Enhancing Aid Effectiveness-Joint Assistance Strategy DPG Orientation Seminar 12 September 2006

I. Global Aid Context Paris Declaration-Framework for Aid Effectiveness: From donorship to ownership Partners set the agenda Aligning with partners’ agenda Using partners’ systems Establishing common arrangements Simplifying procedures Sharing information Ownership (Partner countries) Alignment (Donors-Partners) Harmonization (Donors-Donors) Managing for Results

II. A Shifting Aid Environment in Tanzania TAS ( ): A framework to more effectively manage and improve predictability of external resources; restore local ownership and leadership Progress achieved: Improved relationship in development cooperation; national capacity developed through core reforms (essentially PFM); new mechanisms adopted (PRS I; PER; MTEF); rationalization and increased national ownership of technical assistance; move from project to program aid and increasingly GBS Outstanding Challenges: still widespread provision of off-budget financing (projects) impeding strategic budget resource allocation at national level, transparency & domestic accountability; parallel systems and procedures; uncoordinated Development Programme at LGAs; multiple missions, meetings and analytical studies Scaling up TAS towards JAS to operate at a higher level of commitment to the principles of H&A by effectively aligning donor country assistance strategies with MKUKUTA and MKUZA. Further enhancement of national ownership and GoT wide leadership.

III. Joint Assistance Strategy (JAS) Inclusive Dialogue  Idea of JAS emerged in TAS process in 2003/04  resulting from a joint GOT-DP study on rationalisation/ harmonisation of processes  Idea was taken further in GOT-DP consultations  formulation of a JAS Concept Paper end 2004  JAS Consultative Meeting with domestic and international stakeholders in April 2005  First draft JAS Document prepared by GOT in May 2005  JAS Retreat with Directors of Policy and Planning in November 2005  Outcomes of JAS Retreat incorporated into third draft JAS Document November 2005  JAS discussion with Parliamentarians  JAS discussion with Zanzibar on 3 rd draft  JAS Consultative Meeting with PSs and DPs in April 2006 – agreed on JAST principles

III. Joint Assistance Strategy (JAS) JAS to emphasize:  Guiding framework of principles moving toward post Paris High-Level Forum  The principle of National Ownership and Leadership with broad-based stakeholder participation (CSO, private sector, local governments, Parliament) in identifying development goals and formulate strategies;  Country-led partnership representing a paradigm shift towards putting Tanzania in the driver’s seats/reduce the asymmetrical relationships and tensions in the donor-led approach. Ensuring that aid is aligned with GoT priorities.  Shift from external accountability to domestic accountability (Legislature, non-state actors – participation, quality)  Mutual accountability (to move towards better alignment and greater predictability in ODA disbursement)

III. JAS-Key Principles Harmonisation and alignment around MKUKUTA/MKUZA and national budget  Align National, Sector and Local policies, strategies and processes with MKUKUTA/MKUZA and national budget  Align DPs support, strategies, and processes with national priorities (MKUKUTA/MKUZA), systems, procedures and processes Mix of aid delivery modalities:  GBS: GoT’s preferred modality (currently 38% of total ODA); Current PRBS instrument evolving: more inclusive; focused on domestic accountability with PAF to be increasingly aligned to MKUKUTA Monitoring Master Plan and national instruments and processes  Basket funding (as a transition to GBS) to protect public reforms and/or thematic areas not yet mainstreamed in normal government activities  Direct Project Funding (under specific conditions; well aligned to national systems – for pilots and innovations & emergency aid)

Channel/Disburse ODA through Govt Exchequer and Budget System Use of national procurement, accounting and auditing systems and procedures Developing National Capacity  Supporting the building of sustainable human resource, technical and financial capacity in Tanzania institutions  Working closely with Govt to eliminate systems that historically detracted from this goal (i.e. separate or parallel PIUs, etc.) Enhanced TA strategy  Demand driven, responsive to GoT needs and focused on capacity development  Increasingly untied from the source of financial assistance (focusing on value for money)  Procurement under Govt Leadership and using Govt system (I.e. pooled TA)

Better Division of Labour:  More effective division of labour among GOT agencies with clearly defined roles – lead agency in each sector/thematic area  Rationalise number of DPs per sector/thematic area and the number of sectors/thematic areas per DP  Concept of lead & delegating partner by sector & thematic areas (based on comparative & competitive advantages) Dialogue :  Improving public policy choices, effectiveness in planning, budget management and public service delivery  High quality and regular dialogue under Govt leadership  Based on existing, national processes (i.e. MKUKUTA/MKUZA, PER, Sector Reviews, etc.)  Facilitating domestic and mutual accountability  On the basis of agreed DoL arrangements

III. JAS-Going Forward Cabinet approval process– ascertaining GoT’s commitments Joint JAS Working Group to carry out: Preparation of JAS Monitoring Framework and Action Plan immediately after the JAS Consultation and to be carried out into first quarter of FY 2006/07 MoU/Commitments of Principles – Mutual commitments to JAS JAS – dynamic and evolutionary process with emphasis on inclusiveness and dialogue

IV. Paris Baseline Exercise – Assessing where we are Paris Baseline Exercise in Tanzania – concluded at the end of August, under GoT/MoF leadership in steering the process in Tanzania Paris Indicators to inform the JAST progress – JAST Monitoring Framework, building on the Paris Indicators and the baseline exercise Baseline exercise provides quantitative assessment on where we are: at the beginning of JAST Implementation Opportunity for dialogue

INDICATORSSurvey ResultsTarget Indicator 3: Aid flows are aligned with national priorities 90% of aid flows to government sector reported on government's budget At least 85% reported on budget Indicator 4: Strengthened capacity by coordinated support 50% of technical cooperation flows are implemented through coordinated programmes 50% Indicator 5a: Use of country PFM systems 66% of aid to the public sector using countries PFM systems (76% through Exchequer, 60-61% using financial reporting and auditing, 55% using all the three procedures) a two-thirds reduction for score 5+, a one- third reduction for score

INDICATORSSurvey ResultsTarget Indicator 5b: Use of country procurement systems 62% of aid to public sector using public procurement systems a two-thirds reduction for score A, a one- third reduction for score B Indicator 6: Avoiding parallel implementation structures 69 PIUsReduce by two-thirds Indicator 7: Aid is more predictable 70% of aid disbursed within the fiscal year for which it was scheduled Halve the proportion of aid not dibusred within the fiscal year for which it was scheduled

INDICATORSSurvey ResultsTarget Indicator 9: Use of common arrangements or procedures 55% of flows are provided in the context of programme-based approahces (40% GBS, 15% Basket) 66% Indicator 10a: Joint missions 17% of donor missions to the field are joint 40% Indicator 10b: Joint analytic work 38% of country analytic work is joint 66%

IV. Paris Baseline Exercise – Challenges Improving MTEF processes – ensuring aid alignment (reflected on budget) TA/TC for capacity development through coordinated framework H&A of processes and procedures PIUs – systematic approach Predictability Reduction of transaction costs