Economic Commission for Africa Commission 6conomique pour 1'afrique
AFRICAN LEARNING GROUP
ON POVERTY REDUCTION STRATEGIES
PRSP STRATEGY PAPER
Experiences and Lessons from Tanzania
by
Prof. Samuel M. Wangwe
Economic and Social Research Foundation Dar es Salaam
18 September 2001
5-6 November 2001
Economic Commission for Africa Commission 6conomique pour l'afrique
AFRICAN LEARNING GROUP
ON POVERTY REDUCTION STRATEGIES
PRSP STRATEGY PAPER
Experiences and Lessons from Tanzania
by
Prof. Samuel M. Wangwe
Economic and Social Research Foundation Dar es Salaam
18 September 2001
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TABLE OF CONTENTS
Lfi INTRODUCTION ~ - 1
2,0 SCOPE AND DEPTH OF THE GROWTH STRATEGY...- 4
3J) THE PARTICIPATION PROCESS - 6
4,0 LINKAGE BETWEEN DEBT RELIEF AND POVERTY .„ 11
S£ CAPACITY GAPS: ANALYTICAL AND DATA NEEDS.- 13
^0 ADJUSTMENT OF POLICIES AND PRACTICES OF DEVELOPMENT
PARTNERS - 15
7JL CONCLUSION - 17
REFERENCES - 19
1.0 INTRODUCTION
1.1 Background and context
The poverty reduction strategy papers represent a higher stage of the policy reform process which started in the mid-1980s. The reforms in Tanzania during the 1980s and 1990s were, like in many African countries, based on the World Bank/IMF initiated Structural Adjustment Programmes (SAPs) as a precondition for receiving loans. The World Bank and the IMF argue that SAPs are necessary to bring a developing country from crisis to economic recovery and growth. The SAP policy reforms have reflected liberalization of policies towards a particular type of policy package. SAPs are mainly focussing on macroeconomic stabilisation, public sector reform and liberalization of markets and trade. The role of the IMF and the World Bank has become increasingly important in four related aspects of development in Tanzania:
(i) Providing a seal of approval before donors make decisions on aid flows.
(ii) Providing a signal to international financial markets as private creditors hesitate to lend money to risky countries unless they have a programme with the International Finance Institutions (IFIs).
(iii) Debt relief is often tied to the adoption and implementation of some policy reforms.
(iv) Influencing the type and pace of policy reforms and the consequent erosion of ownership of the policy making process.
The first generation of policy reforms were directed at macroeconomic stabilization and
"getting the prices right". While Tanzania embarked on SAP, there were no strategies for taking care of the social dimensions of adjustment. It was widely believed that stabilizing the economy and the resulting growth would ultimately lead to poverty reduction. Critics of SAPs, pointed to the fact that SAPs' objectives were not addressing the social dimensions of adjustment and that the SAPs were not making any notable dent on poverty. The leading
critic from this perspective was UNICEF (1987)1 In response, SAPs started to include some
social dimensions. The Economic and Social Action Programme (1989-92) was partly an attempt to take on board the social aspects of adjustment. The social dimension, however, was introduced as an "add on" rather than being integrated in the policy making process. The fact that poverty is multidimensional and cross cutting was not appreciated at that time. It is in this context, that the concept of Poverty Reduction Strategy Papers (PRSP) has introduced a new dimension. PRSP attempts to integrate the poverty concern in the policy making process of indebted countries.
Adjustment with A Human Face.
The underlying principles of the PRSP (it is a "paper" within a process) are first steps in making development strategies truly responsive to the needs of the poor. The principles include:
(i) Country driven with governments leading the process.
(ii) Broad-based participation between governments, other actors in civil society, the private sector and the donor community in the adoption and monitoring of the resulting strategy.
(iii) Results oriented identifying and prioritizing desired outcomes and planning the way towards them. PRSPs are meant to provide a link between growth and poverty reduction. In this context, poverty reduction would result from high growth and a growth that is also pro-poor and widely shared.
(iv) Comprehensive view of poverty taking into account of its multi-dimensional nature covering incomes, human capabilities (e.g. education and health), empowerment in terms of command over resources and authority to make decisions and governance (fighting corruption, ensuring responsiveness to the needs of the poor and
promoting accountability). According to Sen (1999)2 poverty has five dimensions
covering economic, social, political, transparency and protective security. Poverty reduction is supposed to mean processes that improved the capabilities and functioning of people in these five dimensions. This broad concept of poverty has
been adopted in major recent development reports such as World Bank (2000)3 and UNDP (2000)4.
(v) The successful design of PRSPs was linked to support from the donor community that was expected to take the form of debt relief; poverty reduction support credits and direct transfer of resources to communities and local government.
In preparation of the launching of the first meeting of the ECA- Sponsored Poverty Reduction Strategy Paper learning group (PRSP-LG) for African countries it has been decided that it will be useful to learn from past experience and from experience of several countries in Africa. The PRSP-LG forum is designed to facilitate systematic sharing of information and experiences on PRSP experiences and lessons of how the process is unfolding in Africa.
2 Sen, A., Development as Freedom, 1999.
3 World Bank: World Development Report, 2000.
4 UNDP: Human Development Report, 2000.
The purpose of this paper is to present the experience of Tanzania in respect of five main issues relating to the unfolding of experiences and lessons from the PRSP process. The first issue referring to the scope and depth of the growth strategy that is underpinning the PRSPs is examined in section 2. Section 3 addresses the second issue which relates to the depth and legitimacy of the participatory process and the associated institutions and processes. The third issue covering the linkage between debt relief and poverty and the implications on monitoring poverty outcomes is examined in section 4. The fourth issue relating to gaps in analytical capacity and data gaps for monitoring poverty outcomes is the subject of section 5.
The fifth issue is the extent to which development partners are adjusting their aid policies and practices consistent with the ownership and participatory principles of the PRSP process.
This issue is covered in section 6. Section 7 is the conclusion.
2.0 SCOPE AND DEPTH OF THE GROWTH STRATEGY
PRSPs are meant to provide a link between growth and poverty reduction. In this context, poverty reduction would result from a high level of growth and a growth that is also pro-poor and widely shared in society. The PRSP focused on initiatives to strengthen growth prospects in pro-poor sectors, strengthen prioritization, increase resource allocation to priority sectors, develop an effective framework for monitoring poverty and elaborating strategies for intervention in key sectors.
During 2000/01, the first year of implementing PRSP, the Government of Tanzania continued to consolidate the macroeconomic situation. In year 2000, GDP rose to 4.9% up from 4.7%
the previous year and is projected to increase to 5.9% in 2001. However, the weak performance of agriculture, which caters for lives of 70-80% of Tanzanians, coupled with the collapse of export prices for cashewnuts, coffee and cotton pose a major challenge to the poverty reduction objective. The formulation of the Agricultural Sector Development Strategy (ASDS) in August 2001, the Rural Development Policy (March 2001) and the Rural Development Strategy (RDS) are recent developments which represent clear efforts to generate growth in the sector where the majority of the poor are active and derive their livelihood. For instance, the ASDS has been designed with the objective of increasing profitability and productivity of agriculture and livestock as a means of reducing rural poverty by improving the incomes of farmers and promoting food security.
At the time of producing the first PRSP in September 2000 not all sectors had elaborate sector development strategies. It was understood that in the course of implementation further work would be needed to prepare outstanding sector strategies. It is in this context that during 2000/01 the Government prepared sector development strategies for basic education, agriculture and^rural development and reviewed the strategies of tlie other priority sectors with a view to identifying action plans for pursuing the PRSP objectives. In costing the action programmes for the priority sectors special attention was gjven to estimating total requirements based on the Public Expenditure Review (PER) and the Medium-Term Expenditure Framework (MTEF). In addition, attention was given to enhancing non-wage current outlays (popularly known as "other charges") and development expenditure for key interventions needed to attain the PRSP objectives.
The 2001/02 budget has continued to deepen growth promoting policies such as facilitation of investments, abolition of taxes on capital goods and intermediate goods, removal of all national taxes on agriculture, rationalization of business licensing procedures, removal of advance payment of income tax prior to commencement of business and increasing allocation of resources to the priority sectors taking into account PRSP objectives.
During 2000/01 the Government monitored progress in the main crosscutting issues which are relevant for deepening the growth impact on poverty. The main issues in this context include governance, gender, environment, HID/AIDS, employment and urban poverty. The interventions needed in these areas have been costed under the respective priorities sectors of the PRSP or line ministries.
Concern has continued to be expressed over the need to increase the orientation towards pro- rural growth. In this respect three types of concerns can be identified. First, there is concern that adequate resources have not been allocated to agriculture, a sector in which the majority of the poor are found. While the agricultural development strategy has been developed and approved by Cabinet in August 2001, it is apparent that implementation of the strategy has not yet been costed. This means that resource allocation has yet to be shifted in favour of agriculture. Second, concern has been expressed that deliberate effort has not been made to promote linkages between the fast growing sectors such as mining and tourism and the activities of rural communities. Growth in these sectors is therefore likely to bypass the majority of the poor. Third, there are indications that the rural areas are not receiving adequate attention in terms of provision of quality social services, rationalizing and reducing the tax burden on agriculture (especially tax by local authorities), improving market access within the country and outside, reducing unnecessary bureaucracy in production and trade in the rural areas and designing appropriate safety nets for the vulnerable groups in society.
3.0 THE PARTICIPATION PROCESS
The reforms of the late 1980s and 1990s have entailed economic and political liberalization and democratization. On the economic management front, a shift has been made from a public sector-led economy associated with central planning and administrative control of the economy towards a market-oriented economy associated with private sector led development.
In terms of policy making it has come to be accepted that policy making is no longer a monopoly of the government. Participation of various groups in society has therefore become an accepted practice in recent policy making initiatives such as Vision 2025 (1998) and the National Poverty Eradication Strategy (1997) which have been prepared in a participatory manner. The National Poverty Eradication Strategy (NPES) set out long-term poverty reduction goals consistent with the international development goals. This was followed by the PER and MTEF processes which focused on priority areas and preparation of poverty indicators. The PRSP process has built on these processes.
The PRSP process itself has been participatory involving key stakeholders. Its preparation
has been participatory at three levels: government, domestic non-government stakeholders
and the development partners.(i) Government
The Government formed a high level Inter-Ministerial Committee of 12 ministers and Governor of the Bank of Tanzania in November 1999 which was to oversee the preparation of IPRSP. A Technical Committee of top civil servants representing central ministries and key sector ministries was formed at the same time to provide technical support to the Committee of Ministers. The Technical Committee drafted the IPRSP which was the basis for consultation with the CSOs in January 2000. Cabinet approved the IPRSP in February 2000. In March 2000 a prospectus of the final PRSP was prepared by the Technical Committee as a basis for further consultations with other domestic stakeholders. In June 2000 the Technical Committee having incorporated views from consultations of various groups produced a draft final (full) PRSP. Consultations were made with Parliament in June 2000 and with Regional Administrative Secretaries in August 2000.
Cabinet had the opportunity to discuss and approve the final draft PRSP in September 2000.
The PRSP was submitted to the World Bank and IMF in October and was endorsed in November 2000. Since then, quarterly Cabinet reviews have been held to review the implementation of PRSP based on reports submitted by the PRSP Ministerial Steering Committee. During the annual budget discussions, the parliamentarians had an opportunity to review the implementation of PRSP. In March 2001, the President convened a three-day seminar (chaired by him) which was attended by key regional and district leaders. The seminar was attended by all Regional Commissioners (20), all Regional Administrative Secretaries (20), District Commissioners (113) and all District Executive Directors (114).
One of the main agendas of the seminar was poverty reduction and copies of PRSP were made available to all participants.
After producing PRSP participation continued to be organized on sectors and issues which were still being elaborated. For instance, in June 2001 a workshop was organized in which key stakeholders were invited to participate in exploring effective ways to integrate environment concerns in the PRSP process.
Participation on the side of government has been better coordinated during the PRSP process than in previous times. The formation a inter-ministerial committees to systematically address the poverty problem is unprecedented. This therefore represents a positive step towards coordination of development management within government.
While acknowledging the positive development, three main concerns have been identified.
First, a survey undertaken by DFID (2001)5 has found that the level of participation, as
reflected by the level of understanding of the PRSP, declined steeply as the organizational locus of the respondents moved from Central Ministries and Priority sector ministries to other ministries. Within ministries the level of understanding declined as one moved beyond policy and planning departments. It was also found that the level of understanding declined as one moved from ministries in Dares Salaam to the regions and districts. The second concern relates to dissemination of information. The DFID survey has revealed that there is lack of a clear and comprehensive strategy for information, education and communication on the PRSP. Many survey respondents were found to be relying on ad hoc and informal sources of information about PRSP. Third, there is the concern about the capacity to cope with the coordination demands of the PRSP process. There is concern that that capacity is on the low side especially in the Vice-President's Office (VPO) which is designated as the main coordinating institution on poverty issues. The YPO is short of human resources to meet the large demands for coordination. Mainly because of the low capacity in VPO, during the preparation of the first PRSP, the Ministry of Finance (MOF) has had to shoulder considerable responsibilities in coordinating the PRSP process. However, MOF has huge responsibilities relating to budget management, government accounting, fiscal policy and short-to-medium term economic management in related areas. It is therefore overburdening for MOF to have to coordinate poverty issues which are essentially medium-to-long term development issues and are located in VPO. The challenge is to build that capacity in the VPO and /or to augment it with capacity from other institutions such as the Planning Commission and think tanks and other research institutes within and outside government.
Depth of Understanding of PRSP, 2001
(ii) Non-government Domestic stakeholders
At the level of non-government domestic stakeholders participation took the form of making initial consultations with CSOs in two workshops in January 2000 based on the Interim PRSP
(IPRSP). The two workshops involved CSOs provided inputs to the Technical Committee (of top civil servants). The IPRSP was completed and submitted in February 2000 and was endorsed by IMF and World Bank in March 2000. The Technical Committee worked on the
prospectus of the PRSP and completed it in March. At that point another forum of CSOs was organized. This was followed by holding seven zonal workshops (for two days each) in the country in May 2000 in which views from 426 villagers, 53 CSO representatives, 215 local councilors and 110 District Executive Directors were solicited on the causes of poverty and priority policies. This information was complemented by information from participatory poverty assessment exercises. In addition, presentation of the draft PRSP to Parliament fordiscussion and comments and to regional administrators provided them the opportunity to
contribute. Domestic stakeholders had another opportunity to participate in the nationalworkshop which was held in August 2000 where a draft PRSP was presented for discussion.
A further opportunity came at the Consultative Group meeting in September 2001 where a progress report on PRSP implementation was presented by government and discussed by domestic stakeholders and development partners.
The annual process of updating the PRSP presents an opportunity for periodic consultations with a wider range of domestic stakeholders to obtain useful feedback and foster ownership.
This provision coupled with the institutional reforms which are taking place present good prospects for improving the participatory process.
Institutional and organizational reforms are being carried out to consolidate participation and national dialogue. For instance, the formation of the Private Sector Foundation (1999) provides a mechanism for consolidating private sector participation while the launching of the National Business Council (2001), to be chaired by the President, provides an avenue for regular consultation between the Government and representatives of the private sector. The CSOs are increasingly becoming organized. The fact that they presented joint/common statements (on PRSP and other issues) in the Consultative Group meeting which was held in Dar es Salaam 11-12 September 2001 is a positive step in the right direction.
The level of participation in the PRSP process has continued to grow building on the experiences of formulating Vision 2025 (1995-98), NPES (1995-7) and TAS (1999-2000).
However, against the background of the progress made two concerns have been identified.
First, Civil Society Organizations (CSO) participants have found the participation process in PRSP technically demanding and unsatisfactory on a variety of counts. The detailed papers on PRSP have not always been made available in time and many CSOs have not developed the capacity to analyse the PRSP documents and make contributions. As regards the
advantage of pooling analytical resources the experience of other countries has shown that coming together and putting forward consolidated views can be one way of enhancing the effectiveness of CSO participation in the PSRP process. For example, in the case of Zambia, an innovative initiative has been taken whereby CSOs have come together to prepare a document suggesting policies and programmes for multi-sectoral poverty relief. The Civil Society for Poverty Reduction (CSPR) brought together 90 CSOs active in the local process and produced a 260-page document being a direct contribution to the final PRSP document with a view to enhancing domestic ownership. The document contributes to the understanding of poverty and priority areas for response. Two lessons can be drawn from the CSPR's experience. First, pooling of energies and resources under an umbrella body is useful. Second, reaching out to research institutions and sectoral policy specialists adds much value. This is one way of making fuller utilization of existing capacities in the country for enhancing participation and ownership.
The second concern relates to the tension that emerged between the speed with which country would like to access debt relief and the time needed for the domestic stakeholders to effectively participate in the process. In the preparation of the first PRSP, the tension seems to have been resolved in favour of speed to access debt relief at the expense of effective participation. The participation process was rather rushed in year 2000. However, during 2001 the participation process has shown some improvement. One aspect of better organization is the fact that, the CG meeting in September 2001, CSOs had the opportunity to receive papers in advance of the meeting and some of them even met as groups and presented joint statements on various aspects of the PRSP.
(Hi) Development Partners
The IMF and World Bank received the IPRSP in February 2000 and endorsed it in March 2000. That meant reaching the "decision point." At that point the IMF granted Tanzania a three-year Poverty Reduction and Growth Facility (PRGF).
Development partners participated in various sector-working groups which were formulating sector programmes and in the zonal and national workshops which discussed draft PRSP.
Consultations with the development partners were made in June 2000 where the draft PRSP was presented for discussion and comments. In addition, the development partners participated fully in the CG meeting which discussed progress made in implementing PRSP.
A concern has been identified in relation to striking the balance between participation by the development partners and ownership at the national level. Questions have been raised as to what extent the PRSP process itself is owned if it has to be endorsed by the IFIs. On this question, a tension is emerging between developing nationally owned PRSP and receiving endorsement by the boards of the World Bank and the IMF. This tension could mean that governments would be writing with a preconceived view of what is likely to be endorsed by 9
the Bank and Fund. If this is carried too far it can undermine ownership if the government accommodates views (actual or perceived) from Washington rather than from the domestic stakeholders. It is on this consideration that some demands are being expressed for all criteria by which PRSP content and processes are to be judged to be disclosed publicly in advance. This caution is real considering that the partnerships in development have been lopsided in favour of the donors. In it possibly on these grounds that one recent preliminary evaluation has indicated that the PRSP has been inevitably donor driven, though the goals for the most part reflect those identified previously by the GoT in many instances through a consultative process (Hamner, 2001). It is important that the GoT makes deliberate effort to regain ownership over the reform process but at the same time it is expected that donors will adjust the aid policies and delivery mechanisms so as to allow national ownership to occur.
This point is discussed further in section 6.
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4.0 LINKAGE BETWEEN DEBT RELIEF AND POVERTY
PRSP has come to be the foundation of the lending programmes with the IMF and World Bank and the HIPC debt relief initiatives. The first generation of the HIPC initiative tied its conditionality to the reform process. However, the conditions were such that actual debt relief was not substantial and it took too long for countries to qualify for the relief. In response to these concerns the World Bank and the IMF in 1998/99 introduced a comprehensive debt relief initiative to the world's poorest countries, most heavily indebted countries. Following the Comprehensive Development Framework, it was proposed that debt relief would be tied to the preparation of development strategies, which had a poverty reduction focus. These development strategies, reflected in PRSPs, have replaced Policy Framework Papers (PFPs) which were supposed to be prepared jointly by Governments, World Bank and the IMF. In practice, the PFPs were largely produced by the IMF. PRSPs are supposed to be a major departure from PFPs in terms of who has primary responsibility in preparing them. It is envisaged that governments rather that IFIs would have primary responsibility in preparing and implementing PRSPs. The PRSPs are supposed to be prepared only by HIPC and ESAF countries and the IMF and World Bank Boards must approve a country's PRSP before a lending programme and debt relief can be agreed with the Bank and Fund. For a country to qualify for multilateral debt relief it must have reached the decision point as defined by the Bank and the Fund.
The debt relief under PRSPs is supposed to be more substantial than what was possible in the first generation of HIPC and was supposed to come within a shorter period. Potential beneficiaries qualify for debt relief if they prepare acceptable Poverty Reduction Strategy papers. Tanzania has prepared its PRSP, it was endorsed in November 2000. Tanzania has been implementing the conditions for HIPC completion point as integral parts of the IMF's PRGF and World Bank's PSAC-1 programmes. Most of the conditions in these programmes have been implemented on schedule. The positive review of progress of PRSP at the CG meeting in Septembex2QQJ-Shows_good prospects for reaching the completion point soon. At the moment the IFIs are updating the sustainability analysis to assess the latest position to ascertain debt sustainability. This may be important taking into account the fact that expoer performance has fallen below projections on account of falling prices of some key exports such as cashewnuts, coffee and cotton in the last few months. It may be necessary to top up the earlier indications of the debt relief amounts.
Tanzania's debt strategy (1999) envisages to restore and maintain orderly relations with its creditors, reducing contractual obligations to a manageable debt-service ratio of about 20%
and maintaining it at that level or below. The resources that will be generated from debt relief will be channeled to priority sectors identified in PRSP. These sectors have a poverty focus.
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According to IMF/IDA (2000) cited in Mjema ( 2000)6 after HIPC the debt service was
projected to decline to 11.9 in 2000/01 (from 24.6 before HIPC) and to 9.5 in 2001/02 (from 20.9 without HIPC) and further to 8.4 in 2002/03 compared to 25.6 without HIPC.In 1998 an initiative was taken to establish a multilateral debt fund (MDF). Progress has been made on this front after year 2000 when PRSP was formulated in that MDF has been succeeded by the Poverty Reduction Budget Support (PRBS) amounting to $139 million in 2001/02. Progress has been made in terms of defining priority sectors, enhancing predictability, sharpening the poverty focus, and reducing further the transaction costs.
Many voices especially from CSOs continue to advocate total debt cancellation as the preferred option if debt relief is to have substantial impact on poverty reduction.
Mjema, G.D. Debt Relief and Poverty Reduction in Tanzania: Prospects and challenges. Paper presented at the 1st IFMASA Workshop on Poverty Alleviation and the Finance Management System in Tanzania. Dams Salaam, 29 November 2000.
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5.0 CAPACITY GAPS: ANALYTICAL AND DATA NEEDS
Tanzania has in the last two decades been formulating and implementing economic and social policies with various stakeholders. These policies should be primarily aimed at influencing the actions of individuals or groups in predetermined directions through a sequential process.
Capacity building in policy analysis is weak in Tanzania and needs to be strengthened to manage economic development. Evidence of the uneven performance of certain priority areas suggests the need to reinforce the capacity building efforts. Capacity problems are aggravated by two factors: the tightness of the timetable associated with the PRSP process and the capacity over-stretching due to by the multiplicity of reforms and review processes to which PRSP is an additional dimension. In turn, however, the success of PRSP will depend on the success of several complementary reform programmes (e.g. Public Service Reform Programme, Reform of Public Financial Management).
Capacity for policy analysis needs to be created in the whole sequence of policy making starting with identifying problems, analyzing them, formulating appropriate policies to options to solve them, articulating these options clearly, deciding upon which of the options to take, implementing these policies and finally evaluating the implementation process with a view to capitalizing on feed-backs. The PRSP process requires considerable coordination. It s implementation will require change in the way the government planning and economic management, improving the capacity to coordinate the development process.
Poverty focus in development requires good and relevant data on the status of poverty and on progress being made in poverty reduction. Considerable data g^ps exist in this area.
Capacity in filling critical poverty data gaps is in the process of being built as part of the monitoring activities of the PRSP. The poverty monitoring master plan, which was completed in June 2001, is expected to constitute an important tool to foster a coherent approach to monitoring poverty in Tanzania. The master plan presents a three-year programme of work, provides a detailed costing of activities and contains capacity building efforts that will be needed. The poverty monitoring master plan is the outcome of an agreement reached through a series of consultations on priority indicators, data sources, dissemination channels, institutional framework, progress review procedures, involvement of civil society organizations (CSOs) in the monitoring process, capacity building and cost of poverty monitoring.
The need to monitor progress towards poverty reduction has necessitated initiatives which has constituted a comprehensive poverty monitoring and evaluation system in 2000/01. The oversight institution is the Vice-President's Office and technically the leading institution is the National Poverty Monitoring Steering Committee. The established framework is oriented towards four main tasks:
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(i) Surveys and censuses
To fill data gaps and to reorient data analysis towards poverty monitoring. In recognition of the data gaps, the National Bureau of Statistics (NBS) has brought into public domain existing relevant poverty data and has taken the initiative to collect new poverty data. One set of existing data which has been disseminated through a workshop is the results of the 1999 Tanzania Reproductive and Child Health Survey. New poverty data has been collected by initiating a new and more comprehensive household survey (HBS) covering 22584 households and an Integrated Labour Force Survey covering 11660 households. The new data has been analysed partially and full analysis is expected to be completed in February 2002. In the meantime, however, the results of the 1991/92 HBS have been reassessed to allow trend comparison with the new HBS (2000/01). Based on HBS for 1991/92 and 2000/01 more comprehensive data on poverty has been produced. Arrangements are being made to produce regional estimates of income poverty and proxy indicators of income poverty for use in annual poverty monitoring. The 2002 Population and Housing Census has been designed with a view to generating further poverty data. NBS has drawn up a multi- year survey programme with a view to ensuring the PRSP data requirements are met.
(ii) Administrative data
This task entails the development of administrative data within Ministries and in local government and community levels. A framework for monitoring and evaluating progress has been developed at the local government level within the Local Government Reform Programme.
(Hi) Research andAnalysis
There is need to strengthen poverty-related research and analysis. This task will involve co ordination of participatory poverty assessments. Under this task, research priorities have been identified including testing underlying assumptions in PRSP, impact studies, and research to deepen knowledge and understanding of poverty reduction challenges.
(iv) Dissemination and sensitization
Poverty monitoring systems are expected to generate data and information which will be used for raising awareness and supporting advocacy. One of these activities is represented by the Tanzania Socio-economic Database which has been launched as a database for disseminating information through a designated website. There are plans to produce an Annual Status Report on Poverty in Tanzania which will compare current status of PRSP indicators against PRSP targets.
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6.0 ADJUSTMENT OF POLICIES AND PRACTICES OF DEVELOPMENT PARTNERS
Development partners are committed to changing their aid policies and practices with a view to enhancing ownership. Ownership means that the Government in the recipient country is responsible for writing the PRSP and for commissioning and organizing any technical input and other inputs from the development partners. The extent to which a PRSP is owned nationally will depend on how the government involves key stakeholders such as CSOs and others in the PRSP process.
In Tanzania, the PRSP process came at a time when discussions on redefining partnership between Tanzania and its development partners was fairly advanced. The new framework for relationships with the development partners is contained in what has come to be known as
"Tanzania Development Strategy (TAS)". TAS is essentially medium-term framework for promoting local ownership and development partnership. It seeks to promote good governance, transparency, accountability, capacity building and effectiveness of aid. TAS is essentially about a process of change in aid relationships. TAS presents a three-year strategic national framework articulating four main issues: the national development agenda, the policy framework, best practices in development cooperation and indicators for monitoring its implementation.
The development partners have generally been supportive of the PRSP process and have been actively engaged in the various sectoral working groups. The level of buy-in has been quite high as shown by the level of pledges in the CG meeting on September 2001. The pledges met the expectations of the Government in terms of external resource requirements.
In practice, there has been some adjustment of aid policies in terms ofchanging the pattern of aid delivery in response to the PRSP. The changes have involved committing resources to budget support over a longer period (usually three years instead of one year), shift to integrate projects into sector-wide approaches and other common basket arrangements and subordination of donor country strategies to PRSPs. In general, the response has led to the shift of modalities of financing away from stand-alone project aid towards programme aid and budget support. For instance, in financing of the Poverty Monitoring Master Plan in Tanzania, it was agreed that the development partners could use one of the three options to finance the monitoring system: contribute to poverty monitoring budget; contributing to particular budgets of working groups without earmarking for any particular budget line; or contribute to a particular budget line of a particular working group. Whichever option is preferred by a development partner, the bottom line is that the support given goes to implement the PRSP. This in itself is a commendable step towards ownership and directing financial support to priority areas from the point of view of the recipient government.
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Concern has continued to be expressed by Tanzania over the continued assistance outside the government budget. Currently, 50% of aid still is channeled outside the budget down from 70% two years ago. This means that 50% of the assistance bypasses the normal approval procedures including the legal procedures. This practice has important implications on undermining coherence of the poverty focus and weakening the reporting system and accountability over resource use. As a shift is being made from project to programming approach coordination of the funding mechanisms will continue to pose a major challenge in order to make progress in transparency, flexibility, predictability, policy based (along the principles of PRSP) and towards evolving common reporting and accounting procedures.
In 1998 an initiative was taken to establish a multilateral debt fund (MDF) which was started by 7 countries in 1998 and later increased to 8 countries. Progress has been made on this front after year 2000 when PRSP was formulated. The MDF has now been succeeded by the Poverty Reduction Budget Support (PRBS) amounting to $139 million in 2001/02 out of pledges of $1.2 billion. Progress has been made in terms of defining priority sectors, enhancing predictability, sharpening the poverty focus, and reducing further the transaction costs. The progress made in operating PRBS has signified progress in pooling resources, enhancing reform objectives, targeting, monitoring and consolidation of dialogue and evolution of common ways of solving problems and reorientation towards performance.
Following similar principles, the World Bank is providing poverty reduction support credit (PRSC), a form of adjustment lending meant to continue efforts started under PSAC.
Reasonable progress has been made in coordinating national policies. In particular, progress in sector development programmes (SDPs) has been reported as positive. However, more needs to be done in two areas: to ensure consistency in meeting PRSP targets and to roll out the process to district level.
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7.0 CONCLUSION
Poverty is not new in the development agenda of the poor countries in Africa. For most of the countries in Africa poverty has been on the agenda during the post-independence years and has been part of the second generation of SAPs. However, the outcome has been disappointing suggesting that previous policy tools may have been blunt and the processes adopted in fighting poverty may not have been appropriate. It is in this context that PRSPs, against this background of failure, are expected to make a difference by departing from business as usual and proceeding to adjusting ways of doing certain things in the development management. What is new is the appreciation of structural processes within domestic societies and globally and revisiting governance institutions in the light of current development challenges. The PRSP process is expected to bring innovations in focusing on poverty in four senses: paying greater orientation to poverty as a policy issue, focusing resource allocation on poverty reduction, mobilizing wide participation around the poverty issue and putting in place mechanisms for monitoring and evaluation of the progress towards achieving poverty reduction targets. The mainstreaming of poverty reduction as the primary development challenge and its integration with both the macroeconomic policy management and the budget process is a new innovation.
The experience with the PRSP process has revealed that there are outstanding challenges which need to be addressed. Some of these are:
• Mainstreaming poverty requires that the institutional machinery for development management be revisited to ensure that it is appropriate for effecting coordination of development policies and programmes around the poverty reduction challenge. This should also imply that rather than being yet one more activity among the many reform activities it should be used in integrating the otherwise uncoordinated reform activities into a coherent reform programme around poverty reduction as the key development challenge and therefore as the unifying theme of development
management.
• Poverty largely derives from political and socio-economic processes which underpin and perpetuate disparities in the distribution of power, wealth and opportunities in society. Changing the status quo will involve gains and losses among different groups in society. In this sense, poverty reduction goes beyond a technical problem and delves into the realm of political economy. Poverty reduction strategies and implementation need to be addressed as a problem of changing the systems of governance at all levels from the household to the state.
• The majority of the population depends on agriculture which is not only dependent on the vagaries of nature and on fluctuating export prices. The challenge is how best to design interventions which can assist the poor peasants to raise the level of
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productivity and incomes while designing measures for assisting peasants to cope with various shocks.
• Unemployment of the youth including the educated youth is major source of poverty.
The PRSP has not addressed this problem sufficiently. It is hoped that employment creation will come from growth. However, there is need to explore quick wins in the PRSP process and design intervention mechanisms which can address the employment challenge in urban and rural areas. Initiatives like the ILOs Jobs for Africa programme which is promoting investment for poverty reducing employment should find their way into the PRSP.
• There is the challenge of coordinating the PER process with the updating of the PRSP with a view to ensuring that the budget continues to serve an important instrument for poverty reduction without compromising the pursuit of sound macroeconomic policies.
• Participation can be more effective if it is permanent and institutionalized so that it is an on-going activity of development management. The challenge is to institutionalize the participatory process so that it is an integral part of policy analysis and development management. In particular, good measures need to be taken to ensure decentralization and good local governance that empowers people at the local level to effectively participate in making critical decisions that affect their community affairs and enhance their bargaining power including that of influencing poverty reduction strategies.
• Capacity building is central to the sustenance of the poverty reduction agenda. The capacity building agenda needs to address institutional and human capacity gaps.
Building long term capacities of key local actors (individuals and institutions) to ensure strengthening of the ability to identify poverty reduction challenges, to carry out analysis or to commission work to experts, to interpret the results of the analysis carried out internally or by experts from outside government and to use those results intelligently for policy purposes. Capacity building of needed to ensure that individuals and institutions like think tanks and policy research institutions are enabled to produce high quality inputs which are needed as inputs into the policy
process.
• The challenges identified in this paper are likely to face many countries in Africa to a greater of lesser extent. One major concern should therefore relate to the need to strengthen cross-country debates and sharing of experiences of the trajectory of individual PRSP processes on a systematic and continuous basis.
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Grinspun, Alejandro, et al (Ed.), Choices for the Poor: Lessons from national poverty strategies. UNDP. (Undated, but reports results of studies done in year 2000).
Hamner, Tanzania: Review of the PRSP Medium Term Targets. A Report commissioned by DFID East Africa (Tanzania). Dar es Salaam, 28 March 2001.
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