Independent Evaluation of Budget Support to Tanzania 2005/06 – 2011/12

1. Independent Evaluation of Budget Support to Tanzania 2005/06 – 2011/12 Presentation of conclusions and their implications Andrew Lawson Copenhagen, November 2013

2. Objective of the Evaluation To Assess: How effective have GBS & SBS been in contributing to sustainable results on growth and poverty reduction (2006-12)? • How successful have GBS and SBS been in providing the means to the Government of Tanzania to implement its national and sectoral strategies? • How successful have GBS and SBS been in facilitating improvements in the design and implementation of these strategies? • As a consequence, how successful have GBS and SBS been in attaining successful outcomes and impacts on growth and poverty reduction?

3. How successful have GBS and SBS been in providing the means to the Government of Tanzania to implement its national and sectoral strategies?

4. Budget Support has been a major source of public funding – US $ 5 billion over 7 years, on average$690 million or $16 per head per year

5. Budget Support has comprised 37% of ODA…and 13.7% of public spending

6. The annual predictability of BS Funds has been better than other modalities (actual annual disbursements as % of planned disbursement)Source: Own computation from data provided by MoF

7. …although within-year Predictability of BS Funds remains problematic… Differences between scheduled & actual GBS/ SBS disbursements, per quarter (Tsh. m) Source: Own computation from data provided by MoF

8. Budget Support has permitted increased spending on recurrent expenses, development projects, and new social sector staff……..

9. Budget Support facilitated a rise in public spending on priority sectors from 8.8% to 13.9% of GDP….. with the share of priority sectors rising from 40 % to 53% of spending Priority sectors spending (as % of GDP)

10. Evidence suggests that the bulk of General Budget Support funding was absorbed within the Education and Roads sectors……

11. Contributing the means to implement Government policies: • Budget Support has allowed public spending to be 13 % higher than it otherwise would have been • BS funding has been significantly more predictable than other modalities, but could be better • This funding allowed expansion of social sector staffing, of non-salary recurrent spending, and of Development spending • Additional spending accrued to the 6 Priority Sectors but especially to the Education and Road sectors

12. 3. How successful have GBS and SBS been in attaining successful outcomes and impacts on growth and poverty reduction?

13. Outputs of Spending: the improved road network – length increased by 14%, while maintaining condition Length & condition of National Road Network (paved/ unpaved regional & trunk roads), 2008 – 2011 (Source: TANROADS)

14. Improved Outputs & outcomes in the Education Sector….. • Enrolment in primary schools doubled, with a GER of 102.3% in 2011 and 98.4% in 2012, while the Net Enrolment Rate (NER) was 94% in 2011 and 92% in 2012. • Transition rate from primary to secondary education more than doubled from 20.2% in 2006 to 53.6% in 2012. The 2ary GER rose from 9.4% in 2005 to 36.9% in 2012. • The number of university students rose from 45,500 in 2005/6 to 139,600 in 2010/11. • Gender parity in enrolment has been achieved at primary level.

15. …but also many continuing challenges in the Education Sector • Quality of education remains an issue: • From 2007 to 2010 20% drop in the pass rate for the primary school leavers exam, • although an increase in the pass rates was achieved from 2010 to 2011. • Secondary Pass rates remain very low, especially for Community Schools • In 2011, 10% of pupils passed the Certificate of Secondary Education Examination, a fall from 11.6% in 2010. • Pass rates vary according to type of school. In 2011 was 41.2% for seminaries, 35.1% for Government Schools, 19.5 % for Non-Government Schools and 6% for Community Schools. • Teacher retention is a key difficulty in rural areas.

16. But Primary School Pupil: Teacher Ratios are improving and district disparities are narrowing..

17. Over 2000-2010, Tanzania averaged 7% real annual GDP growth – outperforming its neighbours

18. Yet, the rate of Income Poverty declined only marginally, if at all… • 2007 Household Budget Survey (HBS) reported that the % of people living in poverty decreased from 35.6% in 2001 to 33.3% in 2007. • This reported reduction in the poverty ratio would not have compensated for the population growth rate of about 2.0% per year. (HDR, 2011). • Reported decline in the poverty rate is within the boundaries of statistical error: the reduction in income poverty may have been twice the reported amount but also there may have been no income poverty reduction over the period.

19. On the other hand, there was improvement in indicators of Non-Income Poverty … • From 2000 to 2011, Tanzania’s Human Development Index increased from 0.364 to 0.466 (HDR, 2011), shifting from significantly below the SSA average to slightly above it. • The 2000/1 and 2007 Household Budget Surveys (HBS) show improvements in some indications of welfare (education and ownership of assets). • Since 2003, HIV prevalence in adults (15-49 years) has declined in both males and females. • There has been progress in the reduction of under five and infant mortality and Tanzania is now on track to meet MDG4.

20. Overview of impact of Budget Support in Tanzania

21. 2. How successful have GBS and SBS been in facilitating improvements in the design and implementation of Government policies and strategies?

22. Budget Support as a mechanism for better policy dialogue (& implementation) • Tanzania faces major policy challenges in promoting growth and poverty reduction, and meeting the needs of an expanding population efficiently and fairly • Budget Support should help: • By providing a framework to set policy targets and measure progress on Mkukuta and sector strategies • By keeping attention on Macro, PFM & core issues • By providing advice & giving access to TA • By providing incentives to faster implementation

23. Better Structures for Policy dialogue have been established …. • The Partnership Framework Memorandum, signed in 2006 by GoT and 14 DPs, set a clear collaborative basis for a Policy Dialogue to ‘enrich the country’s strategies’ • It established an integrated framework for assessing performance against Mkukuta targets and against specific disbursement triggers & conditions, based upon: • A standardised annual calendar for review/ assessment • A common Performance Assessment Framework (PAF) • Thus, in terms of harmonisation, alignment and stakeholder engagement the framework scores well.

24. And Budget Support has been influential in certain policy results …. • Budget Support has contributed to: • Consistent political and administrative commitment to the PFM reform programme • Consistent support for the Road Fund and related road maintenance arrangements • The introduction of Capitation Grants for secondary schools • The introduction of Budget Transparency targets • The establishment of the high-level dialogue on Corruption

25. Yet, Evaluation found that Policy Dialogue was not working well …. • Senior Stakeholders have pointed to some major problems, for which we have found evidence : • A declining level of ownership over the process by Govt., prompted by a loss of trust by DPs and an increased level of conditionality • Excessive transactions costs • A lack of consistency, coherence and “S.M.A.R.T-ness” in the definition of PAF indicators • The absence of a strategic, problem-solving orientation to the dialogue process

26. Government’s ownership and leadership of Policy Dialogue has declined …. • In 2005/06, the spirit of partnership was strong : • Targets in the PAF related closely to Mkukuta and the principles in the Partnership Framework Memorandum • MoF officials participated actively in defining targets. • By 2011, far from a Govt-led framework, PAF had developed into ‘the sum total of all DPs’ individual preferences and requirements’(Claussen & Martinsen, 2011) • After EPA scandal in 2007, trust was lost and PAF changed from a joint monitoring mechanism to a DP-led instrument to exert ‘policy leverage’.

27. Transaction Costs of Annual Assessment & related Policy Dialogue have increased • Assessment process has become more burdensome with more indicators, more meetings, larger reports being written, and assessments finalised later in the year due to time taken to bring necessary information together. • PAF indicators grew from 55 in 2004/05 to 89 in 2007/08

28. Poor coherence, consistency and quality of PAF indicators undermine their value.. • Over 12% of PAF indicators have proven unmeasureable • Of 64 TPAs ‘partially completed’, ‘not completed’ or ‘delayed’, only 16 (25%) were followed up in the next year • In 4 out of 6 years, over 35% of indicators were new.

29. Tentative conclusions & some implications • Budget Support facilitated expanded spending on priority sectors and brought benefits in service delivery. • There has been steady progress in PFM reform, in transparency & in strengthening of anti-corruption work. • Non-income poverty has fallen. • These are important results which should be celebrated. But… • The Policy dialogue process is not working effectively. • As a result, important policy problems remain unresolved. • Put simply, Budget Support scores 6.5 out of 10, where there is a potential for 8 or 9, out of 10.