Donors warn aid to corrupt-prone Tanzania at risk

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Donors warned aid-reliant Tanzania that rising corruption and weak accountability put next year’s grants to the country at risk.
For the 2009/10 (July-June) fiscal year, 11.4% of its budget, or $831 million, is funded directly by a pool of 14 donors. It is among Africa’s highest per capita aid recipients.
But rising concern over the government’s weak governance, economic policy and failure to keep to agreements has led donors to disburse below what they pledge for the past few years.
“Weak public finance management as well as corruption continues to hamper economic and social progress,” Pieter Dorst, co-chair of the Development Partners Group, said at an annual policy meeting with ministers, donors and civil society.
“Donor partners may inevitably find it hard to maintain high levels of support if concerns about corruption should grow.”
Netherlands is withholding €30 million in general budget support this financial year.
“My minister has lost confidence in the government of Tanzania’s implementation of policy,” Dorst told Reuters.
The tourism-dependent country’s economy has grown at an annual average of 7% 2001-2008. Levels of poverty in the country of 40 million people have barely dropped and Dorst said they fell by only 2% between 2001 and 2007.
“The people of Tanzania deserve to have confidence that the country’s resources are being used to advance their welfare rather than being lost due to corruption,” he said.
Increasing scepticism
In a region with high incidence of violence and human rights abuses, Tanzania’s stability and sound macroeconomic policies have for several years appealed to donors keen to spend.
But the country has dropped 32 places in Transparency International’s Corruption Perceptions Index in the past two years.
“Corruption will be taken care of,” said Finance Minister Mustafa Mkulo.
“Recently we’ve noticed increasing scepticism about the function of general budget support. As government, we simply say that general budget support is the best aid.”
Mkulo said that Tanzania would soon embark on its own review of donor performance to make sure donors behave effectively. He blamed some donors for late payments.
President Jakaya Kikwete has placed fighting corruption, especially in public procurement, among his top priorities.
Earlier in the year, he said 578 graft cases were before Tanzanian courts, up from just 50 four years ago, 27 of them involving individuals implicated in grand corruption.
“Tanzania has been held up as the poster-child of Africa but it has had an image and reputation as a donor haven that was not fully justified,” said one donor, who did not want to be named. “The results are not there and that’s causing people to be frustrated.”