however, tend to focus on the creation of larger, formal enterprises. Both types of enterprises are critical for poverty reduction, but the micro and household enterprises can absorb a larger share of the workforce, and face different constraints and opportunities than the large firms. Poverty, Human Development, and Demography 15. Surveys suggest that poverty has not declined to the extent expected, although data are ambiguous.4 According to the 2007 Household Budget Survey (HBS), the incidence of monetary poverty has declined only marginally on the mainland from 35.7 percent in 2001 to 33.6 percent in 2007. In Zanzibar, it declined from 49 percent in 2004/05 to 40 percent in 2009. However, using the international poverty line (purchasing power parity US$1.25/day), an estimated 68 percent of the population was in poverty in 2007, down from 89 percent in 2001. Labor force surveys found that urban areas realized important gains in access to non-farm employment over the same period, and earnings increased substantially. Survey data also show real gains in wealth among all quintiles between 2000 and 2007 (as measured by increased consumer durables and better housing). As a result, Tanzania ranks higher on the multi- dimensional poverty index (non-monetary poverty) than it ranks on the international poverty index. 16. Rural poverty remains pervasive and deep. All data sources suggest that Tanzania has not made adequate progress in raising incomes in rural areas, where the majority of the poor live. Lack of access to technology, credit, water, and power resulted in stagnant productivity and high vulnerability to shocks, leaving many rural households in the same or weaker position as at the beginning of the decade. 17. Tanzania’s rank in the UNDP Human Development Index has improved since 1995. It is now 148 of 169 countries in the 2010 HD Index. Tanzania is expected to reach three of seven of the Millennium Development Goals (MDGs) by 2015 (box 1). Tanzania is on track for meeting the MDGs related to combating HIV/AIDS and reducing infant and under-five mortality. It is lagging in primary school completion, maternal health, poverty eradication, malnutrition, and environmental sustainability. 4 While Tanzania has made gains in the frequency of household surveys, quality of data obtained and consistency between surveys and methods remain a problem. Therefore, all measures of household income and poverty from the last decade need to be understood as estimates with wide margins of error. The government is committed to improving the quality of data used to track economic and social outcomes, and has developed a new National Strategy for Statistical Development. The Bank will provide support through the Development of a National Statistical System for Tanzania Project (under the Statistical Capacity Building APL), approved in March 2011. 4 Box 1: Tanzania and the Millennium Development Goals in 2015 Goal 1: Eradicate extreme poverty and hunger Unlikely. Despite high GDP growth over the past few years, the incidence of income poverty has declined only marginally from 35.7 percent in 2001 to 33.6 percent in 2007. Considering a target of 19.5 percent in 2015, the poverty MDG is unlikely to be met. The proportion of under-weight children under five has declined from 28.8 percent in 1990 to 20.7 percent in 2010 but is off track to meet the target of 14.4 percent in 2015. Malnutrition is responsible for more than 130 child deaths daily, making it the greatest contributor to under-five deaths. Goal 2: Achieve universal primary education Unlikely. The second phase of the Primary Education Development Program (2007-2011) provides free preprimary and primary education. The net enrollment rate for primary school is 95.4 percent, and the gross enrollment rate is 106.4 percent. However, primary completion rates are low with 49.4 percent passing the Primary School Leavers Examination. Goal 3: Promote gender equality and empower women Likely. Gender parity in primary (1.01) and secondary (1.05) enrollment has been achieved, and the ratio of girls to boys in tertiary (0.68) indicates progress. In the October 2010 elections 20 women were directly elected as members of parliament (out of 232 directly elected members), up from 17 in 2005. Goal 4: Reduce child mortality Likely. Under-five and infant mortality rates have declined substantially over the past five years, and the targets are likely to be met. Under-five mortality rate declined from 191 deaths per 1,000 live births in 1990 to 81 deaths in 2010 (compared to MDG target of 64), and the infant mortality rate declined from 115 to 51 deaths per 1,000 live births during the same period (compared to MDG target of 38). Goal 5: Improve maternal health Unlikely. The maternal mortality rate increased between 1996 (529 deaths per 100,000 live births) and 2005 (578 deaths). The rate has declined to 454 deaths in 2010 but remains much higher than the target of 133 by 2015. On average, only 51 percent of births take place at health facilities. Goal 6: Combat HIV/AIDS, malaria, and other diseases Likely. Tanzania has reduced the HIV/AIDS prevalence rate from 9.4 percent in 2000 to 5.7 percent in 2009, and is on track to meet the MDG. In 2007, there were only 27 reported cases of malaria per 1,000 people. Tanzania could achieve the malaria MDG target (18 cases per 1,000 people), particularly if anti-malarial interventions continue. Goal 7: Ensure environmental sustainability Unlikely. Tanzania has made progress in increasing access to safe drinking water. While access to clean water in urban areas has already met the MDG target (84 percent), access in rural areas is 57.1 percent against a target of 74 percent. Access to improved sanitation is 88.9 percent in rural areas and 98.5 percent in urban areas. However, on natural resource management, progress has been challenging. Forest cover, for example, has declined from 46 percent in 2005 to 36 percent in 2010. Source of data and estimated likelihood: UNDP Tanzania. Source of data for Goal 2: MKUKUTA Annual Implementation Report 2009/2010; World Bank 18. The uneven progress toward the MDGs is evidence of the country’s mixed record in service delivery, despite some improvements brought about by decentralization (box 2). The country has done well in reducing infant and under-five mortality, but less so in child malnutrition. Maternal mortality has been persistently high at unacceptable levels, despite the modest increase in the number of births taking place in health facilities (41 to 52 percent over 2005-09). The prevalence of HIV/AIDS declined from 7 percent in 2003 to 5.7 percent in 2007. Challenges remain in further improving service delivery and health systems management, and expanding protection for catastrophic care for the poor, unemployed, and informal sector 5 workers. Human resources for health, in number, skills and geographical distribution, are the most important supply-side constraint. Other remaining challenges include the supply chain for drugs and medical supplies, and the flow of funds, especially to the lower levels of care. Box 2: Decentralization through Devolution Local Government Authorities (LGAs) have had a role in the delivery of primary services since 1999. Most of the services hitherto delivered by central ministries, including education (primary and secondary) and primary health care, have been shifted to LGAs. The increased responsibilities have required increased resource allocations. The share of total government budget allocated to LGAs rose from 17 percent in FY 2005/06 to 24 percent in FY 2009/10. The government successfully established and mainstreamed the Local Government Development Grant (LGDG) system, supported by the World Bank and other development partners (DPs). The LGDG system provides Council Development Grants and Capacity Building Grants on a formula basis to LGAs that meet good governance- related minimum conditions and performance measures. From 2006/07, the Agricultural Sector Development Program, the Rural Water Supply and Sanitation Program, and the Health Sector Development Grant have been integrated into the LGDG system as windows. From 2008/09 the Education Sector Development Grant was integrated into the Council Development Grant system. Decentralization has had a positive impact on governance and service delivery outcomes. Results from two citizens’ surveys conducted in 2003 and 2006 show evidence of increased electoral and civic participation, access to information, and trust in government. Corruption is still perceived as a problem. As for service delivery, in 2006, 78 percent of respondents agreed that local government reforms are helping to improve service delivery (up from 58 percent in 2003); 75 percent of respondents thought that service delivery had improved in the last two years (compared to 54 percent in 2003); and urban dwellers were more likely to note improvements than rural dwellers. Wage bill expenditure patterns continue to disadvantage local governments. Vacancy rates are higher in rural areas and discretionary elements of wage bill expenditure (allowances and indemnities) accrue almost exclusively to central government, exacerbating the gap in coverage and quality of service delivery staff. Increased transfers to LGAs have highlighted systemic weaknesses in public financial management systems such as multiple planning processes, multiple reporting requirements, lack of harmonization of stand-alone IT solutions, inadequate co-ordination with central government ministries, lack of comprehensive monitoring of fund flows, dormant bank accounts, and insufficient management of carry forward balances. All these increase the fiduciary risk that public funds are subjected to at the local government level. Central to public financial management (PFM) improvement is the need to put in place a well functioning incentive structure. Fiscal transfers do not cover demand for infrastructure, especially in urban areas. Although most of the domestic revenues are collected in urban areas, more than 80 percent of transfers go to rural areas. In per capita terms, transfers to rural LGAs are 21 percent higher than transfers to urban LGAs. An effective funding mechanism is being developed to enable cities and towns in Tanzania to deliver services to a rapidly increasing number of citizens and to fulfill their role of driving economic growth. World Bank support to decentralization. Ongoing and proposed urban and local government interventions aim to strengthen the capacity of rural and urban local governments to provide services, establish sustainable mechanisms for urban local government to finance infrastructure, establish mechanisms for delivering services at the metropolitan level, and improve local government public financial management. 19. Tanzania’s population dynamics pose a challenge to socioeconomic development. First, population has doubled since 1985 and grows today at an annual rate of 2.8 percent. While infant and mortality rates have fallen significantly, the total fertility rate remains high and has been declining very slowly (from 5.8 births per woman in 1996 to 5.4 in 2010). Second, the population is very young – the median age is about 17 – so that the working age population exceeds that of young dependents by only 15 percent. The high dependency ratio makes it costly to achieve sufficient per child investments in health and education and also lowers the country's savings rate. Third, rapid urbanization stresses municipal institutions in such services as water 6 and sanitation,5 security, mass transport and solid waste management. Simulations of the impact of population growth on per capita income show that if fertility remains constant, income per capita growth will significantly slow down during the next 40 years, while low and medium fertility scenarios result in higher incomes per capita and a larger overall economy.6 The Outlook for Shared Growth 20. The quick economic rebound from the global crisis will be softened in 2011 due to adverse weather conditions and will be exposed to external shocks from oil and food prices. A shortfall in rainfall beginning in late 2010 caused power shortages that are affecting growth, which is projected at 6 percent in 2011, down from 7 percent in 2010. (Economic projections for 2011-2015 are shown in table 2.) Inflation is likely to reach 7.5 percent in the second half of 2011 due to the rise of oil and food prices. While it is projected to slow to 5 percent, inflation will remain dependent on external shocks to oil prices and agriculture production. Monetary and fiscal policy will have an important role in anchoring inflation expectations. 21. The medium-term outlook is positive but with significant uncertainties. Growth is expected to rise to 7.5 percent or even higher in the medium term owing, in particular, to investments in mining (especially gold). The positive medium-term outlook depends on timely investments to tackle infrastructure bottlenecks and structural reforms, especially to improve the business climate. In addition, as Tanzania becomes increasingly integrated into the global economy through trade and investment, it becomes more sensitive to exogenous shocks from global downturns or variable food and fuel prices, which will compound the challenge of sustaining high economic growth rates. Table 2: Macroeconomic Projections (Percent) Indicator 2011 2012 2013 2014 2015 Output and prices Real GDP growth 6.0 7.2 7.5 7.5 7.8 GDP Inflation 7.3 5.7 4.8 4.9 4.8 Balance of payments Export of goods to GDP 15.0 20.4 20.5 20.8 21.1 Import of goods to GDP 27.4 34.4 34.0 33.4 33.1 Current account to GDP (after grants) -9.3 -10.7 -10.1 -9.1 -8.3 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 Fiscal developments Domestic revenue to GDP 16.3 16.5 16.7 16.9 17.0 Expenditure to GDP 28.6 27.6 26.2 25.2 25.3 Overall budget balance to GDP (after -6.0 -5.2 -4.1 -3.7 -3.2 grants) Domestic borrowing 1.0 1.0 1.0 1.0 1.0 Source: Staff projections using macroeconomic model for Tanzania (Macmod) and IMF data. 5 Responsibility for sanitation under the Water Sector Development Program has recently been given to Ministry of Health and Social Welfare, which should improve integration of sanitation issues into national health policy. 6 World Bank: Demography and Economic Growth in Tanzania. 2011. 7 22. Tanzania must expand public investment in infrastructure with prudent public finance policies. Tanzania faces fiscal challenges over the medium term as the government intends to scale up public investment. One of the thrusts of the new poverty reduction strategy (MKUKUTA II and MKUZA II), which covers FY 2011-2015, is to support growth through increased infrastructure spending, especially in transportation, power generation, and irrigation. Financing is expected to come from domestic and external borrowing. While concessional borrowing and grants will remain the main source of financing for development spending, the authorities are exploring sources for semi-concessional and non-concessional external borrowing, as well as domestic borrowing. With rapid population growth, demand for public services is expanding quickly in both the social and infrastructure areas. Tax collection in recent years has not kept pace with spending needs, and recurrent spending is consuming an increasing portion of non-earmarked budgetary resources (domestic revenues and external budget support). General budget support is unlikely to grow at the same rapid rate as in recent years, making it important to increase domestic revenue mobilization, improve spending efficiency, and attract foreign direct investment. 23. Tanzania must improve its business climate for sustained growth and job creation. The current small market share of new, labor-absorbing export-oriented industries, together with inadequate human capital development, creates a medium-term risk of high youth unemployment. Growth in GDP and employment has so far largely come from domestic oriented industries in Tanzania. Tanzania is set to produce 2.8 million secondary school graduates between 2010 and 2015. A large supply of secondary graduates where the quality of their educational attainments is increasingly a concern, coupled with urban employment growth that is limited to domestic-oriented industries, creates the risk of up to 1.5 million youth unemployed in Tanzania by 2015. 24. Regional integration will produce opportunities for building an export base that creates jobs. Within the East African Community (EAC), Tanzania is now a net exporter of intermediate goods and is potentially a net exporter of consumer goods. While Tanzania’s exports with other countries in the EAC is but 10 percent of its total exports, its EAC export share is much higher (36 percent) for exports of consumer goods. Tanzania’s overall export profile still shows its dependence on raw materials, which constitute 40 percent of total exports to the rest of the world. Tanzania also aims to establish itself as a regional trade and logistics hub, harnessing the comparative advantage of its geographical position. The government, however, has not sufficiently invested in necessary infrastructure, as shown by the condition of energy, railways, and port services. Debt Sustainability 25. Tanzania’s current risk of debt distress remains low, reflecting debt relief and sound macroeconomic policies. In the coming years, the government anticipates borrowing from domestic and external sources, including on non-concessional terms, to finance higher infrastructure spending. The additional borrowing will increase the present value of debt-to-GDP ratio but should not jeopardize long-term debt sustainability. Alternative downside scenarios illustrate, however, that debt indicators would be sensitive to significantly lower long-term growth, higher budget deficits, or low productivity of public investment. This highlights the 8 importance of a sound debt management strategy and rigorous evaluation of the quality and feasibility of infrastructure projects to ensure healthy rates of return on investment. C. Key Development Challenges and Opportunities 26. Maintaining Tanzania’s recent growth and transforming it into longer and better lives for its people requires harnessing the opportunities for growth, solving the key distribution problems, and reducing vulnerability and building resilience. 27. Infrastructure is a binding constraint to growth and private sector development. The private sector ranks poor infrastructure, especially insufficient power supply, as the main constraint to growth. Insufficient and unreliable infrastructure services increase input costs, raising transaction costs, and lowering productivity. Expensive transport, especially rural roads, blocks market access and the value-addition of agricultural products that are needed to increase income of smallholders. Unlocking Tanzania’s growth potential depends on well designed and implemented public investment programs for energy, transport, and water; and better management of public-private partnerships (PPP). 28. Reforms in the business environment have been too slow to improve competitive. Progress in the business environment and other core reforms (i.e., public sector reform, public financial management reform, legal sector reforms, and anti-corruption) has been limited and uneven. Both small entrepreneurs and large investors face many hurdles, including policy inconsistencies and long and cumbersome bureaucratic processes. Land management, in particular the uncertainty in land tenure, continues to constrain formal ownership and access to credit. The development of the Roadmap for Improvement of Tanzania’s Investment Climate is a step in the right direction. However, making it operational and immediately implementing some quick wins is critical to avoid further falling behind competing countries. 29. Agricultural productivity needs to be increased to raise the poor above the poverty line and improve the competitiveness of commercial agro-processing. Despite its critical role for the majority of Tanzanians, the agriculture sector has not been performing to its potential. Problems include low adoption of improved technologies, high transport costs, and the lack of adequate market competition. A number of policy interventions, although some have been designed for other genuine reasons, still continue to constrain the growth of the sector. High rates of taxation and non-tariff trade barriers also undermine commercial growth in some subsectors. Recent commitments under Kilimo Kwanza (Agriculture First) offer the promise of greater coordination of public and private commitment to make Tanzanian agriculture more competitive. The government is investing a growing share of its budget in agriculture and is encouraging broader commitments to agribusiness development. These commitments have been confirmed in the Comprehensive Africa Agriculture Development Program (CAADP) for Tanzania, which is linked both to the Agriculture and Food Security Investment Plan and to the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). 30. Improving service delivery is necessary to build up a healthy and skilled workforce. Improving Tanzania’s competiveness depends on improving access to and quality of health and education services: 9 (i) The main problem in the education sector is poor outcomes at primary and secondary levels. Increases in enrollment combined with supply-side constraints— failing infrastructure, inequitable staff allocation systems, and a shortage of skilled teachers and educational materials—have caused declines in quality. Also, resource allocation within the education sector is not linked to the sector’s strategic objectives to improve quality and equity. In particular, higher education student loans that subsidize the upper two income quintiles are consuming an increasing share of spending. (ii) The main problem of health policy is low longevity caused by poor and inequitable services. Tanzania has about 10 health workers per 10,000 people, but their distribution by region ranges from 4.27 and 4.57 in Singida and Tanga respectively to 16.19 and 16.35 in Mwanza and Dar es Salaam - an almost four-fold difference between the lowest and the highest region. According to a recent study on service delivery, 53 percent of medical personnel surveyed in rural areas diagnosed five common diseases correctly, compared to 68 percent in urban areas. Moreover, just 31 percent of the rural clinicians followed recognized protocols in reaching their diagnosis, compared to 44 percent in urban areas. Domestic resources to health have been variable or even declining, and the sector depends greatly on foreign aid. Tanzania needs a long-term health financing strategy that integrates all sources of funds into a sustainable financing system, recognizing that poor people cannot pay for health care. IDA has recently completed a Health Financing Policy Note.7 31. Urbanization, if properly managed, can stimulate economic growth. The urban population has grown from 5.7 percent in 1967 to an estimated 26.4 percent in 2010.8 Concentration of economic activity is desirable for economic growth, but the government needs to decentralize budget preparation, execution, and accountability to local governments if urban development is to achieve its full potential for growth. Policy can also do more to enhance the productivity of household enterprises that are already important sources of urban employment.9 At the same time, other targeted interventions - notably investments in agriculture, transport, and productive safety nets - will be required to reduce the spatial disparities in income and ensure inclusive growth. 32. Slower population growth is needed to reap a demographic dividend. To reduce population growth, the country must improve its policies to further reduce child and infant mortality and fertility (through an expansion of health interventions and family planning coverage, respectively), and increase access to and quality of education, especially for girls. 33. The government needs to continue to fight corruption and strengthen transparency and accountability across sectors and at all levels. The government has made good progress in implementing the Extractive Industries Transparency Initiative, which will be increasingly important in the context of natural gas development (see box 6). Strengthening public financial management (PFM) and public procurement is essential for high quality infrastructure 7 World Bank: Health Financing Policy Note. 2011. 8 The urbanization rate is even higher (33.5 percent) using the population density criterion, which defines urban as areas having a population density greater than 150 persons/square kilometer. 9 Kweka, Josaphat and Louise Fox: The Household Enterprise Sector in Tanzania: Why it Matters and Who Cares? 2011. 10 investments, more effective service delivery, and attracting private investment. Another challenge is to address so-called “quiet corruption,” such as teacher and health worker absenteeism, which is less visible than big-time corruption but occurs across a much wider set of transactions directly affecting a large number of beneficiaries. D. Tanzania’s Poverty Reduction Strategy 34. Tanzania’s first National Strategy for Growth and Reduction of Poverty was implemented between 2005/06 and 2009/10. It is better known by its Kiswahili acronym MKUKUTA (Mkakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania). 35. In November 2010, the Government of Tanzania finalized a new five year (2010/11- 2014/15) National Strategy, MKUKUTA II.10 Concurrently, the Revolutionary Government of Zanzibar finalized the Zanzibar Strategy for Growth and Reduction of Poverty (Kiswahili acronym MKUZA II), covering the same period. MKUKUTA II and MKUZA II are based on Tanzania’s Development Vision 2025, which aims to transform Tanzania into a middle-income country. Though MKUKUTA II and MKUZA II build on their predecessor strategies, they are more strongly oriented toward growth and the enhancement of productivity. The strategies scale up the role and participation of the private sector in economic growth and employment generation, and emphasize investment in people and infrastructure development. 36. MKUKUTA II and MKUZA II are organized into three clusters. Cluster I of both strategies is Growth and Reduction of Income Poverty; broad outcomes include: (i) sustained inclusive and accelerated growth; (ii) enhanced employment opportunities for all, including women and youth; and (iii) good economic governance and enhanced quality of social services. Cluster II of MKUKUTA II is Improvement of Quality of Life and Social Wellbeing or Social Well-Being and Equitable Access to Social Services in MKUZA II; broad outcomes include: (i) improved quality of life and social wellbeing for enhancing capabilities, with particular focus on the poorest, people with disabilities, and other vulnerable groups; and (ii) reduced inequities in accessing social and economic opportunities. Cluster III of MKUKUTA II is Good Governance and Accountability, while MKUZA II focuses on Good Governance and National Unity; broad outcomes include: (i) democracy, good governance, human rights, and the rule of law; (ii) consolidated and sustained peace, political stability, social cohesion, and national unity; (iii) accountable, responsive, effective, and efficient leadership in public services; and (iv) equity in accessing public resources and services. 37. The IDA-IMF Joint Staff Advisory Note (JSAN) considers the macroeconomic framework and the sector-specific plans to be generally compatible with the government’s vision of structural transformation of the economy. The JSAN notes that exogenous shocks and governance challenges could affect implementation adversely. The JSAN recommends measures to strengthen MKUKUTA II and enhance its implementation: better prioritization; stronger emphasis on enhancing agricultural productivity and empowering the private sector; actions to make growth more inclusive; intermediate targets reflecting different scenarios in the 10 The Planning Commission under the President’s Office is developing the first 5-year plan. It is based on MKUKUTA II and has four pillars: (i) sustaining macro-economic stability; (ii) harnessing Tanzania’s natural resources; (iii) establishing Tanzania as a trade and logistic hub in the region; and (iv) utilizing ICT as a tool to increase productivity, which will require investments in science education and capacity development. 11 monitoring and evaluation framework; and clearer linkages between operation targets, priority areas, cluster strategies, and intervention packages. MKUKUTA II/MKUZA II Cluster I: Growth and Reduction of Income Poverty 38. MKUKUTA II and MKUZA II cluster strategies emphasize economic growth with a target of 8-10 percent annually as envisaged in the Tanzania Development Vision 2025. In order to create appropriate incentives for investment and job creation, Cluster I of the strategies calls for macroeconomic stability. The strategies identify agriculture, manufacturing, tourism, mining, and infrastructure as growth sectors. 39. Agriculture is identified as a priority contributor to economic growth, poverty alleviation, and food security. This growth is to be achieved through a diverse approach founded on the government’s Agricultural Sector Development Program and the Kilimo Kwanza (Agriculture First) initiative. This focuses on modernization and commercialization of private sector-based agricultural activities. Emphasis is placed on speeding productivity growth and resolving bottlenecks along the value chains of strategic agricultural products. Priority drivers for agricultural growth include improved irrigation and rainwater harvesting, strengthened agro- processing, promoting science and technology, strengthening financial and extension services, and better markets. 40. Both strategies note that the private sector is constrained mainly by poor infrastructure and an inadequate business environment. They call for improving the business climate by: implementing a road map for easing doing business; establishing industrial parks; improving physical infrastructure, such as energy, water, road and railway transport, ports and harbors, and marketing infrastructure; promoting technological innovations; linking farmers with manufacturers; and formalizing the informal sector. 41. Infrastructure is identified as a cross-sectoral driver of growth. The strategies place priority on primary infrastructure in rural areas, trunk and regional roads, constructing and upgrading existing railway lines, transit traffic facilitation (port and maritime), and urban transport. Reliable supply of electricity is identified as a central element of a productive business climate, as well as an important factor for enhancing efficiency in agriculture. 42. Other goals within Cluster I include employment-creation, ensuring food and nutrition security, environmental sustainability, climate change adaptation and mitigation, as well as leveraging returns on natural resources. Priority areas of intervention include an improvement of the labor market information system, promoting affirmative action, investment in human capital, promoting nutrition, providing adaptation and mitigation options, enhancing community-based natural resource management arrangements, strengthening weather projections, and early warning systems. MKUKUTA II/MKUZA II Cluster II: Improvement of Quality of Life (Equitable Access to Social Services) and Social Well-Being 43. MKUKUTA II and MKUZA II Cluster II focuses on improving the quality of social services to reach the poor and other vulnerable groups. While some progress has been made 12 in recent years, some of Tanzania’s health outcomes remain poor, particularly in maternal and child health. The health service delivery system remains inadequate, and the human resources for health are insufficient, in number, skill, and geographical distribution. Priority areas are human resources for health, maternal health, and improvement in health facilities and service delivery. In addition, the strategies recognize the additional strain placed on the sector by high population growth and prioritizes access to reproductive education and family planning. 44. Gross enrollment rates have grown during MKUKUTA I and MKUZA I. Completion rates, however, have not increased and the quality of education is too low. To address quality, the strategies focus on improvements in physical infrastructure, teaching and learning materials, human resources, and school governance. The strategies also identify increased access to secondary education, especially for girls, to be one of the most effective measures to address issues of population dynamics, including reduction in the fertility rate. 45. Skills development is identified as a priority; gaps in the low-to-medium level technical cadre in all sectors are identified as the primary focus for improvement. Tailor-made programs aim to generate the required number of workers with appropriate skills for the growth drivers in agriculture, manufacturing, tourism, mining, services, and trade logistics, through technical and vocational education and training, higher education, and adult and non-formal education. 46. Cluster II also identifies targets in access to water and sanitation, particularly the construction of additional low-cost appropriate water sources. Settlement development is addressed in the context of environmental conservation. Plans, surveys and issuance of land titles are a priority area, as well as the regularization of unplanned settlements and enforcement of urban land use plans. The strategic plan for the implementation of land laws aims to ensure gender-balanced access to land. To provide adequate social protection to vulnerable groups, MKUKUTA II proposes to mainstream social protection measures in the plans of state and non- state actors, as well as the introduction of exemption and waiver schemes for vulnerable people to access social protection packages. MKUKUTA II/MKUZA II Cluster III: Governance and Accountability (National Unity) 47. MKUKUTA II and MKUZA II recognize good governance as fundamental for economic growth and poverty reduction. In past years, institutional ineffectiveness has led to low absorption of public funds and poor delivery of services. 48. MKUKUTA II and MKUZA II identify core reforms to strengthen institutional performance and address governance challenges. Those include fighting petty and grand corruption, strengthening public finance management and value for money in use of resources, ensuring a credible legal sector, responsive and performance-based public service administration, capable local government, and enhancing the institutional and human resource capacity of each pillar of the state for the proper execution of its functions. 49. Efforts will be made to create policy and legal frameworks in a more cohesive, cross-cutting, coordinated, and effective manner. A mechanism for implementation, coordination, and monitoring for results will be put in place under the National Framework on Governance and Accountability. Other goals under Cluster III include the improvement of public 13 service delivery, with a special emphasis on the poor and vulnerable; the promotion and protection of human rights, ensuring national and personal security, safety of properties, and others. E. Development Partner Support 50. Tanzania is highly aid dependent. Nominal official development assistance (ODA) to Tanzania increased from US$1.6 billion in 2000 to US$3 billion in 2009, accounting for about 9.2 percent of GDP and 34 percent of actual government expenditures. 51. More than 40 development partners support Tanzania, with five accounting for about 53 percent of ODA disbursements from 2005-2009. IDA is the largest accounting for about 20 percent of the US$12.3 billion disbursed ODA from 2005 to 2009, followed by the United Kingdom with 10 percent, Japan at 9 percent, and the European Union (EU) institutions and the United States (US) at 8 percent. Tanzania is a leader in efforts to improve the aid effectiveness based on ownership, alignment, and harmonization. The large number of donors active in Tanzania results in high transaction costs, thereby reducing aid effectiveness. 14 II. IMPLEMENTATION OF THE TANZANIA COUNTRY ASSISTANCE STRATEGY AND LESSONS LEARNED 52. World Bank Executive Directors discussed the Tanzania Country Assistance Strategy, called the Joint Assistance Strategy of Tanzania (JAST) in April 2007 (Report number 38625- TZ). The JAST, prepared with 22 DPs, comprised four parts: a national medium-term framework of development cooperation, a joint country analysis, a joint program document, and the World Bank Group’s Country Assistance Strategy (CAS). 53. The 2007 CAS adopted the three clusters of Tanzania’s National Strategy for Growth and Reduction of Poverty. These were: Cluster I – Economic growth and reduction of income poverty; Cluster II – Improvement in the quality of life and social well-being; and Cluster III – Governance and accountability. Within these three clusters, the CAS identified 32 outcomes and 52 outcome indicators. The Country Assistance Strategy Progress Report (CASPR, Report number 52922-TZ) extended the original CAS period by one year to include FY11 and updated and streamlined the results matrix, reducing the number of outcomes to 12 and the number of outcome indicators to 22. 54. The CAS Completion Report rates program and Bank performance under the CAS as moderately satisfactory. Of the 12 CAS outcomes, three were achieved, eight were partially achieved, and one was not achieved (see table 3). Achievements include better roads, improved access to and quality of electricity, better health indicators for infant and under-five mortality, and progress towards reducing HIV prevalence. There was some progress toward improved tax collection efficiency, increased agricultural productivity, improved natural resource management, and improved access to water and sanitation, but challenges remain in these areas. Access to post-primary education improved, but quality suffered. See annex 13 for the full CAS Completion Report. 55. The CAS was designed to provide support within a highly favorable reform environment; but reforms were slower than anticipated. The 2007 CAS envisioned that Bank support would be mainly through large, multisectoral Poverty Reduction Strategy Credits (PRSCs); it anticipated that budget support would average 50 percent of total IDA lending, increasing from 30 percent of annual IDA lending in FY07 to 72 percent in FY10. However, reform momentum appeared to stall, and some key reforms even reversed. As a result, many CAS outcomes were only partially achieved, and the government fell short in some key areas, such as reducing poverty and improving the business environment. 56. A client survey, carried out in late 2010, reported generally positive views of the Bank’s work in Tanzania. Most survey participants believed that the Bank plays an important role and that its work is aligned with country priorities. Most participants held positive views of budget support but especially valued investment lending. About half of participants cited “imposing conditions” and “taking a boilerplate approach to country challenges” as the Bank’s main weaknesses. See annex 9 for a detailed discussion of survey results. IDA, Trust Funds, and Analytical and Advisory Activities 57. World Bank Executive Directors approved over US$3 billion in IDA for 34 operations during the CAS period (FY07-FY11), which included US$110 million from the 15 Crisis Response Window, committed in FY10 and FY11. In terms of net commitments, the Tanzania portfolio is the third largest among IDA-recipients in the Africa Region. As of April 2011, there are 25 IDA-financed operations with a net commitment of US$2.7 billion. There are seven active regional projects with Tanzanian commitments of US$204 million. 58. IDA-financed project sizes have increased with higher commitments. The number of operations has remained relatively constant over the past decade, ranging from 22 to 26 (excluding regional projects), with the exception of FY01 when only 18 operations were in the active portfolio. The average project size doubled from US$51 million in FY01 to US$113 million in FY11. 59. The sector distribution of IDA has moved toward infrastructure. About 56 percent of commitments are allocated to energy, mining, transport, water, environment, and urban development. About 24 percent are allocated to education and social development; 6 percent to finance and private sector development; and 3 percent to economic and public sector management.11 (Annex 5 provides a summary of the operations portfolio.) 60. Governance concerns and inadequate performance against agreed actions led to a reduction in planned budget support under the 2007 CAS. PRSCs during the period amounted to US$810 million, 28 percent of total lending, less than the amount planned in the CAS of US$1.14 billion, which was 50 percent of projected IDA lending under the CAS.12 Table 3 : Summary of CAS Outcomes and Results CAS Outcome Result Cluster 1: Growth and Reduction of Income Poverty 1.1 Increased revenue collection efficiency Partially achieved 1.2 Improved doing business environment Not achieved 1.3 Increased agricultural productivity Partially achieved 1.4 Improved access to and quality of roads Achieved 1.5 Improved management of natural resources Partially achieved 1.6 Improved quality and access of electricity services Achieved Cluster 2: Improvement of Quality of Life and Social Wellbeing 2.1. Increased access to quality post-primary education Partially achieved 2.2. Improved provision and quality of health services Achieved 2.3. Reduced HIV prevalence between 15-24 years Partially achieved 2.4. Improved access to water and sanitation in rural/urban areas Partially achieved Cluster 3: Governance and Accountability 3.1 Improved basic services and safety net through community participation Partially achieved 3.2 Improved management, transparency, and accountability of public resource management Partially achieved Source: CASCR, annex 13 11 Tanzania is currently between PRSC operations. When there is a PRSC in the active portfolio, the allocation to economic and public sector management increases. 12 The four PRSCs were: PRSC-5 in FY07, PRSC-6 and PRSC-7 in FY10, and PRSC-8 in FY11. PRSC-7 received supplemental financing in FY09 to respond to the financial crisis. 16 61. The Bank’s program favors sectorwide approaches (SWAPs). Nine IDA-financed operations channel money through ten basket funds, which pool resources from various DPs to support a common government investment program. 62. Project portfolio performance remains satisfactory. The FY10 disbursement rate was 34.8 percent and as of April 2011 it was 21.3 percent, versus the Africa region average of 14.1 percent. There are four problem projects resulting in commitments at risk of 17 percent, lower than the Africa Region average of 26 percent.13 IEG project ratings of projects exiting the portfolio have been lower than implementation completion report ratings (see annex 13). 63. During the CAS, Tanzania benefitted from 48 trust funds (annex 7) providing over US$ 99 million in grants. Most were linked to lending operations. They focused on environment (GEF), energy (GEF), rural transformation (SIDA), community-based conditional cash transfers (JSDF), and monitoring and evaluation (IDF). Much of trust fund support was also linked to general budget support through the PRSC series. 64. Analytical and advisory activities (AAA) underpinned sector strategies, investment operations, and the reform dialogue. Analytical work included a series focusing on the constraints to economic growth and how growth can contribute to poverty reduction. A number of short policy notes were produced to provide clear and concise policy recommendations, for instance in the education, cashew, charcoal, and coffee sectors. Cross-sectoral issues were addressed through the national poverty assessments and the annual public expenditure reviews. Analytical work also contributed to addressing recent corruption scandals by strengthening the Controller Auditor General’s office and facilitating policy dialogue in connection with triggers for the PRSC series. 65. A 2009 Country Portfolio Performance Review (CPPR) identified actions to improve portfolio performance and reduce transaction costs. Undertaken jointly with the African Development Bank, it recommended actions to reduce procurement and disbursement delays; strengthen project implementation capacity; improve fiduciary staffing and training; reduce delays in fulfillment of loan/grant conditions, release of counterpart funds, and submission of audit reports; strengthen M&E; and improve project ownership through better integration of projects with broader government programs and increased use of country systems. The International Finance Corporation 66. IFC investment commitments over the CAS period (FY07-11) amounted to US$184.6 million for 13 projects. Investments were mainly in the financial sector, particularly access to finance for small and medium sized enterprises (SMEs), as well as the infrastructure sector, agribusiness, and tourism. IFC’s portfolio has increased from US$35 million in February 2007 to US$133 million in April 2011, as it has taken advantage of investment opportunities across sectors. In addition, by the end of FY11, IFC expects to commit another US$46 million to support a local bank to finance SMEs, private health, and education. IFC forged partnerships 13 Actual problem projects have project development objective or implementation progress ratings of moderately unsatisfactory or lower. Potential problem projects are those with both ratings of moderately satisfactory or higher, but with three or more risk flags. 17 with local banks to foster joint ventures aimed at supporting its operations with local currency financing. Those include a number of innovative projects in SME financing, Trade Finance Facility, support to women entrepreneurs, and loan and equity investment in a microfinance institution. IFC has also been exploring private sector participation in utilities and parastatals. Unfortunately, its largest loan (US$44 million) to Tanzania Railways Limited has been unsuccessful and the operator has been renationalized. IFC initiated five advisory projects during the period with total funds managed by IFC of US$2.9 million. (See annex 8 for additional details.) Lessons Learned 67. The CAS Completion Report identified the following key lessons that have been incorporated into the new CAS: (i) Ensure that CAS outcomes are realistic, measurable, and linked to Bank interventions. The JAST included an overambitious number of outcomes and indicators, typical of first-generation CAS. The CAS Progress Report appropriately reduced CAS outcomes to twelve. However, some of the outcomes of the CAS Progress Report remained inconsistent with the government’s pace of reform and implementation capacity or could not be supported by data, as shown by the mixed results in achieving them. (ii) Increase attention to monitoring and evaluation, which remains a challenge at all levels. The government’s weak statistical capacity made it difficult to track MKUKUTA progress and accurately measure poverty reduction. The Bank should do more to build government’s statistical capacity, given its importance for evidenced- based policy decisions. The Bank should also do better to ensure that IDA-financed operations have effective monitoring and evaluation systems. (iii) In a slow policy reform environment, narrow the size and scope of PRSCs and target IDA to high impact areas where there is clear government commitment. The CAS was designed to provide broad multisectoral support, including increasing budget support, in a favorable reform environment. However, the pace of government was not as fast as expected over the 2007 CAS period, providing an insufficient framework for large, broad-based PRSCs. (iv) Increase governance support at the service delivery level. The CAS focused on broad-based governance reform programs, which did not progress as rapidly as desired. Greater attention should be given to strengthening service delivery through local government and sector-specific support. In addition, the Bank’s program could more systematically support the demand for good governance, including through use of ICT. (v) Focus on on-the-ground mechanisms for aid effectiveness rather than on development of joint assistance strategies. Tanzania has a well developed structure on the ground to strengthen aid effectiveness, and SWAPs are widely used. However, the development of a joint assistance strategy (the 2007 CAS), while well intended, did not reduce transaction costs for the government or DPs. 18 III. COUNTRY ASSISTANCE STRATEGY IN TANZANIA 68. The FY12-15 CAS is aligned with MKUKUTA II and MKUZA II (FY11-15) and the World Bank’s Africa Strategy.14 The Africa Strategy notes that African countries continue to face long-term development challenges such as an undiversified production structure, infrastructure deficit, low human capital, weak governance, women’s empowerment, youth employment, and climate change. The Africa Strategy has two pillars: (i) competiveness and employment, addressing poor business environment (policies and access to finance), poor infrastructure, and the need for a healthy and skilled workforce; and (ii) vulnerability and resilience, addressing the high risk of idiosyncratic covariate shocks, such as natural disasters, through, for example, safety nets. Governance and public sector capacity is a foundation of the Africa Strategy. A. CAS Objectives and Outcomes 69. Challenges and strategic pillars identified in the Africa Strategy resonate in Tanzania, given its identified development challenges and opportunities: (i) infrastructure deficit as a binding constraint to private sector-led growth, (ii) slow reforms in the business environment, (iii) need to increase agricultural productivity, (iv) improving service delivery to build a healthy and skilled workforce, (v) using urbanization for economic growth, and (vi) reducing population growth. Adapting the Africa Strategy to the Tanzanian context, the CAS will focus on four objectives: (i) Promote Inclusive and Sustainable, Private Sector-led Growth (ii) Build Infrastructure and Deliver Services (iii) Strengthen Human Capital and Social Safety Net (iv) Promote Accountability and Governance CAS objectives (i) through (iii) fall under the Africa Strategy pillar “Competiveness and Employment” and objective (iii) also falls under the second pillar “Vulnerability and Resilience.” In line with the Africa Strategy, the CAS proposes objective (iv) as a foundational objective. 70. The CAS focuses on eleven outcomes. The relationship between CAS objectives and outcomes is shown in figure 1. B. Proposed CAS Approach 71. The CAS incorporates the lessons learned from the previous CAS. For example, in a slow policy reform environment, it is prudent to narrow the size and scope of PRSCs and target IDA to high impact areas where there is clear government commitment (see section II). To mitigate the risk of a weakening reform environment, the proposed CAS narrows the scope of PRSCs, focuses on areas with strong government commitment, and where results can be 14 World Bank: Africa’s Future and the World Bank’s Support to It. March 2011. 19 carefully monitored. This reflects a shift from the 2007 CAS, which was designed to provide broad multisectoral support through increasing amounts of development policy lending. CAS support will include: (i) Large infrastructure in sectors necessary for growth, and which can absorb large sums of IDA and/or leverage WBG resources to mobilize private and public money through guarantees and cofinancing; (ii) Operations that target poor and vulnerable households and communities with immediate impact on their livelihoods, e.g., for employment generation or safety nets, and/or on their income and asset vulnerabilities; and (iii) Operations that link financing to results to deliver tangible outcomes and achieve accountability, such as the new municipal portfolio proposed in this CAS. Figure 1: Tanzania CAS FY12-15: Objectives and Outcomes CAS Objective 1:  CAS Objective 2: Build  CAS  Objective 3:  Promote Inclusive and  Infrastructure and Deliver  Strengthen Human  Sustainable, Private  Services Capital and Safety Nets Sector‐led  Growth CAS Outcome 1.1:  CAS  Outcome 2.1:  CAS Outcome 3.1:  Improved  business  Increased access,  Improved access  to  environment and  quality, and  and quality of  financial  sustainability of  education intermediation electricity CAS Outcome 1.2:  CAS Outcome 2.2:  CAS Outcome 3.2:  Increased  Increased access to  Improved access to  productivity and  and quality of  and quality of health  commercialization of  transport services care delivery agriculture CAS Outcome 1.3:   CAS Outcome 2.3:  Increased access to  CAS Outcome 3.3:  Enhanced  and quality of water  Improved access to  sustainability and  and sanitation  safety nets improved  management of  services natural resources CAS Outcome 2.4:  Improved   management and  delivery of urban  services CAS Cross‐Cutting Objective 4:  •CAS Outcome 4.1:  Promote Accountability and  Improved accountability and  efficiency of public  Governance management 72. As opportunities arise, the WBG CAS in Tanzania can support: (i) Innovations to develop new resources (for example, gas development); to start reforms (for example, decentralized finance to rapidly growing towns), or to try novel solutions for old problems (for example, results-based financing in secondary education targeting vulnerable groups, such as young women, or regions with poor outcomes); 20 (ii) Focused policy-based lending where there is strong reform drive, with amounts linked to the fiscal costs of the reforms (for example, pension system); and (iii) AAA on long-term problems such as the proposed 2013 CEM on The Transition from Aid; the 2012 ESW on How can Education Outcomes be Improved?; and the 2014 ESW on The Economic and Fiscal Implications of Hydrocarbon Income - will lead to lending operations or recommend policy changes as functions of the problems and solutions identified. 73. Sectoral assistance strategies as well as use and size of budget support will be assessed on their own merit, based on the soundness of policy environment, government’s leadership and commitment, governance and fiduciary issues, and expected impact. Progress against outcome targets will be assessed after about two years. The strategy, lending mix, and the results framework (annex 1) will be adjusted as necessary in the CAS Progress Report (CASPR), tentatively scheduled for mid-2013. 74. CAS activities will include Zanzibar as appropriate and in consistency with the MKUTUA II and MKUZA II. Box 3 summarizes ongoing and planned support for Zanzibar. Box 3: World Bank Support to Zanzibar The Zanzibar Archipelago consists of the main islands of Unguja and Pemba and numerous smaller islands. Zanzibar is an autonomous part of the United Republic of Tanzania and has an estimated population of about 1.4 million people, about 2.5 percent of Tanzania's total population. Zanzibar elects its own president, who heads the Revolutionary Government of Zanzibar (RGoZ). The RGoZ has responsibility for matters internal to Zanzibar and for overseeing development in key sectors in Zanzibar. In light of this responsibility, RGoZ has developed its own poverty reduction strategy, called the Zanzibar Strategy for Growth and Reduction of Poverty II or MKUZA II. The Bank supports MKUZA II through eight projects. Under the Central Transport Corridor Project II, component C finances the rehabilitation and extension of the Zanzibar airport runway and support to Zanzibar's Ministry of Communications and Transport. The Marine and Coastal Environment Management Project supports the Coast Community Action Fund, targeting Zanzibar and all coastal districts on the mainland. The Statistical Capacity Building Project supports construction of new headquarters for Zanzibar's Office of Statistics. The Tanzania Social Action Fund II works across mainland and Zanzibar to empower communities to access opportunities so that they implement subprojects that improve livelihoods. The Tax Modernization Project supports Zanzibar through assistance to the Zanzibar Revenue Board for improving collection of taxes, promotion of voluntary compliance, provision of quality service to taxpayers, and improvement of working environment, staff skills, competence, and motivation. The Zanzibar Basic Education Project aims to improve completion of lower secondary education with successful performance among students in Zanzibar. The Science and Technology Higher Education Project supports the State University of Zanzibar through strengthening capacity for teacher training, particularly in mathematics, sciences, and languages. The Zanzibar Urban Services Project will improve access to urban services in Zanzibar and conserve the physical cultural heritage at one public location within Stone Town. In addition to investment lending operations, Zanzibar has received a fixed percentage from each of the Bank's credits under the second PRSC series. 21 C. Cross-cutting Issues 75. Governance is a foundation of the CAS. Given its cross-cutting nature, it is addressed under various CAS outcomes. Under the JAST, the Bank’s governance support focused mainly on broad-based public sector and PFM reform programs, which progressed slowly, hindering sector reforms and service delivery. Under the CAS, the Bank will diversify its approach to governance by increasing support to the subnational level and for demand-side measures. A core Bank governance team in the Tanzania Country Office will be established to review governance dimensions during project preparation, including use of ICT as a tool to increase transparency and accountability. Initiatives to be undertaken during the CAS include: (i) Increasing support to the local government level. The Bank will increase support to local governments, which are responsible for service delivery, to help them roll out reforms that improve public sector management and public financial management. Investment and capacity building will also be provided to Zanzibar, where system design support is still essential and will have a higher impact due to the smaller scale of the reform program. (ii) Integrating governance in investment projects, using them as entry points. Attention will be given to including governance dimensions in sector programs, where governance and development effectiveness meet. For example there will be a stronger emphasis on PFM and public sector management in social sectors and on procurement and anti-corruption measures in infrastructure programs. (iii) Building demand-side measures into project design; and using ICT to increase social accountability. The Bank will step up its involvement in strengthening the demand for good governance (DFGG), drawing upon the findings of the recent Partnership for Transparency Report “Stimulating Demand for Good Governance.” The Bank will support DFGG at the country level (such as through EITI), the sector level (such as through the Construction Sector Transparency Initiative), and the project level; and will, in particular, explore ways to utilize ICT to increase transparency and accountability. Civil society organizations in Tanzania have already started to use ICT to strengthen the voices of citizens and to monitor the effectiveness of government programs. Recently, for example, citizen monitoring revealed only partial disbursement of the secondary school capitation grant, which is supported by the IDA-financed Secondary Education Development Project, allowing quick rectification. 76. The CAS will address gender concerns identified in the 2010 Gender Review of MKUKUTA I implementation. Areas which have potentially the highest return for society in terms of overall poverty reduction will be prioritized. Bank-financed operations will be designed to reflect differences in men’s and women’s needs and constraints to ensure equal access to resources and equitable distribution of benefits. The CAS will include specific interventions to address gender inequalities in the following sectors: agriculture and rural development, education, health, social protection, finance, energy, and mining. The CAS results framework includes gender-disaggregated indicators whenever applicable and available (see box 4). 22 Box 4: Reducing Gender Inequalities in Tanzania Tanzania’s legal, institutional, and policy framework promotes gender equality and empowerment of women, with a few notable exceptions, i.e., marriage, inheritance, and citizenship issues. However, socio-cultural barriers persist, hindering women to fully participate in politics, economy, and social development. Despite legal provisions guaranteeing women’s rights to inherit and own property, discriminative provisions in the law, customary practices, and informational barriers to justice, deny women the full enjoyment of their rights. There are critical issues with regards to women’s socio-economic development and participation:  Gender parity is almost achieved in enrollment in primary education. Other key indicators like examination performances, and primary to secondary transition rates, are significantly worse for girls than for boys, highlighting the persistent challenge of achieving gender equality in access to secondary education (1). Early pregnancies and marriages are among reasons behind girls drop-outs.  Only 51 percent of births are delivered by a health professional (2). Women would prefer to deliver at a health facility, but are dissuaded from doing so due to transport difficulties, cost (including purchase of medical materials and unofficial payments), and inadequate quality of services. Maternal mortality ratio remains very high in Tanzania (estimated 454 deaths per 100,000 births) (2).  Violence against women occurs widely, and often women are not knowledgeable about their rights. Rape, physical and sexual violence, as well as economic, psychological, and emotional abuse, occur in families and communities, in such forms as threats, sexual harassment, intimidation and battery, forced (child) marriage, and female genital mutilation.  Women play a key role in the labor force (rates are 80.7 percent for men and 79 percent for women) (4). However, significant gender disparities exist in the quality of their participation. Only 6.1 percent of women are engaged in formal employment against 15.3 percent of men (4). Inequalities also endure in land tenure and property ownership, mainly due to inheritance practices. Women are prevented by socio-cultural barriers from accessing their full economic potential. They lack access to wage employment, face challenges formalizing their enterprises, and have limited access to finance and justice (3). (1) Tanzania Gender Indicators, REPOA, 2010 (2) Tanzania Demographic and Health Survey 2010 Preliminary Report (3) Gender and Economic Growth Assessment in Tanzania, World Bank, 2007 (4) Integrated Labor Force Survey, 2006 77. Tanzania’s growth is inextricably linked with its environment. The three key growth sectors – mining, tourism, and fisheries – are all natural resource based, driven largely by the country’s rich biodiversity and natural resource endowment. The Bank is working on mainstreaming environmental considerations into the portfolio, through efforts to promote environmental capacity building in most sectors (including notably water, agriculture, and transport). In parallel, the Bank is also trying to leverage national and regional IDA funds, using GEF and other trust funds, to maximize the environmental benefits of national development efforts. 78. Tanzania is vulnerable to climate change given that a large proportion of GDP is associated with climate sensitive activities, particularly agriculture. As described in box 5, current climate variability already results in significant costs in Tanzania, with regularly occurring annual events costing in excess of 1 percent of GDP, which could grow to 3 percent of GDP by 2030. Recent studies have concluded that Tanzania is not adequately adapted to the current climate, resulting in a large existing adaptation deficit, which future climate change can 23 only exacerbate.15 Such vulnerability could prevent Tanzania from achieving key economic growth and poverty reduction targets. In order to support Tanzania in readying itself, the Bank has secured trust fund resources for a national climate change strategy. Such a strategy would identify the key vulnerabilities across all key economic sectors, identify priority actions to address those vulnerabilities, and clarify institutional roles in responding to climate change. All projects will be screened by technical staff based in the Dar country office to identify how climate change considerations can be mainstreamed. 79. ICT will be integrated into the country program by deploying a mix of the growing set of ICT tools to achieve sectoral goals. Mainstreaming will be achieved by: (i) continuing support to cross-cutting ICT infrastructure and enabling environment, in particular to develop ICT policies and institutions, to support the adoption of ICTs by ministries, departments, and agencies (MDAs), and to promote rural connectivity through public-private partnerships; (ii) promoting pilots of promising ICT tools across sectors with priority on areas with high scalability potential; and (iii) integrating ICT systematically in selected sectors, where sectorwide transformation is both feasible and critical, e.g., agriculture, microfinance, small enterprise development, education, health, social protection, and local government accountability and services. 80. Chronic malnutrition weakens food security, harms maternal and child health, blocks educational achievements, and slows poverty reduction via economic growth. The 2009/2010 Demographic and Health Survey (DHS) shows that 42 percent of children under-five in Tanzania are chronically malnourished and that many more suffer from micronutrient deficiencies. Micronutrient deficiencies alone costs the government more than US$518 million annually (2.65 percent of GDP), due to decreased productivity.16 The government has acknowledged malnutrition as a barrier to economic growth. The Ministry of Health and Social Welfare (MoHSW) and the Tanzania Food and Nutrition Centre have already developed a National Nutrition Strategy for 2010-2015 that is ready for endorsement and implementation. The Prime Minister’s office has committed to leading a government coordination effort to address nutrition in all sectors, possibly by including a specific budget line for nutrition in the sector budgets. IDA has supported these efforts through technical assistance from the Dar es Salaam office and will continue to do so under the CAS. D. IDA Resources in the CAS 81. IDA resources under the FY12-15 CAS are estimated at SDR 1,612 million (US$2,473 million equivalent), or about SDR 403 million (US$618 million) per year. The CAS covers the three years of IDA16 (FY12-14) and the first year of IDA 17 (FY15). It is assumed that the IDA 16 and 17 allocations to Tanzania will at least be equivalent to IDA 15 levels.17 Under IDA 15 (FY09-11), Tanzania received an IDA allocation of SDR 1,209 million 15 Global Climate Change Adaptation Partnership: Economics of Climate Change in the United Republic of Tanzania. 2011. 16 “Why Nutrition is Critical to Economic Growth”, briefing note published by the development partners group for nutrition in Tanzania. 2010. The National Food Fortification Action Plan - Provision of vitamins and Minerals to the Tanzanian Population through the Enrichment of Staple Foods. Food Fortification Alliance / World Bank.2010. 17 The indicative lending plan (see table 4) amounts to US$2,800 million to plan for a potential increase in Tanzania’s IDA allocation. 24 (US$1,842 million equivalent), not including IDA received from the Crisis Response Window or IDA reallocated in FY11 from other countries. The estimates for FY12-15 are indicative only and can change depending on: (i) total IDA resources available, (ii) the country’s performance rating, (iii) the number of IDA eligible countries, (iv) the performance and assistance terms of other IDA-eligible countries, and (v) the terms of IDA’s assistance to Tanzania (grants or credits), which are determined annually and based on the risk of debt distress. IDA allocations are made in SDRs, and the US dollar equivalent is dependent upon the prevailing exchange rate. Tanzania could also potentially access IBRD funding for enclave projects. E. CAS Instruments and Financing Modality 82. IDA-financed operations in Tanzania typically use one of three instruments: general budget support (GBS), basket funding, and project finance. A tentative lending pipeline is shown in table 4. 83. General budget support. PRSCs have been the primary instrument of IDA budget support to Tanzania since 2003. Performance against annually agreed actions has been only moderately satisfactory during the current CAS period, with some key reform areas showing limited to little progress (e.g., business environment, public service reform, PFM reform). Good governance is a critical underlining principle for GBS, which was negatively affected by major corruption cases that have surfaced since 2006. Under a weak reform environment, PRSCs based on a broad-based multisector program will be scaled back, which could be adjusted upward or downward based on annual policy dialogue and assessments of performance. In addition to PRSCs, development policy operations (DPOs) linked to specific sector or policy reforms may be used when such opportunities emerge. 84. Sectorwide approaches using basket funding. The Bank contributes to ten basket funds through nine operations.18 The Bank makes use of its investment lending instruments for basket funding,19 disbursing either part or the entire portion of an investment operation into a basket. 85. Project financing. Investment lending is being used especially for large-scale physical investment projects (e.g., energy, transport, and urban infrastructure). However, implementation is mainstreamed within the existing institutional structures rather than creating parallel project implementation units. 86. Partial risk guarantee. Guarantees catalyze private financial flows in support of private infrastructure projects. Partial risk guarantees (PRG), which have not been used in Tanzania in the past, will be considered for large infrastructure projects, for example, for power generation. 18 The ten basket funds are: agriculture, health, water, Public Service Reform Program (PSRP), Legal Sector Reform Program (LSRP), Public Financial Management Reform Program (PFMRP), Business Environment Strengthening in Tanzania (BEST) program, Financial Sector Support Program, Tax Modernization Program, and the Statistical Capacity Building Program (STATCAP). 19 This is almost equivalent to what some bilateral DPs call “Sector Budget Support.” 25 Table 4: Indicative Lending Plan FY12-15 Fiscal Year (US$ million) Proposed Operation 75 PRSC9 - 1st of Series 2012 150 Pension Financing Reform DPO 1 60 Southern Agricultural Growth Corridor 60 Transport Sector Support Project (FY11 Standby)- Additional Financing 30 Central Transport Corridor II - Additional Financing 220 Social Action Fund III 100 Basic Health Services Project 150 Emergency Railroads Rehabilitation 15 Natural Gas TA 27 Rusomo Falls Hydro - IDA and/or PRG [regional] 15 Regional Lake Conservation & Development Project Subtotal (FY12) 902 75 PRSC10 2013 250 Water Sector 75 Dar es Salaam Metropolitan Development Project (1st phase) 190 Local Government II 280 ASDP-2 25 Singida Wind - PRG 35 SA Trade & Transport (N-S Corridor) [regional] Subtotal (FY13) 930 75 PRSC11 2014 120 Higher Education 150 Secondary Education APL2 125 Ruhudji Hydro - IDA (US$100 million) & PRG (US$25 million) Subtotal (FY14) 470 75 PRSC12 2015 180 Transport Sector Support II 120 Pension Financing Reform DPO 2 Subtotal (FY15) 375 Unallocated 123 Total (FY12-15) 2,800 Note: IDA amounts are indicative only. 87. Linking financing to results. To emphasize results, projects and programs will be designed to link financing to outputs and outcomes whenever possible and appropriate. In addition to DPOs, there are several design options to do so, including: (i) performance-linked incremental financing, e.g., implementing subentities such as local governments receive additional resources if performance targets are met; (ii) output based aid, a form of contract with supplier or contractor that pays a predetermined price upon delivery of agreed goods, works or services regardless of actual costs; and (iii) output based disbursement, disbursement amount determined by actual quantity of outputs and predetermined unit cost (e.g., the number of boreholes built multiplied by an agreed unit cost regardless of actual costs; the Bank usually pays less than 100 percent). The Bank is currently designing a new instrument called Program for Results (P4R). If approved by our Board of Directors, use of this new instrument will be considered in new operations where appropriate. 26 88. IFC and MIGA. IFC will continue to seek investment opportunities across sectors and provide its advisory services. Currently, MIGA has no active contracts in Tanzania. MIGA will continue to offer its political risk product for investors concerned about Transfer Restriction, Expropriation, Breach of Contract, and War and Civil Disturbance risks. Over the CAS period it hopes to also make the best use of its new products, the Non-Honoring of Sovereign Guarantees and its more flexible, Small Investment Product to best serve the needs of investors entering into the Tanzanian market. Table 5: Indicative Non-Lending Plan FY12-15 Fiscal Year Technical Assistance and Economic and Sector Work Public Expenditure Review ("The Impact of Public Spending") Education Sector Review ("How can Education Outcomes be Improved ?") Water Sector Review ("Why has the Water MDG not been met?") Economic Policy Notes 2012 TA: Basket Funds LGDG Integration TA: Governance and Anti-Corruption TA: Telecom Backbone and Rural ICT TA: Information and Communication Technology Economics of Protected Areas ("How to Reconcile Global Biodiversity with National Interests?") Country Economic Memorandum ("The Transition from Aid")* 2013 National Climate Change Strategy and Action Plan TA: Governance and Anti-Corruption TA: Information and Communication Technology Petroleum Revenue Management: ("The Economic and Fiscal Implications of Hydrocarbon Income")** 2014 Economic Policy Notes TA: Governance and Anti-Corruption TA: Information and Communication Technology Public Expenditure Review ("Measuring the Transition from Aid") 2015 TA: Governance and Anti-Corruption TA: Information and Communication Technology * FY13 CEM will include the FY13 Annual Public Expenditure Review. * FY13 CEM will include a chapter on the "Economics of Transfers". ** FY14 ESW on Petroleum Revenue Management will include the Annual Public Expenditure Review. 27 IV. PROPOSED CAS OBJECTIVES AND EXPECTED RESULTS A. Objective One: Promote Inclusive and Sustainable, Private Sector-led Growth 89. MKUKUTA II and MKUZA II Cluster I main objectives are to reduce income poverty and unemployment. The Bank will support the government to improve the conditions for the private sector by strengthening the financial sector and by expanding the broadband network. To improve income in the agriculture sector, Bank support will help farmers to adopt more productive agricultural techniques and will include construction of agricultural infrastructure. To make economic growth sustainable the Bank will support the government in protecting and managing its natural resources by financing climate adaptation measures, improving land management practices as well as governance. CAS Outcome 1.1: Improved business environment and financial intermediation 90. Analytical underpinnings. The 2009 Investment Climate Assessment highlighted the two main constraints the private sector faces: power shortages and access to finance. Ongoing analytical work on special economic zones will continue to inform measures to improve the business environment. The Country Economic Memorandum “The Transition from Aid”(FY13) will analyze how Tanzania can harness its growth potential and improve efficiency of public spending, while reducing the poverty rate. 91. IDA-financed operations. The WBG will support selected interventions that are critical and have long-lasting impact on the economic development and infrastructure for an enabling environment for the private sector. The GBS framework and the PRSC operations, complemented by a series of analytical work, will provide the platform for policy dialogue and support to critical structural reforms for private sector development. Support to the Business Environment Strengthening in Tanzania (BEST) program (under the Private Sector Competitiveness Project (US$95 million, FY06) will be phased out. The Bank will continue its support for financial sector deepening through the Financial Sector Support Project (FSSP, US$12 million, FY06) that aims to increase household and firm access to financial services, facilitate efficient financial intermediation, and support financial stability and integrity. The Housing Finance Project (US$40 million, FY10) will facilitate expansion of mortgage financing. The PPP framework development and related institutional support is being financed under FSSP. The Southern Agricultural Growth Corridor (SAGCOT) Investment Project (US$60 million, FY12) will strengthen the dialogue between the public and private sector that addresses key policy, regulatory, administrative, and infrastructure constraints along agribusiness value chains in the southern corridor. The WBG may also provide support to micro, small, and medium-sized enterprises (MSMEs) through the MSME finance component of the SAGCOT investment project. The Sustainable Management of Mineral Resources Project (SMMRP, US$50, FY10) assists artisanal and small-scale miners. 92. Regional operations. The regional EAC Financial Sector Development and Regionalization Project (EAC FSDRP I, US$16 million regional IDA, FY11) provides technical assistance to the EAC Secretariat to establish the foundation for a single market in financial services in the Community. This will include: (i) regional access to finance, (ii) harmonization of laws and regulations, (iii) strengthening of supervisory agencies toward international standards, 28 (iv) integration of market infrastructures, (v) development of a regional bond market, and (vi) capacity building for regional financial policy formulation. The implementation of the EAC FSDRP I (2011-2013) and of the follow-on EAC FSDRP II (2014-2019) will transform Tanzania’s financial sector and integrate it fully within the single financial market of the Community. The East Africa Trade and Transport Facilitation Project (EATTFP, US$37 million national IDA, US$214 million total IDA, FY06) includes measures to promote trade in the EAC, such as the creation of one stop border posts, the expansion of weighing stations, and the reduction of non-tariff barriers. Support through the Regional Communications Infrastructure Program (RCIP, US$58 million national IDA, US$42 million regional IDA, US$151 million total IDA, FY09) will lower the costs of doing business by expanding the broadband network in Tanzania. 93. IFC will strengthen financial markets, particularly in terms of access to finance for MSMEs. IFC looks to forge partnerships with local banks aimed at supporting these projects with local currency financing, as well as developing micro and SME finance products to support the microfinance and SME sectors in Tanzania. The Africa Micro, Small, and Medium Scale Enterprises Finance (AMSME) Program will provide on-site advisory services to local banks in Tanzania. The objective is to assist banks to increase lending to SMEs through the redesign of products and procedures. IFC will provide advisory services to promote PPPs and to improve the investment climate. This will entail advice in structuring the sustainable projects for private sector participation. IFC will provide assistance in investment climate reform program that covers licensing, regulatory reform and other areas tracked in the Doing Business indicators. Through the Credit Reference Bureau Program, IFC will continue to support the BoT and Tanzania Bankers Association to implement a credit bureau program for supervision, licensing, and monitoring of private credit bureaus and for implementation of a credit reporting system. The SME Management Solutions Unit will partner private sector to launch an SME toolkit for Tanzania to provide SMEs access to on-line business management information, interactive tools, and training resources. 94. Trust funds. The Tanzania window of the MDTF for Trade and Development will continue to provide AAA support to improve trade and competitiveness. The Russia Financial Literacy and Education Trust Fund will finance the assessment of financial capability in Tanzania to guide policy and strategy development as well as financial education interventions. 95. Partnerships and leverage. The government and DPs coordinate dialogue and activities for private sector development through the Trade and Industry Sector Working Group. The DP Lead is currently the Danish Development Agency (DANIDA) and there are 13 active members. Activities supported include the BEST program, the Tanzania Private Sector Foundation program for Business Development Services (matching grant and cluster competitiveness programs), and the Financial Sector Development Trust (part of the Private Sector Competitiveness Project). The Financial Sector Basket Fund is supported by DFID and IDA. IDA funding for private sector development, including modernization of the tax system and the Financial Sector Support Program, has been about US$122 million which has leveraged another US$69 million from partners. 96. ICT for social accountability and results. Under RCIP e-government applications will be introduced, which will streamline government to business transactions. This includes the provision of information on regulations and procedures online, streamlining business registration 29 and licensing processes, paying taxes and fees online, and making business registry available online. CAS Outcome 1.2: Increased productivity and commercialization of agriculture 97. Analytical underpinnings. The annual agriculture public expenditure review informs support in the agriculture sector. In addition, it is proposed to analyze the infrastructure and policy constraints to value chain development. 98. IDA-financed operations. The Agriculture Sector Development Project (ASDP, US$155 million, FY06) established a comprehensive and coordinated framework to implement the national Agricultural Sector Development Strategy. This focuses on improving productivity and profitability of agriculture by providing better production and market infrastructure and support services. This is complemented by the Accelerated Food Security Project (AFSP, US$160, FY09), a contribution to the National Agricultural Input Voucher Scheme (NAIVS), which targets productivity growth for staples needed to alleviate impact of rising food and input prices. The proposed continued support for ASDP and NAIVS (US$280 million, FY13) will take into account the lessons learned from the ongoing operations. Multiple agricultural marketing constraints persist, including high transport costs, commodity taxation, and non-tariff trade barriers. These are being challenged under the new Southern Agricultural Growth Corridor of Tanzania (SAGCOT) Partnership. WBG support under the proposed Southern Agricultural Growth Corridor Investment Project (US$60 million, FY12) for this initiative will target the growth of agribusiness investment linked with smallholder outgrower operations offering larger productivity, and the creation of new jobs along the agribusiness value chains. The SAGCOT Investment Project will support the operations of the SAGCOT Secretariat, grants through the Kilimo Kwanza Catalytic Fund to facilitate start-up investments by agribusinesses in the Southern corridor and develop their linkages with smallholders, and access to finance by MSMEs along agribusiness value chains through a line of credit and partial credit guarantees intermediated through the Tanzania Investment Bank and commercial banks. 99. Regional operations. The East Africa Agricultural Productivity Project (US$30 million national, US$120 million total IDA, FY09) intends to make Tanzania a “center of excellence” in rice research. Progress has been made in raising productivity through increased input use and irrigation investments. 100. IFC will work with IDA to identify actions to promote more rapid commercialization of agriculture. Potential activities include PPPs for provision of key inputs, services, storage facilities, long term finance to investors in processing, support to export infrastructure, trade finance, warehouse finance, and logistics. 101. Trust funds. A proposed PHRD Trust Fund for Increasing Rice Productivity in Africa (US$15 million, FY11) will support activities under ASDP. 102. Partnerships and leverage. The World Bank is a key member of the Agriculture Sector Working Group which coordinates sector dialogue and encourages investment harmonization. There are 12 members of which Ireland is now the lead. The World Bank is a founding member of the ASDP Basket Fund that is now supported by several DPs. Bank staff sit on the Executive Committee of SAGCOT, coordinate with the Prime Minister’s Office on agribusiness 30 development, and have strengthened ties with the Agricultural Council of Tanzania and the Confederation of Tanzanian Industries. IDA finance for ASDP has amounted to US$155 million since 2006, which has leveraged about US$200 million from partners. 103. Governance. The proposed ASDP II will introduce citizen report cards for monitoring program results. The Accelerated Food Security Project uses non-state actors and community participation at the national, regional, district, and village levels for determining the allocation of vouchers, the identification of eligible households, settlement of grievances, and the monitoring of input use. If this program is extended these arrangements will be refined and strengthened. Box 5: Leveraging Climate Change for Development Potential climate change impacts range from coral loss in Zanzibar, to coastal erosion, to declining lake productivity, to higher malaria challenge, to loss of plant and animal biodiversity. Current climate variability in the form of extreme events such as droughts and floods, already leads to major economic costs in Tanzania, with the economic cost of regularly occurring individual annual events in excess of 1 percent of GDP, reducing long-term growth and affecting millions of people and livelihoods. Such trends are likely to continue, and Tanzania is particularly vulnerable due to its high level of dependence on natural resources. Biomass, for example, provides 90 percent of the primary energy supply, and Tanzania’s forested ecosystems are subject to climate-related stresses; over 90 percent of agriculture is rainfed, and climate change is likely to affect precipitation and runoff. Malaria is spreading to higher altitudes as temperatures warm. Models indicate that climate change could have net economic costs equivalent to a further 1 to 2 percent of GDP/year by 2030, and Tanzania’s capacity to adapt is limited. Persistent poverty, governance challenges, low access to capital, and ecosystem degradation all stand in the way of an effective climate change response. The country’s limited water storage capacity, for example, could hamper efforts to adapt to changes in precipitation and water supplies. Recent estimates place Tanzania’s current needs for building adaptive capacity and enhancing resilience against future climate change at US$100-150 million per year. Additional funding is needed to address current climate risks, with a conservative estimate of an additional US$500 million per year. Addressing these risks and the adaptation deficit is essential in reducing future impacts and building resilience to climate change. The cost of adaptation increases rapidly in future years. By 2030, financing needs of up to US$1billion per year are reasonable. While less than US$1 billion per year are now available, many development partners are creating new sources of climate- related funding. Tanzania might attract such funding if it can tie its development objectives to climate-related targets. A climate change strategy would incorporate climate change adaptation into national growth and development plans, clarifying institutional responsibilities for addressing climate change across government sectors. A corresponding financing mechanism would let Tanzania leverage multiple funding sources to address both national development priorities and climate-related objectives. Such an approach could serve as a model for other countries in the East African Community. Under the CAS, the Bank will support Tanzania’s work to prepare a climate change strategy, secure funding, and adapt to and mitigate climate change (see outcome 1.3 for further details). CAS Outcome 1.3: Enhanced sustainability and improved management of natural resources 104. Analytical underpinnings. The Bank has secured trust fund resources to prepare a National Climate Change Strategy and Action Plan (FY13). The strategy will identify vulnerabilities, define actions to address vulnerabilities, and clarify institutional roles in responding to climate change. The World Bank Group, led by WBI, is also supporting a Cities and Climate Change pilot focusing on vulnerability of Dar Es Salaam City to climate risks. The Bank will leverage IDA funds to secure GEF climate change resources to promote new rural energy solutions. 31 105. IDA-financed operations and trust funds. The program includes several projects to promote environmentally sustainable growth. In the mining sector, the Sustainable Management of Mineral Resource Project (US$50 million, FY09) supports environmental and social aspects of artisanal and small-scale mining, as well as a Strategic Environmental and Social Assessment to identify policy changes and capacity building needs to improve the environmental performance of the mining sector. In the fisheries and coastal zone management area, the Marine and Coastal Environmental Management Project (MACEMP, US$65 million, including a US$10 million GEF grant, FY06) is supporting regulatory and policy improvements to better manage near-shore and deep-sea fisheries, the creation and management of a network of Marine Protected Areas, and conservation-compatible community investments in coastal districts. The Bank is preparing a GEF financed follow-on operation to the Lower Kihansi Environmental Management Project (US$9.8 million, FY02). The GEF financed Conservation and Management of Kihansi Ecosystem Project (US$6 million, FY12) would enable the continued support for the conservation and reintroduction of the endangered Kihansi Spray Toad. 106. Regional operations. The Bank will continue and scale up support to environmental management through a watershed approach through the Lake Victoria Environmental Management Project II (US$90, FY09). The Regional Lake Conservation and Development (US$15 million, US$30 million regional IDA, GEF US$5 million) aims to improve the management of the Lake Nyasa basin. The Africa Stockpiles Project (US$21.7 million, FY07) includes a US$6.9 million GEF grant to dispose of obsolete pesticides stocks, thereby reducing a source of important contamination to soils and waterbodies. 107. Partnerships and leverage. The Donor Partner Group on Environment is led by the World Bank, and includes nine other multilateral and bilateral partners. This group actively coordinates efforts in the environment and natural resource management sectors. Specific partnerships include joint financing with DFID of the National Climate Change Strategy and Action Plan (FY13). 108. Governance. Successful natural resource management depends on the capacity of sector institutions to work within political constraints. The Bank has started to routinely include assessments in project design in particular in this sector. A review of institutional and political economic constraints in natural resource management will be conducted under the CAS period. Through the Executive Industries Transparency Initiatives (EITI) TF the World Bank will continue to work with the government to improve transparency and accountability in the mining sector (see box 6). 32 Box 6: Extractive Industries Transparency Initiative Prompted by concerns over transparency and accountability in the mining sector, Tanzania joined the Extractive Industries Transparency Initiative (EITI) as a Candidate Country on February 16, 2009, and enacted a new Mining Act on May 28, 2010. Tanzania has made significant progress toward the implementation of EITI standards, including publication of the first EITI report, reconciling payments made by the extractive companies and the corresponding revenues received by the government for the period of July 1, 2008, to June 30, 2009. Launched in February 2011, the report shows a discrepancy of US$36 million, which is being referred to the Controller and Auditor General for further investigation. The process of implementing the EITI includes Tanzania completing validation by May 15, 2011. The validation, which is currently underway, is assessing Tanzania's overall compliance with EITI principles and standards. Successful validation would make Tanzania an EITI Compliant Country. B. Objective Two: Build Infrastructure and Deliver Services 109. Better infrastructure is vital to reduce production costs, to promote investment and to profit from Tanzania’s location. MKUKUTA II and MKUZA II recognize the importance of power, transport, and water in both rural and urban areas. The CAS therefore extends the existing partnership with government in building infrastructure and in delivering services from infrastructure to release constraints to growth. Expected results include more people with access to more reliable electricity, the share of roads in good condition, and more people with access to clean water. Municipal services such as waste collection, street lighting, and urban transport will be improved. CAS Outcome 2.1: Improved access, quality, and sustainability of electricity 110. Analytical underpinnings. Analytical support and technical assistance to the Ministry of Energy and Minerals and sector agencies will continue to be financed through the Tanzania Energy Development and Access Project. The assistance aims to improve sector planning, increase efficiency, and expand electricity access. The World Bank-administered SIDA trust fund provides support to the Rural Electrification Agency (REA) in the development of an electrification master plan and to the Energy and Water Utilities Regulatory Authority to improve regulatory oversight of the sector. 111. IDA-financed operations. Support to the energy sector will be stepped up to help Tanzania expand its generation and transmission capacity, ensure scale up, and diversify the generation sources, including renewable energy, to avoid overdependence on drought-vulnerable hydro power. The Tanzania Energy Development and Access Project (TEDAP, US$130 million, FY08) aims at improving the quality and efficiency of the electricity services in three main growth centers (Dar es Salaam, Arusha, and Kilimanjaro) and establishing a sustainable basis for energy access expansion and renewable energy development in Tanzania. The Backbone Transmission Investment Project (US$150 million, FY11) will connect the major power generation areas in the south with the north where large demand exists. While financing power generation projects, including Ruhudji Hydro (US$125 million, FY14), the WBG will support government to pursue further diversification of energy sources, including support under the Gas TA Project (US$15 million, FY12) and the Singida Wind – PRG (US$25 million, FY13). These 33 operations will include measures to improve the electricity service quality and reliability, to ensure access scale-up, low cost rural electrification as well as to enhance the sector’s financial sustainability through capacity and institutional strengthening activities. This is perhaps the sector that is most promising for PPP and use of WBG’s partial risk guarantee instruments (including IFC and MIGA) on the generation side. In addition, Tanzania is a beneficiary of the Program on Scaling-up Renewable Energy in Low Income Countries that demonstrates the utility of low carbon paths by creating new business opportunities through renewable energy. An energy access project may be considered within the CAS period. The objective of the project would be to scale-up both, grid and off-grid energy access, building on the current piloting of new electrification models under TEDAP. The project would be prepared once the TEDAP off- grid component has been successfully implemented. 112. Regional operations. The Bank will be a partner in the financing of a regional hydro power generation project, Rusumo Falls (US$27 million national, US$54 million regional IDA, FY12), that will serve Tanzania, Burundi, and Rwanda. The WBG is also working on regional power pools in eastern and southern Africa. Based on the regional master plans, the Bank is ready to consider financing priority investment for regional power purchasing arrangements. IFC will consider financing, with debt or equity, the regional Ruhudji Hydro power generation project. 113. Trust funds. TEDAP GEF (US$6.5 million, FY08) supports the development of small power generation and distribution, sustainable solar market packages, and photovoltaic clusters. TEDAP GEF, ESMAP Trust Fund for SME development, SIDA Trust Fund for renewable energy/access scale-up, and Russian Trust Fund for energy SME development support (i) institutional strengthening of the Rural Energy Agency; (ii) the creation of a Small Power Producer Cell at TANESCO; and (iii) the regulatory framework for small rural, renewable power projects. Financing and capacity building instruments offered by these trust funds aim at creating a market driven renewable energy development involving local developers and local commercial banks. On the grid side, the SIDA trust fund and the South-South Cooperation support the design and implementation of a low cost rural electrification pilot that could be further scaled up. The grid and off-grid programs are complemented by Lighting Africa initiative (including Lighting Rural Tanzania sponsored by the Africa Renewable Energy Access Program( AFREA)) that aims at facilitating affordability and access of the poor to modern, clean and low-cost lighting products. AFREA is also supporting capacity development for gender mainstreaming in the Rural Energy Agency. The Nile Basin trust fund provides support for regional power trade project including basin-wide study of power development options and trade opportunities. 114. Partnerships and leverage. The Bank leads the Energy Sector Working Group, which includes six active multilateral and bilateral members. As a result of the close collaboration among partners, an IDA credit of US$150 million (FY11) has leveraged US$300 million for the Backbone Transmission Investment Project (FY11). Additional partners in energy include the Millennium Challenge Corporation, the EU, Finland, UNDP, and France; work with those partners is prominent in non-lending services, notably working with the Tanzanian regulator, EWURA, on sustainable tariffs. 115. Governance. The energy sector is vulnerable to bad governance also because of the scale and complexity of the contracts involved. The Bank will work to improve energy sector governance in two ways. First, at the project level, it will conduct ex-ante and ex-post 34 procurement reviews of contracts in all new and on-going operations that receive World Bank financial or technical support. Second, at the sectoral partnership level, the Bank will lead through the Energy Sector Development Partners Group to improve the transparency of public energy transactions, especially those involving PPPs, and will work to strengthen public oversight of energy sector policy, especially with respect to pricing and sectoral budgets. CAS Outcome 2.2: Increased access and quality of transport 116. Analytical underpinnings. The World Bank will continue to support the national Transport Sector Investment Program. The technical assistance provided under ongoing IDA operations and Public-Private Infrastructure Advisory Facility (PPIAF) are building sector plans in rural roads, railways, and ports by identifying investment needs and operational efficiency measures. 117. IDA-financed operations. The Central Transport Corridor Project II (CTCP II, US$190 million, FY08) and Transport Sector Support Project (TSSP, US$270 million, FY10) are rehabilitating trunk roads and airports (Bukoba, Kigoma, Tabora, and Zanzibar). New operations during the CAS period will support high priority investments identified WBG considers additional financing to CTCP II (US$30 million, FY12) and TSSP (US$60 million, FY12) to finance Dar es Salaam urban transport, and to modernize the Zanzibar airport, respectively. The WBG would continue financing the second phase of the TSSP (US$180 million, FY15). A high- priority operation is the Emergency Railroads Rehabilitation Project (US$150 million, proposed for FY12) which will improve rail performance and increase Tanzania Railways Limited’s market share within the transport sector by rehabilitating railway infrastructure and renewing rolling stock. 118. The World Bank Group is also ready to assist Tanzania in studying the net economic, environmental, and social benefits of alternatives to the Northern Serengeti Road, if the government should request such assistance. The World Bank Group is, moreover, willing to support Tanzania in selecting and, where appropriate, financing the most beneficial alternative to the Northern Serengeti Road to meet the development needs of northern Tanzania, while preserving the unique character of the Serengeti. 119. Regional operations. The multisectoral East Africa Trade and Transport Facilitation Project (EATTFP, US$37 million national IDA, US$214 million total IDA, FY06) aims at (i) improving the trade environment through the effective implementation of the EAC Customs Union Protocol and (ii) enhancing transport and logistics services efficiency along key corridors by reducing non tariff barriers and uncertainty of transit time. The South Africa Trade and Transport Facilitation Project (SATTFP, US$35 million national, US$50 million regional IDA, FY13) seeks to improve the transport infrastructure and reduce non-tariff barriers within the north-south corridor. 120. Partnerships and leverage. Coordination of the transport sector is done through the Infrastructure Working Group, currently led by the EU on the DP side, comprising AfDB, Denmark, DFID, Japan, Korea, and the World Bank. 121. Governance. The transport sector has been affected by weaknesses in the commitment control and procurement systems. The design of new Bank-financed operations will include a 35 review of sector management systems. Action plans to address commitment control, procurement, and accountability and oversight mechanisms will be prepared accordingly. The Bank will also work with the government to include all Bank-financed transport projects in the Construction Sector Transparency (CoST) initiative (see box 7). Box 7: Construction Sector Transparency Initiative Infrastructure projects make a major contribution to economic growth and poverty reduction. However, mismanagement and corruption during the planning, implementation, and monitoring of construction projects can undermine the expected social and economic benefits. The Construction Sector Transparency (CoST)* initiative aims to increase accountability of procuring bodies and construction companies for the cost and quality of public-sector construction projects. Control is facilitated through access to facts about construction projects – purpose, specifications, construction process, completion, budget, etc. – and non-compliance can be revealed. Tanzania is one of seven pilot countries under the initiative since 2008. The first public disclosure of project information was made in February 2011 for six government projects. The Bank will work with the government to include all Bank-financed projects under the disclosure norms of the CoST initiative. *CoST is supported by DFID and the World Bank. CAS Outcome 2.3: Increased access and quality of water and sanitation services 122. Analytical underpinnings. The Bank will conduct a water sector review reflecting lessons learned from the Water Sector Development Program (WSDP) and assess suitable scope and modalities of the future IDA support. The review will assess the options for improving urban water utilities performance and facilitating legal/institutional reforms of the Dar es Salaam Water and Sewerage Authority and the Dar es Salaam Water and Sewerage Corporation. 123. IDA-financed operations. Comprehensive and coordinated support to the water sector has been provided to the sectorwide WSDP through the Water Sector Support Project (US$250 million, FY13). The program is the largest and most complex SWAP operation in Tanzania, involving over 300 implementing entities with US$1,200 million over five years. Recent implementation reviews and a Special Audit by the Controller and Auditor General have identified serious accountability issues and a number of weaknesses in planning, implementation, reporting, and oversight. While good progress has been made to date to address those weaknesses, future support in the sector would be contingent on resolution of those issues identified. Due to the size and complexity of the sector, an option to use multiple operations or focus on strategic investments (e.g., Kidunda dam and Kimbiji Aquifer for Dar es Salaam) under the umbrella SWAP framework may be explored to keep each operation more focused and manageable. 124. Trust funds. The Bank-executed Water and Sanitation Program (WSP) (about US$1 million annually) has been supporting the government in testing promising approaches and delivery models to improve household sanitation facilities and handwashing behaviors in 10 rural districts. Under the leadership of the Ministry of Health, a National Sanitation Campaign, targeting 1.3 million households over four years, will build on these experiences with WSP and partners providing technical assistance and capacity building support. Nile Basin Initiative trust fund provides support through the Nile Equatorial Lakes Subsidiary Action Program for conducting studies for future multipurpose water resources investment schemes. 36 125. Partnerships and leverage. The Bank is the lead development partner for water. In particular, the Bank is working closely with DPs for the WSDP basket. The Bank is also working with other partners, such as EU, GIZ, JICA, Switzerland, Norway, USAID, MCC, UNICEF, and non-governmental organizations, for example, Tanzania Water and Sanitation Network (TAWASANET). IDA support to water (US$200 million, FY07) leverages another US$200 million of DP support to that basket. 126. Governance. Given the governance challenge in the sector the Bank will further strengthen transparence and accountability in the sector. The annual technical audit by an independent entity of the outputs from the WSDP focuses on the equitable budget allocation, community voice in decision making, equitable distribution of infrastructure, and access to water. The MoW is undertaking a Water Point Mapping Survey to enhance monitoring and evaluation, facilitate data sharing and make the planning of water schemes more participatory and transparent. A citizen report card will be completed in Dar es Salaam, Dodoma, Arusha, and Mwanza to establish citizens’ views on access, quality, reliability, costs, and satisfaction of regulated services. CAS Outcome 2.4: Improved management and delivery of urban services 127. Analytical underpinnings. The World Bank has been engaged in the urban and local government sector for more than a decade. Proposed operations will build on this experience and will take lessons from past operations into account. Future analytical work by the Bank or government will review local government financing mechanisms and an impact analysis of urban infrastructure projects on the local and hinterland economy. 128. IDA-financed operations. Investment to upgrade urban infrastructure will be scaled up from selected cities (Strategic Cities (US$163 million, FY10) and Zanzibar Urban Services (ZUSP, US$38 million, FY11) projects) to nationwide (Local Government Support Project II (LGSP II, US$190 million, FY13) and DSM Metropolitan Development Project (DMDP, US$75 million, FY13). The proposed LGSP II will introduce a results-based approach to investments in eleven municipal councils through an urban infrastructure grant system (i.e., all municipal councils in Tanzania excluding the three in Dar es Salaam and the seven supported by TSCP). The proposed DMDP will strengthen the metropolitan governance arrangements for Dar es Salaam, improve urban management systems for service delivery, and ensure increased investments in both cross-cutting and local urban infrastructure. 129. Partnerships and leverage. The international partnership with the government is coordinated through the Local Government Development Partners Group, including Belgium, Germany, Ireland, Japan, Finland, Netherlands, Sweden, United Nations, and the World Bank. In the urban sector, Denmark provides parallel financing (US$12.5 million) for the TSCP and KfW coordinates with the Bank on the ZUSP. Several development partners have confirmed interest in assisting LGSP II. 130. Governance. In terms of supply side governance, the CAS emphasizes the importance of shifting support to cross-cutting public management systems (in particular public financial management and public sector management) from the central to the local level, in order to ensure that instruments and policy tools designed to strengthen these systems are applied where they 37 matter most in public service delivery. Future local government operations will include capacity building through performance management instruments and financial planning and management. 131. In terms of demand side governance, our urban work will support transparency, access to information, and community participation in the design and implementation of its programs. Grant allocations are published in newspapers and are also available on the Prime Minister’s Office – Regional and Local Government Administration’s website along with annual expenditure statements. The Community Infrastructure Upgrading Program in the three municipal councils of Dar es Salaam uses an extensive process of community participation in the planning for use of funds, in supervision of works, compensation, and dispute resolution. 132. ICT for social accountability. The Zanzibar Urban Services Project will use ICT tools to gather citizen votes on urban services such as waste collection and street lightening. It is planned to establish a public domain urban infrastructure map highlighting locations as well as characteristics of urban roads. To enhance the accountability of municipalities and LGAs, LGSP II will finance computerized public financial management systems which will improve the timeliness and accuracy of financial information, make public servants accountable, and enhance the development effectiveness of investments. C. Objective Three: Strengthened Human Capital and Social Safety Net 133. The Bank’s support aims at building a healthy and skilled population base that is better prepared for the changing economy, while reducing vulnerability. This is in line with the MKUKUTA II and MKUZA II emphasis on investment in human capital. In education expected results are increased secondary enrollment and completion rates, with particular attention to girls’ schooling. To decrease maternal mortality, expected health care results include a higher percentage of deliveries taking place in health facilities. To protect the most vulnerable, the CAS aims to increase the income of targeted beneficiaries. CAS Outcome 3.1: Improved access to and quality of education 134. Analytical underpinnings. Bank Group studies in education have focused on policy notes covering equity at the primary level, fiscal aspects of rapid secondary expansion, sustainability of higher education loans, service delivery, and public expenditure management. Results of a 2010 education public expenditure tracking survey are being used to design capitation grant systems. New analytical work includes an education sector review “How can Education Outcomes be Improved” (FY12). In addition, the HD-governance team will study Performance Improvement in Management of Education during FY12 as an input to the design of the potential SEDP II – Additional Financing. 135. IDA-financed operations. The Secondary Education Development Project II (SEDP II, US$150 million, FY10) aims to raise the quality of secondary education in the mainland by supplementing government resources for capitation grants to all schools and school rehabilitation so that all schools meet minimum standards. The Zanzibar Basic Education Project (US$42 million, FY07) is helping to improve access and quality of basic education. IDA supports higher education through a Science and Technology Higher Education Project (STHEP, US$100 million, FY08), which provides grants to universities and assists higher education reforms. 38 Effectiveness of SEDP II and government’s will to implement agreed reforms - student and teacher performance standards, use of capitation grants - will be assessed in FY12 to determine if they can be expanded during a second phase of SEDP II. The second phases of SEDP II (US$150 million, FY14) and STHEP (US$120 million, FY14) will also aim at enhancing skills beyond the traditional tracks. This will be achieved through: vocational skills development for lower secondary graduates who do not proceed to upper secondary (a trigger for APL2 under SEDP II is the development of the first national plan for vocational skills development expected in 2012); improved linkages between labor market skill requirements and the curriculum/ programs offered at tertiary education institutions. 136. The quality of secondary education is a constraint to economic and social development in Tanzania. As secondary enrollment has risen rapidly from 10 percent in 2005 to nearly 30 percent in 2010, quality indicators have not improved.20 IDA therefore proposes Additional Financing for SEDP II in an amount of US$50 million to support interventions for quality education. These interventions, which might include scholarships for girls and other marginalized groups or scholarships to private secondary schools, would be targeted to the districts with the lowest indicators of secondary education quality. 137. Regional operations. IDA will support the Tanzanian goal of developing Arusha into a world center of excellence in higher education in the region under the next phase of the Science and Technology Higher Education Project (US$120 million, FY14). The project will finance the development of the Arusha campus of the African Institute of Science and Technology. The proposed second phase will also support the Arusha campus of the Aga Khan University, subject to agreement on modalities of support between the Government of Tanzania and the Aga Khan Development Network. 138. IFC will promote private education with finance and advisory services. IFC will leverage the AMSME program with local banks to provide access to finance for schools. The program targets to support private educational institutions (primary, secondary, and tertiary) to access long term finance and technical assistance. The advisory services program will provide support at three levels: (i) self diagnostics and business plan development in order to access loans from banks; (ii) sector wide workshops that will cover areas such as strategic planning, finance and accounting management, human resource management, school marketing, corporate governance and administrative systems, education management information systems; and (iii) improve the capacity of local private schools associations to address any operating environment issues. 139. Trust funds. Regional trust funds are providing technical assistance in strategy development for early childhood development as well as for ICT skills development for the new economy. 140. Partnerships and leverage. The Education Sector Development Partners Group is currently led by Canada, with six active members, including the World Bank. Education partners collaborate with civil society organizations such as Twaweza and HakiElimu. Funding from the 20 A recent Uwezo assessment in 38 of the 133 districts covering a total of 42,033 children in 22,800 households found that, based on examination results among form IV leavers, division III and above pass rates have been falling since 2006, and currently stand at only about 10 percent. 39 Development Grant Facility to UWEZO promotes an independent institution to assess learning outcomes in Tanzania, Kenya, and Uganda. The approach helps civil society organizations (CSOs) to raise the issue of education quality and builds an agenda for reforms. 141. Governance. Considering the complexity of governance issues in the sector, an assessment will be undertaken to identify the issues in school management and teacher incentives system and recommend institutional development and governance interventions, consistent with political economy constraints and opportunities, to improve learning outcomes in education. 142. ICT for social accountability and results. Under the Science and Technology Higher Education Project, the use of ICT in the following areas will be explored: (i) improving financial sustainability of student loans scheme by using mobile money repayments, disbursements, and integrated accounting for loan beneficiaries; (ii) strengthening accountability by using an automated grievance redress services for students to provide feedback on loan board efficiency or university performance; and (iii) enhancing efficiency by introducing MIS to harmonize university accreditation, registration, and student loans databases. The introduction of a feedback mechanism will be explored. It would allow students to provide information data pertaining to national accreditation requirements. The Secondary Education Development Project (SEDP II) will consider opportunities to geocode school locations and employ mobile phone based feedback from either supervision teams or citizens reporting on milestone compliance. CAS Outcomes 3.2: Improved access to and quality of health services 143. Analytical underpinnings. The Bank’s current engagement in the health sector is anchored in a rich and varied knowledge base. This includes an independent evaluation of the health sector wide approach in 2007, plus annual health Public Expenditure Reviews and Health Sector Performance Profile Reports, and the recent joint Bank-Africa Economic Research Consortium Study on Service Delivery Indicators. The support for nutrition is based on the December 2007 Bank study: Advancing Nutrition for Long-term Equitable Growth, as well as the Bank-financed Fortification Action Plan, which was jointly developed with the National Food Fortification Alliance. The Health Financing Policy Note (FY11) will support the development of the government’s Health Financing Strategy. It highlights the fragmentation of Tanzania’s health financing system, with many different financiers and modes of financing. Future technical assistance will explore ways of integrating existing basket funds into the overall LGDG framework, with the aim of streamlining financial support and increasing its predictability at the local government level. 144. IDA-financed operations. Having assisted the sectorwide approach through a basket fund over the past eleven years, the proposed Basic Health Services Project (US$100 million, FY12) will review the effectiveness of the current approach, introduce mechanisms to link financing to performance and results, with a particular focus on maternal health. The project will build a foundation to integrate the health basket to government’s broader agenda for decentralization and the PFM Reform Program. Later in the CAS period, consolidation of LGA- level support to social services (basic education and health, rural water and sanitation) could be considered through a creation of a basic service grant window (for recurrent expenses vis-à-vis the capital expenditures under the Local Government Development Grant). This project will 40 continue to support priority interventions at the local level, including those which promote maternal and child health, as well as improved family planning coverage. 145. Regional operations. The objective of the East Africa Public Health Laboratory Strengthening Project (US$63.7 million, FY10) is to establish a regional network of efficient, high quality, accessible public health laboratories for the diagnosis and surveillance of tuberculosis and other communicable diseases. 146. Trust funds. A JSDF trust fund is in place to explore sustainable mechanisms for making food fortification available in rural areas of Tanzania, which will not be covered by the national food fortification program. DFID is considering support to the program through a parallel trust fund. 147. Partnerships and leverage. The health sector partnership coordinates sector dialogue and investments through a sectoral working group. Eleven members of that working group contribute to the Health Basket: Canada, Denmark (lead from July 2011), Germany, Ireland, Netherlands, Norway, Switzerland, One UN, UNFPA, UNICEF, and World Bank (lead until June 2011). The US and the Global Fund for AIDS, Tuberculosis, and Malaria contribute substantially to targeted programs. In 2010/11 the Global Fund gave US$225 million or 49 percent of the total MoHSW budget. US funding for PEPFAR is not included in the government budget, and was expected to reach US$358 million for the US fiscal year which ended September 30, 2010. Other US commitments are expected to total US$80 million, for an overall US total of US$438 million. FY11 funding is expected to remain at similar levels. IDA contributions to the health basket since 2001 have been US$109.7 million which we estimate has leveraged another US$450 million from partners. 148. Governance. Bank support in the health sector emphasizes budget and human resource management. Analytical work in 2010 on equity in service delivery highlighted the strong disparities between central, rural and remote areas when availability and quality of health services is concerned.21 The performance incentives built into the Health Sector Development Grant for LGAs will be improved to focus on results in service delivery, improvements in supply chain management, and staffing. 149. ICT for social accountability and results. The proposed Basic Health Services Project will support improving accuracy and timeliness of reporting, including through the use of mobile technology. This would also facilitate improved diagnostics to assist field level health workers. The use of mobile phone technology for verification of the authenticity of high value drugs will also be considered. RCIP provides support to the implementation of a telemedicine system for the Muhimbili National Hospital and for an e-procurement pilot at the medical stores department. CAS Outcome 3.3: Improved access to safety nets 150. Analytical underpinnings. The Bank’s support is informed by the social safety net review Poverty, Growth, and Public Transfers: Options for a National Productive Safety Net Program. The report highlights that productive safety nets can accelerate poverty reduction, 21 World Bank: Equity in Public Services in Tanzania and Uganda. 2010. 41 especially since a large share of the population are clustered around the poverty line. Existing programs, however, cover only a small portion of the poor, suffer from overlap, duplication, and leakage, and in many cases are not designed in ways which can achieve household poverty reduction objectives. 151. IDA-financed operations. The Bank has supported the government’s social protection efforts in the past ten years through financing the Tanzania Social Action Fund (TASAF). The Third Tanzania Social Action Fund Project (TASAF III, US$220 million, FY12) will build on this experience. It will support the establishment of the main building blocks for a new comprehensive, nationwide safety net program. It aims at improving incomes of poor rural and urban households, while smoothing consumption. The project will support three interventions: (i) public works program, (ii) cash transfers, and (iii) community savings and investments promotion. The Pension DPO (US$150 million, FY12, US$120 million, FY15) aims to secure the sustainability of the system on the mainland. The CAS supports the first two of the three phases of the programmatic DPO. 152. Trust funds. The Rapid Social Response MDTF (US$2 million, FY12) will improve the government’s capacity to provide support to the most vulnerable. 153. ICT for social accountability and results. TASAF III will explore the use of ICT to scale up, improve efficiency, and gain economies of scale. It will explore the feasibility of using (i) using mobile money for works and conditional cash transfers, (ii) mobile applications to register conditionality criteria for conditional cash transfers (e.g., mobile applications allowing teachers to report student attendance), (iii) geo-tagging of project components and assets, (iv) SMS based citizen feedback and verification for whistle blowing and anti-corruption, and (v) MIS for greater efficiency. 154. Partnerships and leverage. The AfDB, DFID, and the World Food Program have indicated their interest to co- or parallel finance TASAF III. D. Objective Four: Promote Accountability and Governance 155. The Bank will support selective interventions where it has a comparative advantage that is public financial management, public service reform, and decentralization. Expected results will include increased share of timely transfers to participating LGAs, improved performance of MDAs and service delivery, as well as increased budget transparency at local and central levels. CAS Outcome 4.1: Improved accountability and efficiency of public management 156. Analytical underpinnings. Analytical work in critical sectors will be carried out to enhance sectoral governance dialogue. It will include work on political economy in sectors, institutional capacity and arrangements, demand side governance, and third party monitoring. This will complement ongoing work on public service recruitment, deployment, and wage bill management, and their linkage to effective service delivery in the social sectors. 157. IDA-financed operations. In order to better focus support to cross-cutting governance systems, support to the development of central management instruments and tools will be clustered in the Performance, Results, and Accountability Project (PRAP, US$40 million, FY08). 42 After the proposed restructuring the project will include a central support mechanism for PFM and public sector management (PSM). The focus will be on public sector pay reform, performance management, leadership and records management, the management of budget preparation and executions, internal and external audit and financial control and procurement reform. Support under the restructured PRAP will also include a new component to support central and local level public management reforms in Zanzibar. 158. Budget support operations will continue to support the implementation of critical PFM and PSM instruments. The proposed Local Government Support Project II (US$190 million, FY13) will support PFM and performance management at the LGA level, which is expected to have a positive effect on the quality of service delivery. The Statistical Capacity Building Project (STATCAP, US$30 million, FY11) will assist government to improve availability and quality of statistical data and strengthen its capacity. Further support will only be considered if credible reform agenda with tangible outputs gets sufficient traction under strong leadership. RCIP supports the improvement of government’s efficiency and transparency through e- government applications. The project finances extension of coverage and access to ICT services in rural areas using PPP arrangements, provision of ICT connectivity and equipment for MDAs, and implementation of several e-government applications. 159. Trust Funds. Through the EITI TF, the World Bank will continue to support the government to maintain EITI compliant status. The PSIA TF (US$50,000) will finance third party monitoring of CAS results. 160. ICT for social accountability and results. Strengthening of local government management is a key to enhanced governance and accountability. ICT can be deployed to modernize planning, budgeting, financial management, procurement, reporting and other systems of local government. Systematic integration of ICT would help make local governments more transparent and accountable. ICTs could be also used to promote accountability and good governance by incentivizing local constituencies and adequately responding to local resident concerns. 161. Partnership and leverage. The public service and public financial management reform agenda are supported and coordinated through the government’s Public Service Reform Program and the Public Financial Management Reform Program. The Public Financial Management Development Partner Group is chaired by the EU. Other active partners are DFID, Norway, Finland, Sweden, Ireland, IMF East Africa Technical Assistance Center, Japan, AfDB, USAID, Germany, Canada, and the World Bank. The World Bank is the lead donor of the Public Sector Reform Program Working Group. DFID and Canada contribute to the PSRP. IDA has committed US$50 million to the two basket funds and leveraged US$100 million from partners. E. Implementing and Monitoring the Country Assistance Strategy 162. Bank-financed investment operations use Tanzania's national financial management systems, in line with the Accra Agenda for Action and consistent with World Bank financial management policy. The Bank supports ten basket fund operations, in partnership with other donors. These projects use government systems for budgeting, disbursement, accounting, internal audit, reporting, and oversight. Sectoral operations such as SEDP II also use government systems 43 for disbursement, internal audit, reporting, and auditing. All Bank-financed investment projects are incorporated in the annual budget and audited by the Office of the Auditor General. There are operational challenges in these projects and capacity building is an ongoing task that is supported through the projects themselves as well as through the joint donor Public Financial Management Reform Program. As for procurement, all Bank-financed contracts procured through national competitive bidding procedures use country systems. Inadequate procurement capacity is a problem especially in local governments; this capacity issue is being addressed through the work of Bank procurement expertise in the Dar es Salaam office. 163. The Bank will maintain a decentralized and high-capacity Tanzania country office. Of 25 active operations, 21 are supervised by task team leaders based in the country office. The Bank office in Dar es Salaam includes a Country Director, a Sector Leader for Sustainable Development and a Sector Leader for Human Development. Senior fiduciary staff (financial management, procurement, and safeguards) are based in the Tanzania country office. In total, the office currently comprises more than 80 staff and consultants, including one staff member from IFC. 164. Multisectoral approaches will continue to be used in designing and implementing the Bank’s work. In addition to the PRSC series and the annual public expenditure review, which are multisectoral by definition, there are a number of ongoing projects and programs that are traditionally sectoral but have already incorporated multisectoral elements in the Bank’s work program. These include the areas of climate change strategy, education, energy, financial sector development, and nutrition. For example, the Tanzania Energy Development and Access Project applies the Sustainable Solar Market Package to improve energy access in some rural areas in Tanzania, providing solar electricity services provided to their health centers and schools including staff quarters, street lights, homes, and private businesses. The conditional cash transfer component under TASAF III will have a substantial portion linked to changing the behavior of parents in enrolling their children at the age of seven, and also help retain girls in forms V-VI, where there have been many dropouts. 165. The CAS Results Framework presents the results chain for the Bank’s program (annex 1). The framework begins from the MKUKUTA and the MKUZA and selects outcomes to those that the Bank can demonstrably influence over the CAS period, including the lagged effects of operations started under the 2007 CAS. CAS outcomes are monitored jointly by the Bank and the government. Also, the Bank will use the Country Program Results Monitoring Tool to monitor portfolio impact and progress toward CAS outcomes. Since most of the new operations foreseen in this CAS will likely not finish implementation until after 2015, results during this CAS period will come mainly from existing operations. 166. The Tanzanian statistical system will be strengthened to improve availability of relevant and reliable data. For many indicators, the CAS will rely on the Tanzanian statistical system for baseline and target values. The national statistical system of Tanzania has been suffering from several constraints in the past. To address this, the World Bank and other development partners assist the government in the development of the Tanzania Statistical Master Plan (TSMP). The estimated cost of the TSMP is US$64.6 million, of which, the Bank will finance US$30 million through the STATCAP credit (FY11) with an expected implementation period of 2011-16. 44 167. The country team monitors the portfolio in real time, eliminating the need for frequent CPPRs, which the government discourages due to the transaction costs they impose. The Country Management Unit will continue to issue focused quarterly portfolio reports, which highlight portfolio issues and actions to be taken. 168. Trust funds are fully integrated in the CAS and will be managed accordingly. The Bank has already taken measures to integrate trust fund programs and budgets with Bank-funded programs and to ensure that trust funds are aligned with the CAS. Analytical work and policy notes funded by trust funds undergo the same rigorous review as Bank budget-funded analytical work; and trust fund financed activities are implemented in accordance with the same fiduciary requirements as IDA financed operations. 169. Continued improvement of donor harmonization for aid effectiveness has been part of development partners’ strategy in Tanzania over the past two decades. The government and DPs signed a Memorandum of Understanding in 2006, which established the current dialogue structure. The Bank is an active player in the Development Partner Group and many of the 26 sector or thematic working groups. The Bank is also a permanent member of the GBS coordination group (Troika+), which provides a forum for government and development partner to assess progress and coordinate interventions. Most major sectors and reform programs undertake joint annual reviews preceding the GBS annual review, and formally adopt or are striving toward sectorwide approaches. The Development Partner Group undertakes periodic division of labor exercises to encourage selectivity and increase effectiveness (see annex 11). 170. During the CAS period, the Bank will continue to coordinate with development partners and participate in development dialogue throughout Tanzania. The Bank will continue to encourage SWAPs and joint supervision missions where relevant. Currently nine IDA financed projects channel funds through ten basket funding mechanisms to support common programs jointly with other DPs. Bank supported projects use country systems to the greatest extent possible and avoid project implementation units. Harmonization is further increased through greater transparency of information shared on the Bank’s website for Tanzania. This includes translation and sharing of Bank project information documents to Kiswahili. 171. The CAS follows the Africa Region’s Strategy by using partnerships as a means to achieve development outcomes, building on the core partnership with the government. The Bank, as a key development partner in Tanzania, will continue to increase aid effectiveness through partnerships with the domestic and international private sector, civil society, the Tanzanian diaspora, and development agencies, including non-traditional donors. The ongoing cooperation with the China Development Bank, the International Poverty Reduction Center of China, the increased collaboration with CSOs to strengthen demand side governance, and deepened dialogue with the private sector (especially in the area of PPPs), and innovative operations in energy, finance, and water – are examples of the renewed focus on partnerships. 172. The Bank will prepare a CAS Progress Report in 2013, or earlier if needed, to evaluate progress toward CAS outcomes and adjust strategy and program. 45 V. RISKS AND MITIGATION 173. Weakening PFM performance. The declining Public Expenditure and Financial Accountability (PEFA) score reflects the gradual deterioration of the PFM systems since 2005.22 A major indicator of deteriorating performance is the adverse opinion given by the CAG on the Consolidated Financial Statement of GoT for 2009/10 in his latest report of April 2011. Weaknesses in budget planning and execution have led to lapses in commitment control, hence reducing contract credibility and driving up prices charged by contractors. This in turn reduces the impact of public investment spending. Weaknesses in managing procurement have further exacerbated this problem. The Bank will continue to collaborate with the national authorities and other partners to strengthen PFM through PEFAR, PRSC, and its lending and advisory support to LGAs. 174. Prospects for hydrocarbon development. The strong possibility of offshore natural gas reserves and the prospects of discovering additional petroleum resources may have a negative impact on governance, fiscal discipline, and public investments. Expected decreased reliance on development assistance may lead to a further deterioration of the reform environment. The concerns will be addressed by continued policy dialogue, AAA, and through the proposed Natural Gas Technical Assistance Project (FY12). To mitigate the risk of a further weakening reform environment, the proposed CAS narrows the scope of PRSCs and will focus on areas with strong government commitment. 175. Weak implementation capacity at the local government level. Risks arise in Bank financed operations implemented primarily at the local government level. The weak institutional and governance framework is exacerbated by inadequate incentive and sanction regime. The inadequate incentive structure remains a key impediment to service delivery at all levels. To mitigate the risk the World Bank will scale up support to LGAs through LGSP II and TSCP and sectoral projects. 176. Risk of increasing inequality. The poverty rate has not changed significantly since 2000 and growth has not been shared evenly. There is growing concern about increasing income inequality and its negative implications for both economic growth and social peace. Less than expected increase in employment opportunities and income, especially in the agriculture sector and for youth, may lead to a further increase in absolute inequality. 177. Exogenous risks, such as weather and international food and fuel prices. Weather conditions, such as droughts, have a strong influence on the output of the agricultural sector and the availability of hydroelectricity. 22 The PEFA score declined between 2005 and 2009 mainly due to reduced ratings for the following indicators: PI 1 - variance in expenditure composition, PI 3 – revenue out turn compared to original approved budget, PI 4 – arrears, PI 11 - orderliness and participation in the annual budget process, and PI 28 - Legislative scrutiny of external audit reports. 46 ANNEX 1: COUNTRY ASSISTANCE STRATEGY RESULTS FRAMEWORK MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals Strategic Objective 1: PROMOTE INCLUSIVE, SUSTAINABLE AND PRIVATE SECTOR-LED GROWTH MKUKUTA Goal  Slow and uneven 1.1 Improved business Ongoing Lending: 1.2: Reducing Business environment: PSCP (FY06) income poverty reforms to improve environment and financial International internet bandwidth FSSP (FY06) through promoting business intermediation (Mbps) increased from 740 in 2010 to Housing Finance Project (FY10) inclusive, environment 2,000 in 2013 (RCIP) SMMRP (FY09) sustainable, and  Cumbersome rules, Business environment: Regional: RCIP (FY09) employment- Reduce dwell time at the port of Dar- Regional: EATTFP (FY06) regulations and Number of days to start a business enhancing growth es-Salaam from 14 days in 2011 to 11 Regional: EAC FSDRP (FY11) and development license requirements (PSCP) days in 2013 (EATTFP)  Inadequate legal and Baseline: 29 in 2011 IFC: Contribution of regulatory Target: 10 in 2013 Financial intermediation: MSME Line of Credit (esp. Women) SMEs to private framework Total number of refinanced housing MSME Direct Finance sector increased mortgage loans provided increased Trade Finance Facility from 33 percent in  Administrative Financial intermediation: from nil in 2010 to 1,200 in 2013 Africa Credit Reference Bureau 2010 to 40 percent burdens and Proportion of adult population that (Housing Finance) in 2015 logistical obstacles uses financial services provided by Trust Funds: at points of export formal and semi-formal financial Portion of non-performing loans MDTF for Trade and Development decreased from 7.2% in 2010 to 5.1% Financial Literacy and Education  Low access to service providers (FSSP) in 2013 (FSSP) financial services, Baseline: 11% in 2008 Pipeline Lending: particularly in rural Target: 22% in 2013 Number of savings accounts in SAGCOT (FY12) areas financial institutions supervised by Pension Financing Reform DPO (FY12 & FY15) BOT increased from 2.9 million in Regional: SA Trade & Transport (FY13) 2010 to 3.5 million in 2013 (FSSP) Pipeline Non-Lending: TA ICT (annual) CEM (FY13) IFC/IDA: Risk Sharing Facilities AMSME 47 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals MKUKUTA Goal  Weak institution and 1.2 Increased productivity Ongoing Lending: 1.2: Reducing Productivity: LGSP (FY05) income poverty regulatory and commercialization of Percentage of farmers in target areas TASAF II (FY05) +AF (FY09)+AF(FY10) through promoting environment in agriculture using improved seed and fertilizers ASDP (FY06) inclusive, agriculture sector increased from 54% in 2010 to 70% in AFSP (FY09) sustainable, and  Unfavorable climate Productivity: 2012 (AFSP) Regional: EAAPP (FY09) employment- for commercial Crop yields in target areas (tons enhancing growth Production of basic seeds for maize IFC: and development activities per hectare) for (i) maize; (ii) rice OPV by private sector and ASA Agri-business  Insufficient (AFSP) increased from 56mt in 2010 to 150mt Unemployment and marketing Baseline: (i) 1.12; (ii) 1.73 in 2009 in 2012 (AFSP) Pipeline Lending: underemployment opportunities Target: (i) 2.20; (ii) 2.50 in 2015 ASDP II (FY13) reduced Agricultural infrastructure constructed SAGCOT (FY12) (unemployment from  Policies and or rehabilitated: (i) markets from 439 LGSP II (FY13) 10 percent in 2008 conditions that are Commercialization: in 2010 to 1,185 in 2012; (ii) irrigation TASAF III (FY12) to 5 percent by not conducive to Households participating in from 386 in 2010 to 600 in 2012; (iii) 2015) private outgrower operations supported by dip tanks from 294 in 2007 to 640 in Pipeline Trust Fund: 2012 (ASDP) PHRD Rice Productivity Development (FY12) Agro-processing in entrepreneurship SAGCOT increase their farmgate key products scaled prices by 25% by 2015 [TBD] Increase in adoption of new varieties, up to enhance value breeds, and management practices chains from 0% in 2009 to 12% in 2012   (EAAPP) Contribution of SMEs to the Commercialization: manufacturing Increase in the number of women sector increased outgrowers linked with agribusiness from 33 percent in funded through SAGCOT [TBD] 2009 to 40 percent in 2015. Increase in the number of agribusiness enterprises in the Southern Corridor obtaining commercial funding [TBD] 48 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals MKUKUTA Goal  Weak institutional 1.3 Increased sustainability Ongoing Lending: 1.4 Ensuring food Mining: SMMRP (FY09) and nutrition capacity for natural and improved management of Time to process mineral MACEMP (FY06) security, resource natural resources rights(exploration licenses)reduced ASDP (FY06) environmental management from 20 months in 2010 to 2 months in LKEMP (FY02) sustainability  Weak governance 2013 (SMMRP) TASAF II (FY05) +AF (FY09)+AF(FY10) WSSP (FY07) and climate and enforcement Mining: Percentage of country covered by Regional: Africa Stockpiles (FY07) change  Weak consideration Improvement in Tanzania’s policy geophysical airborne surveys at Regional: LVEMP II (FY09) adaptation and of environmental ranking as a mining investment 1:100,000 scale increased from 3% in mitigation concerns into destination in Fraser Institute 2009 to 14% in 2013 (SMMRP) IFC: investment planning Survey (SMMRP) Mining MKUKUTA Goal Specific environmental and social 1.5 Leveraging  Growing water Baseline:44/72 in 2009 policies and guidelines (mine closure, Trust Funds: returns on national conflicts, delayed Target: 2-3 points/places in 2014 mercury) developed by 2014 (SMMRP) EITI resources (both water resource within and outside) development, and Natural resources and Natural resources and environment: Pipeline Lending: for enhancing environment: Central Water Board functional by TA Natural Gas (FY12) growth and increased pollution 2012 (WSSP) TASAF III (FY12) benefits to the and watershed Area brought under improved land ASDP II (FY13) country at large degradation use and range land management Adoption of harmonized policies and WSSP II (FY13) and communities in  No national strategy practices in the targeted regulatory frameworks for water and Regional: Rusomo Falls (FY12) particular, catchments (cumulative hectares) fisheries resources management in Regional Lake Conservation and Dev. (FY12) especially in rural for climate change Lake Victoria (together with Kenya Regional: Ruhudji Hydro (IDA/PRG) (FY14) areas (LVEMP) and Uganda) by 2013 (LVEMP) Baseline: Nil in 2010 Pipeline Non-Lending: Sustainable Target: 45,000 in 2013 Government to implement key actions National Climate Change Strategy (FY13) exploitation of of Natural Resources (forestry, The Economics of Protected Areas (FY13) natural resources wildlife, and fisheries) accountability ensured with and transparency action plans Pipeline Trust Funds: benefits to local following the timetable specified in the GEF: Conservation and Management of Kihansi communities M&E framework (PRSC-9 trigger) Ecosystem (FY12) 49 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals Strategic Objective 2: BUILD INFRASTRUCTURE AND DELIVER SERVICES MKUKUTA Goal  Unreliable power 2.1 Increased access , Ongoing Lending: 1.2: Reducing among top quality and sustainability of Maximum transmission capacity in the Backbone Transmission (FY11) income poverty Subsystem increased from 200 MW in TEDAP (FY08) +AF (FY10) through promoting constraints for doing electricity 2010 to 1200 MW in 2014 TSCP (FY10) inclusive, business in Tanzania TASAF II (FY05) +AF (FY09)+AF(FY10) sustainable, and  Low power Access: Generation capacity (MW) of ZUSP (FY11) employment- generation capacity Number of people provided with renewable energy constructed under enhancing growth TEDAP increased from 6 in 2010 to 18  Limited use of access to electricity by household and development in 2013 IFC: renewable energy connections (TEDAP) Infrastructure Electricity potential Baseline: 34,200 in 2010 Number of commercial loans approved generation for rural/renewable energy sub- increased from  High connection Target:252 ,500 in 2015 projects – from 0 in 2010 to 4 by 2013 Trust Funds: charges, low access GEF: TEDAP (FY08) 1064MW in 2010 to (TEDAP) 1722MW by 2015 to electricity, Quality: SIDA TF II: Rural/Renewable Energy/Access particularly in rural Improvements in service quality as Number of community electricity Scale-up and Electricity Regulatory System Use of renewable areas measured by end user voltage connections under TEDAP increased Russian TF for Energy SME Development energy increased (TEDAP) from nil in 2007 to 870 in 2013 Lighting Rural Tanzania (AFREA)  Despite institutional (TEDAP) Baseline: 190 volts in 2010 ESMAP for SME development framework, weak Target: >218 volts in 2015 South-south cooperation for innovative low-cost planning, Improved IT systems for commercial, electrification and low-cost solutions monitoring, and technical and resource management Sustainability: functional by 2013 (TEDAP) reporting Pipeline Lending:  Limited participation Improvement in TANESCO’s TANESCO/REA institutional capacity DMDP (FY13) of the private sector operational efficiency as measured development needs identified and a TASAF III (FY12) by increase in collection efficiency plan to address them agreed and Natural Gas TA (FY12) in targeted areas (TEDAP) Capacity Building program initiated Regional: Rusomo Falls (FY12) Baseline: 70% in 2010 and under implementation by 2013 (TEDAP) Ruhudji Hydro Power (FY14) Target: 95% in 2015 Singida Wind Power PRG (FY13) Pipeline Trust Fund: Rural and Off-grid Access (FY13)-including Program of activities for small renewable energy projects 50 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals MKUKUTA Goal  Poorly performing Ongoing Lending: 1.2: Reducing railways 2.2 Increased access to and Roads rehabilitated (non-rural) LGSP (FY05) income poverty quality of transport services increased from nil in 2009 to 150km in CTCP II (FY08) through promoting  Insufficient 2013 (TSSP) TSCP (FY10) inclusive, financing of TSSP (FY10) sustainable, and transport sector Access: Design and bidding documents for the ZUSP (FY11) employment- rehabilitation of 911 km of roads interventions Passenger volume at Kigoma, Regional: EATTFP (FY06) enhancing growth prepared by 2013 (TSSP) and development  Weak institutional Tabora and Bukoba airports structures and (TSSP) 248 DART buses operational by 2013 Trust Fund Non-Lending: 15,000 km of planning/monitoring/ Baseline: 78,399 in 2009 (CTCP II) PPIAF prefeasibility study of Kisarawe freight national roads reporting systems Target: 104,000 in 2014 station rehabilitated/re- Compliance of Zanzibar airport with graveled (3000 km  Weak decentralized TCAA/ICAO safety and security trunk and 12000 km implementation Quality: standards by 2013 (CTCP II & TSSP) Pipeline Lending: regional) capacity at local Roads in good and fair condition LGSP II (FY13) levels as a share of total classified roads National Road Safety Agency TSSP AF (FY12) 1,000 of paved established and operational by 2012 CTCP II AF (FY12) roads rehabilitated (TSSP) (TSSP) DMDP (FY13) Baseline: 66% in 2009 TSSP II (FY15) 30,000 km per year Target: 70% in 2014 100 National Road/Bridge sections of national roads improved by 2013 (TSSP) Railroad Rehabilitation (FY12) maintained Regional: SA Trade & Transport (FY15) MKUKUTA Goal  Declining water 2.3 Increased access to and Ongoing Lending: 2.4: Increasing Water points developed in WSSP LGSP (FY05) access to affordable service coverage, quality of water and sanitation program areas increased from 77,213 TSCP (FY10) clean and safe slow institutional services in 2010 to 83,015 in 2012 WSSP (FY07) water, sanitation reform of urban ZUSP (FY11) and hygiene water utilities, and Urban Water and Sewerage inadequate attention Proportion of rural population with Authorities (UWSA) registered as Trust Funds: Proportion of access to clean and safe water Category A increased from12 in 2010 Water and Sanitation Program households in rural to small towns to 19 in 2012 (WSSP) Nile Basin Initiative settlements provided  Scaling up service (WSSP) with improved needs in poor Baseline: 58.7% in 2010 New piped household water Pipeline Lending: sources of water communities and Target: 65% in 2015 connections resulting from WSSP LGSP II (FY13) increased from 58.7 interventions increased from 453,908 DMDP (FY13) percent in 2009 to limited attention to in 2010 to 502,405 in 2012 WSSP II (FY13) 65 percent in 2015 sanitation Proportion of rural population with 51 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals  Weak institutional access to improved sanitation Water Point Mapping completed and Pipeline Non-Lending: Proportion of structures and (WSSP) operationalized by 2012 Climate Change Study (FY13) household in urban Water Sector Review (FY12) authorities provided planning/monitoring/ Baseline: 23% in 2010 WSDP Management Information with improved reporting systems of Target: 35% in 2015 System completed and operationalized sources of water MoW by 2011 increased from 84  Weak decentralized percent in 2010 to Citizen Report Card in four zones by 95 percent by 2015 implementation 2012 agencies capacity at Improved toilets at local levels (BWOs, Annual Joint Water Sector Review household level LGAs, UWSAs, increased from 23 DWASAs, etc.) Annual Independent Technical Audit of percent rural and 27 WSDP percent urban in 2010 to 35 percent rural and 45 percent urban) in 2015 MKUKUTA Goal  Rapid urban Ongoing Lending: 1.2: Reducing Bus/lorry stands constructed under LGSP (FY05) income poverty population growth 2.4 Improved access to and TSCP increased from nil in 2010 to 5 TSCP (FY10)  Urban infrastructure management of urban services through promoting in 2013 ZUSP (FY11) inclusive, deficits and sustainable, and proliferation of Drainage constructed/rehabilitated Pipeline Lending: employment- informal settlements Access: under TSCP increased from 0 km in LGSP II (FY13) enhancing growth People with access to improved 2010 to 10 km in 2013 DMDP (FY13) and development  Inadequate fiscal and management public transport services (TSCP) Waste collection points Solid waste capacity for Baseline: Nil in 2010 constructed/rehabilitated under TSCP collected in urban sustained urban Target: 543,721 in 2015 increased from nil in 2010 to 165 in centers increased 2013 from 47 percent in development and 2010 to 85 percent management Management: Streets in Zanzibar with new lighting in 2015 Waste collected and disposed at installed along selected roads and landfill compared to total waste junctions increased to 11km by 2013 Average travel time produced in target areas (TSCP) (ZUSP) in urban transport systems reduced Baseline: 28% in 2010 Participating LGAs in TSCP with up- Target:58% in 2015 to-date strategic urban development 52 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals plans increased from nil in 2010 to 7 in 2015 Cost of operations and maintenance recovered from direct fees and charges for (i) solid waste and (ii) bus/lorry stands increased from nil in 2010 to (i) 25% and (ii) 44% in 2013 (TSCP) Strategic Objective 3: STRENGTHEN HUMAN CAPITAL AND SOCIAL SAFETY NET MKUKUTA Goal  Inequality of quality Ongoing Lending: 2.1: Ensuring 3.1 Improved access to and 2,792 secondary classrooms built Zanzibar Basic Education (FY07) education provision STHEP (FY08) equitable access to quality of education under SEDP II through 2013 quality ECD,  Poor resource SEDP II (FY10) primary and allocation 20,000 teachers trained in-service PRAP (FY08) secondary mechanisms in under SEDP II by 2013 LGSP (FY05) education for boys Access: TASAF II (FY05) +AF (FY09)+AF(FY10) education Students enrolled in secondary and girls “Hard to reach” schools with  No adherence to school in Zanzibar (Zanzibar Basic qualified teachers increased from 41% Non-Lending: MKUKUTA Goal minimum service Education) in 2011 to 46% in 2013 (SEDP II) Education Sector Review (FY12) standards ECD EPDF[regional] TA 2.2: Ensuring Baseline: Boys: 37,723 and Girls: Number of new degree-holding NESAP-ICT [regional] TA expansion of  Inadequate 42,285 in 2010 teachers hired in secondary schools DGF Grant for UWEZO quality technical accountability and vocational Target: Boys: 48,250 and Girls: each school year, qualified to teach education and measures 49,300 in 2013 Math, Science or English increased Pipeline Lending: training, higher  Declining budget from 828 in 2010 to 1,039 in 2013 STHEP II (FY14) education, adult, share for Cluster II (STHEP) Secondary Education APL 2 (FY14) Quality: LGSP II (FY13) non-formal and Completion rates at the O level Proportion of public schools meeting continuing education (SEDP II) government approved minimum IFC Pipeline: Baseline: 22% in 2011 standards for infrastructure and a AMSME Access to secondary student teacher ratio of 1:40 increased Health and Education Risk-Sharing Facility Target: 39% in 2015 from 4% in 2011 to 23% in 2013 education for girls and boys improved (SEDP II) (NER to 45 percent for lower secondary, Shortfall of qualified teachers at the 5 percent for upper primary level declined from 31 percent secondary) in 2010 to 24 percent in 2013 (Zanzibar Basic Education) 53 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals Qualified teachers 10,306 additional classrooms built trained, deployed, and/or rehabilitated under TASAF II and retained to by 2013 achieve recommended students-qualified teacher ratio (primary 1:45; secondary 1:25) MKUKUTA Goal  Human resources for Ongoing Lending: 2.3: Improving HSDP II (FY04)+AF(FY08)+AF(FY10) survival, health, health constraint in 3.2 Improved access to and Satellite laboratories awarded two star LGSP (FY05) number, skills and quality of health care services nutrition and well- status under regional accreditation TASAF II (FY05) +AF (FY09)+AF(FY10) being, esp. for geographic program based on WHO/AFRO five- PRAP (FY08) children, women distribution step accreditation approach increased Regional: EA Public Health Labs (FY10) and vulnerable  Inadequate Proportion of births taking place at from nil in 2009 to 100% (5 labs) in groups health facilities as a proxy of births 2014 (EA Public Health Labs) IFC: accountability Health and Education Risk-Sharing Facility MMR reduced from measures attended by skilled H/Workers Outpatient attendances per capita and 454 per 100,000 live  Declining budget (GBS)/Basic Health per health worker by LGA (Basic Non-Lending: births in 2010 to 265 share for Cluster II Baseline: 51% in 2008 Health Services Project) [TBD] Health Financing Policy Note (FY11) by 2015 Target: 67% in 2012 Political Economy of Cross-Cutting Reforms Percentage of health centers and ECD EPDF[regional] TA Proportion of births dispensaries in each LGA that provide NESAP-ICT [regional] TA attended by skilled Proportion of mothers in each emergency obstetrical care (Basic JSDF Rural Fortification Grant health personnel LGA who received two doses of Health Services Project) [TBD] increased from 50.6 preventative intermittent treatment Pipeline Lending: percent in 2010 to for malaria during last pregnancy Proportion of pregnant women Pension Financing Reform DPO (FY12 & FY15) 80 percent in 2015 receiving 90+ days of iron-folate Basic Health Services Project (FY12) (Basic Health Services project) supplementation (Basic Health [TBD] Services Project) [TBD] Pipeline Non-Lending: TA Basket Funds LGDG Integration (FY12) Reduction in the coefficient of variation in the percent of approved local level health posts filled by LGAs (Basic Health Services Project) [TBD] 54 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals MKUKUTA Goal  Food shortages and 3.3 Improved access to safety Ongoing Lending: 2.6: Providing Communities receiving sub-project LGSP (FY05) adequate social hunger nets grants through TASAF increased from TASAF II (FY05) +AF (FY09)+AF(FY10) protection and  High share of people 6,037 in 2010 to 7,000 in 2013 ASDP (FY06) rights to vulnerable below the poverty AFSP (FY09) and needy groups line Beneficiaries of conditional cash Vulnerable individuals getting support TSCP (FY10) transfers (TASAF II and III) through TASAF II increased from Regional: EAAPP (FY09)  High share of 871,772 in 2010 932,450 by 2013 unemployment Baseline: 6,000 in 2010 Pipeline Lending: Food and nutritional security at  High share of Target: 22,582 in 2013 Subprojects in TASAF completed ASDP II (FY13) informal sector according to design increased from Pension Financing Reform DPO (FY12 & FY15) household, district, regional, and Beneficiaries of public works 3,490 in 2010 to 6,000 in 2013 TASAF III (FY12) national levels programs (TASAF II and III) Person-days provided in labor Ongoing Non-Lending: ensured Baseline: 217,315 (men: 114,124, intensive public works programs Social Safety Net Review (FY11) women: 103,191) in 2010 increased from 14.8 million in 2010 by Target: 238,635 (men: 124,900, 17.8 in 2013 (TASAF II and III) Pipeline Non-Lending: women: 113,735) in 2013 National Climate Change Strategy (FY13) 33,600 individuals participating in community savings under TASAF by Pipeline Trust Funds: 2013 Plan Africa Trust Fund (FY11) Rapid Social Response MDTF (FY11) Strategic Objective 4: PROMOTE ACCOUNTABILITY AND GOVERNANCE MKUKUTA Goal  Serious weaknesses Ongoing Lending: 3.1: Ensuring 4.1 Improved efficiency and Efficiency: PRAP (FY08) systems and in procurement, Volume of electronic records/events ATIP (FY06) financial transparency of public structures of management processed with e-Government LGSP (FY05) governance uphold management and applications (yearly) increased from TASAF II (FY05) +AF (FY09)+AF(FY10) the rule of law and control mechanisms nil in 2010 to 500,000 in 2013 (RCIP) STATCAP (FY11) Efficiency: SMMRP (FY09) are democratic,  Tools and effective, Share of MDAs use performance At least 35 LGAs apply OPRAS in the Regional: RCIP (FY09) instruments on accountable, management system (PMS) to 2013/2014 budget cycle (LGSP II) predictable, performance Non-Lending: enhance service delivery (PRAP) transparent, management exist, Percentage of wage bill allocation that PEFAR Capacity Building Baseline: 62% in 2010 TA GAC (annual) inclusive, and but are not applied at is used from supplements and corruption-free at Target: 85% in 2013 allowances decreased from 59% in all levels service delivery 1009 to 15% in 2013 (GBS) Trust Funds: levels EITI 55 MKUKUTA Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles and Results Indicators Goals Principles of  Lack of equity and Transparency: Transparency: PSIA democracy, rule of Full and timely implementation of Annual publishing of EITI Financial Sector Deepening law, integrity, transparency in wage reconciliation report accountability, bill management census and surveys specified in the Pipeline Lending: transparency,  Weak transparency Inter-censal Survey Calendar Third party monitoring piloted in two Pension Financing Reform DPO (FY12&FY15) inclusiveness, and accountability 2012-2022 (STATCAP) [TBD] sectors by 2013 LGSP II (FY13) effectiveness, and TASAF III (FY12) mechanisms in efficiency ensured Budget execution report published and applied at all service delivery annually Pipeline Non-Lending: levels  Limited capacity for PER: Impact of Public Spending (FY12) reliable and timely Micro-data made available online Basket Funds LGDG Integration (FY12) production of through NADA, number of major CEM (FY13) household datasets (HBS, LFS, DHS, Petroleum Revenue Management (FY14) statistical data NPS, THMIS, etc) available increased PER: Transition from Aid (FY15) from 9 in 2010 to 13 in 2013(STATCAP) 56 ANNEX 2: TANZANIA AT A GLANCE Tanzania at a glance 2/25/11 Sub- Ke y D e v e lo pm e nt Indic a t o rs Saharan Lo w Tanzania A frica inco me Age distribution, 2009 (2009) Male Female P o pulatio n, mid-year (millio ns) 43.7 81 9 828 75-79 Surface area (tho usand sq. km) 947 24,242 17,838 60-64 P o pulatio n gro wth (%) 3.0 2.5 2.2 Urban po pulatio n (% o f to tal po pulatio n) 26 36 28 45-49 30-34 GNI (A tlas metho d, US$ billio ns) 21.4 897 389 15-19 GNI per capita (A tlas metho d, US$ ) 490 1,095 470 GNI per capita (P P P , internatio nal $ ) 1,350 1 ,981 1,131 0-4 10 5 0 5 10 GDP gro wth (%) 6.0 5.2 6.2 percent of total population GDP per capita gro wth (%) 3.0 2.7 3.9 ( m o s t re c e nt e s t im a t e , 2 0 0 3 – 2 0 0 8 ) P o verty headco unt ratio at $ 1 .25 a day (P P P , %) 89 51 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 97 73 .. Life expectancy at birth (years) 56 52 57 200 Infant mo rtality (per 1,000 live births) 68 83 77 Child malnutritio n (% o f children under 5) 17 25 28 150 A dult literacy, male (% o f ages 15 and o lder) 79 72 73 100 A dult literacy, female (% o f ages 15 and o lder) 66 54 59 Gro ss primary enro llment, male (% o f age gro up) 111 105 107 Gro ss primary enro llment, female (% o f age gro up) 109 95 100 50 0 A ccess to an impro ved water so urce (% o f po pulatio n) 54 60 64 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 24 31 35 1990 1995 2000 2008 Tanzania Sub-Saharan Africa a N e t A id F lo ws 19 8 0 19 9 0 2000 2009 (US$ millio ns) Net ODA and o fficial aid 676 1,163 1,063 2,331 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2007): United Kingdo m 73 27 153 254 10 United States 28 39 25 247 8 Euro pean Co mmissio n 25 42 32 186 6 4 A id (% o f GNI) .. 28.6 10.6 11.2 2 A id per capita (US$ ) 36 46 31 55 0 -2 Lo ng- T e rm E c o no m ic T re nds -4 95 05 Co nsumer prices (annual % change) 30.2 35.8 -83.1 12.1 GDP implicit deflato r (annual % change) .. 22.4 7.6 7.4 GDP GDP per capita Exchange rate (annual average, lo cal per US$ ) 8.2 195.1 800.4 1,320.3 Terms o f trade index (2000 = 100) .. .. .. .. 19 8 0 – 9 0 19 9 0 – 2 0 0 0 2000–09 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 18.7 25.5 34.1 43.7 3.1 2.9 2.8 GDP (US$ millio ns) .. 4,259 10,186 21,368 .. 3.0 7.1 (% o f GDP ) A griculture .. 46.0 33.5 28.8 .. 3.2 4.4 Industry .. 17.7 19.2 24.3 .. 3.1 9.5 M anufacturing .. 9.3 9.4 9.5 .. 2.8 8.7 Services .. 36.4 47.3 46.9 .. 2.6 7.8 Ho useho ld final co nsumptio n expenditure .. 80.9 78.3 62.3 .. 5.3 6.4 General go v't final co nsumptio n expenditure .. 17.8 11.7 19.8 .. -8.8 13.5 Gro ss capital fo rmatio n .. 26.1 16.8 29.8 .. -1.1 12.8 Expo rts o f go o ds and services .. 12.6 13.4 23.2 .. 11.7 11.6 Impo rts o f go o ds and services .. 37.5 20.1 35.2 .. 4.7 15.9 Gro ss savings .. 7.7 8.5 21.5 No te: Figures in italics are fo r years o ther than tho se specified. 2009 data are preliminary. .. indicates data are no t available. a. A id data are fo r 2008. Develo pment Eco no mics, Develo pment Data Gro up (DECDG). 57 Tanzania B a la nc e o f P a ym e nt s a nd T ra de 2000 2009 Governance indicators, 2000 and 2009 (US$ millio ns) To tal merchandise expo rts (fo b) 734 2,664 To tal merchandise impo rts (cif) 1,492 7,081 Voice and accountability Net trade in go o ds and services -757 -2,984 Political stability Current acco unt balance -484 -2,216 as a % o f GDP -4.8 -10.4 Regulatory quality Rule of law Wo rkers' remittances and co mpensatio n o f emplo yees (receipts) 8 23 Control of corruption Reserves, including go ld .. .. 0 25 50 75 100 2009 Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e higher values imply better ratings 2000 (% o f GDP ) Current revenue (including grants) 10.5 16.4 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue 9.3 15.5 Current expenditure 1 1.2 19.4 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2008 Overall surplus/deficit -4.7 -11.8 P aved ro ads (% o f to tal) .. 8.6 Highest marginal tax rate (%) Fixed line and mo bile pho ne Individual 30 30 subscribers (per 1 00 peo ple) 1 31 Co rpo rate 30 30 High techno lo gy expo rts (% o f manufactured expo rts) 1.2 1.5 E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) To tal debt o utstanding and disbursed 7,142 7,325 A gricultural land (% o f land area) 38 39 To tal debt service 167 164 Fo rest area (% o f land area) 42.1 38.9 Debt relief (HIP C, M DRI) 2,997 2,124 Terrestrial pro tected areas (% o f surface area) .. 38.8 To tal debt (% o f GDP ) 70.1 34.3 Freshwater reso urces per capita (cu. meters) 2,336 1,977 To tal debt service (% o f expo rts) 12.3 3.1 Freshwater withdrawal (billio n cubic meters) 5.2 .. Fo reign direct investment (net inflo ws) 463 645 CO2 emissio ns per capita (mt) 0.08 0.15 P o rtfo lio equity (net inflo ws) 0 0 GDP per unit o f energy use (2005 P P P $ per kg o f o il equivalent) 2.2 2.5 Composition of total external debt, 2009 Energy use per capita (kg o f o il equivalent) 392 443 Short-term, IBRD, 0 1,342 IDA, 2,598 Wo rld B a nk G ro up po rt f o lio 2000 2009 (US$ millio ns) Private, 1,134 IB RD To tal debt o utstanding and disbursed 11 0 IMF, 329 Disbursements 0 0 P rincipal repayments 4 0 Bilateral, 947 Other multi- Interest payments 1 0 lateral, 975 US$ millions IDA To tal debt o utstanding and disbursed 2,593 2,598 Disbursements 142 608 P riv a t e S e c t o r D e v e lo pm e nt 2000 2009 To tal debt service 23 16 Time required to start a business (days) – 29 IFC (fiscal year) Co st to start a business (% o f GNI per capita) – 36.8 To tal disbursed and o utstanding po rtfo lio 43 50 Time required to register pro perty (days) – 73 o f which IFC o wn acco unt 43 50 Disbursements fo r IFC o wn acco unt 8 16 Ranked as a majo r co nstraint to business 2000 2009 P o rtfo lio sales, prepayments and (% o f managers surveyed who agreed) repayments fo r IFC o wn acco unt 4 5 Electricity .. 72.9 A ccess to /co st o f financing .. 9.3 M IGA Gro ss expo sure 175 0 Sto ck market capitalizatio n (% o f GDP ) 2.3 6.2 New guarantees 172 0 B ank capital to asset ratio (%) .. .. No te: Figures in italics are fo r years o ther than tho se specified. 2009 data are preliminary. 2/25/11 .. indicates data are no t available. – indicates o bservatio n is no t applicable. Develo pment Eco no mics, Develo pment Data Gro up (DECDG). 58 Millennium Development Goals Tanzania With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) T a nza nia G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2008 P o verty headco unt ratio at $ 1 .25 a day (P P P , % o f po pulatio n) 72.6 .. 88.5 .. P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) 38.6 .. 35.7 .. Share o f inco me o r co nsumptio n to the po o rest qunitile (%) 7.4 .. 7.3 .. P revalence o f malnutritio n (% o f children under 5) 25.1 26.9 25.3 16.7 G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) 51 49 53 99 P rimary co mpletio n rate (% o f relevant age gro up) 55 58 55 83 Seco ndary scho o l enro llment (gro ss, %) 5 5 6 .. Yo uth literacy rate (% o f peo ple ages 15-24) .. .. 78 78 G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) 97 97 99 .. Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) .. .. 29 31 P ro po rtio n o f seats held by wo men in natio nal parliament (%) .. 18 1 6 30 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 162 155 139 111 Infant mo rtality rate (per 1,000 live births) 99 95 86 70 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 80 78 78 88 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) 880 920 920 790 B irths attended by skilled health staff (% o f to tal) 53 47 44 43 Co ntraceptive prevalence (% o f wo men ages 1 5-49) 10 18 25 26 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) 4.8 7.4 7.1 6.2 Incidence o f tuberculo sis (per 100,000 peo ple) 230 230 240 190 Tuberculo sis case detectio n rate (%, all fo rms) 39 59 67 75 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) 55 54 54 54 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 24 24 24 24 Fo rest area (% o f to tal land area) 46.8 44.5 42.1 38.9 Terrestrial pro tected areas (% o f surface area) .. .. .. 38.8 CO2 emissio ns (metric to ns per capita) 0.1 0.1 0.1 0.1 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) 2.3 2.2 2.2 2.5 G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt Telepho ne mainlines (per 1 00 peo ple) 0.3 0.3 0.5 0.3 M o bile pho ne subscribers (per 1 00 peo ple) 0.0 0.0 0.3 30.6 Internet users (per 1 00 peo ple) 0.0 0.0 0.1 1.2 P erso nal co mputers (per 1 00 peo ple) .. 0.2 0.3 0.9 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 40 100 75 30 75 50 50 20 25 25 10 0 2000 2002 2004 2006 2008 0 0 1990 1995 2000 2008 2000 2002 2004 2006 2008 Primary net enrollment ratio Fixed + mobile subscribers Ratio of girls to boys in primary & secondary Tanzania Sub-Saharan Africa education (..) Internet users No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 2/25/11 59 Develo pment Eco no mics, Develo pment Data Gro up (DECDG). ANNEX 3: KEY ECONOMIC INDICATORS 3/2/2010 60 Tanzania - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 Indicator e Public finance (as % of GDP at market prices) Current revenues 11.8 12.6 14.5 15.9 15.9 16.5 17.0 17.3 17.5 Current expenditures 15.4 17.3 17.4 14.9 17.3 19.4 17.9 17.3 17.2 f Current deficit -3.6 -4.7 -2.9 1.0 -1.4 -2.9 -0.9 0.0 0.3 Capital expenditure 6.3 5.7 6.2 8.0 8.2 9.1 9.4 9.5 10.0 Foreign financing 3.8 2.6 3.3 3.8 3.2 3.5 3.3 3.8 4.0 Monetary indicators M2/GDP 15.6 17.1 19.0 20.0 21.0 23.0 23.0 23.0 23.0 Growth of M2 (%) 26.8 23.2 22.7 24.4 23.8 21.2 21.0 20.0 19.0 Private sector credit growth / 63.5 41.9 34.5 39.0 26.7 33.6 38.0 39.0 41.0 total credit growth (%) Price indices( YR92 =100) Merchandise export price index 151.7 154.8 166.5 201.2 151.5 163.2 183.9 189.2 193.5 Merchandise import price index 125.8 153.7 171.1 194.8 177.7 191.3 206.0 210.0 213.0 Merchandise terms of trade index 120.6 100.7 97.3 103.3 85.3 85.3 89.3 90.1 90.8 g Real exchange rate (US$/LCU) 70.7 66.4 65.7 69.9 69.9 69.9 69.9 69.9 69.9 Consumer price index (% change) 5.0 7.2 7.0 10.2 11.9 9.9 9.0 8.5 7.5 GDP deflator (% change) 6.2 5.3 9.0 10.0 13.0 5.6 4.4 5.0 5.0 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. Current deficit is the difference between current revenue and current expenditure, it is different to overal deficit which includes development expenditure g. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 61 ANNEX 4: KEY EXPOSURE INDICATORS 3/2/2010 Tanzania - Key Exposure Indicators Actual Estimated Projected Indicator 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total debt outstanding and 8335 4028 4974 5114 5417 5664 5834 6034 6240 a disbursed (TDO) (US$m) a Net disbursements (US$m) 376 496 635 839 772 781 611 668 688 Total debt service (TDS) 116.3 86.1 46.5 34.2 45.7 57.3 86.3 126.3 176.0 a (US$m) Debt and debt service indicators (%) b Total Debt Outstanding/Export of GNFS 308.2 145.1 160.3 134.8 130.4 128.6 121.7 114.6 106.4 Total Debt Outstanding/GDP 55.1 29.6 20.8 24.8 25.1 25.3 26.7 26.8 27.8 b Total Debt Service/Export of GNFS 4.3 3.1 1.5 0.9 1.1 1.3 1.8 2.4 3.0 IBRD exposure indicators (%) IBRD Debt Service/Public Debt Service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IDA Total Debt Outstanding (US$m)c 3861 1056 1585 1805 2009 2190 2321 2520 2760 a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "GNFS" denotes exports of goods and services, including workers' remittances. c. Includes present value of guarantees. 62 ANNEX 5: OPERATIONS PORTFOLIO (IBRD/IDA AND GRANTS) as of 3/10/2011 Closed Projects 131 IBRD/IDA * Total Disbursed (A ctive) 1,237.49 of w hich has been repaid 0.00 Total Disbursed (Closed) 2,746.11 of w hich has been repaid 241.10 Total Disbursed (A ctive + Closed) 3,983.60 of w hich has been repaid 241.10 Total Undisbursed (A ctive) 1,445.36 Total Undisbursed (Closed) 4.13 Total Undisbursed (A ctive + Closed) 1,449.49 Active Projects Difference Between Last ISR Expected and Actual a/ Supervision Rating Original Amount in US$ Millions Disbursements Project ID Project Name DO IP Fiscal Year IDA GRANT Cancel. Undisb. Orig. Frm Rev'd P114291 TZ : Accelerated Food Security Project S MS 2009 160 73.5 11.9 P103633 TZ Second Central Transport Corridor MS MS 2008 190 110.4 113.4 P111598 TZ- Backbone Transmission Investm.(FY11) # # 2011 150 159.3 P114866 TZ-2ndary Educ. Dev. Program II (FY10) S S 2010 150 108.5 -29.9 P070544 TZ-Accountability,Transparency&Integrity MU MU 2006 40 21.2 -2.3 P085752 TZ-Agr Sec Dev (FY06) S MS 2006 155 41.0 -40.2 P101645 TZ-Energy Development & Access Expansion MS MS 2008 130 95.8 42.4 13.5 P099231 TZ-Financial Sector Support MS MS 2006 15 12.8 11.3 P092154 TZ-GEF Energy Dvpt and Access Expansion S MS 2008 6.5 5.9 4.2 P084213 TZ-GEF Marine & Coastal Env Mgmt (FY06) S S 2006 10 2.7 2.3 P082335 TZ-Health Sector Development II (FY04) S S 2004 165 6.4 -96.9 -7.4 P117242 TZ-Housing Finance S S 2010 40 39.5 11.1 P070736 TZ-Loc Govt Supt SIL (FY05) S S 2005 150 21.5 -84.0 -1.0 P073397 TZ-Lower Kihansi Env Mgmt TAL (FY02) S S 2002 9.8 0.9 -3.6 -0.7 P082492 TZ-Marine & Coastal Env Mgmt SIL (FY06) MS S 2006 51 10.1 7.7 P092898 TZ-Performance Results & Accountability MU MS 2008 40 20.9 8.5 P085009 TZ-Private Sector/MSME Competitiveness MS MS 2006 95 15.7 -4.9 P098496 TZ-Sci.&Tech. High Educ. Prog-Ph.1 (FY08 S MS 2008 100 63.4 10.1 P085786 TZ-Soc Action Fund 2 SIL (FY05) S S 2005 215 47.1 -27.6 -6.6 P111153 TZ-Strategic Cities Project S S 2010 163 141.9 -6.5 P096302 TZ-Sustainable Mgt of Min.Resources TAL S S 2009 50 46.7 9.4 P100314 TZ-Tax Modernization Project MS S 2006 12 1.0 0.0 P055120 TZ-Transport Sector Support Project S S 2010 270 232.7 -22.7 P087154 TZ-Water Sector Support SIL MU MU 2007 200 101.4 81.0 P102262 TZ-Zanzibar Basic Educ. SIL (FY07) S S 2007 42 34.3 9.9 P111155 TZ-Zanzibar Urban Services Project # # 2011 38 39.2 Overall Result 2630.8 16.5 1453.9 4.8 -2.2 National Regional TOTAL TOTAL TZ-specific Undisb. Re giona l proje cts IDA IDA P070547 GEF: Groundwater and Drghout Mgmt MS MS 2005 7 0 2.8 n/a n/a P078643 GEF: WIO Marine Highway Development S S 2007 11 0 8.5 n/a n/a P079734 East Africa Trade and Transport Facilitation MS MS 2006 199 37 127.6 12.3 24.7 P100406 Lake Victoria Environemental Mgmt Phase II MS MU 2009 90 32.5 83.6 10.8 21.7 P103189 GEF: Africa Stockpiles Program MS MS 2006 13.4 6.9 9.1 n/a n/a P103298 GEF: Lake Victoria Env. Mgmt Phase II MS MU 2009 7 0 3.5 n/a n/a P111432 Regional Communication Infra Project Phase II MS MU 2009 151 100 141.8 58 42 P112688 East Africa Agricultural Productivity MS MS 2009 90 30 78.5 10 20 P111556 East Africa Public Health Lab Network Project S S 2010 63.7 15.1 62.2 5 10 P121611 EAC Financial Sector Dev. And Regionalization S S 2011 16 0 16.0 0 16 Overall Result 609.7 38.4 221.5 533.6 96.1 134.4 63 ANNEX 6: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT as of 3/10/2011 Indicator 2008 2009 2010 2011 Portfolio Assessment Number of Projects Under Implementation a 23 26 24 24 Average Implementation Period (years) b 3.5 4.1 3.9 4.0 Percent of Problem Projects by Number a, c 8.7 11.5 8.3 12.5 Percent of Problem Projects by Amount a, c 5.2 4.8 8.9 10.6 Percent of Projects at Risk by Number a, d 8.7 11.5 8.3 12.5 Percent of Projects at Risk by Amount a, d 5.2 4.8 8.9 10.6 Disbursement Ratio (%) e 23.2 20.7 34.6 20.8 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 107 8 Proj Eval by OED by Amt (US$ millions) 4,355.4 444.6 % of OED Projects Rated U or HU by Number 41.1 37.5 % of OED Projects Rated U or HU by Amt 36.1 60.3 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 64 ANNEX 7: TRUST FUND PORTFOLIO Fund Fund Name Status Execution Use Effective Closing Grant Amt (USD) Funds Disb to date Disburse- Donor Date Date in USD ment (%) Co-Financing of Private Sector Competitiveness Project in TF094620 Active Recipient CO 12/23/2009 6/30/2012 US$13,654,000.00 US$5,469,050.97 40 % Multiple Tanzania TF090491 Community-Based Conditional Cash Transfer Pilot Active Recipient OP 9/20/2007 9/20/2011 US$1,879,915.00 US$1,346,270.57 71 % Japan TF091281 GEF FSP – Energy Development and Access Expansion Active Recipient TA 1/31/2008 3/31/2012 US$6,500,000.00 US$1,450,000.00 22 % Multiple Africa Renewable Energy Access Trust Fund - Lighting Rural TF096436 Active Recipient TA 5/1/2010 4/30/2011 US$1,000,000.00 US$553,657.00 55% Multiple Tanzania Project TF096660 TZ- Agricultural waste to charcoal Active Recipient TA 12/29/2010 9/30/2012 US$134,815.00 US$67,407.5 50% Multiple TF090420 Community-Based Conditional Cash Transfer Pilot Active Bank OP 9/20/2007 9/20/2011 US$93,000.00 US$83,844.94 90 % Japan TF071411 Support to Electricity Access and Regulation in Tanzania Active Bank TA 1/1/2010 4/30/2013 US$0 US$35,000.00 0% SIDA TF091237 Scaling Up Trade for Growth and Competitiveness Active Bank TA 11/26/2007 12/31/2010 US$670,000.00 US$499,883.8 67 % Multiple TF093763 Tanzania Poverty Assessment Active Bank TA 2/15/2009 12/31/2010 US$150,000.00 US$0.00 0% DGDC PPIAF: Prefeasibility Study of PPP Options for Kisarawe TF094310 Active Bank TA 4/28/2009 2/28/2011 US$331,300.00 US$250,205.71 76 % Multiple Freight Station Case Study for Dar-es-Salaam –Public-Private/Public-Public TF094518 Active Bank TA 6/1/2009 4/30/2011 US$135,000.00 US$115,423.97 85 % Multiple Partnerships in Urban Water Supply Technical Support to Improve Monitoring and Evaluation of the TF094958 Active Bank TA 8/17/2009 4/30/2011 US$57,500.00 US$54,696.54 95 % Multiple SWAP Programs: Tanzania Dar-es-Salaam: Investment Resource Mobilization for TF095375 Active Bank TA 9/25/2009 12/31/2011 US$75,000.00 US$59,966.1 80 % Multiple Metropolitan Development TF096044 Support to Electricity Access and regulation In Tanzania Active Bank TA 1/13/2010 12/31/2012 US$3,142,036.00 US$492,249.30 16 % SIDA TF096123 TA for Poverty Analysis for Tanzania Active Bank TA 2/8/2010 2/29/2012 US$150,000.00 US$86,370.11 58 % DGDC TF096137 Institutional Foundations of Shared Growth for Tanzania Active Bank TA 2/1/2010 4/30/2011 US$64,000.00 US$50,459.12 79 % Multiple TF096371 China-Tanzania TF Active Bank TA 3/8/2010 4/30/2011 US$131,000.00 US$86,790.87 66 % DFID TF096525 Tanzania - Energy Development & Access Expansion Active Bank TA 3/22/2010 12/31/2011 US$100,000.00 US$49,726.81 50 % Multiple TF096939 AFTEG-Energy SME Admin. and Management (Tanzania) Active Bank TA 5/5/2010 2/28/2013 US$100,000.00 US$0.00 0% Russia Restoration of a Fragile and Unique Lower Kihansi Gorge TF097324 Active Bank TA 5/21/2010 6/30/2011 US$50,000.00 US$20,003.48 40 % Multiple Ecosystem Review of the implementing agencies for water sector support in TF097501 Active Bank TA 8/2/2010 12/31/2010 US$100,000.00 US$14,510.37 15% Multiple Tanzania TF098115 Tanzania - Early Childhood Care and Development (ECD) Active Bank TA 10/31/2010 8/31/2011 US$138,000.00 US$0.00 0% Multiple TF098450 Supporting Women Economic Empowerment in Tanzania Active Bank TA 11/30/2010 11/30/2011 US$80,000.00 US$0.00 0% Multiple TF098990 Continuing support for the mainstreaming of trade in Tanzania Active Bank TA 2/2/2011 6/30/2011 US$150,000.00 US$0.00 0% Multiple TOTAL: 24 Trust Funds US$28,885,566.00 US$10,785,517.13 65 ANNEX 8: IFC’S OPERATIONS PORTFOLIO Tanzania Committed and Disbursed Outstanding Investment Portfolio As of 4/30/2011 (In USD Millions) Committed Disbursed Outstanding **Quasi Partici **Quasi Partici FY Approval Company Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 2007 Access Tanzania 1.68 0.88 0 0 0 0.76 0.88 0 0 0 0 Alaf 3.21 0 0 0 0 3.21 0 0 0 0 2005 Bbl 2 0 0 0 0 2 0 0 0 0 0 Boa - Tanzania 0 0 4.5 0 0 0 0 0 0 0 0 Braeburn TZ 2 0 0 0 0 0 0 0 0 0 2010 Crje estate ltd 10 0 0 0 0 0 0 0 0 0 2007 Exim bank 2 0 0 0 0 2 0 0 0 0 2009 Green resources 10 0 8 0 0 5 0 0 0 0 2010 Helio resource 0 6.69 0 0 0 0 4.81 0 0 0 2007 Ifa-Zanzibar 9.28 0 0 0 0 9.28 0 0 0 0 2000 NBC 0 4 0 0 0 0 4 0 0 0 2011 Petra diamonds 40 10 0 0 0 36.5 4 0 0 0 0 Stanbic Tanzania 0 0 3 0 0 0 0 3 0 0 1994 Tanzania brewery 0 3.25 0 0 0 0 3.25 0 0 0 2008 TRL 6.96 0 0 0 0 6.96 0 0 0 0 Total Portfolio: 87.13 24.82 15.5 0 0 65.71 16.94 3 0 0 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. 66 ANNEX 9: WORLD BANK CLIENT SURVEY 1. Objective: The purpose of the client survey was to (i) assist the World Bank in gaining a better understanding of how stakeholders in Tanzania perceive the Bank and (ii) obtain data to help inform the Tanzania country team’s strategy. Stakeholders were asked to provide (i) their views regarding the general environment in Tanzania; (ii) overall impressions of the World Bank as related to programs, poverty reduction, personal relationships, effectiveness, knowledge base, collaboration, and its day-to-day operation; and (iii) perceptions of the World Bank’s communication and outreach in Tanzania. 2. Methodology: From October through December 2010, 813 stakeholders of the World Bank in Tanzania were invited to provide their opinions on the Bank’s assistance to the country by participating in a country survey. Participants in the survey were drawn from among the office of the president, prime minister, ministers, or parliamentarians, permanent secretaries or deputy permanent secretaries, employees of a ministry, ministerial department, or implementation agency; regional administration offices, local government officials or staff, bilateral or multilateral aid agencies, private sector or business organizations, NGOs (including CBOs), the media, independent government institutions, trade unions, religious organizations, academia or research institutes, and the judiciary. A total of 348 stakeholders participated in the country survey (43 percent). The largest number of respondents were from NGOs (19 percent), followed by ministry/regional administration (15 percent), and private sector (13 percent). 3. Results: The survey suggests that the World Bank is believed to play a critical and relevant role in Tanzania, and that its work is aligned with the priorities of stakeholders in the country. The slightly less positive views of the Bank revolve around its results. While respondents suggest that the Bank does relatively well in some key areas such as education and agriculture, the ratings are somewhat low for many key priority areas such as poverty reduction, governance and corruption, and growth (all with ratings at or below 6.3 on a 10 point scale). 4. Areas of focus: In contrast to most countries, stakeholders in Tanzania do not identify just one or two top development priorities when considering growth and poverty reduction. Rather they view a range of areas as critical. Within this context respondents report that the Bank would be most productive if it focused on areas (considered important) related to basic infrastructure, improving government effectiveness, education and to a less degree, agriculture development (followed by employment and corruption). There is strong alignment between which development areas stakeholders believe the Bank should emphasize, and what they believe the Bank, in fact, considers its top priorities (government effectiveness and basic infrastructure). 5. Value to the clients: Stakeholders report positive views about the Bank’s general budget support but see a bit more value in its investment lending. Stakeholders identify ‘imposing conditions’ (53 percent) and taking a boilerplate approach to country challenges (47 percent) as the Bank’s greatest weaknesses in Tanzania. Another weakness emerged which is rarely seen in other country surveys. Nearly four out of ten stakeholders reported that the Bank is too influenced by ‘rich donor countries’ in Tanzania. 67 ANNEX 10: CAS CONSULTATIONS 1. The World Bank carried out consultations with stakeholders in Zanzibar, Mwanza, and Mbeya in December, 2010, and in Dar-es-Salaam in late 2010 and January-February, 2011. The stakeholders emphasized a role for the Bank in addressing the following challenges: governance and anti-corruption, access to basic services, capacity building, income-generating opportunities, business environment, infrastructure limitations, particularly in rural roads, rail and electricity, and value-addition in agriculture. 2. Ministers identified key priority areas for development including agricultural productivity, population growth, value addition, land administration, climate change and natural resource management. The Planning Commission is preparing the first five-year development plan whose objectives are in line with the proposed CAS. The Prime Minister noted that the World Bank is too thinly spread and interventions should focus on agriculture and infrastructure (energy, ports, roads, airports). The Prime Minister concurred with development partners’ assessment of GBS performance as disappointing, and requested World Bank’s assistance in addressing the challenge of stagnant poverty rates in the context of high growth. 3. Regional government representatives requested expanded assistance over the next CAS period, particularly in social sectors. Key issues raised include job creation, particularly in light of youth unemployment, investment climate reforms, social protection and safety net programs, and human resources for health and education, including absenteeism. Participants noted that delivery of basic social services suffers from weak coordination between the national government and LGAs, as well as from low downward accountability. Government officials urged the World Bank to improve bureaucratic procedures, increase efficiency in disbursements, and deepen the involvement of councils and municipalities in project preparation activities and project management, which would increase ownership, equitability, and local capacity. Zanzibar government representatives emphasized the need to improve dialog between the Revolutionary Government of Zanzibar (RGoZ) and Development Partners, as well as the need for better integration of MKUZA II in the CAS. 4. Civil Society Organizations (CSOs) highlighted the following key areas where the World Bank could focus its support: health systems strengthening, infrastructure bottlenecks, employment and vocational training, participation of youth and vulnerable or marginalized groups, people with disabilities, early childhood development, and a more radical approach to governance. CSOs requested World Bank assistance in improving their capacity to monitor public sector performance, as well as to plan and implement projects. Representatives welcomed the proposal to create a civil society mechanism for third-party monitoring of CAS implementation. 5. Private sector representatives pointed to the inadequate levels of education and skills as major challenges to the private sector growth, and a necessary precondition for competitiveness. Improvements in power supply, telecom, and transport infrastructure, particularly the railways and ports, are central to future growth in the sector. Representatives urged the World Bank to facilitate a simplification of the tax system and the regulatory framework, as well as improvements in the setup and performance of regulatory authorities. The World Bank was 68 asked to increase emphasis on governance to prevent conflict of interest and political interference. To improve the investment climate, the stalled reforms must be restarted 6. The Governor of the Bank of Tanzania noted the following three areas as crucial for poverty-reducing growth: agriculture, SME, and the private sector. In agriculture, SAGCOT should be seen as a pilot on partnerships between smallholders, agro-business and processors. Agriculture should be supported by a “cluster of services” including infrastructure, export processing zones, irrigation, and skills. SME development could be improved by extension services and access to finance and could address increasing youth unemployment in urban areas. In the private sector, the World Bank has a role in leveraging investments, and PPPs could be an instrument for growth. Infrastructure investment could facilitate trade and strengthen the manufacturing sector. The governor noted that the Bank’s AAA could support the planning commission in deepening the understanding of key issues. 7. Regional integration ministry officials emphasized the importance of private sector led growth and noted the importance of the 2010 PPP Act in improving the enabling environment. Critical measures to promote private sector growth include: lowering the cost of doing business and trade; improving transport links, especially with landlocked EAC countries; reducing NTBs and improving law enforcement and regulations addressing NTBs. The ministry faces significant communication challenges both within the EAC, and between Tanzania and the EAC, with regard to the alignment of sectoral plans and priorities. 8. Judiciary officials noted the limited capacity to prosecute grand corruption; an increase in funds for materials and staff is essential for dealing with the current case load. The officials noted that World Bank support for the judicial system should be given straight to the Judiciary and not the Executive (Ministry of Justice), which undermines the judiciary as a separate branch and is ineffective in bringing about improvement, as it mixes judicial with legal reform. Participants requested more Bank support for the judiciary’s land division in order to accelerate land reform during the next CAS. 69 ANNEX 11: DEVELOPMENT PARTNERS – DIVISION OF LABOR As of April 2011 Sector Working Groups Thematic Working Groups o f w h ich L ead o r D /L ead s Cluster 1 Cluster 2 Cluster 3 Clus Cluster 2 Cluster 3 M K U K U T A M o n ito rin g S y ste m ter 1 In n o va tio n an d T e ch n o lo g y Governance & Core Reform T O T A L A ctive 2010 T O T A L A ctive 2007 Programmes L an d s & H u m an S ettlem en t M a c ro - E c o n o m ic M g m t P u b lic F in a n c ial M g m t H u m an itar ian A ssistan ce T o tal D eleg ated N atu r al R eso u r ces an d P u b lic S ecto r R efo r m E n er g y & M in er als L o cal G o ver n m en t S o cial P r o tectio n In d u str y & T r ad e A n ti-C o r r u p tio n E n v iro n m e n t A cco u n tab ility In fr astr u ctu r e E m p lo ym en t Z A N Z IB A R P R B S (G B S ) G o ver n an ce A g r icu ltu r e E d u catio n H IV /A ID S D o m estic T o u r ism C u ltu r e G en d er R efo r m H ealth W ater L eg al D evt. AfDB 4 1 5 7 Belgium 3 0 2 11 Canada 10 3 3 10 Denmark 11 2 3 9 EC 10 3 6 7 Finland 5 3 6 4 France 4 1 3 5 Germany 6 2 2 5 IMF 3 0 1 6 Ireland 7 2 4 7 Italy 1 0 0 0 Japan 10 0 3 12 Korea EDCF 1 0 0 - Netherlands 6 1 3 9 Norway 7 1 4 9 Spain 0 0 1 0 Sweden 10 4 3 6 Switzerland 5 1 3 9 UK 13 4 2 10 USA 2 0 11 8 World Bank 22 7 0 19 FAO 1 1 2 9 IFAD 1 0 0 - ILO 4 1 0 8 IOM 1 0 0 - UNAIDS 1 1 0 8 UNDP / UNCDF 6 2 7 14 UNEP 0 0 2 - UNESCO 3 2 1 8 UNFPA 3 0 0 5 UNHCR 1 1 0 6 UNICEF 9 1 2 10 UNIDO 1 0 0 5 UNIFEM 1 1 0 - WFP 2 1 4 9 WHO 2 0 2 5 UN-HABITAT 1 0 0 4 Total Active 2010 15 9 10 5 6 6 7 6 7 12 3 9 3 10 5 4 9 3 10 6 10 6 8 9 10 4 10 Total Active 2007 14 8 10 5 10 3 7 9 7 15 5 5 2 11 4 5 10 4 10 12 7 12 12 7 9 11 0 20 Coding: Lead Partner Active partner Deputy Lead Partner Delegating partner Preparing to take over Lead or Deputy Lead soon 70 ANNEX 12: REGIONAL INTEGRATION A. Current Status of Regional Integration 1. Over the last decade, the pace of regional integration in Africa has increased, as evidenced by the fastened institutional development and on-going initiatives to harmonize trade policies within regional economic communities (RECs). The EAC, established in 2000, is the most recent and arguably most advanced. The custom union (CU) came into effect in 2005 and the common market protocol was signed in 2009. A monetary union is planned for 2012, and later political federation (2016). The Common Market for Eastern and Southern Africa (COMESA) launched its custom union (CU) in June 2009. The Southern African Development Community (SADC) FTA was launched in August 2008, and their Regional Indicative Strategic Development Plan (RISDP) envisioned a CU by 2010, a common market by 2015, and a monetary union by 2016 with single currency to be introduced by 2018. 2. One of the key challenges in RECs is overlapping memberships. Three EAC members are in COMESA, and only Tanzania is in SADC. Further five SADC members are also in the Southern Africa Customs Union (SACU) which is open for three others. However, establishment of a tripartite free trade area (TFTA), that was decided at the 2008 tripartite summit, will be a historic step (combining three RECs: COMESA, SADC, and EAC). The TFTA plan does not envisage replacing the existing RECs, but its main objective is to help avoid problems of overlapping memberships and harmonize trade policies. It is also supposed to facilitate cooperation in infrastructure projects. 3. Member states now focus on harmonization of their macro and sector policies, and the enabling legal and regulatory regimes. Activities focus on harmonizing trade policies in COMESA and EAC with respect to CETs, RoO regimes, approaches to elimination of NTBs (at the TFTA). 4. The accelerated progress in East African integration offers new opportunities and challenges for Tanzania. The EAC development policy blue print is contained in the EAC Five Year Development Strategy. The current strategy ended in 2010, and the EAC secretariat is in the process of formulating a new strategy (2011 – 2015).23 5. Despite significant progress, much remains to be done as there are major delays at borders, revenue sharing agreements have yet to be formulated, and customs and red tape remain burdensome. However, the challenges of implementing Common Market Protocol (CMP) notwithstanding, EAC stands a greater chance of demonstrating the beneficial role of regional integration by addressing both soft and hard issues underlying development in Tanzania. 23 The key priorities in the present strategy are grouped under five pillars: (i) cooperation in political matters, defense, and security; (ii) completion of the implementation of the Customs Union Protocol; (iii) establishment of the East African Common Market; (iv) laying the foundation for the East African Monetary Union; and (v) laying the foundation for an East African political federation. 71 B. Policy and Institutional Context 6. As in most other EAC member states, the institution responsible for regional integration is the Ministry of EAC (MEAC). The vision, mission, and strategic objectives of the ministry is stated in the MEAC’s Medium Term Strategic Plan 2010/11 – 2012/2013 (MEAC, October 2010). The overall objective of the strategic plan is to enable Tanzania to achieve increased economic and social benefits from the EAC. The strategic goals of MEAC, as outlined in the MEAC strategic plan, include to:  Coordinate and facilitate participation of public, private, and civil societies  Public awareness on EAC regional integration  Harmonization of EAC policies and programs  Promote EAC-SADC-COMESA policies for free trade area  Monitor and promote EAC project and programs implemented in the country  Strengthen monitoring and evaluation of EAC Treaty and its protocols  Facilitate capacity building. 7. The renewed emphasis on regional integration for Tanzania emanates from the increasing recognition of Tanzania improved trade performance in the regional markets. Table 1 shows positive trend in the flow of exports from Tanzania to other EAC countries. Table 1: Tanzanian Exports to EAC countries: 2004-2009 (US$ million) Country 2004 2005 2006 2007 2008 2009 Kenya 90.08 93.25 103.73 123.41 251.74 183.36 Uganda 55.59 48.72 43.68 46.07 58.73 49.23 Sub Total 145.67 141.97 147.41 169.48 310.47 232.59 Rwanda 7.72 6.92 5.56 17.63 22.19 15.38 Burundi 13.39 12.62 37.98 70.94 20.40 24.13 TOTAL 166.78 160.95 190.95 258.05 353.06 272.10 Source: TRA as quoted in the MEAC Strategic Plan, 2010. 8. Transit trade is increasingly been viewed as a great opportunities for Tanzania given its geographic location. However, these priorities are only broadly reflected in the policy frameworks. In MKUKUTA II, regional integration is covered under cluster 1 (growth and reduction of income poverty), in relation to its aim of increasing competitiveness to achieve higher export growth for poverty reduction. 9. Reflecting increased emphasis on regional integration, the Planning Commission has commissioned a study on “harnessing the benefits of regional integration” in order to inform medium to longer term policy interventions. With support from Trade Mark EA, the Ministry of EAC is also preparing its Common Market Implementation Strategy (2011-2015). The strategy discusses potential costs and benefits from the EAC integration. It also describes the institutional framework, instruments, and strategic interventions for implementing the CMP. 72 10. In its current endeavors, the MEAC has placed emphasis on the need to lower cost of doing business at regional level and enhancing capacity of the Tanzanian private sector to take full advantage of the integration. Some of the initiatives being prioritized include (i) an EAC wide PPP; (ii) SPS protocol to promote standards in agricultural products; (iii) trade related infrastructure, for instance, to support one border post initiatives, railway, and road connections to promote transit trade; and (iv) awareness raising. C. World Bank and Other Donors’ support on Regional Integration 11. The regional integration agenda is central for Sub-Sahara Africa as stressed in the World Bank strategy for Africa, given the scope for cooperation to help overcome market inefficiencies and also improve competitiveness. Regional integration is one of the four major themes in the new WBG trade strategy. One of the strategic interventions proposed by the strategy is improving trade corridors and regional trade facilitation frameworks. This is a critically important issue for transit trade. While in many cases formal regional and bilateral agreements are already in place, implementation is often jeopardized by poor cross-country cooperation. The trade strategy will be implemented through region-specific work programs and activities by central units. 12. The World Bank will continue to support the regional integration agenda. Ongoing and future interventions on regional integration in Tanzania include ESW, TA, and lending. Examples of on-going or past work include work on services trade, growth potential of agglomeration, the Trade and Transport Facilitation Project, financial integration, and in- country transport corridors. There is also increased recognition of the role of the private sector as both financier and operator of regional projects. 13. In going forward, the Africa regional strategy identified strategic actions for the Bank to:  Be more selective and invest in a smaller number of projects in terms of potential outcomes and impacts within each sub-region;  Scale up partner collaboration to mobilize resources and reduce transaction costs for regional investments;  Work more closely with the private sector in helping to deliver PPP solutions;  Mainstream regional integration in CASs and work programs, with a focus on addressing policy and institutional barriers that impede economic integration, and ensuring stronger alignment between national policies and regional trade and economic agreements;  Expand support for capacity building of regional institutions, and strengthening civic engagement and social accountability in the regional integration process;  Strengthen knowledge platforms on regional economic issues and collaboration with regional institutions in delivering such work. 73 Regional approaches as game changers African countries are increasingly recognizing that collaborative actions and regional approaches are critical to stimulating trade by connecting markets; and developing cost effective economic infrastructure that would not only spur faster growth but also the competitiveness required to participate in the global economy. They are particularly important to overcome the physical disadvantages for 15 land-locked countries whose trade performance relies on collaboration with coastal countries; managing shared natural resources (water, fisheries); and resolving such challenges infection diseases which recognize no boundaries and in tertiary education and research where economies of scale can be achieved in developing regional centers of excellence. Since 2007, the World Bank has scaled-up its support to regional integration, doubling its commitments from US$1.8 billion to the current US$3.6 billion. Key sectors include transport, power, trans-boundary water infrastructure, and ICT accounting for 78 percent of these commitments. This distribution clearly reflects the Bank‘s focus on supporting the continent in bridging the infrastructure deficit – crucial for growth, competitiveness and employment and vital for poverty reduction. The results of this support are already showing. In Kenya and Malawi, the price of broadband capacity has dropped by over 80 percent in part, due to their connected to international, undersea broadband cables. These are two of 7 Eastern and Southern African countries benefiting from Bank support. Also the construction and rehabilitation of 840 km of roads along critical commercial transport corridors in West, Central Africa and East Africa is expected to reduce the transit time by 20 percent at Mombasa-Kigali, Tema-Ougadougou-Bamako, Douala-Nd‘jamena, and Douala-Bangui corridors; significantly cutting down on ―beyond the factory cost of doing business. In agriculture, common regulations for the registration of genetic materials and pesticides have been adopted by the Economic Community of West African States. This is incentivizing the development of agricultural technologies tailored to the specific climatic and geographic needs of West Africa by enlarging the target market and easing dissemination across borders. Furthermore, five productivity enhancing agricultural technologies have been developed at new regional centers of excellence and disseminated across West Africa, the result of which is a new technology that allows for the addition of 15 percent local cereal flour in bread production has resulted in a 30 percent reduction in the price of bread. Source: World Bank Group Africa Region Strategy, March 2011. 74 ANNEX 13: CAS COMPLETION REPORT Period Covered FY2007 - FY2011 Document date of the TZ JAS March 1, 2007 Document Date of the CASPR March 2, 2010 Approval Date of the CASPR April 6, 2010 CAS Completion Report by Adam Nelsson (AFCE1) and Diana Hristova (AFCTZ) Table of Contents I.  Introduction ........................................................................................................................................................ 80  II.  Tanzania’s Strategic Goals ................................................................................................................................. 80  Achievements in Policy Reforms Supported by the Second PRSC Series ......................................................... 83  III.  Progress against CAS Outcomes ........................................................................................................................ 84  Cluster I: Growth and Reduction of Income Poverty ......................................................................................... 87  CAS Outcome 1.1: Increased Revenue Collection Efficiency [Partially Achieved] .......................................... 88  CAS Outcome 1.2: Improved Doing Business Environment [Not Achieved] ................................................... 89  CAS Outcome 1.3: Increased Agricultural Productivity [Partially Achieved] ................................................... 93  CAS Outcome 1.4: Improved Access to and Quality of Roads [Achieved] ....................................................... 94  CAS Outcome 1.5: Improved Management of Natural Resources [Partially Achieved] ................................... 96  CAS Outcome 1.6: Improved Quality of and Access to Electricity Services [Achieved] .................................. 97  Cluster II: Improvement of Quality of Life and Social Wellbeing..................................................................... 98  CAS Outcome 2.1: Increased Access to Quality Post-Primary Education [Partially Achieved] ..................... 100  CAS Outcome 2.2: Improved Provision and Quality of Health Services [Partially Achieved] ....................... 102  CAS Outcome 2.3: Reduced HIV Prevalence between 15-24 Years [Partially Achieved] .............................. 103  CAS Outcome 2.4: Improved access to Water and Sanitation in Rural/Urban Areas [Partially Achieved]..... 104  Cluster III: Governance and Accountability .................................................................................................... 105  CAS Outcome 3.1: Improved socio-economic basic services and safety net through community participation [Partially Achieved] ......................................................................................................................................... 106  CAS Outcome 3.2: Improved Management, Transparency and Accountability of Public Resource Management [Partially Achieved] ................................................................................................................... 107  IV.  Bank Portfolio Performance ............................................................................................................................. 111  IDA Non-Lending ............................................................................................................................................ 115  Regional Projects ............................................................................................................................................. 116  MIGA, IFC and WBI ....................................................................................................................................... 117  Country Dialogue and Aid Coordination ......................................................................................................... 117  V.  Lessons Learned and Suggestions for the Next CAS ....................................................................................... 118  75 Annex 1: Summary Table of the Tanzania CAS Completion Report ........................................................................ 120  Annex 2: Revised CAS Outcomes ............................................................................................................................. 129  Annex 3: Planned Lending Program and Actual Deliveries FY07-FY11 .................................................................. 131  Annex 4: Planned Non-lending Program and Deliveries FY07-FY11 ...................................................................... 133  Annex 5: Selected Indicators of Bank Portfolio Management and Performance (FY07-FY11) ............................... 136  Annex 6: Closed Projects during CAS Period FY07-FY11 ....................................................................................... 137  Annex 7: IEG/ICR Ratings-IDA Projects that exited Tanzania Portfolio during FY07-FY11 .................................. 138  Annex 8: Active Trust Funds FY07-FY11 ................................................................................................................ 139  Annex 9: Regional Projects FY07-FY11 ................................................................................................................... 141  Annex 10: Regional AAA involving Tanzania FY07-FY11 ..................................................................................... 141  Annex 11: Regional Trust Funds FY07-FY11........................................................................................................... 141  76 Acronyms AAA Analytical and Advisory Activities IEG Independent Evaluation Group AFSP Accelerated Food Security Program IFAD International Fund for Agricultural Development ASDP Agriculture Sector Development Program IFMIS Integrated Financial Management Information ASDS Agricultural Sector Development Strategy System AF Additional Financing IL Investment Lending APIR Annual Policy Implementation Review IMF International Monetary Fund APL Adaptable Program Loan ISR Implementation Status Report ARV Antiretroviral drug JARD Joint Annual Review on Decentralization CBG Capacity Building Grants JSAN Joint Staff Assessment Note CAE Country Assistance Evaluation LGA Local Government Authority CASCR Country Assistance Strategy Completion Report LGDG Local Government Development Grant CASPR Country Assistance Strategy Progress Report LGRP Local Government Reform Program CAG Controller Auditor General LGSP Local Government Support Program CAS Country Assistance Strategy LSRP Legal Sector Reform Program CDG Council Development Grants LTD Large Taxpayers Department CEM Country Economic Memorandum M&E Monitoring and evaluation CIFA Country Integrated Fiduciary Assessment MDG Millennium Development Goal COMESA Common Market for Eastern and Southern Africa MDTF Multi-Donor Trust Fund CPI Consumer Price Index MFI Micro Finance Institution CPIA Country Policy and Institutional Assessment MIGA Multi Investor Guarantee Agency CPPR Country Portfolio Performance Review MAIR MKUKUTA Annual Implementation Report CSO Civil Society Organization MSME Micro-, Small-, and Medium-sized Enterprise CTCP Central Transport Corridor Project MTEF Medium Term Expenditure Framework D by D Decentralization by devolution NACSAP National Anti-Corruption Strategy DSWSSP Dar es Salaam Water Supply and Sanitation Project NPV Net Present Value DHS Demographic and Health Survey ODA Overseas Development Assistance DP Development Partner PAF Poverty Action Fund DPL Development Policy Lending PEFAR Public Expenditure and Financial Accountability DSA Debt Sustainability Analysis Review DTIS Diagnostic Trade Integration Study PER Public Expenditure Review EAC East African Community PFM Public Financial Management ENR Environment and Natural Resource PFMRP Public Financial Management Reform Program ERL Economic Recovery Loan PPP Public Private Partnership ERR Economic Rate of Return PPRA Public Procurement Regulatory Authority ERT Energy for Rural Transformation PRSC Poverty Reduction Support Credit ESW Economic Sector Work PRSP Poverty Reduction Strategy Paper FIRST Financing Sector Reform and Strengthening PSIA Poverty and Social Impact Analysis Initiative PSRP Public Service Reform Program FY Fiscal Year (WB, GoT: July 1 – June 30) SIL Specific Investment Loan GAC Governance and Anti-Corruption SHSDP Second Health Sector Development Project GAVI Global Alliance for Vaccines and Immunizations SMMRP Sustainable Management of Mineral Resources GBS General Budget Support Project GDP Gross Domestic Product SWAp Sector-Wide Approach GEF Global Environment Facility TA Technical Assistance GoT Government of Tanzania TMP Tax Modernization Project GPOBA Global Partnership on Output-Based Aid TPA Temporary Process Action HBS Household Budget Survey TRC Tanzania Railways Corporation HIPC Heavily Indebted Poor Countries TRL Tanzania Rail Limited HPPG Harmonized Participatory Planning Guide TSSP Transport Sector Support Project ICA Investment Climate Assessment VAT Value Added Tax ICR Implementation Completion Report WB World Bank ICT Information and Communication Technology WSS Water Supply and Sanitation IDA International Development Association WSDP Water Sector Development Project IDP Internally Displaced Person 77 Summary i. This CAS Completion Report for Tanzania (CASCR) reviews and rates performance under the FY2007-2011 Country Assistance Strategy (CAS), which was prepared as part of the multidonor Joint Assistance Strategy for the United Republic of Tanzania (JAST). The JAST and CAS were aligned to support Tanzania’s Growth and Poverty Reduction Strategies, known by the Kiswahili acronyms MKUKUTA (mainland) and MKUZA (Zanzibar). In April 2010, the Bank produced a CAS Progress Report with an updated and streamlined Results Matrix focusing on 12 outcomes and 22 outcome indicators. ii. The CASCR rates overall program and Bank performance under the JAST as moderately satisfactory. Of the 12 CAS outcomes, three were achieved, eight were partially achieved, and one was not achieved, as shown in the summary table below. iii. During the CAS period, investment lending and development policy lending within a general budget support (GBS) framework have contributed to a number of important outcomes, and lending instruments have complemented and reinforced each other. Achievements include: an improved road network, improved livelihoods for the urban poor, and better health indicators for infant and under-five mortality. A substantive dialogue between Government and GBS partners, led by the World Bank, was an important contributor to these outcomes. iv. However, despite the rich dialogue, the overall reform environment appears to have slowed during the CAS period and many reforms needed for sustainable, long-term development are stalled. In some areas, progress has even reversed course. Areas where progress is disappointing include: rural poverty reduction, the business environment; management of strategic infrastructure, such as utilities, ports, and railroads; quality of basic education; and public financial management. v. Achievement of the outcomes in the CAS Results Matrix reflects these two trends. Many CAS outcomes have been achieved. However, Tanzania’s progress has been mixed in implementing reforms needed to achieve country-level goals. Summary of Ratings of CAS Outcomes Outcome Rating Cluster 1: Growth and Reduction of Income Poverty 1.1 Increased revenue collection efficiency Partially achieved 1.2 Improved doing business environment Not achieved 1.3 Increased agricultural productivity Partially achieved 1.4 Improved access to and quality of roads Achieved 1.5 Improved management of natural resources Partially Achieved 1.6 Improved quality and access of electricity services Achieved Cluster 2: Improvement of Quality of Life and Social Wellbeing 2.1. Increased access to quality post-primary education Partially achieved 2.2. Improved provision and quality of health services Achieved 2.3. Reduced HIV prevalence between 15-24 years Partially achieved 2.4. Improved access to water and sanitation in rural/urban areas Partially achieved Cluster 3: Governance and Accountability 3.1 Improved socio-economic basic services and safety net through Partially achieved community participation 3.2 Improved management, transparency and accountability of public Partially achieved resource management - 78 - vi. The weakening reform environment possibly reflects less commitment to undertake difficult reforms or possibly reflects the difficulty of implementing second and third generation reforms. The Bank responded to the slowdown by shifting some IDA resources from development policy lending to investment lending, especially infrastructure. - 79 - I. Introduction 1. The CAS Completion Report (CASCR)24 assesses program and Bank performance under the FY2007- 2011 CAS for the United Republic of Tanzania (Report No. 38625-TZ; March 1, 2007), henceforth referred to as the CAS, and the CAS Progress Report (Report No. 52922-TZ; March 2, 2010), henceforth referred to as CASPR. 2. The JAST aligned 22 development partners25 (DPs) with Tanzania's Growth and Poverty Reduction Strategies, (MKUKUTA for Mainland and MKUZA for Zanzibar). The JAST was a national medium-term framework for managing development cooperation between the Government of the United Republic of Tanzania (Government) and DPs to achieve national development and poverty reduction goals. 3. The CAS was formulated under the JAST framework and consisted of four parts: (i) the national medium-term framework established by Government for managing development cooperation and DPs commitment to the aid effectiveness agenda; (ii) joint country analysis describing Tanzania’s development achievements and challenges; (iii) a joint program document, reflecting the Development Partner Group’s planned support; and (iv) the World Bank’s strategic approach and proposed program for FY07 to FY10, including a Bank-specific Results Matrix with milestones to facilitate monitoring. 4. As was typical for first-generation results-based CASes, the original CAS Results Matrix was long and unrealistic, with 32 CAS outcomes and 52 indicators and incomplete baseline and target data. Under the CASPR, the Results Matrix was updated and streamlined, reducing the number of outcomes to 12 and the number of outcome indicators to 22. The CASPR also extended the CAS by one year, to end June 2011, to accommodate delays in the development of Tanzania’s Second Growth and Poverty Reduction Strategy (MKUKUTA II). The extension also allowed the CAS to be finalized with Tanzania’s new government after the October 2010 elections. 5. The remainder of this report is organized as follows. Section II outlines Tanzania’s strategic goals to which the CAS is aligned. Included in this discussion is an assessment of Tanzania’s higher development achievements contributed to by the PRSC series through GBS. Section III reports on progress towards CAS outcomes listed in the Results Matrix. Section IV assesses performance of the Bank portfolio over the CAS period. Section V outlines lessons learned and suggestions for the next CAS. II. Tanzania’s Strategic Goals 6. MKUKUTA was formulated in a broad-based consultative manner with civil society and other non- government stakeholders, including international partners. Government and DPs have measured progress against MKUKUTA targets since 2007 through a MKUKUTA Annual Implementation Report (MAIR), as 24 The Tanzania CASCR mainly follows the previous CACSR guidelines, because the CASCR was initiated before OPCS issued new CASCR guidelines dated January 2011. Sources for the Completion Report are ISRs, ICRs, mid-term reviews, aide memoires, GBS annual reviews, MKUKUTA Annual Implementation Reports, sector reviews, and IEG ICR and sector evaluations. 25 Belgium, Canada, Denmark, European Commission, Finland, France, Germany, Ireland, Italy, Japan, Korea, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, United States, United Nations (UNDP, UNICEF, ILO, IFAD, UNFPA, UNIDO, UNAIDS, UNCDF, WFP, UNHCR, FAO, UNESCO, WHO, UN-Habitat), African Development Bank, International Monetary Fund, and World Bank. 80 well as through the Annual Reviews of General Budget Support. MKUKUTA, based on the National Vision 2025, envisages a reduction of poverty by 50 percent by 2010 and eradication of absolute poverty by 2025. The goals would be achieved through advancement in three clusters: (I) economic growth and reduction of income poverty; (II) improvement of quality of life and social well being; and (III) governance and accountability. Those sectors with prominence in the ruling party’s program received most Government involvement and support, suggesting that understanding priority areas within the larger parties better could ensure a higher degree of positive development results in the next CAS. 7. Progress across the three clusters of the MKUKUTA has been uneven because the pace of policy reform has been inconsistent. Poverty has not fallen as much as expected. Analyses based on the 2007 Household Budget Survey (HBS) suggest that poverty fell marginally by about 2.3 percentage points, from 35.6 percent of the population in 2001 to 33.3 percent in 2007. Between 2007 and 2009, the estimated poverty headcount, using the latest National Panel Survey (2009) data, suggests a very small increase in the proportion of Tanzanians living below the basic needs and food poverty lines with increases from 33.6 percent to 34.0 percent, and 16.6 percent to 17.4 percent respectively. Based on the latest data, Tanzania is not on track for meeting these two MDG targets. 8. The small relative reduction in the poverty rate from 2001 may at least partly be linked to Tanzania’s very rapid population growth rate of about 2.9 percentage points per year. Due to rapid population growth, even if the relative proportion of poor has fallen slightly, the absolute number of poor has risen by approximately one million between 2001 and 2009. Box 1: Poverty Reduction in Tanzania 2000-2010 Between 2007 and 2009, the estimated poverty headcount using the latest National Panel Survey (2009) data suggests a slight increase, albeit not significant, in the proportion of Tanzanians living below the basic needs and food poverty lines with increases from 33.6 percent to 34.0 percent , and 16.6 percent to 17.4 percent , respectively. Tanzania is therefore not on track for meeting the basic needs and food security MDG. Though Tanzania is undeniably off track to achieving the poverty MDG, the distribution of consumption suggests that achieving the MDG remains feasible, because a relatively large concentration around the poverty line. Contrary to the situation for the poverty MDG described above, Tanzania is on track to reach the MDG for nutrition. The 2010 DHS measured that 15.8 percent of children are underweight down from 28.9 percent in 2000 and 21.6 percent in 2004/05. 9. The Bank underscored the importance of sustainable economic growth in the second Poverty Reduction Support Credit (PRSC) series and in the 2007 Country Economic Memorandum (CEM) for Tanzania. The CEM emphasized the need to replace certain drivers of growth, such as Government spending and expansion of cultivated land, with others such as increased productivity, savings, and investment by the private sector, in order to ensure continued economic growth. While poverty did not decrease as expected, Tanzania’s economy grew by an estimated rate of between 5 and 7 percent per annum from 2000 to 2008. Under normal circumstances, the economic growth would have had a much greater impact on poverty reduction. However, economic growth over the CAS period was spurred by significant increases in public spending and foreign aid in addition to population growth. The 2007 CEM identified three quarters of economic growth coming from Government spending and foreign aid. Therefore, the annual growth of the economy, adjusted for Government stimulus, comes to just above four percentage points – about the same rate of economic growth as the period 1990-99. With an estimated population growth of nearly three percentage points, non- Government induced real growth per capita is just above one percentage point. 81 10. Under Cluster I – Growth and Reduction of Income Poverty – achievements, many linked to Bank interventions, include macroeconomic stability, a broadened tax base, improved roads, and a six percentage point increase in the population with access to electricity. But these improvements are eclipsed by lack of progress elsewhere: the business environment; infrastructure management, including railway, seaports, and power generation and distribution; and water supply and sanitation (WSS). 11. Substantial progress has been made under Cluster II – Improvement of Quality of Life and Social Wellbeing – in relation to basic education enrollment and lower rates of infant and under-five mortality. However, increased enrollment has not been matched by improvements in the quality of education. In WSS, gains have been made in areas covered by Bank financed projects, providing more people with access to improved WSS. However, overall WSS in Tanzania faces serious challenges: the Dar es Salaam WSS utility continues a multiple decade struggle for financial sustainability and reaching satisfactory levels in quality of services. The Water Sector Development Program for mainland Tanzania shows signs of fiduciary problems such as inconsistent disbursement data, missing documentation for fund management, and unsatisfactory financial management arrangements. 12. Under Cluster III – Governance and Accountability – gains have been made in providing basic services through safety nets to the vulnerable in areas covered by IDA-financed community-driven development programs, notably the Tanzania Social Action Fund (TASAF). However, progress has been marginal or even reversed for four of five core Government reforms: Public Financial Management Reform Program (PFMRP), Public Service Reform Program (PSRP), National Anti-Corruption Strategy (NACSAP), and Legal Sector Reform Program (LSRP). For example, the draft Procurement Bill (September 2010), among other issues, allows for procurement of heavy plant equipment under emergency procedures. The amended Public Service Act limits competitive recruitment to entry level positions in the public service up to senior professionals, effectively making all managerial positions in the public service noncompetitive appointments. On the positive side, Government has shown commitment to fulfilling the agreed funding level for the Local Government Development Grants (LGDG): in the FY10/11 budget, Government contributions for the first time exceed DP contributions. Figure 1: Planned and Delivered Commitments by MKUKUTA Cluster 1500 US$ million 1318.3 1000 1140 810 500 608 597 492 50 100 0 GBS Cluster I Cluster II Cluster III Planned Commitments Delivered Commitments 82 Achievements in Policy Reforms Supported by the Second PRSC Series26 13. The second PRSC series (PRSC 4-8) yielded a number of major policy reforms, such as the abolishment of levies by Crop Boards, the limitation of Crop Board functions to regulatory functions, the timely issue of budget audit reports, the submission of an electricity tariff application, an improved Road Bill, enhanced autonomy of the Road Agency, substantially increased budget for road maintenance, enactment of a new Anticorruption Bill, new Audit Bill aligned with AfroSAI27-3 requirements, new internal audit department for the entire Government, approval of a new Private Public Partnership (PPP) Bill, key measures to reduce congestion at the port, and enhanced powers and autonomy of the Public Procurement Regulatory Authority (PPRA). 14. Policy has failed to advance, or has reversed, in some areas. Bank-supported Public Expenditure Reviews (PERs) have shown that alignment of the budget with the MKUKUTA has weakened. Other areas of stalled or reversed policy include: agricultural marketing, notably phasing out the local crop levies; civil service pay reform; and the enactment of the Business Activities Registration Act (BARA), which goes against the one-stop-shop principle. 15. The increasing number of unmet triggers from PRSC 4 to PRSC 8 reflects Tanzania’s slowing reform environment (see Figure 2). Under PRSC 4 all triggers were met. For PRSC-7 and PRSC-8, only seven triggers of the initial eleven were met. The share of triggers not met or partially met increased progressively to nearly 40 percent of triggers for PRSC 8. The Bank responded to the slowdown by adjusting and sequencing triggers in some areas from one operation to the next, thus helping to bring about crop board reforms and the new PPP law. 16. The unmet triggers resulted in lower amounts of GBS. PRSC operations were adjusted downward when triggers were not met. In addition, and most importantly, the Bank responded to Tanzania’s slowdown in reforms by reducing budget support as a percentage of IDA lending. Under the 2007 CAS, annual budget support was expected to increase from US$190 million in FY08 to US$400 million in FY10. Actual budget support disbursements from the World Bank in FY10 were less than 30 percent of the planned amount (US$115 million). 17. Several factors may have contributed to the slowdown in policy reforms, such as reform fatigue, failure to agree on the consequences of lack of progress between Government and the Bank, and a perception of entitlement to GBS on the part of Government. The question of whether to continue to provide budget support has been intensely debated by the Country Team. If the current reform environment continues, budget support disbursements under IDA 16 are likely to drop further, allowing a further shift of IDA funds into investment operations. 26 This section has been written in collaboration with PREM staff as the ICR for the Second PRSC Series was postponed until after completion of the CASCR. 27 African Organization of English-speaking Supreme Audit Institutions 83 Figure 2: Tanzania PRSCs 4-8 – Triggers and Credit Amount 100% $200  $180  80% $160  $140  60% $120  Triggers not met $100  40% $80  Trigger partially met $60  20% $40  Triggers fully met $20  0% $‐ Credit amount Note: PRSC 7 emergency supplemental financing (US$170m) not included. III. Progress against CAS Outcomes This section assesses progress against the outcomes and indicators outlined in the CAS Results Matrix of the CASPR (see Annex 1). 18. Progress against CAS outcomes has been mixed. Some areas have seen remarkable progress (e.g. net education enrollment, improved basic health indicators, and improvement of the road network) while other areas (e.g. railway transport and infrastructure, electricity generation and supply, WSS, agricultural production and efficiency) have stagnated or shown little progress. 19. The Bank began adjusting its portfolio's project designs to the slower speed of reform once results from HBS 2007 were available (late 2008). For instance, the amount of GBS was reduced substantially in PRSC 7 and PRSC 8, and funding moved to projects in energy, agriculture and food security, and urban development where fungibility is less and targeting of the poorest easier. 20. In the context of Government's willingness to reform, the Bank's impact could be further strengthened by better sequencing and a stronger focus of the development dialogue on core areas, notably in Cluster I. Once core areas show satisfactory progress, this could provide the basis for further assistance targeting secondary areas. 21. In order to focus aid on areas that enjoy stronger Government support and can provide the basis for growth, it is vital to understand the reform agenda. The Bank has carried out a series of routine analysis (e.g. PEFAR, rapid budget analyses, and rapid poverty analyses) and has prepared comprehensive analytical notes on Tanzania's political economy. These notes have provided Government, DPs, and Bank staff with practical suggestions of ways to address issues across sectors, as well as within agriculture, transport, PFM, and infrastructure. From a learning perspective, it is important that these activities are carried forward under the next CAS, particularly since insights into Tanzania's political economy have yet to be fully translated into the design of new projects. 22. The CAS supports MKUKUTA through cluster specific and cross-cluster approaches. For cross-cluster support, the Bank -financed programs include, among others, the PRSC series, Local Government Support Program (LGSP), and Analytical and Advisory Activities (AAA). Cluster specific support includes the Central Transport Corridor Project (CTCP), Songo Songo Gas Development and Power Generation Project (SSGDPGP), Agricultural Sector Development Project (ASDP), the Private Sector Competitiveness Project (PSCP). 84 23. All clusters included successful operations, particularly health, social protection, energy, transport, local government, WSS and urban development. A common theme for successful projects is strong Government support at central and local levels. 24. There were less successful operations including privatization, the Tanzania Railways Limited (TRL) concession, natural resource management, governance, WSS and the business environment. For three projects (MACEMP, TMAP, and PPSDP) an overly ambitious design and lack of Government support had a major role in their unsatisfactory completion ratings. For the two WSS projects, the rail component under CTCP, and the core reform projects, lack of ownership and conflicting political economy interests were blocked progress towards project outcomes. 25. The mix of lending AAA was generally adequate as Economic Sector Work (ESW), Technical Assistance (TA), and policy notes provided timely and relevant information to the Bank’s lending program in Tanzania. The AAA program covered among other nutrition, private sector development, trade, economic growth, poverty dynamics, agriculture, and public expenditure analysis. However, it is unclear whether findings under the AAA program always reached policy makers sufficiently as few policy recommendations have been taken onboard in the government’s broader program, implying either that more work should go into aligning the AAA program closer with government’s interest, or that interest in AAA from government’s side has leveled off similar to government’s interest in pursuing broader reform. 26. The partnership agenda under the CAS resulted in an elaborate and intricate dialogue structure with a complex system of working groups (WG), such as cluster WGs, technical WGs, fora for Heads of Missions (HoM), Heads of Cooperation (HoC), and a dedicated forum for the GBS dialogue headed by a troika plus the World Bank as a permanent member. In accordance with the Paris Declaration, DPs have pledged a reduction in the number and frequency of missions, and to respect Government’s “quiet time” from April to August where there should be few missions at all. 27. The new dialogue structure has reduced partner meetings with Government, which should increase the latter’s efficiency by reducing external demands on its. However, coordination of DPs’ support to Tanzania is imperfect. The OECD DAC recorded Overseas Development Assistance (ODA) to Tanzania from 43 entities between 2003 and 2007. Four of the 43 entities provided more than half of ODA and 13 entities provided more than 90 percent of ODA. This leaves Tanzania’s Government with 30 entities providing less 10 percent of foreign assistance to Tanzania, creating high overheads for the donors and increased transactions costs for the Government. The Bank has started a discussion about the number of DPs, but this initiative has not reduced the dispersion of partners supporting Tanzania. Table 1: Bank and Government Performance during CAS Implementation, FY2007 - FY2011 What did the Bank do well? Responded timely to potentially damaging effects of the global financial crisis to the Tanzanian economy Adjusted to Government’s speed of reform Adjusted an overly ambitious and complex strategic document and Results Matrix Effectively guided the GBS dialogue between 14 partners and Government Actively contributed to aid effectiveness under the new DP dialogue structure Through GBS dialogue, bypassed the unproductive aspects of the new DP dialogue structure Initiated dialogue on aid effectiveness What did the Bank not do well? 85 Addressed the unproductive development strategy framework later than necessary Could have responded earlier to slow speed of reform Reacted late to inflated project ratings Adjusted PRSC downwards too late What did the Government do well? Broadened tax base & increased domestic revenues Increased primary enrollment Reduced significantly basic health care indicators such as under five mortality and infant mortality Improved trunk road network What did the Government not do well? No discernable reduction of poverty (about two percentage points over a decade) Stagnant to deteriorating business environment Quality of education has not matched enrollment increase Power supply remains inadequate & unreliable Transport costs remain high (among other due to suboptimal port & rail operations) Slow progress and even backtracking in core reforms (e.g., LSRP, PFMRP) Most PPP (public private partnership) in infrastructure and utilities faltered or reverted to state ownership Did not adequately address high population growth, fertility rate, and maternal mortality 28. The revised Results Matrix reflects the changes in the lending program and the progress in implementation, with special attention to attribution to the Bank's interventions. CAS outcomes in the same or related sectors have been consolidated, while some outcomes that were too high or low were either removed or included as milestones. Overambitious targets have been modified to more realistic levels. All indicators have been selected from existing government sources or projects. Annex 1 presents a streamlined matrix with 12 CAS outcomes and 22 associated indicators. The revised outcomes are described in Annex 2. Four outcomes were dropped. The first pertains to improved railway network capacity where it was envisaged transport on the Central Railway Line would increase from 1.45m tons to 2.0 million tons by 2010. However disputes around the concession to Tanzania Railways Corporation (TRC) led Government to revoke the contract with RITES in February 2010 (see box below). Annex 2 compares the original and revised outcomes, and explains key revisions. Box 2: The Concession of the Tanzania Railways Limited In May 2001, Government of Tanzania decided to involve private sector participation in the operation of the Central Railway Line through the creation of Tanzania Railway Cooperation (TRC), a vertically integrated concession, without open access and with exclusive rights to a 25 year concession to operate railway transport services on the Central Line railway network. By the end of 2005 TRC was caught in a vicious circle of low performance, lack of funding for necessary investments, and no interested private partner. Operational efficiency was constrained by poor infrastructure and rolling stock. From 2001 to 2006 freight figures for TRC dropped from 1.35 million tons to 0.775 million tons. It was clear that the negative trend could only be reversed through heavy investment in rail infrastructure and operating equipment. To address the challenges TRC was restructured through a transfer of infrastructure assets and rolling stock to the newly created RAHCO. In January 2006 the cabinet approved negotiations with the only bidder for the Central Line, Rail India Technical and Economic Services Limited (RITES). Negotiations were concluded in March 2006. TRC was handed over to Tanzania Rail Limited (TRL), jointly owned by Rites Railways of India (51 percent) and GoT (49 percent), on October 10, 2007. A World Bank mission found in 2009 that the performance of TRL was unsatisfactory. Only 450,000 tons of freight was transported against a target of 650,000 tons. At the same time TRL faced an operating deficit estimated at US$80 million for the following three years. A combination of heavy rains leading to serious damages to the Central Line, workers’ strikes, and disputes with the asset holder (RAHCO) regarding lease of rolling stock led Government to revoke the contract with RITES in February 2010. 86 29. Two outcomes (Integrated Management of Lake Victoria Basin and Increased Export of Value Added Mineral Production) were dropped due to a delay in Board approval and because of weak expected impact of technical assistance on mineral exports. The fourth dropped outcome was on improved management of court cases; it was dropped due to weak attribution. 30. Important exogenous factors affecting CAS outcomes include to a limited degree the effects of the global financial crisis, climatic changes (drought, El Niño), corruption, and lack of Government ownership of certain parts of the development process. In relation to the global crisis, Tanzania appears to have suffered less direct impact than what was initially expected. Tanzania’s economic slowdown is now estimated to result in a reduction of GDP growth from 7.4 percent (4.5 percent per capita) in 2008 to 6 percent (4.5 percent per capita) in 2009 - a significant reduction from 2008’s 7.4 percent, but close to the trend growth in non-drought years of 6.8 percent. Direct external shocks are most clearly visible in tourism (about 0.6 percent of GDP down) and possibly manufacturing exports – but not enough to depress growth by 2.4 percentage points of GDP. Markets for Tanzania’s export crops and minerals were hit temporarily or not at all by the global crisis, and there were terms of trade benefits, so Tanzania’s import bill came down as a result of the crisis. Cluster I: Growth and Reduction of Income Poverty 31. Progress under Cluster I has been made in certain areas of transport and energy while progress has been slow and uneven in agricultural development, natural resource management, business environment, budgeting, financial management systems, and governance of public enterprises. Cluster 1’s goal to reduce the poverty headcount to 19 percent by 2010 has been missed. Achievement of the goal by 2015 will not be possible unless continued growth has a stronger impact on poverty. 32. The Bank wrote several pieces of AAA for Cluster I. Activities include PEFAR 2007, 2008, 2009, 2010, and April 2011 (forthcoming), poverty assessments (2009 and 2011), and a number of analytical policy papers spanning all sectors, notably power, port, education, business environment, and poverty. 33. Exogenous factors affecting the Bank’s contribution to outcomes under Cluster I include the political environment, corruption, predictability of power supply, and the failed infrastructure privatization attempts. Government’s commitment to a legal framework addressing corruption is not clear, particularly given the new draft Procurement Bill, which contains provisions that may increase the potential for corruption. Corruption has affected the power sector over the past decade, caused delays in procurement of equipment, raised the cost of electricity generation, and disrupted senior management of the sector. Governments’ commitment to privatize is also not clear given the high number of infrastructure entities (including TRL and DAWASCO), which have reverted to Government stewardship. 34. Besides the unclear future of TANESCO management, steady power supply has been affected by slow adjustments of tariffs to full cost recovery for power generation, leaving TANESCO with insufficient funds for maintenance and operation, resulting in frequent brown- and black outs. 35. All in all, the unsuccessful PPP attempts (notably the attempt to bring in a private partner for Dar es Salaam WSS and the failed concession of TRL) have damaged Tanzania’s image as a suitable investment destination in East Africa. 87 Table 2: Summary Assessment of CAS Outcomes under Cluster I CAS Outcome Result 1.1 Increased revenue collection efficiency Partially achieved 1.2 Improved doing business environment Not achieved 1.3 Increased agricultural productivity Partially achieved 1.4 Improved access to and quality of roads Achieved 1.5 Improved management of natural resources Partially achieved 1.6 Improved quality and access of electricity services Achieved CAS Outcome 1.1: Increased Revenue Collection Efficiency [Partially Achieved] 36. The World Bank has supported progress towards Outcome 1.1 through the Tax Modernization Project (TMP) approved in June 2006 and the second PRSC series. The Tanzania Revenue Authorities (TRA) has made substantial efforts to improve the efficiency of revenue collection, but even with an optimistic projection, the achievable collection results will be 7 percent below the target for 2010. The tax/GDP ratio dropped from 15.0 percent in FY 2008/2009 to 14.5 percent in FY 2009/2010. For FY 2010/2011, collection targets were increased by around 28 percent despite policy changes that are expected to reduce the revenue potential. The effects of the global economic crisis also affected Outcome 1.1. 37. For the following years’ revenue, projections have been reduced to 16.2 percent of GDP in FY 2011/12 and 17.4 percent of GDP for FY 2012/13. This still represents a 12 percent increase in the tax/GDP ratio in a two-year period. The Bank has reiterated its concerns with regard to overly optimistic collection targets. 38. The nominal net increase in tax collection compared to the same period in the previous FY was not sufficient to sustain the tax/GDP ratio, which is expected to decrease to 14.2 percent in FY 2009/2010 compared to 15.0 percent in FY2008/2009, and a target of 15.5 percent. Policy changes having an impact on collection results need to be appropriately considered when preparing collection estimates, causing collection to fall short of target. In particular, collection levels in the Large Taxpayers Department (LTD) remained below expectation due to an underestimation of the effects of the economic downturn and a decreased revenue collection from the Value Added Tax (VAT). This was due to the fact that the reduction of the VAT rate was not compensated to the extent expected by increased taxpayer compliance and boosted consumption. Following particularly disappointing collection results in the second quarter of the fiscal year, performance of both LTD and Customs is stabilizing, although actual collection of VAT remains below projections. 39. For FY2009/10, income tax is the highest component of tax revenues (31 percent) followed by VAT (29 percent) and excise tax (21 percent). Personal income is taxed according to a progressive schedule with five income brackets. Tax rates applied range from 15 to 30 percent of taxable income. The exemption threshold level of income has been adjusted annually. Since VAT is paid mainly by urban classes, it is likely to be progressive, similarly for personal income tax. Non-tax revenue is very low, and massive evasion is reported in the natural resource sector. In recent budgets, the use of tax exemptions has increased in a way that subsidizes private goods and investments – this is probably regressive. A policy brief by Uwazi (December 2010) shows a substantial increase in tax exemptions relative to GDP from 2005, although exemptions have started to decline since to pre-2005 levels. Tanzania’s tax exemptions are between two and six times higher than those of Kenya and Uganda. 40. While milestones for Outcome 1.1 were all achieved, the indicator for the outcome itself was not achieved. At the same time, the Bank recognizes that targets may have been too optimistic for Outcome 1.1. Nevertheless, challenges from tax evasion in the natural resource sector and through exemptions indicate that 88 more can be done to achieve better revenue collection efficiency; hence progress towards Outcome 1.1 is partly achieved. Supervision of TMP has been satisfactory and triggers related to revenue collection under PRSC were achieved. AAA for Outcome 1.1 has taken place through the annual PEFAR exercise and input through PRSC and TMP. CAS Outcome 1.2: Improved Doing Business Environment [Not Achieved] 41. Support to an improved doing business environment took place through the following operations: Privatization and Private Sector Development Project (PPSDP) from December 1999 to June 2010; Private Sector Competitiveness Project (PSCP) from December 2005 to June 2012; Financial Sector Support Project (FSSP) from June 2006 to July 2011 (likely to be extended); and TMP (described above under CAS Outcome 1.1). 42. The impact of Bank support to Outcome 1.2 has been mixed. The ICR for PPSDP rates supervision and achievement of PDO for this project as unsatisfactory. The ongoing PSCP has had satisfactory supervision and marginally satisfactory achievement of PDO. The project’s component related directly to the business environment (BEST) was rated unsatisfactory in April 2010. The ongoing FSSP was rated moderately satisfactory in December 2010, but implementation has been slow. Government is addressing delays by making changes to project implementation arrangements, and the project will likely be extended. 43. Following the disappointing rankings in the 2009 Doing Business Indicators and Africa Competitiveness Report, Government restructured and mainstreamed the BEST program to focus on reviewing the status of the business regulatory framework as measured by Doing Business indicators. A Regulatory Reform Task Force constituted by a select committee of Permanent Secretaries undertook a detailed technical analysis of all processes and procedures involved in each of the Ease of Doing Business Indicators and identified immediate, medium-term, and long-term interventions in terms of policy, legal, or administrative changes required to improve the situation, resulting in a Roadmap. The Roadmap consists of four pillars: (i) opening/closing a business; (ii) construction permits; (iii) trade across borders, and (iv) tax administration. Under BRELA, some progress is being made. About 40 percent of the business names are now available in the BRELA database for searching. With respect to taxes, TIN numbers are now available online and double inspections (by TRA Ministry of Finance and Planning) have been removed for property assessments. While these measures contribute to reducing cost and time incurred by businesses, much still needs to be done, particularly by setting specific targets and dates for the Roadmap. The Roadmap is at the nascent stages of implementation; meanwhile, Tanzania has slipped three more places from 125 to 128 in the 2011 Doing Business Indicators. 44. Though many issues were well known and could have been resolved with minimal or no additional funds, the Roadmap took more than eight months to prepare, and once completed the proposed changes are superficial and do not address core issues facing Tanzanian entrepreneurs. The Roadmap is at the nascent stages of implementation; meanwhile, Tanzania has slipped three more places from 125 to 128 in the 2011 Doing Business Indicators. 89 Figure 3: Tanzania’s Doing Business Indicator Rankings 2006 2007 2008 2009 2010 2011 1 21 Kenya 41 61 Mozambique DBI 81 Tanzania DBI 101 Uganda DBI 121 Zambia DBI 141 161 181 45. Under PSCP, a Comprehensive Action Plan for implementation of medium- and long-term interventions in all pillars of the Roadmap is in preparation. The Roadmap consists of four pillars: (i) opening/closing a business; (ii) construction permits; (iii) trade across borders, and; (iv) tax administration. Under BRELA, some progress is being made. About 40% of the business names are now available in the BRELA database for searching. With respect to taxes, TIN numbers are now available online and double inspections (by TRA Ministry of Finance and Planning) have been removed for property assessments. While these measures contribute to reducing cost and time incurred by businesses, much still needs to be done, particularly by setting specific targets and dates for the Roadmap. 46. The goals for registration of formal enterprises and extension of credit to the private sector are on track or have exceeded their targets. However, underlying indicators for these goals show less even progress and the ICR for PPSDP was rated unsatisfactory in achieving its Development Objective. The project’s two core components (privatization and business environment) were both rated unsatisfactory as was the overall performance of the Bank. Threats to project implementation were systemically not addressed but ISR ratings remained satisfactory in spite of a deterioration of the project’s performance. 47. According to the ICR, a significant shortcoming of PPSDP was the reversal in infrastructure reforms during the project. Under PPSDP, most attempts to privatize large-scale infrastructure entities unraveled. A Bank report from 2005 noted that by 2003, six key infrastructure enterprises28 (TANESCO, DAWASA, TTCL, TICTS, TRL and ATCL) had some type of private participation in capital structure or in management, and several showed operational and financial improvements compared to their status prior to reforms. At the time of closure of PPSDP, only one enterprise (TICTS) was operating to a satisfactory standard. The remaining five entities had all reverted to state ownership. ATCL underwent a reversal and re- nationalization in 2006 and during the search for a new strategic investor the airline made monthly losses estimated at US$0.5 million and was banned from flying after an inspection by the International Air Transport Association (IATA) in December 2008 found more than 500 operational issues. The joint venture between Indian Rites and GoT (TRL) was terminated by Government in 2010 following disagreements. The Dar es Salaam WSS, Tanzania Telecommunications Company (TTCL), and TANESCO all reverted to state 28 In addition, rail operations on the Central Railway Line were taken over by a joint venture (TRL) in 2007. 90 ownership and management after a period with various types of private management (management contracts, concession, lease contracts). 48. One infrastructure company, TICTS, was privatized in an overall positive manner. During private management of the Dar es Salaam Port container terminal throughput doubled, waiting times declined, and container transshipments increased significantly. However, the circumstances of a 15 year extension of the lease contract in 2005 are unclear, which contributes to a perception of lack of transparency around infrastructure contracts, hurting Tanzania’s efforts to become a more attractive investment destination. In relation to the port it is also unclear why Tanzania Port Authority (TPA) plays the dual role of landlord and port operator (general cargo and some container handling operations). Last but not least, the Tanzania private sector views the overall operational and financial situation of the port as poor and as an obstacle to Tanzania’s economic growth. 49. Tanzania’s business environment has not improved during the CAS period. According to the latest Enterprise Survey for Tanzania (2006), more than 70 percent of businesses name lack of access to reliable electricity and the widespread outages as the main obstacle to growth, compared to an African average of less than 40 percent. According to the Africa Infrastructure Diagnostic, Tanzanian electricity prices are among the lowest in Eastern Africa, though this fact does not make Tanzania a more attractive investment destination because the quality of electricity determines whether production is feasible. A blackout, such as the one hitting Zanzibar for more than three months during December 2009 and March 2010, reduces employment and damages business. The PRSC series and PPSDP have contributed to bringing tariffs to cost- recovery levels by supporting the establishment of an independent regulator, Energy & Water Utilities Regulatory Authority of Tanzania (EWURA). However, both TANESCO and DAWASCO continue a decade-long struggle to reach financial sustainability due to low collection of payment and system losses caused by leakage and theft. 50. In addition to directly and indirectly impeding businesses and Government’s poverty reduction goals, low electricity tariffs are also a subsidy to the 14 percent of the population with access to electricity, mostly the non-poor. The same principle applies to the Dar es Salaam WSS. In this regard, it is clear that the Bank’s emphasis on higher tariffs to reach financial sustainability for utilities has been appropriate and the approach should be continued under the next CAS. 51. For the majority of Tanzania’s entrepreneurs the ease of doing business has not improved significantly during the CAS period as evidenced by the country’s absolute and relative decline in the annual Doing Business Indicators rankings, notably in relation to neighboring countries, where Tanzania ranks lowest in the 2011 Doing Business Indicator ranking. Rules, regulations, and license requirements put additional burdens on businesses instead of adding support while basic requirements for a vibrant private sector such as unrestricted competition, price information, and standard enforcements are not in place. Bank research, e.g. Poverty Reduction in Tanzania since 2001: Good Intentions, Few Results (PREM technical note, May 2009) on the disappointing progress in poverty reduction, finds that large Tanzanian firms are uncompetitive compared to their East African peers and suggests that low incidence of exports is caused by administrative costs and logistical issues at points of export (e.g., Dar seaport- and airport). According to the research, 90 percent of all firms in Dar es Salaam (which is estimated to generate 50-60 percent of Tanzania’s GDP) employ fewer than five people. To ensure more competition, higher value addition per worker, higher effectiveness, and higher salaries, firms must be given incentives to grow into the formal sector where they can contribute to the tax base. From this perspective what should be considered is how Government can 91 contribute more to ensuring the removal of unnecessary, costly, and time consuming obstacles to private entrepreneurship. Figure 4: Number of Firms and Share of Private Sector Employment in Dar es Salaam Source: PREM Technical Note, May 2009. Calculations based on NBS 2003-2005 Census of Business Establishments. 52. An area of tremendous potential to Tanzania’s entrepreneurs is a well-functioning real estate market where land titles are traded openly and efficiently. However, several challenges persist, for instance in relation to women entrepreneurs. Tanzania’s legal framework (e.g., inheritance laws) blocks women’s access and rights to property in spite of women making up half of the employed population. An illustration is the case of matrimonial assets at the time when customary laws are applied in inheritance/probate cases. In most cases, women receive a minimum portion of the matrimonial assets irrespective of contribution before and during marriage. 53. Legally, women in Tanzania have the right to own property as per the Constitution and laws that further elaborate on these rights, like the Land Act No. 4 and 5, 1999, Unit Titles Act, 2008, and the Mortgage Finance Special Provisions Act, 2008. These should support the development of women entrepreneurs because they can secure business premises and finance against assets. 54. Despite legal provisions guaranteeing women’s rights to own property, the continued existence and application of customary law - particularly with reference to property, inheritance and land rights - play a key role in undermining women’s economic empowerment. Lack of land security acts as a disincentive to women who are reluctant to invest and grow business/assets. Because women have much more limited access to resources, their ability to embark, maintain or scale up productive activities is constrained. 55. The PRSC series supported completion of the land registry under the BEST component of PSCP, which has resulted in Government‘s plan to issue about 12,000 titles of occupancy in urban areas in 2009/10 and about 40,000 customary titles of occupancy in rural areas. The goal of completing the land registry has only partially been met. Main reasons include lack of policy consensus on some provisions of the legal and institutional framework and gaps in the legal and regulatory environment. 56. In all, progress towards an improved business environment, was not fully achieved. While Government’s contribution to Outcome 2 has been wavering, Bank interventions for the outcome include unsatisfactory supervision of PPSDP, satisfactory supervision and partial successful progress towards the DO of PSCP, satisfactory supervision of FSP and moderately successful progress towards PDO albeit several serious issues facing the project. The triggers related to doing business under the PRSC series were only partially achieved. 92 CAS Outcome 1.3: Increased Agricultural Productivity [Partially Achieved] 57. The Bank has supported Government’s Agricultural Sector Development Strategy (ASDS) through the second PRSC series and the following SILs: the Agriculture Sector Development Program (ASDP) from July 2006 to June 2013; the Participatory Agricultural Development and Empowerment Project (PADEP) from March 2003 to June 2010, and; the Accelerated Food Security Program (AFSP) from May 2009 to June 2012. Objectives of the ASDS are to improve farm incomes and to reduce rural poverty in the medium and long-term through a more profitable agriculture. 58. Despite Tanzania’s respectable recent growth in agriculture in this century, rural poverty and malnutrition have not significantly decreased. The reasons for this discrepancy are not clear. This could be linked to Tanzania’s relatively high estimated population growth of 2.9 percentage points per year, or the skewed distribution of economic growth between urban and rural areas, and economic sectors. Or this could be an artifact of inaccuracies in the underlying data. It is believed that this conundrum will be at least partially resolved once data from several ongoing surveys (the national panel survey, and on-going agricultural census, and the impact assessment survey linked with the AFSP) become available. 59. The PRSC series supported Outcome 1.3 by linking a phased replacement of the crop cess tax and improvements in the agricultural marketing regime to PRSC triggers. However, Government postponed the first phase of the cess tax reduction while preparing an overhaul of local taxation aimed at guaranteeing revenues for local governments, thereby hoping to improve market incentives in the agricultural sector. The result, however, was that PRSC 8 Project Document shows myriad regulations and taxes and interventions by LGAs, Crop Boards, and cooperatives creating an unfavorable investment climate and low profitability for most cash and staple crop markets. Successful reform of Tanzania’s agricultural sector rests on increased transparency in regulatory systems and more competition in the marketing system combined with reduction of opportunities for monopolistic and rent-seeking activities. 60. The three investment operations supporting Outcome 1.3 have had mixed progress towards their respective development objectives. Under AFSP, average maize yields have sharply increased from 1.12 tons/hectare in 2008/09 to 2.1 tons/hectare in 2010, but average rice yields have remained largely unchanged at 1.79 tons/hectare, well below the target of 2.7 tons/hectare. . The underlying causes for the different trend for the two crops are unclear at the time of writing of the CASCR. AFSP registered positive progress for areas cultivated with improved seeds and fertilizers in the AFSP target area. Mechanization progressed at a slower than expected pace as use of oxen remained unchanged since 2003 while use of tractors increased less than expected, from 3 percent of households in 2003 to 8 percent of households in 2007. Use of tractors would have to increase threefold to meet the target of 24 percent of households in 2013, which is highly unlikely given past performance. 61. Data for ASDP similarly shows mixed progress towards the achievement of end-of-project targets for most PDO indicators. Achievements under ASDP include farmers’ access to and use of agricultural knowledge, technologies, marketing systems, and infrastructure. Agricultural private investment also improved. The arable area under irrigation has increased in accordance with the project’s targets, and construction of dip tanks is increasing reasonably well. On the other hand, construction of markets has been slower than expected with only 439 markets completed in 2011, against the goal of 1,185 markets by 2012. The attainment of this goal seems increasingly unlikely. The proportion of Tanzanian farmers using improved seeds increased marginally from 18 percent to 19.5 percent, but this is far below ASDP’s target 93 value of 35 percent in 2013. But the proportion of farmers using improved livestock breeds has doubled and appears likely to achieve the project’s target of 5 percent by 2013. 62. At first glance, PADEP has registered satisfactory progress on all PDO indicators; however, caution is needed when evaluating PADEP’s impact, as the initial sample frame of data for assessment of PADEP’s achievements was unexpectedly small. To address this issue, an extended impact assessment with a larger sample has been undertaken and is expected to be completed by the end of March, 2011. 63. Besides GBS and individual project support, the Bank has provided substantial AAA under Outcome 1.3. This includes: 2010 Annual Joint Agricultural Sector Implementation Review; a study on agricultural taxation; East Africa Regional Maize Trade ESW; and two papers on international competitiveness and policy options for Tanzania’s agricultural sector. These studies highlight many concerns about agricultural policy, and inconsistencies in policy implementation. They cite the need to shift from an inward orientation concentrating on food security, toward an external orientation encouraging private sector investment and trade. 64. The mixed progress for Outcome 1.3 under the projects outlined above can be linked to the generally slow and uncertain progress in implementing economic and policy reforms in Tanzania. Hence, progress towards project targets depends largely on the Tanzanian Government and private sector. Measuring progress is further complicated by lack of reliable data available at the time of this CASCR. The impact of the Bank’s support through AAA has further been undermined by continuing questions about data quality and uncertainty about official commitment to market reforms. CAS Outcome 1.4: Improved Access to and Quality of Roads [Achieved] 65. Tanzania has progressed well in improving access to and quality of its trunk road network. The Bank contributed substantially to these achievements through financial support to CTCP (August 2004 to December 2009), CTCP II (April 2008 to June 2011), and the Transport Sector Support Project (September 2010 to May 2015) (TSSP). Under CTCP, higher than expected traffic volumes exceeded the target of 10 percentage points increase per annum. Similarly, roads in poor condition stood at five percent in 2009 compared to the target of 30 percent. All three transport projects have registered positive progress towards DOs and Bank supervision has been rated satisfactory. Table 3: Selected Statistics for Transport in Tanzania (percentages) 2008/09 2009/10 2010/11 Transport Sector Expenditure as share of total GoT Budget 12.4 11.6 13.9 Transport Sector Budget (as a share of GDP) 3.3 3.5 4.3 Budget increase (decrease) in expenditure 24.0 13.5 37.3 66. An important factor in the successful rehabilitation and extension of the trunk network has been the good performance of the Road Fund, to which the second PRSC series contributed. The Road Fund increased its revenue from around US$60 million per annum in 2005 to above US$200 million in 2009, one of the largest in Sub-Saharan Africa. The PRSC series also contributed to enactment of the Road Bill, which enhanced autonomy of the road agency. Bank support has further resulted in substantial progress for improvement of Zanzibar Airport, which will allow for a substantial increase in passenger traffic to the island of Unguja, stimulating the island’s tourism sector. 94 67. However, the road sector also faces challenges, notably in relation to budgetary constraints, budget management, and sustainability of achievements realized over the CAS period. Increases for road maintenance funds have not been sufficient to remove the maintenance backlog, exacerbating the risks in shifting the burden of road rehabilitation to the future, especially as the gap in periodic maintenance continues to widen. At the same time, the increase in allocations to upgrading of trunk and regional roads is not enough to match the funding envisaged in this MTEF. Most upgrading of trunk and regional roads initiated in 2009 continues with funding below forecasted needs, thus putting completion at risk and reflecting shifts in GoT priorities. Currently, government finances 65 percent of road maintenance needs, down from 80 percent after an increase in the fuel levy by 100 percent in the 2007/08 budget. 68. As a result of budgetary over commitments, Government faces the hard choice between increasing funds for road maintenance, or focusing maintenance on a core road network by avoiding continuous maintenance on some sections, which would therefore only be passable during the dry season. In addition, there is a need to improve the oversight of procurement and contracting activities so that commitments are transparently linked to approved budgets. The function of TANROADS as an executive agency should further be strengthened to ensure sound financial planning and budget execution of the road sector. 69. While the road sector receives substantial funding, budget allocations for the railway and maritime sectors have been minimal over the CAS period. CTCP financed upgrade and maintenance of roads as well as improved operations of both rail networks. The CTCP ICR rated Bank supervision and progress toward DPO moderately satisfactory based on good effectiveness of the road component and disappointing outcome of the project’s railway component. 70. TRL suffered from lack of investment and maintenance for many years, both before and during the CAS period, due to low profitability and contract disputes between share holders (RITES and Government). Total freight carried by TRL on the Central Line in 2009 amounted to 0.54 million metric tons compared to the target of 2.67 million metric tons. Despite annual GDP growth of 5-7 percentage points over the project period traffic on the Central Line TRC railway at project closure was lower than at project appraisal. This situation endangers future balanced development of transport corridors and limits the railway networks’ ability to absorb overload of traffic on the road network. The poor state of the railways is further exacerbated by unlevel competition between railways and road haulers. The trucking industry enjoys a tax exemption from excise duty (10-15 percent) while the railway sector pays fuel levies for the Road Fund. 71. In Dar es Salaam, trunk roads as well as feeder roads suffer from massive congestion caused by historically low investments in urban roads, a rapidly growing vehicle fleet, poor public transport systems, and complete lockdown of traffic when high-level members of government travel through the city. The Dar es Salaam Transport Policy and System Development Master Plan address most of these issues and an implementation strategy is underway. The challenge is how to allocate funds for implementation. It is expected the Dar es Salaam Rapid Transit (DART – a bus transport system with dedicated lanes) will provide some relief to the city’s transport problems, but procurement issues have delayed launching of the project by more than a year (the original opening date was December 2009). 72. Outcome 1.4 has been largely achieved and progress in some areas has been well above targets. Bank supervision and design of projects related to the outcome, including the PRSC series has largely been satisfactory. However, Tanzania’s road sector faces budgetary challenges due to over-commitment and underfunding. 95 CAS Outcome 1.5: Improved Management of Natural Resources [Partially Achieved] 73. The Bank supported Outcome 1.5 through the Forest Conservation and Management Project (FCMP) and accompanying Global Environmental Fund (GEF) from June 2002 to December 2009, Marine and Coastal Environment Project (MACEMP) from August 2005 to August 2011, Sustainable Management of Mineral Resources Program (SMMRP) from September 2009 to June 2014, Lower Kihansi Environmental Management Project (LKEMP) from December 2006 to December 2010, Lake Victoria Environmental Management Project II (LVEMP II) from February 2009 to June 2013, and the Regional Stockpiles Program (RSP) from December 2006 to December 2011. 74. In addition to IL, the PRSC series has contributed to improved management of natural resources through the PRSC 8 trigger - approved and initiated implementation of an action plan to improve accountability and transparency in allocating natural resource licenses and concessions. The PRSC 7 prior action was transparency and accountability of licenses/concession allocations systems collected in the forestry, fisheries, wildlife, minerals and oil & gas sectors. 75. FCMP aimed at assisting Government in policy implementation by developing a framework for long- term management and conservation of Tanzania’s forest resources. During implementation, the project was plagued by implementation and disbursement delays due to changes in leadership, weak supervision in initial years, and capacity constraints. The project was restructured twice in the span of one year, and at closing was rated moderately unsatisfactory. Notably, the assessment of Bank performance was negative and the rating was moderately unsatisfactory on quality at entry, supervision, and overall performance. The Client and progress towards DO received similar ratings. The ICR found that project design had relied too heavily on political commitment to institutional reform. The failure to establish the Tanzanian Forest Service (TFS) as planned weakened the original commitment to involving the private sector in forest plantation management. The lack of inventory data and a regulatory and procedural framework unfit for the allocation of concessions undermined the commitment to privatization. By the end of the project three concession agreements were in the process of being developed, and although MOUs were drafted, no contracts have been signed. 76. MACEMP aims to improve the sustainable management and use of Tanzania’s territorial seas and coastal resources. An assessment of the project in June 2010 found achievement of the project’s DO moderately unlikely citing questionable capacity of the lead agency, weak coordination arrangements, lack of implementation readiness, and overly ambitious performance indicators. In particular, the mid-term quality assessment of MACEMP (June, 2010) delivered a negative assessment of the Bank’s ratings of the project, noting that ISR ratings have been far too optimistic, and the project an actual Problem Project for all of the period under review resulting in an unsatisfactory rating for candor and realism in the project. Indicators for MACEMP are not readily verifiable further questioning the basis for concluding that progress is on track and achievable. Low mid-term ratings for MACEMP and the low final rating for the Forestry Project suggest a need for more realism and in turn lower expectations in relation to natural resource management in Tanzania. At present the sector is constrained by shortfalls in governance and law enforcement as well as weak regulatory capacity. 77. SMMRP is a young project and one component (aerial resource surveys) uses the majority of the budget. Progress towards PDO is rated satisfactory, but the project faces several issues, such as disbursements not in accordance with plan, the percentage of household income levels in selected artisanal and small scale mining has not moved from the baseline (zero), the time to process mineral rights (exploration licenses) has deteriorated from the baseline. Tanzania's ranking as a mining investment 96 destination as evidenced by independent investor surveys has deteriorated from 22 out of 71 countries in 2008 to 35 out of 72 countries in 2009. 78. LKEMP has had satisfactory overall implementation of activities and PDO remains achievable. Major achievements under the project include the development of research and monitoring protocols for Kihansi Gorge ecosystem and establishment of a captive Kihansi Spray Toad (KST) population in Tanzania, an important milestone in the process of reintroducing KST back to the wild in the Kihansi Gorge. 79. Project implementation for LVEMP II started slowly with first year activities focusing on hiring and training members of the project implementation unit. Activities also focused on coordinating national activities with regional activities implemented under the project by the Lake Victoria Basin Commission. The project team expects that implementation will pick up by mid 2011 and a supervision mission will be fielded during first half of 2011 to identify potential implementation bottlenecks. 80. RSP Tanzania (as well as other RSP countries in Africa) underwent restructuring as the PDO (eliminating inventoried publicly held obsolete pesticide stocks and associated waste and implementing measures to reduce and prevent future related risks) could not be satisfactorily achieved. In Tanzania heavily contaminated soils have become an increasingly urgent issue and original project design was flawed needing project design to be addressed as well as development of results frameworks for all RSP countries. During the CAS period RSP Tanzania has addressed previous delays, which has translated into positive results for the project. As a result of progress made since beginning of 2010, the IP rating has been upgraded from MS to S while the PDO rating is kept at MS until the Level I restructuring is completed. 81. The Bank provided AAA in support of Outcome 1.5, most notably a Policy Note on the stakeholders in Tanzania’s charcoal sector. The note emphasizes the importance of charcoal as a major source of energy in Tanzania for the next 30 to 40 years, especially for the poor in both rural and urban areas. At the same time the note identifies substantial disincentives for sustainable management of the charcoal sector due to uncertainty about forest asset ownership, capacity of government agencies, and disempowerment of village and district governments. 82. Progress against improved management of natural resources has been low overall. For FCMP, the final DO is rated moderately unsatisfactory, and MACEMP’s DO and indicators appear, after the latest mission, out of reach. Bank support through the PRSC series and AAA has been more successful, but does not change the overall picture suggesting that progress against Outcome 1.5 has not been satisfactory. CAS Outcome 1.6: Improved Quality of and Access to Electricity Services [Achieved] 83. Quality and access to electricity services has improved during the CAS period in line with the goals set out in the CAS Results Matrix. The progress is a result of many small improvements in the power sector, which the Bank financed through three projects, Songo Songo Gas Development and Power (SSGDP) Generation Project (November 2001 to December, 2010), Tanzania Energy Development and Access Expansion Project (December 2007 to March 2012), and the Backbone Transmission Investment Project (December 2010 to March 2015). All three projects have shown satisfactory progress towards DOs and Bank supervision is rated satisfactory. 84. Highlights for the three projects are the encouraging steps towards improvement of Tanzania’s electricity transmission infrastructure (end user voltage is expected to switch from 190 volt to 218 volt 97 during first half of 2011). Access to electricity for rural households has improved noticeable, albeit from very low levels with the percentage of population with access to electricity went from 8.2 percent in 2005 to 14.5 percent in 2010. Under SSGDP, completion of the gas pipeline from the Songo Songo gas field to Dar es Salaam resulted in an increase of gas production for power generation from zero million cubic feet (mmcf) in 2001 to 65 mmcf in 2010, more than twice the target of 30 mmcf in 2010. Under TEDAP, the New Electricity Act has been passed and the Rural Electricity Agency is fully staffed and operational. However, the updated Power Sector Strategy has yet to be approved by the new Government. 85. Improvements in the power sector have taken place in spite of damages caused by corruption (e.g. Richmond and IPTL) and general mismanagement. The challenge is now to sustain positive progress in recent years and manage the necessary heavy investments caused by decades of inadequate maintenance and extension of the power infrastructure. 86. At the same time, TANESCO’s future – whether private, public, or PPP – needs to be addressed. Whichever model the government chooses, the current Tanzanian power system, which is characterized by small capacity and dependence on hydropower, needs to be considered. It is widely agreed that demand for power generation in Tanzania will grow rapidly over the coming five to ten years. Similarly, there is consensus that increased short term power generation capacity can only come from thermal power generation. While thermal power generation could be managed by both private and public entities, Tanzania's Power System Master Plan recognizes that most new power in the short term will be generated by private operators. 87. In relation to AAA, the Bank has financed studies on improved quality of electricity services, through a note on tariffs, integrating SMEs in rural energy and two studies of the attempted privatization of TANESCO. A number of lessons have emerged from these studies, among other: the role of the regulator in relation to tariff adjustments is critical to the utility’s ability to maintain and extend its infrastructure. Low tariffs are not pro-poor when the poor are not connected and increased tariffs would allow the utility to maintain its infrastructure better. In the future, greater contract transparency could contribute to minimizing rumors and politicization surrounding procurement and management of Tanzania’s power infrastructure. Box 3: The Energy Sector and the Richmond Development Company The power supply crisis of 2006 sheds light on the Richmond corruption case. Richmond Development Company (RDC) was an unknown player in the energy sector until it won the contract for construction of an oil pipeline from Dar es Salaam to Mwanza. However, soon after the award of the contract it became clear that the company could not deliver on its promises. In spite of the lack of progress on the pipeline construction, TANESCO proceeded to purchase generators from RDC to generate 100 MW of emergency power. The equipment arrived late and when finally in Tanzania never worked as agreed. In spite of problems with both pipeline and power generation Government honored the contract and continued payments to RDC. 88. Targets under Outcome 1.6 have largely been met and AAA has contributed to a better understanding of the challenges to improved electricity services in Tanzania. While the energy sector suffered setbacks from two corruption cases, these setbacks did not affect the development impact of the Bank’s operations. On this background, Bank performance for Outcome 1.6 is rated satisfactory. Cluster II: Improvement of Quality of Life and Social Wellbeing 98 89. Since 2004 Tanzania has forged ahead of other Sub Saharan countries in the 2009 UNDP Human Development Index – which covers MKUKUTA Cluster II - Improvement of quality of life and social well being – and now ranks 157 out of 182 countries. 90. Access to social services increased significantly during the CAS period due to substantial increases in Government spending. Bank financed projects have strongly supported this development through increased financing of activities in social services provision via the PRSC series and successive projects in education, health, HIV/AIDS, and WSS. In addition, the World Bank has supported the building and strengthening of local government systems. Considerable funds for education, health infrastructure and water have been utilized through the LGCDG. 91. However, progress has been uneven across Cluster II. For instance, access to education has improved, but the quality of education has suffered, especially at the secondary level. In health, progress has been more uniform, albeit starting from a very low level, and has followed a general trend for improved health in Sub Saharan Africa. 92. Malnutrition is one of the most serious health problems in Tanzania and the single biggest contributor to child mortality. It is a main inhibitor of educational performance and a key impediment to economic growth through its consequences on health, the ability to learn and labor productivity. According to the preliminary 2009/10 DHS report, little progress has been made with respect to nutrition. Exclusive breastfeeding is still not widely practiced with only 23 percent of all children breastfed as recommended for the first six months. Stunting rates are extremely high and there has been no significant improvement in stunting rates or under- nutrition since 2004/5. Estimates for 2010 suggest that 43,000 children will die prematurely due to malnutrition. The only successful nutrition program in Tanzania is the vitamin A supplementation program which is heavily donor dependent leaving the program in jeopardy when/if DPs would withdraw. 93. In retrospect, the Bank did not address the issue of nutrition in spite of malnutrition’s impact on children’s ability to grow, learn and earn an income as adults, and thus contribute to economic growth. Malnutrition retards cognitive development and lowers school performance. About 130 children die every day in Tanzania from diseases they would have survived if they had been well-nourished. It weakens the immune system making illnesses more dangerous. Nutrition interventions are known, but how to implement them within the Tanzanian context is less clear. Table 4: Summary Assessment CAS Outcomes under Cluster II CAS outcome Result 2.1. Increased access to quality post-primary education Partially achieved 2.2. Improved provision and quality of health services Achieved 2.3. Reduced HIV prevalence between 15-24 years Partially achieved 2.4. Improved access to water and sanitation in rural/urban areas Partially achieved 94. In WSS, more people have gained access to a safe source of water across Tanzania. However, more than forty percent of the population in rural areas still has more than 30 minutes to walk to a safe and clean water point while 16 percent of the urban population has no access to piped or protected water as their main drinking water source. In the largest city, Dar es Salaam, residents suffer from the continued poor performance of the WSS utility. The poor disproportionately lack access to adequate WSS services while at the same time they pay the highest price for basic goods such as potable water. 99 95. For HIV/AIDS, Tanzania has managed to stem the epidemic, but it is not clear whether the efforts are sustainable and whether the decline in HIV prevalence is due to societal changes in sexual behavior or to the increased mortality of AIDS infected patients. 96. The challenges of effectively managing urbanization in Tanzania are becoming increasingly severe since the country’s urban population is growing by more than 3.5 percent a year, twice the country’s average population growth rate. The urban population share—or urbanization rate— is estimated to increase from 24 percent in 2002 to 39 percent in 2030. By then, 20 million people will be living in Tanzanian towns and cities. The city of Dar es Salaam with an estimated population of about 4 million in 2010 (about ten percent of the country’s total population) has a population growth rate of 4.3 percent per year, making it the third fastest growing city in Africa and among the ten fastest growing cities of the world. CAS Outcome 2.1: Increased Access to Quality Post-Primary Education [Partially Achieved] 97. The Bank has supported education in Tanzania with the following education specific project: Secondary Education Development Project I (SEDP I) between 2004 and 2008, followed by Secondary Education Development Project II (SEDP II) from July 2010 to December 2015, Zanzibar Basic Education Improvement Project (ZUSP) from June 2007 to July 2013, and Science and Technology Higher Education Program (STHEP) from May 2008 to June 2013. In addition, the Bank has supported education in Tanzania through Tanzania Social Action Fund (TASAF) and the Local Government Support Project (LGSP). The Bank has also provided support to the education sector through the second PRSC series. 98. The ICR for SEDP I rated PDO Satisfactory and Bank contribution to PDO as satisfactory. However, the IEG Project Performance Assessment Report (PPAR) for SEDP I rated the PDO moderately unsatisfactory based on significant shortcomings in the project’s achievement of objectives, particularly learning outcomes, capacity building, and relevance of project design. Bank performance was rated moderately satisfactory based among other on a quick and flexible response to the Borrower’s request for more support to the education sector, rapid preparation, which attempted to harmonize the project. 99. The ongoing education projects (SEDP II, ZUSP, and STHEP) are all rated Satisfactory for PDO and Bank contribution. The three programs have supported government’s ambitious education agenda formulated in 2001. The ruling party promised a primary school facility in every ward and enrollment in primary and secondary education subsequently soared. However, at the secondary level, the surge of pupils was not matched by a similar rise in qualified teachers (the ratio of qualified teachers to pupils has remained at 1:51). Textbooks and other necessary inputs to quality education have also not followed the increased enrollment. These service delivery failures have resulted in reduced student learning. Form IV pass rate has decreased significantly from 2009’s 72.51% to 50.40% in year 2010. The PRSC 8 document notes that these developments have led to an overall decline in quality of education outcomes. 100. While the entire education sector has experienced substantial enrollment increases and a nominal increase in basic education spending, resource allocation for secondary education has been erratic and uneven until 2008/09. The 2010 Rapid Budget Analysis records that secondary education received a very large nominal increase (71 percent) in 2009/10. During the same period, primary education’s allocation has been practically frozen in per capita terms. Overall, education funds have been disproportionately channeled to tertiary education where funding for an inefficient student loan scheme, has been increased. However, the number of science and technology students enrolled has declined from 2,631 in 2007 to 2,184 in 2010 instead of increase towards the target of 7,844 in 2013. 100 101. Quality of education is noticeably lower in remote areas where teachers are less willing to relocate. The 2010 Field Review of Decentralized Investments (FREDI) mission and the SEDP II preparation missions found that FY06/07 and FY07/08 funds from the Capital Development Grants (CDG) were mostly directed to construct secondary schools. However, many of these schools suffered from critical shortages in teachers and necessary facilities such as laboratories, libraries, and toilets. These challenges are a result of high pressure to implement the Government’s initiative of one secondary school in every ward. 102. Secondary education quality has also been affected by quality issues at the primary level. Even though, according to official data, net enrollment in basic education has reached 95 percent in 2009 up from 59 percent in 2005, the quality and equity of primary education has remained a concern.29 103. The rise in primary enrollment benefited poor households in particular, but did not translate into similar high transition rates to secondary education. A serious side effect of the increase in basic education enrolment is that pupils enroll too late and stay in school for too long. The trend is particularly noticeable for pupils from poorer families. For the education system in general, the late start and long transition to secondary education impacts negatively on chances to transition and complete secondary education. 104. Learning in Tanzania was recently assessed by UWEZO - an NGO specializing in education quality in East Africa. UWEZO's findings were announced in September 2010 and are sobering; according to its survey (carried out in 38 of 133 districts covering a total of 42,033 children in 22,800 households), one in five primary school (primary school goes from Standard 1 to Standard 7) leavers cannot read a Standard 2 level story in Kiswahili. Half the children who complete primary school cannot read a Standard 2 level story in English. In Mathematics, 31.5 percent of Standard 7 pupils cannot do Standard 2 level multiplication. One in 10 children complete primary school with no mathematical skills at all. UWEZO warns that this situation provides a poor foundation for further learning and analysis, affecting science and business particularly negatively. 105. The challenge for Tanzania is to transform the success in enrollment into better educated children, who will enter a labor market increasingly open to competition from neighboring countries. In hindsight, neither the DPLs nor Sector Adjustment Loans have been appropriate for the education sector as technical and implementation capacity is weak and, therefore, resources have been spent inefficiently and at too high a cost. An example of inefficient use of resources for the education sector is the disproportionate spending on an ambitious and unsustainable school construction program. The initiative did not have enough financing to complete the construction of the schools and limited focus on inputs and processes that would improve quality. Moving forward, use of Adjustable Program Lending (APL) should ensure provision of technical assistance and availability of funds for the medium term, which would facilitate the sustainability of results over time. 106. Progress towards outcome 2.1 has been positive in terms of access, but the foundations for good teaching have not improved during the CAS period, and the education sector suffers from funding imbalances across primary, secondary, and tertiary education levels. The Bank has produced relevant AAA on key issues facing the primary and secondary education levels. This work is a result of the collaboration 29 Technical observations (PREM-HD policy note, September 2008) based on cross reference between DHS, EMIS, and household-based sources indicate that the routine data system over-estimates net enrollment. According to the PREM- HD note, real net primary enrollment is thus more likely to be around 80 percent. 101 between PREM and the education team, and has provided vital information to the debate. The ICR for SEDP I, the only education project which closed during the CAS period, rated project outcome as moderately unsatisfactory, while the ongoing operations are all regarded as Satisfactory. Overall, while significant progress is evident in terms of access, there is deterioration in qualified teacher/pupil ratio, availability of capitation grants, and poor infrastructure leading to falling Form IV results. CAS Outcome 2.2: Improved Provision and Quality of Health Services [Partially Achieved] 107. The World Bank supports the health sector in Tanzania through a SWAp, which uses a combination of budget support, pooled funding, and targeted project financing. Eleven development partners participate in the pooled basket fund in order to reduce transaction costs and strengthen government systems. The Health Sector Development Project (HSDP) II, which contributes to the basket fund, and provides non-pooled funds, has received two rounds of additional financing. The Health Basket fund has provided direct financing to local governments to help finance the operations of front-line facilities. The use of these funds is monitored by the MOHSW and development partners to ensure that they are used in accordance with the objectives of the Health Sector Strategic Plan (HSSP). In addition to the funding to districts, health basket funds are also used to provide central support, primarily in the areas of medical supplies and drugs, human resources development, and overall support to health sector reforms. The World Bank contribution to the HBF has been about 15-20 percent, on average. 108. In addition to the HBF, HSDP II has financed malaria prevention, including retreatment and bed nets, which have had a direct impact morbidity and mortality attributable to malaria. International evidence suggests that mortality is reduced by 6 lives per year for each 1,000 bed nets provided, suggesting that the 2.4 million nets purchased with World Bank financing are saving about 14,400 children per year from dying from malaria, or some 72,000 children over the estimated 5-year life of these nets. Other non-basket activities included support to purchasing emergency obstetrical equipment and support for the establishment of a national food fortification program, which is estimated to have a benefit-cost ratio of 8.22:1. In addition, a health sector review, assessing progress on agreed outcome targets, adequacy of resource allocation, achievement of sector milestones, and adequacy of stakeholder consultations, was successfully carried out as a PRSC-8 trigger, and it is also included as a preliminary PRSC-9 trigger. Tanzania is also a beneficiary of the East Africa Public Health Laboratory Networking Project, approved in May, 2010, to establish a network of accessible public health laboratories in the region. 109. Tanzania is on track to meet some health related Millennium Development Goals, though challenges remain. The recent preliminary report of the Tanzania Demographic and Health Survey 2010 finds notable progress in a wide range of health and well-being indicators. Wider use of bed nets has contributed to a drop in under-five mortality of 44 percent from 144 per 1000 births in 1999 to 81 in 2010, and a drop in infant mortality from 99 in 1999 to 51 in 2010, reductions which were among the greatest in Sub-Saharan Africa over the past several years. The use of insecticide treated bed nets by pregnant women has increased dramatically from 26 percent in 2007 to 57 percent in 2010. This, combined with a 25 percent increase in the share of births taking place at a health facility (41 to 52 percent over 2005-9), has contributed to the fall in maternal mortality rate from 578 deaths per 100,000 births in 2004/5 to 454 in 2010, though the rate, while reduced, is still unacceptably high. 110. About 75 percent of children between 12 and 23 months old are fully vaccinated and only 2 percent of children have not received any vaccines. Coverage declines for subsequent doses, with 96 percent receiving the first DPT dose and only 88 percent receiving all three. Regional differentials are modest, with urban 102 children more likely than rural children to have received the recommended vaccinations. In addition, coverage increases with increased education level of the mother. To recognize the need for further improvements in this area, the Health Basket Fund is financing improvements to immunization coverage. 111. Over the CAS period the government’s health budget per capita has almost doubled and is expected to reach US$14 in 2010/11. However, the proportion of government budget devoted to health has declined over recent years. Between the actual 2005/6 budget and the estimates for 2010/11, the share of the health sector in the budget has fallen from almost 12 percent to slightly over 8 percent, raising concerns about the overall priority of the health sector. The percentage increased in 2010/11, but this was largely due to a significant increase in grants from the Global Fund, which is now close to half of the MOHSW budget. However, as these grants are used and the emerging constraints on Global Fund financing take hold, the proportions of the government budget devoted to health could once again decline. The flow of funds is still problematic, especially to the lower levels of care. Human resources for health, in number, skill and geographical distribution, are one of the most important supply-side constraints. In addition, there has been relative lack of progress in the implementation of effective public-private partnership. 112. During the negotiations for HSDP II, the government and the World Bank had agreed to fold financial support for the health sector into the Poverty Reduction Support Credits by 2008, instead of implementing a third phase of HSDP. The conditions for the shift in IDA financing include increased allocation to the health sector, improved procurement performance, and annual reviews of the Health Care Waste Management Plan. The proposed shift is currently on hold as there are outstanding issues with each of the conditions, coupled with concern that a move to budget support would exclude the World Bank from the policy dialog in the sector. Further, a joint external evaluation of the sector in 2007 (funded by Belgium, Canada, Denmark, Germany, the Netherlands, and Switzerland) highlighted the effectiveness of the SWAp approach, and the Basket Fund in particular, in getting funds to the frontlines and improving outcomes. In the absence of a public finance mechanism, the pooled funds are instrumental in financing service delivery at the district level. 113. As the World Bank operation supports the sector through a SWAp, the HSDP II outcomes mirror the indicators of the HSSP, as well as those in the MKUKUTA. A number of project targets have been exceeded (infant mortality, under-five mortality, health spending per capita, TB completion rate) and have been accordingly revised upward for the additional financing. The ratio of infant mortality rate between the richest and poorest quintiles is on track for being achieved, while the total fertility rate is not likely to be met, so it has been adjusted upward. HSDP II closed on December 31, 2010, with satisfactory ratings for both implementation support and progress towards achievement of project development objective. CAS Outcome 2.3: Reduced HIV Prevalence between 15-24 Years [Partially Achieved] 114. Bank support to reduced HIV prevalence among the 15-24 year old took place under Tanzania Multi- Sectoral HIV/AIDS Program (TMAP) from July 2003 to March 2010. World Bank support was provided within the framework of the umbrella multi-country AIDS Program (MAP) for the Africa region. The project focused on social mobilization through the development of a Community AIDS Response Fund (CARF), administered largely through LGAs, as well as public sector activities on prevention, care and support, and institutional support for the Tanzanian Commission for AIDS (TACAIDS). 115. During the life of the project the prevalence of HIV/AIDS dropped from 2.1 percent in 2003/4 to 1.2 percent for the 15-19 year old. However, the prevalence for the 19-24 year old increased from 5.2 percent in 103 2003/4 to 5.3 percent in 2007/8. The number of pregnant women testing positive for HIV dropped from 6.8 percent in 2003/4 to 5.0 percent in 2007/8. The number of people with advanced HIV infection receiving Anti-Retro Viral combination therapy has increased tenfold from 20,588 in 2005 to around 226,000 in 2010, though unmet ARV needs still exist. 116. A number of behavioral characteristics in relation to HIV/AIDS appear to have changed. Three in four men and women know that condoms can reduce the risk of contracting HIV during sexual intercourse. Almost 90 percent of men and women indicate that limiting sex to one unaffected partner who has no other partners reduces the chances of infection. There has been a marked decrease in the share of people, particularly men, who have had more than one sexual partner in the last 12 months. About 29 percent of all women currently use some method of contraception with a higher share (34 percent) for currently married women and even higher share (48 percent) for single sexually active women. However, the stigma against HIV/AIDS persists, and some traditional social or religious values hinder behavioral changes that curtail HIV transmission. 117. The ICR for TMAP found that the project was developed as an emergency response, with little known about the complexity of the epidemic at the beginning of the project. Efficacy and efficiency of the project were deemed modest and Bank support to the project was rated moderately unsatisfactory as no attempt was made to address the general design problems, which included eligibility criteria and absorptive capacity of MDAs and CSOs. The Bank did not use its comparative advantage in building institutions, assessing alternatives, and improving the selection of alternatives regarding AIDS efforts. In addition, project objectives were complex and unfocused, and implementation began without baseline data or targets in place. On the basis of the substantial relevance, modest efficacy, and modest efficiency, the overall project outcome rating is moderately unsatisfactory, while quality of supervision is rated moderately unsatisfactory by the ICR team. The World Bank has decided not to finance a follow-on HIV/AIDS project because there are substantial global and bilateral resources available to Tanzania, such as the Global Fund, the President’s Emergency Plan for AIDS Relief (PEPFAR), and others. CAS Outcome 2.4: Improved access to Water and Sanitation in Rural/Urban Areas [Partially Achieved] 118. The World Bank has contributed to the water and sanitation sector through the Rural Water Supply Project from March, 2002, to June, 2010, the Water Sector Support Project (WSSP) from February, 2007, to February, 2012, and the Dar Water Supply and Sanitation Project from May, 2003, to November, 2010. The WSSP supports the government through a SWAP financing the Water Sector Development Program, drafted in 2006. Under WSDP a total of US$627 million (corresponding to 52 percent of the revised project budget of US$1,204 million) has been disbursed over the three years of implementation. This has among other resulted in the promotion of institutional and legal reforms at the trans-boundary, national and basin levels. 119. However, WSS in Tanzania faces major challenges, among other in relation to systematic planning, monitoring and reporting. In addition, implementation of WSSP has been seriously constrained by delays in Ministry of Water in submission of required documentation for basket financing advance, weak capacity in the ministry, and insufficient MoU compliance. WSSP lacks a senior program manager as well as professional experts, which has contributed to lack of effective planning and budgeting. 120. The two programs (DSWSSP and WSDP) have not been able to clearly demonstrate achievement of program outcomes due to limited capacity for monitoring and evaluation. Reported progress on output and 104 outcomes is lower than original targets due to increased unit costs, changed technology mix, and over- ambitious targets. Vital government institutions, including the sector ministry, suffer from continued under- capacity to manage the programs and do not comply with financial, procurement and safeguard procedures. Moreover, a recent WSDP Special Audit Report issued by the Controller and Auditor General (CAG) confirmed serious accountability issues. 121. The increased funding for the sector has had some impact on access to improved water sources. However, many targets will not be met and more than forty percent of the population in rural areas still has to walk more than 30 minutes to a safe and clean water point, while 16 percent of the urban population has no access to piped or protected water as their main drinking water source. The share of Tanzanians with access to improved sanitation facilities has decreased from 22 percent in 2006 to 21 in 2008. 122. The issues with the WSS utility in Dar es Salaam are even more serious. DSWSSP has not managed to address the fundamental price and service challenges facing the poor. Studies carried out by NGOs and universities conclude that the poor in Dar es Salaam pay a much higher price for water because they are not connected to the city water. Instead, the poor buy water from neighbors, kiosks, or street vendors at much higher rates than those of the water utility. A recent study conducted by an NGO at 25 water kiosks in Dar es Salaam found that all kiosks charged prices above the tariff set by EWURA, some charging up to ten times the price set by the regulator. 123. The Dar Water Supply and Sanitation project closed in November, 2010, with a marginally unsatisfactory rating for achievement of development objective. The current ratings for the Water Sector Support project are moderately unsatisfactory for both implementation progress and achievement of development objective. Cluster III: Governance and Accountability 124. Tanzania's National Framework on Good Governance provides the overall mechanism for governance and anti-corruption reforms. The Framework places high priority in addressing poor governance in the public sector that is associated with financial management, corruption, low level of service provision, tax evasion, and unnecessary bureaucracy. The five main instruments for reform, the “core reforms”, in the sector are the Public Financial Management Reform Program (PFMRP), the Public Service Reform Program (PSRP), the Local Government Reform Program (LGRP), the National Anticorruption Strategy (NACSAP), and the Legal Sector Reform Program (LSRP). Since 2000 the Bank has supported the GoT in implementing the five core reforms through IDA credits for PSRP, ATIP, and LGSP. Implementation of these core reforms has been slow with LGRP rated moderately satisfactory while LSRP, PSRP, and PFMRP are rated unsatisfactory by the Bank. 125. Tanzania is ahead of many Figure 5: Tanzania’s CPIA Ranking and Score, 2005- 2009 countries in sub-Saharan Africa in terms of public sector reform and improved management, transparency and accountability of public resource management. At the start of the CAS period in 2007, Tanzania had completed the first and second stages of public sector reforms, which 105 include ensuring budget discipline through control of the wage bill, downsizing the civil service, improving taxation and introducing performance management in the public sector. The third stage of public sector reforms, which includes deepening of the reforms, as well as ensuring their sustainability and linkages to service delivery, has been difficult and more demanding. This challenge is reflected in the current state of public sector reforms as well as in the status of relevant projects supported by the Bank and the overall Country Policy and Institutional Assessment (CPIA) score for Tanzania. Tanzania’s CPIA score has been relatively high compared to other IDA countries, but dropped in 2008, largely driven by a decline in scores for public sector management and institutions, in particular in the area of quality of budget and financial management, as well as transparency, accountability, and corruption in the public sector (Figure 1). Table 5: Summary Assessment of CAS Outcomes under Cluster III CAS Outcome Result 3.1. Improved socio-economic basic services and safety net Partially achieved through community participation 3.2. Improved management, transparency and Partially achieved accountability of public resource management CAS Outcome 3.1: Improved socio-economic basic services and safety net through community participation [Partially Achieved] 126. The World Bank has supported the improvement of basic services through community participation the Tanzania Social Action Fund (TASAF) II from November, 2004, through June, 2013, as well as through a number of other sector operations, including health, TMAP, and LGSP. In addition, one of the two PRSC-8 strategic objectives concerns Outcome 3.1 as it focuses on expansion of effective service delivery through the government budget. Outcome 3.1 supports both CAS outcomes under Cluster III and has been pursued through the implementation of sector strategies, and the strengthening of monitoring and evaluation systems in selected service delivery sectors. The relevant PRSC-8 trigger is a satisfactory water, health and education sector review and it was successfully carried out and is included as a preliminary trigger for PRSC-9. 127. To strengthen demand-side accountability, various measures have been introduced such as the publication of quarterly grant amount transfers to LGAs in national and local newspapers, postings of local government budgets in public places, and a web-based system (http://www.logintanzania.net) for disclosure of information on local government finances. Progress has been noted in the participation of citizens in local government issues and at the community level. Examples include participation of community members, Civil Society Organizations (CSO), faith-based service providers, and the private sector in health planning and implementation at the local level, and introduction of community score cards. Under LGRP, communities prepare their local plans under the Opportunities and Obstacles for Development (O&OD) process, which are consolidated at the District level and prioritized for funding using the Council Development Grants. The plans of the Tanzania Social Action Fund are interwoven into those of the local governments. 128. TASAF II provides a multi-sectoral response to the needs of communities. Communities can request, implement and monitor subprojects in health, education, water and sanitation, income generation, savings, access to markets, etc. The demand-driven approach empowers communities to take advantage of market- created opportunities as well as utilize resources made available from or through Government. Implementation of the Fund has been rated satisfactory and there has been a marked increase in the number of people with access to improved socio-economic services, overall, through the many interventions, the project has reached 20,017,227 direct beneficiaries. 106 129. With regard to health services, 10,722,052 people have access to enhanced health facilities compared to 6,146,533 in 2004; through other economic infrastructure such as roads, markets, irrigation schemes 3,199,000 people have been served compared to 693,000 in 2004; for communities with access to safe water, the number of beneficiaries increased to 1,510,250 from 350,000 in 2004, this has the potential of reducing water borne diseases. In addition, availability of water nearby also releases time that would have been spent on fetching water to use in productive activities at the household level. There have been improvements in the student to classroom ratio, through support to construction of education infrastructure, such that 560,516 children have access to education services compared to 244,162 in 2004 in the targeted areas, the pupil classroom ratio has also improved from 70:1 in 2004 to 45:1 in 2010); increase in income, inform the actual percentage increase in incomes of beneficiaries, information is also available from the independent assessment commissioned by TASAF in 2010). Public works program and the support to vulnerable groups, among the targeted beneficiaries the percentage of people who took three meals a day had increased from 30 percent to 67 percent, this could also mean that there is improved nutritional status. Also the beneficiaries spending power is reported to have increased for, clothes and education)), savings (21,712 savers compare to 4,054 in 2004), and the number of person- days provided (15,864,030 compared to 5,431,992 in 2004). About 85 percent of community members from sampled areas are satisfied with the quality and delivery of basic social services (using community score card). savings, and the number of person- days provided. 130. TASAF II has received two additional financings, the second coming from the Crisis Response Window. The government has initiated steps to turn the Social Action Fund into a legal entity. The entity will be responsible for building community-based institutions with a strong focus on improving the livelihoods of poor people. TASAF II is one of the vehicles for implementation of MKUKUTA, championing the government's social protection agenda and CDD approach. The focus of TASAF II will be on livelihood enhancing initiatives such as Community Savings and Investment Promotion, income- generating activities, social safety nets, and Community Based Conditional Cash Transfers, moving away from infrastructure construction. The Bank has initiated the preparation of a follow-up operation, which will be strongly grounded in MKUKUTA II, and will shift focus from a social fund mode to a social safety net. 131. Despite its successes, TASAF II’s effect on poverty reduction is not clear with poverty rising instead of falling over the CAS period. Concerns remain regarding its scope, whether it is broad enough to effect deep and sustainable improvement of socio-economic well-being. In addition, TASAF is not the only instrument for CDD and its relationship with LGAs is less than strictly delineated, which raises concerns about allocation and prioritization of funding, crowding out and elite capture. Based on the satisfactory progress towards meeting CAS outcomes while noting the remaining issues, including questions regarding attribution and the general quality of data, Bank performance in the improvement of socio-economic basic services and safety net through community participation is rated as moderately satisfactory. CAS Outcome 3.2: Improved Management, Transparency and Accountability of Public Resource Management [Partially Achieved] 132. The Bank has contributed to the improved management, transparency and accountability of public resource management through the Performance, Results and Accountability Project (PRAP) from September, 2007, to December, 2012, the Accountability, Transparency and Integrity Project (ATIP) from May, 2006, to December, 2011, and the Local Government Support Project (LGSP) from November, 2004, to June 2012. Outcome 3.2 has been pursued through work on improvement of the quality of budget preparation and execution, strengthening the integrity and soundness of the PFM systems, improving the effectiveness of public administration, focusing on civil service reform and wage bill management, and improving the 107 institutional framework for anti-corruption and accountability of the state. In addition, as discussed under CAS Outcome 3.1, the PRSC series supports its strategic objective of improving service delivery through the budget by aiming to strengthen PFM systems, as well as anti-corruption and accountability institutions. A successfully completed trigger for PRSC-8 is the approval of amendments to the Public Procurement Act of 2004 increasing the autonomy of Public Procurement Regulatory Authority (PPRA). 133. Tanzania has taken action in terms of law enforcement and recovery of funds. Investigations and prosecutions of high ranking officials and businessmen involved in high profile cases (e.g. BOT External Payment Account, Richmond energy, and Alex Stewart) have been undertaken, but only one conviction has been made in relation to seven grand corruption cases over the CAS period. The share of court cases outstanding for two or more years has declined only marginally from 27.9 percent in 2005 to 25.9 percent in 2009.Performance of the PCCB has often been hampered: of the 22 grand corruption cases prosecuted in 2009, only one (relating to a Central Bank construction contract) has been adjudicated in the high court. Over the past three years there have been delays in prosecuting companies involved in the Bank of Tanzania EPA case, and in recovering funds diverted in that case. There has not been adequate follow up on the Richmond scandal despite recommendations of a Parliamentary inquiry. Lack of progress in prosecution of high-level cases sends a signal of impunity about grand corruption. 134. The World Bank supports judicial reform in Tanzania through ATIP. The project contributes to improved access to judicial and legal services through skill development and the strengthening of oversight and watchdog institutions. A major achievement of the project is the establishment of a law school that provides graduate training to lawyers in a set of skills required for public practice. A total of 800 lawyers have been trained, most of which have been absorbed in the public legal institutions, thus enhancing the legal and judicial services. Progress in other areas, including reducing the backlog of cases in the court system and expanding access to justice, has been slow. Lack of progress towards development objectives has resulted in Marginally Unsatisfactory status for the project for more than a year. In response, the project has been restructured and focused on skills development related to the law school, improvement of judicial business processes to reduce case backlog, construction of primary courts, and support for legal aid to the poor to improve access to justice. Other bilateral partners have committed to funding the legal and judicial component, further strengthening support for reforms in the sector. 135. Although Tanzania's public financial management (PFM) system is more solid than most in Africa, progress has been slow in the past few years, and in some areas the PFM systems have deteriorated. The Bank and other Development Partners are supporting the PFM Reform Program through Basket Funding, but there are ongoing implementation challenges with this program. The legal framework for PFM has improved with the enactment of a new Audit Act in 2008 and an ongoing revision of the Public Finance Act. A new economic classification of the budget is being introduced, the annual accounts are now compliant with the format of International Public Sector Accounting Standards (IPSAS), Internal Audit has been strengthened and is being made independent, and there have been major improvements in the functioning of the National Audit Office (NAO). On public procurement reform, the government established the Public Procurement Regulatory Authority (PPRA) in 2005, as well as additional complaint mechanisms including Public Procurement Appeals Authority, and a Procurement Policy Unit within MOFEA. A draft Public Procurement Bill (which will replace the Public Procurement Act of 2004), awaiting Parliament approval, further strengthens the powers of the PPRA, though it contains a number of weaknesses pertaining to approval authority of contract awards, e-procurement, integration of procurement planning in the budgetary process, etc. 108 136. These improvements have, however, been too slow to prevent a gradual deterioration of the overall quality of PFM systems, as reflected by declining PEFA scores over the past five years. The PEFA scores for 2009 were worse than the PEFA scores for 2005.The 2008 report of the Controller and Auditor General (CAG) has pointed to problems including weaknesses with the Integrated Financial Management Information System (IFMIS) both at the central and local government level, poor bank reconciliation, lack of reliable information on government revenues, weak internal controls. Cash management remains a major challenge. In 2009, there were over 36,000 government bank accounts in commercial banks. Steps have been taken to close around 10,000 of them, but progress is slow. Due to poor control over government cash - spending units face a large amount of unpredictability regarding fund flows, adversely impacting budget execution and service delivery. In addition, a 2010 systems audit by KPMG found that the government has not received optimal value for money for the IFMIS system and the introduction of the system without an accompanying capacity building may have decreased accountability in some LGAs. The government has expressed an intention to tackle some of the important issues concerning the IFMIS in the wake of an NAO diagnostic report (PRSC-9 preliminary trigger). 137. The World Bank's Performance, Results and Accountability Project (PRAP), approved in FY08, has been supporting the government in enhancing the capacity, performance and accountability of public servants in service delivery through the use of modern performance management tools for MDAs and LGAs. Specifically, the project focuses on the improvement of regulatory capacity, improved use of performance management systems, as well as improved management of public servants. While the development of performance management instruments, manuals and guidelines has been satisfactory and largely achieved during the previous CAS, their implementation and integration in MDA functions under the current CAS has been weak. Consequently, the project has been rated Marginally Unsatisfactory for progress towards Development Objectives. The slow uptake of demand-side interventions, as well as reports of improper use of funds, has necessitated an upcoming restructuring of the project. The restructuring is expected to lead to a select set of MDAs and LGAs that will be fully supported to use performance management tools to enhance public service delivery in collaboration with other reform programs. Accountability mechanisms such as the Inspector-General, Ombudsman, and independent audit exist such as the Prevention and Combating Corruption Bureau (PCCB), the Ethics Secretariat (ES) and the Controller and Auditor General (CAG). While the CAG enjoys a wide level of freedom consistent follow-up on CAG recommendations remains weak and the quality of the work undertaken by the NAO remains a matter of concern. In FY 11 the World Bank advised the CAG that seven project related audit reports were rejected due to poor quality. 138. The first National Governance and Corruption Survey was done in 2009. It found widespread petty corruption in the police, judiciary and health services. Government has yet to act fully to cut corruption in these institutions. Integrity committees have been established in all Ministries, Departments and Agencies (MDAs) and Local Government Authorities (LGAs) to handle corruption allegations, but they do not work as well as they should. 139. The Ethics Secretariat (ES) is trusted with ensuring leaders are ethical and do not have a conflict of interest in their official duties has not functioned effectively. Since its establishment in 1995, there has not been a single tribunal sitting and ES annual reports are not published. A register of public assets held by the ES and public complaints against leaders have been the main instruments for accountability of public officials but the register is not effective since it cannot be verified as public access to the register is by discretion of the ES Commissioner. As a result, prospects of sanctions from unethical or corrupt behavior are low and the effect on public officials who further their own interests more than the public interest is low. 109 140. Implementation of the decentralization by devolution (D by D) policy has increasingly given Local Government Authorities (LGAs) in Tanzania a leading role in the delivery of primary services. Before the launch of D by D most services were delivered by central ministries; currently education (primary and secondary), and primary health care have been shifted to LGAs. The increased responsibilities have required larger resource allocations. The share of total GoT budget allocated to LGAs increased from 16 percent in FY 2005/06 to 25 percent in FY 2009/10. 141. In addition, since 2004/05, Government has successfully implemented and mainstreamed the Local Government Development Grant (LGDG) System under which discretionary Council Development Grants (CDG) and Capacity Building Grants (CBG) are transferred to LGAs which meet good governance related minimum conditions and performance measures. The World Bank supports the LGDG through the Local Government Support Project (LGSP). Since 2004 the project has supported the strengthening of fiscal decentralization, the improvement of accountability in the use of local government resources, and the management of inter-governmental transfer systems. The share of participating LGAs that meet the minimum conditions to access the grants has increased from 53.2 percent in FY04/05 to 97.2 percent in FY09/10. 142. LGSP has made its final contribution to LGDG and a follow-up project is under preparation for FY12. Despite the increased resource base of LGAs and the functional system of performance-based intergovernmental transfers, several weaknesses remain. Those include weak capacity in LGAs and the failure of government to insure timely and reliable transfers, with delays and shortfalls especially high during the first two quarters of the fiscal year. Inadequate coordination with central ministries often leads to deficient planning, fund flow analysis, cash management, and reporting, as well as inequitable allocation among districts. Too many centrally-driven parallel structures with different processes overburden LGAs. The government has recently set up a working group on LGA planning and reporting and will carry out an assessment of LGA capacity. The second phase of LGSP will support the mainstreaming of LGDG into the budget. The World Bank is considering consolidating some of the existing funding mechanisms to the decentralized level under eight operations into a few multi-sectoral local government baskets, thereby reducing transaction costs and further promoting alignment to country systems. 143. Concerns over transparency and accountability in the mining sector, including the level of revenues generated by the sector and captured by the Government (through royalties, taxes, and other fees), prompted Government to join the Extractive Industries Transparency Initiative (EITI) as a Candidate Country on February 16, 2009, and to enact a new Mining Act on May 28, 2010. The process of implementing EITI includes Tanzania completing validation by May 15, 2011. The validation process, which is currently underway and will be completed by March 30, 2011, assesses Tanzania's compliance with EITI principles and standards. To date, Tanzania has made significant progress towards the implementation of EITI standards, including the launch of the first EITI report reconciling payments made by the extractive companies and the revenues received by the government for the period of July 1, 2008 to June 30, 2009. Launched in February, the report shows that the government received a total of US$ 99,457,000, while the extractive companies report they paid a total of US$ 135,504,000, thus resulting in a discrepancy of US$ 36,047,000. 144. Tanzania recently improved its ranking in Transparency International’s Global Corruption Perception Index from 126 in 2009 to 116 in 2010, though its CPI score has only marginally increased from 2.6 in 2009 to 2.7 in 2010. 110 145. Progress towards CAS Outcome 3.2 has been mixed. On the one hand, LGCDG has overall noted positive progress with the percentage of LGAs meeting the minimum conditions for accessing Capital Development Grants and Tanzania’s accession to EITI has registered reasonably good progress. On the other hand, PRAP and ATIP have both registered major implementation issue leading to Marginally Unsatisfactory ratings and restructuring of both projects. Coupled with the overall high levels of impunity and unethical or corrupt behavior in the public sector leads to a rating of moderately unsatisfactory for Outcome 3.2. IV. Bank Portfolio Performance IDA Lending 146. The CAS projected new IDA commitments to reach US$2.29 billion over the FY07-FY10 CAS period. By the end of FY10, actual IDA commitments amounted to US$2.47 billion (see annex 3). The increase in total commitments was largely due to the record amounts raised for IDA-15 and to Tanzania’s consistently high CPIA ratings.30 In addition, the CAS period was extended by one year to cover FY11, during which another US$434 million will be committed for a total of US$2.9 billion over the extended FY07-FY11 CAS period. The IDA envelope was supplemented with an additional US$110 million from the Crisis Response Window, committed over FY10 and FY11, bringing the total FY07-FY11 commitments to over US$3 billion. 147. The PRSCs were reduced from planned disbursements of US$1.14 billion to US$810 million over the CAS period. Combined with the increase in the overall program, PRSC’s share of overall new lending declined from the planned 50 percent to 33 percent for the original period of FY07-FY10, or even further to 29 percent of the increased IDA including FY11. 148. 20 projects were planned for delivery during the original CAS period of which 17 were delivered, and one slipped to FY11. However, 11 new projects, including two regional Figure 6: Trend of Portfolio Size (FY05-FY10) projects and six additional financing (of which one was a PRSC supplemental), were delivered over the original CAS period of FY07-FY10, bringing the total number of projects delivered to 28 projects. In addition, six more projects (three new plus the PRSC that slipped from FY10 and two additional financings) will be delivered in FY11, bringing the total number of projects delivered over the extended CAS period to 34 projects. A number of projects slipped one or two fiscal years. 149. All but two projects originally planned in the CAS program were delivered. Allocations to projects in the energy, secondary education, transport, communication infrastructure, and mineral sectors were higher 30 Tanzania scored 3.9 in the IDA Resource Allocation Index in 2006 and 2007, and slightly declined to 3.8 in 2008 and 2009, still consistently higher than the IDA borrowers’ average of 3.3. 111 than planned commitments. New projects and additional financing for agriculture, social protection, and urban services increased the share of those sectors relative to the original program. 150. The total number of projects under implementation during FY07-FY11 averaged 24 projects, with an average total commitment of US$2.4 billion. World Bank Group disbursements to Tanzania during the CAS period amounted to US$1.2 billion. In addition, IFC guarantees, loans and equities (disbursed outstanding) amounted to US$59.6 million. 151. Currently, the project portfolio consists of 23 IDA lending operations, nine regional projects and 15 IFC loans and guarantees. Of the 23 active IDA operations, 13 were approved during FY07-FY11. The total commitment of active operations is US$2.6 billion, of which US$1.4 billion is undisbursed. According to the latest ISRs, 13 projects are rated satisfactory for progress towards achievement of development objective, six projects are rated moderately satisfactory, and three are rated moderately unsatisfactory, while one project is not yet effective. 152. A total of 16 projects closed from FY07-FY10 (see Annex 6),31 including four PRSCs. In addition, five more projects have closed or will close in FY11. ICRs were available for ten projects that exited the portfolio, but only seven of those were reviewed by IEG, see annex 732. IEG rated the outcome of one project satisfactory (14 percent) , four projects were rated moderately satisfactory (57 percent) , while two projects were rated moderately unsatisfactory (29 percent) . Borrower performance and quality of Bank supervision were rated moderately satisfactory or satisfactory. Bank performance and Quality at Entry were similarly rated, with the exception of the Roads 2 project, where a rating of unsatisfactory for quality at entry reduced the Bank performance rating to moderately unsatisfactory. The main design flaws identified by IEG included unrealistic targets, complex structure and failure to consider the low absorption and implementation capacity of the road sector. 153. The disbursement ratio averaged 24.8 percent over the period FY07-FY10, including a ratio of 34.6 percent in FY10, one of the highest in the region. The disbursement ratio for Tanzania compares well with the regional average of 23.2 percent over the same period. In a historical perspective, the Bank increased its gross commitments in Tanzania to an all time high of US$2.85 billion in FY10 (see figure 7). The number of national operations has remained relatively constant over the past decade, normally ranging from 22 to 26 operations, with the exception of FY01 when only 18 operations were in the active portfolio. This trend combined with the gradual increase in the total commitments has led to a steady increase in the average project size from US$51 million in FY01 to US$113 in FY11. Disbursements reached an all time high in FY10 (US$408 million), though that amount as a share of total commitments was closer to the average over the past decade. 154. The average age of projects closed during FY07-FY10 was 7 years (excluding PRSCs and GEFs), compared to the regional average of 5 years. Further, only one of the projects that exited the portfolio between FY07 and FY10 (excluding PRSCs) did not extend its closing date, reflecting a nearly chronic underestimation of implementation times. 31 This excludes one GEF project: Eastern Arc Forests (approved FY06, US$ 7 million, closed FY10, fully disbursed) 32 At the time of CASCR finalization, ICRs were available for Privatization and Private Sector Development (rated unsatisfactory), Forest Conservation Management (rated moderately unsatisfactory), and Central Transport Corridor Project (rated moderately satisfactory). A joint ICR will be prepared for the PRSC 4-8 series in FY11. 112 155. Project portfolio performance has been satisfactory overall (Annex 5). From FY07 to FY11, four to 12 percent of projects were at risk and 11 projects were rated as problem projects at any time in their lives. Among the reasons for problem status were slow disbursement, monitoring and evaluation, procurement and financial management. Most problem projects improve their status quickly due to proactive interventions from project teams. The restructuring of the Accountability, Transparency and Integrity project was inadvertently delayed which has reduced Proactivity to 67 percent in FY10 down from 100 percent for the rest of the CAS period. The (revised) realism index for Tanzania at the end of FY10 was 58.3 percent compared to the 40.8 percent regional average. Figure 7: Trend of Disbursement Ratio and Actual Disbursements by Modality 156. M&E issues at national, CAS, and project level. The government designed and implemented a MKUKUTA/MKUZA Monitoring System as a key tool to increase government accountability and transparency. The monitoring and evaluation mechanism revolves around three Technical Working Groups (Surveys and Census, Research and Analysis, and Communications) and the publication of an Annual Implementation Report to assess progress in the implementation of MKUKUTA/MKUZA. The World Bank financed an Institutional Development Grant for strengthening the M&E system of MKUKUTA from FY06 through FY09. Due to a series of restructurings and low capacity in the various implementing agencies responsible for the monitoring system, the grant was underutilized. While data production has significantly improved over the CAS period, remaining challenges include increased access to data, as well as enhanced data evaluation as an input to evidence-based decision making. Currently, a new Tanzania Statistical Master Plan is under development, which is an opportunity to further strengthen statistical production and move towards greater reliance on country systems and results-based policy making. 157. Tracking progress of MKUKUTA/CAS indicators encountered major challenges, as some indicators were missing baselines or targets, while data for others was not readily available. With the CASPR, the results framework was revised, updated and streamlined to improve quality and realism. All indicators were selected from existing government sources or projects, improving the quality of monitoring, as well as facilitating attribution to Bank interventions. At the project level, however, monitoring progress on outputs and outcomes remains a challenge. A monitoring and evaluation assessment was undertaken as part of the 2009 CPPR and issues highlighted include weak linkages between the activities and outputs of the projects and their development objective, weak evaluation mechanisms and low utilization of data. The CPPR action plan included specific M&E actions recommended for each project. 113 158. One Country Portfolio Performance Review (CPPR) took place during the CAS period in April 2009. The country team monitors the portfolio in real time, eliminating the need for frequent CPPRs, and the Government discourages CPPRs due to the transaction costs they impose. The April 2009 CPPR was conducted jointly with AfDB and was designed with the aim of reducing transaction costs for both institutions and the Government. The joint review identified weaknesses of the Bank’s portfolio in Tanzania, remedies, agencies responsible for actions, and a timeline for implementation. The weaknesses identified included: (i) delays in fulfillment of loan/grant conditions; (ii) delays in procurement and disbursements; (iii) poor communication between the Banks and government; (iv) weak implementation capacity; (v) untimely release of counterpart funds; (vi) irregular submission of project audit reports; (vii) inadequate staffing and training of fiduciary specialists for the projects; (viii) delays in GoT contributions as well as release of funds from designated accounts; and (ix) weaknesses in M&E, especially missing baseline and/or targets. The CPPR emphasized the importance of increased ownership through integration of projects with broader government programs, use of country systems and implementation arrangements through existing institutions and procedures. The government was encouraged to adopt a “readiness filter” for future operations, while the AfDB and World Bank committed to enhancing quality and strengthening results and identified a number of measures for improving quality of entry, supervision, and exit. 159. Gender Audit. The Gender and Development Group (PRMGE) completes an annual review of the lending portfolio approved each fiscal year to assess whether projects include (1) gender analysis and identification of key gender issues, (2) gender actions or actions to ensure women's inclusion in project benefits, (3) assessment of whether and how the project would contribute to women's empowerment, and (4) whether the project design included mechanisms to monitor women's participation in project implementation, its benefits and the project's gender impacts. Between FY08 and FY10, out of the 21 newly approved projects in Tanzania, 43 percent were considered moderately satisfactory or satisfactory33, according to the methodology described above. Those projects had some moderately satisfactory gender content, and some combination of gender sensitive actions, analysis, monitoring & evaluation. The review reveals that the lending portfolio has improved during the 3 years period, as projects approved in FY10 were more likely to empower women that those approved in FY08 (56 percent in FY10 - 5 out of 9 projects in total were gender informed, compared to 17 percent in FY08 - 1 out of 6 projects in total were gender informed). 160. In terms of sector distribution, while in FY08 only one project in the health sector was considered gender informed, the sector’s performance had improved in FY09 and FY10. In FY10, Agriculture and Rural Development, Education, Health, Social Protection, and Urban Development sectors had gender-informed projects. However, projects in Energy, Mining and Telecommunications, Finance and Private Sector Development, Public Sector, and Transport were still rated unsatisfactory. In FY09, under the WB Gender Action Plan (GAP), the initiative “Promotion of Women's Entrepreneurship: Tanzania Virtual Business Incubator” was approved. The pilot aims to contribute to women’s social and economic empowerment; an Impact evaluation will measure its benefits in 2012. 161. Financial Management. The 2009 CPPR identified a number of cross-cutting issues in financial management affecting implementation. Those include inadequate financial management staffing and low familiarity with the fiduciary procedures of development partners, resulting in poor financial reporting. 33 Each project is rated for integration of gender issues on the above mentioned four criteria/dimensions:1) analysis,2) actions,3) discussion of implications for women’s empowerment, and 4) M&E, on a scale of 1-6, from 1: highly satisfactory to 6:highly unsatisfactory. 114 Following the CPPR a number of joint fiduciary trainings were organized (FM, Disbursement, and Procurement) and were well attended by staff at the central level, though capacity at the decentralized level (LGAs) still needs to be addressed. Disbursement is still slowed down by delays in submission of disbursement requests or inadequate supporting documents. 162. Procurement. Capacity building and procurement streamlining has significantly progressed. The World Bank has revised and raised the thresholds for prior review of packages to address the delays in issuance of no objection. Procurement staff for IDA-financed projects have been encouraged to attend short-term procurement courses (2-4 weeks), organized by Eastern and Southern Africa Management Institute (ESAMI) to improve their skills and understanding of policies and procedures. In an effort to professionalize procurement functions, in December, 2009, the Government established a Public Procurement Policy Unit (PPPU) within MOFEA, which among other activities will develop and manage the public sector procurement cadre. The Public Procurement Regulatory Authority (PPRA) conducts regular training sessions to disseminate provisions of the Procurement Law, regulations and procurement procedures. 163. Safeguards. Over the CAS period, the awareness of environmental and social safeguard policies has improved though the safeguard capacity in counterpart agencies is still relatively low. The capacity issue is further exacerbated by lack of appropriate skills, particularly at Local Authority level where responsibilities for environmental management are delegated to designated officials such as wildlife, forestry and fisheries officers with limited awareness and scope of issues that need to be covered. Although Government of Tanzania has enacted an environmental framework law and associated regulations that ensure due diligence in managing environmental and social impacts, capacity to implement the law remains inadequate. 164. A Field Review of Decentralized Investments (FREDI) was conducted in July 2009 focusing on eight projects with decentralized components. At the time of the report, the value of decentralized commitments amounted to 25 percent of the Tanzania portfolio. The report identified a number of project management issues at both district and community level leading to delays in completion and weak coordination between different levels. The main issues include difficulty in mobilizing community contributions, weak project management skills, lack of regular review and proper incentive mechanisms. The review made a number of recommendations to address not only cross-cutting issues but also project-specific bottlenecks. IDA Non-Lending 165. Substantial analytical and advisory (AAA) work has been carried out since 2007; many activities in close collaboration with other DPs (see Annex 4). This work includes a series focusing on constraints to economic growth and how growth can contribute to a society with less poverty. An extensive number of short policy notes in specific areas have been produced with the intention to provide key issues, options, and recommendations in a clear but concise and readable manner, for instance in the cashew, charcoal, and coffee sectors. The majority of AAA has been carried out under Cluster I, where activities promise greatest benefits to the economy in the short to medium term. At the same time AAA has addressed cross-sectoral issues such as national poverty assessments and PEFAR. Finally, the Bank’s AAA has contributed substantially to addressing recent corruption cases by strengthening of the Controller Auditor General’s office and policy dialogue in connection with triggers for the Poverty Reduction Strategy Credit (PRSC) series. 115 Trust Funds 166. Over the CAS period, the Tanzania program included disbursements from 44 trust funds, providing more that USD 93 million in grants (see annex 8 for more detail). More than half of the trust funds were Bank executed, but in terms of volume, over 80 percent of the trust fund commitments and disbursements were recipient executed. The majority of trust funds were closely linked to lending operations and thus aligned with the Government’s priorities. 167. Trust funds focused mainly on: i. environment and sustainable energy (GEF); ii. community-based cash transfers; iii. support to Poverty Reduction Support Credits; iv. capacity building for M&E of MKUKUTA, legal literacy, and distance learning centers. Trust funds also contributed to the completion of various AAA during the CAS period, including the Poverty Assessment, the Shared Growth policy notes, and a TASAF Impact Evaluation report. 168. Projects that integrated major trust funds in design and implementation include LVEMP, Eastern Arc Forest Conservation and Management, Marine and Coastal Environmental Management, Private Sector Competitiveness, Energy Development and Access Expansion, and Lower Kihansi Gorge Ecosystem. Looking forward, the new CAS should ensure that trust funds are integrated in the strategic framework, including the results framework, for Bank assistance to the country, both on the lending and the non-lending side. Regional Projects 169. Growing regional initiatives and commitment have increased the number and volume of regional projects for Tanzania (see Annex 9). Government has shown increased interest in regional projects, recognizing the potential benefits such as network effects from infrastructure programs and positive externalities from environmental initiatives. In 2007, there were only six regional projects involving Tanzania with a total commitment of US$68.9 million specifically for Tanzania. By end-FY10, the number had grown to eleven projects with Tanzanian commitments of US$214 million (equivalent to about 9 percent of the country portfolio).34 Since two-thirds of regional projects or components are financed through a separate regional IDA envelope, regional financing potentially has a substantial impact on resource availability for Tanzania. 170. The regional integration agenda is supported largely through projects for trade facilitation, transport, energy, and communication networks. The efforts to create a stronger EAC are supported through the East Africa Trade and Transport Facilitation Project and the Regional Trade Facilitation Project. In addition, several studies have been undertaken in support of Tanzania’s efforts to further regional integration. These include how to build Tanzania as a regional trade hub, a strategic plan for Export Processing Zones in Tanzania, and a study on non-tariff measures on goods in EAC. A follow up to the latter is planned for FY11 in combination with a study on professional services. Lastly, IFC and Foreign Investment Advisory Services (FIAS) have provided analysis of the regulatory framework for Special Economic Zones in an effort to assist harmonization of regulatory frameworks across the member countries of EAC. 34 There are currently 9 regional operations with Tanzania commitments of US$204 million. 116 MIGA, IFC and WBI 171. Over the CAS period IFC’s strategy in Tanzania focused on strengthening financial markets, particularly access to finance for MSMEs, improving infrastructure by providing long-term financing for large infrastructure projects, and developing competitive high growth firms in agribusiness and tourism. IFC’s portfolio has significantly increased from US$35 million in February 2007 to US$113.9 million in June, 2010, as it has taken advantage of investment opportunities across sectors. IFC has forged partnerships with local banks to foster joint ventures aimed at supporting its operations with local currency financing. The Africa Micro, Small and Medium Term Enterprise program (AMSME) assists the Diamond Trust Bank of Tanzania in increasing its lending to SMEs through redesigning its products and procedures. The Credit Reference Bureau program provides advisory services to the BoT for the implementation, licensing, and monitoring of bureaus and the implementation of a credit reporting system. Other innovative projects in SME that IFC has developed include a Trade Finance Facility at Exim Bank, a credit line with Exim Bank to support women entrepreneurs, a loan and equity investment in Access Bank, a microfinance institution. The recently closed SECO/IFC Leasing program has contributed substantially to the development of the leasing sector, especially by giving SME owners the opportunity to acquire equipment without much up front capital outlay. 172. Energy and transport infrastructure are among the long-standing constraints impeding faster private sector development. The infrastructure sector is dominated by large public enterprises such as TANESCO, TRL, or DAWASCO. IFC has been exploring private sector participation in utilities and parastatals, and is interested in providing finance to Independent Power Producer projects in the country. However, IFC’s largest loan (US$44 million) to the Tanzanian Railway Limited has been unsuccessful. After multiple implementation difficulties, and failed efforts to restructure the project, the GoT and the operator (RITES) have decided to re-nationalize the TRL, and IFC has already received its first prepayment from TRL. Country Dialogue and Aid Coordination 173. To assist Tanzania in reaching its development goals, the Bank coordinates with development partners and participates in joint dialogue with the Government. Tanzania has an elaborate dialogue structure agreed between the Government and DPs, and the Bank has been a very active player in the Development Partner Group (DPG) and many of the 25 sector or thematic Working Groups. In 2009-2010, Government and DPs undertook extensive consultations on the Division of Labor (DoL) to improve coordination and policy dialogue. Most major sectors and reform programs undertake joint annual reviews preceding the GBS annual review, and formally adopt or strive toward Sector-wide Approaches (SWAps). Currently, eight Bank projects channel funds through nine Basket Funding mechanisms to support common programs jointly with other DPs.35 From FY07 to FY10, 45 percent of total actual disbursement from the country portfolio was made in the form of budget support (PRSCs or other DPL), with the rest through Basket Funding or project financing. Implementation arrangements for the Bank-financed operations are increasingly mainstreamed and 35 Sectors/programs in which the Bank channels funds through Basket Fund mechanism with other DPs include: agriculture; business environment; financial sector; heath; legal sector reform; public financial management; public sector reform; tax modernization; and water and sanitation. 117 aligned to the country’s institutions and systems; the default mode is to use existing institutional structures without creating Project Implementation Units.36 174. While the formal dialogue structure has developed substantially over the CAS period it is not clear whether the quality of dialogue has made similar improvements. Task Team Leaders note a tendency to one- sided dialogue in the cluster working groups where government representative often lack capacity or mandate to make interventions and commit to agreements on behalf of government. This delays implementation of decisions and contributes to a perception of defensiveness on government’s part, when the annual reviews find lack of progress in the related sectors. While ability or mandate is low, government representative show a lot of interest in ownership of the development dialogue. This is welcome but the abovementioned limitations in government participation in the dialogue translate into inadequate awareness of what to do and reluctance to admit shortcomings. V. Lessons Learned and Suggestions for the Next CAS 175. The Completion Report of the 2007-2011 Tanzania CAS contains lessons for the country’s next CAS and for the Bank’s work in low income countries. General Lessons and Issues to be Addressed 176. General budget support was projected to be the principal instrument during the 2007-2011 CAS period. However, over the CAS period government’s commitment to policy reform slowed significantly, which compromised the performance of a number of reform programs, and actual outcomes fell short of expected results. In a slow policy reform environment, the size and scope of PRSCs should be revisited in favor of interventions in areas with high impact and strong government commitment. 177. The original CAS Results Matrix was overambitious in trying to align CAS results with MKUKUTA goals, making attribution of development outcomes a challenge. The CAS mid-term review (CASPR) appropriately reduced the number of outcomes and milestones in an attempt to make them more realistic and better aligned with Bank interventions. However, the overall development outcomes remain mixed; a number of Bank projects during the CAS period did not deliver their expected results due to an overestimation of Government’s implementation capacities. A careful assessment of the Bank’s comparative advantage in program design and supervision should guide the formulation of the next CAS. More realism, candor, and less complex design are instrumental for ensuring successful outcomes under the next CAS. 178. Efforts to improve Government’s implementation capacity were not always successful. The traditional approach of building institutions and capacity did not always work, for example the expansion of decentralized MDAs did not improve service efficiency and public financial management. Reform by doing less might yield more, for example through selective focus on how Government can remove costly obstacles to private investment. 179. The development of the 2007 Joint Assistance Strategy (JAST) did not reduce transaction costs as intended. Rather than elaborating a joint strategy, Development Partners and the Government should focus on on-the-ground operational mechanisms for aid effectiveness. The General Budget Support Framework is 36 A Client Survey was done in the fall of 2010 and its results are given in the FY12-15 Tanzania CAS, which will be presented to the Board in FY11. 118 aligned with the MKUKUTA and is a strong mechanism for coordination and harmonization among development partners. 180. The CASCR and CASPR have identified major shortcomings in M&E as MKUKUTA and CAS indicators were missing baselines, targets, and progress data. With the CASPR, results indicators were selected from existing government sources or Bank projects to improve the quality of monitoring. However, the government’s weak statistical capacity made it difficult to track progress on MKUKUTA indicators. The Bank should contribute to improving the government’s statistical capacity given its importance for evidence- based decision making. In addition, at the World Bank project level monitoring progress on outputs and outcomes remains a challenge. Although the importance of M&E has been highlighted since 2007, this CASCR has identified operations in sectors such as agriculture, social protection, and the environment, where there is no adequate data to fully evaluate progress. 181. AAA has been particularly effective when it has been linked to investment operations. An example of a successful combination of interventions (AAA, IL, and policy dialogue through DPL) is electricity tariffs. The Bank has managed to convince government of the need for higher tariffs through a mix of incentives (GBS and IL) and information (AAA). This approach should be continued under the next CAS and could be extended to other sectors such as secondary education and higher education, water supply and sanitation, land titling, and upgrade of port and railway infrastructure. 182. The JAST focused on broad-based governance reform programs, which did not progress as rapidly as desired. Greater attention should be given to strengthening governance at the level of service delivery through local government and sector-specific support. In addition, the Bank’s program could support the demand for good governance more systematically, including through use of ICT. Sector Specific Lessons and Issues to be Addressed 183. Bank financing in education should give performance incentives for better outcomes. The primary and secondary education agendas should focus more on the quality of education and learning outcomes and less on construction of new buildings. A greater focus on quality education can be achieved by introducing incentives to students (such as payments for completing primary and secondary school), to teachers (payments to work in remote areas) and by promoting competition from private secondary schools through a voucher program. 184. Efforts to promote private investment in large infrastructure have been generally unsatisfactory, such as the TANESCO management contract to the DAWASCO/DAWASA water supply concession, the TRL railway concession, and the ATCL airline privatization. These failures have both technical causes (poor contract preparation; wrong incentives for better private management; unclear agreements about investment plans) and political ones, notably the reluctance of the state to surrender control. The Bank’s role in promoting future private infrastructure investments should be to finance complementary public investments, improve regulation, and advise on structured finance. 119 Annex 1: Summary Table of the Tanzania CAS Completion Report CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments CLUSTER I: GROWTH AND REDUCTION OF INCOME POVERTY MKUKUTA Goal 1: Ensuring sound economic management: Outcome 1 : Increased revenue collection FINANCING efficiency PRSCs; TMP 1.1 Total revenue collected as percent of revenue 1.1 100.5 percent for 1.1) 91 percent for 1.1 100 percent for AAA due at national level maintained at 100 period of July 2005- period of July 2009- all periods PEFAR percent [MKUKUTA] March 2006 March 2010 Milestones to contribute to the outcome: 1.a) Number of (i)TIN registered tax payer; (ii)VAT 1.a) (i) 288,680; 1.a) (i) 635,756; 1.a) (i) 674,442; registered tax payers [TMP] (ii) 6,154 in 2006 (ii)13,923 in 9/10 (ii) 14,797 by 3/11 1.b) Amount of previous year’s tax arrears collected 1.b) 116 percent in 1.b) 57 percent in 3/10 1.b) 95 percent by to total amount of tax arrears at beginning of 2006 3/11 year [TMP] 1.c) Total revenue realized from audits as a 1.c) 17 percent in 1.c) 5 percent in 9/10 1.c) 10 percent in percentage of revenue collected [TMP] 2006 3/11 MKUKUTA Goal 2: Promoting sustainable and broad-based growth Outcome 2 : Improved Doing Business FINANCING Environment PSCP/MSME; PPSDP; 2.1 Number of formal enterprises (in thousands) 2.1 60 in 2006 2.1) 72 in 2/2011 2.1 66 in 2009 TMP; FSP; HFP; [Private Sector/MSME] SMMRP; Regional: 2.2 Credit extended to the private sector as percent 2.2 10 percent in 2.2 17.9 percent in 2.2 24 percent in RCIP; Regional: Trade of GDP [FSSP] 2006 6/2010 2011 Facil; Regional: Milestones to contribute to the outcome: EATTFP; IFC: SME line 2.a) Number of days to start a business 2.a) 35 days in 2006 2.a) 29 days in 2011 2.a) 20 days in 2010 of credit, incl. specifically [PSCP/MSME] women; IFC: SME direct 2.b) Percentage of customs clearances made within 2.b) (i) 95 percent ; 2.b) (i) 53 percent; (ii) 87 2.b) (i) 65 percent ; finance; IFC: leasing; 24 hours at: (i) DSM Port; (ii) Airports [TMP] (ii) 88 percent in percent in 9/2010 (ii) 90 percent in IFC: Trade finance 2006 2010 facility; IFC: Africa 2.c) (i) Number of land titles, (ii) number of 2.c) (i) 800; 2.c) (i) 2,799; 2.c) annual increase Credit Bureau; IFC: registered land transfers increased (ii) 267 in 2006 (ii) 370 in 2010 of 10 percent Microfinance (investment [PSCP/MSME] in Microfinance Banks) 2.d) Total number of housing micro-finance loans 2.d) 462 in 2009 2.d) 462 (Project just 2.d) 2,000 in 2011 AAA provided [HFP] became effective) Shared growth; Did 2.e) Access to finance increased as measured by : 2.e) 2.e) 2.e) poverty decline?; Pro- (i) Medium-term loans (2-5 years) in relation to the i) 16 percent in 2006 i) 32.9 percent in 6/2010 i) 24 percent in poor policies; Pro-poor lending portfolio (value) of commercial banks 2011 growth and political 120 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments [FSSP] stability; Toward a Trade (ii) Volume of mortgage lending in relation to ii) 0 percent in 2006 ii) 2.6 percent in 6/2010 ii) 2 percent in and Competitiveness lending portfolio of financers [FSSP] 2011 Strategy; Sub-national (iii) Total number of bank account holders/ SACCO iii) 734,027 in 2006 iii) 866,267 in 6/2010 iii) 930,626 in 2011 growth; Shared growth; members [FSSP] Building Tanzania as a 2.f) Implementation of a Mining Cadastre system 2.f) Nil in 2007 2.f) Mining Cadastre 2.f) Cadastre regional Trade hub; Low for managing titles and licenses for mining and system set up in 2008 process completed, electricity for the rich; exploration [SMMRP] updated with the Employment study; latest legislation and Investor Roundtable; linked to regional PPPs; Zanzibar MSME offices in 2011 ICA; Tourism and shared growth (with IFC); Doing Business (w IFC);ICA (with IFC); IFC: Gender/growth assessment; IFC: Voices of Women entrepreneurs; Putting Tanzania’s hidden economy to work; Environment crisis or sustainable development Opportunity Outcome 3 : Increased agricultural productivity FINANCING 3.1 Maize and rice yield in target areas 3.1 Maize: 1.12; 3.1 Maize: 2.1; Rice: 3.1 Maize: 2.1; PRSCs; ASDP; PADEP; (ton/hectare) [AFSP] Rice: 1.73 in 1.79 in 12/2010 Rice: 2.5 in 2011 AFSP; Regional: EAAPP 2008/09 AAA Milestones to contribute to the outcome: High marketing costs and 3.a) Areas cultivated with sufficient improved seeds 3.a) 300 in 2009 3.a) 608 in 2010 3.a) 729 in 2010/11 inefficient policies; The and fertilizers in target areas (thousands of impact of regulatory and hectares) [AFSP] institutional arrangements 3.b) Percentage of farming households using 3.b) 12.1 percent in 3.b) 55 percent in 5/2010 3.b) 37.3 percent in on agricultural markets; sufficient seeds and fertilizers in target areas ( 2008/09 2010/11 A case study of percent of total farming households) [AFSP] Tanzania’s coffee market; 3.c) Area under Irrigation (thousands of hectares) 3.c) 250 in 2005 3.c) 331 in 2010 3.c) 380 in 2013 State and markets in [ASDP] cashew marketing 3.d) Number of agriculture infrastructure 3.d) (i) 0; 3.d) (i) 294; 3.d) (i) 640; constructed/rehabilitated and in operation: (i) (ii) 0 in 2006 (ii) 439 in 2010 (ii) 1,185 in 2012 Dip tanks; (ii) Markets [ASDP] 3.e) Agricultural sector review and public 3.e) Nil in 2006 3.e) Both reviews have 3.e) Conducted expenditure review conducted annually [ASDP] been conducted annually annually 121 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments since 2006 Outcome 4: Improved access to and quality of FINANCING Roads PRSCs; CTCP; CTCP II; 4.1 Percent of rural roads that are passable (good 4.1 50 percent in 4.1 56 percent in 2010 4.1 65 percent in TSSP; PSCP; LGSP; and fair condition) [GBS] 2005 2011 SCP; ZUSP; TASAF II 4.2 Percent of trunk and regional roads network in 4.2 82 percent in 4.2 89 percent in 2010 4.2 94 percent in AAA good and fair condition [GBS] 2005 2011 Decongesting the port of Milestones to contribute to the outcome: Dar es Salaam; Dar es 4. a) National Rural Transport Policy and Strategy 4.a) Nil in 2007 4.a) Target met in the 4.a) Strategy Salaam Port – “Past- established [CTCP] form of Local established Present-Future”; Sub Government Transport national growth; Telecom Program (2007-2011) in Backbone; Rural Telecom August 2008 Backbone 4.b) Rural road inventory completed [CTCP] 4.b) Nil in 2007 4.b) Target met by 4.b) Inventory delivery of 2008 report completed 4.c) Road network under TANROADS 4.c) 49 percent in 4.c) 5 percent in 2009 4.c) 30 percent in responsibility in poor condition [CTCP] 2003 2009 4.d) Roads rehabilitated, non-rural [CTCP] 4.d) Nil in 2004 4.d) 169 km in April 2009 4.d) 169 km in 2009 Outcome 5: Improved management of natural FINANCING resources PRSCs; MACEMP; 5.1 Proportion of territorial seas under effective 5.1 4 percent in 5.1 13 percent in 6/2010 5.1 6 percent in LKEMP; FCM;GEF protection or management (compared to open 2005 2010 Eastern Arc Forests; access) [MACEMP] Regional: Stockpile; 5.2 Area of forests on Tanzania Mainland 5.2 3.6 million ha in 5.2 5.46 million in 2009 5.2 4.8 million ha Regional: LVEMP; Nile managed according to approved forest management 2006 in 2009 Basin Initiative/ plans (incl. Community Based Forest Management Subsidiary Action (CBFM) and Joint Forest Management (JFM) Program [FCMP] AAA Milestones to contribute to the outcome: Charcoal and fuel wood: 5.a) Number of daily observations of vessel catch 5.a) 1,000 in 2005 5.a) Piracy prevents 5.a) 4,000 per year, environmental crisis or and effort entered into URT Fisheries vessels from monitoring by end of 2008 sustainable development Information Management System [MACEMP] opportunity 5.b) Proportion of recurrent costs of Marine 5.b) 10 percent in 5.b) 80 percent in 6/2010 5.b) 50 percent by Managed Area (MMA) system covered by 2005 end of 2008 own revenues [MACEMP] 5.c) Area of forest plantations under private 5.c) Nil in 2007 5.c) 16,563 ha in 11/2009 5.c) 20,000 ha in management agreements (concessions, co- 12/2009 management, or communities designated) [FCMP] 5.d) Revenue Tracking System for revenue 5.d) Revenue 5.d) Revenue Tracking 5.d) Revenue 122 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments collected from forest goods and services Tracking System System has been Tracking System introduced and decentralized at district level developed in 2007 introduced and is operational at [FCMP] operational in 25 pilot district level in districts in 5/2009 12/2009 MKUKUTA Goal 6: Provision of reliable and affordable energy to consumers Outcome 6 : Improved quality and access of FINANCING electricity services PRSCs; SSDP; TEDAP; 6.1 Improvement in service quality as measured by 6.1 190 v in 2008 6.1 190 v in 2010 6.1 218 v in 2012 Regional: Backbone an increase in end user voltage [TEDAP] Transmission; IFC: 6.2 Percent of population with access to electricity 6.2 8.2 percent in 6.2 14.5 percent in 2010 6.2 15 percent in Renewable Energy [GBS] 2005 2011 Milestones to contribute to the outcome: AAA 6.a) Updated Power Sector Strategy adopted 6.a) N/A 6.a) Not yet approved. In 6.a) Strategy ESMAP – integrating [TEDAP] the cabinet for approval adopted SMEs in rural energy 6.b) New Electricity Act passed [TEDAP] 6.b) N/A 6.b) Act passed 6.b) Act passed 6.c) Rural Electricity Agency (REA) fully 6.c) (i) Incomplete 6.c) (i) REA fully staffed 6.c) (i) REA functional as demonstrated by: (i) capacity to functional and operational; identifies and develop, finance and implement scale up of organization; approves new pilot schemes; and connections; (ii) Number of new rural household connections (ii) Nil (ii) 17,960 connections (ii) 40,000 new [TEDAP] (approved and pipeline) connections in 5/2010 6.d) Volume of gas production for power generation 6.d) Nil in 2001 6.d) 65 in 12/2010 6.d) 30 in 2010 (mmcf/day) in Songas facility [SSGD] CLUSTER II. IMPROVEMENT OF QUALITY OF LIFE AND SOCIAL WELL BEING MKUKUTA Goal 1: Ensuring equitable access to quality primary and secondary education, universal literacy among men and women and expansion of higher, technical and vocational education Outcome 7 : Increased access to quality post- FINANCING primary education PRSCs; SEDP I & II; 7.1 Net secondary school enrollment rate 7.1 10.3 percent in 7.1 29.9 percent in 2010 7.1 30 percent in ZBEP; STHEP; TASAF [MKUKUTA] 2005 2010 II; LGSP; IFC: Ed Milestones to contribute to the outcome: financing through 7.a) Number of students enrolled in secondary 7.a) Boys: 39; Girls: 7.a) Boys: 38; 7.a) Boys: 48; banking system – e.g. school in Zanzibar, disaggregated by gender (in 40 in 2007 Girls: 42 in 2010 Girls: 49 in 2013 CRDB Bank Ltd. No thousands) [ZBEP] direct financing of 7.b) Qualified Teacher/Pupil Ratio in secondary 7.b) 1:51 in 2005 7.b) 1:51 in 2010 7.b) 1:53 in 2011 investments contemplated schools [GBS] 7.c) Secondary education curriculum enhanced 7.c) N/A 7.c) Completed 7.c) Curriculum AAA 123 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments enhanced Sustaining job creation; 7.d) Comprehensive strategy for Teacher 7.d) N/A 7.d) Completed 7.d) Strategy Primary education in Development & Mgt completed/implemented implemented mainland Tanzania; 7.e) Number of science and technology students 7.e) 2,631 in 2007 7.e) 2,184 in 2010 7.e) 7,844 in 2013 Advancing nutrition enrolled [STHEP] MKUKUTA Goal 2: Improved survival, health and well-being of all children and women and of especially vulnerable groups Outcome 8: Improved provision and quality of FINANCING health services PRSCs; HSDP II; IFC 8.1 Proportion of under-fives malnourished (low 8.1 29 percent in 8.1 20.7 percent in 2010 8.1 20 percent in possible financing of weight for age) [MDG Report] 2003 2010 private hospitals through 8.2 Infant Mortality Rate per 1000 live births 8.2 99 in 1999 8.2 51 in 2010 8.2 54 by 2010 financial intermediaries – [HSDP] no direct financing 8.3 Proportion of births taking place at health 8.3 41 percent in 8.3 51 percent in 2009 8.3 65 percent in contemplated facilities [GBS] 2005 2011 AAA Milestones to contribute to the outcome: Repositioning nutrition 8.a) Immunization DPT3HB under 2 years old 8.a) 81 percent in 8.a) 88 percent in 2010 8.a) 85 percent in [GBS] 2005 2011 8.b) TB treatment completion rate [GBS] 8.b) 82.6 percent in 8.b) 88 percent in 2010 8.b) 85 percent in 2005 2011 8.c) Use of insecticide treated nets by vulnerable 8.c) 25 percent 8.c) 64 percent (under 5); 8.c) 40 percent groups [HSDP] (under 5); 26 percent 57 percent (pregnant) in (both) in 2010 (pregnant) in 2007 2010 8.d) The government’s health budget per capita 8.d) US$ 6.6 in 2003 8.d) US$13.98 in 8.d) US$14 in 2010 [HSDP] FY08/09 (actual) 8.e) Health workers trained pre-service to minimum 8.e) 899 in 2004 8.e) 6,450 in 2009 8.e) 8599 by 2010 qualifications and certification requirements (proxy: total number of students enrolled) [HSDP] Outcome 9: Reduced HIV prevalence between FINANCING 15-24 years PRSCs; TMAP; HSDP II; 9.1 HIV prevalence between the ages of 15-24 9.1 7.4 percent in 9.1 5.7 percent in 2008 9.1 5.0 percent in TASAF II; Regional: years [MKUKUTA] 2005 2010 GLIA; Regional: Milestones to contribute to the outcome: ARCAN 9.a) Number of people with advanced HIV 9.a) Total: 20,588. 9.a) Total: 278,000 in 9.a) Total: 440,000 infection receiving Anti-Retro Viral Male: 7,466. Female: 2010 in 2011 combination therapy, gender disaggregated 13,122 in 2005 [GBS] 9.b) Percentage of women and men aged 15-24 who 9.b) Women 4.3 9.b) Women 4.1 percent 9.b) Women 4 have had more than one sexual partner in the percent and men 30.3 and men 22.0 percent percent and men 20 last 12 months [TMAP] percent Zanzibar Zanzibar : women 0.3 percent (mainland) 124 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments women 0.9 percent percent and men 10.6 Zanzibar: women and men 18.4 percent percent (THMIS) in 2010 0.9 percent and men (TDHS 2004/05) in 18 percent in 2010 2005 9.c) Number of CSO grants that have been mapped 9.c) 4,500 mapped 9.c) 4,888 funded 9.c) 3,000-4,000 to and funded in the last 12 months [TMAP] and 2,000 funded in (Mainland); 96 active and be funded by 2010 2007 65 funded in Zanzibar in 2010 9.d) Percentage of persons aged 15 and older who 9.d) Women 12.2 9.d) Women 16 9.d) Women: 37.2 percent received counseling and testing for HIV and percent and men 12.3 and men 26.5 percent percent and men 16 received their test results [TMAP] (DHS 2004/5); from THMIS 2007/8; percent ; Zanzibar: Zanzibar: Women: Zanzibar: women: 26.3Women 15 percent 8.6 percent and men: percent and men: 25.2and men 22 percent 18.9 percent in 2010 9.e) percent of pregnant women living with HIV 9.e) 53 percent 9.e) 68 percent received 9.e) Mainland: 75 who received anti-retrovirals to reduce the risk received ARV prophylaxis (at age of 28 percent /Zanzibar: of MTCT [TMAP] prophylaxis ( at age weeks). Zanzibar 84 100 percent by 2010 of 28wks) Zanzibar: percent (ZACP 2009 78 percent report) (ZNSP/MTR 2007 report) MKUKUTA Goal 3: Increased access to affordable and safe water, sanitation, decent shelter and a safe and sustainable environment and thereby, reduced vulnerability from environmental risk. (i) Outcome 10: Improved access to water FINANCING and sanitation in rural/urban areas PRSCs; RWSS; DSM; 10.1 Percent of rural population with access to 10.1 53 percent 10.1 58.7 percent in 10.1 65 percent WSS; WSSP; SCP; clean and safe water within 30 minutes of time in 2007 2010 in 2011 ZUSP; TASAF II; WSP spent on collection of water [GBS] (ii) AAA 10.2 Percent of urban population with access to 10.2 73 percent 10.2 84 percent in 10.2 90 percent Public expenditure review piped or protected water as their main drinking in 2007 2010 in 2011 for the Water sector; water source [GBS] Infrastructure 10.3 Percent of population with access to 10.3 22 percent 10.3 21 percent in 2008 10.3 23 percent privatization improved sanitation facilities [WSSP]37 in 2006 in 2012 Milestones to contribute to the outcome: 37 The definition for Outcome 10.3 has been improved by measuring access to improved sanitation instead of access to basic sanitation. As a result, baseline, progress, and target values for this outcome differ from the values in the 2007 CAS and the 2010 CASPR. 125 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments 10.a) Number of people in rural areas provided with 10.a) 68,225 in 2006 10.a) 77,213 in 2010 10.a) 37,400 by access to Improved Water Sources [WSSP]38 2012 10.b) Community water points constructed or 10.b) N/A 10.b) N/A40 10.b) N/A41 rehabilitated in urban program area [WSSP]39 10.c) National Water Board established and 10.c) N/A 10.c) Established by the 10.c) Board operational [WSSP] Water Resource established & Management Act. operational Awaiting signature 10.d) New piped household water connections 10.d) 199,106 in 10.d) 453,908 in 10/2010 10.d) 229,457 in [WSSP] 2007 2012 10.e) Percent of schools with adequate sanitation 10.e) 60:1 in 2007 10.e) 61:1 in 2010 10.e) 100 percent by facilities (Proxy: Number of pupils per latrine) 2010 (with ratios of [MKUKUTA] 1:20 for girls and 1:25 for boys) CLUSTER III. GOVERNANCE AND ACCOUNTABILITY MKUKUTA Goal 1: Structure and Systems of governance Outcome 11: Improved socio economic basic FINANCING services and safety net through community PRSCs; LGSP; TASAF participation II; MACEMP 11.1 Percent Increase income of targeted 11.1 N/A 11.1 Evaluation 11.1 5 percent AAA vulnerable beneficiaries [TASAF II] ongoing by 2011 Zanzibar public service 11.2 Number of person days provided in Public 11.2 5.4 in 2005 11.2 15.9 in 2010 11.2 Increase by reform; TA for GAC Work Programs (in millions) [TASAF II] 2.5 percent by 2011 Milestones to contribute to the outcome: 11.a) Vulnerable individuals getting support (in 11.a) 2.7 in 2005 11.a) 383 in 2010 11.a) Increase by 5 thousands) [TASAF II] percent 11.b) Individuals participating in community 11.b) N/A in 2005 11.b) 22.2 savers in 2010 11.b) 20 in 2012 savings [TASAF II] 38 In line with the improved measuring of Outcome 10.3, this milestone has been updated to reflect new baseline, progress, and target. 39 This milestone has been updated to reflect changes to improve the WSSP results matrix following restructuring of the project and changes to improve WSS indicators in MKUKUTA. 40 Please see 10.d) for information on this milestone. 41 Please see 10.d) for information on this milestone. 126 CAS Outcomes, Indicators and Milestones Baseline Progress to date Target WBG Instruments 11.c) Trained Community Management Committee 11.c) 22.7 in 2005 11.c) 138 in 2010 11.c) 90 in 2012 members in sub-project implementation (thousands) [TASAF II] MKUKUTA Goal 2: Equitable allocation of public resources with corruption effectively addressed Outcome 12: Improved management, FINANCING transparency and accountability of public PRSCs; LGSP; TASAF resources management II; ATIP; PRAP; FCMP; SMMRP; Regional: RCIP 12.1 Percent of participating LGAs meet the 12.1 53.2 percent 12.1 97.2 percent (129 12.1 80 percent of (e-Government) minimum conditions for accessing Capital (25 out of original out of 132) in FY09/10 132 LGAs by AAA Development Grants (LGCDG) [LGSP] 47) in FY04/05 FY09/10 National Panel Surveys on poverty; STATA; 12.2 Percent of court cases outstanding for two 12.2 27.9 percent 12.2 13 percent in 12.2 20 percent in Zanzibar – Public service; or more years [GBS] in 2005 2010 2011 Urban Transition; Urban Milestones to contribute to the outcome: Policies; Putting Tanzania 12.a) Average level of compliance of procuring 12.a) 39 percent in 12.a) 73 percent in 2010 12.a) 80 percent by Hidden Economy to entities with the Procurement Act 2004 2006/7 2011 Work; Charcoal and fuel [MKUKUTA] wood: environmental 12.b) Extractive Industries Transparency Initiative 12.b) Nil in 2007 12.b) Deadline extended 12.b) EITI crisis or sustainable (EITI) Validation and will likely be met in validation development opportunity April, 2011 completed by Feb 16, 2011 *[ ] shows the source of indicator 127 List of Project Acronyms ASDP Agricultural Sector Development Project MDGR Millennium Development Goals Report AFSP Accelerated Food Security Project PADEP Participatory Agricultural Development & Empowerment Project ATIP Accountability, Transparency and Integrity Project PRAP Performance, Results and Accountability Project ARCAN African Regional Capacity Building Network for HIV/AIDS PPSDP Privatization and Private Sector Development Project Prevention, Treatment and Care Project PSCP Private Sector Competiveness Project CTCP Central Transport Corridor Project RCIP Regional Communication Infrastructure Project DSM WSS Dar-es-Salaam Water Sector Strategy RWSS Rural Water Sector Strategy EAAPP East Africa Agricultural Productivity Project SCP Strategic Cities Project EATTFP East Africa Trade and Transport Facilitation Project STHEP Science and Technology Higher Education Project ESMAP Energy Sector Management Assistance Program SEDP Secondary Education Development Project FCMP Forest Conservation Management Project SSGD Songo Songo Gas Development and Power Generation Project FSSP Financial Sector Support Project SMMRP Sustainable Management of Mineral Resources Project GLIA Great Lakes Initiative for HIV/AIDS Project TASAF Tanzania Social Action Fund HFP Housing Finance Project TEDAP Tanzania Energy Development and Access Expansion HSDP Health Sector Development Project TMAP Tanzania Multi-sectoral HIV/AIDS Project LGSP Local Government Support Project TMP Tax Modernization Project LKEMP Lower Kihansi Environmental Management Project TSSP Transport Sector Support Project LVEMP Lake Victoria Environmental Management Project WSSP Water Sector Support Project MACEMP Marine and Coastal Environmental Management Project ZBEP Zanzibar Basic Education Project 128 Annex 2: Revised CAS Outcomes Original CAS Outcome Revised CAS Outcome & Key Changes Made 1. Increased revenue collection efficiency 1. Increased revenue collection efficiency  One of the two indicators retained. 6. Improved doing business environment 2. Improved Doing Business Environment 2. Increased access to financial services  Original Outcomes 2, 3 and 6 integrated 3. Increased growth of MSME Indicators aligned to key ones used under ongoing operations.  Targets adjusted to more realistic levels. 5. Improved railway network capacity Dropped due to the problems in the concession and poor performance of the TRL. 7. Increased agricultural productivity 3. Increased agricultural productivity  Indicators aligned to those used in ongoing operations (with clearer attributions) 6. Improved coverage of all-weather roads 4. Improved access to and quality of roads 8. Improved rural access  Original Outcomes 4 & 8 combined  Indicators aligned to those used in GBS reviews 9. Sustainable marine and coastal environmental 5. Improved management of natural resources management  Original Outcomes 9-12 integrated into one. 10. Integrated management of Lake Victoria  Indicator on Lake Victoria dropped due to delayed basin project approval and effectiveness 11. Increased export of value added mineral  Indicator on mineral production dropped because the production indirect effect or the TA loan and time lag to impact on production levels. 12. Increased participation of population to  Indicators for Original Outcomes 9 & 12 retained sustainable forest resource management with revised wording to align to those in use. 13. Improved quality of electricity services 6. Improved quality and access of electricity services 14. Increased access to electricity  Original Outcomes 13 & 14 combined  Indicators aligned to those in use with targets at more realistic levels. 15. Increased enrollment in secondary schools 7. Increased access to quality post-primary education 16. Increased quality in secondary schools  Original Outcomes 15-17 combined. 17. Increased enrollment in higher/technical  Indicator focused on access because of the education enrollment pressure on quality and the delayed Bank support on secondary education.  Higher education is included only as a milestone due to implementation delays. 18. Improved provision of quality health 8. Improved provision and quality of health services services  Three key indicators selected and wording aligned. 19. Increased coverage of births attended by  Indicators on immunization, tuberculosis, and trained personnel malaria converted as milestones, aligned to the wording in use. 20. Reduced HIV prevalence of pregnant 9. Reduced HIV prevalence between 15-24 years women between 15-24 years  Original Outcomes 20-21 combined. 21. Reduced HIV prevalence between 15-24  Indicator on use of anti-retroviral drugs converted as years milestone. 129 Original CAS Outcome Revised CAS Outcome & Key Changes Made 22. Improved access to water supply in rural 10. Improved access to water and sanitation in rural/urban areas areas 23. Improved access to water supply in urban  Original Outcomes 22-24 combined. areas  Indicators aligned to those in use. 24. Increased access to sanitation services 25. Increased number of vulnerable individuals 11. Improved socio-economic basic services and safety net reached with effective social protection through community participation measures  Original Outcomes 25-26 combined. 26. Increased participation of citizens in local  Indicators aligned to those in use and focused those governance issues attributable to Bank interventions. 28. Improved management, transparency and 12. Improved management, transparency and accountability accountability of public resource of public resource management management  Original Outcomes 27-32 integrated into one. 27. Fiscal decentralization strengthened  Two key indicators retained (clean audits for LGAs 30. Improved Human Resource Management in & outstanding court cases) and one converted as the public sector milestone (procurement). 31. Strengthened national M&E systems  Indicators for convicted corruption cases dropped 32. Improved efficiency in the management of due to weak attribution. court cases flow 130 Annex 3: Planned Lending Program and Actual Deliveries FY07-FY11 Changes in the CAS Lending Program CAS Projection CAS Completion Report (US$ million) FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY11 Budget Support/DPL PRSC 5-8 190 250 300 400 190 350 100 (+15) PRSC 7 Supplemental 170 Investment Operations (in CAS) Water Sector Support 200 200 Zanzibar Basic Education 42 42 Central Transport Corridor 148 190 Health Sector Development 60 60 40 Secondary Education 50 150 Science, Tech & Higher Education 140 100 Energy Dev & Access Expansion 47 40 105 25 26 Performance, Results, 50 40 Accountability Lower Kihansi Environmental 3 3.5 Mgmt Lake Victoria Env. Mgmt 10 10.8 (Regional) Transport Sector Support 220 255 (+15) Sustainable Mgmt of Mineral Res. 20 50 Communication Infra (Regional) 10 58 Agriculture Sector Development 100 30 (35) East Africa Power Pool (Regional) 10 Investment Operations (new) Accelerated Food Security 160 Social Action Fund II 30 (35) East Africa Agriculture (Regional) 10 Strategic Cities 153 (+10) Housing Finance 40 TB/Health Systems (Regional) 5 Zanzibar Urban Services 38 STATCAP 30 Backbone Transmission 150 EAC Financial Integration I 0 (Regional) Total (Country IDA only) 640.0 550.0 550.0 550.0 432.0 498.5 698.8 838.0 359.0 *The regional IDA allocations are excluded and the Crisis Response Window (CRW) amount are shown in brackets but not counted in the total. The figures in italics indicate Additional Financing and those shaded are actual approvals. 131 Lending Program FY07-FY11 Original CAS Program IDA Revised Program National Regional Crisis (US$m) IDA IDA Response (US$m) (US$m) Window FY07 PRSC 5 190.0 PRSC 5 190.0 Water Sector Support Program 200.0 Water Sector Support 200.0 Zanzibar Basic Education 42.0 Zanzibar Basic Education 42.0 Central Transport Corridor Scale- 148.0 (Shifted to FY08) Up Health (Supplemental) 60.0 (Shifted to FY08) Sub-total: 640.0 Sub-total: 432.0 FY08 PRSC 6 250.0 (Shifted to FY09) Secondary Education Supplement 50.0 (Converted to new project FY10) Energy Access 47.0 Energy Dev& Access Expansion (TEDAP) 105.0 Science, Technology and 140.0 Sci.& Tech. High Educ. Prog (APL1) 100.0 Vocational Public Service Reform II 50.0 Performance Results & Accountability (APL2) 40.0 Lower Kihansi (Supplemental) 3.0 Lower Kihansi Env. Mgmt. – Additional Financing 3.5 Lake Victoria 2 (Regional) 10.0 (Shifted to FY09) Second Central Transport Corridor 190.0 Health Sector Dev. II - Additional Financing 60.0 Sub-total: 550.0 Sub-total: 498.5 FY09 PRSC 7 300.0 PRSC 7 190.0 Transport APL 220.0 (Shifted to FY10) Sustainable Minerals 20.0 Sustainable Mgmt. of Mineral Resources 50.0 Communication Infra. (Regional) 10.0 Communication Infra. III - Tanzania (Regional) 58.0 42.0 PRSC 6 160.0 Lake Victoria 2 - Tanzania (Regional) 10.8 22.0 Accelerated Food Security 160.0 ASDP - Additional Financing 30.0 TASAF II - Additional Financing 30.0 East Africa Agriculture - Tanzania (Regional) 10.0 20.0 Sub-total: 550.0 Sub-total: 698.8 84.0 FY10 PRSC 8 400.0 (Shifted to FY11) Agriculture 100.0 (Shifted to later year) Energy Access 40.0 TEDAP Additional Financing 25.0 EA Power Pool (Regional) 10.0 (Shifted to later year) Strategic Cities 153.0 10.0 Housing Finance 40.0 PRSC 7 Supplemental 170.0 Transport Sector Support 255.0 15.0 Secondary Education 150.0 HSDP II 2nd Additional Financing 40.0 TB/Health Systems (Regional) 5.0 10.0 ASDP 2nd Additional Financing 35.0 TASAF II 2nd Additional Financing 35.0 Sub-total: 550.0 Sub-total: 838.0 10.0 95.0 Total FY07-10: 2290.0 Total FY07-10: 2467.3 10.0 95.0 FY11 PRSC 8 100.0 15.0 Zanzibar Urban Services 38.0 STATCAP 30.0 Backbone Transmission 150.0 EAC Financial Integration I 0.0 15.0 TEDAP Additional Financing 26.0 Sub-total: 344.0 15.0 15.0 Total FY07-11: 2811.3 109.0 110.0 Total FY09-11 (IDA15): 1880.8 109.0 110.0 132 Annex 4: Planned Non-lending Program and Deliveries FY07-FY11 Analytical and Advisory Activities by Cluster FY07-FY10 FY07 Crosscutting STATCAP* (AFTP2) Cluster I Economic Management Sub National Growth* (AFTUV) Shared Growth* (AFTUV) Infrastructure Building Tanzania as a Regional Trade Hub Towards a National Logistics Masterplan (AFTP2) Low Electricity Tariffs for the Rich (AFTP2) Poverty Reduction Did poverty decline since 2001? (AFTP2) Private/Financial Sector Tanzania Investor Round Table* (AFTFE) Zanzibar MSME Income Climate Assessment (ICA)* (AFTFE) Trade Toward a Trade and Competitiveness Strategy to Propel Growth (AFTP2) Cluster II Health Advancing Nutrition for Long-Term Equitable Growth* (AFTP2) FY08 Crosscutting PEFAR 2007* (AFTP2) Cluster I Economic Management Shared Growth* (AFTP2) Natural Resources Putting Tanzania’s Hidden Economy to Work Reform, Management, and Protection of its Natural Resource Sector (AFTS2 and AFTP2) Cluster II Urban Development Urban Policies* (AFTUV) Cluster III Public Service Zanzibar Public Service Reform* (AFTP2) FY09 Crosscutting National Panel Survey on Poverty (AFTP2) PEFAR 2008* (AFTP2) Cluster I Poverty High Poverty Incidence and a Bad Business Environment - Unfortunate Outcome or Rational Decision (AFTP2) Economic Management Infrastructure, Trade and Growth* (AFTP2) The Short and Longer Term Potential Welfare Impact of Global Commodity Inflation in Tanzania (AFTP2) Proposed Strategic Plan for Tanzania EPZ Program (AFTP2) Non-Tariff Measures on Goods Trade in the East African Community (AFTP2, AFCRI) Natural Resources Environmental crisis or sustainable development opportunity? Transforming the charcoal sector in Tanzania: a policy note* (AFTEN) Infrastructure ESMAP – Integrating SMEs in Rural Energy* (AFTEG) Telco Backbone* (CITPO) Emergency Action Plan to Decongest Dar es Salaam Port (AFTP2) Dar es Salaam Port “Past – Present – Future” (AFTTR) Private/Financial Sector Investor Round Table (AFTFE) Investment Climate Assessment* (AFTFE) Employment Study* (AFTP2) Agriculture Eastern Africa: A Study of the Regional Maize Market and Marketing Costs* (AFTAR) Cluster II Education Primary Education in Mainland Tanzania: Poor kids left behind? (AFTP2) Urban The urban transition in Tanzania: building the empirical base for policy dialogue (AFTUV) FY10 Crosscutting PEFAR 2009* STATCAP Cluster I Agriculture High Marketing Costs and Inefficient Policies in Tanzania’s Maize Market (AFTAR) 133 The Impact of Regulatory and Institutional Arrangements on Agricultural Markets and Poverty A case study of Tanzania’s Coffee Market (AFTP2) State and Markets in Cashew Marketing - What Works Better for Tanzanian Farmers? (AFTP2) Economic Management Sustaining Job Creation and Improving the Quality of Jobs in Tanzania (AFTP2) Developing Export Market Information System Status, Challenges and priorities for Tanzania (AFTP2) Quantitative Assessment of Potential Impact of Services Trade Reforms in Tanzania (AFTP2) Poverty Reduction Pro-Poor Policies in Tanzania and the Role of Political Institutions (AFTP2) Pro-Poor Growth and Political Stability in Tanzania: Does Aid Help? (AFTP2) Poverty Reduction in Tanzania since 2001 Good intentions, few results (AFTP2) Infrastructure ICT, Rural Telco Backbone* (CITPO) Cluster II Health Repositioning Nutrition* (AFTHE) Water Public expenditure review of the water sector (AFTU2) Cluster III GAC TA for GAC* FY 11 Crosscutting PEFAR 2010* Poverty Assessment* (AFTP2) Cluster I Economic management Micro Constraints to Growth* (AFTP2) Professional Services Study (AFTP2) Private/Financial Sector ICA Follow Up* (AFTFE) Infrastructure Privatization (AFCE1) Energy and Mining TA for EITI* (COCPO) Infrastructure Telecom Backbone and Rural ICT* (TWICT) Cluster II Social Protection Social Safety Net Review* (AFTSP) Urban Dar Investment Resource Mobilization* (AFTUW) Cluster III GAC TA for GAC* (AFTPR) *Indicates formal AAA 134 Formal Analytical and Advisory Activities by Type FY07-FY11 Product Task Cost Audience (a) Objective (b) (US$000) FY07 Core ESW Nutrition Study 120 G, D, B KG, PD, PS Zanzibar MSME ICA 25 G, B KG Sub-National Growth 66 D KG, PD TA Investor Round Table 33 G, B, D KG, PD, PS FY08 Core ESW PEFAR 2007 385 G, D, B KG Urban Policies 391 G, D, B KG, PS Policy Note Shared Growth 222 G, D, B KG TA Zanzibar Public Service Reform 9 G, D KG, PS STATCAP 196 G, D, B KG FY09 PEFAR 2008 235 G, D, B KG Investment Climate Assessment 174 G, D, B KG Core ESW Regional Maize Trade G, D, B, PD KG, PD Employment Study 260 G, D, B KG, PS Charcoal & Fuelwood – JAS 91 G, D, B, PD KG, PD, PS Policy note Infrastructure, trade, growth 199 G, D, B KG National Panel Survey 179 G, D, B KG, PD Investor Round Table 52 G, D, B, PD KG TA ESMAP Integrating SME in Rural G, D, B PS ICT, Telco Backbone 55 G, D, B KG, PS FY10 Core ESW PEFAR 2009 125 G, D, B KG Poverty Assessment Repositioning Nutrition 30 G, D, B KG, PD, PS TA TA for GAC 80 G, D, B KG ICT, Rural Telco Backbone 60 G, D KG FY11 Poverty Assessment 200 G, D, B, PD KG, PD, PS Core ESW PEFAR 2010 50 G, D, B KG Micro Constraints to Growth 250 G, D, B KG, PD, PS Policy Note Social Safety Net Review 58 G, D, B KG, PD, PS ICA Follow-up 75 G, D, B KG EITI 20 G, D, B KG, PD, PS TA TA for GAC 246 G, D, B KG, PD, PS Telecom Backbone and Rural ICT 60 G, D, B KG, PD, PS Dar Investment Resource Mobil. 125 G, B KG, PS (a) Government (G), Development Partner(s) (D), Bank (B), public dissemination (PD). (b) Knowledge generation (KG), public debate (PD), problem-solving (PS). 135 Annex 5: Selected Indicators of Bank Portfolio Management and Performance (FY07-FY11) Indicator 2007 2008 2009 2010 2011 Number of Projects Under Implementation* 23 23 26 24 24 Average Age (years) 3.2 3.5 4.1 3.9 4.6 Realism 15.9 46.4 86.5 58.3 Number of Problem Projects 1 2 3 2 4 Ratio of Problem Projects 4.3 8.7 11.5 8.3 16.6 Proactivity 100 100 100 67 0 Commitments at Risk 1.6 5.2 4.8 8.9 10.0 Number of Projects at Risk 1 2 3 2 4 Ratio of Projects at Risk 4.3 8.7 11.5 8.3 16.6 Number of Risk Flags 9 11 20 14 16 Number of Overage Projects 0 1 1 2 1 Disbursement Ratio 20.4 23.2 20.7 34.6 21.2 Ratio of Projects with Slow Disbursement 8.7 8.7 11.5 0 4 Portfolio Management 2007 2008 2009 2010 2011 CPPR during the year (yes/no) no no yes no yes Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 FY07-FY11 Project Evaluation by IEG (number) 107 8 Project Evaluation by IEG (amount, US$ millions) 4,355.4 444.6 percent of IEG Projects Rated U or HU (number) 41.1 37.5 percent of IEG Projects Rated U or HU (amount) 36.1 60.3 *Excludes regional projects 136 Annex 6: Closed Projects during CAS Period FY07-FY11 Exit Project name Lendin Approval Date Closing Date Commitm Undisburs Project Problem Closing Developm Implementa # Risk year g (Actual) ents (US$ ed Age Project Extension ent tion Flags instru millions) Balance (Years) (Months) Objective Progress ment (US$ Rating Rating millions) 2007 TZ-Roads 2 (FY94) SIL 4/7/1994 12/30/2006 170.2 13 12.7 No 72 S S 0 TZ-GEF Eastern Arc Forests SIL (FY04) SIL 7/3/2003 12/31/2007 7 0 3.4 No 0 S S 0 TZ-Tax Administration (FY99) SIL 3/30/1999 12/31/2006 40 3.2 7.8 No 24 S S 0 TZ-Financial Institutions Dev Project II SIL 8/31/1999 12/31/2006 27.5 5.8 7.3 No 36 S S 0 TZ-Emergency Power Supply (FY04) ERL 6/8/2004 7/31/2006 43.8 0 2.1 No 11 MS S 2 TZ-PRSC 4 DPL (1st of 2nd series) DPL 5/9/2005 7/17/2006 200 0 0.2 No 0 S S 0 2008 TZ-Rural Water Supply (FY02) SIL 3/26/2002 6/30/2008 26 2.6 6.3 No 24 S MS 0 TZ-Pub Sec Reform Program (FY00) SIL 12/2/1999 12/31/2007 41.2 0 8.1 No 36 S S 0 TZ- Secondary Education Dev. Pr (FY04) SAD 6/8/2004 12/31/2007 150 0 3.2 No 6 S S 0 TZ-PRSC 5 (2nd of 2nd series) DPL 4/24/2007 8/27/2007 190 0 0.4 No 0 S S 0 2009 TZ-PRSC 6 (3rd of 2nd series) DPL 10/21/2008 11/17/2008 160 0 0.1 No 0 MS MS 0 2010 TZ-Privatization & Private Sec Development SIL 12/14/1999 9/30/2009 45.9 0 9.8 Yes 60 U MU 5 TZ-Forest Conservation & Mgmt SIL (FY02) SIL 2/26/2002 12/31/2009 31.1 0 7.8 Yes 24 MU MU 2 TZ-Participatory Ag. Dev. SIL (FY03) SIL 5/27/2003 6/30/2010 56.6 0 7.1 No 18 S S 0 TZ-HIV/AIDS APL (FY04) APL 7/7/2003 3/31/2010 70 0.1 6.7 No 18 MS S 1 TZ-Central Transport Corridor Project (FY04) SIL 4/29/2004 12/31/2009 122 0 5.7 No 0 MS S 0 TZ-PRSC 7 (4th in 2nd series) DPL 6/9/2009 12/31/2009 360 0 0.8 No 0 MS MS 0 2011 TZ-Songo Gas Dev. (FY02) SIL 10/9/2001 12/31/2010 183 2.6 9.2 No 57 S S 0 TZ-Lower Kihansi Env. Mgmt (FY02) TAL 7/3/01 9.8 TZ-Health Dev. II (FY04) APL 12/16/03 165 TZ-Dar Water (FY03) SIL 5/27/2003 11/30/2010 61.5 0.1 7.5 Yes 23 MU MS 1 TZ-Tax Modernization (FY06) SIL 6/15/2006 3/31/2011 12.0 1.0 4.7 No 20 MS S 0 *SAD – Structural Adjustment Loan U: Unsatisfactory MU: Moderately Unsatisfactory MS: Moderately Satisfactory S: Satisfactory 137 Annex 7: IEG/ICR Ratings-IDA Projects that exited Tanzania Portfolio during FY07-FY11 Exit Project Outcome rating Overall Bank Overall Borrower Quality at Entry Quality of Bank year Performance Rating Performance Supervision ICR IEG ICR IEG ICR IEG ICR IEG ICR IEG 2007 TZ-Roads 2 (FY94) MS MU MS MU MS MS MS U MS MS TZ-Tax Administration (FY99)  S MS S MS S S S MS S S TZ-Financial Institutions Dev Project II S S S S S S S S S S TZ-Emergency Power Supply (FY04) MS MS S S MS MS S S MS MS 2008 TZ-Rural Water Supply (FY02) S MS S MS S MS S MS S MS TZ-Pub Sec Reform Program (FY00) S MS HS S S S HS S HS S TZ- Secondary Education Dev. Pr (FY04) S MU S MS S MS S S S MS 2010 TZ-Privatization & Private Sec Dev U U U U MU MU MU MU U U TZ-Forest Conservation & Mgmt SIL (FY02) MU # MU # MU # MU # MU # TZ-Participatory Ag. Dev SIL (FY03) S # MS # MS # S # MU # TZ-HIV/AIDS APL (FY04) MU # MU # MS # MS # MU # TZ-Central Transport Corridor Project (FY04) MS # MS # MS # MS # MS # *No ICR available for PRSC 4-8, as this is a DPL series ending in FY11 **No IEG ratings for projects exiting in FY10 by the time of completion of the CASCR 138 Annex 8: Active Trust Funds FY07-FY11 Fund Fund Name Status Execution Effective Closing Grant Amt (USD) Funds Disb to date Disburs Donor Date Date in USD e-ment (%) TF052745 PRSP- Household Vulnerability and Market-Based Insurance Closed Recipient 10/28/2003 12/31/2005 US$311,576.00 US$269,380.39 86% Multiple Donors Schemes TF054487 TANESCO Management Support Services Closed Recipient 8/1/2004 12/31/2007 US$5,409,000.00 US$5,159,122.00 95 % SIDA TF056813 Tanzania: Lake Victoria Trust Fund Closed Recipient 6/13/2006 06/30/2009 US$1,4108,44.00 US$503,979.15 36 % Multiple Donors TF051476 PHRD- Lake Victoria Environmental Management Project Phase 2 Closed Recipient 1/29/2003 1/28/2007 US$710,870.68 US$710,870.68 100 % Japan TF052911 IDF- Capacity Building to Promote Gender-Responsive Legal Closed Recipient 12/9/2003 12/15/2006 US$488,000.00 US$62,331.50 13 % IBRD Literacy and Legal Aid TF053879 TFESSD Poverty Window: Impact Evaluation of Tanzania Social Closed Bank 7/1/2004 3/31/2008 US$480,000.00 US$472,481.63 97 % Multiple Donors Action Fund I TF090200 CIDA funds for Tanzania PRSC 4 Closed Recipient 6/7/2007 6/30/2007 US$17,224,712.18 US$17,224,712.18 100 % CIDA TF052283 GEF3 FSP- Eastern Arc Forests Conservation and Management Closed Recipient 9/20/2005 12/31/2009 US$7,000,000.00 US$7,000,000.00 100 % Multiple Donors Project TF053440 JSDF-Community-Based Coastal Resource Management and Closed Recipient 7/6/2004 12/31/2008 US$1,818,173.00 US$1,754,393.08 96 % Japan Sustainable Livelihoods TF053441 JSDF- Community-Based Coastal Resource Management and Closed Bank 6/7/2004 6/30/2009 US$67,500.00 US$62,662.46 93 % Japan Sustainable Livelihoods (Bank-Ex TF to Cover Incremental Bank Costs of TF053440) TF053938 GEF3 MSP- Wildlife and Livestock Utilization Closed Recipient 3/8/2005 6/30/2009 US$880,000.00 US$880,000.00 100 % Multiple Donors TF056596 IDF-Strengthening the Monitoring and Evaluation System of the Closed Recipient 5/9/2006 5/15/2009 US$498,000.00 US$80,000.00 16 % IBRD National Strategy for Growth and Reduction of Poverty TF090533 Poverty and Social Analysis Fund for Shared Growth Notes Closed Bank 7/1/2007 6/30/2009 US$150,125.49 US$150,125.49 100 % GTZ TF092351 JSDF SEED-Food Fortification Closed Bank 6/13/2008 6/12/2009 US$49,800.00 US$42,723.91 86 % Japan TF094420 Poverty Reduction Support Credit Closed Recipient 6/5/2009 11/30/2009 US$16,178,959.00 16,178,959.00 100 % CIDA TF054418 Energizing Rural Transformation Closed Recipient 3/10/2005 6/30/2010 US$2,086,689.12 US$1,495,822.10 72 % SIDA TF055580 GEF FSP-Marine and Coastal Environmental Management Active Recipient 8/25/2005 8/31/2011 US$10,000,000.00 US$6,963,191.43 70 % Multiple Donors TF071009 Multi Donor Trust Fund for Co-financing of Private Sector Active Bank 6/3/2008 12/31/2012 US$0 US$35,000.00 0% Multiple Donors Competitiveness Project in Tanzania TF071411 Support to Electricity Access and Regulation in Tanzania Active Bank 1/1/2010 4/30/2013 US$0 US$35,000.00 0% SIDA TF081166 Support to Electricity Access and Regulation in Tanzania Active Recipient 1/5/2010 4/30/2013 US$0 US$0.00 0% SIDA TF090420 Community-Based Conditional Cash Transfer Pilot Active Bank 9/20/2007 9/20/2011 US$93,000.00 US$43,457.57 47 % Japan TF090491 Community-Based Conditional Cash Transfer Pilot Active Recipient 9/20/2007 9/20/2011 US$1,879,915.00 US$1,157,663.63 62 % Japan TF090573 IDF Grant for Capacity Development for the Association of African Closed Recipient 8/7/2007 8/7/2010 US$491,000.00 US$491,000.00 100 % IBRD Distance Learning Centers TF091237 Scaling Up Trade for Growth and Competitiveness Active Bank 11/26/2007 12/31/2010 US$450,000.00 US$356,554.58 79 % Multiple Donors 139 TF091281 GEF FSP – Energy Development and Access Expansion Active Recipient 1/31/2008 3/31/2012 US$6,500,000.00 US$600,000.00 9% Multiple Donors TF093352 Providing Affordable and Reliable Solar Systems in Northern Closed Recipient 12/15/2008 7/15/2010 US$200,000.00 US$180,000.00 90 % Multiple Donors Tanzania TF093763 Tanzania Poverty Assessment Active Bank 2/15/2009 12/31/2010 US$150,000.00 US$0.00 0% DGDC TF094310 PPIAF: Prefeasibility Study of PPP Options for Kisarawe Freight Active Bank 4/28/2009 12/31/2010 US$331,300.00 US$81,032.69 24 % Multiple Donors Station TF094518 Case Study for Dar-es-Salaam –Public-Private/Public-Public Active Bank 6/1/2009 12/31/2010 US$135,000.00 US$115,423.97 85 % Multiple Donors Partnerships in Urban Water Supply TF094620 Co-Financing of Private Sector Competitiveness Project in Tanzania Active Recipient 12/23/2009 6/30/2012 US$13,654,000.00 US$0.00 0% Multiple Donors TF094958 Technical Support to Improve Monitoring and Evaluation of the Active Bank 8/17/2009 10/31/2010 US$57,500.00 US$35,014.71 61 % Multiple Donors SWAp Programs: Tanzania TF095375 Dar-es-Salaam: Investment Resource Mobilization for Metropolitan Active Bank 9/25/2009 12/31/2011 US$75,000.00 US$38,227.12 51 % Multiple Donors Development TF096044 Support to Electricity Access and regulation In Tanzania Active Bank 1/13/2010 12/31/2012 US$3,142,036.00 US$139,313.65 44 % SIDA TF096123 TA for Poverty Analysis for Tanzania Active Bank 2/8/2010 2/29/2012 US$150,000.00 US$57,440.51 38 % DGDC TF096137 Institutional Foundations of Shared Growth for Tanzania Active Bank 2/1/2010 4/30/2011 US$64,000.00 US$39,259.00 61 % Multiple Donors TF096371 China-Tanzania TF Active Bank 3/8/2010 12/31/2010 US$131,000.00 US$33,165.15 25 % DFID TF096436 Africa Renewable Energy Access Trust Fund - Lighting Rural Active Recipient 5/1/2010 4/30/2011 US$1,000,000.00 US$0.00 0% Multiple Donors Tanzania Project TF096525 Tanzania - Energy Development & Access Expansion Active Bank 3/22/2010 12/31/2010 US$100,000.00 US$48,837.07 48 % Multiple Donors TF096630 South-South Learning for Dar-es-Salaam Metropolitan Area Active Bank 3/31/2010 12/31/2010 US$50,000.00 US$16,888.29 34 % DGDC TF096939 AFTEG-Energy SME Admin. and Management (Tanzania) Active Bank 5/5/2010 2/28/2013 US$25,000.00 US$0.00 0% Government of the Russian Federation TF097324 Restoration of a Fragile and Unique Lower Kihansi Gorge Ecosystem Active Bank 5/21/2010 12/31/2010 US$50,000.00 US$10,842.73 22 % Multiple Donors TF097501 Review of the implementing agencies for water sector support in Active Bank 8/2/2010 12/31/2010 US$100,000.00 US$0.00 0% Multiple Donors Tanzania TFM54418 Swedish Grant for Preparation of Tanzania Energizing Rural Active Bank 3/8/2005 10/31/2010 US$0 US$0.00 0% SIDA Transformation Project TF098450 Supporting Women Economic Empowerment in Tanzania Active Bank 11/30/2010 11/30/2011 US$80,000.00 US$0.00 0% Multiple Donors Total: 44 Trust Funds 93,673,000.00 62,524,876.00 140 Annex 9: Regional Projects FY07-FY11 Project Name Date, Date, Net of which Approval Rev Comm Tanzania Closing Amt Trade Facilitation 4/3/01 6/30/11 122.50 15.00 African Regional Capacity Building Network for 8/19/04 4/30/10 10.00 10.00 HIV/AIDS Prevention, Treatment and Care (ARCAN) HIV/AIDS Great Lakes Initiative 3/15/05 12/31/10 20.00 N/A GEF: Groundwater & Drought Management 6/14/05 10/31/11 7.00 N/A GEF: Africa Stockpiles Program 9/8/05 12/31/11 13.40 6.90 East Africa Trade & Transport Facilitation 1/24/06 9/30/11 199.02 37.00 GEF: WIO Marine Highway Development 5/22/07 12/31/12 11.00 N/A Lake Victoria Environmental Management Phase II 3/3/09 6/30/13 90.00 32.50 GEF: Lake Victoria Environmental Mgmt 3/3/09 6/30/13 7.00 N/A Eastern Africa Agricultural Productivity 6/11/09 2/27/15 90.00 30.00 Regional Communication Infrastructure Project - Phase 3 6/25/09 2/28/15 151.00 100.00 East Africa Public Health Laboratory Net 5/25/10 3/30/16 63.66 15.10 EAC Financial Sector Dev. and Regionalization 1/31/11 3/30/14 16.00 N/A Total: 800.58 246.50 Annex 10: Regional AAA involving Tanzania FY07-FY11 Output Task Name Delivery Countries Involved TA Regional Multi-Disciplinary Center of Excellence FY07 Mauritius/COMESA/ (RMCE) SADC countries ESW Strengthening Food Security in Southern and Eastern FY09 EAC/COMEA/SADC Africa through Trade Liberalization and Regional countries Integration TA COMESA and ECOWAS Infrastructure Fund Structure FY09 COMESA/ECOWAS and Management countries Annex 11: Regional Trust Funds FY07-FY11 Project Name Regional Net Commitments for Approval Organization all countries Supported MDTF to support agricultural research through ASARECA 50.0 FY08 ASARECA Nile Basin Initiative NBI MDTF Activities and ** IDA investments 141 IBRD 33494R1 TA N Z A N I A SELECTED CITIES AND TOWNS MAIN ROADS PROVINCE CAPITALS RAILROADS NATIONAL CAPITAL PROVINCE BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 30°E 32°E 34°E 36°E This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any To endorsement or acceptance of such boundaries. 0° Tororo 0° To GAN DA U GAND A Kampala To Kampala Lake To Ka ge r a Victoria Nakuru K E N YA Bukoba Musoma Mara To Nakuru Buoen RWANDA KAGERA MARA 2°S 2°S Lake Mwanza Natron To M WA N Z A Simi yu Ka A R U S H A Kilimanjaro ma (5895 m) Moshi BURUNDI Arusha To NGO CONGO Yalova Lake Malindi Mo S H I N YA N G A Eyasi Lake yow Kibondo Pa Shinyanga e Manyara KILIMANJARO n ga p o si Kahama 4°S ni ep Nzega Same F CO Babati St Mas ai sa KIGOMA PEMBA e St S teppe er NORTH Kasulu MANYARA mb OF Kigoma Singida Kondoa Kaliua DEM. REP. O Tabora PEMBA Iwe SINGIDA Wete SOUTH Tanga TA N G A Mkoani ZANZIBAR TA B O R A Lake Ugalla Manyoni NORTH Tanganyika DODOMA ts. Mkokotoni ZANZIBAR M SOUTH & u Zanzibar Koani CENTRAL ur i am Mpanda D O D O M A Ng ZANZIBAR W WEST Morogoro Kibaha R U K WA Dar es Salaam Rung wa Grea MO ROGORO MOROGORO DAR ES SALAAM t Rua ha P WA N I Lake Iringa Sumbawanga Rukwa M B E YA e 8°S ng IRINGA Utete 8°S Ra ro Mpui ya IN DI AN ji e ufi be Mb R Kilom Kilwa Mbeya du Kivinje t an Ma Tunduma Ki pe Njombe O CE AN To Kasama n LINDI ur u mk ge be Lindi re 10°S M 10°S Mtwara Ra To ng Kasama A MB Z AM IA B IA e Songea Masasi To TANZANIA Kasungu MTWARA Lake RUVUMA a Tunduru vum Ru Malawi To Chiúre 12°S To To Lichinga Marrupa MOZAM MO BI QUE ZA MBIQ UE 0 50 100 150 200 Kilometers 32°E 34°E 36°E 0 50 100 150 Miles 40°E NOVEMBER 2007