Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 35615-TZ

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT IN THE AMOUNT OF SDR 27.9 MILLION

(US$40.0 MILLION EQUIVALENT)

TO THE

UNITED REPUBLIC OF TANZANIA

FOR AN

ACCOUNTABILITY, TRANSPARENCY & INTEGRITY PROJECT

April 13,2006

Public Sector Reform and Capacity Building Country Department 4 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 13,2006)

Currency Unit = Tanzania Shillings TShs1 = US$O.O00817

US$ 1.0 = TShs 1,224.70

FISCAL YEAR July 1 - June 30

ABBREVIATIONS AND ACRONYMS

AAP ATP BEST BOT C A G CAS C F A A CHRGG C L E C C M CPAR cso DCS DFID DPS DPs ES EU FEAT FILMUP FRs GBS GGCU GOT HIV/AIDS IDA I E C IFMS I M T C IMWG

Africa Action Plan Accountability, Transparency and Integrity Project Business Environment Strengthening Program Bank o f Tanzania Controller and Auditor General Country Assistance Strategy Country Financial Accountability Assessment Commission for Human Rights and Good Governance Council for Legal Education Chama Cha Mapinduzi Country Procurement -Assessment Report C iv i l Society Organization Department o f Computer Services Department for International Development Deputy Permanent Secretary Development Partners Ethics Secretariat European Union Facility for Ethics, Accountability and Transparency Financial and Legal Management Upgrading Project Financial Reports General Budget Support Good Governance Coordination Unit Government o f Tanzania Human Immunodeficiency Virus /Acquired Immune Deficiency Syndrome International Development Association Information, education and communication Integrated financial management system Inter-Ministerial Technical Committee In ter Ministerial Working Group

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JAS - JIPRC - JSC - LGAs - LGW LGSP L R C T - LSRP - MDAs - MDGs - M J C A - MKUKUTA - MoF M o U MTEF NACSAP N A O NFGG NGOs OWIS P A D PCB PER PFMRP P M U PO-PSM PRBS PRSC PRSL PRSP PSRP SDC SIDA SWAP TLS

Joint Assistance Strategy Joint Implementation Program Review Committee Joint Steering Committee Local Government Authorities Local Government Reform Program Local Government Support Program Law Reform Commission o f Tanzania Legal Sector Reform Program Ministries, departments and agencies Mil lennium development goals Ministry o f Justice and Constitutional Affairs National Strategy for Growth and Reduction o f Poverty Ministry o f Finance Memorandum o f Understanding Medium Term Expenditure Framework National Anti-Corruption Strategy and Action Plan National Audit Office National Framework for Good Governance Non-Governmental Organizations Oversight and watchdog institutions Project Appraisal Document Prevention o f Corruption Bureau Public Expenditure Review Public Financial Management Reform Program Procurement Management Units President’s Office Public Service Management Poverty Reduction Budget Support Poverty Reduction Support Credit Poverty Reduction Support Loan Poverty Reduction Strategy Paper Public Service Reform Program Swiss Development and Cooperation Agency Swedish Development Agency Sector-Wide Approach Tanganyika Law Society

Vice President: Gobind Nankani Country ManagerDirector: Judy M. O’Connor Sector Manager: Helga W. Muller Task Team Leader: Denyse E. Mor in

... . 111 .

TANZANIA Accountability. Transparency & Integrity Project

CONTENTS

Page

A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 Country and sector issues .................................................................................................... 1

Rationale for Bank involvement ......................................................................................... 5 1 . 2 . 3 . Higher level objectives to which the project contributes .................................................... 6

PROJECT DESCRIPTION ................................................................................................. 7 B . 1 . 2 Project development objective and key indicators 7

3 . 4 . 5 .

Lending instrument ............................................................................................................. 7

Project components ............................................................................................................. 8

Alternatives considered and reasons for rejection ............................................................ 23

C . IMPLEMENTATION ........................................................................................................ 24 1 . Partnership arrangements .................................................................................................. 24 .

Monitoring and evaluation o f outcomeshesults ................................................................ 28

Critical r isks and possible controversial aspects ............................................................... 29

Credit conditions and covenants ....................................................................................... 32

APPRAISAL SUMMARY ................................................................................................. 32

. ..............................................................

Lessons learned and reflected in the project design .......................................................... 22

................................................................ 2 . Institutional and implementation arrangements 25

3 . 4 . Sustainablllty ..................................................................................................................... 28

5 . 6 .

* . .

D . 1 . 2 . 3 . 4 . 5 . 6 . 7

Economic and financial analyses ...................................................................................... 32

Technical ........................................................................................................................... 33

Fiduciary ........................................................................................................................... 33

Social ................................................................................................................................. 35

Environment ...................................................................................................................... 35

Safeguard policies ............................................................................................................. 36

Policy Exceptions and Readiness ...................................................................................... 36

. iv .

Annex 1: Country and Sector or Program Background ......................................................... 37

Annex 2: M a j o r Related Projects Financed b y the Bank and/or other Agencies ................. 47

Annex 3: Results Framework and Monitoring ........................................................................ 49

Annex 4: Detailed Project Description ...................................................................................... 53

Annex 5: ProgradPro ject Costs .............................................................................................. 72

Annex 6: Implementation Arrangements ................................................................................. 73

Annex 7: Financial Management and Disbursement Arrangements ..................................... 84

Annex 8: Procurement Arrangements ...................................................................................... 98

Annex 9: Economic and Financial Analysis ........................................................................... 104

Annex 10: Safeguard Policy Issues .......................................................................................... 106

Annex 11: Project Preparation and Supervision ................................................................... 108

Annex 12: Documents in the Project F i l e ............................................................................... 110

Annex 13: Statement o f Loans and Credits ............................................................................ 111

Annex 14: Country at a Glance ............................................................................................... 113

Annex 15: L e t t e r of Sector Policy ............................................................................................ 115

Annex 16: Maps ......................................................................................................................... 124

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Project ID: PO70544

TANZANIA ACCOUNTABILITY, TRANSPARENCY & INTEGRITY PROJECT

PROJECT APPRAISAL DOCUMENT AFRICA AFTPR

and financial reporting (S); Law reform (S) Environmental screening category: Partial

~~

Date: April 13,2006 Country Director: Judy M. O'Connor Sector ManagedDirector: Helga W. Muller

Team Leader: Denyse E. Morin Sectors: Law and justice (63%); General finance sector (25%); Central government administration (12%) Themes: Other accountability/anti-corruption (P); Public expenditure, financial management and procurement (P); Judicial and other dispute resolution mechanisms (P);Standards

I Assessment Lending Instrument: Specific Investment Lending

[ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other:

For Loans/Credits/Others: Total Bank financing (US$m.): 40.00 Proposed terms (IDA): Standard Credit Grace Period: 10 years Years o f maturity: 40

INTERNATIONAL DEVELOPMENT AS SOCIATION 11.2 28.8 40.0 BILATERAL AGENCIES 22.0 56.6 78.6 Total: 60.2 85.4 145.6

Borrower: United Republic of Tanzania Ministry o f Finance Dar es Salaam Tanzania

Responsible Agencies: (1) Deputy Permanent Secretary, Ministry o f Finance, Dar es Salaam, Tanzania (2 ) Deputy Attorney Generalpermanent Secretary, Ministry o f Justice & Constitutional

(3) Chairman, Ethics Secretariat, Dar es Salaam, Tanzania Affairs, Dar es Salaam, Tanzania

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’Y 2007 I 2008 m u a l 5.60 1 8.10 hmulat ive 5.60 13.70

2009 2010 2011 8.10 I 11.10 7.10

21.80 ’ 32.90 40.00

ATP will contribute to improved access to judicial and legal services and in the accountable and transparent use o f public financial resources. This will be achieved by improving the skills and systems to deliver judicial/legal services and public financial management, and strengthening the capacity o f oversight and watchdog institutions (OWIs) to perform their role.

Project description:

The program has four components: (i) strengthening the legal and judicial system; (ii) enhancing public financial accountability; (iii) strengthening oversight and watchdog institutions; and (iv) project coordination. Which safeguard policies are triggered, if any? Partial Environmental Assessment (OP/BP/GP 4.01) and Involuntary Resettlement (OPBP 4.12) as a result o f c iv i l works.

Significant, non-standard conditions, if any, for: none Board presentation: none Credit effectiveness: Submission o f legal opinion in accordance with the General Conditions. Covenants applicable to project implementation: Conditions o f disbursement: For component 1, signature o f the Legal Sector Reform Program (LSRP) Memorandum o f Understanding (MOU), appointment o f the key Ministry o f Justice and Constitutional Affairs staff, and approval by the jo int Government o f Tanzania/Donor committee o f the respective LSRP annual work plan and budget; For component 2, signature o f a modified Public Financial Management Reform Program (PFMRP) Memorandum o f Understanding (MOU) and approval by the jo in t GoTDonor committee o f the respective PFMRP annual work plan and budget; and For components 3 and 4, finalization o f the Ethics Secretariat Operations Manual, appointment of key staff and, for approval o f the Facility for Ethics, Accountability and Transparency (FEAT) grants exceeding a specified threshold, a prior no-objection by the Bank.

A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues

During the past decade the Government o f Tanzania (GOT) has implemented a comprehensive program o f reforms that has yielded sustained macroeconomic stability, an increasingly liberalized economy, and scope for the private sector to become the main agent o f economic activity. These reforms have created the foundation for accelerated economic growth. Overall economic growth has r isen consistently for the past eight years (except in 2003 due to drought) from 3.3 percent in 1997 to 6.7 percent in 2004, which is an average annual growth rate o f 5.1 percent. However, poverty s t i l l remains widespread and at an average o f U S $ 330 per capita (Atlas Method), Tanzania remains one o f the poorest countries in the world.

The Government has developed a National Strategy for Growth and Reduction o f Poverty (MKUKUTA)’ that provides an overarching framework for fighting poverty and a framework for resource allocation. I t i s based on three clusters (i) growth and reduction o f income poverty; (ii) improved quality o f l i f e and social well-being; and (iii) good governance and accountability. The strategy’s major focus i s shared growth, recognizing that this cannot be achieved without addressing governance issues that are the bedrock o f public sector performance.

To address good governance and accountability, the Government developed in 1999 i t s National Framework for Good Governance (NFGG). The NFGG continues to be the platform for the ongoing, crosscutting public sector reforms, namely, public service, local government, public financial management and legal/judicial as wel l as anti-corruption measures detailed in the National Anti-Corruption Strategy and Action Plan (NACSAP). The latter enshrines the government’s program to fight corruption. I t provides the framework within which ministries, departments and agencies (MDAs) are expected to initiate concrete measures to address corruption in addition to implementing the crosscutting reforms. NACSAP I was a coherent and holistic program designed to be implemented over five years (2000-05). GOT i s now in the process o f taking stock o f i t s achievements as well as designing a successor phase. The key thrust o f the next NACSAP will remain the same.

The newly elected President Kikwete in his inaugural speech2 emphasized that the new government wil l continue to implement the crosscutting reforms started under the Mkapa government to provide more efficient and effective delivery o f services to the public. H e highlighted the need for good governance, transparency and accountability. H e emphasized the war on corruption and the need to strengthen key organs o f governance, e.g., the judiciary, the Prevention o f Corruption Bureau, the Ethics Secretariat (ES) and others that are at the forefront o f this fight. H e also underscored the importance o f strengthening the rule o f law and ensuring that procurement processes are transparent.

The sector issues to be addressed by the project

The Government has set up the Good Governance Coordination Unit (GGCU) in the President’s Office to coordinate the implementation o f NACSAP which includes monitoring the

’ Known by its K iswahi l i acronym MKUKUTA. * Speech to inaugurate the Fourth Phase Parliament o n December 30, 2005.

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implementation o f the crosscutting reforms as a crucial vehicle to discourage and control corruption. I t has mobilized MDAs to report regularly and systematically on their fight against corruption. Although several undertakings and mechanisms are in place, there are a number o f challenges that st i l l remain in order to improve governance in Tanzania.

The GOT has made progress in addressing the management o f its human resources through the public service reform program (PSRP). I t continues to improve the management o f financial resources by implementing the public financial management reform program (PFMRP) and to strengthen the fiduciary contract with citizens via improved revenue collection. Through i t s local government reform, it i s seeking to increase citizens’ direct involvement and bring accountability closer to them. The Government has also designed a program o f legal/judicial reforms that aims at providing the environment necessary to uphold the r u l e o f law and give confidence to both citizens and private sector that they can be heard and judged in a fair and transparent way. T o complement these comprehensive reforms, the GOT recognizes the need to continue to improve the performance and effectiveness o f institutions such as the Prevention o f Corruption Bureau (PCB) and the GGCU to effectively coordinate the anti-corruption efforts, and to raise awareness and engagement o f non-state actors. NACSAP and NFGG identified specifically, among others, the following issues to be addressed comprehensively:

The latter reform program i s the least advanced.

0

0

0

weak legal and judicial system; gaps in procedures and controls for public expenditure management and more broadly financial accountability; and weak oversight and watchdog (0 WIs) institutions.

Weak legal and judicial system

Upholding the rule o f law through the efficient, fair and transparent administration o f justice i s the basis for the promotion and maintenance o f social peace and stability o f the state. I t is also crucial in ensuring an enabling environment for development generally and to attract private sector investment. The quality o f legal and judicial services remains low. This i s reflected by: (a) inordinate delays in resolving disputes and dispensing justice; (b) very limited access to legal services for the majority o f citizens particularly the poor and uninformed; (c) corruption and other unethical conduct o f officers in the legal system; (d) a legal system that i s not responsive to social, political, economic, technological changes, and to long-running financial constraints; and (e) limited public t rust in the legal and judicial system.

The problems and constraints underlying the weakness o f the legal and judicial system have been identified by stakeholders as: (i) a fragmented, excessively bureaucratic, cumbersome and outdated legal and regulatory framework; (ii) weak management and coordination o f legal/judicial institutions; (iii) l o w competence, morale and integrity o f some public sector legal personnel; (iv) inadequate numbers o f professionally-trained legal personnel; (v) constrained independence and l o w integrity o f the legal system; and (vi) poorly furnished, equipped and maintained work environment o f public sector legal institutions.

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In response to these deficiencies, the GOT has developed a comprehensive Legal Sector Reform Program (LSRP) with the broad participation o f key legal/judicial institutions and stakeholders. The LSRP seeks to improve access to justice and increase the effectiveness o f delivery o f judicial and legal services. The Government recognizes that i t needs to give a high priori ty to this reform agenda now that the other crosscutting reform programs are underway. Failure to do so would undermine the gains made in the other areas o f public service, public finance, local government and sectoral reforms, and would jeopardize achieving the MISUKUTA objectives.

Gaps in procedures and controls for public expenditure management and more broadly for f in an cia1 accountability

Over the past decade, the Government has been improving i t s systems and practice o f public expenditure management. With regard to budget management, the imposition o f a strict cash budget regime has provided more reliable aggregate control over total public expenditure, consistent with revenue raising capacity and borrowing constraints. Budget reform through Public Expenditure Reviews (PERs), implementation o f a Medium-Term Expenditure Framework (MTEF) and by introducing performance budgeting (linked to a public service improvement strategy under the Public Service Reform Program -- PSRP) are underway. These latter initiatives aim at improving allocative and operational efficiencies o f the Government's expenditure programs.

In accounting for public expenditures, the Government has successfully installed a transparent, computerized, integrated financial management system (IFMS) in al l ministries. The system i s currently being rolled out to agencies and districts. In this respect, Tanzania i s a pace setter in Sub-Saharan Africa. However, the procedures and controls for public expenditure management remain weak in the three following areas:

(i) Procurement. Over the years, there has been weak set o f public procurement statutory controls, regulations and procedures. Consequently, as explained in the report o f the Presidential Commission o f Enquiry against Corruption3 (1 996), there have been grave concerns about corruption and waste in the procurement o f goods and services by public officers. President Kikwete, in his inaugural speech, stated the need to tackle this issue seriously.

The NACSAP also emphasizes the need for procurement reforms. The recently passed Public Procurement Act (2004) provides for the establishment o f a regulatory fiarnework and decentralization o f procurement functions to MDAs . To date, regulations accompanying the implementation o f the Ac t have been passed and measures are being taken to operationalize them in al l M D A s . These need to be enforced by the regulatory authority to improve compliance. This i s an area that needs to be implemented more vigorously under the PFMRP and for which the Bank's technical expertise i s sought by other development partners (DPs).

(ii) Internal Audit. An effectively performing internal audit function supports and

Better known as the Warioba Report

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reinforces the internal controls for safeguarding proper custody, use and accounting for the resources o f any organization. While the GOT has had an Internal Audit Department in the Ministry o f Finance (MoF) and other ministries, this task has never functioned well. This i s explained by the following: (i) the function i s poorly staffed in terms o f both quality and numbers o f personnel; and probably the most important; (ii) there was limited demand for regular internal audit reports by public service managers. However, this is changing and recognized as an area to be addressed by the PFMRP.

(iii) Mandate and Capacity o f the National Audit Office. The National Audit Office (NAO) i s established in the Constitution to promote and safeguard financial accountability for the custody and use o f public resources. However, the performance o f the NAO i s s t i l l significantly constrained in three important respects. Firstly, the mandate o f the office has traditionally been restricted, Le., i t provided for the checking compliance and did not allow for value for money (VFM) audits; this considerably reduces the value o f the function. Secondly, while the NAO has been constitutionally empowered to make independent decisions and report directly to Parliament, the office had been, until three years ago, constrained in i t s independence o f operation because it depends whol ly on the M o F for funding, and on the President’s Office-Public Service Management (PO-PSM) for staff appointments and compensation. Thirdly, in part as a consequence o f the second, the office does not have enough skilled personnel to carry out i t s audits efficiently, effectively and on time.

The NFGG clearly states that to improve financial accountability as well as control o f value for money in government spending, there has to be an effective external audit capacity. In the PFMRP, Government has started to address these constraints. Through the Public Finance Act, Government changed the Exchequer and Audit Ordinance to grant the NAO operational autonomy and gave i t a mandate to carry out value for money (VFM) audits.

Weak Oversight and Watchdog Institutions (0 WIs)

Tanzania has led the way in establishing oversight institutions for good governance. In 1995, it introduced a leadership code o f ethics and established the Ethics Secretariat within the President’s Office whose executive officer i s a Judge o f the High Court. I t also established a Prevention o f Corruption Bureau (PCB) and a Commission for Human Rights and Good Governance (CHRGG). This i s in addition to the traditional oversight institutions such as Parliament and the NAO. In spite o f this mult ipl ici ty o f institutions, the country continues to face serious governance problems. The afore-mentioned oversight institutions remain weak. This has been highlighted by the Bank’s recently completed pol i t ical economy study, the Department for International Development (DFID’s) Drivers o f Change study o n accountability and SIDA’s power analysis study. All three concluded that much work remains to be done before the legislative and judiciary branches, and the participation o f non-state actors can counterbalance the monopoly o f the executive on power and authority.

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These weaknesses emanate fiom the common maladies that have afflicted other public institutions, including: under-funding o f operations, inability to recruit, motivate and retain well qualified and strongly motivated officers, overlapping mandates that give r ise to conflicts, absence o f collaboration and coordination amongst these institutions, and a weak legal framework. The NFGG recognizes these malaises and seeks to strengthen these institutions and their framework to enable them to exercise more effectively their oversight role and hence to hold the GOT more accountable. I t also advocates the need to strengthen c iv i l society organizations by increasing citizens’ voice in pursuit o f good governance. The fourth phase government has, so far, welcomed the role o f c iv i l society. I t s critique o f the status quo touches al l the issues that have been the hue and cry o f c iv i l society. There i s an opportunity for a partnership that m a y push the governance agenda forward.

2. Rationale for Bank involvement

The World Bank’s Country Assistance Strategy (CAS) for Tanzania (2000-2003) focuses interventions in four areas o f strategic importance, based on GOT’S development agenda contained in the Poverty Reduction Strategy Program (PRSP)4. They include: private sector and infrastructure development; sustainable rural development; improved social infrastructure; and public sector reform and institution building to increase the effectiveness o f public service delivery and improve governance. ATIP i s closely related to the last area since it wil l support reforms that will have impact on both service delivery and wil l contribute to improving governance.

A successor CAS, the Joint Assistance Strategy (JAS), i s being prepared jo int ly with other DPs seeking to align Bank support fully’with MKUKUTA. MKUKUTA seeks to continue the reforms on governance that were undertaken under the PRSP, including fostering the r u l e o f law and making leaders and public servants accountable to the people.

Within the Bank, the Africa Action Plan ( A M ) seeks to provide a new impetus to the implementation o f the Strategic Framework for IDA in Afr ica (SFIA). I t acknowledges that the “principal means available to Africa’s economies to achieve [the MDGs] include building honest and capable states; raising the rate o f growth, and enabling the poor and women to participate in and benefit from growth.” Operationally, the Bank recognizes countries that “benefit f rom reform-minded state leadership, capacity for strategic decision-making, and have the organizational and institutional capacity for pol icy and program implementation”. Bank support for interventions that improve public sector management, strengthen discipline in fiscal expenditures and revenues, and further reform o f legal and judicial systems in such countries i s viewed as key by the AAP. The Accountability, Transparency and Integrity Project (ATIP) i s the Bank’s response to the GOT’S renewed impetus to reform i t s legal/judicial systems, to continue to strengthen i t s public financial management, to intensify the participation o f oversight and watchdog institutions (OWIs) and to strengthen the capacity o f non-state actors to ho ld government accountable for the delivery o f services. This group o f activities complements ongoing crosscutting and sectoral reforms in which the Bank i s actively involved. In addition to supporting various sector development programs, the Bank i s already involved in supporting GOT’S public service reform program and the reform o f local government.

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Tanzania Government’s f i rs t poverty reduction strategy program for 2000-2003

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Through the Poverty Reduction Support Credit (PRSC) pol icy dialogue, the Bank, in harmony with the Poverty Reduction Budget Support (PRBS) DPs, is supporting government’s objective to improve i t s performance in the area of good governance and accountability ( M K U K U T A Cluster 3). The performance assessment framework for the PRSCPRBS includes results in al l public sector reform areas including the reforms that ATP would support, Le., public financial management, legal/judicial reforms and anti-corruption.

The Bank supported the GOT throughout i t s long journey to develop the legal/judicial program o f reforms and has been instrumental in guiding the development o f a reform program for public financial management. The Bank has also nurtured government’s commitment to fostering greater participation o f non-state actors, for example, through the public expenditure review process (PER). The PRBSPRSCPRSL policy dialogue and the programmatic approaches (S WAp: sector-wide approaches) provide complementary vehicles to supporting the Government’s comprehensive reform agenda. ATIP wil l support institutional reforms in the key areas o f legal/judicial reforms, public financial management and strengthening the capacity o f oversight and watchdog institutions. These three areas have yet to benefit from the same leve l o f support as other crosscutting reforms. The Bank’s worldwide comparative experience and expertise in addition to i t s long-term involvement with GOT in these areas i s welcomed by Government and DPs.

3. H i g h e r level objectives to which the project contributes

ATP will contribute to the GOT’S efforts to achieve the outcomes o f the governance cluster o f the MKUKUTA. These broad outcomes include: (i) good governance and the r u l e o f law are ensured; (ii) leaders and public servants are accountable to the people through the effective reduction o f corruption and public access to information; (iii) democracy and pol i t ical and social tolerance are deepened; and (iv) peace, political stability, national unity and social cohesion are cultivated and sustained. In collaboration with other DPs, ATIP wil l contribute directly to achieve goals (i) and (ii) o f the MKUKUTA while indirectly contributing to other outcomes.

In pursuit o f these outcomes, Government has adopted comprehensive, crosscutting reforms namely the legal sector reform program (LSRP) and the public financial management reform program (PFMRP) and a National Anti-Corruption Strategy and Action Plan (NACSAP). The LSRP and the PFMRP both have the support o f several DPs through SWAPS. Fo r the NACSAP, Government has established i t s own fund that M D A s can access for anti-corruption activities that do not fal l under the reform programs. Through components 1 and 2 o f ATP, the Bank will directly provide resources to complement those o f the GOT and other DPs in the implementation of the LSRP and the PFMRP respectively. By way o f i t s third component, ATP will reinforce the results foreseen under the LSRP and PFMRP as we l l as the NACSAP by strengthening the capacity from the demand side o f accountability, transparency and integrity in both the use o f public sources and service delivery, including access to justice.

Further, by strengthening the demand side o f good governance, ATIP will, secondarily, contribute to the Government’s pol icy objectives for improved public service delivery and poverty reduction. In pursuit o f these objectives, Government with the support o f DPs has a

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wide range o f sector development projects, as well as cross-cutting programs for public service reform (PSRP), local government reform (LGRP) and decentralization. In these programs, i t i s generally acknowledged that weak demand by the public for accountability, transparency and integrity o f service providers and their managers i s a major risk. However, overall, interventions to mitigate this r isk have been imprecise and ineffective. The third component o f ATP i s an innovative initiative to close that gap in the governance cycle.

The Government’s letter o f sector pol icy clearly spells out the GOT’S consolidated vision for ATP and i t s commitment to the project. I t underlines the fact that ATP will support the implementation o f programs that wil l enable the government to deliver on the pledge made by President Kikwete, namely that the government wil l focus on good governance and accountability and the r u l e o f law.

B. PROJECT DESCRIPTION

1. Lending instrument

GOT seeks to gradually move DPs’ assistance to the general budget support modality. However, i t i s recognised that the resource allocation system needs to develop further before budget support can h l ly encompass sectors with limited capacity and experience in articulating a strategic vision for the sector, setting priorities and policies, and managing comprehensive, strategic reform programs including the participation o f a wide-range o f stakeholders, such as the LSRP and the PFMRP. In this context, the Government and other DPs have opted for SWAP investment operations with pooled funding arrangements to support the implementation o f the LSRP and the PFMRP. The Bank wil l j o in other DPs to support this programmatic approach with pooled funds for components 1 and 2, in addition to the earmarked funds for components 3 and 4 which are fully aligned with Government strategy but for which no pooled fund modalities have yet been established. ATP will be funded through a five-year Specific Investment Loan (SIL), which provides the flexibility to create and rehabilitate institutional infrastructure.

2. Project development objective and key indicators

ATP will contribute to improved access to judicial and legal services and to the accountable and transparent use o f public financial resources. This will be achieved by assisting the borrower in improving the sk i l ls and means to deliver judicial and legal services and public financial management, strengthening the capacity o f OWIs to perform their role, and enabling the GGCU to coordinate anti-corruption efforts more effectively and more broadly the dialogue on good governance.

Progress in achieving results wil l be measured by the fol lowing key indicators (see Annex 3 for more details). Progress on legal and judicial reform will be measured by the percentage o f court cases outstanding for two years or more (PAF indicators). Progress o n public financial management wil l be measured by the percentage o f MDAs with clean value for money audit in the NAO report presented to Parliament. Progress in strengthening OWIs will be measured by: (i) the increased number o f OWIs that use evidence-based reports in assessing government

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performance in core reform programs, and (ii) the increased number o f professional associations actively promoting ethical conduct amongst members.

3. Project components

The project wi l l have four main components that reflect the key areas identified in GoT’s MKUKUTA, NFGG and NACSAP as necessary to improve good governance in Tanzania:

1. Strengthening legal and judicial system; 2. Enhancing public financial accountability; 3. Strengthening oversight and watchdog institutions; and 4. Project coordination

Component 1: Strengthening the legal and judicial system - US$71.3 million (of which US$ 24.8 million i s funded by IDA)

A T P wil l support the implementation o f GoT’s comprehensive legal/judicial reform program - the Legal Sector Reform Program. Support to the overall LSRP wil l be harmonized with other DPs through a SWAP modality with pooled funds. Although the LSRP i s a three-year program, this time-span has been extended to five years under the ATP, taking into account implementation capacity in the implementing legal and judicial institutions. ATP support to the LSRP wil l not be used to finance police, prisons, prosecution and human rights activities. The LSRP Memorandum o f Understanding between the GOT and pooled hnding DPs will explicitly provide for this exclusion.

The LSRP i s the result o f a long participatory process that started with a series o f comprehensive studies on the legal/judicial system carried out under the leadership o f a Legal Reform Task Force. The Task Force report produced in 1996 highlighted issues that overall remain valid. The LSRP and its medium-term strategy and action plan were prepared in response to the Task Force’s recommendations. The dialogue involved many stakeholders, both government and non- government, who together designed the overall LSRP over a long period. The LSRP’s objective i s to improve access to judicial and legal services for al l Tanzanians through improving the capacity o f selected legal and judicial institutions as defined in Annex 6. This will contribute to achieve the MKUKUTA outcomes on governance and accountability and will contribute to providing an enabling environment for private sector investments and growth. The LSRP objectives wil l be closely coordinated with the Business Environment Strengthening Program in Tanzania (BEST). T o achieve these results, the LSRP plans to intervene in the fol lowing six sub-components, referred to in the LSRP as “key result areas (KRAs)”.

Sub-component 1: Establishment of a harmonized national legal framework - US$% 7 million

GOT is adopting a comprehensive approach to harmonizing the national legal framework by amending key legislation, streamlining processes and improving capacity for legal research, drafting and law reform. The key outcomes and related activities as laid out in the medium term strategy for LSRP are described below:

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Improved legal environment for enhanced social justice and safety and economic development. The LSRP seeks to harmonize the country’s legal framework by creating linkages among sectors governed by similar or related legal frameworks. This wil l ensure that all reform programs include a review, update, harmonization and alignment o f their respective regulatory frameworks. The LSRP includes harmonization o f commercial laws, an activity, which i s financed under the BEST program. BEST is a five-year private sector development program funded by SIDA, Netherlands, DFID, Denmark and IDA through the Private Sector Competitiveness Project. Measures are underway to ensure that there are no overlaps in activities and funding between the A T P and the BEST. Adequate coordination i s being put in place in the M J C A to ensure complementarities in the activities. The LSRP will also place a special focus on the harmonization o f legislation impeding accessible justice to the poor and the disadvantaged such as women, children and disabled persons. K e y legislation wi l l be identified, prioritized and reviewed through a consultative process.

(ii) Strengthened capacity for research and studies of the national legal framework. The Law Reform Commission o f Tanzania (LRCT) wil l be strengthened in the fol lowing areas: (i) to undertake technical studies; and (ii) to establish a continuous and sustainable mechanism for reviewing the national laws through participatory processes. The ERCT wil l also redesign cost effective legislative processing mechanisms and ensure quality and relevance o f bills/regulations/orders. The L R C T wil l establish mechanisms for collaborative studies with legal training institutions. This wil l ensure broader participation and collaboration to the development o f the national legal framework and other legal developments.

Implementation o f this sub-component wil l contribute to removing overlapping mandates. I t wil l seek to enhance the independence and autonomy o f legal and judicial institutions, speed up disposition o f commercial and other disputes and improve the business environment thus contributing to equitable opportunity to participate in economic activities.

Sub-component 2: Increased access to justice for the poor and disadvantaged - US$ 8.3 million

The LSRP will seek to improve access to justice particularly for the poor and disadvantaged by establishing a case f low management system for primary courts; putting in clear guidelines for handling special cases; promoting the development o f legal aid centers and paralegals; translating legal information into Kiswahili, Braille, and others; and developing the primary court system infrastructure (rehabilitation and construction).

In this context, the key outcomes to be achieved and activities to be carried out under this key result area include:

(i) Improved access to justice for disadvantaged persons. The LSRP aims at improving existing systems for managing cases at primary and district courts through establishing case f low management committees at primary courts and

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strengthening existing ones at higher level courts. Within this context, the program wil l establish guidelines to handle special cases for disadvantaged groups. Through the LSRP judicial personnel wil l be trained on speedy dispensation o f justice. Funding wil l also be available to train justice administrators.

(ii) Enhanced legal aid for disadvantaged and poor persons and dissemination of legal information. The LSRP wil l support the design and implementation o f a w e l l regulated and managed program to monitor and promote expansion o f the legal aid institutions network. The coverage o f the legal aid network will be expanded over a large part o f rural Tanzania and thus will help improve access to justice by the poor and other disadvantaged groups. This includes the translation and printing o f high priority basic statutes and legal information in Brai l le and Kiswahili, and other activities for dissemination o f legal information. The LSRP wil l fbnd the : (a) preparation o f specific guidelines related to the handling o f cases for disadvantaged groups, (b) establishment codes o f conduct and standards o f practice; (c) revision o f the syllabus and curriculum for training paralegals, and (d) expansion o f the legal aid literacy network.

(iii) Improved access to justice in the rural areas. Under the Quick Start Project the participation o f local government authorities (LGAs) and local communities in improving judiciary infrastructure for enhanced access and quality justice in the rural areas was piloted. Under the LSRP, l i n k s with LGAs to support the effective construction, rehabilitation and maintenance o f primary court infrastructure wil l be enhanced.

Implementation o f this KRA will contribute to an increased number o f citizens who understand their legal rights and obligations, equitable distribution o f primary courts and magistrates and reduction o f the backlog o f cases in the courts.

Sub-component 3: Improved governance and administrative justice - US$ 7.9 million

The LSRP wil l support implementation o f the NACSAP in i t s fight against corruption specifically in legal and judicial institutions by enhancing transparency in the administration o f justice through the following interventions:

(i) Enhanced good governance in legavjudicial institutions. The program will support the implementation o f the institutional strengthening strategies spelled out in the NACSAP. These include: (a) promoting practical use o f client service charters in service delivery in legal and judicial institutions; (b) simplifying service delivery procedures; (c) undertaking awareness programs for the general public in collaboration with the information education and communication unit o f the M J C A on client service charters and delivery o f services by legal/judicial institutions; and (d) creating a mechanism for lodging complaints against the misuse o f power or unethical conduct by legal institutions personnel. The LSRP wil l finance the design and implementation o f a computerized complaints management system and client service charters for legal and judicial institutions.

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(ii) Coordinated and organized administrative justice system. The program wil l help develop a basic set o f procedures for administrative tribunals including ward tribunals; identify priority needs for enhancing timely justice by administrative tribunals with a view to promoting effective decision-making; and establishing a monitoring mechanism for the administrative justice system. This will include assessing the efficacy o f establishing an administrative appellate body.

Implementation o f this sub-component wil l contribute to reduced incidences o f corrupt practices in legal and judicial institutions as reported in the NACSAP quarterly reports and improvements in the quality o f services delivered.

Sub-component 4: Improved skills and knowledge of legal professionals - US$ 7.8 million

The LSRP wil l strive to improve the quality o f legal and judicial services in l ine with the needs o f an increasing market-oriented economy by strengthening knowledge and sk i l ls o f legal professionals. This wil l be achieved through a standardized and regulated training program and wel l established institutional mechanisms. The key outcomes and activities under this KRA are:

(0

(ii)

(iii)

Quality legal training by legal education and training institutions delivered. The program wil l enhance the effectiveness o f the Council for Legal Education (CLE) in controlling the quality o f legal training and education in the country by: (a) establishing a full-time secretariat, independent from the judiciary, supported by necessary technical, human and financial resources; (b) designing national curricula for legal training institutions to improve the quality o f legal training for al l requisite qualifications; and (c) designing and implementing specialized training programs for legal and judiciary support staff.

Improved practical skills training for law graduates. The program wil l support the establishment o f a law school, ini t ial ly using temporary premises under the auspices o f the CLE and thereafter constructing permanent premises for the law school. The school wil l provide a structured practical training program to law graduates from both public and private universities leading to bar examinations. The program will also assess the feasibility o f creating two distinct categories o f legal practitioners, namely, advocates and solicitors, to cope with the diversified demands for legal services in the country. The LSRP wil l fund the construction and equipping o f the law school and training o f staff in specialized areas.

Improved capacity to offer continuing education programs. The program wil l strengthen the capacity o f legal training institutions to provide continuing legal education for professional and non-professional staff. Use will be made o f the results of a training needs assessment that has been conducted in the Faculties o f Law o f the University o f Dar es Salaam, University o f Mzumbe, the Open University o f Tanzania, and the Institute o f Judicial Administration (IJA) in Lushoto .

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Implementation o f this key result area wil l contribute to an increased number and quality o f law graduates and diversified legal services available to meet the needs o f the citizens. This wil l lead to an increased number o f qualified primary court magistrates and continuous quality improvements in the legal profession to cope with changes in the socio-economic environment.

Sub-component 5: Improved service delivery capacity in key legal institutions - US$ 38.2 million

The objective o f this sub-component is to develop the capacity o f key legal and judicial institutions to provide high quality services by enhancing their management and coordination, improving the competence, motivation and integrity o f their personnel, and upgrading their work environment. The key outcomes and activities are:

(i>

(ii)

(iii)

Improved organization and support services for effective service delivery. The LSRP, in collaboration with the BEST program, will promote specialization in the court system by expanding the commercial division o f the High Court, the Govemment-funded Land Court division and improving the legal registries. The program also envisages the installation o f an integrated management information system for legal and judicial institutions to promote their effective communication and management.

Enhanced competence, motivation and integrity of personnel. The program, in collaboration with PO-PSM, wil l strengthen meritocratic human resources systems in legal sector institutions, including training administrative staff in legal and judicial institutions in perfonnance management. In addition, support will be provided to assess the mechanisms for attracting, retaining and motivating legal and judicial staff as a particular area o f concern to the public service. Recommendations on appropriate incentives to address this problem would be made to PO-PSM.

Improved working environment. The program wil l support the retooling o f the law libraries, publication o f the Tanzania L a w Reports and the preparation o f case digests. The program wil l support the construction and equipping o f a new Court o f Appeal building, rehabilitation or construction o f pr ior i ty zonal high court centers, resident magistrates’, district and primary courts’ infi-astructure. Appropriate strategies for improving office accommodation facilities at the zonal chambers o f the Attorney-General wil l be developed. In collaboration with the BEST program, the LSRP wil l expand the Business Registration and Licensing Agency (BRELA) services to the regional level.

For al l the infrastructure activities, there would be an agreement between GOT and DPs o n high priori ty c iv i l works to be funded based on the availability o f government budget to share the costs o f construction and for budgeting for the operations and maintenance o f the new and rehabilitated facilities. This would be discussed during the jo int GoT/DP annual reviews o f plans and budget for the LSRP.

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Implementation o f this KRA will contribute to improved legal registry and law library services, expanded access to commercial and land courts and a better working environment for judges and state attorneys. These changes wil l facilitate the handling o f cases by the judiciary, increased access to commercial and land courts and better quality, overall, o f legal and judicial services.

Sub-component 6: Program management, coordination and monitoring and evaluation (US$ 3.4 million)

The objective o f this sub-component i s to promote cohesion, collaboration and coordination among legal sector institutions to allow effective and efficient implementation o f the Medium Term Strategy. The key outcomes and activities are:

Effective implementation of reforms by legal and judicial institutions. The program wil l support the development o f staff skills, knowledge and provide the necessary tooldsystems in the LSRP implementing institutions to enable them to strengthen their capacity for implementation. These institutions wil l also be helped to develop their strategic plans and annual work plans and budgets with a v iew to incorporating objectives o f the LSRP in these plans and budget. Activities wi l l aim at developing their capacity for strategic planning.

Effective management, coordination, monitoring and evaluation. The program wil l establish mainstreamed management, coordination, monitoring, and evaluation mechanisms in each o f the implementing institutions that are in l ine with existing organizational structures. Each lead implementing agency will be accountable for effective implementation o f specific activities and key result areadsub-components.

Enhanced policy and strategic leadership in legal and judicial institutions. Policy coordination in the legal and judicial institutions will be enhanced by the drafting a pol icy to improve coordination o f legal and judicial institutions. This pol icy wil l provide a framework to ensure that individual institutions’ policies are aligned with the overall legal sector pol icy for coordination. The program wil l also strengthen evidence-based policy-making in the legal and judicial institutions and capacity development for pol icy research.

Enhanced information, communication and education regarding the legal sector reforms and development. The program will establish an I E C program to inform the public about the legal and judicial reforms undertaken under LSW. The I E C program wil l also seek to involve the people in providing feedback o n the reform activities and outcomes. This wil l help implementing agencies make improvements and adjustments in the design and implementation approaches. The I E C program wil l be implemented through multiple media channels and physical outreach activities.

Enhanced capacities for change management in legal and judicial institutions. Legal and judicial systems and institutions are fair ly complex in nature and require an effective system to bring about the changes necessary for the reform process. The program wil l build the capacity o f staff in lead

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implementing agencies in change management to enable them to champion the reform program. Change management sk i l ls are essential to ensure the reforms take off, build momentum in the shortest time possible and are well organized to achieve the desired outcomes.

Implementation o f this sub component wil l result in effective and efficient communication o f the reform programs within legal and judicial institutions and with the public at large, and improved capacity o f legal and judicial staff to implement the program. I t wil l also result in better monitoring and evaluation o f the program results.

Component 2: Enhancing public financial accountability - US$ 68.9 million (of which US$ 10.0 million i s funded by IDA)

ATP will support the implementation o f the Public Financial Management Reform Program (PFMRP) in collaboration with other DPs through a pooled funding SWAP arrangement. The PFMRP’s main goal i s to improve the management o f public financial resources for economic growth, public service delivery and poverty reduction. The PFMRP aims at improving the strategic orientation o f the M o F to provide leadership in implementing public financial management across government and ensure i t s efforts are coordinated with other reform programs and sector initiatives. Implementation o f the PFMRP wil l contribute to an enhanced capacity o f M o F to manage public financial resources in an effective, transparent and accountable manner and associated improvements in the MDAs public financial management capacity. I t will also help strengthen the capacity o f N A O to perform i ts oversight functions. The PFMRP strategic plan draws on the Country Financial Accountability Assessment (CFAA), Country Procurement Assessment Report (CPAR), and the IMF’s Report o n Observance o f Standards and Codes (ROSC) analyses and recommendations.

The PFMRP includes the following sub-components referred to as “key strategic goals” in the PFMRP strategic document:

Sub-Component 1: Improved Capacity in the MoF for sound macroeconomic and fiscal management (US$6.6 million)

One o f the PFMRP’s objectives i s to ensure the medium-term stability o f the country’s macroeconomic framework. This strategic goal aims at improving the capacity o f M o F to develop macroeconomic and fiscal pol icy that wil l provide for the improved decision-making required to preserve a stable macroeconomic framework. PFMRP wil l build the capacity o f M o F in macroeconomic management, fiscal pol icy management and wil l strengthen the institutional framework for debt management. This wil l be achieved by improving staff sk i l ls in pol icy analysis, monitoring and economic forecasting. The program wil l also provide forecasting tools and strengthen the institutional mechanism for monitoring, reporting and for stakeholder consultation.

Funds wil l be provided under the program for building a robust macroeconomic and fiscal model, institutionalizing dialogue processes with stakeholders, and implementing the new debt strategy.

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Implementation of the activities under this sub-component wi l l contribute to improved pol icy analysis in the M O F and well informed decision-making on fiscal pol icy and debt management. I t wi l l also contribute to a more inclusive fiscal policy through stakeholders’ consultations thus strengthening domestic accountability.

Sub-Component 2: Devolved decision-making and accountability for resources to MDAs (USS26.0 million)

This sub-component seeks to (i) improve the capacity o f MDAs in public financial management, and (ii) ensure that MDAs are accountable for the public financial resources they manage.

Under the PSRP and the Local Government Reform Program (LGRP), MDAs and LGAs, respectively, have been empowered to manage for results within a resource-constrained environment. To complement these reform programs, the PFMRP aims to relax the control that currently restricts accounting officers from transferring funds from one budget l ine to another within their respective votes. The program wil l consolidate and build o n the gains made from the implementation o f the integrated financial management system (IFMS), which i s already functional in MDAs, to expand the system’s functionality to facilitate MDAs’ and LGAs’ management to better focus on results including support for the adoption in the long-term o f accruals accounting.

The PFMRP will: deepen capability o f internal audit at ministries, departments and agencies (MDAs)-level; enhance the demand for financial management information; and strengthen financial management capacity through the development o f a cohort o f financial management professionals. These professionals wil l have the appropriate blend o f experience and skil ls. Also, given the strategic imperative to implement a solid pol icy and strategy for fiscal decentralization, the program will support the monitoring o f the intergovernmental transfers system.

To achieve the above, the program wil l support the expansion o f the I F M S functionality to enable accrual accounting and interface with the macro-fiscal and debt management systems. Funding wil l also be provided to establish benchmarks for financial and performance reports in MDAs, operationalize MDAs’ internal audit committees, prepare a curriculum and train non- finance and finance personnel including public financial management professionals.

Implementation o f activities under this sub-component wil l contribute to improving resource allocation in l ine with sector priorities thus influencing improvements in service delivery. I t will also lead to a more accountable public financial management system.

Sub-Component 3: Improvedpredictability of resources to MDAs (US$2.9 million)

This sub-component aims to improve the predictability o f resource f lows by strengthening linkages among the MTEF, MKUKUTA and poverty monitoring system (PMS). These linkages wil l provide a basis for promoting a more systematic process for resource planning and prioritization needed to achieve pol icy objectives and desired results. The PFMRP will also focus on capturing al l development assistance channelled directly to projects and programs in

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GOT’S budget and accounting framework. In tandem, the PFMRP will deepen stakeholders’ understanding and ability to appreciate the budget process and i t s results.

The program has funded the design and’implementation o f a management information system (MIS) for external assistance that i s easily accessible and facilitates planning and decision- making. I t has also funded the design and implementation o f an institutional mechanism for deepening stakeholder understanding and ability to implement the external assistance strategy. Based on positive results in implementing these activities, GOT would, in the long-term, phase out the current cash budget system. Another expected long-term result wil l be zero or insignificant differences in the MDAs’ and LGAs’ budget allocations and actual expenditures.

Implementation of activities under this strategic goal wi l l improve the predictability o f the budget through a more informed and inclusive budget process. Furthermore, inclusion o f a l l external resources in the budget process wil l improve the comprehensiveness o f the budget as a tool for resources allocation. This strategic goal wil l contribute to improvements in the accountability o f external assistance funds and improved resources allocation in l ine with the country’s priorities.

Sub-Component 4: Enhanced value for money (VFM) in the use of public resources (US$ 21.0 million)

This sub-component wil l help ensure that the budget i s strategically oriented towards the achievement o f the intended policy results and achieving value for money. Particular emphasis wil l be placed o n improving the procurement and audit functions. A key imperative i s to steer public service managers towards a more strategic orientation in the use o f public resources. In particular, in the medium-term, the existing information system will be further customised to enable enhanced budget analysis. Furthermore, the PFMRP will spearhead the redesign o f the budgeting and reporting processes to enhance their results orientation. Specifically, this intervention will contribute to ensuring that the MTEF supports Government in attaining efficiency and effectiveness in service delivery. Also, during budget implementation, the program will, through a combination o f monitoring at MDA level, public expenditure reviews (PERs), VFM audits and overhauled procurement systems engender an ethos o f accountability for procuring resources under the most cost-effective terms; delivering maximum outputs f rom planned activities and associated inputs; and achieving outcomes specified at each MDA’s, LGA’s and program planning stage. A key anticipated long-term result will be minimal or zero losses resulting from public procurement.

The program wil l support the review and modification o f budget databases, strengthening o f institutional arrangements for budget management including integration o f human resources planning with overall personnel expenditure budget, and the rolling-out o f participatory planning and budgeting guidelines to LGAs. The program wil l support the new institutional framework for procurement, including the design and implementation o f a system for monitoring and evaluating procurement in MDAs. In addition, the program will finance support to NAO to institutionalize VFM audits.

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Implementation o f activities under this strategic goal wil l support the effective use o f public financial resources in a more transparency manner, in l ine with public financial management and procurement regulations. This i s expected to contribute to improvements in accountability and a reduction in misspending and procurement losses.

Sub-Component 5: Reduced dependency on external financing (US$2.6 million)

The objective o f this sub-component i s to improve the management o f external funds to ensure they contribute effectively to national economic development. A key perspective shared by stakeholders i s that ten years from now Tanzania wil l be less dependent o n external financing. The PFMRP will support improvements in the effective management o f external financing, with a view to promoting aid coordination and harmonization under the draft jo int assistance strategy (JAS). This will include advocating for aid principles that support Tanzania’s development priorities including untied aid, ensuring the predictability o f aid flows, and reducing parallel systems and structures for implementing development projects. The program will emphasize directing aid utilisation to the most productive investments and reducing debt servicing to sustainable levels. In addition, i t wil l support the enhanced mobilisation o f domestic resources by broadening GOT’S tax base and at the same time ensuring i t s simplicity and equitability. This wil l imply rationalization of the tax exemptions regime in order to widen the domestic tax base.

Under the program, the M o F wil l lead the prioritizing, coordinating and managing o f external financing and in rationalizing the tax exemption regime thus supporting effective use o f external assistance funds in l ine with the country priorities.

Sub-Component 6: Capacity for sustained improvements in management and program implementation (US$9.8 million)

This sub-component seeks to strengthen the leadership, management and monitoring and evaluation capacity o f the M o F to implement the PFMRP. The program will seek to effect changes in the organizational culture o f the MOF and in the implementing MDAs. In this respect, the program wil l endeavour to enhance strategic leadership; consult internal and external stakeholders; conduct I E C campaigns; inform and f ine tune the PFMRP by adopting an M&E framework; introduce needs-based human resource capacity development interventions; utilize more effectively management information systems, including Information Technology (IT); and promote a culture of ethics, integrity and accountability.

Implementation o f the activities under this strategic goal wil l support the mainstreaming o f the PFMRP activities within the MOF and MDA functions and contribute to an inclusive, effective and accountable implementation o f the program.

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Component 3: Strengthening oversight and watchdog institutions (OWIs) -US$4.6 million (of which US$4.6 million i s funded by IDA)

A T P wil l support the strengthening o f oversight and watchdog institutions (OWIS)’ to improve domestic accountability, particularly with respect to the crosscutting reforms, i.e., LSRP, PFMRP, PSRP and NACSAP. This program aims at ensuring that OWIs are well informed o f public sector performance and hence more effectively able ho ld government accountable by interventions aimed at: (i) generating and disseminating high quality information o n performance and outcomes o f government, centered on the crosscutting reforms; (ii) improving the ethical environment in both the public and private sectors by supporting improvement in the capacity o f professional organizations to raise the level o f ethics o f their members using self-regulatory ethics mechanisms, continuing education programs and, more broadly, I E C programs aimed at the public at large; and (iii) generally improving the capacity o f OW1 staff to perform their functions.

OWIs that wil l potentially benefit from this component include state oversight institutions such as Parliament and its committees, the PCB, and non-state actors such as professional associations, the media and c iv i l society organizations.

Sub-component 1: Facility for Ethics, Accountability and Transparency - IDA US$ 4.0 million

To achieve the above objective, a flexible Facility for Ethics, Accountability and Transparency (FEAT) wil l be established and housed within the ES. The funds will be available o n a demand- driven basis for activities related to the above objectives. FEAT activities wil l be coordinated with other development partner programs through the DP accountable governance working group. Although other DPs have been supporting OWIs, their activities are s t i l l insufficient to warrant the establishment o f a pooled funding mechanism at this stage. This could be reviewed during the mid-term review.

Generation and dissemination of quality information. The FEAT will support OWIs in generating data, including statistics and other types o f information that confirm results o f government policies and initiatives in al l the crosscutting reform areas. I t wil l also fund c iv i l society organizations’ (CSOs) activities to disseminate the findings from studies and other key government accountability documents such as the N A O report. This is expected to increase public awareness of the reforms, lead to effective dialogue between informed OWIs and GOT in domestic policy-making processes and build domestic accountability. I t will also fund capacity development o f OW1 staff to improve their skills related to their functions as oversight and watchdogs. This wi l l include targeted short-term training programs locally and within the Afr ica region that are aimed at improving the performance o f OWIs in domestic accountable activities.

Improvement in the ethics of members of professional associations. The FEAT will support capacity development of professional associations to promote ethics amongst their members and thereby influencing the quality o f ethics in the public service. Professional associations will be

OWIs are defined to include state oversight institutions such as Parliament, PCB, NAO, the Ethics Secretariat as well as non-state actors such as the media and c i v i l society organizations.

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Eligible interventions

Interventions that are eligible for FEAT financing should support capacity building in the respective organizations to enhance oversight capabilities or ethical environment in the public sector, which may include:

Technical support at a l l stages o f the development o f the participating organization’s strategic plans, annual work plans, monitoring and implementation plans. Specific training activities within Tanzania or

supported to implement self-regulatory mechanisms and development programs for their members. The funds could also be used for I E C and M&E activities related to the roles and responsibilities o f professional associations. Depending on the level o f development o f the respective professional associations, the nature o f support is likely to differ and could include helping them develop as associations. The program wil l also support capacity development programs for professionals as groups that aim at improving the ethical dimensions o f the respective professions based on the identified needs within the context o f associations.

Ineligible interventions

FEAT i s n o t t o b e used for investments where the contributions to capacity improvements are n o t readily demonstrable. These include:

Investment in commercial ventures.

The purchase o f motor vehicles.

Civil works.

The ES will oversee the use o f the Facility. I t wil l be reporting to a high-level technical steering committee chaired by the Ethics Commissioner that wil l approve applications to the FEAT. To reduce the possibility that the funds wil l be captured by a specific agency the technical steering committee wil l include members from (i) the Government, i.e., Head o f GGCU, Director o f Ethics (PO-PSM), registrar o f non-governmental organizations (NGOs); (ii) non-governmental sector-one f rom the NGO council and one from the Tanzania Business Council. The executive secretary o f the ES would be a non-voting member and honorary secretary to the Committee.

To ensure that a l l activities to be funded are in l ine with A T P ’ s objectives, the FEAT manual wil l have criteria for institutional as wel l as activity eligibility. Institutions that will be eligible for funding wil l need to show evidence o f their status as non-profit NGOs. They should have been registered at least for one year and with audited accounts and financial statements. They should also be able to contribute at least 10% o f the activity costs in cash or in kind. Political parties, firms and individuals wi l l not be eligible for funding.

FEAT will fund activities that seek to achieve the A T P ’ s development objective and that address the information gap or seek to improve the ethics environment in the country as mentioned above. Specific eligible and ineligible activities are reflected in table 1 below. A more comprehensive l i s t o f criteria and modalities to access the facility will be included in the Operations Manual. The grant amounts wi l l vary from a minimum o f $10,000 to a maximum o f $500,000. For grants above U S $ 100,000, the FEAT management wil l provide IDA with al l relevant details o f the request for no-objection. These funds wil l be disbursed in at least two tranches. Disbursement wil l be based on satisfactory submission o f financial and physical progress reports. Successful OWIs wil l s ign a grant agreement that wil l give the Secretariat the right to suspend or cancel disbursements where funds are not used for the intended purposes.

Table 1 : Eligiblehneligible activities under the FEAT sub-component

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Afr ica region (or elsewhere with detailed justificationl) related to improving the quality o f information produced, disseminated and used. Activi t ies with funding committed f r o m other sources, demonstrating h o w FEAT will contribute to achieving the objectives o f the activities. FEAT will on ly support incremental results-oriented investments. This wil l include, for instance, resources required to re-engineer processes; to put in place systems for monitoring and evaluation; and/or t o foster organizational learning in OWIs. Re-tooling o f participating organizations to improve bo th working facilities and environment in the context o f improv ing oversight and watchdog capabilities and activities. Support t o the rationalization o f OWIs’ roles and functions. Support work aimed at promoting governance with respect t o the activities o f the A T I P including the monitoring and evaluation o f service delivery by beneficiaries, c i v i l society groups and the private sector. Activi t ies above for which the organization does not have access to another primary source o f funds.

General administrative expenditures.

Salaries or salaries enhancement and remunerative allowances.

Activit ies with full funding committed f rom other sources.

Re-tooling that i s more than 15 per cent o f the budget requested.

Activities related to human rights, police, prosecution or prisons o r pol i t ical advocacy.

Activit ies with a financing gap.

Repeater activities whose predecessor did not achieve the desired objectives or did not meet the fiduciary requirements o f the FEAT.

Implementation o f the activities under this component wi l l contribute to strengthened capacity o f OWIs to perform their roles with respect to improving access to legal and judicial services and accountability in management o f public funds.

The Bank would review the implementation o f this component approximately 12-18 months after the f i rs t disbursements with a view to assess the demand for the FEAT. Since the facility i s an innovative approach i t will be important to assess the strengths and weaknesses o f the mechanism in order to make the necessary adjustments to improve its operations or to consider scaling up the FEAT by adding the necessary funds should there be high demand for the facility. At the time, the Bank would discuss with GOT the possibility o f moving to a pooled fund arrangement for the FEAT should there be interest from other DPs.

Sub-component 2: Ethics Secretariat Capacity Building - IDA US$ 0.6 million

The ES as an OW1 wil l not be eligible for FEAT funding, therefore Project funds will be directed separately to support i t s institutional strengthening. A budget o f $600,000 would be set aside for that purpose. Support to the ES will be related to achieving the objectives o f the FEAT and o f the ES action plan. The ES will be strengthened to enable it to host the FEAT through the recruitment o f key staff and by funding incremental operational costs. The Secretariat, as host o f the FEAT, will not be one o f the beneficiaries o f the fund. Therefore, the ES will receive funding to disseminate widely the “rules o f the game” o f the FEAT and to systematically collect and disseminate the lessons learned and good practices. The ES wil l also be supported to create more awareness o f the importance o f ethical behavior within the general population. The ES will

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receive technical support to set up the FEAT and strengthen generally i t s capacity to perform an improved role with respect to ethics within the public service.

Component 4: Project Coordination - US$ 0.6 million (of which US$ 0.4 million i s funded by IDA)

To ensure overall coordination o f the activities related to improving accountability, transparency and integrity and, more particularly, monitoring progress o f the fight against corruption and improvement in good governance, support wi l l be provided to the GGCU to help the unit achieve the objectives o f i t s action plan.

A T P wil l provide support to GGCU to improve i t s M&E capacity including reporting on and disseminating the overall results o f the NACSAP. The GGCU wil l have overall responsibility for coordinating and for overseeing the monitoring and evaluation o f the ATP. The interventions and activities under this component generally reflect strengthening and facilitating the GGCU to better perform i t s core roles and functions, which are: (i) overall coordination o f good governance programs, especially the NACSAP; and (ii) high level M&E, including reporting to the President on progress o f implementation o f the anti-corruption measures.

Support wil l also be provided to review, i f necessary, the institutional structure o f GOT to combat corruption with the objective o f delineating clear mandates and fostering greater collaboration among institutions. Under the PRBSPRSCPRSL pol icy dialogue, there i s a general agreement between government and DPs that a stronger dialogue should be established around good governance as a key pi l lar o f the MKUKUTA. The understanding i s that a broad pol icy dialogue similar to the one instituted for SWAPS should be established for anti-corruption. Support to the GGCU would help concretize this agreement by providing the funds necessary to launch the process and put in place the mechanisms for dialogue and to improve coordination within government, and gradually, between GOT and i t s domestic constituency. Further, the G G C U would be strengthened to collect and disseminate information to the public and to undertake performance reviews o f anti-conuption activities.

A T P wil l also support information, communication and education (IEC) activities. In the f i rst two components of ATIP, a balance wil l be struck between sensitization activities for c iv i l servants and outreach activities for the general public. Emphasis will also be put on getting feedback from beneficiaries and using it to modify the communication strategy, as needed. Overall, I E C activities wil l focus on creating and sustaining a symmetrical information environment that wil l enhance the potential for decentralization, good governance, transparency and accountability. These activities will sensitize the range o f stakeholders about the project’s overall philosophy and methodology, the objectives and rationale o f the components, outline the complementary roles and responsibilities o f the various actors and build a knowledge base o f lessons learned. In the interest o f sustainability, they will seek to build a strategic development partnership between government officials, NGOs, communities and the private sector by empowering populations in their interactions with public institutions.

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4. Lessons learned and reflected in the project design

ATP’s design takes into account experiences learned from past World Bank and other development partner projects in Tanzania, other developing countries and transition economies in public financial management, legal and judicial reform and support to oversight and watchdog institutions. I t also draws from analytical studies carried out by the Bank staff in the preparation o f this project, government and other development partner agencies. These include the CPAR, CFAA, PEFAR, political economy study, SIDA Power Analysis and DFID’s Drivers o f Change studies and a stakeholders’ workshop that focused on issues related to accountability, transparency and integrity. Lessons learned include:

(i) Stakeholder consensus on the project objectives and indicators. The project components have been based on analytical work and have been discussed at length with key stakeholders. The respective objectives and perfonnance indicators have been agreed by the main stakeholders. This consultative process will help strengthen the results focus by ensuring that key implementing institutions focus on project outcomes. A specific session on M&E enabled some participants to appreciate that the results framework o f the three components will need to be adjusted to reflect agreement between government and DPs in the context o f the SWAPS o f prioritized results and indicators to be met on an annual basis.

(ii) The need for a coordinated approach within and among the respective reform programs. Recent assessments o f the cross-cutting reform programs raised concerns about whether the current government coordination arrangements offer a credible basis for driving forward harmonized and sequenced LSRP, PFMRP, PSRP and LGRP. Recognition o f the interdependencies among cross-cutting reform programs and linkages with sector development programs provides the basis for a coherent approach and more sustainable outcomes. ATP i s embedded in the Government’s holistic framework for building good governance. The proposed coordination arrangements at the G G C U level would strengthen the link between the anti-corruption drive and other supporting organizational and institutional reforms.

(iii) Strengthening the demand-side o f the accountability equation i s crucial. The analytical work on the political economy and governance environment in Tanzania points to the need to strengthen the demand-side o f accountability. The political economy study o f Tanzania (2005) in particular indicated that Tanzania’s strong executive branch needs to be counterbalanced by equally strong legislative and judiciary branches. I t also pointed out that much work needs to be done to provide quality information to citizens and to ensure that citizens understand their roles and in responsibilities with regard to the state’s performance. In addition, lessons learnt f rom the Tanzania Financial and Legal Management Upgrading Project (FILMUP) reflect on the positive contribution the National Board o f Accountants and Auditors (NBAA) has provided in the improvement o f accounting standards and thereby contributing to accountability, transparency and

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integrity in workplace. To increase the capacity o f stakeholders in the accountability processes, and therefore achieve timely and sustainable outcomes, i t i s important to strengthen the OWIs and c iv i l society organizations that promote demand for public accountability. This wil l be achieved through the third component o f ATIP.

(iv) The need for an effective M&E system. Without an effective M&E system, i t i s di f f icult to assess whether a program i s going to meet i t s objectives within the agreed period and within the agreed budget or whether there i s a need to adjust i t s trajectory. Thinking through the results framework upfront also supports developing more appropriate interventions to achieve the planned outcomes. In the absence o f a results framework and indicators, there i s a limited objective basis to provide for accountability to project beneficiaries. Therefore M&E has been embedded in the government’s reforms supported by ATIP and i s also included in the strengthening o f the M&E function o f the GGCU. I t i s recognized that there i s limited capacity for M&E within government, and that there are few institutions that can impart that capacity locally. I t wil l take time and effort to develop an M&E capacity.

(v) The value o f effective IEC interventions. Besides implementing the actions that contribute directly to the project outputs, it i s beneficial with respect to both the accountability for and sustainability o f the project outcomes to have regular communication with the beneficiaries to inform and educate them on the objectives o f GOT reform programs. Similarly, a failure to listen to citizens and their views regarding the performance in delivering services means that i t i s more difficult to adjust and provide the services that are valued by citizens. IEC activities and measures help deepen domestic accountability. IEC, as a feature, runs through ATIP and wil l link to similar systems that are being established for other core reform programs.

5. Alternatives considered and reasons for rejection

The following alternatives were considered and rejected:

(i) Provide funds through General Budget Support (GBS). The option o f Bank funding for AT IP through the general budget support was considered, especially because the GOT has clearly stated i t s preference for this modality o f development assistance. However, the sector programs that ATP i s supporting (LSRP, PFMRP and the NACSAP) have not achieved the maturity o f pol icy dialogue and articulation o f strategies and priorities in the planning and budget processes that would enable them to claim the needed resources for their reforms through the general stream o f resources allocation. Thus Government and DPs have for now agreed that development assistance to the LSRP and the PFMRP will be through investment support under a SWAP pooled fund arrangement. The Bank wil l harmonize i t s support to the sectors with that o f other DPs by participating in these SWAP arrangements. During the mid-term review, the

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(ii)

(iii)

Bank would assess what would be needed for the program to be supported through the GBS during a subsequent phase.

Multiple capacity building projects. This approach does not appear to correspond to the Government's comprehensive and holistic approach as reflected in the NFGG and would impose an additional burden on an already overstretched capacity in GOT to coordinate coherently al l interventions in the area o f good governance. The alternative approach would be fragmented and lacking in strategic perspective. There would be loss o f synergy in the implementation o f a series o f disjointed projects and i t would be more difficult to focus on integrated results. Furthermore, in the preferred harmonized framework, the capacity o f Government wi l l be strengthened to coordinate the support o f the various DPs in these important areas.

Supply-driven capacity building support to OWIs. This was rejected for two reasons. Firstly, the actual needs and inputs for capacity building are likely to differ considerably between the various target organizations. Therefore, an attempt to predict the support needed at this stage could ultimately undermine the efficacy o f the component's implementation. Second, a supply-driven approach usually fails to develop and test the sense o f ownership and commitment o n the part o f the beneficiary institutions. These are considered crucial to attain and sustain the outcomes o f A T P . The approach was put forward by the Government with a view to giving an opportunity to organizations that are committed to the objectives o f improving accountability throughout and outside the government as a means to broadening access to funds to organizations that could be le f t out otherwise.

C. IMPLEMENTATION

1. Partnership arrangements

A T P design takes into account the GOT policy on development assistance that i s presented in the draft JAS. The JAS i s a GOT-led initiative that provides a guiding framework for DPs in funding the MKUKUTA. The key principles o f the JAS include harmonization o f DPs' processes to reduce transaction costs to GOT, untied support to capacity building and division, mainstreaming o f project implementation within GOT systems and procedures in order to ensure the sustainability o f development assistance. Although the JAS is s t i l l in a draft form, GOT and DPs have already applied the principles to their collaboration.

The LSRP and PFMRP are designed as SWAP components to be funded through pooled funding. A number o f DPs organized through the Legal Sector Donor Group and the Public Financial Management Donor Group have expressed interest in funding the two programs. These two groups meet monthly and are part o f a wider governance working group (GWG) o f DPs with counterpart groups within government. These DPs are also involved in the PRBSPRSCPRSL that provides general budget support for implementing the MKUKUTA. Under this funding modality, the partners carry out joint annual reviews to assess performance against an agreed set o f actions and indicators.

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Within the context o f these two groups, there i s consensus amongst GOT and DPs to fund the LSRP and the PFMRP under pooled funding arrangements in addition to other donors with earmarked project funding. A total o f US$71.3 mi l l ion has been committed by DPs and GOT for financing the LSW. Belgium, Canada, Denmark, Germany, Sweden and U S A I D wil l commit US$ 32.3 m i l l i on while the IDA will commit US$25 mi l l ion to the LSRP. With the exception o f USAID, the other DPs including IDA wil l be channeling funds to the LSRP through the pooled funding arrangement. GOT has committed US$ 15 million from i t s own funds for the LSRP.

The PFMRP is supported by several donors including the EU, Denmark and Norway who have already signed the MoU and deposited funds into the pool. DFID and Japan, have also deposited funds into the pool whereas the AfDB, Sweden, Switzerland and UNDP have been supporting the PFMRP through direct support to some components, and they are currently considering the possibility o f joining the pool. DPs including IDA will commit a total o f US$ 57.3 mi l l ion while GOT contribution to the PFMRP wil l be US$ 1 1.6 million.

IDA wil l provide US$ 4.0 mi l l ion for improving the capacity o f OWIs, U S $ 0.6 million for the strengthening o f the ES and $0.4 mi l l ion for project coordination within the GGCU.

2. Institutional and implementation arrangements

There are two major considerations with respect to the definition o f the implementation arrangements for ATIP. Firstly, two o f the project’s components wil l support distinct SWAp- based programs, Le., PFMRP and LSRP. For these two programs, Government and DPs have already agreed to adopt a pooled fund modality, to which the Bank wil l subscribe. Thus funds under components 1 and 2 o f the ATIP will be disbursed to the LSRP and PFMRP pooled bank account for each of the two programs. Secondly, the third and fourth components o f ATIP (support to OWIs and coordination, M&E and IEC) wil l be implemented under a traditional project-type modality. Furthermore, the implementation arrangements for these latter two components require particular attention because: (i) the third component wil l be demand-driven through the provision o f FEAT grants to eligible applicant OWIs; and (ii) while overall project coordination under component 4 wil l be implemented by the GGCU in the President’s Office, Government has decided that the ES rather than G G C U should handle a l l funds under Components 3 and 4.

In the context o f the above, the key features o f the implementation arrangements are described under the fol lowing headings:

0

0 Mainstreamed project implementation 0

0

0

0

0 Coordination with other reform programs through the Inter-Ministerial Technical

Pooled funding modality for components 1 and 2

LSRP institutional and implementation arrangements PFMRP institutional and implementation arrangements FEAT grant facility under component 3 Component 4 institutional and implementation arrangements

Committee (IMTC) and Inter-Ministerial Working Group (IMWG).

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Pooled funding modality for components 1 and 2. Project funds for the LSRP and PFMRP components wi l l be disbursed through a pooled fund account for each o f the components. For this purpose, the Government and the pooled fund DPs have agreed on common coordination, activity planning, disbursement, financial management, procurement and M&E arrangements and procedures, as specified in MOUs for each program. The GOT and the participating DPs, including the Bank, wi l l review and endorse consolidated annual work plans and budgets for each fiscal year detailing the eligible activities and budgets for each LSRP and PFMRP sub- component as described in this PAD. The Bank has already reviewed the arrangements and operational manuals for pooled hnding o f the LSRP and PFMRP and i s satisfied that these comply with i t s fiduciary requirements (annexes 7 and 8). Thus, the Bank is prepared to j o i n the MOU for the LSRP and, following some modifications, the M O U for the PFMRP.

Mainstreamed project implementation. There i s no enclave project implementation unit for any o f the project components. All activities under the LSRP and the PFMRP, as wel l as under components 3 and 4, are being undertaken within the mainstreamed structures o f the relevant MDAs. This implies full staffing o f the implementing agencies to enable them to implement the project efficiently and effectively. The Government has already initiated the appointment o f key staff to positions in the M J C A and the ES, and PO-PSM has confirmed i t s commitment to the accelerating the staffing process. The respective implementing arrangements are detailed in Annex 6.

LSRP institutional and implementation arrangements. Because the LSRP involves multiple legal and judicial institutions as program implementing agencies, i ts implementation arrangements are based on the need for clearly assigned sub-component implementation responsibilities as well as coherent overall program coordination. The overall LSRP implementation i s coordinated by the MJCA. The assigned “lead implementing agencies” for each LSRP sub-component, include the Law Reform Commission, the Court o f Appeal6, the Commission for Human Rights and Good Governance, the Faculty o f L a w (University o f Dar es Salaam) and the MJCA. However, a l l institutions benefiting from the program are responsible for the day-to-day implementation, reporting, monitoring, evaluation and communication o f their respective program activities. These lead and other implementing agencies are listed in Annex 6.

The mechanism for the jo int G o T D P coordination o f the LSRP implementation i s the Joint (GOT and DPs) Implementation Program Steering Committee (JPRC). This committee i s the main forum for pol icy and strategy dialogue between GOT and DPs. Once the pooled funding for the program i s operational, the JIPRC wil l also approve funding and disbursements based on satisfactory performance and agreed annual work plan and budget. There i s also a Policy Steering Committee, chaired by the Chief Justice, composed o f the chief executives o f al l implementing institutions and responsible for coordinating GOT’S LSRP pol icy guidance and oversight. The detailed implementation arrangements o f the LSRP are documented in financial management and procurement manual, and summarized in the LSRP MOU. A more detailed description o f these arrangements i s presented in Annex 6.

The use o f Judiciary in this case refers to the Registrar o f the Court o f Appeal, w h o i s the ch ief executive and accounting officer o f a l l courts in Tanzania.

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PFMRP institutional and implementation arrangements. The PFMRP i s coordinated by the MoF. Other institutions involved in the program implementation include the recently established Public Procurement and Regulatory Agency (PPRA) and the National Audit Office (NAO). A Joint (Government and DPs) Steering Committee i s in place to provide policy, strategic oversight and facilitate dialogue. The Deputy Permanent Secretary in the M o F i s the Program Manager for the PFMRP. There i s also a full-time Program Coordinator who has been contracted to provide technical support on program implementation. MoF’s heads o f department, based o n their portfolio, are responsible for sub-components o f the program. Details o f the implementation arrangements for the PFMRP are documented in an Operations Manual and highlighted in the MOU entered into between Government and DPs. An extended description o f these arrangements is provided in Annex 6.

FEAT grant facility under component 3. The third component o f ATP (strengthening o f OWIs) wil l be managed by the ES, and funded through a designated account operated by the Secretariat. An inter-agency committee (Technical Steering Committee) wi l l be established to approve applications for FEAT from the OWIs. The chairman o f the ES wil l chair the proposed committee. Other members o f the committee are l ikely to be from: (i) the Government - Head o f GGCU, Director o f Ethics, PO-PSM and Registrar o f NGOs; (ii) non-governmental sector - a nominee from the N G O Council and a nominee from the Tanzania Business Council. The Secretary o f the ES will be a non-voting member and honorary secretary to the Committee. A draft operational manual has been prepared to guide the operations o f the FEAT and also the users on accessing the fbnds. The Technical Steering Committee wi l l ensure that FEAT activities are carried out in accordance with the operational and financial manual. The Committee will enter into a grant agreement with each recipient OW1 to ensure fiduciary control. Day-to-day operations o f the FEAT will be carried out within a mainstreamed structure o f the ES. Additional staff wil l be recruited to support implementation o f the FEAT. They will be reporting to the Commissioner o f the ES, who i s the chief executive and accounting officer. Since the ES will not have access to the FEAT even in i t s role as OWI, it will be facilitated to access funding ($600,000) to strengthen i t s core functions, mainly to create more awareness o f ethical values in the public service and also to inform and educate the public about the need to have accountable leaders in key positions. Detailed implementation arrangements are provided in Annex 6.

Component 4 institutional and implementation arrangements. The implementation o f the fourth component o f the A T P wil l be primarily the responsibility o f the GGCU. The interventions and activities under this component generally reflect strengthening and facilitating the GGCU to better perform i t s core roles and functions, which are: (i) overall coordination o f good governance programs, especially the NACSAP; and (ii) high level M&E, and reporting to the President on progress o f implementation o f the anti-conuption measures. Funds for use under this component wil l be managed by the ES.

Coordination with other reform programs through the IMTC and the IMWG: The overall coordinating mechanism for the core cross-cutting reforms (public service, local government, public finance, legal/judicial and sector development) i s the responsibility o f the existing committee o f al l Permanent Secretaries (IMTC) chaired by the Chief SecretarykIead o f Public

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Service. The IMWG comprised o f senior government officers and chaired by the PS PO-PSM meets quarterly to review progress o f al l core reform programs and reports to the I M T C .

3. Monitoring and evaluation o f outcomes/results

Monitoring and evaluation under the project wi l l be streamlined within the GOT’S own M&E framework for the M K U K U T A . The M&E arrangements under the governance pi l lar o f MKUKUTA are based largely on the monitoring and evaluation framework for NACSAP, which incorporates many o f the target outcomes o f the LSRP and the PFMRP. These are centralized under the GGCU, which provides leadership and coordination for NACSAP across GOT. Furthermore, GGCU’s M&E system, which i s operationalized through the Presidential MIS will capture at a high level both outputs and outcomes indicators for the ATIP.

At the program level the LSRP and the PFMRP wil l each have their own M&E arrangements, based on the broader M&E system for cluster 3 o f M K U K U T A already developed by central government agencies (under leadership o f the PO-PSM and MOF) for implementation by al l MDAs under the harmonized planning, and budgeting initiative. Specifically, PO-PSM has developed a computer-based M&E database, which wil l be tailored to meet the needs o f the LSRP and PFMRP. The advantage o f this IT-based system i s that i t i s user friendly and offers a reliable storage facility, which make easy the manipulation and retrieval o f information Moreover, it can readily be reviewed to establish data completeness or inconsistencies. I t also enables the creation o f a variety o f reports. The system i s hierarchical and applies the logical structure specified under the MTEF.

Data collected from routine administrative systems, surveys, studies and other management systems (e.g., the national poverty monitoring system, IFMS, payroll, etc.) will be stored and analysed on the M&E database. The LSRP and PFMRP coordination units will maintain this system and use i t to generate periodic implementation progress reports for monitoring purposes, as well as, dissemination to various stakeholders. The joint review wil l draw o n reports f rom the system to inform their bi-annual evaluations o f the program. This LSRP and PFMRP M&E framework wil l provide a basis for: (i) ensuring accountability; (ii) assessing progress towards achieving the programs’ goals and objectives; (iii) facilitating planning and decision-making; (iv) orienting stakeholders to the programs’ objectives; (v) motivating implementing agencies and component managers to deliver pre-determined results and, for (vi) dissemination purposes.

The specific aspects o f M&E for the OW1 component would focus on the indicators o f the implementation processes and outputs f rom each entity to be funded. These would be captured at the ES as laid down in the Operations Manual. At the outcome levels, the ES, just l ike any other MDA, wil l be required to forward relevant indicators to the PO-PSM and G G C U coordinated M&E systems.

4. Sustainability

According to the foreword to the NFGG, “The GOT has given governance issues the highest priority in recent years, as it i s aware that the continuing development problems in the country could be associated with difficulties o f management in the public sector that are reflected in

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Risks Risk Mitigation Measures

financial mismanagement, corruption, low level o f service provision, tax evasion and unnecessarily bureaucratic procedures.’’ In addition, the recent speech by the newly-elected President confirms that his government wil l be “guided by good governance, transparency and ac~ountabi l i ty . ”~ This priority i s already evident in the wide ranging comprehensive reforms that the GOT has undertaken and which the new President vows to accelerate. This renewed commitment and the assurance that the new government wil l not “unravel what was done by previous governments” also provides the assurance necessary to continue with long-term institutional reforms. The GOT has also emphasized in recent years the need to better inform the people about progress with reforms and to listen to citizen’s concerns about the performance o f government in delivering services. ATIP will include activities that wil l strengthen this approach through a results-based monitoring framework coupled with developing the capacity for sharing information, communicating and responding to the public’s demands for greater accountability. Building domestic accountability i s key to sustainable results.

Risk Rating with Mitigation

ATIP wil l use GOT structures for implementation. Activities related to the four components o f ATIP wil l be part and parcel o f the GOT’S objectives for legal/judicial and public financial management reforms. They wil l be managed by public servants as part o f implementing their organizational goals and results. For this reason, i t i s expected that capacity built wil l be retained and wil l continue to advance the institutional changes implemented even after DP funding has ended. This approach requires a close link to the PSW which i s looking into the needs to go further in terms o f providing adequate incentives to attract and retain qualified people in the public service. I t also requires close linkages to the BEST program (supported as a component o f the Bank’s Private Sector Competitiveness Project) which aims at strengthening the business environment.

T o Project Development Objective

amongst the leadership to continue with the core

Decline in political wil l

GOT has demonstrated strong ownership in preparing the project’s components with strong support from the Hon. Chief Justice, the Attorney-General and the Head o f the Public Service in addition to other senior public servants. GOT has budgeted funds in 2005/06 for implementing some init ial aspects o f the LSW and P F M W . In addition, the Bank’s project preparation facility (PPF) and other DP initiatives have supported building the capacity for management and implementation o f the reform agenda. Although capacity constraints are substantial, capacity development activities wil l be linked to results and aimed at improving definite skills related to specific tasks.

A political analysis has been carried out that M reflects on the large constituency o f reformers within the executive and in the general public.

5. Critical risks and possible controversial aspects

’ President Jakaya Kikwete’s speech o n inaugurating the fourth phase parliament (30 December 2005).

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reforms. 1

conducive to attract, motivate and retain staff.

L o w level capacity in the lead agencies to implement and coordinate the LSRP and PFMRP.

GOT has also been moving towards a more inclusive policy-making environment and this wil l strengthen the public’s support for reforms. ATP, apart from promoting inclusive policy- making in public fiscal policy, includes IEC activities to ensure that reforms are well understood at al l levels o f society. In addition, there are activities that wil l continue to take place through the PSRP that contribute to the demand for the PFMRP and LSRP and create strong linkages. These are embedded in the MKUKUTA, the government’s overall growth and poverty reduction instrument. The new government has reaffirmed i t s commitment to continue and even accelerate the reforms. GOT i s working on a major review o f the public service salary structure to improve the capacity o f the public service to attract, motivate and retain staff. Further, pay i s a major issue in the PRBSPRSCPRSL pol icy dialogue and wil l continue to be raised as an issue for action. However progress remains slower than anticipated. Dialogue will be heightened at the PRBS/PRSCPRSL level and through the PSRP dialogue. Some key technical work i s taking place that should help the GOT to move faster on pay and rationalization o f incentives. The LSRP and PFMRP have built a significant amount o f technical expertise and other short- te rm support into the project components. This takes into account the need to support lead implementing institutions, MoF, MJCA, G G C U and ES to achieve a sustainable level o f capacity to implement the reform agenda. A lot will depend on the quality o f the expertise that i s provided and the willingness o f GOT to get the best possible resources for the specific specialized areas. The review process will provide for a forum to assess regularly progress made in the implementation o f the reforms and to adjust accordingly. Fol lowing the elections, government’s commitment to the reforms has been reconfirmed. The senior management of the key implementing agencies has indicated their willingness to move urgently with the LSRP, which lagged behind other reforms.

M

H

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Weak commitment and capacity o f publ ic service managers to improve service delivery and good governance.

T o component results Weak coordination o f legal/judicial reforms leads to delays and ineffective implementation o f reforms.

I L o w utilization o f

The PRSCPRBSPRSL performance assessment framework includes dialogue on continued public service reforms and incentive structure to build capacity and commitment o f managers to service delivery. In addition, the A T P has built in a number o f activities in al l areas that wil l strengthen the capacity o f public service managers including change management training.

Coordination mechanisms have been developed with the full participation and collaboration o f key stakeholders. Continue to maintain the dialogue with the Minister, Attorney General, Chief Justice and PS to confirm their strong leadership in spearheading the reform program. The joint review process o f GOT and DPs wil l provide an avenue to reassess regularly the commitment and progress made in implementing the LSRP. This joint dialogue w i l l also provide the forum to focus on results. An IEC program wil l be in place to educate target organizations and agencies on the objectives o f the Facility, and the modalities o f i ts operation. Conduct IEC campaigns soon after the launch o f the project to create more awareness o f the FEAT. Start working closely with ES now in anticipation o f the launch o f the operation and continue working closely with GGCU to ensure that i t also lends its support to the ES and the FEAT through i t s coordination responsibility.

S

H

M

All o f the ATIP components contribute to strengthening good governance and indirectly curbing corruption by putting in place more transparent systems o f accountability. The PFMRP seeks, among other things, to improve procurement and financial management processes and systems, and support extensive reforms in the justice system. The G G C U i s the main organ o f government to monitor the implementation o f anti-corruption action plans in both central and local governments. Therefore ATP i s addressing accountable and transparent practices directly and indirectly addressing corruption issues.

Bank i s also taking steps to minimize the r i sks o f corruption within the ATIP. The project will support the strengthening o f the auditing (NAO), both external and internal, and procurement agencies. Support to the demand side o f good governance, including strengthening the capacity o f non-state actors, wil l contribute to greater transparency in the use o f project funds. The potential scale-up of the FEAT approach that aims at strengthening the capacity o f OWIs

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provides an avenue to broaden the voice o f non-state actors in requesting an accountable public service. Lastly, financial and procurement management assessments o f the key implementing agencies were conducted with a view to mitigate the r isks against weak fiduciary capacity. Detailed operations manuals including procedures for financial management and procurement are in place for each component o f ATIP. Close supervision and focus o n results semi-annually wi l l provide a regular assessment o f the implementation o f the project.

6. Credit conditions and covenants

Board Condition

None.

Conditions of Effectiveness

Submission o f legal opinion in accordance with the General Conditions.

Conditions of Disbursement

(i) for component 1, signature o f the LSRP MOU, appointment o f the key M J C A staff, and approval by the joint Government/DPs committee o f the respective LSRP annual work plan and budget; for component 2, signature o f a modified PFMRP M O U , and approval by the joint GovernmentDPs committee o f the respective PFMRP annual work plan and budget;

(iii) for components 3 and 4, finalization o f the ES Operational Manual and appointment o f key ES staff; and

(iv) for approval o f FEAT grants exceeding a specified threshold, a prior no-objection by the Bank.

(ii)

D. APPRAISAL SUMMARY 1. Economic and financial analyses

The project wil l have positive economic and fiscal benefits. Implementation o f the legal and judicial reform program wil l result in improvements in the commercial legal environment, improvements in the delivery o f justice particularly in the rural areas and generally observance of the rule o f law. Improvement in the rule o f law wil l support the achievement o f the NACSAP objective o f reducing corruption and improving governance in Tanzania.

Implementation o f public financial management reforms wil l resul t in positive economic and fiscal impacts. There will be significant budgetary benefits after implementation o f the project compared to the current levels o f GOT annual expenditure. The PFMRP has an economic rate of return o f 26.3% at August 2005 prices. This i s significantly higher than the opportunity cost o f capital o f 12%. These fiscal benefits will have a positive impact o n the overall economy.

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2. Technical

The SWAP programs that wil l be supported by the ATP (LSRP and PFMRP) have major elements o f technical capacity development. This development i s crucial for the LSRP where comparatively slow progress, especially compared to other cross-cutting reforms, has been constrained by, among other factors, dearth o f program implementation capacity. Already, some training o f officers from the various concerned MDAs has taken place through a previous IDF grant for the M J C A and more recently the PPF for A T P . Furthermore, GTZ has seconded some program management specialists to the LSRP, and plans are at hand to recruit additional technical expertise to support the program implementation.

With regard to the PFMRP, the more daunting technical challenges, particularly those associated with the application o f I C T to implement an integrated financial management system (IFMS) have been largely overcome in the past several years. The IFMS system has been implemented in Tanzania for the past ten years and has led to significant improvements in treasury management. Indeed Tanzania’s IFMS, even though i t is not yet a fully integrated system i s probably the most successful I C T application in public financial management in Sub-Saharan Africa. In this context, we consider that the design o f these programs has taken aboard any significant technical issues that could constraint the programs implementation.

There are no major technical challenges in the implementation o f components 3 and 4 o f the ATIP. The operations, and financial and procurement manuals describe in detail every procedure and format to be used by the ES in the management o f the FEAT (component 3). The staffs in the ES have the knowledge and sk i l ls needed to make proper use o f these manuals. They already operate the IFMS system for accounting and they use the new GOT procurement regulations and procedures, which are Bank compliant. Further, they wil l receive training o n the manuals and program management, including the administration o f a designated account, before commencing the disbursement o f hnds under this component. As previously indicated (Section C3 above) implementation o f component 4 i s essentially about supporting the G G C U to improve i t s performance in carrying out its,core role and functions. As and when necessary, the funds from ATIP wil l be used to hire consultants, on a short-term basis, to support the G G C U to implement i t s activities. Therefore, the technical issues and challenges for the ATIP are well catered for in the design of each component.

3. Fiduciary

(A) Financial Management

A financial management assessment for the three implementing institutions - MJCA, M o F and ES was carried out. The project’s financial management arrangements satisfy the Wor ld Bank’s minimum requirements under OP/BP10.02. However, some improvements remain to be effected for the system to establish an acceptable control environment and to mitigate financial management risks. The program financial management r isk i s assessed as being modest. The various measures/improvements that need to be made are detailed in Annex 7.

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Major risks that may face the project include:

1.

0

0

0

2.

3 .

Funds m a y not be used in an efficient and economical way and exclusively for purposes intended.

Mit igat ing measures: The program wil l be subject to joint regular implementation review and annual external financial and procurement audit review aimed at closely monitoring both financial and physical performance o f the program. ATP will provide support to the oversight and watchdog institutions for good governance in order to strengthen the public accountability at al l level. Linkage between physical output and financial outcomes wil l be strengthened including M& E functions in the ministry.

Weak internal audit capacity within the ministry to oversee the internal controls systems.

Mitigating measures: Each ministry has established an internal audit unit and audit committee. An internal audit manual has been developed and training conducted to internal auditors, accountants, and Accounting Officers. Although these are now in place, i t s effectiveness i s hindered due to inadequate number and skilled internal auditors.

Lack o f qualified internal auditors and accounting staff in the ministries

Mitigating measure: Recruitment i s underway this FY by the Accountant General office for additional qualified internal auditors and accountants. In addition, significant efforts have been made over the last four years by the Accountant General to improve the capacity o f technical accounting and internal auditing staff. This has been through a range o f in service training courses for al l levels o f staff as well as support for academic and professional qualifications. However the ability o f the government to recruit and retain suitably experienced personnel remains a challenge.

(B) Procurement

The overall procurement r i s k o f the project has been rated high. The key issues and r isks concerning procurement for implementation o f the project have been identified. The assessment has revealed that:

(i) The procurement staff have l i t t le experience in carrying out procurement o f goods and works under International Competitive Bidding (ICB) procedures and selecting o f consultants; procurement filing and record keeping systems are inadequate; the procurement staff lack sk i l ls to prepare procurement plans; the procurement staff at M J C A who are expected to deal with the proposed c i v i l works have no experience with construction and supervision contracts; and inadequate staffing at the ES.

(ii) (iii) (iv)

(v)

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The corrective measures which have been proposed are:

(i)

(ii)

(iii)

(iv) (v)

procurement staff and tender board members to attend workshops and training in procurement o f goods, works; and selection o f consultants; procurement staff to attend data management training and establish acceptable procurement filing and record keeping; the project to hire short term procurement specialists to work and build capacity at the E S and at M J C A for 6 months, with a possibility o f extension i f necessary; the E S to establish a mainstreamed procurement management unit (PMU); and the Government to make available at least one additional procurement officer to enhance the capacity o f PMU.

The risk wil l be monitored during supervision missions and post review missions and validated accordingly.

A new Public Procurement Act was passed by the Parliament in November 2004. The Act is based on recommendations o f 2003 Country Procurement Assessment Report (CPAR) and i t repealed the Public Procurement Act o f 2001. I t i s envisaged that the new Act will improve the existing procurement system.

4. Social

The preparation o f the project has been inclusive, involving a wide range o f stakeholders. In particular, the preparation o f the LSRP and PFMRP included both government officials and representatives o f c iv i l society organizations, professional bodies and academicians. This inclusive approach has raised the expectations o f the stakeholders in the reform outcomes. GOT, through the LSRP and PFMRP program documents, has sought to meet these expectations.

The OW1 component has been informed by consultations with professional and c iv i l society organizations as wel l as by outcomes o f the seminar o n political economy and accountability structures o f Tanzania (September 2005) that involved a number o f stakeholders f rom c iv i l society, academia, professional associations and the GOT.

5. Environment

The project wil l not have any interventions directly related to environmental issues, apart from those that address safeguards below. ATP wil l finance under the LSRP c iv i l works construction costs for completely new buildings; extension o f and rehabilitation o f existing buildings; demolition o f existing buildings and construction o f new buildings for selected high priori ty infrastructure for the judiciary and MJCA. ASPEN has reviewed the project’s safeguards status and categorized i t as B - partial assessment.

An environmental and social management framework and a resettlement pol icy framework have been prepared, reviewed and approved by the government. These have been disclosed in country and the World Bank In fo Shop on February 20,2006. See Annex 10 for details.

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6. Safeguard policies

Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI

Pest Management (OP 4.09) [I [ X I Cultural Property (OPN 1 1.03, being revised as OP 4.11) [ X I

Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [X I

Forests (OP/BP 4.36) [I [ X I

Safety o f Dams (OP/BP 4.37) [I [XI

Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI

Projects on International Waterways (OP/BP/GP 7.50) [I [XI

[ ]

[I

7. Policy Exceptions and Readiness

The project i s not seeking any policy exception. The project i s ready for implementation.

* By supporting the proposedproject, the Bank does not intend to prejudice thej inal determination of the parties' claims on the disputed areas

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Annex 1: Country and Sector or Program Background

TANZANIA: Accountability, Transparency & Integrity Project

1. Background: Major country and sector issues

During the past decade the Government o f Tanzania (GOT) has implemented a comprehensive program o f reforms that has yielded sustained macroeconomic stability, an increasingly liberalized economy, and scope for the private sector to become the main agent o f economic activity. These reforms have created the foundation for accelerated economic growth. Overall economic growth has r isen consistently for the past eight years (except in 2003 due to drought) from 3.3 percent in 1997 to 6.7 percent in 2004, which i s an average annual growth rate o f 5.1 percent. However, poverty s t i l l remains widespread and at an average o f U S $ 330 per capita (Atlas Method), Tanzania remains one o f the poorest countries in the world.

The Government has developed a National Strategy for Growth and Reduction o f Poverty (MKUKUTA)9 that provides an overarching framework for fighting poverty and a framework for resource allocation. I t i s based on three clusters (i) growth and reduction o f income poverty; (ii) improved quality o f l i f e and social well-being; and (iii) good governance and accountability. The strategy’s major focus is shared growth, recognizing that this cannot be achieved without addressing governance issues that are the bedrock o f public sector performance.

The governance and accountability cluster (cluster 3) aims to achieve four broad outcomes: (i) good governance and the rule o f law ensured; (ii) leaders and public servants are accountable to the people through the effective reduction o f corruption and public access to information; (iii) democracy and political and social tolerance are deepened; and (iv) peace, political stability, national unity and social cohesion are cultivated and sustained. T o attain these results, MKUKUTA has seven goals:

Structures and systems o f governance as well as the r u l e o f l aw are democratic, participatory, representative, accountable and inclusive;

Equitable allocation o f public resources with corruption effectively addressed;

Effective public service framework in place to provide the foundation for service delivery improvements and poverty reduction;

Rights o f the poor and vulnerable groups are protected and promoted in the justice system;

Reduction o f political and social exclusion and intolerance;

Improved personal and material security, reduced crime, eliminate sexual abuse and domestic violence; and

National cultural identities enhanced and promoted.

Known by i ts Kiswahili acronym MKUKUTA.

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A T P wil l contribute to the f i rst four goals o f the MKUKUTA. Development partners, including the Bank, have joined forces to support cluster 3 through projects, programs and GBS (see Annex 2).

Before embarking on the M K U K U T A as the central plan for Tanzania’s development, GOT had already put in place in 1999 a National Framework for Good Governance (NFGG). The NFGG guides GOT’S comprehensive reform agenda with a view to improving governance and service delivery thus ensuring better use o f limited resources. To this day, i t remains the platform for the ongoing crosscutting public sector reforms namely public service, local government, public financial management and legal/judicial reforms as well as anti-corruption measures reflected in the NACSAP. The latter, which enshrines the government’s program to fight corruption, provides the framework within which MDAs should be fighting corruption. I t embraces al l crosscutting and sectoral reforms. Moreover i t provides Government (GGCU)” the instrument for monitoring and reporting to the President on progress made to fight corruption.

The WBI governance indicators (below) show that Tanzania has made substantial progress in a number o f areas since 2002. This i s particularly true for government’s effectiveness and the control of corruption. Slight improvements can be noted in voice and accountability and the rule o f law with pol i t ical stability remaining the same. However, the regulatory quality has worsened.

T W A N I A &OM3

lo The GGCU was created in the President’s Office to coordinate the government’s efforts to fight corruption.

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2. The Government Strategic Framework

As described in the NFGG, the Government’s strategic framework for building good governance i s multi-point and comprehensive, focusing on the following:

Participation o f the people in decision-making for social, political and economic development;

Legal and regulatory framework for private sector development;

Constitutionalism, the r u l e o f law, administration o f justice and protection o f human rights;

Gender equity;

Accountability, transparency, and integrity in management o f public affairs;

Electoral democracy; and

Greater public service capabilities to deliver services efficiently and effectively.

This holistic approach reflects the appreciation that achieving good governance at the national level entails a broad spectrum o f strategic measures that cover central and local governments, the private sector and the c iv i l society and their inter-linkages, as reflected in the diagram below. In that context, Government has formulated specific strategies and programs, such as has been done with the NACSAP, LSRP, PSRP and PFMRP, without loosing sight that these programs are complementary and need to work together to achieve better governance and control o f corruption.

The former Chief Secretary and Head o f the Public Service states in the foreword to the NFGG: “The Government o f Tanzania has given governance issues the highest priori ty in recent years as it i s aware that the continuing development problems in the country could be associated with difficulties o f management in the public sector that are reflected in financial mismanagement, corruption, l ow level service provision, tax evasion and unnecessary bureaucratic procedures”. In his maiden speech to Parliament in December 2005, President Jakaya Kikwete identified good governance as one o f the ten core issues for h i s government. H e promised that “The fourth phase government will fulfill i t s governance and development responsibilities and will focus on good governance and accountability, the ru le o f law and respect for the human rights o f a l l people.” This perspective i s underpinned by a broad view that: (i) governance encompasses political, economic, administrative/managerial and social dimensions, and (ii) a participatory approach i s imperative considering the close correlation between development and good governance. This partnership o f the central government, local governments, private sector and c iv i l society i s illustrated in Figure 1 below.

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Figure 1 : Partnership for Good Governance

1. CENTRAL GOVEKNMENT (Executive,

Judiciarv

4. PRIVATE SECTOR

(and i t s organizations) its agtncies)

3 . c1v-11, SOCIETY

Source: GOT, The National Framework on Good Governance, December 1999

Based on the NACSAP, a set o f high priority issues were identified under the fol lowing

inefficient and ineffective public service delivery;

corruption;

weak legal and judicial system;

gaps in procedures and controls for public expenditure management and more broadly financial accountability;

poor management o f information including records and data; and

weak oversight and watchdog institutions.

Inefficient/irzeffective public service delivery and lack of accountability of public service institutions

Since the mid 1990s GOT with the help o f DPs;has been supporting public service reforms under the PSRP. The development objective o f the PSRP, supported by an IDA credit (3300-TA) i s to improve efficiency and effectiveness o f public service delivery o f the Government's economic and social programs on a continuous and sustainable basis through institutional reforms and capacity development measures. This is aimed at improving the capacity and performance o f the public service and the ability o f the public service to recruit and retain qualified professionals.

- 4 1 -

Government, with support o f the Bank and other DPs, has been addressing problems o f poor service delivery through various projects, program and GBS for the development o f specific sectors (education, health, water, agriculture, roads, urban infrastructure, etc.), and cross-cutting reform programs for public service, public finance, and local government. The decentralization and LGRP, launched in 1997 and supported by several DPs, including the Bank through LGSP, i s geared to enhance efficiency, effectiveness, transparency and accountability in the delivery o f basic social services through devolution o f planning and decision-making authority and resources from the central government to local governments.

Corruption

In 1999, the GOT recognizing that corruption in the public and private sectors had reached very high proportions adopted a NACSAP. The current NACSAP, which has been implemented from 2000 and came to an end in 2005. The new NACSAP wil l have the same thrust. The major causes o f corruption were identified to include: (i) greed and abuse o f power; (ii) poor discipline; (iii) deficiencies in management systems, procedures and controls; (iv) weak legal and judicial systems; (v) weak oversight and watchdog institutions (among these, the ES, the PCB, the NAO, Parliament and the media); and (vi) low public awareness.

The NACSAP i s coherent and holistic. I t i s underpinned by the principles o f zero-tolerance, the commitment o f political leaders, prevention, public awareness and institution building. I t s seven priority areas are:

The r u l e o f law and legal framework: This component aims to facilitate the review o f sectoral laws and creation o f conditions necessary for restoration o f confidence in the judiciary and law enforcement agencies;

Financial discipline and management: The objective includes curbing misuse, waste and loss o f Government resources;

Procurement: The aim i s to ensure strict adherence to efficient and transparent administration o f tendering and procuring goods and services to realize value for money;

Public education, awareness and sensitization o f their rights: The strategy involves developing and implementing I E C programs that create awareness o f how corruption harms the economy, and ultimately undermines the fabric and values o f society;

Public service reform: This will target the transformation o f public service officers to accountable servants o f the public;

Whistle blowers and witness protection: The aim i s to launch a campaign to encourage citizens to volunteer information on corrupt practices to enforcement agencies and to protect them from victimization by the corrupt; and

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(vii) The mass media: The media wil l be encouraged and supported to report corruption incidences and elements without fear or favor, and to publicize the harm o f corruption to the innocent, the poor and the weak in Tanzania.

The new President has pledged to “accelerate the war on corruption in a more scientific way and by addressing i ts root causes”.

Weak legal and judicial system

Upholding the r u l e o f law through the efficient, fair and transparent administration o f justice i s the basis for the promotion and maintenance o f social peace and stability o f the state. I t i s also crucial in ensuring an enabling environment for development generally and to attract private sector investment. The quality o f legal and judicial services remains low. This i s reflected by: (a) inordinate delays in resolving disputes and dispensing justice; (b) very l imi ted access to legal services for the majority o f citizens particularly the poor and uninformed; (c) corruption and other unethical conduct of officers in the legal system; (d) a legal system that i s not responsive to social, political, economic, technological changes, and to long-running financial constraints; and (e) limited public trust in the legal and judicial system.

The problems and constraints underlying the weakness o f the legal and judicial system have been identified by stakeholders as: (i) a fragmented, excessively bureaucratic, cumbersome and outdated legal and regulatory framework; (ii) weak management and coordination o f legal/judicial institutions; (iii) low competence, morale and integrity o f some public sector legal personnel; (iv) inadequate numbers o f professionally-trained legal personnel; (v) constrained independence and low integrity o f the legal system; and (vi) poorly furnished, equipped and maintained work environment o f public sector legal institutions.

Government has over the past years developed a comprehensive LSRP to tackle the problems mentioned above. The key features o f the Medium-Term Strategy and Act ion Plan (2005-2008 for this program include:

Government’s commitment to enhanced funding o f the Judiciary and other public legal sector institutions;

Emphasis on relatively low-cost and early impact interventions;

Strong inter-agency collaboration as a crucial element to the overall successful implementation o f the program;

Strategic planning by legal sector institutions; and

A program that complements and l inks with such other public sector reforms as the PSRP, LGRP and the NACSAP and also with private sector development programs such as BEST.

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Gaps in procedures and controls for public expenditure management and more broadly for f in an cia1 accountability

Government has, over the past decade, persistently endeavored to improve i t s systems and practice o f public expenditure management. With regard to budget management, the imposition o f a strict cash control budget has secured aggregate control over total public expenditure, consistent with revenue raising capacity and borrowing constraints. As a result, Tanzania enjoys macroeconomic stability and fiscal deficits that have remained within set targets in recent years. At the same time, budget reform through PERs, implementation o f a MTEF and introduction o f performance budgeting (linked to a public service improvement strategy under the PSRF’) are underway. These latter initiatives aim at allocative and operational efficiencies o f the Government’s expenditure programs.

In accounting for public expenditures, the central thrust o f the reform has been the implementation o f a transparent computerized IFMS in al l ministries. I t i s currently being rolled out to agencies and districts. In this, Tanzania i s a pace setter in sub-Saharan Africa. Nevertheless, the procedures and controls for public expenditure management are s t i l l conspicuously weak in the following three important areas:

(i) Procurement. There has been weak public procurement statutory controls, regulations and procedures over the years. Consequently, as well elaborated in the report o f the Presidential Commission o f Enquiry against Corruption (1 996)”, there have been serious concerns about corruption and waste in the procurement o f goods and services by some public officers. President Kikwete has promised to “look again at our systems and processes o f contract making, contract enforcement and tendering in the government and other public offices, in order to increase transparency and accountability”. Public procurement reform initiatives have been underway but much remains to be done. However, it acknowledges GOT’S concern that “public procurement i s st i l l weak and needs to be strengthened substantially”’2. In this respect, progress has been made to correct deficiencies in the regulatory regime, but tackling capacity and organization culture issues remain key challenges.

The NACSAP emphasizes the need for procurement reforms. As result, the Public Procurement Act passed in 2004 provides for establishment o f a regulative framework and decentralization o f procurement fimctions to MDAs . To date, regulations accompanying the implementation o f the A c t have been passed and measures are being taken to implement them in al l MDAs. They need to be enforced more vigorously by the regulatory authority to improve compliance. This i s a core area being targeted by the PFMRF’ for which the Bank’s expertise i s being sought.

*’ Better known as the Warioba Report ” Tanzania: Country Procurement Assessment Report, GoTNorld Bank, (2003)

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(ii) Internal Audit. An effectively performing internal audit function supports and reinforces the internal controls for safeguarding proper custody, use and accounting for the resources o f any organization. While the GOT has had an Internal Audit Department in the M o F and other ministries, the function has never been effectively carried out. Three main factors explained this situation. First, the task i s poorly staffed in terms o f both quality and numbers o f personnel. Secondly, and probably the most important, there was limited demand for regular internal audit reports by public service managers. The PFMRP also seeks to improve the internal audit function in the public service.

(iii) Mandate and Capacity ofthe NAO. The N A O is established in the Constitution to promote and safeguard financial accountability in the custody and use o f public resources. The Exchequer and Audit Act o f Parliament requires the C A G to cert i fy that: all revenues due are collected and deposited into a consolidated fund; a l l monies are drawn out o f the consolidated fund on the basis o f specific provisions in the Constitution or as appropriated by an Ac t o f Parliament; the monies disbursed have been applied to the purpose for which they were appropriated; and there has been compliance with the prescribed financial rules, procedures and regulations. In all these respects, the capacity and performance o f the N A O have remarkably improved in recent years. This has been made possible by the technical assistance received from a number o f DPs.

However, the performance o f the N A O i s s t i l l significantly constrained in three important respects. Firstly, the mandate o f the office has traditionally provided for the restricted function o f checking compliance and did not allow for VFM audits, which considerably reduces the value o f the function. Secondly, until three years ago, while the C A G has been constitutionally empowered to make independent decisions and report directly to Parliament, the office i s denied independence o f operation because i t whol ly depends on the M o F (i ts primary auditees) for hnding and PO-PSM for staff appointments and compensation. Thirdly, in part as a consequence o f the second, the office has a limited number o f skilled personnel to carry out i t s audits efficiently, effectively and on time.

Government has acknowledged the need to address these constraints in the PFMRP and NFGG. The latter states that to improve financial accountability as well as control o f VFM in government spending, there has to be an effective external audit capacity. Also, Government has through the Public Finance Act changed the Exchequer and Audit Ordinance and granted the NAO operational autonomy and given it a mandate to carry out VFM audits. SIDA and DFID have been supporting capacity development o f the NAO. President Kikwete has recently underscored the urgent need to act o n NAO’s annual reports and call to account a l l those identified as having flouted procedures or the law.

Weak 0 WIs

Historically, compared to other countries in Africa, Tanzania has led the way in establishing oversight institutions for good governance. In 1995, the country set an example by introducing a leadership code o f ethics, and establishing an ES (ES) whose executive officer i s a Judge o f the

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High Court. These institutions were additional to the more conventional ones, i.e., the DPP, the NAO, Parliament and i t s committees. Yet, in spite o f this multiplicity o f institutions, the country continues to face serious governance problems. These oversight institutions have been and remain weak.

These weaknesses are the common woes o f other public institutions in Tanzania and elsewhere in Africa, e.g., under funding o f operations, poor salaries and incentives resulting inability to recruit and retain well qualified officers, overlapping mandates that give rise to conflicts, lack o f collaboration and coordination o f the institutions, and a weak legal framework. Hence, the GOT’S programs for good governance, and particularly those for anti-corruption and legal sector reform specifically target to rationalize the mandates and functions o f these institutions, strengthen their capacities and improve coordination o f their operations. These problems have been highlighted in a series o f recent studies: the Bank’s political economy study, DFID’s Drivers o f Change and SIDA’s power analysis. I t particularly stressed that Tanzania has a strong executive but weak legislative and judiciary branches. This coupled with l o w participation o f non-state actors contributes to l i t t le demand for accountability f i om public institutions.

GOT has recognized that in pursuit o f good governance, i t i s not enough to strengthen only public sector institutions. In the NFGG, GOT states that c iv i l society institutions (Le. NGOs, CSOs, religious societies, trade unions, charities, clubs, cultural groups, sports associations, special interest groups, professional associations, academic and research institutions, etc.) constitute a strong instrument for the effective participation and involvement o f the people in decision- making, and social, political and economic development activities. In addition, c iv i l society organizations have a crucial role in informing and sensitizing the people, and thereby strengthening public demand for accountability by leaders and services providers.

The NFGG also recognizes that c iv i l society organizations in the country have considerable capacity weaknesses, in areas o f problem analysis, advocacy, outreach, networking, management, revenue raising, accountability and responsiveness. Key factors that underlie the weaknesses in the c iv i l society organizations include a reform focus o n the supply side o f the accountability equation, Le., getting the state side Yo be accountable to the public”. However, this approach can work only as long as i t continues to be reinforced by the (external) DPs o f the accountability programs. Continued accountability o f state institutions in the long run will require strengthening the institutions that represent the demand side o f the same equation, Le., c iv i l society and, the media organizations. These conclusions imply the need for more innovate and inclusive DP-supported approaches to strengthening institutions for good governance. The Tanzania Foundation for C iv i l Society provides capacity building support to CSOs to enable them engage effectively in accountable governance activities. The foundation i s funded by several DPs, and has recently launched a strategic plan that outlines i t s key activities for 2005 - 2008.

A recent seminar on “The political economy and accountability structures o f T a n ~ a n i a ” ’ ~ concluded on the need to address public sector reforms together with opening up space for more accountable governance within society as reflected in the figure below. These two dimensions

l3 September 2005.

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show how the balance between improving technical management needs to be balanced with more checks and balances from OWIs including non-state actors.

Technical & Managerial Competencies

Multi-Year Financial Planning

Value for Money Auditing

Improved Accounting

Budget Formulation

Budget Execution

" Democratic Checks; Debate

Source: A Lawson. Tanzania Accountablllty Study, 2005

The issues that have been raised in the NFGG and the NACSAP have been central to the dialogue between DPs and the GOT in the context o f the Poverty Reduction Support CreditBudget Support and in other pol icy forums. They are also at the heart o f cluster 3 o f the M K U K U T A . There has been consensus in recent years on the need for comprehensiveness and the financing modality to pursue these reforms that wil l contribute to achieving the results o f the M K U K U T A and the NFGG.

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Sector Issue

Legal and regulatory constraints

Fiscal decentralization, use o f government resources, improved management Banking restructuring, infrastructure & ut i l i t ies regulation Improved functioning and capacity building o f the public service Improved legal framework & administrative infrastructure

I Sector Issue

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

TANZANIA: Accountability, Transparency & Integrity Project

Latest Supervision

(Bank-financed projects only) Ongoing Projects (PSR) Ratings

Implementation Development

N o t yet rated

Progress (IP) Objective (DO)

N o t yet rated Private Sector Competitiveness

Local Government Support S S

S S Privatization & Private Sector Development

Public Service Reform Program

Tax Administration

S S

S S

Completed Projects OED Ratings

Lega1 and judicia' system and gaps in procedures and

I I Outcome 1 Sustainability I I D Impact I FILMUP (not rated by OED) d a n/a nfa

controls for public expenditure management Procedures and controls for public expenditure management

nfa d a n/a Poverty Reduction Support Credit (not rated by OED)

Related Projects/Programs Funded by Other Agencies and the Bank in support o f MKUKUTA Cluster 3 Goals

I MKUKUTA Goals I Government Program I Development Partner14 I World

1. Structures and systems o f governance as well as the rule o f l aw are democratic, participatory, representative, accountable and inclusive.

National Anti-Corruption Strategy and Act ion Plan (NACSAP)

Local Government Support Program (LGSP)

NACSAP: SIDA, Finland, Norway, Denmark, UNDP

Bank LGSP ATP (proposed) PSCP T A S A F

I I I I

l4 Excludes General Budget Support donors.

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MKUKUTA Goals

2. Equitable allocation o f public resources with corruption effectively addressed.

3. Effective publ ic service framework in place to provide foundation for service delivery improvements and poverty reduction.

4. Rights o f the poor and vulnerable groups are protected and promoted in the justice system.

5 , Reduction o f polit ical and social exclusion and intolerance.

6. Improved personal and material security, reduced crime, eliminate sexual abuse and domestic violence.

7 . National cultural identities enhanced and promoted.

Government Program

Local Government Reform Program (LGRP)

Public Financial Management Reform Program (PFMRP)

NACSAP

Public Service Reform Program (PSRP)

Local Government Support Program (LGSP)

Local Government Reform Prom-am (LGRP) Legal Sector Reform Program (LSRP)

Business Environment Strengthening in Tanzania program (BEST)

Tanzania Foundation for C iv i l Society (TFCS)

Legal Sector Reform Program ( L S W

Tanzania Cultural Trust Fund (TCTF)

Development Partner14

LGRPLGSP SIDA(Sweden), DFID, Canada, GTZ, Finland, UNDP, EC PFMRP: SIDA(Sweden): IFMAP” ,NA016, DFID, CIDA, EC, Norway, Denmark, Switzerland, Japan

NACSAP: Finland, UNDP PSRP: DFID, Denmark

LGRPLGSP: SIDA(Sweden), DFID, Canada, GTZ, Finland, UNDP, EC

LSRP: SIDA, Denmark, Federal Republic o f Germany, UNDP

BEST: DFID, Denmark, SIDA, Netherlands

TFCS: DFID, Ireland, Netherlands, Switzerland, France

Legal and Human Rights Center: S I D A LSRP: SIDA, Denmark, Federal Republic o f Germany, U N D P

TCTF: SIDA

World Bank

TASAF ATP (proposed)

LGSP PSRP TASAF T A P

ATP (proposed) TASAF PSCP

Integrated Financial Management and Accoun tab i l i t y Programme covers PFMRP comp. 4 l6 Supported together with Swedish NAO and covers PFMRP component 10

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Annex 3: Results Framework and Monitoring

TANZANIA: Accountability, Transparency & Integrity Project

Results Framework

Improved access to justice by the public and especially the poor

Accountable and transparent use of publ ic services

LSRP

A harmonized legal national framework established

Qualified primary court magistrates trained to serve in primary courts

Project Outcom

Percentage o f court cases outstanding for two years or more

Percentage o f MDAs with clean value for money audit in NAO report presented to Parliament

Increased number o f participating OWIs that use evidence based reports in dialogue and oversight role

Increased number o f participating professional associations actively promoting ethical conduct amongst members

Intermediate Outcome Indicators

Average t ime taken to resolve court cases

Increased number o f qualif ied magistrates in primary courts

Decline in percentage o f court cases outstanding contributes to achievement o f the MKUKUTA goals o n g o o d governance and the rule o f l a w ensured.

Increase in value for money audits in the publ ic sector improves effectiveness o f publ ic spending and improves accountability. Submission o f NAO report t o Parliament improves transparency and. contributes to achievement o f MKUKUTA goal: Public resources are allocated, accessible and used in an equitable, accountable and transparent manner.

Increase in the number o f O W I s using evidence based report in dialogue and oversight role improves dialogue with GOT and improved domestic accountability in Tanzania.

Increased number o f professional associations actively participating and promot ing ethical conduct increases the ethical standards in

Decline in average t ime taken to resolve court cases leads to decline in back log o f pending court cases.

M o n i t o r improvement in delivery of j ud i c ia l services in the primary courts contr ibuting to decline in back log o f cases and improvements in l a w and order.

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L a w graduates t ra ined in practical sk i l l s t o serve in lega l and judicial institutions

PFMRP

Implementation o f budget in line with approved budget

Procurement units established in MDAs and LGAs

Increased capacity o f N A O to undertake value for money audits

ow1

OWIs generate qual i ty and relevant reports o n performance o f the GOT

Ethical standards and self regulatory mechanisms in place in professional associations

Increased number o f qualified l aw graduates employed in the judiciary and M J C A

Expenditure outturn as percentage o f approved budget

Percentage o f procurement units established and operational in M D A s and LGAs

Percentage o f N A O staff able to undertake value for money audits

Number o f evidence based and relevant reports by participating OWIs o n GOT performance in key reform programs.

Percentage o f participating professional associations actively regulating ethical standards and practice o f members

Monitor improvement in quality and lumbers o f staff in legal and jud ic ia l .nstitutions contributing to increased lel ivery o f legal and jud ic ia l ;emices .

Monitor effectiveness o f the budget in achieving po l i cy objectives and -0ntributing t o effective resource use in the publ ic sector.

To monitor quality o f publ ic procurement processes and to improve accountability in procurement processes and decisions

To monitor qual i ty o f publ ic financial management in MDAs and LGA and t o improve accountability for publ ic funds.

To monitor qual i ty and effectiveness in performing oversight functions.

T o monitor capacity building in ethics for professional association members thereby contributing to increased ethics environment.

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Annex 4: Detailed Project Description

TANZANIA: Accountability, Transparency & Integrity Project

ATIP wil l have four components, (a) Strengthening the legal and judicial system; (b); Enhancing public financial accountability; (c) Strengthening OWIs; and (d) Project coordination. The total cost o f the ATP i s U S $ 145.6 million, o f which IDA through ATIP wil l provide US$40 million, while the rest wil l be funded by GOT and other development partners. These project components are described below.

Component 1: Strengthening the legal and judicial system - $71.3 million (of which US$24.8 million will be funded by IDA)

Component 1 has six sub-components or key result areas:

(i) (ii) (iii) (iv) (v) (vi)

Establishment o f a harmonized national legal framework; Increased access to justice for the poor and the disadvantaged; Improved governance and administrative justice; Improved ski l ls and knowledge o f legal professionals; Improved service delivery capacity in key legal sector institutions; and Program management, coordination and M&E.

Each o f the above key result areas i s a component o f the GOT’S LSRP.

Sub-component 1: Establishment of a harmonized national legal framework - US$ 5.7 million

GOT i s adopting a comprehensive approach to harmonizing the national legal framework by amending key legislation, streamlining processes and improving capacity for legal research, drafting and law reform. The key outcomes are described below:

(i) Improved legal environment for enhanced social justice and safety and economic development. The LSRP seeks to harmonize the country’s legal framework by creating linkages among sectors governed by similar legal frameworks. This wil l ensure that al l reform programs include a review, update, harmonization and alignment o f the respective regulatory frameworks. The harmonization o f commercial laws i s financed under the Business Environment Strengthening in Tanzania (BEST) program. BEST i s a five-year private sector development program funded by SIDA, Netherlands, DFID, Denmark and the IDA (through the Private Sector Competitiveness Project). The LSRP will implement a comprehensive approach to update and harmonize the legal framework in two important respects. First, the need for a legal framework enhancing social justice, public safety, and economic development, and enhanced independence for legal and judicial institutions has been given prominence. A key aspect o f this covers the activities being carried out under the BEST program which include:

a. Business Registration Reform. Review and revision o f the business registration legal, pol icy and institutional framework.

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b. Land Reform. Implementation o f selected short and medium term activities for the development o f efficient land registration and administration services identified under the GOT’S strategic plan for implementation o f land laws, including capacity development for district land and housing tribunals to facilitate the resolution o f land disputes.

c. Commercial Law and Justice Reform. (a) Review, modernization and dissemination o f selected commercial laws and regulations; (b) Development and training programs on commercial law and dispute resolution for legal professionals in private, public and judicial practice; (c) Provision o f expertise to support priority court system reform measures, including the revision o f the C iv i l Procedure Code and other related legislation; establishment and operation o f online legal databases; development o f information technologies; upgrading the sk i l l s o f law librarians; streamlining o f case law reporting; provision o f training to magistrates and court staff and improvement o f court registry systems; and (d) Training o f private companies in corporate governance standards and conduct.

d. Labor Law Reform. Revision o f the legal framework governing the labor market, including capacity development to concerned MDAs.

In addition, the LSRP will harmonize laws impeding accessible justice to the poor and the disadvantaged such as women, children and disabled persons. Key legislation wil l be identified, prioritized and reviewed through a consultative process.

The key activities to be implemented under this sub component are as follows:

Sub-comDonent 1 : Establishment o f a harmonized national legal framework Target outcomes 1. Improved Legal Environment for enhanced social justice and safety and economic development.

2. Strengthened capacity for legal research and Studies1 Review on the National Legal Framework.

Key outputs 1.1 Priori ty legislations enabling growth o f business sector in Tanzania defined, updated and harmonized. 1.2 Laws impeding justice to the disadvantaged groups (gendermuman Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIVIAIDS)) identif ied and action p lan defined and amended. 2.1 Implementation o f Phase I1 and I11 o f the capacity building project for the L a w Reform Commission. 2.2 Measures for strengthening legislation processing capacity designed and implemented.

Implementation o f this sub-component wil l contribute to removing overlapping mandates. I t wil l seek to enhance the independence and autonomy o f legal and judicial institutions, speed up disposition o f commercial and other disputes and improve the business environment thus contributing to equitable opportunity to participate in economic activities.

Sub-component 2: Increased access to justice for the poor and disadvantaged - US$ 8.3 million

GOT recognizes the existing measures for enhancing accessibility to justice for the poor and the disadvantaged that are being implemented by voluntary groups and NGOs. These initiatives need to be properly promoted, coordinated and managed. Linkages between the LSRP and the LGRP to support ward tribunals and construction and maintenance o f primary courts based on

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the outcomes o f the pi lot scheme in Arusha and Manyara Regions are envisaged. They wil l enhance accessibility to justice at this level and would serve the majority in the rural areas.

The reform program wil l improve access to justice particularly for the poor and disadvantaged by establishing a case flow management system for primary courts, putting in clear guidelines for handling special cases; promoting the development o f legal aid centers and paralegals; translating legal information into Kiswahili; and developing o f the primary court system infrastructure (rehabilitation and construction).

In this context, the key results to be achieved under this component include:

(i)

(ii)

(iii)

Improved access to justice for disadvantaged persons. The LSRP will improve existing systems for managing cases at primary and district courts through establishing case f low management committees at primary courts and strengthening existing ones at higher levels. Within this context, the program wil l establish guidelines for handling special cases for disadvantaged groups. Through the LSRP judic ia l personnel and justice administrators wil l be trained on speedy dispensation of justice.

Enhanced legal aid for disadvantaged and poor persons and dissemination o f legal information. The LSRP will support the design and implementation o f a well regulated and managed program to monitor and promote expansion o f the legal aid network for legal aid institutions. The objective wil l be to ensure an expanded legal aid network that covers a large part o f the rural areas and provides access to the disadvantaged and the poor. This includes translation and printing o f priori ty basic statutes and legal information in Braille and Kiswahili.

Improved access to justice in the rural areas. Under the Quick Start Project the participation o f LGAs and local communities in improving judiciary infrastructure for enhanced access and quality justice in the rural areas was piloted. 'Under the LSRP links with LGAs to support effective maintenance o f judiciary infrastructure will be enhanced.

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The key activities to be implemented under this sub component are as follow^'^:

Sub-component 2: Access to Target outcomes 1. Improved access to justice for disadvantaged.

~

2. Enhanced legal ID and dissemination o f legal information.

3 . Improved access to justice in the rural areas.

~~

ustice for the poor and disadvantaged Key outputs 1.1 Guidelines for handling o f cases o f disadvantaged groups for all justice administrators issued. 1.2 Justice administrators trained on speedy dispensation o f justice for the poor and unrepresented. 1.3 Case flow management committees for primary courts established and reactivated at the district courts and higher levels. 1.4 Case flow management committees reporting capacities strengthened. 1.5 Streamlined case flow management system implemented. 2.1 Efficacy for establishing the Legal Aid Literacy Network assessed. Legal, information, education and communication packages for legal literacy groups developed and disseminated. 2.2 Equipped and staffed legal aid secretariat. 2.3 Legal aid groups and centers at ward, district and regional level established. 2.4 Code o f conduct for members of the legal aid network and procedures for legal aidiliteracy issued and disseminated through publications and seminars. 2.5 Five trained paralegals for each district. 2.6 Legal aid literacy fund launched. 2.7 Nature and scope o f work done by NGOs in training paralegals and dissemination of legal information profiled. 2.8 Training program and training manuals and modules for paralegals designed. 2.9 Training fund for grants to NGO’s for paralegal training established. 2.10 Training o f paralegals at the Ward, District and Regional levels. 2.1 1 Publication of paralegal training and activities through the media. 2.12 Basic statutes and legal information translated, printed in Swahili and Braille form and disseminated. 3.1 Program o f assistance for enhancing efficiency of ward tribunals in administering justice designed. 3.2 Measures for enhancing efficiency o f ward tribunals in administration of justice implemented. 3.3 Working tools for ward tribunals provided. 3.4 Trained ward tribunal members and secretaries. 3.5 Community based mechanism for continuous support to the lower courts in Arusha and Manyara Region. 3.6 Selected priority primary courts rehabilitated /constructed/equipped.

Sub-component 3: Improved governance and administrative justice - US$7.9 million

The LSRP wil l support implementation o f the NACSAP in i t s fight against corruption specifically in legal and judicial institutions by enhancing transparency in the administration o f justice through the following interventions:

Enhanced good governance in legayjudicial institutions. The program wil l support implementation o f the institutional strengthening strategies spelled out in the NACSAP. These include: (a) promoting practical use o f client service charters in service delivery in legal and judicial institutions; (b) simplifying service delivery procedures; (c) undertaking awareness programs for the general public in collaboration with the reform program information education and communication unit; and (d) creating a mechanism for lodging complaints against misuse o f power or unethical conduct by legal institution personnel.

” LSRP activities related to criminal just ice (police, prisons, prosecution, juvenile cases) and human rights are omitted as ATIP w i l l not finance them.

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(ii) Coordinated and organized administrative justice system. The program wil l develop a basic set o f procedures for administrative tribunals including ward tribunals; identify priority needs for enhancing timely justice by administrative tribunals with a view to promote effective decision-making and establishing a monitoring mechanism for the administrative justice system. This will include assessing the efficacy for establishing an administrative appellate body.

The key activities to be implemented under this sub-component are as follows:

I Sub-component 3: Improved governance and administrative justice Target outcomes 1. Enhanced good governance in the legal and jud ic ia l institutions.

2. Coordinated and organized administrative justice system

Key outputs 1.1 Procedures for legal and judicial institutions simplified translated into SwahiliBraille languages and disseminated. 1.2 Guidelines for lodging complaints against misuse of powers and un-ethical conducts by legal sector institution personnel in place. 1.3 Client service charters aligned with simplified procedures. 1.4 Revised client service charters printed and distributed. 2.1 prepared. 2.2 Program o f capacity development for administrative tribunals implemented. 2.3 Program review o f assistance for capacity building for administrative tribunals undertaken.

Basic set of procedures and guidelines for administrative tribunal operations

The LSRP will finance the design and implementation o f a computerized complaints management system and implementation o f client service charters for legal and judicial institutions. Funding will also be provided for the establishment o f an information, education and communication (IEC) program.

Implementation o f this sub-component will result in reduced incidence o f corrupt practices in legal and judicial institutions as reported in the NACSAP quarterly reports; improved quality and relevance o f resolutions o f administrative tribunals; and ethical conduct by legal and judicial personnel.

Sub-component 4: Improved skills and knowledge of legal professionals - US$ 7.8 million

The LSRP wil l improve the quality o f legal and judicial services in line with the needs o f a growing market economy by enhancing knowledge and sk i l ls o f legal professionals. The program wil l support improvements in legal training institutions, including establishing an effective practical training program for law graduates together with strengthening the capacity o f the C L E to effectively regulate legal training and practice in Tanzania. In addition, the program wil l support the creation o f an effective mechanism for continuing legal education for practicing lawyers and other staff in the legal/judicial institutions. The outcomes wil l be:

(i) Quality legal training by legal education and training institutions delivered. The program wil l enhance the effectiveness o f the Council o f Legal Education in controlling the quality o f legal training and education in the country by: (a) establishing a full-time secretariat, independent from the Judiciary, supported by necessary technical, human and financial resources; (b) designing national curricula for legal training institutions to improve the quality o f legal training for al l requisite

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qualifications; and (c) designing and implementing specialized training programs for legal and judiciary support staff.

(ii) Improved practical skills training for law graduates. The program wi l l support the establishment o f a law school, initially using temporary premises under the auspices o f the CLE and thereafter constructing permanent premises for the law school. The school wil l provide a structured practical training program to law graduates from both public and private universities leading to bar examinations. The program will also assess the feasibility o f creating two distinct categories o f legal practitioners, namely, advocates and solicitors, to cope with the diversified demands for legal services in the country. The LSRP wil l fund the construction and equipping o f the law school and training o f staff in specialized areas.

(iii) Improved capacity to offer continuing education programs. The program wil l strengthen the capacity for legal training institutions to provide continuing legal education for professional and non-professional staff. U s e wi l l be made o f the results o f a training needs assessment that has been conducted in the Faculties o f L a w o f the University o f Dar es Salaam, University o f Mzumbe, the Open University o f Tanzania, and the Institute o f Judicial Administration (IJA) in Lushoto.

The key activities that wil l be implemented under this sub-component are as follows:

ised curriculum and syllabi for each legal training institution. y academic staff trained in specialized legal areas. timum levels o f operations determined and action plan for each training

The LSRP wil l finance the establishment o f the secretariat for continuing legal education. In addition, the law school wi l l be constructed and equipped. I t s legal academic staff wil l be trained in specialized areas. Prior to undertaking this activity, government would have to demonstrate that it has budgeted for staff and associated operations and maintenance costs related to establishing the law school.

As a result there would be an increased number and quality o f law graduates, diversified legal services available to meet the needs o f the people, increased number o f qualified primary court magistrates and continuous quality improvements in the legal profession.

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Sub-component 5: Improved service delivery capacity in key legal institutions - U S $ 38.2 million

The objective o f this sub-component i s to develop capacity to provide quality services by enhancing management and coordination o f legal and judiciary, enhancing competence, motivation and integrity o f personnel and improving their work environment.

(i) Improved organization and support services for effective service delivery. The LSRP in collaboration with the BEST program wil l promote specialization in the court system by expanding the commercial division o f the High Court, the Government-funded Land Court division and improving the legal registries. This KRA also provides for the installation o f an integrated management information system to promote effective communication and management o f legal and judicial institutions.

(ii) Enhanced competence, motivation and integrity of personnel. The program in collaboration with PO-PSM will support institutionalization o f a meritocratic system for personnel management including staff training related to performance criteria and career development plans. In addition, support wil l be provided to assess means to attract, retain and motivate legal and judicial staff. Recommendations on appropriate incentives to address this particular problem would be made to PO-PSM.

(iii) Improved working environment. The program wil l support improvements in the law libraries through retooling and supporting the publication o f Tanzania Law Reports and preparation o f case digests. The program wil l support improvements in office accommodation through construction and equipping o f a new Court o f Appeal building, rehabilitation or construction o f priority zonal high court centers, resident magistrates’, district and primary courts infrastructure. Appropriate strategies for improving office accommodation facilities at the Zonal Chambers o f the Attorney- General wil l be developed. In collaboration with the BEST program, the program wil l expand Business Registration and Licensing Agency (BRELA) services to the regional level.

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The key activities to be implemented under this sub-component include:

Target outcomes 1. Improved organization and support services for effective service delivery.

and integrity o f personnel.

3. Improved Working Environment.

Key outputs 1.1 Integrated Management Information System for legal and judicial institutions operationalized. 1.2 Measures for strengthening administrative support systems implemented. 1.3 Measures for strengthening supervision and division of work in sector institutions implemented. 1.4 Measures for strengthening revenue retention schemes implemented. 2.1 Meritocratic personnel management system for legal and judicial institutions established. 2.2 Qualified and competent personnel recruited. 2.3 New remuneration package for legal and judicial institutions applied. 2.4 Legal and judicial personnel trained in specialized skills. 2.6 Framework for securing accommodation and transport for magistrates and state attorneys. 3.1 Action plan for modernizing and equipping law libraries prepared and implemented. 3.2 Mechanism for continuous updating o f Law Reports, Case Digest and revised laws reactivated. \

3.3 T h e Court o f Appeal and other priority judiciary infrastructure constructed and equipped. 3.4 Office space and equipments requirements for zonal offices o f AGC specified. 3.5 Office scheme for zonal Attorney General’s offices approved and implemented. 3.6 Action plan for alterations or rehabilitations or construction and equipping offices of the Legal Registries prepared and implemented. 3.7 Equipped, furnished and constructed rehabilitated Offices for the Legal Registries.

Sub-component 6: Project coordination (US$3.4 million)

The objective o f this sub-component i s to promote cohesion, collaboration and coordination to attain effective and efficient implementation o f the Medium Term Strategy. I t aims at achieving the following key outcomes:

(0

(ii)

(iii)

Effective implementation of reforms by legal and judicial institutions. The program wil l support the development o f staff skills, knowledge and provide the necessary toolshystems in the LSRP implementing institutions to enable them to strengthen their capacity for implementation. These institutions wil l also be helped to develop their strategic plans and annual work plans and budgets with a view to incorporating objectives o f the LSRP in these plans and budget. Activities will aim at developing their capacity for strategic planning.

Effective management, coordination, monitoring and evaluation. The program wil l establish management, coordination, monitoring, and evaluation mechanisms in each o f the implementing institutions that are mainstreamed within the existing institutional and organizational structures. All lead agencies will be accountable for effective implementation o f respective activities and programs in their key result area.

Enhanced policy and strategic leadership in legal and judicial institutions. The program will enhance pol icy coordination in the legal and judicial institutions by drafting a pol icy to govern the activities o f the legal institutions. I t wil l also support

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capacity building to strengthen evidence based pol icy making in the legal and judicial institutions.

Enhanced information, communication and education on the legal sector reforms and development. The program wil l establish an information, education and communication (IEC) program to create awareness amongst the public o f the legal and judicial reforms. The IEC program wil l also seek to involve the people in providing feedback on the reform activities and outcomes, to enable management make improvements and adjustments in the design and implementation approaches. The I E C program wil l be implemented through multiple media channels and physical outreach activities.

Enhanced capacities for change management in legal and judicial institutions. Legal and judicial systems and institutions are fairly complex in nature and require an effective system to bring about the changes necessary for the reform process. The program wil l build the capacity o f staff in lead implementing agencies in change management to enable them to champion the reform program. Change management skills are essential to ensure the reforms take off, build momentum in the shortest time possible and are well organized to achieve the desired outcomes.

The project will finance capacity building activities for management and pol icy making, for establishing a change management program and establishing and implementing an I E C for the reform program. Financing will also be provided for monitoring and evaluation o f the program.

Implementation o f this sub component wil l result in effective and efficient communication o f the reform programs within legal and judicial institutions and with the public at large and improved capacity o f legal and judicial staff in implementing the program. I t will also result in improved monitoring and evaluation o f the program results.

Component 2: Enhancing public financial accountability - US$68.9 million (of which US$ 10.0 million will be funded by IDA)

ATP will support the implementation o f the PFMRP in collaboration with other DPs through a SWAP with a pooled funds arrangement. The PFMRP’s main goal i s to improve the management o f public financial resources for economic growth, public service delivery and poverty reduction. The PFMRP aims at improving the strategic orientation o f the M o F to provide leadership in implementing public financial management across government and ensure its efforts are coordinated with other reform programs and sector initiatives. Implementation o f the PFMRP will result in an enhanced capacity o f the M o F to manage public financial resources in an effective, transparent and accountable manner and associated improvements in the MDAs public financial management capacity. I t will also result in a strengthened capacity o f the NAO to perform i t s oversight function effectively. The PFMRP strategic plan draws o n the Country Financial Accountability Assessment (CFAA), Country Procurement Assessment Report (CPAR), and the IMF’s Report on Observance o f Standards and Codes (ROSC) analyses and recommendations.

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The PFMRP includes the following sub-components, referred to as “key strategic goals” in the PFMRP strategic program document‘*:

(i) (ii) (iii) (iv) (v) (vi) Capacity for sustained improvements in management and program

Improved capacity in the M o F for sound macro economic and fiscal management; Devolved decision-making and accountability for resources to MDAs ; Improved predictability o f resources to MDAs; Enhanced value for money (VFM) in the use o f public resources; Reduced dependency on external financing; and

implementation.

Sub-component 1: Improved capacity in the MoF for sound macro economic and fiscal management (US$6.6 million)

The GOT has done a commendable j ob in achieving macro-economic stabilisation. However, without a strategic perspective, gains made could be lost. Against this backdrop, an intended result o f the program i s that GOT’S macro-economic framework continues to ensure that the economy i s stable. This i s a prerequisite for securing high and/or sustainable levels o f growth, employment and investments in public services including poverty reducing interventions. To this end, the program wil l focus on developing and implementing a thorough basis for formulating, monitoring and adjusting tight monetary and fiscal policies which are credible, and ensure sustained l o w levels o f inflation and effective management o f public finances.

One o f the PFMRP’s objectives i s to ensure that the country’s macroeconomic framework remains stable in the medium-term. This sub-component aims at improving the capacity o f M o F in macroeconomic and fiscal pol icy that wil l enable improved decision-making towards preserving a stable macroeconomic framework. PFMRP will build the capacity o f M o F in macroeconomic management, fiscal pol icy management and will establish the institutional framework for debt management. This wil l be achieved by improving staff sk i l ls in pol icy analysis, monitoring and economic forecasting. The program will also provide forecasting tools and establish an institutional mechanism for monitoring, reporting and for stakeholder consultation.

These key strategic goals are further broken down, in the MOU for the PFMRP, in 10 intermediate outcomes, namely: policy analysis and development; external resources management; budget management; treasury management and accounting; procurement; information technology services; investment management; administrative support services; external audit services; and program leadership, coordination, monitoring and evaluation.

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Expected outputs from this sub-component are as follows:

I Sub-component 1: Improved capacity in the M o F for sound macro economic and fiscal

1 Macro-fiscal forecasting and policy development capacity i s strengthened to achieve a more reliable and sustainable macroeconomic planning framework.

effective debt management practices established.

3. Appropriate domestic revenue policies and legal instruments and tight institutional links within M o F (PAD & Department o f Legal Services), and between the MoF, the Tanzania Revenue Authority (TRA) and the Attorney General’s Department.

4. Enhanced appropriate expenditure frame, allocations and management.

Key Outputs 1.1 Improved macro-economic forecasting models and tools. 1.2 New tools for methodical fiscal forecasting o f revenue and expenditure. 1.3 A more sound fiscal planning process. 1.4 Revised principles o f revenue, expenditure and financing policies. 1.5 Research and policy developments on monetary-fiscal coordination; and on emerging macro-fiscal issues; and follow-up on execution o f budget policy issues. 1.6 Integration o f the fiscal decentralization work plan. 1.7 Civ i l society participation in the budget preparation process strengthened. 1.8 P A D staff computer literacy and competency with computer systems. and software (Windows, MS-Suite, AREMOS-XLS) enhanced. 2.1 Debt Policy Analysis centralized in PAD. 2.2 New National Debt Strategy. 2.3 Debt sustainability policies and system. 2.4 Strategy to develop financial markets. 2.5 Debts verified as part o f National debt Strategy. 2.6 Active and effective participation in Paris Club and Non-Paris Club Debt Negotiations. 2.7 Effective Government participation in securities markets. 2.8 Effective secretariat to Technical Debt Management Committee. (TDMC) and National Debt Management Committee (NDMC) and Highly Indebted Poor Country (HIPC) relief tracking. 2.9 Updated profile o f Government debt stock, debt schedule and Government’s on-lending operations. 3.1 Results o f assessment o f the socio-economic impact o f tax and non-tax policies. 3.2 Models and other quantitative tools to assess the economic and revenue effects of tax policies and assess the incidence on savings and investment, income distribution, regional economic development. 3.3 Treasury Voucher System extended, and strategy and modalities to transform i t into an explicit budget allocation regime developed. 3.4 A transparent policy and administration framework for fiscal incentives (e.g. to convert Government Notices (GNs) into tax regulations and schedules; and centralize tax exemptions in the MoF). 3.5 A detailed G N database, and a repository o f legal instruments and other reference materials operational. 4.1 A framework for development o f appropriate expenditure policies, and systems for tracking and effective consultations and communications with stakeholders. 4.2 Sector expenditure targets set within fiscal frame constraints and aligned with PER-MTEF priorities4.3 A framework to translate sector allocations into ministries. program, economic and functional allocations. 4.4 Reporting and accountability systems on use o f budget funds to confirm alignmen1 with priorities. 4.5 Full integration o f financial information management system.

Funds wil l be provided under the project to build a robust macroeconomic and fiscal model, institutionalizing dialogue processes with stakeholders, implementing the new debt strategy and rationalizing the tax exemptions regime.

Sub-component 2: Devolved decision-making and accountability for resources to MDAs (US$ 26.0 million)

This sub-component seeks to (i) improve the capacity o f MDAs in public financial management, and (ii) ensure that MDAs are accountable for the public financial resources they manage.

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Under the PSRP and LGRP, MDAs and local government authorities respectively, have been empowered to take the lead in managing for results within an environment where resources wil l remain constrained in the medium-term. I t i s in this spirit that the PFMRP will seek to shift away from the control orientation implied by the strict virement rules currently enforced o n vote- holders. The program wil l also consolidate and build on the gains made f rom the IFMS initiative, to expand i t s functionality to facilitate MDAs’ and local governments’ managements to realise their results focussed agendas, including supporting the anticipated adoption in the long-term o f accruals accounting.

In recognition that building the necessary management capacity remains a challenge, the PFMRP will deepen capability in the internal audit function at MDA level, enhance utility and demand for financial management information through initiatives that heighten awareness and understanding, and strengthen financial management capability through the development o f a cohort o f professionals in that function with the right blend o f experience and skills. Also, given the strategic imperative to implement a solid pol icy and strategy for fiscal decentralisation, the program wil l support monitoring o f the system o f intergovernmental transfers.

The expected outputs from this sub-component are as follows:

Sub-component 2: Devolved Intermediate outcomes 1. Improved human resource capacity development for enhanced IFMS application.

2. Public Financial Management best practices promoted and enhancement o f stakeholders’ participation.

3. Conducive working environment ensured for efficient and effective services delivery. 4,Financial management framework and systems throughout the government are more efficient, effective and sustainable.

5. Improved accounting o f Vote 23,50 and pension funds to ensure that the MoF’s i s a role model in accounting for funds

ecision-making and accountability for resources to MDAs Key Outputs 1.1 Training programs and systems for modernizing financial management training. 1.2 Public Debt staff trained in and have relevant knowledge and skills 1.3 More Government accounting staff from regions and local authorities enabled to improve professional knowledge and skills. 1.4 Systems Development Unit (SDU) enabled to carry out its responsibilities effectively and structured to complement systems development and facilitate training in user departments. 1.5 IFMS users in MDAs, sub treasuries and local authorities provided with continuous training and monitored. 1.6 T h e number and competence o f professional and technical staff o f the department increased 2.1 Computerized Government Accounting System extended and maintained as a secure, timely and efficient system. 2.2 Plan and ro l l out for improved IT hardware and data communications taking into account the existing investment, current constraints and future requirements. 3.1 T h e IFMS in al l M D A s improved on continuous basis. 3.2 Integrated planning, budgeting and accounting piloted and institutionalized in select LGAs (also see Component 3 - 1.5). 4.1 Results o f a major review o f staffing levels, sk i l ls responsibilities and other resource requirements. 4.2 Improved operation o f IFMS in the government. 4.3 Audit and accounting manuals rolled out to MDAs. 4.4 MDAs’ fixed assets identified, valued and bar coded. 4.5 Mainstreaming o f assets and procurement modules o f I F M S effected as we l l as interfacing o f other government applications. 4.6 Accountant General and Bank o f Tanzania (BOT) debt data reconciled. 5.1 Staff in the Accounting Unit have the sk i l ls needed for efficient, effective and accountable management o f the funds. 5.2 Accounting Department has necessary equipment.

To achieve the above, the project wil l fund the expansion o f the IFMS functionality to enable accrual accounting and interfacing i t with the macro-fiscal system and the debt management

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system. Funding wil l also be provided for consultancy services to establish benchmarks for financial and performance reports in MDAs, making internal audit committees operational in MDAs, preparing a curriculum for training finance and non-finance personnel and training public financial management professionals.

Sub-component 3: Improvedpredictability of resources to MDAs (US$2.9 million)

The objective o f this sub-component i s to improve the predictability o f resource flows by strengthening linkages between the MTEF, M K U K U T A and poverty monitoring system (PMS). These linkages will provide a basis for promoting a more systematic process for resource planning and prioritization needed to achieve pol icy objectives and desired results. The PFMRP will also focus on capturing al l development assistance channelled directly to projects and programs in GOT’S budget and accounting framework. In tandem, the PFMRP wil l deepen stakeholders’ understanding and ability to appreciate the budget process and i t s results.

The program wil l also focus on capturing al l development assistance channelled directly to projects and programs in Government’s budget and accounting framework. In tandem, the PFMRP wil l deepen stakeholders’ understanding and ability to implement the government’s program.

The GOT anticipates the successful completion o f the interventions above wil l in the long-term result in the phasing out o f the current cash budget system. Another expected long-term result wil l be zero or insignificant differences between budget allocations and actual expenditures for MDAs and LGAs.

The following wi l l be the outputs from this sub-component:

Sub-component 3: Improvc Intermediate outcomes 1. Improved planning and budget preparation for better expenditure outcomes.

L predictability o f resources to MDAs Key Outputs 1.1 Results o f the review o f existing content o f budget databases and processes and a follow- up program for agreed recommendations. 1.2 T h e PER Secretariat strengthened and consolidated. 1.3 Plan for strengthening MTEF - integrated recurrent / development budget, MDAs requirements and implications for IFMS budget module development. 1.4 Capacity in MDAs for priority-setting, budgeting and expenditure management. 1.5 Integrated planning, budgeting and accounting piloted and institutionalized in select LGAs (also see Component 4 - 3.2.). 1.6 A plan for decentralizing budget envelopes to high performers and a ro l l out plan for institutional change in remaining LGAs. 1.7 Strategic plans o f M D A s have the performance indicators required every three years by M o F and are linked with MTEF targets. 1.8 Results o f a review o f other government institutions and executive agencies’ budgets and recommendations on revisions to legislation, regulations and procedures. 1.9 A systematic capacity building program at sector level on MTEF process and procedures implemented. 1.10 Improved staff skills. 1.1 lBudget reclassified in accordance w i th the updated version o f Government Finance Statistics (GFS) economic and functional codes implemented in MDAs . 1.12 Budget Committees strengthened. 1.13 Tools for mainstreaming gender in the budget process installed in all MDAs. 1.14 Objective criteria for resource allocation for selected servicedactivities in collaboration wi th other reforms.

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2. Established effective budget execution and monitoring mechanisms.

2.1 Expenditure tracking studies and their follow-up actions. 2.2 PER carried out as a routine annual activity. 2.3 Strategic performance indicators for MDAs across sectors introduced. 2.4 Results o f periodic physical and financial monitoring of MKUKUTA. 2.5 Computer based analytical capacity within Budget Department installed. 2.6 MDAs capacity in budget planning, execution and reporting phases developed.

The project wi l l fund the design and implementation o f a management information system for external assistance that i s easily accessible and facilitates planning and decision-making.

Sub-component 4: Enhanced value for money (VFM) in the use of public resources (US$ 21.0 million)

In the area o f VFM, a key imperative i s to push public service managers towards a more strategic orientation in the use of public resources. In particular, in the medium-term, Epicor’s active planner wil l be further customised to enable enhanced budget analysis. Furthermore, the PFMRP wil l spearhead the redesign o f the budgeting and reporting processes to enhance their results orientation. Specifically, this intervention is expected to contribute towards ensuring that the MTEF supports Government in attaining efficiency and effectiveness in services delivery. Also, during budget implementation, the program will, through a combination o f monitoring at MDA level, PERs, VFM audits and overhauled procurement systems engender an ethos o f accountability for: procuring resources under the most cost-effective terms; delivering maximum outputs from planned activities and associated inputs; and achieving outcomes specified at each MDA’s, local government’s and program’s planning stage. A key anticipated long-term result will. be minimal or no losses resulting from public procurement.

For the foreseeable future, Government wil l continue to divest some o f i t s shareholdings in parastatals, retaining a strategic interest in utility parastatals, as we l l as a full interest in Government institutions. In doing so, its efforts wil l be focussed on: maximising returns b y investing prudently and preserving capital; ensuring divestiture meets i ts objectives (i.e. to promote competition, encourage public and private sector participation etc.); foster productivity; and ensure sound management o f institutions.

The kev outmts from this sub-comDonent are as follows: Sub-component 4: Enhancec Intermediate outcomes ‘

1, Procurement practices provide government with improved value for money in accordance with the new Public Procurement Act.

2. Procurement capacity developed in the country.

value for money (VFM) in the use of public resources Key Outputs 1.1 A Regulatory Authority (RA) with appropriate functions and powers operationalized. 1.2 Revised standard bidding documents and procurement guidelines and user manuals prepared. 1.3 Public Procurement Appeals Authority (PPAA) established. 1.4 A system for checking and monitoring MDAs and LGAs developed and implemented. 1.5 Anticorruption strategy in procurement developed and implemented. 1.6 An MIS developed and implemented. 1.7 Competent professional staff of RA appointed and trained. 1.8 Supplies units transformed into Procurement Management Units (PMUs). 1.9 A system for procurement of common items in MDAs established. 2.1 Procurement cadre established in consultation with the PO-PSM. 2.2 Procurement professional body established. 2.3 Procurement capacity building strategy developed and implemented.

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Intermediate outcomes 1. Increased proportion o f external finance recorded in the government budget and exchequer system. 2. JAS understanding increased among MDAs, LGAs and Civ i l society. 3. Improved practices in development

Sub-component 5: Reduced dependency on external financing (US$2.6 million)

Key Outputs 1.1 Strengthened capacity for external resource management and accountability.

2.1 An effective JAS understanding and awareness campaign.

3.1 Updated TAS and TAS action plan.

This sub-component’s objective i s to improve the management o f external funds to ensure they effectively contribute to national economic development. A key perspective shared by stakeholders i s that ten years from now, Tanzania wi l l be less dependent o n external financing. The PFMRP wi l l support improvements in the effective management o f external financing, with a view to promoting untied aid, ensuring predictability o f aid flows and reducing parallel systems and structures for implementing development projects. The program wil l emphasize directing aid utilisation to the most productive investments and reducing debt servicing to sustainable levels. In addition, i t wil l support the enhanced mobilisation o f domestic resources by broadening GOT’S tax base and at the same time ensuring i t s simplicity and equitability. This wil l imply rationalization o f the tax exemptions regime.

4. Enhanced access to information on aid flows. 5 Improved performance of staff in the

The fol lowing k e y activities wil l be implemented:

4.1 A more robust external aid flow database. 4.2 Security and maintenance o f the Microsoft Access database. 5.1 Higher quality and motivated o f staff in the department.

Under the program, funds will be provided to enable M o F to take leadership in prioritizing, coordinating and managing external financing and rationalizing the tax exemption regime.

Sub-component 6: Capacity for sustained improvements in management and program implementation (US$9.8 million)

This strategic goal seeks to strengthen the leadership, management and monitoring and evaluation capacity of the M o F to implement the PFMRP. The program wil l seek to effect changes in the organizational culture o f the M O F and in the implementing MDAs with respect to public financial management. In this respect, the program will endeavour to enhance strategic leadership; consult internal and external stakeholders, conduct an I E C campaign; inform and fine tune the PFMRP by adopting an M&E framework; introduce needs-based human resource capacity development interventions; utilize more effectively management information systems, including Information Technology (IT); and promote a culture o f ethics, integrity and accountability.

The following key activities wil l be implemented:

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Sub-component 6: Capacity for sustained improvements in management and program implementation Intermediate outcomes 1. Optimize and deploy Government Information and Communication Technologies (ICT) in support o f efficient, effective decision making and service delivery. 2. Expanded Network connectivity and Information sharing and integration. 3. Government Management Information Systems are secure and have a contingency plan and disaster recovery procedures. 4. Improved M I S for the MoF.

capacity to deliver public financial management services established.

6. Efficient and effective Records Management Information System at MoF. 7. Enhanced integrity and ethical conduct o f M o F staff. 8 Effective leadership and coordination o f the program.

9. Stakeholders’ awareness. 10. Effective M&E o f the program.

Key Outputs 1.1 Department o f Computer Services (DCS) mandate reviewed. 1.2 DCS staff requirements established. 1.3 DCS staff trained and equipped to improve on their competence in managing and maintaining I C T resources.

2.1 DCS staff trained in on network utilization. 2.2 Improved online access to information. 3.1 I C T policy formulated and approved. 3.2 Disaster Recovery Procedures formulated and implemented. 3.3 Back-up systems installed. 3.4 M o F network security in place. 4.1 M o F Records Management Information System installed. 4.2 Inventory (stock verification) M I S installed. 4.3 An integrated investment database system installed. 4.4 Treasury Registrar’s records M I S implemented. 4.5 Al l M o F leadership and technical staff trained and capable o f uti l izing the I C T facilities. 5.1 Generic outputs o f the PSRP, including pol icy pronouncements and implementation o f the Performance Management System. 5.2 Staff who are more ethical, disciplined and motivated to perform. 5.3 Ministry has capacity for change management and carries out strategic changes needed. 5.4 Results o f review o f the establishment o f the ministry to ensure adequate numbers o f staff and vacancies are filled. 5.5 A succession plan for key M o F staff. 5.6 A personnel database, wi th a users’ guide and staff trained in the use o f the system. 5.7 A gender affirmative action plan. 5.8 Participatory training approaches and methods adopted in the Ministry. 5.9 Awareness o f risks and impact o f H IV iA IDS and reduction HIV/AIDS transmission among staff. 5.10 Staff sponsored to leadership, management and operational training courses for different levels o f staff and include these in the Human Resources (HR) strategy for MoF. 5.1 1 Staff in M o F have awareness o f employment rights issues. 5.12 Office environment improved and maintenance plans designed and implemented. 5.13 Necessary equipment, facilities and technical capacity installed. 2.1 Records Management System for the M o F improved.

3.1 Anti-corruption strategy is effectively implemented. 3.2 Ethical conduct policy implemented and rolled out to sub-treasuries. 1.1 Coordination Secretariat established and operational. 1.2 Leaders and top management o f M O F have the knowledge and are facilitation tc provide effective policy and strategic leadership and coordination o f the PFMRP. 2.1 Regular broad-based and adequate communication to stakeholders. 3.1 M&E System in place and operational within PFMRP.

Component 3: Strengthening OWIs - IDA US$ 4.6 million (of which U S $ 4.6 million will be funded by IDA)

ATP will support the strengthening o f oversight and watchdog institutions (OWIs) to improve domestic accountability, particularly with respect to the crosscutting reforms, i.e., LSRP,

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PFMRP, PSRP and NACSAP19. This program aims at ensuring that OWIs are well informed of public sector performance and hence able to effectively hold government accountable by interventions aimed at (i) generating and disseminating quality information on performance and outcomes o f government, centered on the crosscutting reforms; and (ii) improving ethical environment in both public and private sectors, by supporting improvement in the capacity o f professional organizations to raise the level o f ethics o f their members using self-regulatory ethics mechanisms, continuing education programs and more broadly I E C programs aimed at the broader public; and (iii) generally improving the capacity o f OW1 staff in undertaking their hnctions. OWIs that wil l potentially benefit from this component include Parliament and i t s committees, the PCB, professional associations, the media and c iv i l society organizations.

Sub-component 1: Facility for Ethics, Accountability and Transparency - IDA US$ 4.0 million

To achieve the above objective, a flexible Facility for Ethics, Accountability and Transparency (FEAT) wil l be established and housed within the ES. The funds wil l be available on a demand- driven basis for activities related to the above objectives. FEAT activities will be coordinated with other development partner programs ,through the D P accountable governance working group. Although other DPs have been supporting OWIs, their activities are s t i l l insufficient to warrant establishment of a pooled funding mechanism.

Generation and dissemination of quality information. The FEAT will support OWIs in generating data, including statistics and other types o f information that confirm results of government policies and initiatives in al l the crosscutting reform areas. I t wil l also fund C iv i l Society Organizations’ (CSOs) activities to disseminate the findings from studies and other key government accountability documents such as the N A O report. This i s expected to increase public awareness of the reforms, lead to effective dialogue between informed OWIs and GOT in domestic policy-making processes and build domestic accountability. I t will also hnd capacity development o f OW1 staff to improve their sk i l ls related to their functions as oversight and watchdogs. This wil l include targeted short-term training programs locally and within the Afr ica region that are aimed at improving the performance o f OWIs in domestic accountable activities.

Improvement in the ethics of members of professional associations. The FEAT will support capacity development of professional associations to promote ethics amongst their members and thereby influencing the quality o f ethics in the public service. Professional associations wil l be supported to implement self-regulatory mechanisms and development programs for their members. The funds could also be used for IEC and M&E activities related to the roles and responsibilities o f professional associations. Depending on the level o f development o f the respective professional associations, the nature o f support i s likely to differ including helping them develop as associations. The program wil l also support capacity building programs for professionals as groups that aim at improving the ethical dimensions o f the respective professions based on the identified needs within the context o f the associations.

’’ OWIs are defined to include state oversight institutions such as Parliament, PCB, NAO, CHRGG, Ethics Secretariat and non-state actors such as the media and c i v i l society organizations. Support t o Parliament wil l be targeted to the Parliamentary service, the operational arm which supports the legislature,

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The ES wil l oversee the use o f the Facility. The ES i s an inter-ministerial department under the President’s Office established by Article 132 o f the Constitution. The Secretariat i s charged with powers to administer the ethical conduct o f public leaders as defined by the Public Leadership Code o f Ethics Act, No. 13 o f 1995. The Secretariat, being the host o f the FEAT, will not be one o f the beneficiaries of the fund. Pertinently, technical expertise wil l be provided to help the Secretariat set up the F E A T and also for strengthen generally i t s capacity under sub-component 2.

The ES will be reporting to a high-level technical steering committee chaired by the Ethics Commissioner that will approve applications to the FEAT. To reduce the possibility that the funds wil l be captured by a specific agency the technical steering committee wil l include members f rom (i) the Government, i.e., Head o f GGCU, Director o f Ethics (PO-PSM), registrar o f NGOs; (ii) non-governmental sector-one from the N G O council and one from the Tanzania Business Council. The secretary o f the ES would be a non-voting member and honorary secretary to the Committee.

To ensure that a l l activities to be funded are in l ine with ATIP’s objectives, the FEAT manual wil l have criteria for institutional as well as activity eligibility. Institutions that will be eligible for funding will need to show evidence o f their status as non-profit NGOs. They should have been registered at least for one year and with audited accounts and financial statements. They should also be able to contribute at least 10% o f the activity costs in cash or in kind. Political parties, f i rms and individuals wil l not be eligible for funding.

FEAT will fund activities that seek to achieve the ATIP’s development objective and that address the information gap or seek to improve the ethics environment in the country as mentioned above. Specific eligible and ineligible activities are reflected in Annex 6. A more comprehensive list of criteria and modalities to access the facility are included in the Operations Manual. Successful OWIs wil l s ign a grant agreement that wil l give the Secretariat the right to suspend or cancel disbursements where funds are not used for the intended purposes.

OWIs wil l access the funds by submitting applications. Guidelines and formats for applications wil l be issued to OWIs. The guidelines will include a negative l i s t o f what FEAT will not fund, as well as the criteria o f evaluation o f the proposals. Detailed institutional arrangements are described in Annex 6.

The Bank would review the implementation o f this component approximately 12-1 8 months after the f i rst disbursements with a view to assess the demand for the FEAT. Since the facility i s an innovative approach i t wil l be important to assess the strengths and weaknesses o f the mechanism in order to make the necessary adjustments to improve i t s operations or to consider scaling up the FEAT by adding the necessary h n d s should there be a high demand for the facility. At the time, the Bank would discuss with GOT the possibility o f moving to a pooled fund arrangement for the FEAT should there be interest from other DPs. During the mid-term review o f the project, the possibility o f scaling-up the FEAT would be examined.

Sub-component 2: Ethics Secretariat - IDA US$0.6 million

A budget o f $600,000 would be set aside for the ES. Support to the ES wil l be related to achieving the objectives o f the FEAT and o f the ES action plan. The ES wil l be strengthened to

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enable it to host the FEAT through the recruitment o f key staff and by funding incremental operational costs. The Secretariat, as host o f the FEAT, wi l l not be one o f the beneficiaries o f the fund. Therefore, the ES will receive funding to disseminate widely the “rules o f the game” of the FEAT and to systematically collect and disseminate the lessons learned and good practices. The E S wil l also be supported to create more awareness o f the importance o f ethical behavior within the general population. The ES wil l receive technical support to set up the FEAT and strengthen generally i t s capacity to perform an improved role with respect to ethics within the public service

Component 4: Project Coordination - IDA US$0.6 million

The leadership and management arrangements o f the A T P provide for (i) coordination o f ATIP with other good governance programs through the Inter-Ministerial Technical Working Group (IMTWG) at the technical level and the I M T C at the policy and strategic levels; (ii) program implementation would be mainstreamed in the structures o f each o f the stakeholder agencies; (iii) funds for coordination and monitoring and evaluation would be under the direct control o f the ES, and disbursed and accounted for through the IFMS; and (iv) coordination o f the ATIP components together with monitoring and evaluation would be done by the GGCU. However, GGCU would not have any direct implementation role.

To ensure overall coordination o f the activities related to improving accountability, transparency and integrity and more particularly monitoring o f the progress in the fight against corruption and improvement in good governance, support wil l be provided to the GGCU. The G G C U has been established in the President’s Office in the Chief Secretary’s Office to enhance the overall coordination o f NACSAP across government. The mandate and role for this coordination generally l i es with the Chief Secretary as the Head o f the Public Service and Secretary to the Cabinet.

Under the current NACSAP, support was provided to the GGCU by UNDP, Norway, Finland and Sweden through the Strengthening Capacities to Combat Corruption in Tanzania (SCCCT) project. I t i s expected that some o f these DPs wil l continue supporting the G G C U for the coordination o f the new NACSAP activities. However, at this time this support i s not yet clear. I t i s important that results in improving good governance be monitored at the highest level in government. Therefore ATIP wil l provide support to GGCU to improve i ts monitoring and evaluation functions including reporting on the overall results o f NACSAP. Support wil l also be provided to review if necessary the institutional structure o f GOT to combat corruption with the objective o f delineating clear mandates and fostering greater collaboration among institutions. Under the PRBS/PRSC/PRSL pol icy dialogue, i t i s noteworthy that there i s agreement between government and DPs that a stronger dialogue should be established around good governance as a key pillar o f the MKUKUTA. The understanding i s that a broad pol icy dialogue similar to the one instituted for SWAPS should be established for anti-corruption. Support to the G G C U would help concretize this agreement by providing the necessary funds to launch the process and put in place the necessary mechanisms for dialogue and improved coordination within government and gradually between GOT and i t s domestic constituency.

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Annex 5: ProgradProject Costs

TANZANIA: Accountability, Transparency & Integrity Project

Program Costs

Project Cost By Component Local Foreign Total U S $million U S $million U S $million

Strengthening legal and judicial system 20.5 46.5 67.0

Enhancing publ ic financial accountability 17.4 47.4 64.8

Institutions Project Coordination 0.3 0.4 0.7 Tota l Baseline Cost 38.9 98.1 137.0 Physicaflr ice Contingencies 2.4 6.2 8.6 Tota l Program Costs 41.3 104.3 145.6 Tota l Financing Required 41.3 104.3 145.6

Strengthening Oversight and Watchdog 0.7 3.8 4.5

(of which IDA)

Project Cost By Component Local Foreign Total

U S $million U S $million U S $million Strengthening legal and judicial system 7.1 16.7 23.8 Enhancing public financial accountability 2.5 6.0 8.5

Institutions Project Coordination 0.3 0.4 0.7 Tota l Baseline Cost 10.6 26.9 37.5 Physical/Price Contingencies 0.8 1.7 2.5 Tota l Project Costs 11.4 28.6 40.0 Tota l Financing Required 11.4 28.6 40.0

Strengthening Oversight and Watchdog 0.7 3.8 4.5

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Annex 6: Implementation Arrangements

TANZANIA: Accountability, Transparency & Integrity Project

1. Overview

There are two major considerations with respect to the definition o f the implementation arrangements for ATP. Firstly, two o f the project’s components wil l support distinct SWAP- based programs, Le., PFMRP and LSRP. For these two programs, Government and DPs have already agreed to adopt a pooled fund modality, to which the Bank wil l subscribe. Thus funds under components 1 and 2 o f the ATIP wil l be disbursed to the LSRP and PFMRP pooled bank account for each of the two programs. Secondly, the third and fourth components o f ATIP (support to OWIs and coordination, M&E) will be implemented under a traditional project modality. Furthermore, the implementation arrangements for these latter two components require particular attention because: (i) the third component wil l be demand-driven; and (ii) while the fourth component wil l have activities that will be implemented by the G G C U in the President’s Office and the ES. Government has decided that the ES rather than GGCU i t se l f should handle al l funds under component 4, including GGCU’s coordination and capacity building activities.

2. Key features of the implementation arrangements

In the context o f the above, the key features o f the implementation arrangements are described under the fol lowing headings:

0 SWAP pooled funding modalities. 0 Mainstreamed project implementation.

SWAP pooled funding modalities. There wil l be a designated pooled fund account for each o f components 1 and 2 o f ATIP. The report-based disbursement modalities and time frame for transferring funds to the pooled fund accounts i s stipulated in the PFMRP and LSRP MoUs to be executed by the Bank and wil l be detailed in the disbursement letter to be issued by the Bank and the LSRP and PFMRP operational manuals. The World Bank has reviewed the MoUs and operation manuals o f the LSRP and PFMRP and i s satisfied that these comply with i t s fiduciary requirements, upon certain agreed modifications.

Government and development partners supporting the LSRP and PFMRP are organized under the Joint Implementation Program Review Committee (JIPRC) and Joint Steering Committee (JSC), respectively. These two committees which are government lead are guided by the Memorandum o f Understanding and the operational manuals for the pooled funds. DPs, including the Bank, wil l review and endorse consolidated annual work plans and budgets for each fiscal year detailing the eligible activities and budgets for each LSRP and PFMRP sub- component as described in this PAD.

The designated account of the ATIP will cater for components 3 and 4. This account wil l be managed by the ES, which i s a quasi-autonomous constitutional body under the President’s Office. The specific procedures and controls for the management o f this account wil l be documented in a financial and procurement management manual which will guide the ES in the implementation o f components 3 and 4.

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Key Result Area (LSFW Sub-

Mainstreamed implementation of ATIP. There i s no enclave project implementation unit for any of the ATP activities in the M D A s responsible for their implementation. All ATIP activities are being undertaken within the mainstreamed structures o f the relevant MDAs. Detailed description o f the arrangements for each o f the components i s provided in separate sections below. This implies full staffing o f the implementing agencies to enable them to implement the project efficiently and effectively. The Government has already initiated the appointment o f key outstanding staff positions in M J C A and the ES, and PO-PSM has confirmed i ts commitment to the process.

Lead Agency Implementing Agency

3. L S R P implementation arrangements

component) 1. National legal Law Reform

framework Commission o f Tanzania

The lead coordinating institution wil l be the Ministry o f Justice and Constitutional Affairs (MJCA). The Deputy Attorney General/Permanent Secretary o f M J C A as the Chief Executive Officer/Accounting Officer wi l l ensure effective coordination o f the lead agencies and al l implementers o f the LSRP. To facilitate the Ministry in i t s role as the overall coordinating agency, the Directorate o f Planning, Policy and Information wil l be strengthened with capacity building for program coordination.

L a w Reform Commission o f Tanzania M J C A NGOs and other voluntary Associations Judiciary Legal training institutions Legal Registries (BRELA, Registry o f Titles, Registries, Administrator Generals Department) Tanganyika Law Society

The lead implementing agencies assigned for the overall implementation o f the LSRP sub- components (KRA) are the Law Reform Commission, the Judicia$', the Commission for Human Rights and Good Governance, the Faculty o f Law, University o f Dar es Salaam and the Ministry o f Justice and Constitutional Affairs. Other implementing agencies are charged with the implementation o f specific LSRP activities under the overall coordination o f the lead implementing agencies (see the table below listing the key implementing agencies). Nonetheless, a l l legal and judicial institutions wil l be actively involved in the implementation o f ATP activities, as wel l as in the pol icy dialogue, reporting, and monitoring and evaluation.

*' The use o f Judiciary in this case refers to the Registrar o f the Court o f Appeal, w h o i s the ch ief executive and accounting officer o f a l l courts in Tanzania.

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Human Rights and Good

2. Access to justice for the poor and disadvantaged

3. Improved governance and administration justice

4. Knowledge and sk i l ls o f legal professionals

NGOs and other voluntary Associations Law Reform Commission o f Tanzania

5. Service delivery capacity in the sector institutions

6. Management, coordination, monitoring and evaluation

M J C A

Judiciary

CLE M J C A Registrar, Court o f Appeal Legal Registries (BRELA, Registry o f Titles, Registries, Administrator Generals Department)

I and Local Government I Commission for 1 M J C A

1 Administrative tribunals I Law Faculty Law Faculty University o f Dar es Salaam University o f hllcrli Dar es Salaam Tanganyika Law Society

Institute o f Judicial Administration I Law Facultv. Mzumbe Universitv I

Law Faculty, 0 en University o f Tanzania Judiciary Law Faculty, Tumaini University . Ministry o f Science Technology and Higher

1 Education I

All lead agencies and implementing agencies

Implementing agencies will have direct responsibility for implementing the activities arising under the targeted outcomes and outputs under the relevant Key Result Areas. They wil l develop annual work plans and budgets for the respective outputs in the LSRP; identify the nature o f technical support for implementing the activities, review progress in achieving desired outputs and reporting progress o n a quarterly basis to the lead agency. The implementing agency wil l also liaise with the lead agency to request technical support in implementing activities under the program.

The responsibility of the lead agency will be to lead, coordinate and monitor the implementation o f program activities within i t s relevant Key Result Area in partnership with the implementing agencies. The lead and implementing agencies are reflected in the table below for each key result area (i.e. each LSW sub-component o f ATIP):

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(i) A Joint (GOT and DPs) Implementation Program Review Committee (JIPRC). The mechanism for overall coordination o f LSRP implementation i s the Joint (GOT and DPs) Implementation Program Review Committee (JIPRC). This committee i s the main forum for pol icy and strategy dialogue between GOT and DPs. Once the pooled funding for the program i s operational, the JIPRC will also approve funding and disbursements based on satisfactory performance and approved annual work plans and budgets for each GOT fiscal year. The Members o f the JIPRC will be the Deputy Attorney GeneralPennanent Secretary MJCA, Permanent Secretary Ministry o f Home Affairs, Registrar o f the Court o f Appeal, the LSRP Program Coordinator and DPs.

(ii) GOT Steering Committee. For the LSRP there i s also a GOT Steering Committee, composed o f chief executives o f al l implementing agencies. The steering committee wil l provide pol icy and strategic leadership to the reform program. The steering committee i s chaired by the Chief Justice and the Attorney General will be the deputy chairman.

The Committee wil l meet at least once every four months, to deliberate and approve on amongst others:

0

0

0

0

Quarterly work plans and budgets for the program. Recommendations o f the Technical Coordination Committee with respect to program implementation monitoring and evaluation reports. Policy and strategic issues arising in the program implementation. Developments in the country that might require changes in the program implementation. .

(iii) The Technical Coordination Committee. A technical coordination committee wil l be responsible for coordination o f program implementation activities, as well as ensuring regular monitoring and evaluation o f the activities, outputs and outcomes. Members o f this committee wil l be the chief executive officers o f the lead agency for each KRA (LSRP sub-component) and two representatives from the donors supporting the LSRP.

The Committee wil l meet at least once in every 3 months, to deliberate on, among others pertinent matters including the following:

0 Quarterly work plans and budgets for the K R A s . 0 Monthly progress reports on each o f KRA to be presented by the respective

lead agencies. 0 Technical papers and reports submitted by lead agencies. 0 Policy and strategy papers prepared by lead agencies (including Cabinet

memos and draft bills) for submission to the GOT Steering Committee.

(iv) Program Coordinator: The Program coordinator wil l be a GOT employee and wil l be overall facilitator and manager o f the program on the day to day basis. The functions o f the program coordinator wil l be:

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To assist the lead agencies and implementing agencies in realigning their strategic plans, annual work plans, plan o f operations and MTEF budgets with the Medium Term Strategy (MTS). This wil l include providing the necessary technical support where there are capacity constraints. To monitor and report on progress in program implementation. To coordinate al l aspects o f planning and implementation o f the program. In this regard, the coordinator wil l closely liaise with the sector agencies responsible for implementing components o f the LSRP, and especially with the chief executives and the link/program officers o f these agencies. To receive, manage and account for al l the program funds basing on periodical reports from implementing agencies. To facilitate procurement and contracting o f goods/services/works/ equipment for p r o g r d p r o j e c t implementation activities to the implementing agencies. To provide technical secretarial and other administrative support to the GOT Steering Committee and Technical Coordination Committee. To publicise the activities and achievements o f the program.

Figure A.6.1: Overview o f LSFW institutional arrangements

Office of the National LSRP Coordinator

Technical Coordination Committee

t l I I t t t t t

Result Area 1 Result Area 3 Result Area 5 Result Area 6

f

I t i s acknowledged by both Government and DPs that there i s a need to improve urgently the program implementation capacity o f the key institutions responsible for the LSRP. Currently the German Agency for Technical Cooperation (GTZ) i s providing a Chief Technical Advisor and a capacity building advisor to MJCA. There i s consensus between GOT and DPs that there i s a

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need to increase the technical support in the areas o f M&E, IEC, and management information systems.

Details o f the implementation arrangements for the LSRP are documented in an Operations Manual and highlighted in the M O U to be entered into between the Government and the pooled fund DPs.

4. PFMRP implementation arrangements

The PFMRP i s coordinated by the MoF. Other institutions involved in the program implementation include the recently established Public Procurement and Regulatory Agency (PPRA) and the National Audit Office (NAO). A Joint (Government and DPs) Steering Committee i s in place to provide policy, strategic oversight and facilitate dialogue. The Deputy Permanent Secretary in the M o F i s designated the Program Manager. There i s also a full-time Program Coordinator who has been contracted to provide technical advice and support o n program implementation. MoF’s heads o f department based on their portfolio are responsible for key result areas o f the program. Details o f the implementation arrangements for the PFMRP are documented in an Operations Manual and highlighted in the MOU between Government and DPs.

A Joint Steering Committee (JSC) headed by the Permanent Secretary, M o F (PSF), comprising the C A G and with representatives from the M o F and DPs, has been established. The JSC wil l maintain strategic oversight of the program and where necessary take required actions. The full Committee will meet bi-annually. However, the JSC may set up working groups for specific purposes, which will meet on a more frequent basis.

The Coordination Secretariat set up under the Deputy Permanent Secretary (DPS) - Policy and Resource Mobilization, wi l l support the coordination o f the program. The DPS who i s also the Program Manager i s supported by a Program Coordinator and Deputy Program Coordinator/ M&E Specialist.

MoF’s Heads o f Departments are responsible for a key strategic areadsub-component. This assignment o f component managers was determined on the basis o f each head’s portfolio mandate. Similarly, the C A G has appointed one o f h i s deputies to manage External Audit Services. The M o F wil l be the lead implementing institution for the PFMRP. It wil l be responsible for coordinating implementation o f the PFMRP with the NAO and the PPRA.

The management of the PFMRP will build on existing mechanisms for leadership, coordination and monitoring of public sector reforms. Specifically, the Permanent Secretary, M o F wil l on a quarterly basis, report to the I M T C o f Permanent Secretaries, which has responsibility for leadership and oversight of GoT’s reforms, on PFMRP implementation progress. In addition, the IMWG comprising senior GOT officers and headed by the PS, PO-PSM, wil l monitor the PFMRP at i t s quarterly meetings, and report the same to the I M T C (see Figure A.6.2).

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Figure A.6.2: Overview of institutional arrangements

Leadership 8 coordination

I I P r o a r e s s F i

_ -

5. Strengthening of OWIs component implementation arrangements

The third component o f A T P (strengthening OWIs) wil l be managed by the ES. The ES i s one o f the independent inter-ministerial departments under the President’s Off ice that are responsible for good governance. The Secretariat i s charged with powers to administer the ethical conduct o f public leaders as defined by the Public Leadership Code o f Ethics Act, No. 13 o f 1995. The Secretariat’s functions are prescribed in the Constitution, Article 132 (1) which provides that: “There shall be the Ethics Secretariat which shall have powers to inquire into the behavior and conduct o f any public leader for the purposes o f ensuring that the provisions o f law concerning the ethics o f public leaders are duly complied with”.

The ES i s headed by an Ethics Commissioner, who i s appointed by the President. There are two operational departments, one for political leaders and another for public service leaders. The head o f the political leaders department i s also the head o f administration o f the Secretariat. The latter wil l also be directly responsible for overseeing the FEAT implementation. Details o f the modalities, procedures and criteria to be used in implementation o f this component, and in particular the administration o f the FEAT by the ES, will be documented in detail in an operations manual.

The FEAT Steering Committee: The FEAT Steering Committee (FSC) wil l ensure that facilities activities are carried out in accordance with the operational and financial management manuals. The specific responsibilities o f the Steering Committee include:

0 Approve FEAT’S annual work program and budget; Approve all applications for funding on a quarterly basis; Approve amendments to the Operations and Financial Management Manual; and Approve the annual reports and Audit Reports and Financial Statements o f FEAT.

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Sn. Affiliation

The Chairman o f the ES who i s also i t s Commissioner, President’s Office.

2 Head, GGCU, President’s Office

3 Director o f Ethics - PO-PSM

The FSC has seven members drawn from public, private and NGO’s sectors. Membership o f the Steering Committee is as detailed below:

Status in FSC

Chairperson o f FEAT Steering Committee

Member

Member

A nominee from TANGO representing NGOs and the c iv i l Society

Member

5

6

I

A Nominee from Tanzania Business Council Member

Registrar, NGOs Registration Council Member

The Steering Committee may also meet on an extraordinary basis or conduct special meetings whenever an issue that needs immediate attention arises. To ensure that a l l activities to be funded are in line with ATP’s objectives, the FEAT manual wil l have criteria for institutional as well as project/activity eligibility. These are described below.

7

Institutional Eligibility

The Secretary o f the ES, President’s Office Secretary

All OWIs are eligible for funding under the FEAT arrangement. These include OWIs such as the Parliament and i t s Committees, PCB, NAO, professional associations as wel l as NGOs. A political party or an organization directly affiliated to a political party will be not eligible. Firms and individuals wil l also not be eligible institutions.

For not-for-profit organizations such as NGOs to qualify for funding o f i t s proposed activities under FEAT i t must declare its status and meet the fol lowing criteria:

0 I t must be registered by the Registrar o f NGOs as a non-profit making organization for at least one year. Any non-profit organization submitting an application must submit proof o f i t s non-profit status in i t s application at the time o f submission. This may include a certified copy o f the organization’s certificate o f incorporation or similar document that clearly establishes non-profit status or a statement from the appropriate government organ certifying that the applicant organization has a non-profit status and that i t s net earnings do not accrue to any private shareholders or individuals. Applications that do not include proof o f non-profit status will be disqualified;

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0

0

0

0

0

I t must have a constitution; I t must demonstrate that i t has a sound management structure with trustees and at least three professional permanent staff; I t must have the capacity to produce financial statements and audited reports for the past year; I t must demonstrate ability to provide at least 10% contribution to the project proposal cost, either in cash or in kind, and I t must b e able to show that recurrent costs o f the organization will be met by i t s own resources.

Project Eligibility

The FEAT will fund activities that seek to achieve the ATIP project development objective and that address the information gap or seek to improve the ethics environment in the country as mentioned above. Specific eligible and ineligible activities are reflected in table A 6.1 below.

Table A.6.1: Eligiblehneligible activities under th Eligible interventions

[nterventions that are eligible for FEAT financing should support Zapacity building in the respective organizations to enhance sversight capabilities or ethical environment in the public sector, which may include:

Technical support at a l l stages o f the development o f the participating organization’s strategic plans, annual work plans, monitoring and implementation plans.

Specific training activities within Tanzania or Africa region (or elsewhere with detailed justification) related to improving the quality o f information produced, disseminated and used. Activities with funding committed from other sources, demonstrating how FEAT will contribute to achieving the objectives of the activities.

FEAT will only support incremental results-oriented investments. T h i s will include, for instance, resources required to re-engineer processes; to put in place systems for monitoring and evaluation; and/or to foster organizational learning in OWIs.

Re-tooling o f participating organizations to improve both working faci l i t ies and environment in the context of improving oversight and watchdog capabilities and activities.

Support to the rationalization of OWIs’ roles and functions.

Soft assets including computers and software contributing directly to the O W objectives.

Support work aimed at promoting governance with respect to the activities o f the ATIP including the monitoring and evaluation o f service delivery by beneficiaries, civil society groups and the private sector.

Activities above for which the organization does not have - access to another primary source of funds.

FEAT sub-component Ineligible interventions

FEAT i s not to be used for investments where the contributions to capacity improvements are not readily demonstrable. These include:

Investment in commercial ventures.

T h e purchase of motor vehicles.

Civil works.

General administrative expenditures.

Salaries or salaries enhancement and remunerative allowances.

Activities with full funding committed from other sources.

Re-tooling that i s more than 15 per cent of the budget requested.

Activities related to human rights, police: prosecution or prisons or political advocacy.

Activities with a financing gap.

Repeater activities whose predecessor did no) achieve the desired objectives or did not meei the fiduciary requirements of the FEAT.

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The minimum application for funding is expected to be US$ 10,000 while the maximum wil l be US$ 500,000 per applicant. For grants above US$ 100,000, the FEAT management will provide IDA with al l relevant details o f the request for no-objection. These funds wil l be disbursed in at least two tranches. Disbursement wil l be based on satisfactory submission o f financial and physical progress reports.

There wil l be a legally binding grant agreement signed by the ES and each recipient OW1 stipulating the activities to be carried out by the recipient and the output and outcome indicators of achievement o f the grant’s objectives, the conditions o f the grant, including sound procurement and financial management and reporting, and the rights o f the Secretariat and IDA in relation to supervising and auditing the use o f the funds provided. The agreement wil l also give the Secretariat the right to suspend or cancel disbursements where the funds are not used for the purposes intended.

6. Project coordination implementation arrangements

The fourth component o f the ATP wil l be primarily the responsibility o f the GGCU. The G G C U has been established in the Chief Secretary’s Office o f the President’s Off ice to enhance the overall coordination of NACSAP across government. The mandate and role for this coordination generally lies with the Chief Secretary as the Head o f the Public Service and Secretary to the Cabinet.

The interventions and activities under the fourth component generally reflect strengthening and facilitating the GGCU to better perfonn i t s core roles and functions, which are: (i) overall coordination o f good governance programs, especially the NACSAP; and (ii) high level M&E, and reporting to the President on progress o f implementation o f the anti-corruption measures. Funds for use under this component will also be managed by the ES.

Under the current NACSAP, support was provided by UNDP, Norway, Finland and Sweden through the Strengthening Capacities to Combat Corruption in Tanzania (SCCCT) project that came to an end in 2004. I t i s expected that some o f these DPs wil l continue supporting the GGCU for the coordination o f the new NACSAP activities. However, at this time this support has not been specified in detail. It i s important that results in improving good governance be monitored at the highest level in government.

In this context, the GGCU wil l have overall responsibility for coordinating and for overseeing the monitoring and evaluation o f the ATIP. This i s in l ine with GGCU’s assigned core roles and functions, which are: (i) overall coordination o f good governance programs, especially the NACSAP; and (ii) high level M&E, and reporting to the President on progress o f implementation of the anti-corruption measures.

Monitoring and evaluation under the project will be streamlined within the GOT’S own M&E framework for the MKUKUTA. The M&E arrangements under the governance pillar o f MKUKUTA are based largely on the monitoring and evaluation framework for NACSAP, which incorporates many of the target outcomes o f the LSRP and the PFMRP. These are centralized under the GGCU, which provides leadership and coordination for N A C S A P across GOT. GGCU’s M&E system will capture at a high level both outputs and outcomes indicators for the ATP.

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The Bank’s supervision o f the ATIP wil l be based on the respective program arrangements for components 1 and 2 in l ine with the pooled funding mechanisms. These relate to the joint government - DP committees that wil l review the progress o f the LSRP and PFMRP every six months. For component 3 and 4, the Bank wil l carry out normal supervision missions every six months during which i t will review and discuss with the ES and the G G C U implementation progress. In reviewing implementation progress under component 4, the Bank wil l review and discuss with the GGCU progress on al l the four components o f the ATIP based on monitoring and evaluation reports that are in line with the government system.

7. Coordination with other cross-cutting reform programs

The overall coordinating mechanism for the core cross-cutting reforms (public service, local government, publ ic finance, legal/judicial and sector development) i s the responsibility o f the existing committee o f a l l Permanent Secretaries - the Inter-Ministerial Technical Committee (IMTC) chaired by the Chief Secretary/Head o f Public Service. The Inter-Ministerial Working Group (IMWG) comprises senior government officers and chaired by the PS PO-PSM meets quarterly to review progress o f al l core reform programs and reports to the I M T C .

Further, a Public Sector Management Working Group (PSMWG) has responsibility for coordinating resources allocation and expenditure for the core governance reforms, particularly: PFMRP; PSRP; and LGRP within the GOT planning and budget processes. I t comprises representatives f rom MoF, PO-PSM, President’s Office Regional Administration and Local Government, DPs and c iv i l society.

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Annex 7: Financial Management and Disbursement Arrangements

TANZANIA: Accountability, Transparency & Integrity Project

EXECUTIVE SUMMARY

ATIP activities will be implemented by the following ministries and a secretariat namely: MJCA, MoF, and the ES. ATIP will support the following main components: (i) Strengthening legal and judicial system through Legal Sector Reform Program (LSRP) in collaboration with other development partners through a S WAp pooled funds arrangement; (ii) Enhancing public financial accountability through Public Financial Management Reform Program (PFMRP); and (iii) Strengthening of OWIs through the FEAT grant mechanism to be coordinated by the ES. M J C A and M o F are the overall coordinators o f their respective programs. The LSRP’s objective is to improve access to judicial and legal services for al l Tanzanians through improving the capacity o f legal sector institutions. The PFMRP’s main goal i s to improve the management o f public financial resources for economic growth, public service delivery and poverty reduction. The main objective of the FEAT i s to improve domestic accountability, particularly with respect to the cross-cutting reforms.

ATP’s implementation arrangements wil l be mainstreamed in the existing government structures, which include financial arrangement in terms o f accounting, planning and budgeting, reporting and auditing. The accounting officers o f the above respective ministers and secretariat wil l assume overall responsibility for accounting o f the project funds. The respective Directorate o f Finance within these ministries wil l ensure that the disbursements and financial management o f the project components mentioned above are carried out efficiently and in accordance with acceptable international accounting standards issued by the International Accounting Standard Board or Public Sector Accounting Standards, Government Public Finance Ac t 2001, and signed MoUs in case o f PFMRP and LSRP. The accounting system i s based on an integrated government computerized accounting system called Epicor.

During the appraisal, the Bank carried a financial management assessment for the three above institutions. The purpose o f the financial management assessment was to determine whether the financial management systems and arrangements o f the MoF, Ethic Secretariat, and M J C A are capable o f producing timely, understandable, relevant, and reliable financial information that would allow the project management and the World Bank monitor compliance with agreed procedures, and appraise progress towards i t s objectives. Also require the project implementing entities to undertake appropriate measures to mitigate r isks poses by weaknesses that are identified (if any).

Major risks that may face the project include:

(i) Funds may not be used in an efficient and economical way and exclusively for purposes intended.

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Mitigating measures:

0 The program wil l be subject to joint regular implementation review and annual external financial and procurement audit review aimed at closely monitoring both financial and physical perfonnance o f the program.

0 ATP wil l provide support to the oversight and watchdog institutions for good governance in order to strengthen the public accountability at a l l level.

0 Linkage between physical output and financial outcomes wil l be strengthened including M& E functions in the ministry.

(ii) Weak internal audit capacity within the ministry to oversee the internal controls systems.

Mitigating measures:

Each ministry has established an internal audit unit and audit committee. Audit committee major role i s to review the internal and external audit reports and fol low up on implementation o f the recommendations arising from these reports. An internal audit manual has been developed and training conducted to internal auditors, accountants, and Accounting Officers. Although these are now in place, i t s effectiveness i s hindered due to inadequate number and skilled internal auditors.

(iii) Lack o f qualified internal auditors and accounting staff in the ministries

Mitigating measure:

Recruitment i s underway this FY by the Accountant General office for additional qualified internal auditors and accountants. In addition, significant efforts have been made over the last four years by the Accountant General to improve the capacity o f technical accounting and internal auditing staff. This has been through a range o f in service training courses for al l levels o f staff as well as support for academic and professional qualifications. However the ability o f the government to recruit and retain suitably experienced personnel remains a challenge due to l o w pay.

The overall conclusion o f the financial management assessment i s that the project’s financial management arrangements satisfy the Wor ld Bank’s minimum requirements under OPh3P10.02. However, some improvements remain to be effected for the system in order to establish an acceptable control environment and to mitigate financial management risks. The project financial management risk i s assessed as being modest. The various measureshmprovements should be implemented by the due dates as indicated in the table below.

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2

3

before disbursements

Recruit additional qualified internal auditor and accountants (MJCA and ES) before

Completed

disbursements to specific components Completed during the

imdementation

Carry out a staff development and training program to cover financial management and accounting (ES) project

~~

Finuncial Covenants

Standard financial covenants include the submission to IDA of: . . .

Annual audited financial statements for the three components (FEAT, PFMRP and LSGP) within six months after the year-end. Agreed interim un-audited Financial Reports (FRs) within 45 days after each calendar quarter, and shall cover such calendar quarter. Other related information as required by IDA.

Disbursement Method

Disbursements from the IDA Credit wil l be on Report-Based disbursement method.

Disbursements to meet eligible expenditures under FEAT program will be based on submission o f acceptable quarterly withdrawal application requests to IDA based o n quarterly interim un- audited Financial Reports (FRs) and six month cash requirements. The FRs will be submitted to IDA within 45 days after the end o f each quarter. The FRs reporting formats were agreed during the project negotiations. In compliance with FMR guidelines, we wil l expect the Ethic Secretariat to, (a) sustain satisfactory financial management rating during program supervision; (b) submit FRs consistent with the agreed form and content within 45 days o f the end o f each reporting period, and (c) submit a Program Audit Report by the due date.

Disbursements to meet eligible expenditures under PFMRP and LSRP SWAP modalities wi l l follow the agreed disbursement modalities as stipulated in the signed M o U . Funds from the IDA Credit will be disbursed to the existing LSRP and PFMRP basket holding accounts.

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External Audit

The external audit will be carried out annually by the N A O or such other person registered as an auditor under the Auditors and Accountants Act, 1972 and approved by the CAG. The auditor wil l be required to express an opinion on the audited project financial statements in compliance with International Standards on Auditing.

FINANCIAL MANAGEMENT ASSESSMENT

SCOPE OF WORK

The objective o f the assignment was to conduct an assessment o f the current financial management system at two l ine ministries and a secretariat responsible for implementation o f ATP, and record the results o f such an assessment, in accordance with the requirements o f paragraph 5 o f the Wor ld Bank guidelines to staf f ’ . These arrangements include systems for planning and budgeting, accounting and internal controls, reporting and auditing, as we l l as appropriately qualified accounting staff to operate the project financial systems. The entity’s arrangements are acceptable if they are considered capable o f recording correctly al l transactions and balances, supporting the preparation o f regular and reliable financial statements, safeguarding the entity’s assets, and are subject to auditing arrangement acceptable to the Bank.

During the assessment, the Bank examined the systems o f accounting, reporting, auditing, planning & budgeting, and internal controls o f the MoF, MJCA, and Ethic secretariat. In addition, the existing financial management arrangement, disbursement modalities, and MoUs for PFMRP and LSRP were reviewed and found satisfactory.

PFMRP

PFMRP has been under implementation since July 2004. Three Development Partners (DPs) namely Norway, Denmark and EU have signed the M o U and provided funds to the basket. PFMRP support 10 components that are implemented under the M o F and National Audit Office (NAO). The components are as follows: (i) Policy analysis and development; (ii) External resources management; (iii) Budget management (iv) Treasury management and accounting (v) Procurement (vi) Information technology services (vii) Investment management (viii) Administrative support services; (viii) External audit services; and (x) Program leadership, coordination, monitoring and evaluation. The PFMRP long-term strategy clearly articulates the strategies to realize specific intermediate outcomes in the medium-term together with associated indicators and expected outputs. Since i t s inception, the Bank FM team has been fully involved in the preparation and follow-up on implementation o f PFMRP. The team i s also member o f the DPs Public Financial Management working group.

21

Guidelines to Staff issued by the Financial Management Sector Board, June 30,2001. Refer to Assessment o f Financial Management Arrangements in Wor ld Bank-financed Projects-

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Topic

L S R P

Risk Incorporated Risk Mitigating Conditions of Rating Measures Board or

Strengthening legal and judicial system through LSRP has been developed and the program was launched on March 22, 2005. The LSRP’s strategic imperatives, medium-term priorities and proposed interventions for reforming the Sector are articulated in a three-year Medium Term Strategy.

Funds may not be used in an efficient and economical way and exclusively for

COUNTRY ISSUES

M The respective ministries are strengthening the internal audit and audit committee’s functions through the PFMRP program.

RISK ANALYSIS AND CONDITIONS

COUNTRY R I S K S

The Government o f Tanzania has clearly made great steps in improving financial management and through implementation o f Public Financial Management Reform Program (PFMRP). The March 2005 Public Expenditure and Financial Accountability Review (PEFAR) concludes that, generally Tanzania now has a sound system o f formal rules for financial management and extensive training has taken place on the application o f the financial rules and regulations. Most o f the recommendations contained in the 200 1 Country Financial Accountability Assessment (CFAA) report have been implemented or are already included in the Public Financial Management Reform Programme (PFMRP) under implementation. In terms o f appropriate legislation and regulatory frameworks, significant progress has been made to ensure that the risk associated wi th lack of clear rules and regulations has been reduced. Also more useful information i s now provided in the annual accounts. As a result the general level o f fiduciary risk has been reduced from high to medium. Although much has been accomplished, r isks remain in terms of (i) effective controls, compliance and sanctioning, including enforcement o f procurement and payroll rules and procedures; (ii) timeliness o f audited financial information and effectiveness o f public reporting o f corruption; (iii) predictability o f internal and external resources; (iv) lack o f adequate qualified internal auditors, external auditors, and accountants; (v) effective independent oversight; and (vi) timeliness and effectiveness o f legislative and public scrutiny. Tanzania does not have the kind o f legal framework that would facilitate and help to make public reporting of corruption more effective, i.e. there i s no freedom o f information, whistleblower protection; (vii) lack o f public access to government financial information.

PROJECT R I S K S

The table below identifies the key r isks that management may face in achieving program objectives and provides a basis for determining how management should address these risks.

Effectiveness Inherent Risk Country:

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the purposes intended.

Implementing Entity

Overall Inherent Risk Funds Flow: Delays in funds flow

Staffing: Lack of skilled internal and external auditors and accountants

Accounting Policies and Procedures: Internal Audit : Weak internal audit function

External Audit : NAO lack modem audit techniques

Financial Reporting and Monitvring: Delay in submission of quarterly FRs, annual financial statements Planning & budgeting:

Information Systems

Overall Control Risk

Overall Risk Assessment

M

M

M

M

N

S

M

N

N

N

M

M

Linkages between physical output and financial outcomes will be strengthened including M&E functions within the ministries. ATIP will provide support to the oversight and watchdog institutions for good governance. ATIP will be subject to procurement audit to be conducted by an independent annually.

Clear implementation arrangements are in place and these are stipulated in the programs operational manuals

Disbursement will be based on report based method, on six months cash forecast and previous quarter funds accounted for, and approved work-plans.

Designated account and holding account will be opened before credit effectiveness

Recruitments are underway this FY by the Accountant General office for additional qualified internal auditors and accountants. More training on financial management and I T are planned in future through the PFMRP support.

Respective ministries are strengthening the internal audit and audit committee's functions. There will be strong supervision and quality assurance in the project. There will be a better follow-up o f internal & external audit reports by the audit committees.

NAO i s being strengthen to focus more on value for money audit through the PFMRP

T h e existing government computerized system Epicor wil l be used to produce the financial reports

Will follow MTEF framework o f the government

The project accounts will be integrated into government computerized accounting system called Epicor.

Risk rating: H(High Risk), S(Substantia1 Risk), M(Modest Risk) N(NegIigib1e OY Low Risk)

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MAIN STRENGTHS AND WEAKNESSES

The program financial management i s strengthened by the following salient features: . Various measures are being taken by the government to address the issue o f l o w technical capacity amongst key financial groups. For example, significant efforts have been made over the last four years by the Accountant General office to improve the capacity o f technical accounting and internal auditing staff as well as Accounting Officers and Audit Committee. Same i s being done at NAO and Local Authorities. In addition recruitment i s underway to recruit additional 700 qualified accounting staff, 200 out o f the 700 will be internal auditors. The effectiveness and efficiency o f the external audit function i s been strengthened in order to have a more responsive and proactive NAO. Since 2001, the capacity o f the NAO has been somewhat strengthened, i t s authority and scope have expanded, and i t s functioning has improved to some extent. More efforts are underway to ensure N A O apply modern audit techniques. Generally Tanzania now has a sound system o f formal rules for financial management and extensive training has taken place on the application o f the financial rules and regulations. Most o f the recommendations contained in the 200 1 Country Financial Accountability Assessment (CFAA) report have been implemented or are already included in the PFMW. Inbuilt controls in the Integrated Financial Management System (IFMS) also provide a greater degree o f assurance about the accuracy o f transactions. The accounting system i s based on integrated government computerized systems which comply with international accounting standards and reporting standards (IFRS).

.

.

. The program financial management i s weakened by the fol lowing salient features:

. . .

. Weak internal audit capacity within the ministry to oversee the internal controls systems. Lack o f adequate qualified internal auditors, external auditors, and accountants. Poor levels of compliance on financial regulations and rules by the Accounting Officers. GOT inaction to follow up and enforce financial regulations and rules. Lack o f public access to government financial information to ho ld the government accountable.

IMPLEMENTING ENTITY

MJCA, MoF, and Ethic Secretariat shall have the overall responsibility for day-to-day implementation and management o f funds in terms of:

(a)

(b)

(c)

(d)

procurement, including purchases o f goods, works, and consulting services,

project monitoring, reporting and evaluation;

contractual relationships with IDA and other co-financiers; and

financial management and record keeping, accounts and disbursements.

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The Permanent Secretaries o f the above institutions and the Commissioner (ES) wil l be the “Accounting Officer” for this project assuming overall responsibility for accounting for the project funds. A T P wil l be fully integrated into the government existing accounting and financial management system under the Directorates o f Finance. They will ensure that the disbursements and financial management o f the project components mentioned above are carried out efficiently, and in accordance with acceptable international accounting standards.

FINANCIAL MANAGEMENT SYSTEM

The objectives o f the program financial management system are to:

0

0

0

0

0

ensure that funds are used only for their intended purposes in an efficient and economical way; ensure that funds are properly managed and f low smoothly, adequately, regularly and predictably in order to meet the objectives o f the program; enable the preparation o f accurate and timely financial reports; enable program management to monitor the efficient implementation o f the program; and safeguard the program assets and resources.

Furthermore, the following are necessary features o f a strong financial management system:

0

0

0

the program implementing institutions should have an adequate number and m i x o f skilled and experienced staff; the internal control system should ensure the conduct o f an orderly and efficient payment and procurement process, and proper recording and safeguarding o f assets and resources; the accounting system should support the project’s requests for funding and meet i t s reporting obligations to fund providers including Government o f Tanzania, IDA, other donors, and local communities; the system should be capable o f providing financial data to measure performance when linked to the output o f the program; and an independent, qualified auditor should be appointed to review the project’s financial statements and internal controls.

0

0

ACCOUNTING AND REPORTING

Financial/Accounting Policies & Procedures

The government accounting system i s based on integrated government computerized systems which comply wi th IFRS. The project financial management arrangements shall observe the requirements stipulated in GOT’S laws and regulations. Specifically, in accordance with Regulation 53 Sub-section (1) o f the Public Finance Regulations o f 2001 and the accounts wil l be maintained on a cash basis. In addition al l project transactions will be processed on the integrated financial management system called Epicor and in accordance with Regulation 25 Sub-section (1) of the Public Finance Act. The annual accounts will be prepared o n a historical basis and submitted to the NAO within a period o f six months after the end o f the financial year. Project financial statements are required to be prepared in accordance with acceptable accounting

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standards acceptable to the Bank issued by the International Accounting Standard Board or Public Sector Accounting Standards.

The Program Operational and Financial Manual

A comprehensive operations and financial manuals have been developed to support implementation of the PFMRP and LSRP strategies using basket modalities and FEAT. These manuals provide guidance to personnel charged with financial management on how to ensure effective resource management, recording and accounting. This manual draws on existing GOT legislation and r u l e s to specify common financial management arrangements for the basket arrangements. It also builds on good practices and the lessons learned from the joint pooling arrangements and other implementation procedures adopted for Sector Wide Approaches operating in other sectors. The manuals were reviewed and found satisfactory for program implementation except for the FEAT manual, which has yet to be finalized and reviewed.

The above policies and procedures were reviewed and found acceptable to account & report on program funds.

REPORTING AND MONITOFUNG

Project quarterly and annual financial reports including quarterly interim un-audited FRs will be prepared by the implementing agency. The financial reports will be designed to provide quality and timely information to project management and various stakeholders on program performance.

At end o f each quarter, the following reports should be prepared and submitted to DPs including IDA no later than 45 days after the end o f each calendar quarter. The contents o f these reports should at the minimum consist o f the following:

0 Financial reports consisting o f sources o f funds, uses o f funds by project

0

0 Procurement report.

activity/component, and statement o f actual and budget expenditures; Physical progress or output monitoring reports; and

FINANCIAL STATEMENTS

The project financial statement shall be in accordance with Generally Accepted Accounting Practice These Financial Statements 22will comprise of:

a. A Balance Sheet reflecting the assets, liabilities and funding o f the project based on the cash bases.

22 I t should be noted that the project financial statements should be al l inclusive and cover al l sources and uses o f funds and not only those provided through IDA funding. I t thus reflects al l project activities, financing, and expenditures, including funds from other donorsiparties and contributions in kind such as labor and accommodation, irrespective o f whether the project implementing agency controls the funds for a particular aspect o f the project. However, the IDA components would have to be identified separately.

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b. A Statement of Sources and Uses of Funds / Cash Receipts and Payments, which recognizes all cash, receipts, cash payments and cash balances controlled by the entity for this project; and separately identifies payments by third parties on behalf o f the entity.

c. The Accounting Policies Adopted and Explanatory Notes. The explanatory notes should be presented in a systematic manner with items on the Balance Sheet and Statement o f Cash Receipts and Payments being cross-referenced to any related information in the notes. Examples o f this information include:

d. A Management Assertion that program funds have been expended in accordance with the intended purposes as specified in the relevant World Bank legal agreement.

ANNUAL PLANNING AND BUDGETING:

The overall project budget and a disbursement schedule wil l be drawn up and included in the Project Appraisal Document. I t i s from this disbursement schedule (as may be subsequently revised) that IDA funds wil l be drawn from. The annual Work Plans and Budgets (WPB) will be prepared based o n the policy guidelines issued by Ministry o f Finance on the fiscal po l icy o f the government under MTEF framework. Each ministry should ensure that DPs’ contributions are fully reflected in their ministries budget and MoF’s MTEF and annual budget. WPB for PFMRP and LSRP must be approved by the Joint Steering Committee as stipulated in the operational manual and MoUs.

AUDIT ARRANGEMENTS:

Internal Control and Internal Auditing

Each ministry has established an internal audit unit and audit committee. Ma jo r weakness observed i s the weak internal audit capacity in terms o f adequate number o f staff with modem skills to be able efficiently and effectively carryout internal audit functions o f the ministry.

The Internal Auditors wi l l have to develop an audit strategy and plan for the project based o n the r i s k assessment. I t i s important to note that the internal auditor’s work wil l have to be monitored during the implementation and reviewed to ensure that the internal control systems are being followed and that the issues raised in the internal auditor’s report are addressed by ministry. The effectiveness o f internal audit will be complemented by the institution o f periodic audit issues follow-up by the Audit Committee o f the ministries. The Committee wil l meet quarterly, review and approve the Internal Auditor’s plans and reports. I t will also advise Accounting Officer on any actions that need to be taken.

The ministries internal control system indicated satisfactory levels o f segregation o f duties and controls.

EXTERNAL AUDIT

The external audit will be carried out annually by the National Audit Office (NAO). The auditor wil l be required to express an opinion on the audited project financial statements in compliance with International Standards on Auditing (IFAC/INTOSAI pronouncements) and submit the audit report within six months o f the end o f the financial year. In addition, detailed management letters containing the auditor’s assessment o f the internal controls, accounting system and

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compliance with financial covenants in the IDA Credit Agreement. In addition, program activities wil l subject to procurement audit o f the previous year to be conducted by an independent firm by 31 December o f each year. ATP implementing agencies responsible for the three components wi l l be required to submit to IDA the audit reports within six months after the end o f the financial year.

Fundsflow arrangements:

Bank Accounts

The following bank accounts wil l be maintained by M o F for the purposes o f implementing the pro gram :

0 Basket Fund Holding Account: The Accountant General, MOF will maintain basket fund holding accounts at the BOT denominated in U S dollars for the LSRP and PFMRP. Disbursements from the IDA Credit wil l be deposited in these accounts. Funds will then be transferred from these accounts to the respective M J C A and MOF votes on approval by the JIPRC and JSC respectively.

The following bank accounts wil l be maintained by ES for the purposes o f implementing F E A T component:

0 IDA dollar Designated Account: Denominated in U S Dollars and to be held in a commercial bank acceptable to the World Bank.

0 Local project account: Denominated Local currency and to be held in a commercial bank acceptable to the World Bank.

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The categories o f expenditure that wi l l be financed by the credit and the respective amounts are specified in the table below:

Category

(1) Works, goods, consultants’ services including audits, training and operating costs under Components 3.2 and 4 o f the Project

(2 ) LSRP Subprograms

(3 ) PFMRP Subprograms

Amount o f the Financing Allocated (expressed in US$)

Percentage of Expenditures to be Financed

1,400,000 100%

23,500,000 Such percentage o f eligible expenditures as the Association shall determine for each fiscal year

9,500,000 Such percentage o f eligible expenditures as the Association shall determine for each fiscal year

(4) FEAT Grants 4,000,000 100% o f amounts disbursed

I I

(5 ) Refund o f Project Preparation Advance

TOTAL AMOUNT

The above bank accounts shall be opened by credit effectiveness date.

Flow o f Funds

(a) PFMRP and LSRP components through a basket holding account

1,600,000 Amount payable pursuant to Section 2.07 o f the General Conditions

40,000,000

IDA will make an advance disbursement from the proceeds o f the Credit based on the approved cash f low forecast and AWP by depositing into a Borrower-operated Basket Holding Accounts. Quarterly disbursements (LSRP) and semi-annual (PFMRP) from the two basket holding accounts maintained by the Accountant General at the BOT will be based on availability o f resources, the annual or quarterly action plans and cost estimates and approved quarterlyhemiannual progress and expenditure reports. Detailed annual plans for activities, procurement and associated progress and financial reports and budgets wil l be compiled in the structured formats contained in the LSRP and PFMRP Financial Management and Procurement Manual. Deposits wi l l be made within the GOT’S financial year, and where possible, front-loaded within the f i rst quarter. On making a deposit, development partners pledge to comply

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with the 2001 Treasury Circular “Channeling Project Funds through the Exchequer System”.

(b) FEAT component through the ES:

0

0

0

IDA wi l l make an initial advance disbursement from the proceeds o f the credit by depositing into ES (ATIP) dollar Designated Account. Funds from the dollar Designated Account wil l be transferred into project local bank account to meet the local expenditures. Ethic Secretariat will prepare a six monthly cash f low forecast based on the approved work plan and submit a quarterly Withdrawal Application under the FMR method o f disbursement guidelines for borrowers to IDA within 45 days after the end o f the quarter.

IDA will be expected to fund 100% o f program costs in accordance with the recently approved Country Financing Parameters for Tanzania.

Sta ffirtg:

The two Min i s t r i es and the Secretariat have an accounting unit that is headed by a Chief Accountant who will be responsible for maintaining the books o f accounts and records o f ATIP funds. With exception o f the MoF, the other institutions have less qualified accountants and internal auditors. In this regard, the additional internal auditors and accountants wil l be needed in order to strengthen the above institutions to ensure that funds are timely recorded and accounted for.

All the accounting staff at Ethic Secretariat shall need training on the more recent World Bank Financial Management and Disbursement Guidelines. This can be arranged in consultation with the Senior Financial Management Specialist at the World Bank Country Off ice during the implementation period o f the program.

In order to ensure that the program is effectively implemented, M o F will ensure that appropriate staffing arrangements are maintained throughout the l i f e o f the program.

Information systems

The accounting unit o f the agencies i s using the Integrated Financial Management System (IFMS) which i s a fully integrated computerised based accounting and reporting system that uses Epicor software. The staffs in finance units have undergone training in the use o f IFMS. More training i s planned in the future on the upgrade o f the software.

To ensure that the IFMS i s used to capture the accounting records o f ATIP, demonstrating that this can be done wil l be a condition o f credit effectiveness.

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Procurement arrangements

Procurement o f the program wil l b e under the management o f the PMU established in each ministry. There are n o specific Procurement arrangements that speci f ical ly impacts o n the FM arrangements.

Supervision Plan:

Joint review. T h e program i s subject to j o i n t annual rev iew by both the GOT and DPs. In addition, there will b e three external reviews on PFMRP that wil l b e carried out by a n independent consultant. Th is wil l b e done during the 5 year l i f e o f the program. The first rev iew has been undertaken in M a r c h 2006.

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Annex 8: Procurement Arrangements

TANZANIA: Accountability, Transparency & Integrity Project

A. General

Procurement for the proposed project would be carried out in accordance with the Wor ld Bank's "Guidelines: Procurement Under International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits" dated M a y 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated M a y 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan wil l be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

Procurement o f Works: Works procured under this project would include: Rehabilitation o f court buildings and extending ES offices. The procurement wil l be done using the Bank's Standard Bidding Documents (SBD) and Standard Bid Evaluation Forms for a l l International Competitive Bidding (ICB) contracts. Since the Government has prepared Standard Bidding Documents for procurement o f works which are acceptable to the Bank, the Government may use these documents for procurement o f works under National Competitive Bidding (NCB).

Procurement of Goods: Goods procured under this project would include: Office equipment/furniture and vehicles. The procurement will be done using the Bank's SBD and Standard Bid Evaluation Forms for al l ICB. The National SBDs have been accepted by the Bank and may be used for procurement o f goods under NCB.

Procurement of non-consulting services: Non-consulting services to be procured under the project include: workshops, training, production and dissemination o f information through radio, print and television.

Selection of Consultants: Consulting services to be financed by the project include: Design and supervision o f rehabilitation o f court buildings, Procurement Specialists at ES and Ministry of Justice and Constitutional Affairs. Other consultancy services are impact assessment, training needs assessment, etc. Short lists o f consultants for services estimated to cost less than U S $ 200,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions of paragraph 2.7 o f the Consultant Guidelines.

Operating Costs: Operating costs for this project will consist o f office supplies, communication charges, utility charges, operation and maintenance costs for vehicles and office equipment. These will be financed by the project and procured using the Borrower's administrative procedures.

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B. Assessment o f the agencies’ capacity to implement procurement

Procurement activities wil l be carried out by three entities: (i) Ministry o f Finance (MoF); (ii) Ethics secretariat (ES); and (iii) Ministry o f Justice and Constitutional Affairs (MJCA). Procurement in the two Ministr ies and the Secretariat wi l l continue to be carried out by their respective PMUs, which have been established according to the new Public Procurement Act (PPA) no. 21 o f 2004. All the three entities have Tender Boards in place as per requirements o f the PPA. The PMU at M o F consists 5 members while at M J C A i t i s composed o f 3 members and al l the staff are qualified and experienced with procurement o f goods. The staff - supplies officers and stock verif iers lack experience o f procurement o f works and selection o f consultants.

The ES has not yet established a PMU, but has a supplies unit with only one person - the Supplies Officer. Besides carrying out procurement o f items for i t s own purposes, the Secretariat wil l also issue grants to Oversight and Watchdog Institutions (OWIs). At this time, i t i s not easy to know the type of subprojects which will be requested by the OWIs as these subprojects wil l be demand driven. Procurement o f items included in the subprojects will be carried out in accordance with Operations Manual for operating the Facility for Ethics Accountability and Transparency (FEAT). The Secretariat wil l assess the capacity o f each OW1 accessing the grant to ascertain i t s capacity and if possible to train them before starting procuring. The Secretariat wil l also conduct annual post reviews for selected post review contracts and share the report with DPs.

An assessment o f the capacity o f the implementing agencies to carry out procurement actions for the project has been completed by Donald Mneney in February 2006. The assessment reviewed the organizational structures for implementing the project and the interaction between the project’s staff responsible for procurement and the Ministry’s/ Secretariat relevant central unit for administration and finance.

The key issues and r isks concerning procurement for implementation o f the project have been identified. The assessment has revealed that (i) the procurement staff have l i t t le experience in carrying out procurement goods and works under I C B procedures and selecting o f consultants; (ii) procurement filing and record keeping systems are inadequate; (iii) the procurement staff lack sk i l ls to prepare procurement plans; (iv) the procurement staff at M J C A who are expected to deal with the proposed c iv i l works have no experience with construction and supervision contracts; and (v) inadequate staffing at the ES. The corrective measures which have been proposed are (i) procurement staff and tender board members to attend workshops and training in procurement o f goods, works; and selection o f consultants; (ii) procurement staff to attend data management training and establish acceptable procurement filing and record keeping; (iii) the project to hire short te rm procurement specialists to work and build capacity at the ES and at M J C A for 6 months, with a possibility o f extension if necessary; (iv) the ES to establish a PMU; and (v) the Government to make available at least one additional procurement officer to enhance the capacity o f PMU.

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The overall project risk for procurement i s high. To mitigate the risk, the fol lowing action plan i s proposed.

Due date During implementation o f the project.

Within six months o f project implementation.

Action Responsibility Recipient

Recipient

Train staff in (i) procurement o f goods, works, (ii) selection of consultants, (iii) preparation o f procurement plans, and (iv) data management. Establish acceptable procurement filing and record keeping. The project to h i re short term procurement specialists to work and build capacity at the ES and at the M J C A for 6 months. The ES to establish a PMU. Government to make available at least one additional procurement officer.

Before disbursement. Recipient

The Parliament passed a new Procurement Act in November 2004 that repealed the Public Procurement Ac t of 2001 based on 2003 Country Procurement Assessment Report (CPAR) recommendations. The new Act and its associated Regulations were effective on M a y 1, 2005. The new legislation improves the current procurement system.

C. Procurement Plan

The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on March 09, 2006 and i s available at Ministry o f Finance, Ethics Secretariat, and Ministry o f Justice and Constitutional Affairs. I t will also be available in the project’s database and in the Bank’s external website. The Procurement Plan wil l be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

D. Frequency o f Procurement Supervision

In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended two supervision missions to visit the field to carry out post review o f procurement actions.

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(a) L i s t o f contract packages to be procured following I C B and direct 1 2 3 4 5 6 7

Ref Contract Estimate Procurement P-Q Domestic Review No. Description d Method Preference by Bank

cost (yedno) (Prior/Post) us $

Works 01. Construction 3,528,158 ICB NIA YES Prior

o f Courtof Appeal Building

o f High Court Building

o f Resident Magistrate court Building

o f MJCA HQ

02. Construction 1,510,616 ICB NIA YES Prior

03. Construction 762,436 ICB NIA YES Prior

04. Construction 1,020,000 ICB NIA YES Prior

E. Details of the Procurement Arrangements Involving International Competition

contracting: 8 9

Expected Comments/ Bid- Implementing Opening Agency Date

15112106 MJCA

1510 1/07 MJCA

3010 1 I07 MJCA

30101107 MJCA

1. Goods, Works, and Non Consulting Services

05. Computer 475,670 ICB NIA YES Prior Equipment and accessories

06. Stationery 466,099 ICB NIA YES Prior 07. Motor 219,660 ICB NIA YES Prior

08. Printing 57,000 D C NIA NIA Prior Vehicles

Procurement Guidelines , user manuals

Guidelines for procurement appeals

09. Printing 4,000 ICB NIA NIA Prior

7108106 MOF

17108106 MOF 2 1108106 MOF

lOl08l06 MOF

121 10106 MOF

(b) I C B contracts for works estimated to cost above U S $ 250,000 equivalent per contract, for goods estimated to cost above U S $ 200,000 equivalent per contract and al l direct contracting wil l be subject to prior review by the Bank.

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Description of Assignment

2. Consulting Services

(a) List o f consulting assignments with short-list o f international f i rms.

Estimated cost

2 1 3

Update designs and installation o f MISI In ter l ink with I L M I S for M J C A

1

Ref No.

-

- 01.

1 16,000

4

Prior

5 1 6

16/12/06

7

sector wide plans for M J C A Prepare an implementation action p lan for modernizing at least 20% o f l a w libraries for M JCA Undertake a training needs assessment in pol icy formulation, management analysis and research for

Review Expected by Bank Proposals (PriorDost) Submission 1 Date

410,000

350,000

Selection Method

Design and prepare an implementation strategy for information, education and communication for PCO

Comments/ Implementing Agency

208,000

Consultancy for the Mid term review o f ATIP Carry out expenditure tracking studies and follow-up actions Carry out commission due

enterprises Carry out financial and technical procurement audit o n 20 MDAs Study to transform supplies

diligence work to publ ic

1 10,000

500,675

100,000

360,000

Prior

units~ into procurement units

2511 1/06

180,000

QCBS

QCBS

QCBS

QCBS

a l l MDAs, PCB, and CAG o n the PPA 2004, regulations, bidding documents, guidelines and user manuals Develop and implement procurement capacity building strategy Develop and implement management information system (MIS)

M J C A

M J C A

M J C A

M J C A

324,000

360,000

360,000

2o/06'06 Prior 02.

03.

04.

~

-

Prepare departmental strategic I 200,000 glans for MJCA Design and install generic I 110.000

Prior I 09/09/06

05.

- 06.

- 07.

08.

09.

-

-

QCBS Prior M J C A 10/06/06

QCBS Prior M J C A 15/06/06

Ethics Secretariat QCBS

QCBS

QCBS

Prior 0311 1/06

Prior 2711 1/06

MOF

MOF

10. QCBS Prior MOF 3011 1/06

11.

12. -

I

Prior 0411 2106 t Prior 0811 2/06

MOF QCBS

QCBS MOF

13.

- 14.

-

MOF 13/12/06

Prior !5/11/06

QCBS

QCBS MOF

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(b) Consultancy services estimated to cost above U S $ 100,000 equivalent per contract and single source selection o f consultants (f irms) will be subject to prior review by the Bank. Consultancy services estimated to cost above U S $ 50,000 equivalent per contract for individual consultants wil l b e subject to prior review by the Bank.

(c) Short lists composed entirely o f national consultants: Short l is ts o f consultants for services estimated to cost less than U S $ 200,000 equivalent per contract, may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

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Benefit stream 1. Interest saved due to a reduction in budget deficits 2. Interest saved as a result o f a reduction in the level of domestic debts 3. Savings from current losses in national procurement

Annex 9: Economic and Financial Analysis

TANZANIA: Accountability, Transparency & Integrity Project

Basis for quantification of the flow Budget deficit, saving rate 2% p.a. 1,608,250,000,000 and borrowing interest 10% p.a. Amount o f domestic debt, debt 933,400,000,000 reduction rate 5% p.a. and interest rate 10% p.a. 20% loss o f 70% o f total public 1,615,397,807,700 expenditure from corruption and savings 2.5% p.a.

Base in TShs”

Introduction

This annex presents an assessment o f the economic benefits that are expected as a result o f the investments planned under the ATP project. Due to the cross cutting nature o f these investments, i t has not been possible to undertake a conventional economic analysis o f the economic benefits that might arise from these investments for the economy. However, the positive contribution that the project will have on the economy can be summarized as follows.

Benefits from implementing the LSF2P and strengthening oversight and watchdog institutions

The project i s expected to have positive economic benefits to the economy as a result o f implementing the LSW and by strengthening oversight and watchdog institutions. Implementation o f the legal and judicial reform program wil l result in improvements in the commercial legal environment, improvements in the delivery o f justice particularly in the rural areas and generally observance o f the ru le o f law. Improvement in the rule o f law wil l support the achievement o f the NACSAP objective o f reducing corruption and improving governance in Tanzania. The implementation o f the OW1 component wil l result in improvements in domestic accountability that wil l impact on efficiency in the implementation o f core reform programs and achievement o f their intended objectives.

Benefits from implementing the PFMRP

The expected quantifiable benefits from implementing the PFMRP will arise primarily from savings in budget deficit financing, savings in interest payments on domestic debt and savings arising from reduction in procurement losses. These savings are expected to accrue annually for a period o f five years, commencing in year three o f implementation. In column two, various parameters have been identified as a basis for quantifying the benefit streams. The next column lists the values o f the budget deficit, annual domestic debt, and funds lost through procurement in the base year - August 2005.

23 Base figures for estimating program benefits are from vanous sources including MoF’s website (uww rnof PO t i ) , Parliament’s website (N\+\V nailianicnt 20 u) , the Budget Speech (2004), PERs for FY02 and 03, the CPAR (2003) etc

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Implementation o f public financial management reforms will result in positive economic and fiscal impacts. There wil l be significant budgetary benefits after implementation o f the project compared to the current levels o f GOT annual expenditure. The PFMRP has an economic rate o f return o f 26.3% at August 2005 prices. This i s significantly higher than the opportunity cost o f capital o f 12%. These fiscal benefits wi l l have an impact on the overall economy.

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Activity

Translation in Kiswahili and

Annex 10: Safeguard Policy Issues

TANZANIA: Accountability, Transparency & Integrity Project

Particulars cost

Translation of ESMF in Kiswahili (US$25 x 58 pages) printing, binding, estimates US% 175,000

Summary of Key Safeguard Issues

dissemination o f ESMF Needs Assessment Needs Assessment Training o f designated staff

Workshop for decision makers

EIAs for infrastructure projects Total

ATP will finance civ i l works construction costs for completely new buildings; extension and rehabilitation o f existing buildings; demolition o f existing building and construction o f new buildings for selected high priority infrastructure for the Judiciary and Ministry o f Justice and Constitutional Affairs. There are potential negative impacts that could arise before construction such as loss o f vegetation during site clearing; pollution o f land and water resources arising from waste disposal during and after construction, soil erosion may result f rom inadequacies in backfill ing construction works and improper drainage o f storm water; and unsafe disposal o f asbestos fol lowing demolitionhehabilitation o f buildings. Potential social impacts that may arise include possible land acquisition and loss o f livelihoods, negative effects o n health due to air pollution and noise during construction; blockage o f access during construction and diseases associated with poor sanitation during use o f the buildings. Another potential social impact may be increased pressure on existing water and other natural resources during construction and operation.

dissemination o f about 3,000 copies MJCA and Judiciary in Dar es Salaam, Judiciary in Dodoma, Mwanza, Kilimanjaro and Mbeya at $72,500 per region. 6 courses each $25,000 (costs include per diem, food, transport, accommodation, conference hall, incidentals for participants, trainers and support staff % day workshop o f 20 Participants. Costs include diem, food, transport, accommodation, conference hall, incidentals for participants, trainers and support staff 15 EIAs each US$5,000.00 US$75,000

US$ 145,000 US$290,000

US% 845,000

The anticipated impacts from development o f the buildings and sub-projects to be funded by ATP will be short-term, site specific, confined and reversible and can be managed through the application o f mitigation and monitoring measures.

dissemination o f ESMF Needs Assessment

Measures taken by the borrower to address safeguard policy issues

I dissemination o f about 3,000 copies I MJCA and Judiciary in Dar es Salaam, I US$ 145,000

An environmental and social management framework (ESMF) and a resettlement pol icy framework (RPF) have been prepared by the Borrower to guide the respective authorities to handle any o f these issues in case they arise. The ESMF and RPF have been reviewed ,

commented upon and approved by the Bank and the Borrower. These documents have been disclosed in country and at the World Bank Info Shop on February 20,2006.

Needs Assessment Training o f designated staff

Workshop for decision makers

EIAs for infrastructure projects

A review o f institutional capacities o f the implementing institutions M J C A and Judiciary revealed the lack o f capacity to plan and implement the ESMF. Training will be needed to establish such capacity within these two institutions. This has been described in the ESMF report and has been included in the project costs which are reflected below.

Judiciary in Dodoma, Mwanza, Kilimanjaro and Mbeya at $72,500 per region. 6 courses each $25,000 (costs include per diem, food, transport, accommodation, conference hall, incidentals for participants, trainers and support staff % day workshop o f 20 Participants. Costs include diem, food, transport, accommodation, conference hall, incidentals for participants, trainers and support staff 15 EIAs each US$5,000.00 US$75,000

US$290,000

Table A. 10.1: Costs for capacity building in ESMF implementation

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Key stakeholders and mechanisms for consultation and disclosure on safeguard policies

The key stakeholders include the National Environmental Management Council, Department o f Environment, Ministry o f Justice and Constitutional Affairs, the Judiciary, the resident magistrates and primary court magistrates and the communities in the localities where the buildings will be located.

The draft ESMF and RPF have been discussed by the government, N E M C and the Wor ld Bank. The latter has reviewed and commented on the two documents. The final reports have been approved by N E M C and have been disclosed in the relevant government ministries and departments. They have also been disclosed at the MJCA, resident magistrates’ courts and primary courts in relevant areas.

The ESMF and the RPF set out the consultation processes that wil l be used before constructionhehabilitation takes place. These are in line with the Tanzania national environmental impact assessment guidelines. Consultations with local communities and other interested parties wi l l be carried out during the screening process and in undertaking an Environmental Impact Assessment. The project implementers M J C A and Judiciary will provide al l relevant material and information concerning the infrastructure projects in a timely manner prior to consultation, in a form and language that are understandable and accessible to the groups being consulted. Depending o n the public interest in the potential impacts o f the sub-projects, a public hearing may be requested to better convey the concerns.

Once the infrastructure projects have been cleared by NEMC and the Department o f Environment, the implementers wi l l inform the public the results o f the review. For infrastructure projects implemented at local level, the implementer in collaboration with the village, hamlet governments wil l be responsible for disclosing the findings and recommendations o f the environmental and social screening process to the village assembly and ward development committee. The implementer wil l be responsible for taking the minutes o f the public disclosure meeting, producing and distributing copies to the district/municipal councils, ward and village/hamlet governments, political parties and NGOs/CSOs in the respective community. A summary o f the outcome o f this public disclosure meeting wil l be posted at appropriate places.

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Annex 11: Project Preparation and Supervision

TANZANIA: Accountability, Transparency & Integrity Project

Planned Actual Project Concept No te (PCN) review Init ial Project Information Document (PID) to Public Information Center

January 10,2006 Ini t ia l Integrated Safeguards Data Sheet (ISDS) to P I C Appraisal February 6,2006 Negotiations March 8 - 9,2006 BoardAXegional Vice President (RVP) M a y 9,2006 approval Planned date of effectiveness August 1 , 2006 Planned date o f mid-term review June 2,2008 Planned closing date December 0 1,20 1 1

October 18,2005 January 10,2006

(PIC)

Key institutions responsible for preparation o f the project:

Ministry o f Justice and Constitutional Affairs, Registrar, Court o f Appeal, Ministry o f Finance, National Audit Office, Ethics Secretariat, President’s Office - Good Governance Coordination Unit.

Bank staff and consultants who worked on the project included:

Name Title Unit Denyse E. Morin Sr Public Sector Specialist AFTPR Denis M. Biseko Public Sector Specialist AFTPR Elizabeth 0. Adu Deputy General Counsel LEGVP Said N. A1 Habsy Chief Counsel LEGAF Edith Ruguru Mwenda Sr Counsel LEGAF Manush Hristov Counsel LEGAF Marius Koen Sr Financial Management Specialist AFTFM Mercy M. Sabai Sr Financial Management Specialist AFTFM Parminder P. S. Brar Lead Financial Management Specialist OPCFM Modupe A. Adebowale Sr. Finance Officer L O A G 2 Steve J. Gaginis Sr Finance Officer L O A G 2 Rogati A. Kayani Lead Procurement Specialist AFTPC Pascal Tegwa Sr Procurement Specialist AFTPC Donald Mneney Procurement Specialist AFTPC Barbara Magezi Public Sector Management Specialist AFTPR Sahr Kpundeh Sr Public Sector Specialist AFTPR Prasad C. Mohan Lead I E C Specialist A F T K L Stephen Ndegwa Peer Reviwer PRMPS Amithaba Mukherjee Peer Reviewer ECSPE Klaus Decker Peer Reviewer LEGJR

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Kithinji Kiragu Public Sector Management Specialist Consultant Rwekaza Mukandala Political Scientist Consultant Joel Barkan Political Scientist Consultant Betty Bigombe Governance Specialist Consultant Reynaldo P. Castro Operations Specialist Consultant Brian H. Falconer Financial Management Consultant Mwanaisha Kassanga Team Assistant AFC04 England Maasaba Team Assistant AFC04

Bank funds expended to date on project preparation: 1. Bank resources: $521,000 2. Trust funds: 0 3. Total: $521,000

Estimated Approval and Supervision costs: 1. Remaining costs to approval: $100,000 2. Estimated annual supervision cost: $130,000

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Annex 12: Documents in the Project Fi le

TANZANIA: Accountability, Transparency & Integrity Project

Hyden, G., A power analysis for SIDA’s country strategy in Tanzania, 2005.

Evaluation o f project U R T 00/006 and URT 00/06: Strengthening Capacities to Combat Corruption in Tanzania, Ghana Center for Democratic Development. Jul. 2004.

FILMUP Implementation Completion Report, World Bank. Nov. 2000.

Feasibility study and preliminary design o f an integrated management information systems for the legal sector institutions, PricewaterhouseCoopers, June.2005

Feasibility study and pre-contract services o f the judiciary infrastructure, M / s Hab Consult Ltd et. al.

Institutional assessment of the Tanzania Law School, PricewaterhouseCoopers.

Medium Term Strategy for Legal Sector Reform 2005/06 - 2007/08, Vol. I and 11, Ministry o f Justice and Constitutional Affairs, Dec. 2004.

National Anti-Corruption Strategy and Action Plan, President’s Office, Good Governance Coordination Unit.

National Framework on Good Governance, President’s Office, Good Governance Coordination Unit.

Mukandala, R. and al, Political Economy o f Tanzania, 2005

Public Financial Management Reform Program Strategic Plan, Ministry o f Finance. Aug. 2005.

Research o n Citizen’s Access to Information and I t ’ s Use for Greater Government Accountability and Responsiveness, IDASA, Dec. 2004.

Review o f the NBAA Corporate Plan, Delloite and Touche, Jun. 2005.

Study to identify the nature o f administrative support in the legal sector institutions, Checchi, Dec. 2004.

Tanzania Ethics Promotion Project, Elaine Ward, University o f Calgary, Nov . 2004.

Understanding Accountability in Tanzania - Drivers o f Change, Oxford Pol icy Management, 2005.

Updating and harmonizing the legal framework for key legal sector institutions, M / s Desjardin Duchame Stein Monist et. al., Jun. 2005.

- 111 -

Annex 13: Statement of Loans and Credits

TANZANIA: Accountability, Transparency & Integrity Project

PO85786

PO70736

PO57234

PO74624

PO710 14

PO78387

PO82335

P 0 8 3 0 8 0

PO67103

PO59073

PO74072

PO73397

PO58706

PO47762

PO02797

PO65372

PO69982

PO49838

PO57187

PO60833

PO47761

PO02789

PO46837

PO02770

2005

2005

2004

2004

2004

2004

2004

2004

2003

2003

2003

2002

2002

2002

2002

2001

2001

2000

2000

2000

1999

1998

1997

1994

Second Social Action Fund

TZ-Local Govt Support Project SIL (FY05) TZ-GEF Eastern Arc Forests SIL (FY04)

TZ-Emergency Power Supply (FY04)

TZ-HIV/AIDS A P L (FY04) TZ-Central Transport Conidor Prj (FY04)

Second Health Sector Dev.

TZ-Secondary Edu Dev P i (FY04)

TZ-Partic Agr Dev & Empwrmnt SIL (FY03) DAR W A T E R SUP & SANITATION

T Z PRSCI

TZ-Lower Kihansi Env Mgmt T A L (FY02)

TZ-Forest Conserv & Mgmt SIL (FY02)

RURAL WATER SUPPLY

T Z SONGO SONGO GAS DEV. & POWER GEN.

Social Action Fund

Regional Trade Fac. Proj. - Tanzania

Privatization

FIDP I1

PUBLIC SERV REF PROG

Tax Administration

Human Res. Dev. I TZ-Lake Victoria Environment (IDA) T Z ROADS I1

Difference between expected and actual disbursements Original Amount in US$ Millions

Project ID F Y Purpose IBRD I D A SF GEF Cancel. Undisb. Orig. Frm. Rev’d

0.00 129.00 0.00 0.00 0.00 156.00 0.17 0.00

0.00

0.00 0.00 0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00

0.00 0.00

0.00

0.00

0.00

52.00

0.00

43.80

0.00 122.00

40.00

123.60

56.58

61.50

100.00

6.30

31.10

26.00

183 .OO

60.00

15.00

45.90

27.50

41.20

40.00

20.90

10.10

170.20

0.00 0.00

0.00 7.00

0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00

0.00

0.00 0.00 0.00

0.00

0.00 0.00 0.00

63.53

54.29

7.00

8.41

74.82 112.87

39.35

100.22

57.45

52.10

0.19

4.30

33.38

25.19

103.07

0.75

8.84

30.16

11.27

24.01

15.46

0.48

3.54

14.72

0.00

2.17

-36.08

14.12

25.92

17.57

-0.13

6.51

10.40

-132.38

1.84

13.78

11.49

69.46

-7.69

6.52

27.15

9.70

-19.48

10.38

0.17

-4.91

82.42

0.00

0.00

0.00

0.00

0.00 0.00

0.00

0.00

0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00

0.00

3.06

0.00 10.38

0.00

0.00

41.43

Total: 0.00 1,405.68 0.00 7.00 63.53 937.87 109.10 54.87

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TANZANIA Statement o f International Finance Corporation (IFC’s)

Held and Disbursed Portfolio In Millions o f U S Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

1997 AEF Aquva Ginner 0.68 0.00 0.00 0.00 0.68 0.00 0.00 0.00

2001 AEF Boundary Hi1 0.20 0.00 0.00 0.00 0.20 0.00 0.00 0.00

1998 AEF Maj i Masafi 0.18 0.00 0.00 0.00 0.18 0.00 0.00 0.00 2000 AEF Zan Safari 0.52 0.00 0.00 0.00 0.52 0.00 0.00 0.00 2002 Exim Bank 2.08 0.00 1 .oo 0.00 2.08 0.00 1 .oo 0.00 1996 IHP 0.23 0.00 0.00 0.00 0.23 0.00 0.00 0.00

2000 IOH 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00

2000 NBC 0.00 10.00 0.00 0.00 0.00 3.63 0.00 0.00 1993 TPS (Tanzania) 3.50 0.87 1.04 0.00 3.50 0.87 1.04 0.00 1991197 TPS Zanzibar 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00

1994 Tanzania Brewery 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00

Total portfolio: 9.89 14.33 2.04 0.00 9.89 7.96 2.04 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

- 113 -

Annex 14: Country at a Glance TANZANIA: Accountability, Transparency & Integrity Project

POVERTY and SOCIAL

2004 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

Average annual growth, 1998-04

Population (%) Labor force (%)

Most recent estimate (latest year available, 1998-04)

Poverty (% ofpopulation below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% ofchildren under 5) Access to an improved water source Literacy (% ofpopulation age 15+) Gross primary enrollment

(% ofpopulation)

(% of school-age population) Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1984

GDP (US$ billions) 6.3 Gross capital formation1GDP

8.3 Exports of goods and serviceslGDP Gross domestic savings/GDP 7.8 Gross national savings1GDP 9.9

Interest paymentsiGDP 0.9 Current account balanceIGOP -5.0

Total debVGDP 114.7 Total debt servicelexports 26.6 Present value of debVGDP Present value of debVexports

1994-04 (average annual growth) GDP 5.0

Exports of goods and services 5.6 GOP per capita 2.1

Tanzanla

35.1 340 11.8

2.6 -0.8

35 36 51 68 38 60 80

106 108 104

1994

4.5 24.6 20.6 -0.3 6.6

-23.8 1.5

160.4 21.5

2003

7.1 5.0 8.8

Sub- Saharan

Africa

719 600 432

2.2 1 .o

37 46

101

58 65 95

102 88

2003

10.3 18.6 17.6 9.8

10.4

-7.6 0.4

65.7 5.1

18.6 106.4

2004

6.7 4.2 9.0

Low- income

2,338 51 0

1.184

1.8 2.1

31 58 79 44 75 61 94

101 88

2004

11.3 18.4 19.1 7.9 8.5

-11.1 0.5

65.4 6.5

16.1 102.1

2004-08

7.3 4.7 7.4

Jevelopment diamond'

Life expectancy 7

GNI Gross

capita enrollment per +-+ primary

1

Access to improved water source

**- Tanzania

- Low-Income group

Economic ratios'

Trade

T

Domestic Capital savings formation

Indebtedness

p*-m~ Tanzania

- Low-income O ~ O U D

STRUCTURE of the ECONOMY

(% of GDP) Agriculture 526 450 Industry 109 151

Services 365 399

Household final consumption expenditure 776 81 2 General govt final consumption expenditure 146 171 Imports of goods and services 15 1 436

Manufactunng

(average annual growth) Agriculture Industry

Services

Household Rnai consumption expenditure General gov't Rnal consumption expenditure Gross capital formation Imports of goods and sewices

Manufacturing

1984.94

3.5 1 .o

39.9 4.1

3.1 0.7 3.8 2.7

1994.04

3.9 7.4 5.8 4.9

4.3 7.6 5.0 4.3

2003

4.0 10.4 8.6 5.6

3.7 29.6

5.6 6.9

2004

6.0 10.1 8.6 6.0

1.3 20.9

9.2 3.2

IGrowth of exports and imports (YO) I 40 30 20 70 0

-10 -20

1 -Exports -C-- Imports

Note: 2004 data are preliminary estimates.

*The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.

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PRICES and GOVERNMENT FINANCE

Domestic prices (99 change) Consumer prices Implicit GDP deflator

Government finance (99 of GDP, includes current grants) Current revenue Current budget balance Overall surplusldeficit

TRADE

(US$ millions) Total exports (fob)

Coffee cotton Manufactures .

Total imports (cif) Food Fuel and energy Capital goods

Export price inde$2000=100) Import price inde$2000=100) Terms of tradq'2000=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net resefves

Memo: Reserves including golg/S$ millions) Conversion rat$D€C, local/US$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment (net inflows) Pohfolio equity (net inflows)

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

1984

36.1

18.1 -2.2 -8.1

1984

388 154 50 33

856 83

230 336

85 104 82

1984

491 920

-429

-73 186

-315

350 -35

12.6

1984

7,228 206 51 8

131 31 5

29 1 324 35

0

35 74 17 57 20 38

1994

37 2 31 2

10.5 -1 8 -5.1

1994

486 115 105 77

1,344 97

124 597

88 145 61

1994

855 2,242

-1,387

-1 54 465

-1,076

1,183 -107

306 509.6

1994

7,235 114

1,998

183 42 70

564 156

2 63 0

195 21 7 77

139 35

104

2003

4.4 5.6

12.1 -2.5 -7.7

2003

1,010 49 42 76

1,821 146 261 751

99 112 89

2003

1,716 2,580 -864

-33 119

-778

1,239 -46 1

2,040 1,039.1

2003

6,759 3

3,474

91 3

29

788 456

16 232

0

251 397

12 385 20

365

2004

4.1 8.1

13.0 -3.5 -9.3

2004

1,175 41 38 95

2,366 257 461 677

108 133 81

2004

1,911 3,231

-1,320

-68 132

-1,256

1,497 -241

2,238 1,089.7

2004

7,391 0

3,916

131 3

41

829 371

-4 232

0

451 343

16 327 28

299

I Export and import levels (US$ mill.) I 2,500

2,000

1.500

1.000

500

0 98 99 00 01 02 03

kB Exports 0 Imports

Current account balance to GDP (Oh)

0 2 4

-6 8

-10 -12 -14 -18 1.181

Composition of 2004 debt (US$ mill.) I

C. 423

A - IBRD B - IDA 0 . Other multilateral F - Pnvate C-IMF G -Short-term

E - Bilateral

- 115 -

Annex 15: Letter o f Sector Policy

TANZANIA: Accountability, Transparency & Integrity Project

‘RECEIVEDMAR 2 I 2006

oom dR THE UNITED REPUBLIC OF TANZANIA

Telegrams: “TREASURY’, DARES SALAAM Tal: 2111174-6, Fax: 2110326,Telex: 41329

(All official communications should be addressed to the Permanent Secretary to the Treasury and NOT to individuals).

In reply please quote:

MINISTRY OF FINANCE L L ‘

P.O. Box 9111, DAR ES SALAAM,

TANZANIA.

. .

Ref. No: TYC/ B/40/ 130 1lth March, 2006

Ms Judy O’Connor, Country Director for Tanzania and Uganda, World Bank Country Office, DAR ES SALAAM.

D e a r M s y o r , 1

Re: ACCOUNTABILITY, TRANSPARENCY AND INTEGRITY PROJECT (ATIP) - LETTER OF SECTOR DEVELOPMENT POLICY

1. I am writing on behalf of the Government of the United Republic of Tanzania to request for a credit a mounting t o U S $ 4 0 m illion from t he I nternational D evelopment Association (IDA) to support the Tanzania Accountability, Transparency and Integrity Project. This credit will contribute to our Government‘s programs for enhancing good governance, in line with our newly adopted National Strategy for Growth and Reduction of Poverty (NSGRP or MKUKUTA in Kiswahili). The MKUKUTA focuses on three core areas as instrumental to poverty reduction in the period 2005-2010. The first two are (i) Growth of the Economy and Reduction of Income Poverty and; (ii) Improvement of Quality of Life and Social Well being. The third one (iii) on Governance and Accountability, is the focus of support under the proposed ATIP credit. Specifically, the credit will support implementation of the Legal Sector Reform Programme (LSRP); the Public Financial Management Reform Programme (PFMRP); strengthening coordination, monitoring and evaluation of the National Anti-Corruption Strategy and Action Plan (NACSAP); and an innovative programme to strengthen the demand side

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’ for transparency, integrity and accountability in use of public resources and improved public service delivery.

A. Background 2. Successive governments of this country since independence have recognized that good governance is critical to enhancing and sustaining Tanzania’s peace and stability, economic growth, social development and poverty reduction. In this perspective, the Third Phase Government of President Benjamin Mkapa promulgated a National Framework for Good Governance (NFGG) in 1999. The NFGG envisions a long term and comprehensive approach in the pursuit of the Government’s policy goals in good governance. This framework emphasizes focus on the following:

(a) Participation of the people in decision-making for social, political and economic development;

(b) Legal and regulatory framework for private sector development;

(c) Constitutionalism, the rule of law, administration of justice and protection of human rights;

(d) Gender equity;

(e) Accountability, transparency, and integrity in management of public affairs;

(f) Electoral democracy; and

(9) Greater public service capabilities to deliver services efficiently and effectively.

3. This holistic approach reflects the understanding that’ attainment of good governance at the national level entails a wide front of inclusive strategic measures that cover central and local governments, the private sector and the civil society. Furthermore, this comprehensive strategic framework underscores the linkages among the various areas of focus. It is thereby feasible to formulate specific strategies and

2

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action programmes, such as the LSRP, PFMRP and NACSAP without loosing sight of the ultimate long term goals and the complementarities of the proposed interventions.

4. The NFGG envisions a broad-based national partnership for development of good governance. The partnership involves the central government, local governments, private sector and civil society, as illustrated in the figure below.

Figure: Partnership for Good Governance in Tanzania

(and irs orgmbalio

Source: Government, The National Framework on Good Governance, December 1999

Under NFGG, four major policy and strategic initiatives have been formulated, viz: the Public Service Reform Programme (PSRP), the Local Government Reform Programme (LGRP), the Legal Sector Reform Programme (LSRP), the Public Financial Management Reform Programme (PFMRP) and the National Anti-Corruption Strategy and Action Plan (NACSAP). The Third Phase Government has implemented these programme to varying degrees of success. In his maiden speech to Parliament in January 2006, H.E Jakaya Mrisho Kikwete, President of the United Republic of Tanzania promised to build on the strategies and programmes of the Third Phase Government. Therefore, as elaborated below, these programmes still constitute the

3

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policy and strategic framework for enhancing accountability, transparency and integrity in the use of public resources and public service delivery.

B. Public Financial Management Reform Programme

5. The main goal of the Public Financial Management Reform Programme (PFMRP) is to improve the management of public financial resources for economic growth, public service delivery and poverty reduction. The PFMRP aims at improving the strategic orientation of the MoF to provide leadership in implementing public financial management across government and ensure its efforts are coordinated with other reform programs and sector initiatives. Implementation of the PFMRP will result in an enhanced capacity of MoF to manage public financial resources in an effective, transparent and accountable manner and a ssociated improvements in the ministries, departments and agencies (MDAs) public financial management capacity. It will also result in a strengthened capacity of the National Audit Office (NAO) to perform its oversight function effectively. The PFMRP has six key strategic goals: (i) improved capacity of the MoF for sound m acroeconomic and fiscal m anagement; (ii) devolved decision-making and accountability for resources to MDAs; (iii) improved predictability of

resources to MDAs; (iv) enhanced value-for-money in the use of public resources; (v) reduced dependency on external financing; and (vi) capacity for sustained improvements in management and program implementation.

6. The current phase of the PFMRP (2004-2009 ) builds on the major strides made in macroeconomic and fiscal stabilization, a nd public expenditure management since the second half of the 1990s. The basic modules of an integrated financial management system (IFMS) have been successfully operationalized for some years in all ministries, departments and agencies (MDAs). These systems have enabled particularly effective accounting and budgetary control of public expenditures. IFMS is also in use in 32 local government authorities (councils). It will be installed in another 32 councils during this fiscal year (2005/06). The target under the PFMRP is to roll out to all councils in the next three years. When that is accomplished, there will be for the first time a reliable

4

- 119 -

basis for consolidating the execution, control and accounting for the total Government budget (central and local governments).

7. A particularly noteworthy development under the PFMRP is the implementation of the Strategic Budget Allocation System (SBAS), which enables consistency between strategic plans and budgets. SBAS has facilitated focusing of public expenditures to strategic priorities, and today MKUKUTA-related funding accounts for 54 percent of Central Government budget allocation. Over time, as MKUKUTA gets fully costed and

interventions prioritised and sequenced, the Government's Medium-Term Expenditure Framework (MTEF) will translate comprehensively the policy objectives into programmes, targets and activities. Successful implementation of the PFMRP will therefore facilitate efficient and effective use of public expenditures in pursuit of

MKUKUTA goals.

C. Legal Sector Reform Program 8. The i mperative to t ransform Tanzania's I egal a nd j udicial s ystems h as been a key policy objective for the past decade. However, progress in the reform of this sector has been comparatively slow. The problems and constraints underlying the weakness of the legal and judicial system have been identified by stakeholders as: (i) a fragmented, excessively bureaucratic, cumbersome a nd o utdated legal and regulatory framework; (ii) weak management and coordination of legal sector institutions; (iii) low competence, morale and integrity of public sector legal personnel; (iv) inadequate numbers of professionally-trained legal personnel: (v) limited access to legal and judicial services by poor and uninformed citizens; and (vi) poorly furnished, equipped and maintained work environment of public legal sector institutions. In response to these deficiencies, the Government has developed a comprehensive Legal Sector Reform Programme (LSRP).

9. Achieving the strategic goals under the LSRP will be a long-term undertaking, and will transcend the current medium-term (three-year) programme (2005-2008). The medium term plan has the following six key result areas:

5

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(a) establishment of harmonized national legal framework: (b) increased access to justice for the poor and disadvantaged; (c) improved governance and administrative justice; (d) improved skills and know1,edge of legal professionals; (e) improved service delivery capacity in key legal sector institutions; and (f) effective programme management, coordination, and monitoring and evaluation,

10. The LSRP is the result of a long participatory process that started with a series of comprehensive studies on the legal/judicial system carried out under the leadership of a Legal Reform Task Force. The Task Force report produced in 1996 highlighted issues that overall remain valid. The LSRP and its medium-term strategy and action plan were prepared in response to the Task Force's recommendations. The dialogue involved many stakeholders, both government and non-government, who together designed the overall LSRP over a long period.

11. Government is according particularly high priority to the implementation of the LSRP, which is seen to lag behind the other crosscutting reform programs that are underway. Failure to make rapid progress in the reform of the sector would undermine the gains made in the other areas of public service, public finance, local government, and sectoral reforms, and would jeopardize achieving the MKUKUTA objectives.

D. 12. Implementation of the National Anti-Corruption Strategy and Action Plan (NACSAP) is the focus of the Government's interventions to combat corruption. It provides the framework within which ministries, departments and agencies (MDAs) are expected to initiate concrete measures to address corruption. NACSAP I was a coherent and holistic programme designed to be implemented over five years (2000- 05). Under NACSAP I, a set of high priority areas of interventions were identified under the following headings:

National Anti-Corruption Strategy and Action Plan

0 inefficient and ineffective public service delivery; 0 corruption;

6

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weak legal and judicial systems;

gaps in procedures and controls for public expenditure management and more broadly financial accountability; poor management of information including records and data; and

weak oversight and watchdog institutions.

13. Government established the Good Governance Coordination Unit (GGCU) in the President‘s Office to coordinate the implementation of NACSAP which includes monitoring the implementation of the crosscutting reforms as a crucial vehicle to

discourage and control corruption. The GGCU has mobilized MDAs to report regularly and systematically on their fight against corruption, and the published quarterly reports on the implementation of the MDAs’ anti-corruption plans depict substantial progress. Tanzania’s commitment to improve good governance, and the results thereof, has been recognised by local and international stakeholders including a finding from a recent survey that the country’s governance profile made the most improvement in all three governance areas (Voice and Accountability, Government Effectiveness, and Control of Corruption) over the last ten years among African countries south of Sahara’. All local governments (councils) are also required to commence this fiscal year, 2005106, the implementation of anti-corruption strategies and action plans they prepared under the guidance and supervision of the GGCU last year.

14. Government is now in the process of taking stock of its achievements with MDAs’ implementation of the NACSAP I, as well as designing a successor phase. The key thrust of the next NACSAP will remain the same. Government is also taking broad measures to strengthen the GGCU through, among others, increasing the number of staff and enhancing training.

E. 15. Tanzania has led the way in establishing oversight institutions for good governance. In 1995, it introduced a leadership code of ethics and established the

Strengthening the Demand Side of Good Governance

‘ Kaufmann, Kraay and Mastruzzi (2005) - http://www.worldbank.org/wbi/governmane/govdata

7

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Ethics Secretariat whose executive officer is a Judge of the High Court. It also

established a Prevention of Corruption Bureau (PCB) and a Commission for Human Rights and Good Governance (CHRGG). This is in addition to the more traditional institutions such as Parliament and the NAO. In spite of this multiplicity of institutions, the country continues to face serious governance problems. The afore-mentioned oversight institutions remain weak.

These weaknesses emanate from the common maladies that have afflicted other public institutions, including: under-funding of operations, inability to recruit, motivate and retain well qualified and strongly motivated officers, overlapping mandates that give rise to conflicts, absence of collaboration and coordination amongst these institutions, and a weak legal framework. The NFGG therefore sets the goal to strengthen these institutions and their framework to enable them to exercise more effectively their oversight role and to hold public service managers more accountable.

16. The NFGG also states that civil society institutions (Le. NGOs, CBOs, religious societies, trade unions, charities, clubs, cultural groups, sports associations, special interest groups, professional associations, academic and research institutions, etc.) constitute a strong instrument for the effective participation and involvement of the people in decision-making, and social, political and economic development activities. Also, civil society organizations have a crucial role in informing and sensitizing the people. I n t his context, the framework advocates the need t o strengthen c ivil society organizations by increasing citizens’ voice in pursuit of good governance.

17. In the NFGG, furthermore, it is recognized that civil society organizations in the country have considerable capacity weaknesses, in areas of problem analysis, advocacy, outreach, networking, management, revenue raising, accountability and responsiveness. A key factor that underlies the weaknesses in the civil society organizations includes a reform focus on the supply side (public sector) of the accountability equation. The NFGG stipulates that enhanced and sustained accountability of state institutions in the long run will require strengthening of the institutions that represent the demand side of the accountability equation, including civil

8

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society and mass media organizations. Government is keen to realize this development, and hence its endorsement of the initiative in the ATIP to strengthen the oversight and watchdog institutions through the Facility for Enhanced Accountability and

Trans pa re n cy (FEAT).

F. Conclusion 18. Good governance is critical to enhancing and sustaining Tanzania’s peace and stability, economic growth, social development and poverty reduction. Our Government’s policy objectives for good governance are well articulated in the third cluster of the MKUKUTA. Several programs that constitute a comprehensive strategy for pursuit of g ood governance h ave been I aunched as described i n this I etter. The fourth phase Government of H.E. President Jakaya Mrisho Kikwete is not only committed to build on the achievements from the past, but also to accelerating and enhancing efficiency and effectiveness of implementation of these programmes. The President h as, i n h is i naugural s peech t o Parliament pledged that “The fourth p hase government will fulfil its governance and development responsibilities and will focus on good governance and accountability, the rule of law and respect for the human rights of all people.” ATIP will support fully and timely implementation of the programmes that will enable Government to deliver on her pledges. Government appreciates the support of the World Bank in the implementation of these programmes.

Thanking you for your cooperation.

Yours sincerely n

Gray S. Mgonja PERMANENT SECRETARY -TREASURY

9

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Annex 16: Maps

TANZANIA: Accountability, Transparency & Integrity Project

Map Number 33494

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DODOMADODOMA

TTaboraaboraKigomaKigoma

ArushaArusha

MwanzaMwanza

SingidaSingida

MorogoroMorogoro

ZanzibarZanzibar

ShinyangaShinyanga

K E N Y A

UGANDA

ZAMBIA

MOZAMBIQUE

RWANDA

BURUNDI

DEM

. R

EP.

OF

CO

NG

O

To Nakuru

To Malindi

To Kasama

To Kasama

To Kasungu

To Lichinga

To Marrupa

To Chiúre

To Nakuru

To Tororo

To Kampala

To Kampala

To Kama A R U S H A

M A R A

R U V U M A MTWARA

KILIMANJARO

I R I N G A

L I N D I

D O D O M A

K I G O M A

M WA N Z A

S H I N YA N G A

R U K W A

M B E Y A

P WA N I

TA B O R A ZANZIBARNORTH

PEMBANORTH

PEMBASOUTH

ZANZIBARSOUTH &CENTRALZANZIBARWEST

DAR ES SALAAM

KAGERA

SINGIDATA N G A

MOROGORO

Yalova

Kaliua

Kasulu

Babati

Kondoa

Manyoni

KibondoKahama

Nzega

Buoen

Njombe

Mpui

Mpanda

Tunduma

Same

Tunduru

Masasi

Utete

KilwaKivinje

Wete

Lindi

Mbeya

Koani

Tanga

Moshi

Songea

Mtwara

Iringa

Kibaha

DODOMA

Mkoani

TaboraKigoma

Arusha

Mwanza

MusomaBukoba

Singida

Morogoro

Zanzibar

Mkokotoni

Shinyanga

Sumbawanga

Dar Es Salaam

K E N Y A

UGANDA

ZAMBIA

MOZAMBIQUE

RWANDA

BURUNDI

DEM

. R

EP.

OF

CO

NG

O

Mbemkur

u

Matandu

Rufij

i

GreatRuaha

Rungwa

Wam

i

Simiyu

Ruvuma

Mara

Kagera

Moyow

osi

Ugalla

Pangani

Kilo

mbe

ro INDIAN

OCEAN

Lake

Victor ia

LakeTanganyika

LakeMalawi

LakeRukwa

LakeNatron

LakeEyasi Lake

Manyara

To Nakuru

To Malindi

To Kasama

To Kasama

To Kasungu

To Lichinga

To Marrupa

To Chiúre

To Nakuru

To Tororo

To Kampala

To Kampala

To Kama

Iwem

bere

St

eppe

MasaiSteppe

NguruMts.

MbeyaRange

KipengereRange

Kilimanjaro(5895 m)

30°E

0°

2°S

8°S

10°S

0°

2°S

4°S

8°S

10°S

12°S

32°E 34°E 36°E

32°E 34°E 36°E 40°E

TANZANIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 33494

JULY 2005

TANZANIAMAIN ROADS

RAILROADS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

SELECTED CITIES AND TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

RIVERS