ISP for Good Governance II


  • Reference: P-TZ-KF0-003
  • Approval date: 20/09/2010
  • Start date: 23/05/2011
  • Appraisal Date: 09/09/2010
  • Status: OngoingOnGo
  • Implementing Agency: MINISTRY OF FINANCE
  • Location: NATIONWIDE


Project Components and Outputs: The project will have three main components:

(i) Financial Governance and Anti-Corruption;

(ii) Economic Management; and

(iii) PIU. Each of the three components will be sub-divided into two sub-components, i.e. Mainland Tanzania and Zanzibar. The following outputs, will feature under Financial Management and Anti-Corruption:

(i) strengthening public procurement process

(ii) strengthening internal and external audit control systems

(iii) enhancing capacity of PFM training institutions;

(iv) strengthening accounting systems through IFMS. Under the Economic Management component the major potential outputs would be

(i) improving macroeconomic policy analysis and

(ii) improving the budgetary process. The third component is an operating cost of the PIUs for each of Mainland and Zanzibar. The main activities under the first two components will be:

(i) training,

(ii) IT and office equipment; and

(iii) Technical assistance support.


Tanzania's current PRSP strategy (2005/06 - 2009/10) is anchored to three complementary pillars:

(i) Growth and reduction of income poverty;

(ii) Improved quality of life and social well being, and;

(iii) Governance and accountability. The first pillar underlines the importance of improving macro-economic stability, whereas the second pillar aims at improving the quality and delivery of social services and public utilities. The third pillar aims to achieve four broad outcomes of: good governance and the rule of law; enhanced accountability of leaders and public officials to citizens; social and political tolerance and democracy and, sustained political stability and national unity. The Bank's strategy of intervention has focused on two mutually reinforcing pillars: i.e. growth and reduction of poverty; and the improvement of the quality of life and social well-being. The Bank's JAST stated that "Although support to governance pillar is not envisaged over the medium term, the Bank Group will remain engaged in this area through the Institutional Support Project for good governance '".

The key development issues, which the project will address is the weak institutional capacity in financial and economic management and in anti-corruption institutions. An assessment of the "Public Financial Management Reform Program, Phase III" has been submitted by a consultant in June 2009. The draft report, which is yet to be released, has suggested several recommendations on the future of the PFMRP. Amongst his recommendations is that the program is too widely spread and that there is a need to re-focus and prioritize areas of reform. The General Budget Support (GBS) partners in their Annual Meeting in November 2009 also took note that the components under PFMRP need to be prioritized and that institutions involved in public financial management need to be supported. The Government recognized the need for strengthening public finance and undertook the following:

(i) to prepare a more focused and prioritized PFMRP;

(ii) to review the Public Finance Act and Local Government Act;

(iii) to increase the oversight function to the Accountant General over Local Government Finances; and

(iv) to implement measure to increase budget transparency, including continuous updating of information on local government authoritiey (LGA) budgets and expenditure on government websites. The revised PFMRP would focus on the following five priority areas:

(i) enhanced performance, scope and coverage of Integrated Financial Management System (IFMS);

(ii) improved cash management;

(iii) improved flow of funds;

(iv) improved quality of reporting; and

(v) improved budget management.

9.3 The rationale for the Bank's involvement in this operation is the fact that it is consistent with JAST and the Bank's "Governance Strategic Directions and Action Plan (GAP 2008-2012). The proposed operation also complements the policy reform program through capacity building of institutions engaged in economic and financial management and anti-corruption in mainland Tanzania and Zanzibar. The proposed project would also lend synergic support to the on going and planned Bank Group portfolio in Tanzania, particularly in the area of project management and financial accountability. The Bank's intervention at this particular point in time is opportune, as the Government has strongly renewed its commitment to improve reforming the public finance sector, during the November 2009 GBS meeting.


The project will enhance capacity in the general area of Public Financial/economic Management in view of the fact that capacity continues to be a binding constraint in Tanzania. The main ingredient is the support to PPRA, NAO, and Parliament (in mainland and Zanzibar) and also building the PFM capacity of a pilot decentralized local government. The project will consolidate the PFM reforms currently implemented by the government in the context of the Tanzania joint Donor Budget Support Program.

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Finance source Amount
ADFUAC 5,200,000
GovernmentUAC 260,000
TotalUAC 5,460,000

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