JAS Consultative Meeting, 28 April 2006, Golden Tulip Hotel, Dar es Salaam

1. JAS Consultative Meeting, 28 April 2006, Golden Tulip Hotel, Dar es Salaam Joint Assistance Strategy Presentation by Commissioner for External Finance Hussein Khatib, Ministry of Finance and Economic Affairs, Zanzibar

2. Presentation Outline • Introduction – Why do we need a JAS? • JAS development process • What is JAS? • JAS key issues • Conclusion JAS Consultative Meeting

3. 1. Introduction – Why do we need a JAS? • Tanzania has made substantial progress in improving aid effectiveness and strengthening national ownership during the implementation of the Tanzania Assistance Strategy (TAS) from 2002/03 to 2004/05  particular focus on • Aid predictability • Integration of external resources in GOT budget system • Harmonisation and rationalisation of processes • Capacity building for aid coordination and external resource management JAS Consultative Meeting

4. 1. Introduction – Why do we need a JAS? • But despite progress made under TAS, … • GOT ownership needs further strengthening • Still high transaction costs in aid delivery and management • parallel systems and procedures for delivering, managing, monitoring and evaluating development assistance • multiple missions, meetings and analytical studies • provision of off-budget financing, most notably for projects • Need for a strategy that meets demands of the new PRS – National Strategy for Growth and Reduction of Poverty (NSGRP / MKUKUTA) and the Zanzibar Strategy for Growth and Reduction of Poverty (ZSGRP / MKUZA) • Need for a more comprehensive framework than the TAS to fully reflect all principles of aid effectiveness in line with international commitments (Monterrey 2002, Rome 2003, Marrakech 2004, Paris 2005) – adapted to the Tanzanian context JAS Consultative Meeting

5. 2. JAS development process • Idea to align all DP strategies to one Government-led Joint Assistance Strategy emerged in TAS process in 2003/04  resulting from a joint GOT-DP study on rationalisation / harmonisation of processes • GOT set up a JAS Sector Group; DPs set up JAS Core Group • Idea was taken further in GOT-DP consultations  formulation of a JAS Concept Paper December 2004 - sent to MDAs, DPs and non-state actors (NSAs) for comments • JAS Consultative Meeting with domestic and international stakeholders in April 2005 • 1st draft JAS Document prepared by GOT in May 2005  circulated for comments to MDAs, LGAs, Tanzanian Embassies,DPs and a large number of non-state actors JAS Consultative Meeting

6. 2. JAS development process • Comments incorporated into 2nd draft JAS Document in November 2005  discussed at JAS Retreat with MDAs (DPPs) in November 2005 • Comments from JAS Retreat incorporated into 3rd draft JAS Document  JAS Consultation with Permanent Secretaries in February 2006 • JAS Consultation with Parliamentarians in February 2006 • Comments from PS and Parliamentarians incorporated into revised 3rd draft JAS Document – to be discussed at this JAS Consultative Meeting • JAS Consultation with Principal Secretaries and with DPPs of Zanzibar in April 2006 JAS Consultative Meeting

7. 3. What is JAS? • National medium-term framework (renewable 5-year cycle) for managing development co-operation between GOT and DPs so as to achieve national development and poverty reduction goals • JAS to be implemented at all levels of GOT in existing national, sector and local processes • DPs to adopt the JAS to guide their development co-operation with GOT  bilateral agreements and country assistance strategies (CAS) to be brought in line with JAS throughout the JAS process • Overall objective: achieving results on NSGRP / ZSGRP and other national development and poverty reduction programmes • Intermediate objectives: aid effectiveness by strengthening national ownership, alignment, harmonisation, managing for results, mutual and domestic accountability JAS Consultative Meeting

8. 4. JAS key issues - Alignment • GOT will align all national and sector policies, strategies and programmes as well as plans of MDAs, Regions and LGAs with the NSGRP/ZSGRP and harmonise them around the national budget process • GOT will continue to strengthen the linkage between the NSGRP/ZSGRP and the national budget • DPs will fully align their support with the NSGRP/ZSGRP and other national as well as sector strategies, policies and programmes and local government plans • DPs will harmonise their processes around the NSGRP / ZSGRP and the national budget and will follow the GOT calendar of processes, including the specified ‘quiet time’ JAS Consultative Meeting

9. 4. JAS key issues - Capacity development • GOT will further develop the capacity at all of its levels (MDAs, Regions and LGAs) to • formulate, implement, monitor and evaluate policies, strategies, plans, programmes and projects, • produce and implement strategic budgets, • appropriately and timely account for their activities, expenditures and results, • deliver high-quality, timely and effective public services, • meaningfully engage in dialogue • It will do so among others through continuing existing reforms and programmes, e.g. PSRP, PFMRP, LGRP, LSRP, NACSAP • GOT will also support capacity development of Parliamentarians, Councillors, politicians, and non-state actors JAS Consultative Meeting

10. 4. JAS key issues - Capacity development (2) • DPs will support GOT efforts to develop sustainable capacity by responding to national capacity needs with financial and technical assistance to the GOT and to non-state actors • DPs will increasingly rely on GOT systems and structures to deliver and manage their assistance to the GOT, including working towards eliminating parallel PIUs over the medium-term • DPs will provide technical assistance as a means to facilitate sustainable capacity development • TA to the GOT will be demand-driven, increasingly untied from the source of financial assistance and procured under GOT leadership • Untying TA means that TA is not part of a funding conditionality and that the GOT can freely decide on its source JAS Consultative Meeting

11. 4. JAS key issues - Capacity development (3) • TA personnel management will be led by the GOT and will be increasingly integrated in the regular GOT administrative system while relevant GOT structures and mechanisms to coordinate and manage TA resources will be strengthened in the process • GOT will formulate a TA policy in close co-operation with DPs, which outlines the objectives and guidelines for using TA JAS Consultative Meeting

12. 4. JAS key issues – Division of labour • GOT will work towards a more effective division of labour, co-operation and coordination among and between MDAs, Regions and LGAs with clear roles and responsibilities • GOT will assign lead GOT agencies / enhance the effectiveness of existing lead agencies at sector, cross-cutting/thematic and cluster levels to take a supervisory and coordinating role as well as of other involved agencies to undertake joint planning, budgeting and implementation • DPs will rationalise the number of sectors or cross-cutting/thematic areas that they engage in • The number of DPs that are ‘active’ in a sector or thematic area will be limited to an appropriate level, depending on the needs and capacity of the sector/thematic area JAS Consultative Meeting

13. 4. JAS key issues – Division of labour (2) • Each sector/thematic area will have ‘active Partners’ that • engage in dialogue with the relevant GOT agencies, • undertake joint reviews, missions, meetings, etc. • One of the ‘active Partners’ takes the lead in • coordinating other DPs in a sector/thematic area (also possible to have different ‘lead Partners’ for different sub-sectors), and • acts as focal point in communication with GOT • Responsibility can also be delegated within a sector/thematic area to different ‘active Partners’ for administering or carrying out specific tasks (e.g. analytical work) JAS Consultative Meeting

14. 4. JAS key issues – Division of labour (3) • DPs outside a particular sector/thematic area assume the role of ‘delegating Partners’, who • can nevertheless contribute financial assistance to the sector/thematic area, which is administered by the ‘active Partners’, • are represented in dialogue with GOT through ‘active/lead Partners’, and • are kept informed on dialogue issues by ‘active/lead Partners’ • Use of concept of comparative and competitive advantage for selection of the areas of focus for individual DPs and their roles as lead or delegating partners JAS Consultative Meeting

15. 4. JAS key issues – Division of labour (4) • Comparative advantage looks at sectors/thematic areas in which a DP is most effective in relation to all other areas in which it is or could be engaged (focus within a DP agency across different sectors/thematic areas) • Competitive advantage looks at a DP’s performance in a sector/thematic area compared to other DPs (focus across different DPs within one sector/thematic area) • Assessment is primarily based on a DP’s established international and field office expertise, based on past successful experience • Other criteria may be taken into consideration, e.g. appropriate total number of DPs in a sector/thematic area, DP organisational capacity, established relationships, etc. • DPs’ funding capacity or geographical areas of interest do not matter as selection criteria JAS Consultative Meeting

16. 4. JAS key issues – Division of labour (5) • Selection process and timeframe: • GOT will first determine sector and thematic area classification in line with NSGRP/ZSGRP/PER and establish own MDA membership in the respective sectors/thematic areas – work on this is still in progress • DPs will continue their baseline study of current division of labour and propose new division of labour in line with this classification • GOT (relevant MDAs in a particular sector/thematic area in consultation with LGAs) will review DPs proposal and agree with DPs on new division of labour including assignment of lead Partner roles JAS Consultative Meeting

17. 4. JAS key issues – Aid modalities • DPs will increasingly move to GBS, which is the GOT’s preferred aid modality • Basket funds will be used where it is seen appropriate by the GOT and significant transaction cost savings are possible, particularly in protecting public reforms and/or thematic areas which are not yet mainstreamed in normal GOT activities • Already existing basket funds that do not meet these criteria will be utilized as much as possible as a transition measure to GBS • Direct project funds to the GOT will be utilized for large-scale infrastructure investment, for piloting and for emergency aid • They will also continue to be used to support non-state actors • Existing direct project funds that do not fit in these categories will be phased out over the medium-term JAS Consultative Meeting

18. 4. JAS key issues – Aid modalities (2) • Principles for using basket and project funds: • Support national, sector and local priorities, strategies, plans and programmes, and be based on the GOT’s request to undertake such activities outside GBS; • Be integrated in the national budget process; • Operate within GOT structures, systems, regulations and procedures and be consistent with achieving sustainability, complementarity, low transaction costs and local ownership; • Be designed and implemented under the same conditions as other Government funded activities; • Follow the proper GOT process for project and programme approval JAS Consultative Meeting

19. 4. JAS key issues – Aid commitments and disbursements • DPs will report to the GOT according to the agreed timetable through the annual PER process the full amount of funds (incl. funds to non-state actors) committed over the three-year MTEF period, with minimum year-to-year variations in the rolling three-year MTEF commitments • All aid disbursements to the GOT will be made through the GOT Exchequer system, whereby the GOT will ensure timely provision of funds from receiving to spending agencies • All disbursements made to the Government and to non-state actors will be reported by DPs to the GOT on a quarterly basis JAS Consultative Meeting

20. 4. JAS key issues – Procurement • DPs will work towards providing untied development assistance to the GOT • GOT procurement systems will be used to manage procurements in accordance with the Public Procurement Act (2004) and the Procurement Act No. 9 (2005) of Zanzibar • Decisions to rely on GOT rather than DP procurement systems will however also consider their efficiency and effectiveness and ability to ensure value for money • DPs will work closely with the GOT to address weaknesses and further strengthen GOT procurement systems so as to attain international standards (continued implementation and monitoring within the PFMRP) JAS Consultative Meeting

21. 4. JAS key issues – Accounting and Auditing • DPs will use Government accounting and auditing procedures and systems as provided for in the Public Finance Act (2001) and in adherence with the Public Finance Act No. 12 (2005) of Zanzibar • GOT will enhance its capacity to provide reliable and timely accounting and audit reports at all levels • Actions to improve accounting and auditing are implemented and monitored within PFMRP and GBS-PAF frameworks JAS Consultative Meeting

22. 4. JAS key issues - Dialogue • Dialogue between GOT, DPs and NSAs will be guided by principles on: • Government leadership • Involvement of all relevant stakeholders • Domestic accountability • Openness, frankness and mutual trust • Minimisation of transaction costs through simplification and rationalization • Thorough scrutiny • Transparent, timely, clear and accessible information sharing • Establishment of follow-up mechanisms • Sector dialogue to be strengthened, in particular by using SWAps as instruments for organising sector dialogue around strategic issues and overall policy directions rather than for deciding on the provision of funding JAS Consultative Meeting

23. 4. JAS key issues – Risk mitigation • Mitigation of political risk on GOT side by: • Cabinet approval of the JAS • Dialogue between GOT and DPs in case of divergence from JAS • GOT measures to improve governance and accountability under cluster 3 of NSGRP and in various reform programmes (e.g. the PSRP, PFMRP, LSRP, NACSAP, and LGRP) and continuous high-level dialogue between GOT and DPs on these issues • Continued JAS awareness raising among Parliamentarians, Councillors and politicians, and GOT support in strengthening their capacity in the JAS process • JAS consultation and support at all levels of GOT as well as NSAs during formulation stage, and ongoing awareness and capacity building, information sharing as well as stakeholder participation in various consultative fora, including JAS review JAS Consultative Meeting

24. 4. JAS key issues – Risk mitigation (2) • Mitigation of political risk on DP side by: • Bilateral agreements and country assistance strategies of DPs will be brought in line with JAS • Consultation and dialogue between GOT and DPs in case of a divergence from JAS • DPs will take their commitment to the Paris Declaration and other international aid effectiveness initiatives seriously and will continue to advocate at headquarter and international level for adherence to these commitments JAS Consultative Meeting

25. 4. JAS key issues – Risk mitigation (3) • Mitigation of institutional and operational risk on GOT side: • Continued awareness raising at all levels of GOT • Clear identification and communication of each GOT agency’s roles and responsibilities in implementing JAS • Strengthening Government ownership and leadership of the JAS through capacity development • Better organisation and horizontal co-operation within and between GOT agencies including more effective information sharing and consensus building • Regular monitoring and review of GOT agencies’ performance in JAS implementation JAS Consultative Meeting

26. 4. JAS key issues – Risk mitigation (4) • Mitigation measures by DPs: • Better handing-over procedures • Adequate training and agency capacity development • Appropriate recruitment policies and staff performance assessment • Greater devolution of authority from headquarters to field offices JAS Consultative Meeting

27. 4. JAS key issues – Risk mitigation (5) • Mitigation of fiduciary risk by GOT with DP support: • Ongoing efforts to strengthen strategic budget planning and execution as well as financial management and accountability systems under the NSGRP/ZSGRP, PFMRP and LGRP; • Building an efficient and effective procurement system by implementing the Public Procurement Act 2004/Procurement Act 2005 of Zanzibar; • Improving transparency in public spending; • Ongoing national anti-corruption measures under NSGRP/ZSGRP and NACSAP; • Strengthen technical and administrative capacity of GOT agencies through on-going implementation of the PSRP; • Open and frank policy dialogue on public financial management, accountability issues and corruption; • Monitoring and evaluation of public financial management and accountability systems in NSGRP/ZSGRP, PER, PFMRP processes • Periodic harmonised diagnostic reviews within existing processes JAS Consultative Meeting

28. 4. JAS key issues – Monitoring and Evaluation • GOT and DPs will regularly monitor and evaluate their performance relative to jointly agreed indicators, targets and actions outlined in JAS monitoring matrix and JAS Action Plan • Indicators will reflect Paris Declaration indicators as adapted to the Tanzanian context and will be grouped in 6 categories: (1) national ownership and GOT leadership, (2) alignment, (3) harmonisation, (4) managing for results, (5) mutual and domestic accountability, (6) operational functioning of JAS • 2 M&E mechanisms: 1. Annual joint GOT-DP review (incl. comprehensive mid-term and final review) in consultation with NSAs, using existing processes as main avenues for dialogue and information generation 2. Mid-term and final assessment by IMG JAS Consultative Meeting

29. 5. Conclusion • Tanzania’s development partnership has made substantial progress in enhancing national ownership and aid effectiveness • It has been a frontrunner at international level • With the JAS, we now have the opportunity to take a major step forward on our national as well as the international (Paris) aid effectiveness agenda • Success of the JAS depends on all DPs’ support • We need to agree on the presented key issues and adopt the JAS Document, keeping in mind that the implementation of the JAS will be a gradual process of moving forward and that the JAS Action Plan will outline how existing processes and practices will be brought in line with the JAS JAS Consultative Meeting