Tanzania expects more donor aid despite failings

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Tanzania will get more foreign aid injected directly into next year’s budget than it did this year, despite slipping in corruption and investment climate indicators, Finance Minister Mustafa Mkulo said.

"We expect to get even more than we have budgeted," Mkulo told reporters late yesterday. He did not say how much more money the government would get.
 
More than a third of all aid to Tanzania goes on budget support 14 donors jointly fund 11.4% of the national budget directly, worth $831 million this year.
 
During an annual policy review officials, donors and civil society groups said the government scored well on healthcare and education, as well as for making farming a priority.
 
But they said the east African economy of about 40 million people faltered on corruption, its investment climate and poverty reduction.
 
"The focus on agriculture is spot on," said Sipho Moyo, head of the African Development Bank in Tanzania, expressing regret that a row of seats intended for ministers at the meeting was empty except for the finance minister.
 
 
Do more for the poor
 
 
Tanzania wants to become a middle-income country by 2025, but has dropped 32 places in Transparency International’s Corruption Perceptions Index and seven places in the World Bank’s Doing Business rankings over the past two years.
 
"Government and budget support partners agree that more emphasis is needed to promote stronger pro-poor growth and the improvement of business climate in Tanzania," Mkulo said, reading a joint statement by the government and donors.
 
The tourism and mining-dependent nation’s economy has grown at an annual average of 7 percent over 2001-2008, but poverty levels have fallen by just 2% between 2001 and 2007.
 
Investors say the government needs to address impediments to business in infrastructure, power, financing and licensing.
 
"The major issue raised was that that the investment climate in the private sector needed to be significantly strengthened, in order to increase growth and job creation," Mkulo said.
 
Due to poor infrastructure, each Tanzanian spends an average 36 days a year collecting their salaries, while companies lose 10% of their value due to power outages.
 
The IMF said this week it was making another $63.4 million available to the country after its first review under the Exogenous Shocks Facility, which supports poor countries facing temporary shocks in their economies.
 
The global economic downturn has cut demand and prices for commodities like coffee, cotton, as well as slowed tourism earnings and foreign direct investment.
 
Tanzania’s economy is seen growing at 5% this year, down from 7.4% in 2008.