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Tanzania: So rich, so stable, but so poor!

Summary & Comment: In Tanzania aid accounts for more than 40% of the national budget. Several European countries have been sending their aid money straight into the government’s treasury and not for specific projects. The approach is called ’general budget support’. Proponents of that system say that it forces the government to be accountable to its people and also argue it’s the only way to phase out aid dependence in countries like Tanzania. However, they also advocate that taxes must be raised so they can take over from aid as financing.

Author: Allison Dempster, Dar es Salaam Date Written: 8 November 2007
Primary Category: Eastern Region Document Origin: The Citizen
Secondary Category: -none- Source URL:
Key Words: Tanzania, aid, sustainable development, budget management,

African Charter Article #21: All peoples shall freely dispose of their wealth and natural resources for their exclusive interest, eliminating all forms of foreign economic exploitation. (Click for full text...)

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So rich, so stable, but so poor

Once upon a time, there was an African country that was an aid donor’s paradise. Poor, but politically stable with a choice selection of safari trips and sandy beaches for aid workers and volunteers to enjoy during their time off; name any international aid organization you can think of and it’s probably sent some money here in the last thirty years. The donations have come in all shapes and sizes, from large scale debt relief to small projects to build wells and schools in villages. And yet, there’s been no fairy tale happy-ending for Tanzania. The World Bank currently classifies the country among the least developed in the world. It’s also one of the most aid dependent, according to Norwegian economist, Dag Aarnes.

Aid accounts for more than 40 per cent of the Tanzania’s budget, he says. Aarnes has been crunching numbers for the Norwegian and Swedish embassies’new ’Lakini project’. It’s a public education campaign that has the unenviable task of making people care about national budgets and what happens to foreign aid dollars. So, why are donor countries concerned about whether the Tanzanian people know their GDPs (gross domestic product) from their GNPs (gross national product)? They’ve been taking a different approach to foreign aid and part of its success depends on the Tanzanian people paying attention to how their government is spending the public purse.

Since the late nineties a handful of donor countries, including Norway and Sweden, have been sending some of their aid money straight into the Tanzanian government’s treasury. The approach is called ’general budget support’by some, ’direct budget support’by others. It means the aid dollars are not earmarked for specific projects. Aarnes says even though the approach has been used for years it’s not well understood. "It’s easy to tell a story about a new road or a new school. It’s easy to relate to, but budget support is not easily explained." Aarnes is used to explaining and defending the concept, as the name of the Lakini project suggests. In Kiswahili, ’lakini’ means ’but’, as in, 'But what about corruption? Can we really leave it up to Tanzanian government to spend the money on schools, hospitals and reducing poverty?’

Yes, according to Aarnes and other proponents of general budget support. They also argue it’s the only way to phase out aid dependence in countries like Tanzania. The sales pitch for budget support goes something like this: the Tanzanian government decides for itself what to do with the foreign aid money, it’s forced to set and articulate it’s own development priorities, these priorities are debated in parliament, that debate is taken up by the media, which engages the public.

The funding is more predictable and the government can do a better job of long term planning; the follow-through or lack thereof can be monitored by the media and citizens groups. The aid money is tracked by the country’s own auditing system, rather than individual donor countries watching their separate pots of money. Administrative and management costs are saved. "We must use local systems in order to improve them," Staffan Herrstrom, the Swedish Ambassador, said recently at an event held in Dar es Salaam to launch the Lakini project.

Really it should work like, well... a democracy. "We believe it’s possible to phase out government to government aid in this country in the next 20-25 years." Norwegian economist, Dag Aarnes adds. Aarnes says the scenario depends on steady economic growth, with the gross domestic product increasing by about eight per cent a year. The Tanzanian government would also have to hit up its citizens for more taxes, Tanzania has very low tax revenues, Aarnes says. In his report, ’Lakini - Tanzania and the new development cooperation’he points to a large gap between revenues and expenditures, while tax revenues make up about 14 per cent of the country’s gross domestic product, expenditures are about 28 per cent. Foreign aid is closing the gap.

Taxes must be raised so they can take over from aid as financing, Aarnes says. A move that he acknowledges is not likely to be politically popular. Watchdogs of the Tanzanian political process are onside with the budget support approach to foreign aid for the most part, but they have their own ’buts’. "I question whether enough civil society organizations have the capacity to do budget and policy analysis." Usu Mallya of the Tanzania Gender Networking Programme said at the recent launch of the Lakini Project. "For general budget support to succeed domestic accountability needs to be strengthened," Tanzania’s auditor general, Ludovick Utoh, said. "General budget support relies on a public dialogue about resources and results."

This may be the riskiest part of the plan - keeping the government accountable by stirring the hearts and minds of the masses with something called ’general budget support’? "What about getting Bono or Paris on this?" I want to ask. "Maybe come up with a sexier name for it." But that’s the thing about budget support, having a music concert or a celebrity fashion line wouldn’t jive with the underlying message. To hear its fans describe it, budget support is the Tom Hanks of foreign aid concepts - ordinary looking, but turns in solid performance most of the time. A ’no-name’brand approach to international aid, if you will. Perhaps engaging the public in the nation’s budget process requires framing the discussion with budget numbers of another kind.

The Tanzanian Poverty and Human Development Report of 2005 estimated that 36 per cent of the population lives below what it calls the ’basic needs poverty line’. Millions of people living on less than a dollar a day - that’s a budget that’s hard to ignore.

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