Government urges end to donor dependence as MCC cancels aid

By Lydia Shekighenda

                                    The Minister for Finance and Planning, Dr Philip Mpango

 

 President John Magufuli yesterday reiterated his call for Tanzanians to work hard and end the country’s dependence on donor money as a United States government agency confirmed its cancellation of a $472 million (over 1 trillion/-) aid package due to Zanzibar’s  disputed election.

 

According to a statement from the president’s office, Magufuli told a public rally in his home village in Chato District, Geita Region that it was time for the country to wean itself off foreign aid “which comes with strings attached.”

 

"We have to stand on our own … Tanzania will persevere,” the statement quoted Magufuli as saying, albeit without referring directly to the latest aid freeze by the US Millennium Challenge Corporation (MCC) programme.

 

The Minister for Finance and Planning, Dr Philip Mpango, told The Guardian earlier yesterday that the MCC aid freeze was not likely to affect the national budget for this year.

 

Mpango said the government hadn’t made any provisions in its upcoming 2016/17 fiscal year budget for the MCC programme support due to its unpredictability.

 

"We saw it coming, so we made our preparations," Mpango said when asked how the MCC aid freeze might affect the implementation of the Magufuli administration’s maiden budget.

 

"We did not include the expected MCC funds in our financial plans,” the minister stated.

 

But he also said the MCC’s decision to cancel aid that was mainly intended to support rural electrification projects in Tanzania has not been officially communicated to the government.

 

"I don’t think it is in their interest to suspend their partnership with Tanzania," Mpango stated.

 

MCC, an independent US government foreign aid agency, said in a statement it was shelving its aid to Tanzania because the March 20 election rerun in Zanzibar was "neither inclusive nor representative."

 

The statement said the polls rerun, which was boycotted by the main opposition Civic United Front (CUF) party, violated Tanzania's "commitment to democracy and free and fair elections," a key part of MCC’s eligibility criteria for aid-recipient countries.

 

"Tanzania has also not taken measures to ensure freedom of expression and association are respected in the implementation of the (country's) Cybercrimes Act," MCC said.

 

The country won a five-year MCC grants package worth $698 million for water, roads and power projects back in 2008. But the award of the second round of grants was initially deferred due to corruption concerns, and has now being shelved over the Zanzibar polls.

 

Tanzania has "engaged in a pattern of actions inconsistent with MCC’s eligibility criteria,” MCC's board said, voting to “suspend ... partnership with the government of Tanzania."

 

"MCC will therefore cease all activities related to the development of a second compact with Tanzania," the statement said.

 

Incumbent president Ali Mohammed Shein, from the ruling CCM party, was declared winner of the Isles polls rerun after the initial election on October 25 was annulled by the Zanzibar Electoral Commission (ZEC) on grounds of fraud. 

 

CUF strongly contested the decision to hold another vote, saying it had won the first vote.

 

The US ambassador to Tanzania, Mark Childress, issued a short statement yesterday backing the MCC’s decision to cancel its aid package, but suggesting that his country will continue giving financial aid to Tanzania through other channels.

 

"The United States and Tanzania have long-standing and deep relationships across many sectors,” Childress said, adding: “As Tanzania’s largest bilateral development partner, we will continue our work together to improve health and education, promote economic growth, and advance security."

 

Reacting to the MCC aid cut, Foreign Affairs Minister Augustine Mahiga said the government was disappointed with the decision.

 

“Democracy is a process, it does not just happen, therefore no one can doubt Tanzania’s efforts in promoting democracy,” Mahiga told a news conference.

 

“It is their money and their decision …we hope they will reconsider in future and revisit their criteria,” the foreign minister added.

 

Mahiga described the aid cancellation as a blow to the government's development spending.

 

“MCC funding is crucial in rural transformation since there are power projects which are being implemented through those funds, thus denying Tanzania this funding will also affect this process,” he said.

 

But according to Ahmed Salim, a senior associate at the Teneo Intelligence consultancy firm, the cancelled aid will have little impact.

 

“Though the funding is marginal and will have no direct impact on the (national) budget, it may constrain development projects in the energy sector,” Salim said. 

 

“In contrast, European Union donors are divided partly because of the promise shown by Magufuli’s four-month old administration in tackling corruption, government inefficiency and wastage,” he added.

 

A group of Western donors, including the US and EU member states, issued a joint statement in the run-up to the Zanzibar poll rerun describing it as regrettable.

 

Zitto Kabwe, leader of the opposition ACT Wazalendo party and member of parliament, has predicted that the EU could also soon suspend its aid to Tanzania.

 

“The mismanagement of Zanzibar’s politics has cost Tanzania 1 trillion/-, mostly for rural electrification from the US. Soon the EU could follow suit,” he said via Twitter.