AFRICAN DEVELOPMENT BANKAFRICAN DEVELOPMENT FUND

UNITED REPUBLIC OF TANZANIA

COUNTRY STRATEGY PAPER 2011-15:COMBINED MID-TERM REVIEW AND COUNTRY PORTFOLIO PERFORMANCE

REVIEW

March 2014

TANZANIA FIELD OFFICE (TZFO)EAST AFRICA RESSOURCE CENTRE (EARC)

MAP OF TANZANIA

Task team

The report was prepared under the leadership of Gabriel Negatu, Regional Director (EARC), and Tonia Kandiero, Resident Representative (TZFO). The task team comprised: Josef Loening, Principal Country Economist (TZFO), Daniel Lekoetje, Principal Country Program Officer (TZFO), Amu Orison, Chief Country Program Officer (EARC), Prosper Charle, Macroeconomist (TZFO), Patrick Musa, Senior Transport Engineer (TZFO), Stella Mandago, Senior Energy Officer (TZFO), Godfrey Kaijage, Financial Specialist (TZFO), Sabas Marandu, Principal Water and Sanitation Specialist (TZFO), Yussuf Balozi Hija, Procurement Officer (TZFO), Brighton Kishebuka, Procurement Assistant (TZFO), Salum Ramadhani, Senior Agricultural Expert (TZFO), Hamisi Simba, Senior Social Development Specialist (TZFO), Petrine Addae, Economic Consultant (TZFO), Gertrude Mlachila, Private Sector Consultant (OPSM), and Jamilla Bairu, Disbursement Assistant (TZFO).

Peer-reviewers

Alex Mubiru, Lead Strategy Advisor (STRG), Ferdinand Bakoup, Lead Economist (ORWA), Halima Hashi, Principal Country Program Officer (RWFO), Edward Sennoga, Senior Country Economist (RWFO), Andre Almeida Santos, Senior Country Economist (MZFO), Frank Sperling, Chief Climate Change Officer (ONEC), Damoni Kitabire, Lead Economist (ORSA), Eva Ruganzo, Chief Country Program Officer (ETFO), Ando Mensah, Principal Country Program Officer (ORNG) and Lawrence Chi Tawah, Assistant to Vice-President (SAOR).

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CURRENCY EQUIVALENTS

April 2014

UA 1               =          US$ 1.5456 (United States Dollar)UA 1               =          EUR 1.121 (Euro)

                                    UA 1               =          TZS 2531.74 (Tanzania Shilling)                                    US$ 1              =          TZS 1637.9987 (Tanzania Shilling)

GOVERNMENT FISCAL YEAR

July 1st to 30th June

WEIGHTS AND MEASURES

Metric System

1 ton = 2204 pounds (lbs)1 kilogram (kg) = 2.204 lbs1 meter (m) = 3.28 feet (ft)1 millimeter (mm) = 0.03937 inch (”)1 kilometer (km) = 0.62 mile1 hectare (ha) = 2.47 acres

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ACRONYMS AND ABBREVIATIONS

ADB African Development BankADF African Development FundASDP Agriculture Sector Development ProgramALSF Africa Legal Support FacilityAWF African Water FacilityBRN Big Results NowCAR Commitment at RiskCPIA Country Performance and Institutional AssessmentCOMESACPIP

Common Market for Eastern and Southern AfricaCountry Portfolio Improvement Plan

CPPR Country Portfolio Performance ReviewCSP Country Strategy Paper DASIP District Agriculture Investment ProgramDHS Demographic Health SurveyDfID United Kingdom Department for International Development EDCF Korea Economic Development Cooperation FundEIB European Investment Bank EARC East Africa Resource CenterEITI Extractive Industries Transparency InitiativeEAC East African CommunityEU European UnionFDI Foreign Direct InvestmentFYDP Five Year Development PlanGBS General Budget SupportGDP Gross Domestic ProductHBS Household Budget SurveyIFAD International Fund for Agriculture DevelopmentIFC International Finance CooperationIMF International Monetary FundJICA Japan International Cooperation AgencykWh Kilowatt per hourMCC Millennium Challenge Cooperation MDG Millennium Development GoalMKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini TanzaniaMKUZA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini ZanzibarMW MegawattNBS National Bureau of StatisticsNSGRP National Strategy for Growth and Reduction of PovertyPAPs Project Affected PersonsPAR Projects at RiskPDB Presidential Delivery Bureau (for BRN)PEFA Public Expenditure and Financial AccountabilityPSI Policy Support InstrumentPPPs Public Private PartnershipsRWSSP Rural Water Supply and Sanitation ProgramSADC Southern African Development CommunitySAGCOT Southern Agricultural Growth Corridor of TanzaniaSCF Standby Credit Facility Arrangement

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TANESCO Tanzania Electricity Supply CompanyTIC Tanzania Investment CenterTZFO Tanzania Field OfficeUN United NationsUA Unit of Accounts US$ United States DollarVAT Value Added TaxWSDP Water Sector Development ProgramZSGRP Zanzibar Strategy for Growth and Reduction of Poverty

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TABLE OF CONTENTS

EXECUTIVE SUMMARY.........................................................................................................vii1. INTRODUCTION.................................................................................................................12. COUNTRY CONTEXT AND DEVELOPMENT PROSPECTS......................................1

2.1 Political Context.............................................................................................................................12.2 Economic and Sector Context........................................................................................................22.3 Social Context and Cross-cutting Issues........................................................................................62.4 Strengths and Opportunities, Weaknesses and Challenges............................................................8

3. STRATEGIC OPTIONS AT MID-TERM..........................................................................9

3.1 Country Strategic Framework........................................................................................................93.2 Aid Coordination, Harmonization Mechanisms, and Bank Positioning........................................9

4. CSP IMPLEMENTATION AND RESULTS....................................................................10

4.1 Bank Group Resource Allocation................................................................................................104.2 Mid-term Implementation Status.................................................................................................104.3 Achievement of Objectives and Results at Mid-Term.................................................................11

5. COUNTRY PORTFOLIO PERFORMANCE REVIEW................................................12

5.1 Bank Group Portfolio...................................................................................................................125.2 Portfolio Monitoring and Evaluation...........................................................................................135.3 Implementation Status of the Country Portfolio Improvement Plan (CPIP)...............................145.4 The Bank Group and other Stakeholders Performance................................................................155.5 Results from a Survey on Portfolio Quality.................................................................................155.6 Revised Country Portfolio Improvement Plan.............................................................................16

6. STRATEGY FOR THE REMAINING PERIOD 2014-15..............................................16

6.1 Experience and Lessons Learned.................................................................................................166.2 Rationale and Strategic Selectivity..............................................................................................176.3 Bank Indicative Assistance Program...........................................................................................186.4 Monitoring and Evaluation..........................................................................................................196.5 Risks and Mitigation Measures....................................................................................................19

7. CONCLUSIONS AND RECOMMENDATIONS............................................................20Annex 1: Summary of Joint CSP/CPPR Consultations...........................................................21Annex 2: Selected Economic Indicators....................................................................................24Annex 3: Achievement of Millennium Development Goals.....................................................25Annex 4: Coordination among Development Partners............................................................26Annex 5: Achievement of Country Strategy Mid-term Results..............................................27Annex 6: List of Active National and Multinational Lending Projects..................................32Annex 7: Revised Country Portfolio Improvement Plan, 2013...............................................34Annex 8: Implementation Progress and Development Outcomes...........................................35

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TABLES

Table 1: Strengths and Opportunities, Weaknesses and Challenges...............................................8Table 2: Tanzania Portfolio Performance at a Glance, 2009-2013...............................................14Table 3: Indicative Lending Program, 2014-15 (in million UA)...................................................19Table 4: Proposed Studies (in million UA)...................................................................................19Table 5: Tanzania Comparative Development Indicators.............................................................24Table 6: Progress at MDGs at a Glance—Mainland Tanzania......................................................25Table 7: Progress at MDGs at a Glance—Zanzibar......................................................................25Table 8: Donor Coordination Matrix for Tanzania........................................................................26Table 9: Original Results-based Framework, 2011-15..................................................................27Table 10: Revised Results-based Framework for the Period 2014-15..........................................30Table 11: The National and Regional Portfolio for Tanzania – December 2013..........................32Table 12: Revised Action Matrix to Enhance Portfolio Quality - 2013........................................34Table 13: Tanzania Project Ratings in 2013..................................................................................35

FIGURES

Figure 1: Political Context...............................................................................................................1Figure 2: Real GDP Growth (%).....................................................................................................2Figure 3: Trends of fiscal balance and oil imports..........................................................................3Figure 4: Trends of current account balance and oil imports..........................................................4Figure 5: Sectoral composition of active portfolio – December 2013...........................................13

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EXECUTIVE SUMMARY

1. The Country Strategy Paper for the United Republic of Tanzania articulates two main strategic pillars: (1) infrastructure development; and (2) governance. The pillars are aligned with the African Development Bank’s Ten-Year Strategy for 2013-2022 and the Government’s development framework, as articulated in the National Vision 2025 and the Zanzibar Vision 2020. The strategy aims to support Tanzania to enhance competitiveness, achieve inclusive growth, and reduce poverty. The Country Strategy Paper Mid-Term Review, which is combined with the annual Country Portfolio Performance Review, comes at an opportune time as the Government is embarking on “Big Results Now!” (BRN) initiative to improve efficiency and accountability in the implementation of its plans. The Bank’s strategic focus is in line with the priorities under Government’s BRN delivery model.

2. Tanzania has highly favorable development prospects and the focus of public policy is to make growth more inclusive. The country is peaceful, politically stable, and continues to improve public sector efficiency through gradual reform process. Furthermore, the economy continues to perform strongly, with average annual growth of 7% over the past decade. Future growth prospects are high in light of recent natural gas discoveries, commitment to reforms and private sector growth. However, growth is constrained by infrastructure gaps – particularly in transport and energy sectors. Also, poverty has been slow to respond to growth. The areas of focus in supporting inclusive growth are: agriculture productivity, infrastructure (transport and energy), skills gaps, quality of public service delivery, and employment generation – especially in non-farm activities.

3. The performance of the Bank’s on-going portfolio is satisfactory, and significant results have been recorded at mid-term. The portfolio has 33 operations with total commitment of UA 1 billion. The overall portfolio performance is satisfactory with an assessment score of 2.3 in 2013. Important results recorded at mid-term include: upgrading of more than 270km of road to bitumen standard; construction/rehabilitation of 44 market facilities, and training of more than 11,000 Participatory Farmer Groups. Other results are: completion of 300 village water projects – serving about 3.9 million people; provision of micro-credit to 93,364 entrepreneurs, – and, subsequently, an estimated 200,000 new jobs created by small entrepreneurs. Also, 53 Out-Patient Department Units and 9 Obstetric Theaters were constructed.

4. Incorporating lessons learned from this review into ongoing operations and policy dialogue needs to be a joint effort, both by the Bank and Government. The Bank should pay more attention to (1) quality at entry and oversight of operations, (2) measurement of results, and (3) knowledge products to inform operations and dialogue. The Government needs to (4) commit to securing counterpart funding, (5) ensure compliance with the Bank’s safeguard policies, and (6) enhance internal operational efficiency, notably on financial management, procurement, and contract management processes.

5. Overall, the strategic direction remains the same, with refinements. Major developments include the leadership role to support reforms in the energy sector and activities following the discovery of natural gas. The Bank will retain its strategic pillars (1) infrastructure development, focusing on transport and energy, and (2) governance, with focus on the enabling institutional and business environment. Another aspect is the need to generate knowledge in the areas of inclusive and green growth to inform the post-2015 activities. Another area of growing importance is the provision of legal advisory functions through the Africa Legal Support Facility (ALSF), especially in the energy and transport sectors.

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Figure 1: Political Context

Political Stability

Rule of Law

Voice and Accountability

-0.8 -0.6 -0.4 -0.2 0.0 0.2

2011 Score -4.0 (Worst) to 2.5 (Best)

Africa East Africa Tanzania

Source: AfDB Research Department

1. INTRODUCTION

1. The overall objective of the African Development Bank’s Country Strategy Paper (CSP) is to support Tanzania to enhance competitiveness, achieve inclusive growth, and reduce poverty. The CSP 2011-15 for Tanzania is articulated around two strategic pillars: (1) infrastructure development; and (2) governance with focus on enabling institutional and business environment. The original CSP was aligned with the Bank’s Medium-Term Strategy, 2008-12, which focused on infrastructure development, governance, the private sector, and higher education. The CSP Mid-Term Review is combined with the annual Country Portfolio Performance Review (CPPR), and the objective is to assess achievements of the initial objectives and results, assess portfolio performance at mid-term, and update the Bank’s strategy for the remaining period 2014-15. The joint CSP/CPPR Mid-Term Review is informed by intensive consultations with the Government, Development Partners, the private sector, and civil society (see Annex 1 for details). The Review ensures strategic alignment with Bank’s Ten-Year Strategy, 2013-22: At the Center of Africa’s Transformation, which highlights the twin objectives of inclusive growth and transition to green growth. It also ensures alignment with the Bank’s new Gender Strategy 2014 – 2018: Investing in Gender Equality for Africa’s Transformation; which focuses on creating opportunities for women, disadvantaged and marginalised people, and communities to participate in, and benefit from development.

2. COUNTRY CONTEXT AND DEVELOPMENT PROSPECTS

2.1 Political Context2. Tanzania is peaceful and politically stable. Regular elections have ensured that the Government upholds the spirit of democratic values (figure 1). After becoming a multiparty democracy in 1992, every five years, Tanzania has successfully held four peaceful multiparty elections. According to World-wide Governance Indicators, in all dimensions of governance, Tanzania ranked between the 22 to 47 percentiles among 215 countries surveyed in 2012. The country has the best percentile rank in political stability and absence of terrorism (percentile rank 47). Also, Tanzania ranked 17 out of 52 countries in the Mo Ibrahim Index of African Governance with an overall score of 56.9 (out of 100) in 2012, which is higher than African average of 51.6, and also higher than the regional average for East Africa (47.9). In Mo Ibrahim Index, Tanzania achieved its highest category score in participation and human Rights (61.3), where it also attains its highest rank (12th out of 52). 3. There are noticeable improvements in governance, combined with a strong commitment to reform. The country is in the process of preparing a new Constitution, expected to be finalized before the general elections in 2015. The draft New Constitution is currently being reviewed by the Constituent Assembly, and the dominant issues include: structure of the Union between Tanzania Mainland and Zanzibar; political reforms, powers of the President, and natural resources. Overall, Tanzania continues to demonstrate high-level international commitment to improved openness, transparency, and access to information. Most notably, the Tanzania

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Figure 2: Real GDP Growth (%)

2004 2005 2006 2007 2008 2009 2010 2011 20120123456789

Tanzania East Africa Africa

Source: AfDB Research Department

Extractive Industry Transparency Initiative (EITI) will further deepen the country’s compliance with international transparency standards. In order to assure that commitments are rigorously implemented, Tanzania launched in 2013 the ‘Big Results Now!’ (BRN) initiative, which offers an additional opportunity for deepening government accountability.

2.2 Economic and Sector Context4. Tanzania’s economy has continued to perform strongly, growing at 7% in 2013.1 The average Gross Domestic Product (GDP) growth from 2004 to 2013 stood at 6.9%, maintaining stability and resilience to exogenous shocks (figure 2). The economy is expected to grow at about 7% annually until 2015. For the past 3 years, almost 60% of growth has been driven by trade, manufacturing, transport, telecommunications, and agriculture. In 2012, the contribution of agriculture to GDP was 27%, industry 25%, and services 48%. Average annual agricultural growth has been relatively small at only 4% over the past decade. While the structure of the economy has undergone some changes over the years, the low performance of agriculture suggest that Tanzania is in the process of structural transformation. Tanzania, overall, has earned a record for sound macroeconomic management. Currently the International Monetary Fund (IMF) has a Standby Credit Facility arrangement (SCF) with Tanzania until April 2014. In addition to periodic article IV consultations, the Government is in the process of renewing the Policy Support Instrument (PSI) arrangement with the IMF.

5. Over the next decade, natural gas discoveries are expected to boost Tanzania’s economic growth. This might happen gradually, as significant commercial exploitation is projected to start in 2020, through investment flows, increased government revenue, power generation, and various spin-off effects. The Government is already putting measures in place to prepare for the gas economy. Discoveries are currently projected at 46.5 trillion cubic feet. According to estimates at least US$ 15 billion in Foreign Direct Investments (FDIs) could flow to Tanzania over the next decade.2 The country has a ‘latecomer’ advantage, which opens an opportunity to learn from other countries and is compliant with the Extractive Industries Transparency Initiative (EITI) as of December 2012. Tanzania also needs trained and qualified manpower in the oil and gas industry and beyond, such as in physical sciences, construction, and engineering. There is need to further enhance governance and institutional reforms to lay the ground for inclusive growth, and implement the Natural Gas Policy which was approved by the cabinet in October 2013 to guide the activities in the new gas industry.

1 See Annex 2 for other socioeconomic indicators, and figures 2, 3 and 4 for key trends. This section is complemented with information from the monthly and quarterly bulletins of the Bank of Tanzania and administrative data.

2 The FDI figures are based on conservative estimates for a liquefied natural gas plant; other new investments are expected to be in the region of USD 4-5 billion per year. Over the long-run, their magnitude could modify the current equilibrium in the domestic financial markets and have an impact on exchange rates. However, no evidence of Dutch Disease is visible as of now. Notably, Tanzania’s real effective exchange rate has declined by 20% over 2009-2013 period.

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Figure 3: Trends of fiscal balance and oil imports

Source: Bank of Tanzania, Ministry of Finance

6. Tanzania continues to maintain a tight monetary policy stance. Monetary policy aims to support economic growth and maintain price stability. Bank of Tanzania has maintained a policy rate at 12%. In line with a tight monetary policy stance, private sector credit grew by 18.2% in 2012/13, slightly lower than the 20% target, and significantly lower than 27.2% growth recorded in 2011/12. Private sector credit was channeled to manufacturing, building and construction, trade and personal activities. Improved food supply and a generally favorable external environment helped to ease inflationary pressures. Annual headline inflation has declined consistently from a decade high of 19.8% recorded in December 2011 to 5.6% in December 2013, an impressive rebound.

7. The Government has shown commitment to strengthen its fiscal position. The overall fiscal deficit in 2012/13 was 5.8% of GDP (figure 3), against the planned 5.5% of GDP, as a result of lower than expected non-tax revenues, reduced Value Added Tax (VAT) collection relative to the Government’s ambitious target, and expenditures for emergence power financing. This is similar to a deficit of 5.8% of GDP recorded in the previous fiscal year, though it is still lower than the deficit of 6.4% of GDP in 2009/10. In 2012/13, Public spending was up by 0.7% of GDP compared to 2011/12, with an increase in share of recurrent spending, from 64% to 68% of total expenditure due to increased spending on wages and salaries notably in the social sectors, budget transfers to the energy sector, and increased domestic debt services. Through improved revenue performance and expenditure management, the Government expects to reduce the fiscal deficit to 5% of GDP in 2013/14.

8. Progress on strengthening economic and financial governance remains positive. Tanzania’s scores in the Bank’s Country Performance and Institutional Assessment (CPIA) have remained stable during the past 3 years, with a good overall score in economic management and quality of public administration.3 The country is implementing a comprehensive Public Financial Management Reform Program (PFMRP), and by 2013, an integrated financial management system had been rolled out in all local government authorities. Tanzania has overtime shown strong leadership in addressing weaknesses highlighted in Public Expenditure and Financial Accountability (PEFA) assessments. However, challenges still exist, and areas of improvement include the effectiveness of internal audits, effectiveness of payroll control, the annual budget process, and procurement and external audits. Other areas that that need improvement include alignment of expenditure plans with available resources, including revenue forecasts and collection, reduction of arrears, and management of budget re-allocations.

9. Tanzania’s public debt remains sustainable. External debt amounted to 39% of GDP in 2012/13, which is relatively low compared to other countries.4 Tanzania’s total public debt is equivalent to 43% of GDP in 2012/13; and external debt accounts for 77% of total debt. The total

3 In 2013, the overall CPIA score is 4.30, with sub-scores of 4.67 (economic management), 3.99 (structural policy), 4.13 (social inclusion) and 4.01 (governance). These scores show a marked improvement over time, as the overall CPIA score was below 4 during the period 2011-12.

4 Under a currently ‘strong policy’ scenario using the CPIA rating, Tanzania’s debt sustainability threshold is 50% of GDP. Assuming fiscal consolidation and continued high GDP growth, debt burden indicators are below the thresholds. A new debt sustainability analysis is currently being prepared and is expected to be ready in mid-2014.

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Figure 4: Trends of current account balance and oil imports

Source: Bank of Tanzania, Ministry of Finance

public debt is expected to increase by 5% of GDP in 2013/14, on account of the projected increase in borrowing to finance infrastructure projects, especially in the transport and energy sectors. Nevertheless, the joint IMF and World Bank (2012) debt sustainability analysis indicates that Tanzania’s public debt remains sustainable in both the short and medium term. The risk of debt distress remains low due to the structure of debt, which is largely concessional, coupled with high output growth forecast scenarios and ambitious revenue collection targets. On the upside, the discovery of natural gas has not been incorporated into the baseline debt sustainability analysis.

10. External sector performance is one of Tanzania’s success stories. The current account deficit, stood at about 14% of GDP at the end of 2013, driven mainly by manufacturing and fuel imports (figure 4). The deficit does not threaten external sector balance because it is fully financed by capital inflows. The country also holds an official reserve position at around 4.4 months of imports for goods and services. The Tanzania Shilling has remained stable over the past two years vis-à-vis the US dollar. One of Tanzania’s success stories is strong export growth and diversification away from traditional markets and crops. Key drivers include exports of gold, coffee, tobacco, manufacturing, and tourist travel receipts. Over the past decade, Tanzania's total merchandise export grew approximately five-fold. Volume of trade with EAC members more than doubled over the past five years, and Kenya has become the largest regional trading partner.

11. Regional trade can be boosted through infrastructure development. Tanzania remains an active participant in Regional Economic Communities. Trade with its regional partners in the East African Community (EAC), Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) has tripled over the past five years. The country has made progress in promoting participation and accelerating regional integration through tariff reduction in conformity with signed protocols, but regional trade continues to be plagued by infrastructure challenges. There are three main regional transport corridors: the Northern, Central, and Southern Corridors, and in all major routes, most freight is transported by road, although railways could be more efficient. Tanzania is struggling to cope with fast-growing transport infrastructure needs, including maintenance challenges of the existing roads. Transport interconnectivity is crucial for Tanzania and its six land-locked neighboring countries.5 Dar-es-Salaam port has the potential to become a major regional transport hub serving these Eastern and Central African countries. Favorable economic growth prospects for neighboring countries will likely result in increased regional trade.

12. Tanzania continues to face huge challenges in transport infrastructure. Transport sector is characterized by high cost, and low quality of services due to various reasons, including: low levels of investment, inadequate transport network length, a high backlog of infrastructure maintenance and rehabilitation, and mobility difficulties in large cities. The country has an estimated 86,500km road network, and only about two thirds of the network is in good or fair condition according to the classifications by the National Roads Agency. The Government is implementing the Transport Sector Investment Program, and has prioritized transport projects in its BRN initiative. Furthermore, the Public Private Partnership (PPP) Policy and Law have been formulated to guide the participation of private sector in infrastructure development.5 Rwanda, Burundi, Zambia, Malawi, Uganda, and Eastern Democratic Republic of the Congo (DRC).

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13. The energy sector has the potential to unlock Tanzania’s growth potential. Tanzania's energy sector is characterized by low electricity access rates and reliance on biomass as a source of energy, with fuel wood and charcoal accounting for more than 90% of total energy consumption. Overall electricity access rates remain low (18-24%, according to the 2011/12 Household Budget Survey and government estimates). The number of customers served by the power utility – Tanzania Electric Supply Company (TANESCO), is below one million and electricity consumption is estimated at only 97kWh per capita in 2012. The share of renewable sources such as hydropower has declined from 79% of total generation in 2004 to 32% in 2013. Since 2011, TANESCO had to procure more than 300 MW generated from expensive imported fuel by Independent Power Producers, leading to high generation cost and, subsequently, accumulation of losses by the power utility. Going forward, Tanzania plans to diversify its energy mix to ensure stability in generation. Under the BRN initiative the Government aims to double electricity generation capacity by 2015 from currently 1583 MW and to expand access to electricity to 30%. Furthermore, as part of the Government’s effort to strengthen the financial sustainability of TANESCO, power tariffs were increased by 39.1% since January 2014. The Government, with the support from the African Development Bank is preparing a reform roadmap for the sector scheduled to be ready by mid-2014. Other measures include the preparation of policy, legislation and regulations to guide investments in natural gas, to ensure proper utilization of the resources for the benefit of all citizens.

14. In the water and sanitation sector, Tanzania’s main goals are to continue to broaden access to reliable sources of drinking water, amid recent success. In 2012, about half of Tanzania’s rural population and 90% of the urban population had access to improved sources of drinking water. Tanzania has made progress with regard to the management of water resources, supply of water to rural and urban communities and institutional capacity building. Over the past two years, rural water points serving around 3.2 million people have been constructed or rehabilitated. Moreover, 2.6 million people were served through increased household connections and kiosks in urban areas. Planning, tracking, and follow-up of funding flows and monitoring of results in the water sector have improved. More efforts are needed to strengthen accountability systems, address capacity constraints, and build on improvements in decentralization to enhance collaborative arrangements between central and local government authorities.

15. Tanzania has an enormous opportunity for private sector growth. The private sector is still evolving as the country continues to reform towards a market-based economy. A dual economy exists, with a formal sector comprising few highly profitable large and medium-sized companies, and a large informal sector, with a multitude of micro and small enterprises. Constraints include the high cost of doing business due to infrastructure bottlenecks, including: unreliable electricity; congested port facilities in Dar-es-Salaam; and missing links in the road and rail networks. Other constraints include: policy implementation challenges, high interest rates, and skills gaps. Tanzania’s country ranking of the World Bank’s Ease of Doing Business Index declined from 127th position in 2011/12 to 145th out of 185 countries in 2013/14, lagging behind its EAC neighbors. The Government is currently implementing a roadmap to improve business environment and has included measures in this area as part of the BRN initiative. Actions which have been taken recently to reduce the cost of doing business include: reduction of bureaucratic procedures for obtaining business licenses; implementation of pre-arrival declaration system; electronic submission of customs declarations; and reduction of permanent roadblocks from 50 in 2010 to 15 in 2012, as part of efforts to make trading across borders

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easier. Also, Tanzania Investment Center (TIC) continues to step-up online availability of information needed by investors.

16. The country has significant untapped investment opportunities. Tanzania’s ranking in Global Competitiveness Index has remained unchanged, at 120th position between 2012 and 2013, with a low score of 3.6 out of 10. The rankings, however, mask large untapped investment opportunities in agribusiness, tourism, natural gas and mineral sectors, and associated industries, including real estate, construction, housing, and the financial sector. The scale of FDI flows relative to GDP remained at around 5% in 2012, with Greenfield investments in the extractive industries and tourism making up about three-quarters of these inflows. Complementary policy measures to attract private investment include addressing infrastructure gaps, human capital development, and access to finance for small businesses.

17. Tanzania enjoys the presence of a large and growing number of commercial banks. The banking sector is highly concentrated, as 10 out of 53 commercial banks have a market share of 80%. With returns on equity at 17.4%, net interest margins of 73% and a non-performing loan ratio of 7.5%, the banking sector remains highly profitable. The spread between lending interest rates (15.6%) and deposit rates (3.1%) has remained wide because of perceived high credit risk and weak competition. Only 17% of the population has access to formal banking system, but mobile banking is growing fast and is currently reaching 45% of the population. According to Bank of Tanzania, international remittance inflows are estimated at 0.3% of GDP during 2011-12, though the data might be underestimated, precisely because of mobile banking innovations.

2.3 Social Context and Cross-cutting Issues18. Tanzania’s per capita GDP was US$ 608 in 2012. Poverty has been slow to respond to economic growth, and about one third of Tanzania’s population remains poor. Official poverty estimates for 2011/12 indicate that the national basic needs poverty headcount level is 28.2%, and is higher in rural (33.3%) than in urban areas (21.7%).6 Preliminary evidence suggests a decline in headcount from 33.6% in 2006/7. This, however, needs to be confirmed through rigorous trend analysis, since the poverty numbers are not directly comparable due to changes in survey instrument and estimation methodology. Overall, Tanzania’s main development challenge is to ensure that economic growth becomes more inclusive—by translating into broad-based employment generation, equal opportunities across age, geography and gender. Persistent poverty levels are mainly explained by lack of employment opportunities and low productivity in the agriculture sector.

19. Tanzania has made progress towards some of the Millennium Development Goals (MDGs). Gains are notable on primary school enrolment and infant mortality.7 Public policy has placed attention to increase access to education, resulting in significant expansion of enrollment rates. However, the increase in enrolment has not been matched with the requisite resources in terms of qualified teachers, learning materials and quality infrastructure in primary and secondary schools, leading to declines in pass rates in recent years. According to the recent Demographic and Health Surveys, although Tanzania is far from achieving the Millennium Development Goal of reducing Maternal Mortality, progress has been made over the past decade. The results of the 2010 DHS indicate that, maternal mortality declined significantly from 578

6 The poverty headcount is 28.2% based on the 2011/12 Household Budget Survey. Poverty headcounts from the previous household budget surveys were 33.6% in 2007/06 and 35.6% in 2001/00. The Gini coefficient remains almost unchanged at about 0.37.

7 According to the Demographic and Health Surveys, the infant mortality rate has declined from 58 to 51 deaths per 1,000 live births over the period 2008-2011. See Annex 3 for Tanzania’s progress on MDGs.

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deaths per 100,000 live births in 2004/05 to 454 deaths per 100,000 live births in 2010. While maternal deaths are linked with fertility rates and the overall socio-economic status of women, lack of progress may also point to the existing challenges in the delivery of public health services. Tanzania has also made progress in advancing gender equality, such as the achievement of the MDG targets of equal access of boy and girls to basic education.

20. The agriculture sector has great potential for fostering inclusive growth. Agriculture contributes to 27% of GDP and 25% of export earnings, but employs about 75% of the workforce. The relatively low growth rate in agriculture of 4% (or 1% in per capita terms) is below national targets of 6-8% and below the average GDP growth rate of 7%. The sector has been characterized by low productivity, and is constrained by infrastructure gaps, low access to credit, and low investments. Government policies and strategies therefore call for increased commercialization to achieve the national priority goals of ensuring food security, improving rural income levels, and increasing export earnings. This has resulted in the development of flagship initiatives such as the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) and the BRN activities for agriculture. One of the challenges is that the sector has seen a proliferation of projects and initiatives, and there is recognition for the need to have effective coordination mechanisms. A new agriculture policy was approved by the cabinet in 2013, and the agriculture sector development strategy is currently being revised and updated.

21. Major factors for jobless growth and underemployment are economy-wide infrastructure gaps that severely impede private sector growth, low agricultural productivity, and skills gaps. National Panel Surveys (NPS) for 2008/09 and 2010/11 indicate an increase in labor force participation from 78% to 83%, but generally low unemployment. However, youth unemployment is estimated at 17% in Mainland Tanzania and 20% in Zanzibar. Given the large informal sector, the main challenge is chronic underemployment and seasonal labor, especially in rural areas that that is largely dominated by unpaid subsistence family labor. Projections suggest that Tanzania’s population will increase from 44.9 million in 2012 to over 50 million by 2016. With over 42% of the population being under the age of 15, Tanzania is under pressure to create employment opportunities to absorb an increasing number of youth in the coming years. Private sector growth, especially in labor intensive light manufacturing and agribusiness related export activities, will be crucial to address jobless growth and underemployment challenges.

22. Tanzania needs to be supported in its transition to green growth. 8 This process means reaching strategic development objectives and growth targets, while at the same time seeking to maximize natural resource use efficiency, minimizing waste and pollution, and building resilience of livelihoods and economic sectors. It also entails identifying development options that promote economic growth while sustaining or increasing natural and social assets. Green growth aspects in Tanzania have been mainly analyzed from a climate change and environmental perspective, but less so from a multi-sectoral perspective, and analysis is needed towards financial needs of the establishment of climate change mitigation funds. Tanzania needs an integrated strategic framework and funding mechanisms to effectively manage a long-run transition to green growth. Going forward, this presents an opportunity for engagement,

8 Climate change simulations suggest that the main impact of climate change for Tanzania will be through increased rainfall variability, affecting agricultural production and hydropower generation. The Bank and development partners are indirectly supporting green growth objectives through emphasis on infrastructure and regional trade. Because of an increased likelihood of agricultural variability due to climate change, countries face a higher chance of localized droughts. But overcoming risks for food insecurity can be achieved by infrastructure development and trade facilitation.

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especially in areas of renewable energy, transport, agriculture and rural development, and water supply.

23. Tanzania has made significant progress in promoting gender equality, and the Bank continues to support these efforts by emphasizing gender mainstreaming in operations . The country has already achieved gender parity in access to primary education, and gender gap is closing in secondary schools with the share of enrolled girls increasing from around 30% in the last decade to 46.3% in 2012. Also, the share of female students in tertiary education has increased from 25% in 2001 to 41% % in 2012. According to the World Economic Forum’s Global Gender Gap Report, Tanzania’s gender gap index has improved consistently from a score of 0.6797 in 2009,  when it ranked 73rd, to a score of 0.7091 in 2012 – ranking 46th. The Bank continues to mainstream gender in its operations in various ways, with notable results in social sectors (particularly microfinance and health); agriculture, and transport. About 58% of beneficiaries of the Small Entrepreneurship Loan Facility project are women and 34% are youth. Also, the design and implementation of other operations incorporated gender responsive interventions including: construction of village market sheds, construction of water dams, targeting women headed households, use of female labor in project implementation, and capacity building for women and youth. In line with the Bank’s Ten Year Strategy, and the Bank’s new Gender Strategy, gender mainstreaming will continue to be an integral part in the design and implementation of the Bank operations in Tanzania.

2.4 Strengths and Opportunities, Weaknesses and Challenges 24. The most pressing binding constraint to the economy is infrastructure. The most notable challenge for Tanzania is in the power sector, which imposes a fiscal burden to the Government, and affects economic growth by hampering private sector development. This should be viewed as an opportunity for the Bank to partner with Tanzania in transforming the energy sector by supporting reforms and through investments, and advisory services. Also, Tanzania’s growth needs to become more inclusive through improvement in competitiveness and job creation. Tanzania’s strengths, opportunities, challenges and weaknesses are summarized in Table 1. Table 1: Strengths and Opportunities, Weaknesses and Challenges

Weaknesses and Challenges The economy faces huge infrastructure deficit,

particularly in transport and energy sectors. The energy sector needs reforms to overcome power

supply challenges and prepare for the gas economy. Tanzania’s economic growth needs to become more

inclusive. The average Tanzanian has per capita income of US$ 608 and one third of the population lives below the basic needs poverty line.

Slow growth of agriculture sector, which is the main source of employment. It faces significant challenges to boost smallholder development and their access to markets.

Insufficient public service delivery in rural and urban areas with respect to access to health, education, water supply and sanitation, and other basic services.

Decline in quality of education. This risks undermining long-run growth prospects, private and public sector development.

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Strengths and Opportunities The country has a reputation for sound

macroeconomic policy environment. It maintains high economic growth rates and price stability.

The country enjoys a good reputation in maintaining peace and political stability, making Tanzania an attractive FDI destination.

Tourism accounts for about 17% of GDP with an untapped development potential.

Tanzania has abundant natural resources, including recently discovered natural gas and minerals.

The private sector is at its infancy with significant investment potential in the financial sector, agribusiness, and the mineral and hydrocarbon sectors.

Tanzania is strategically located along the Indian Ocean with a major seaport hub.

3. STRATEGIC OPTIONS AT MID-TERM

3.1 Country Strategic Framework25. Tanzania’s development framework is well-articulated. The country’s development framework and long-term development goals are laid out in the National Vision 2025 and Zanzibar Vision 2020. In addition, Tanzania has a medium-term national growth and poverty reduction strategy, covering the period 2011-2015.9 The medium-term objectives for Mainland Tanzania and Zanzibar are guided by the National Strategy for Growth and Reduction of Poverty (NSGRP II) and Zanzibar Strategy for Growth and Reduction of Poverty (ZSGRP II), respectively. The Mainland development strategy focuses on three broad clusters: (1) growth and reduction of income poverty, (2) improvement of quality of life and social well-being, and (3) governance and accountability. Zanzibar’s development strategy focuses on (1) growth and reduction of income poverty, (2) improvement of social services and well-being, and (3) good governance and national unity. In 2012, the Government unveiled the Long Term Perspective Plan (LTPP) which will be operationalized by a series of Five Year Development Plans (FYDPs) to steer implementation of the Vision 2025. The current FYDP, which focuses on growth and investments, will be implemented up to 2015/16.

26. The Government aims to speed-up implementation progress, in full alignment with the Bank’s strategic priorities. The Government formally launched the Big Results Now! (BRN) initiative in 2013, inspired and supported by Malaysia. The idea is to establish a strong and effective system to oversee, monitor, and evaluate the implementation of plans, policies and strategies. The initiative is a fundamental commitment for transformational change by moving implementation away from business-as-usual. The priorities for the initiative in Mainland are: (1) transport infrastructure in the central corridor, (2) energy, (3) agriculture, (4) rural water, (5) education, (6) domestic resource mobilization, and (7) business environment. A Presidential Delivery Bureau (PDB) will assess implementation progress of performance indicators for line Ministries. Zanzibar has also embarked on a parallel process, Results for Prosperity (R4P), focusing on (1) Tourism, (2) Business Environment, and (3) Resource Mobilization. The process is still being developed to identify key priorities for investment.

3.2 Aid Coordination, Harmonization Mechanisms, and Bank Positioning 27. Tanzania’s development cooperation landscape comprises of various multilateral and bilateral Development Partners, and there is a well-established structure for dialogue. Active Development Partners include 4 multinatilaterals, 16 United Nations agencies, and 18 bilateral donors (see Annex 4). Total Official Development Assistance (ODA) is estimated at US$ 2.7 billion in 2012/2013, equivalent to about 10% of GDP, or US$ 60 per capita. There is a 9 The NSGRP is commonly abbreviated in Swahili as MKUKUTA (for Mkakati wa Kukuza Uchumi na Kuondoa

Umaskini Tanzania); while ZSGRP is popularly abbreviated as MKUZA (for “Mkakati wa Kukuza Uchumi na Kuondoa Umaskini Zanzibar”).

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well-established structure for dialogue, which consists of four clusters, more than 20 thematic working groups, and seven sector working groups. The Bank is active in all relevant sectors and thematic areas, including agriculture, environment, water, public financial management, health and education, industry and trade, and General Budget Support (GBS). The Bank has been deputy lead in the transport sector since mid-2011 and is co-chairing the energy sector donor group since June 2013, given its leadership role in the energy sector reforms (i.e. preparation of the Reform Roadmap). As of April 2013, the Bank is chairing the Poverty Monitoring Group.

28. The Bank has strong presence and visibility in infrastructure development. In Tanzania, the Bank has strong comparative advantage in infrastructure, and transport alone accounts for about a third of cumulative operations since 1971. And, even the Bank’s interventions in other sectors including energy, agriculture, and water have traditionally focus on infrastructure aspects. Currently, transport operations account for about 34% of the Bank’s on-going national portfolio in Tanzania and even higher when region projects are included. Projects have focused mainly on road transport but now there is need to look at other modes such as rail and ports. This strong Bank presence bodes well with the Government’s priorities in light of the existing infrastructure gaps in the country. Infrastructure development is a top priority in the national development strategy and the BRN initiative.

4. CSP IMPLEMENTATION AND RESULTS

4.1 Bank Group Resource Allocation29. Tanzania remains one of the largest recipients of the African Development Fund (ADF) Resources. The allocation of ADF resources to Tanzania amounted to UA 382.6 million under ADF-12. The entire country allocation (100%) has been committed for operations in transport, energy, water, agriculture, and governance. The Bank has also been successful in leveraging its ADF allocation through co-financing with other partners, notably in the transport sector.

4.2 Mid-term Implementation Status30. The Bank has successfully delivered programmed lending operations under ADF-12. A total of 5 out of 7 proposed national operations under ADF-12 were approved by the Board. The operations include (1) Road Sector Support Program II, (2) Market Infrastructure, Value Addition and Rural Finance Program, (3) Improvement of the Zanzibar Urban Water Supply and Sanitation Network, (4) GBS – Governance and Economic Competitiveness Support Program, (5) Alternative Skills Development Program in Zanzibar. The remaining two operations are (6) Technical and Vocational Education Training Project (TVET) and the (7) Agriculture Sector Development Program (ASDP). TVET project was reprogrammed for 2014 to give room for Supplementary Financing of the Governance and Economic Competitiveness Support Program targeting energy sector reforms, which was approved in December 2013. The proposed second phase of ASDP was postponed to ADF-13 to allow completion of the first phase of DASIP, which was closed in December 2013. Similarly, 2 out of 3 multinational operations (Arusha-Holili and Taveta-Voi Road Projects, and Rusumo Hydropower Project) were approved by the Board in 2013. The proposed Lake Victoria Maritime Safety project was not ready; and resources were instead committed to the Rusumo Hydropower Project. Preparation of the lending operations has been generally smooth, benefitting from excellent cooperation with Government, and collaboration with other DPs.

31. The delivery of the non-lending program was also successful. Five out of eight non-lending activities proposed for 2011-13 were completed at mid-term. These include the (1)

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Transport Sector Review, (2) Tanzania Chapter for the African Economic Outlook, (3) Study and Policy Brief on Tanzania’s Ports, Logistics and trade (4) Technical Assistance to the National Bureau of Statistics (NBS) for the Integrated Labor Force Survey, and the (5) Fiduciary Risk Assessment executed in Collaboration with DfID. The preparation of the (6) Energy Sector Review and (7) Policy Brief on Finance are underway. The proposed collaboration with other Development Partners on the Observance of Standards and Codes was discarded given the other on-going activities on fiscal transparency. TZFO has also prepared additional analytical products, including in-depth briefing materials for senior management and regular contributions to the East Africa Resource Center’s (EARC) publications.

4.3 Achievement of Objectives and Results at Mid-Term32. Bank projects have generated visible results on the ground. To monitor CSP implementation progress, the original results-based framework (RBF) identified multiple outcome and output indicators at mid-term. The mid-term review has used a combined quantitative and qualitative approach by comparing the expected outputs and outcomes contained in the original RBF to the extent possible (see Annex 5 for the original and revised results matrix).

33. While some significant results were recorded at mid-term, it is worth noting that as of 2013, many infrastructure operations are at the initial stages of operation, and need maturity to generate outputs and outcomes. Given the nature of the infrastructure projects, operations that were approved under the current CSP have not yet recorded results as the operations are either at effectiveness stage or starting implementation. The results recorded covered all ongoing operations including those financed under previous ADF cycles. Under the first pillar, infrastructure development, results at mid-term were recorded in three sectors: transport, agriculture, and water and sanitation. No results were recorded in the energy sector, in part due to low cumulative disbursement ratios of the ongoing portfolio and the existing challenges in the power sector. Main highlights include the following:

Transport: As a result of implementation of four on-going operations (Zanzibar Roads Upgrading Project, Road Sector Support Project I, Singida-Babati-Minjingu Road Project, and Arusha-Namanga-Athi River Development Project); more than 270 km of road were upgraded to bitumen standard. Also, as part of the project implementation, community awareness on road safety and HIV/AIDS reached 29 villages along the respective road projects. No results were recorded for Road Sector Support Program II and Arusha-Holili-Taveta-Voi Road Projects, since they are still in early stages of implementation.

Agriculture: The implementation of DASIP and ASDP I yielded the following results: construction or rehabilitation of 44 market facilities, the upgrading of more than 160 km of feeder roads, and the training of more than 11,000 participatory farmer groups. Implementation of the new Market Infrastructure, Value Addition and Rural Finance Program (MIVARFP) is on-going and no results have been recorded yet.

Water supply and sanitation: Results were recorded from Rural Water Supply and Sanitation Program - phase 2 (part of the Water Sector Development Program - WSDP); Zanzibar Water Supply and Sanitation Project; and Lake Victoria Water Supply and Sanitation Program (multinational). More than 300 village water projects were completed with an estimated 3.9 million people being served. Also, from the Improvement of Zanzibar Urban Water Supply and Sanitation project, 4 out 9 reservoirs and 10 out of 19 boreholes were completed in the Zanzibar islands of Unguja and Pemba.

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34. Under the second pillar – governance with focus on enabling institutional and business environment – results were recorded in microfinance, health, and budget support operations. The Alternative Learning and Skills Development Project was approved in 2011 but has not yet recorded noteworthy results. Main highlights include the following:

Microfinance: Under the Small Entrepreneur Loan Facility (SELF II) an estimated 93,364 entrepreneurs have benefited from loans and 57% of the beneficiaries are women. Most of the clients are in rural areas and one third of the beneficiaries are aged 35 years and below. The project has delivered capacity development to the microfinance institutions and borrowers by training 4,532 small entrepreneurs and 1,042 microfinance staff. As a result of SELF II intervention, it is estimated that by 2013, more than 200,000 new jobs were created by small entrepreneurs who benefited from the project.

Health: through the Support to Maternal Mortality Reduction Project, a total of 53 Out Patient Department Units and 9 Obstetric Theaters are being completed and will be handed over to the authorities in 2014. While the project faced significant implementation challenges during implementation, efforts undertaken jointly by the Bank and Government project team managed to revitalize implementation pace. The project is highly relevant given continued challenges in maternal health in Tanzania.

Economic and financial governance: the Bank’s GBS/GESCP and the Institutional Support for Good Governance Project – second phase (ISP II) were approved in 2010 and 2011, respectively. Generally, in line with objective and implementation arrangements of policy-based lending, the implementation of reforms has been satisfactory, as evidenced by GBS annual reviews, Performance Assessment Framework ratings (PAF) for 2011-2013 perid. Other important achievements include the completion of a Fiduciary Risk Assessment jointly with DfID, the preparation of an Operations Manual for PPPs, and support of EITI, following which Tanzania achieved compliance status as of December 2012.

35. Results in non-lending program are generally promising, and of increasing relevance. In 2013, the Africa Legal Support Facility (ALSF) signed three agreements to support the Government in negotiating the largest port deal in Tanzania’s history of US$ 10 billion with China, capacity building in the area of Public Private Partnerships (PPPs) and capacity building in the natural gas sector to ensure fair deals with international investors. All these activities provide grant support and are well-aligned with the Bank’s on-going and proposed operational lending program. With regard to knowledge management activities, the Bank achieved a significant proportion of the anticipated products, generally with sound recommendations based on good analysis and persuasive evidence with immediate relevance for policy dialogue.

5. COUNTRY PORTFOLIO PERFORMANCE REVIEW

5.1 Bank Group Portfolio36. The Bank’s lending program in Tanzania is sizable, yet sufficiently selective, with six large operations dominating the portfolio. The Bank’s on-going portfolio in Tanzania (as of December 2013) had 33 operations – 17 national, 3 private and 13 regional projects – with a total net commitment of UA 1 billion.10 The sectoral composition of the portfolio (figure 5) is aligned with the CSP pillars, with emphasis on infrastructure. Transport takes the lion share (34%),

10 See Annex 6 for a list of national and multinational projects as of December 2013. Two projects in agriculture and health sectors closed in 2013. This section benefitted from an independent assessment carried out by Oxford Policy Management in 2013.

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Figure 5: Sectoral composition of active portfolio – December 2013

Source: TZFO Portfolio Database

followed by the multinational (mostly transport and energy) operations (19%), multi-sector (14%), water supply and sanitation (10%), energy, social and agriculture (about 8% each). Private sector operations account for 1% of the portfolio. The average age of the portfolio is 4.9 years, while the average cumulative disbursement ratio is 47.3%. The energy and transport sectors have low cumulative disbursement ratios as a result of effectiveness delays. Currently the portfolio has no aged operations.

37. The Bank is leveraging additional financial resources to complement ADF allocations. The Bank continues to work closely with other Development Partners through General Budget Support and sector budget support in water supply and sanitation. The Japanese International Cooperation Agency (JICA) is co-financing the Road Sector Support Projects I and II and the Arusha-Namanga-Athi River road project. The International Fund for Agricultural Development (IFAD) is co-financing the Marketing Infrastructure Value Addition Rural Finance Program. Trademark East Africa is supporting one-stop-border post on the Arusha-Holili-Tavela-Voi road project. The European Investment Bank (EIB), World Bank, JICA and Korea Economic Development Cooperation Fund (EDCF) are co-financing the Iringa-Shinyanga Backbone Electricity Transmission Line. In addition, Tanzania receives support under the Bank’s African Water Facility (AWF) for the Arusha Strategic Sanitation Plan and Rural Water Support Facilities. About 80% of all financing comes from the ADF window and 19% from trust funds. The Bank’s ADB window accounts for only 1%, used for equity participation with Access Bank and credit guarantee with CRDB Bank.

5.2 Portfolio Monitoring and Evaluation38. Tanzania has a healthy portfolio, with notable improvements over time. As indicated in Table 2 (p.14), the overall performance of the Bank Group’s portfolio is rated as satisfactory with an assessment score of 2.3 in 2013 compared to 2.2 in 2011.11 The sectors with the best performing portfolio are the transport and agriculture (rating 2.7), followed by energy (rating 2.2), social (rating 2.1), and regional operations (rating 2.0).12 The proportion of projects-at-risk (PAR) in the active portfolio declined from 29% in 2011 to 6% in 2013—an indication of overall satisfactory and improving portfolio performance. Taking into account the completion of the agricultural projects by the end of 2013, the PAR rate declined further. The estimated Commitment at Risk (CAR) rate is 5% compared to 16% in 2011. The improvements in the PAR and CAR are due to improvements in physical implementation since the last CPPRs in 2009 and 2012 across all sectors. There are no problematic projects and only one project is classified as potentially problematic.

39. The portfolio, however, has experienced some effectiveness delays, particularly in the infrastructure sectors. Empirical analysis undertaken for this mid-term review suggests that

11 These supervision missions’ assessments nevertheless at times may lack candor. Private sector operations and the AWF follow a different rating system, which is not reported in this CSP/CPPR mid-term-review.

12 See Annex 8 for further details on portfolio rating.

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there is a strong relationship between (initial) effectiveness delay and (subsequent) project performance. Projects experiencing effectiveness delays are more likely to face slower implementation progress and achieve lower development outcomes. The underlying causes are quality at entry and capacity constraints of executing agencies, notably in the infrastructure sectors. Despite improvements, effectiveness delays remain a challenge, and the revised Country Performance Improvement Plan (CPIP) makes recommendations to address this issue, notably through a more rigorous assessment of quality at entry and the assessment of readiness conditions.Table 2: Tanzania Portfolio Performance at a Glance, 2009-2013Indicator 2009 2011 2012 2013[1] Portfolio Performance 2.5 2.2 2.3 2.3[2] Problematic Projects (PP) None 1 1 None

[3] Potentially Problematic Projects (PPPs) 6 national projects 2 national projects1 national project 4 regional

1 national project 4 regional projects

[4] Projects at Risk (PAR) 35.0% 28.6% 6.3% 6.3%[5] Commitment at Risk (CAR) 14.2% 16.7% 3.3% 5.0%

[6] Number of Ageing Projects 7 national projects 1 national project2 national projects 3 regional projects

2 national project 4 regional projects

Cummulative Disbursement Ratio 0.466 0.247 0.308 0.473Average Size of National Projects UA 30.0 mio UA 40.4 mio UA 51.9 mio UA 32.4 mioPercentage of Audit Report Submissions NA 90% 100% 100%

[1] Rating scale from 0 (low) to 3 (high).[2] Projects with IP or DO scores ≤ 1.5.[3] Projects with IP and DO ≥ 1.5 but at least two of the conditions securing ≤ 1.[4] The PAR rates is calculated by dividing the number of PAR by the number of rated projects.[5] The CAR rates is calculated by dividing the number of PAR by the value of rated projects.[6] Operation is considered ageing if it is over 8 years old for investment operations and 5 years institutional support. Source: TZFO portfolio database.

5.3 Implementation Status of the Country Portfolio Improvement Plan (CPIP)40. Tanzania’s portfolio challenges are clearly articulated. The 2011 CPIP finds slow disbursement performance of infrastructure projects considering their age. Other generic challenges that cut across sectors include: limited understanding by counterparts of Bank rules and procedures, limited capacity in areas of financial management and procurement, inadequate staffing of Project Implementation Units (PIUs), and delays in payment of Government’s counterpart funds. The 2012 Country Portfolio Performance Review (CPPR) also makes recommendations to improve portfolio performance and reports that challenges fall under three broad categories: procurement, resettlement in the road sector, and monitoring and evaluation.

41. Deepening decentralization is key to improvement in portfolio performance. Regular staff meetings on the portfolio are held to identify issues and enhance oversight. However, for more effective portfolio management, more task-managing of operations needs to move down to the Country Office, as well as increased oversight and follow-up from the EARC. Also, sector specialists should actively monitor project activities beyond mandatory supervision, for all problematic and potentially problematic projects. Progress has been made towards receiving timely submissions of audit reports. The time taken to process disbursement requests has significantly improved. Implementing agencies now take less than the targeted 2-3 months to process payment invoices. In addition, the Bank continues to maintain a strong partnership with Government through frequent meetings.

5.4 The Bank Group and other Stakeholders Performance42. The Bank’s performance was satisfactory. Task-managers’ self-assessments show that portfolio quality is healthy. Client perceptions also indicate that the majority of the portfolio is

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performing at acceptable levels, or above. During the CSP/CPPR consultations, considerable positive feedback was expressed by Tanzanian Authorities about the Bank, which is perceived straightforward to negotiate with. One success has been the provision of fiduciary advisory services to implementation agencies. There has been improvement in turnaround time on Government requests. Nevertheless, there has been progress in addressing the core recommendations identified in the 2011 CPIP. The number of Task Managers on the ground and from EARC in Nairobi, as well as oversight through close follow up and frequent supervision missions, need attention.

43. Government and executing agencies’ performance were moderately satisfactory. Despite high commitment by the authorities, and satisfactory performance across multiple dimensions, the timely release of project counterpart funding continues to be a major challenge, causing delays. Knowledge of the Bank’s procurement rules and its application remain weak, and adherence to project implementation plans need improvement. Project monitoring and evaluation systems need strengthening in order to improve the assessment of the achievements of the project development objectives. The quality of audit reports requires improvements. Frequent changes of project staff have affected performance in some sectors, especially in energy.

44. Donor collaboration has been important, notably in the transport and energy sectors. The Bank has been collaborating with the World Bank, European Investment Bank (EIB), Japan International Cooperation Agency (JICA) and the Korea Economic Development Cooperation Fund (EDCF) to implement the Iringa Shinyanga Backbone Transmission Project. The Bank together with JICA financed the Arusha-Namanga-Athi-River Project and the Road Sector Support Project II. The Bank has also been very active in other partnerships as evident in the planned co-financing agreement for the Rusumo Falls hydropower project with the World Bank. The forthcoming Zambia, Tanzania and Kenya Interconnection project and GBS to leverage reforms in the energy sector, as well as the Scaling up of Renewable Resources Project will be implemented with other Development Partners. During the consultations, generally positive feedback was expressed by Development Partners about the Bank.

5.5 Results from a Survey on Portfolio Quality45. Portfolio quality is perceived as healthy, although some challenges still persist. According to the 2013 CPPR survey, 55% of respondents perceive overall project quality as acceptable. Some 20% of respondents felt that project quality is at least fully satisfactory. Only 6% of respondents found Bank overall performance to be unsatisfactory. These figures, however, do not tell the full story. For instance, about 50% of respondents overlooked the issue of environmental and social safeguards, since for some operations not much has been done on that aspect. And 42% of respondents had nothing to say on monitoring and evaluation system because of irregular reporting challenges and capacity constraints. About 85% of respondents mentioned untimely disbursement of counterpart funds as the most challenging item, followed by fiduciary delays within Government systems, as well as project design and results measurement challenges.

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5.6 Revised Country Portfolio Improvement Plan46. The revised 2013 CPIP provides highly selective recommendations to improve portfolio performance. While the quality of the portfolio in Tanzania is generally improving, the main issues affecting portfolio performance, particularly those outside routine supervisions activities, are: (1) counterpart funding requirements, (2) compensations for project-affected-persons, (3) protracted government approval processes and procedures for procurement and contract administration across all sectors, (4) frequent changes of Bank task managers, (5) stringent requirements for prior review of procurement activities by the Bank, (6) frequent award of contracts to firms with weak implementation capacities due to the lack of procurement knowledge, and (7) the need for an enhanced monitoring and evaluation framework to improve supervision and proactivity. The revised CPIP details these recommendations (see Annex 7).

6. STRATEGY FOR THE REMAINING PERIOD 2014-15

6.1 Experience and Lessons Learned47. Going forward, the Mid Term Review draws important lessons that inform the strategy for the remaining CSP period 2014-15. As documented throughout the previous chapters, a major lesson for the Bank is the existence of huge infrastructure gaps, and the renewed importance of energy sector reforms including institutional development and governance. Moreover, in the light of the expected natural gas boom and the fact that Tanzania is increasingly considered as a promising investment opportunity for capital markets, the Bank should also explore options for alternative lending instruments (for example through enclave projects, blended loans for specific creditworthy investments, more guarantee transactions, and smart co-financing opportunities). In addition, it will be important to continue to generate and finance operationally relevant knowledge and advisory products that inform lending activities and contribute to policy dialogue and programming. As the Bank is recognized as a trusted partner of choice, responsiveness to demand for legal and other specialized technical advisory services will be crucial. The Bank will strengthen measurement of results and enhance project selectivity by focusing on few areas with high development impact for the post-2015 period. Finally, the Bank needs to pay more attention to quality at entry aspects during project design and strengthen oversight and staff proactivity during supervision.

48. In the short-run, for ongoing operations, the Government is encouraged to further strengthen its commitment to comply with contractual obligations. This includes paying attention to counterpart funding and the Banks safeguard policies, including the timely compensation of persons affected by projects; and enhancing internal operational efficiency, notably on financial management, procurement, and contract management. For new operations, the Government should explore jointly with the Bank options that help to solve persistent project implementation challenges up-front. The need for long-term strategic programing is constrained by the urgent short-term decision making. Building, expanding and strengthening an adequate institutional framework, legal and human, to deal with the new challenges, while still addressing the current ones will be important. To finance its investment program, Tanzania needs to continue to adhere to fiscal discipline and resort to innovative financing instruments and mechanisms, such as partial risk guarantees and PPPs. Continued emphasis needs to be given to investments in infrastructure ensuring interconnectivity of main transport corridors and power networks, thereby supporting private sector growth.

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6.2 Rationale and Strategic Selectivity49. The CSP’s strategic focus remains relevant for the remaining period 2014-15. The Bank will retain its two strategic pillars, but include refinements. The country strategic framework is unchanged, and infrastructure and governance remain top priorities both in the National Strategy for Growth and Reduction of Poverty (NSGRP II) and Zanzibar Strategy for Growth and Reduction of Poverty (ZSGRP II). And, in line with the Bank’s Ten-Year Strategy 2013-22, the objectives of inclusive growth and transitioning to green growth will be reflected in the choice and design of new Bank projects. On pillar (1) infrastructure development, the Bank will continue to focus on transport and energy sectors, as well as interventions to support regional integration. On pillar (2) governance, the Bank will continue to focus on enabling institutional and business environment, by supporting reforms in key areas as well as human capital development. In line with the Government’s priorities, and in light of the existing power situation in the country (see paragraph 13, page 5), the Bank will support reforms in the energy sector, to address institutional and governance challenges, and assist the country in its preparations for a gas economy. A robust energy sector will accelerate economic growth by stimulating private sector performance, freeing-up resources for the other sectors, and may thus prevent budget cuts in social sectors. All these have the potential to make economic growth more inclusive and sustainable. Governance issues are also crucial for the upcoming natural gas boom. Bank support in the form of advisory services through ALSF and the use of transaction advisors for infrastructure investments is already in high demand. The Bank is well-placed to support the country in negotiating complex deals and reviewing contracts.

50. Under Pillar 1 ‘infrastructure development’, the Bank will maintain its focus on national and regional transport infrastructure and energy. During the remaining period, climate-compatible infrastructure designs will be considered for all new infrastructure operations. Emphasis will be placed on sustainable energy, in line with the green growth objectives. As such, the Bagamoyo ‘EcoEnergy’ Project is being prepared by the Bank’s private sector department (OPSM) and scheduled for Board discussion in 2014. This operation is complementary to the Bagamoyo Rural Infrastructure Project which will support integrated infrastructure investments – including rural roads and energy (transmission lines).13 This cooperation between the Bank’s private and public sector is in line with the “One Bank” approach encompassing various sectors and departments. Also, the first phase of Kenya-Tanzania Zambia Power Interconnection project, and the proposed Scaling-up of Renewable Energy Project (SREP), are scheduled for Board consideration in 2015. The Bank will prepare an action plan that scoops activities by Development Partners and identify the demand for priority actions for the post-2015 period. This may include an assessment of innovative incentive mechanisms and financing options for enabling the gradual transition to green growth. In 2015, one national and two regional transport sector operations are scheduled for Board discussion, namely: Transport Sector Support Program (national); Burundi – Tanzania: Manyovu – Kasulu – Kigoma road (multinational), and Mueda – Negomamo road projects (Multinational).

51. Under Pillar 2 ‘governance’, the Bank will continue to focus on General Budget Support (GBS) as the main intervention, and seek to leverage reforms in the energy sector. After providing supplementary financing under GBS at the end of 2013, the main activity will be the design of new GBS operation to leverage reforms in the energy sector, and strenthening of advisory services and analytical activities in Tanzania. Through the proposed new GBS, the Bank will leverage reforms in the energy sector and Public Financial Management, in 13 The softer components of the project – including capacity development requirements – will be financed by the

International Fund for Agriculture Development (IFAD).

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coordination with other Development Partners. The Institutional Support for Good Governance III (ISPGG) program will also support the BRN initiative on concrete solutions aiming to enhance private sector development. The private sector will be directly supported through areas of existing engagements in the financial sector (credit guarantees, lines of credit, and technical assistance), multi-sectoral infrastructure projects (through contract awarding to domestic firms), and the ALSF (such as capacity building for PPPs). Execution of new private sector projects might also explore the use of partial risk or credit guarantees to promote PPPs.

52. For both pillars, cross-cutting themes will be mainstreamed into project design. Gender in country programming at the project level is important and will be enforced by setting key measurable indicators, such gender sensitive result measurement framework, if applicable, or by addressing gender related issues at the policy level. More broadly, quality at entry and supervision will be strengthened. Detailed reparatory studies will be financed to inform project design, including the proposed feasibility studies for the Lake Victoria Maritime Transport/Maritime Communication Project, and the Trans-Africa Highway Project in the North – South Corridor (see table 4 for financing details). Financial management, procurement and resettlement assessments need attention before taking the decision to appraise a particular project. The country team review process will pay attention to more candid discussions prior to approvals, including the review of project readiness conditions, such as the availability of counterpart funds and project implementation plans, draft of bidding documents, designation of key project staff, and compliance with fiduciary and safeguards standards, including procurement plans. During supervision, a more candid assessment of project ratings and a generally enhanced level of proactivity will be pursued.

6.3 Bank Indicative Assistance Program53. The Bank’s indicative lending program will continue to be selective and foresees further portfolio improvements for the remaining CSP period. The overall indicative resource allocation under ADF-13 is UA 317.97 million. For the remaining CSP period 2014-15, the Bank foresees seven national operations (see Table 3). The focus in 2014 and 2015 will be on energy sector reforms through policy-based lending, the continuation of transport and energy infrastructure investments, and agribusiness infrastructure (through two closely interlinked operations using ADB and ADF resources). The regional lending program will entail four new operations, focusing on regional transport connectivity. The Bank’s operational lending program will be supported by its on-going engagement in country dialogue, with notable focus on inclusive growth, energy, and transport through its leadership in respective donor working groups.

54. The indicative non-lending program will focus on two operational priorities. The Bank foresees two focus areas, to generate knowledge to inform its strategic and operational choices: (1) Support for Tanzania’s transition to green growth. This activity, which has been discussed with Government and academia, will prepare a green growth roadmap and also consider exploring, from a public expenditure perspective, funding options for climate change mitigation mechanisms; (2) A maritime safety study, which has already been requested by the authorities in light of several recent maritime accidents in the Indian Ocean, will be prepared to inform operational planning.

55. As an option, the Bank will assess, in due course, just-in-time policy advisory needs. Given Tanzania’s low growth elasticity of poverty, emphasis might be placed on inclusive growth. One area to consider is the understanding of poverty trends in Tanzania and ways to enhance broad-based job creation and inclusive growth. To this end, the Bank will join forces

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with other Development Partners and academia to carry out a joint analytical activity during 2015. In addition, in the social sectors, some analytical work could be undertaken to understand population growth dynamics and skills gaps assessments in preparation for the upcoming natural gas boom in 2015. Furthermore, advisory services through the use of transaction advisors in structuring investments will continue to play an important role in Tanzania.

Table 3: Indicative Lending Program, 2014-15 (in million UA)

65.0 (ADB) Bagamoyo Eco-Energy Project (transport/energy)25.0 (ADF loan) Kenya-Tanzania-Zambia Power Interconnection Phase I (energy)* ®20.0 (ADF loan) Bagamoyo Rural Infrastructure Project (transport/energy)30.0 (ADF loan) + 16.0 (TF) Scaling-up of Renewable Energy Project (energy) 61.0 (ADF loan) Transport Sector Support Program (transport)15.0 (ADF loan) Burundi-Tanzania: RN3 Manyovu-Kasulu-Kigoma Roads (transport) ®100.0 (ADB) Dar-es-Salaam-Isaka-Kigali Railway (transport) ®6.0 (ADF loan) Mueda-Negomano Road (transport) ®

2014 100.0 (ADF loan) General Budget Support (Governance)2015 6.0 (ADF loan) Institutional Support Program for Good Governance III (Governance)

ADF-13 (loan): 263.0ADB: 165.0TF: 16.0

® Regional project TF= Trust Fund

Strategic Pillar II – Governance, with focus on enabling institutional and business environment

Total

Source: SRAS and staff consultations.*To be co-financed with JICA

2015

Expected Year of Board Approval

ADF-13 amount (and other windows) - UA million Projects (sectoral coverage)

Strategic Pillar I – Infrastructure Development

2014

Table 4: Proposed Studies (in million UA)Department Sector YearAmountOITC Transport 1OITC Transport 2Source: SRAS and staff consultations.

Proposed Study (All Multinational)North – South Corridor Lake Victoria Maritime Transport/Maritime Communication Project

6.4 Monitoring and Evaluation56. A revised Results-Based Framework (RBF) has been developed for the remaining period 2014-15. The monitoring and evaluation of CSP implementation will be based on a revised RBF for the remaining strategy period 2014-15 (Annex 5). At entry, project logical frameworks will be strengthened for new operations, and lessons learned from previous operations will be incorporated. At supervision, proactivity and communication will be emphasized, along with the strengthening of the mid-term review process. At exit, upcoming evaluations of closed or about to close projects and continued supervision activities will be applied rigorously so as to draw lessons that can inform the design of future projects. The Bank will also undertake a rigorous exercise to strengthen operational monitoring and evaluation.

6.5 Risks and Mitigation Measures57. Tanzania’s overall development prospects look promising with low to moderate operational risks, though challenges remain. The main risks under the current strategy are domestic, and stem from fiscal pressures for increased public spending, ambitious revenue collection targets, and lagging reforms. Engagement in energy sector reforms faces moderate to high risks due to capacity and governance challenges. These include the timely completion of

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proposed gas and power infrastructure projects, existing hydrology risks, and risks of political interference. On the portfolio, it will be necessary to balance staffing and administrative resources with core operational needs. Continued capacity and accountability challenges could impact on implementation of the CPIP. The GBS lending instrument is under intensive scrutiny.

58. Going forward, the Bank will continue to work closely with the Government, Development Partners, private sector and civil society to enhance dialogue on economic policy and monitor risks. The Bank will focus its dialogue on policy areas that are of strategic relevance. These include the energy and transport sectors, but also cross-cutting issues such as inclusive growth (including gender, youth, and vulnerable groups) and the transition to green growth. The Bank is already well positioned in this respect, notably by chairing (poverty) or co-chairing (energy and transport) sector working groups. In addition, the Bank will continue to frequently dialogue with Government to implement the portfolio improvement plan, and share its experience and mitigation strategies with related Development Partners. The Bank will seek further partnership with Development Partners to mobilize co-financing to leverage the country’s ADF allocation. In doing so, the Bank will strengthen its role as a convener, connector and catalyst in development cooperation.

7. CONCLUSIONS AND RECOMMENDATIONS

59. The Tanzania CSP/CPPR mid-term review comes at an opportune time. It makes a strong business case for the African Development Bank, especially in the infrastructure and governance sectors, while maintaining its strategic focus for the remaining period of the CSP. The focus areas under this mid-term review will provide a solid complementary program for support to Tanzania. These include (1) supporting the Government’s drive for energy reforms as Africa’s trusted partner of choice, (2) a sharpened focus on results measurement and rigorous project implementation, and (3) generation of operationally relevant knowledge to inform the next CSP. CODE is hereby invited to take note of the CSP/CPPR mid-term review for Tanzania.

* * *

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ANNEX 1: SUMMARY OF JOINT CSP/CPPR CONSULTATIONSTanzania’s CSP/CPPR Mid-Term Review was informed by two rounds of intensive consultations, involving a wide spectrum of participants from: Government ministries, departments and agencies (including team leaders from project implementation units and executing agencies); Development Partners, civil society organizations, academia, research institutions, the private sector, and Bank sector staff. The review also benefited from the parallel mid-term review of the Regional Integration Strategy Paper (RISP) for Eastern Africa. Also, internally, the review was informed by bi-monthly sector specialists’ meetings for project implementation progress. Key messages on (1) portfolio performance, (2) Bank’s strategic focus, and (3) regional issues, are summarized below.

(1) Key Messages on Portfolio PerformanceProgress in portfolio performance since 2012 include: (1) elimination of problematic projects and (2) an increase of the average cumulative disbursement ratio from 34.6% to 47.3%.

Persisting challenges since the 2012 review are: (1) signature delays, (2) ageing projects, (3) relatively large number of potentially problematic projects in the portfolio, and (4) persistence of slow disbursing projects.The key issues affecting portfolio performance are: (1) Challenges to the Government in meeting counterpart funding requirements, and compensation payments for project-affected-persons (PAPs); (2) protracted government approval processes during procurement and contract administration, (3) frequent changes of Bank task managers and staff at project implementation units, (4) perception of too stringent requirements for prior review by the Bank of procurement activities, (5) continuation of practices to award of contracts to firms with weak implementation capacities, and (6) perception of a need for an enhanced monitoring and evaluation frameworks.

Recommendations for the Bank include:

Reconsideration of counterpart funding requirements: The Bank could consider waiving or reducing counterpart funding requirements on case by case basis for new operations.

Reconsideration of compensation for Project affected peoples (PAPs): The Bank could consider financing compensation costs, on case by case basis to avoid start up delays, especially where large compensation payments are involved.

Reconsideration of prior approval of procurement processes by the Bank: The Bank should consider increasing the threshold of contracts that would require post-procurement reviews in Tanzania, taking into account the prevailing fiduciary and decentralized environment in the country.

Reduce frequent change of Bank task managers: The Bank must strengthen its decentralization process by ensuring that all projects have at least two task managers with at least one based in the field office or in the regional office.

Recommendations for Government include: Government approval processes: To minimize delays in approval processes, the

Government should consider a revision of the threshold of contracts that would require Attorney General’s approval, to allow more contracts to be approved by the legal teams in the sector ministries

Stop award of contracts to incompetent firms: The Government should ensure strict enforcement of blacklisting policy to ward-off non-performing contractors. More vigilance is particularly needed in due diligence during bidding and evaluation processes.

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Strengthen monitoring and evaluation. There is urgent need to strengthen the framework for monitoring and evaluation of Bank funded projects in Tanzania to enhance joint Government-Bank oversight of portfolio performance.

(2) Key Messages on the Bank’s Strategic Focus Strategic alignment. The Bank’s strategic focus is well-aligned with the Tanzania’s

development plans, strategies, and even the recently launched the ‘Big Results Now!’ initiative;

Inclusive growth. Inclusive growth remains a challenge in the context of Tanzania’s growth experience. Key areas of focus include agricultural transformation in the rural sector and formalization of employment in the urban sector;

Public expenditure efficiency. It might be advisable to look at the quality of public expenditures to improve value for money of public sector infrastructure investments;

Monitoring and evaluation. There is a need to improve the national monitoring and evaluation systems and further support the development of official statistics to enhance an evidence-based dialogue;

Decentralization. There is a need for improvement to make the Bank more accessible, as it is challenging to directly deal with task managers based in headquarters; and

Competitiveness. Tanzania’s competiveness, measured by international benchmarks, has declined most likely because of declines in the quality of education and the existing infrastructure challenges in Tanzania.

Main Sector Issues Transport. The need to enhance interconnectivity issues in the infrastructure sector,

especially in the transport sector; Energy. The current energy situation should be regarded as a magnificent development

opportunity for Tanzania given the upcoming natural gas boom; Education. There is a growing concern on how to address education sector challenges to

allow the country to have the appropriate skills mix for broad-based growth, especially under the upcoming natural gas boom;

Social sectors. There is a concern that the social sectors have not been given a significant role in the Bank’s development agenda in Tanzania, especially in education and health;

Private sector. The Bank was called upon to further support Public Private Partnerships (PPP) and acknowledge the importance of ICT as a learning platform;

Quality at entry. This was considered the single most important factor to improve portfolio performance, alongside enhancements of the project monitoring and evaluation systems; and

Donor coordination. Development Partners should have a better dialogue among themselves as to where their comparative advantages are and be less risk-adverse in forging strategic partnerships.

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Client and Stakeholders’ Perception

Two thirds of respondents indicated that the Bank has right strategy in place . It was acknowledged that the Bank’s comparative advantage is in the infrastructure.

More than half of the respondents indicated that CSP/CPPR consultations were adequate. Most respondents felt that consultations covered relevant areas. However, about one third of the respondents cited some missing items, including: importance of social and private sectors, the role of corruption and governance, and a more critical discussion of the links between strategy implementation and portfolio performance.

The Bank can significantly improve on results by strengthening monitoring and evaluations systems along with capacity building. Also, more consultations at the design stage as well as increased capacity and authority of the country office are important to improve results on the ground.

(C) Messages on Regional Aspects Interconnectivity gaps. There was a sense that the Bank could play a stronger role in

assuring that its transport operations should continue to focus on improving road infrastructure, but less exclusively at the expense of other important issues. These include broadening the focus on a single transport mode and better include interconnectivity issues between rail, road, and ports. There was also the perceived need for increased emphasis on institutional reforms and other ‘soft’ factors that could accompany ‘hard’ regional transport sector investments.

Implementation delays. The implementation progress for regional operations has generally been affected by challenges ranging from start-up delays, weak implementing capacities in partner agencies and diversity in national legislation, including the requirement for parliamentary ratification in some countries. Country-specific institutional, regulatory, and legislative frameworks as well as the associated impediments should be assed at project entry. There has also been frequent change of task mangers from the Bank side, causing delays.

Lessons learned. Given the lengthy processing and negotiations required to secure buy-in and ownership from the beneficiary countries as well as to achieve financial closure, the Bank should consider providing better ‘project preparation support’ to the beneficiary countries to assist in offsetting entry challenges, as well as strengthening capacity building to help with the coordination among many institutions in the different countries. The project implementation and procurement plans arrangements and implementation guidelines need to be more candidly assessed for readiness. The coordination of national and regional Bank sector and fiduciary staff needs to be coordinated more smoothly. Monitoring and evaluation systems strengthened.

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ANNEX 2: SELECTED ECONOMIC INDICATORS

Table 5: Tanzania Comparative Development Indicators

Year Tanzania AfricaDevelo-

ping Countries

Develo- ped

CountriesBasic IndicatorsArea ( '000 Km²) 2011 947 30,323 98,458 35,811Total Population (millions) 2012 47.8 1,070.1 0.0 0.0Urban Population (% of Total) 2012 27.2 40.8 47.1 78.0Population Density (per Km²) 2012 108.4 34.5 69.8 23.5GNI per Capita (US $) 2012 570 1 604 3 795 37 653Labor Force Participation - Total (%) 2012 46.9 37.8 68.7 72.0Labor Force Participation - Female (%) 2012 49.7 42.5 38.9 44.5Gender -Related Dev elopment Index Value 2007-2011 0.527 0.525 0.694 0.911Human Dev elop. Index (Rank among 187 countries)2008-2012 152 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2009-2011 67.9 40.0 20.6 ...

Demographic IndicatorsPopulation Grow th Rate - Total (%) 2012 3.0 2.3 1.3 0.3Population Grow th Rate - Urban (%) 2012 4.7 3.4 2.6 0.7Population < 15 y ears (%) 2012 44.9 40.0 28.5 16.4Population >= 65 y ears (%) 2012 3.2 3.6 6.0 16.6Dependency Ratio (%) 2012 92.6 77.3 52.6 49.2Sex Ratio (per 100 female) 2012 100.0 100.0 103.3 94.3Female Population 15-49 y ears (% of total population) 2012 22.7 49.8 53.3 45.6Life Ex pectancy at Birth - Total (y ears) 2012 60.9 58.1 68.2 77.7Life Ex pectancy at Birth - Female (y ears) 2012 57.0 59.1 70.1 81.1Crude Birth Rate (per 1,000) 2012 39.7 33.3 21.4 11.3Crude Death Rate (per 1,000) 2012 8.8 10.9 7.6 10.3Infant Mortality Rate (per 1,000) 2012 49.7 71.4 40.9 5.6Child Mortality Rate (per 1,000) 2012 73.5 111.3 57.7 6.7Total Fertility Rate (per w oman) 2012 5.3 4.2 2.6 1.7Maternal Mortality Rate (per 100,000) 2006-2010 460.0 415.3 240.0 16.0Women Using Contraception (%) 2012 18.2 34.5 62.4 71.4

Health & Nutrition IndicatorsPhy sicians (per 100,000 people) 2004-2010 0.8 49.2 103.7 291.9Nurses (per 100,000 people)* 2004-2009 24.2 133.0 168.7 734.3Births attended by Trained Health Personnel (%) 2006-2010 48.9 53.7 64.3 ...Access to Safe Water (% of Population) 2011 53.3 67.8 86.5 99.1Access to Health Serv ices (% of Population) 2000 42.0 65.2 80.0 100.0Access to Sanitation (% of Population) 2011 11.9 40.2 56.8 96.1Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2011 5.8 4.6 0.9 0.5Incidence of Tuberculosis (per 100,000) 2011 169.0 234.6 146.0 23.0Child Immunization Against Tuberculosis (%) 2011 99.0 81.6 83.9 95.4Child Immunization Against Measles (%) 2011 93.0 76.5 83.7 93.5Underw eight Children (% of children under 5 y ears) 2006-2011 16.2 19.8 17.0 1.4Daily Calorie Supply per Capita 2009 2 363 2 481 2 675 3 285Public Ex penditure on Health (as % of GDP) 2010-2011 2.9 5.9 2.9 7.4

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2009-2012 93.6 107.0 107.8 102.7 Primary School - Female 2009-2012 95.1 103.1 106.2 102.3 Secondary School - Total 2009-2012 35.1 46.3 66.4 100.4 Secondary School - Female 2009-2012 32.7 41.9 65.1 100.0Primary School Female Teaching Staff (% of Total) 2009-2012 51.6 39.2 58.6 81.3Adult literacy Rate - Total (%) 2010 67.8 71.5 80.2 …Adult literacy Rate - Male (%) 2010 75.5 78.4 85.9 …Adult literacy Rate - Female (%) 2010 60.8 64.9 74.8 …Percentage of GDP Spent on Education 2008-2010 6.2 5.3 4.5 5.5

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2011 13.1 7.6 10.7 10.8Annual Rate of Deforestation (%) 2000-2009 0.2 0.6 0.4 -0.2Forest (As % of Land Area) 2011 37.3 23.0 28.7 40.4Per Capita CO2 Emissions (metric tons) 2009 0.2 1.2 3.0 11.6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

october 2013

0102030405060708090

2004

2005

2006

2007

2008

2009

2010

2011

2012

Infant Mortality Rate( Per 1000 )

Ta nzania Africa

020040060080010001200140016001800

2003

2004

2005

2006

2007

2008

2009

2010

2011

GNI Per Capita US $

Ta nzania Africa

0.00.51.01.52.02.53.03.5

2004

2005

2006

2007

2008

2009

2010

2011

2012

Population Growth Rate (%)

Tanzania Africa

111213141516171

2004

2005

2006

2007

2008

2009

2010

2011

2012

Life Expectancy at Birth (years)

Ta nzania Africa

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ANNEX 3: ACHIEVEMENT OF MILLENNIUM DEVELOPMENT GOALS

Table 6: Progress at MDGs at a Glance—Mainland Tanzania Table 7: Progress at MDGs at a Glance—ZanzibarMDG Indicator Baseline 1990 Current status 2015 Target Progress at a

Glance

1.Eradicate extreme poverty and hunger

1.1 Proportion of population below ($1, PPP) (based on national income poverty line)

39 33.6 19.5 1

1.1 Proportion of population below ($1, PPP) (based on national food poverty line)

21.6 16.6 10.8 1

1.8 Under-5 underweight (%) (weight for age below 2SD

28.8 16.8 14.4 11.8 under-5 Stunted (%) (height for age below 2SD

46.6 38.9 23.3 12. Achieve universal primary education

2.1 Net enrolment ratio in primary education (%)

54.2 95.4 100 3

2.2 Gross enrolment ratio in primary education (%)

112.7 100 33. Promote gender equality and empower women

3.1 Ratio of girls to boys in primary school (%)

98 101 100 3

3.2 Ratio of girls to boys in secondary school (%)

… 105 100 33.3 Ratio of females to male in tertiary education (%)

… 68 100 23.4 Proportion of women among members of Parliament (%)

… 30.3 50 24. Reduce child mortality

4.1 Under-five mortality rate (per 1000 live births)

191 81 64 34.2 Infant mortality rate (per 1000 live births)

115 51 38 34.3 Proportion of children vaccinated against measles

… 85 90 25. Improve maternal health

5.1 Maternal Mortality Ratio (per 100,000 live births)

529 454 133 15.2 Proportion of births attended by skilled health personnel (%)

43.9 50.5 90 16. Combat HIV/AIDS, malaria and other diseases

6.1 HIV prevalence 15-24 years 6 2.5 <6 3

6.2 HIV prevalence, 15-49 years 6 5.7 <5.5 37. Ensure environmental sustainability

7.8 Proportion of population using an improved drinking water source (% of rural population)

51 57.1 74 1

7.8 Proportion of population using an improved drinking water source (% of urban population)

68 83 84 3

7.9 Proportion of people with access to improved sanitation (Rural/Urban)

… 13.30% … 1

8. Develop a global partnership for development

… … … 2

Source: United Republic of Tanzania: Accelerating Progress towards the MDGs Country Action Plan 2010-2015.

Note: 3 Achievable2 Achievement probable1 Not achievable

MDG Indicator Baseline 1990 Current status 2015 Target Progress at a Glance

1.Eradicate extreme poverty and hunger

1.1 Proportion of population below ($1, PPP) (based on national income poverty line)

61 44.41 30.5 1

1.1 Proportion of population below ($1, PPP) (based on national food poverty line)

25 13.04 12.5 3

1.8 Under-5 underweight (%) (weight for age below 2SD

39.9 19.9 19.9 31.8 under-5 Stunted (%) (height for age below 2SD

47.9 30.2 23.8 12. Achieve universal primary education

2.1 Net enrolment ratio in primary education (%)

50.9 81.5 100 3

2.2 Gross enrolment ratio in primary education (%)

… 112.1 100 33. Promote gender equality and empower women

3.1 Ratio of girls to boys in primary school (%)

98 99 100 3

3.2 Ratio of girls to boys in secondary school (%)

… 96 100 33.3 Ratio of females to male in tertiary education (%)

… 68 100 23.4 Proportion of women among members of Parliament (%)

… 30 50 24. Reduce child mortality

4.1 Under-five mortality rate (per 1000 live births)

202 79 67 34.2 Infant mortality rate (per 1000 live births)

120 54 40 34.3 Proportion of children vaccinated against measles

… 95.8 100 25. Improve maternal health

5.1 Maternal Mortality Ratio (per 100,000 live births)

377 279 170 15.2 Proportion of births attended by skilled health personnel (%)

… 44.7 90 16. Combat HIV/AIDS, malaria and other diseases

6.1 HIV prevalence 15-24 years 6 2.5 <6 3

7. Ensure environmental sustainability

7.8 Proportion of population using an improved drinking water source (% of rural population)

35 60 67.5 3

7.8 Proportion of population using an improved drinking water source (% of urban population)

70 80 85 1

7.9 Proportion of people with access to improved sanitation (Rural/Urban)

26/52 51/75 … 3

8. Develop a global partnership for development

… … … 2

Source: United Republic of Tanzania: Accelerating Progress towards the MDGs Country Action Plan 2010-2015.Note: 3 Achievable

2 Achievement probable1 Not achievable

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ANNEX 4: COORDINATION AMONG DEVELOPMENT PARTNERS

Table 8: Donor Coordination Matrix for Tanzania

Sectors/Thematic Areas AfD

B

Wor

ld B

ank

IMF

DFI

D

EU ILO

IOM

WFP

Belg

ium

Can

ada

Den

mar

k

Finl

and

Fran

ce

Ger

man

y

Irel

and

Japa

n

Kor

ea

Net

herl

ands

Nor

way

Spai

n

Swed

en

Switz

erla

nd

UK

/Oth

er

US/

MC

C

USA

ID

UN

AID

S

UN

CD

F

UN

DP

UN

EP

UN

ESC

O

UN

-FA

O

UN

FPA

UN

HC

R

UN

ICEF

UN

-IFA

D

UN

IDO

UN

-WH

O

UN

WO

MEN

Agriculture 3 3 3 3 3 3 1 3 3 2 3Industry and Trade (includes PSD) 3 3 1 3 3 3 3 3 3 3 3 3 3 2Energy and Minerals 2 1 3 3 3 3 3 3 3 3 3 3Natural Resources, Environment, and Tourism 3 3 3 3 3 3 3 1 3 3 3Infrastructure (includes Transport) 2 3 3 3 3 3 3 1 3 3Education 3 3 3 3 3 3 3 2 3 3Water 3 1 3 3 3 2 3 3 3 3 3Health 3 3 3 3 3 3 3 3 3 3 3 3 1 2 3Public Financial Management 3 3 3 2 3 3 3 1 3 3 3 3 3 3 3Macroeconomic Management 1 3 3 3 3 3 3 3 3 3General Budget Support 3 3 3 2 3 3 3 3 3 3 3 3 1 3Poverty Monitoring Group 1 2 3 3 3 3 3 3 3 3 3 3 3 3 3Governance 3 3 3 3 1 3 2 3 3 3 3 3 3Public Sector Reform 3 1 3 3Local Government Reform 3 3 1 3 3 2 3 3 3 3 3 3 3Gender 3 3 3 3 1 3 3 3 3 3 3 3 3 2Social Protection 2 3 3 3 3 3 3 1 3Anti-Corruption 3 3 2 3 3 3 3 1Innovation and Technology 3 ∆ 3 1HIV/AIDS 3 3 1 3 3 3 3 3 3 2 3 3 3 3 3Humanitarian Assistance 3 3 2 3 3 3 3 3 3 1 3Culture 1 3 3 3 3 3 3 3 3 2

Source: Compiled from information provided by the DPG Secretariat and staff consultations.

Note: 1 Lead or elected chair in donor group.2 Deputy lead or elected co-chair in donor group.3 Active development partner (provides financial/technical support and/or frequently joins meetings).

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ANNEX 5: ACHIEVEMENT OF COUNTRY STRATEGY MID-TERM RESULTS

Table 9: Original Results-based Framework, 2011-15

Country’s Sector Development Goals

Constraints hindering achievement of desired

outcomes

Final Outcomes(by 2015)

Final Outputs(by 2015)

Mid-Term Outcomes(by 2013)

Actual Outcomes at Midterm

Mid-Term Outputs(by 2013)

Actual Outputs at Midterm

Bank Group Interventions: Previous

CSPs & current CSP period (ongoing &

proposed)PILLAR I: INFRASTRUCTURE DEVELOPMENT TRANSPORT

Improved transport system that links centers of economic activity, enhance socio-economic development, poverty reduction and regional integration

- Inadequate level of periodic and routine maintenance.

- Poor condition of feeder road network

- Level of road user charging below the needs of the road network.

- Reduction of travel time from 5hrs to 2hrs between Dodoma and Babati, and from 4hrs to 1.5hrs between Tunduru and Mangaka.

- 490km of gravel roads upgraded to bitumen surface standard.

- Increase in paved road density from 6.86km /1,000km2 in 2011 to 7.25km/ 1,000km2 in 2015.

- Increase in paved national trunk roads from 18.8% in 2011 to 21% in 2015.

Completed transport sector review study

Completed transport sector review study and study on Arusha-Holili/Taveta-Voi Road

HIV/AIDS awareness reached Construction workers and 29 villages along Iringa – Dodoma Road

- 265km of gravel roads upgraded to bitumen surface standard.

- Increase in paved road density from 6.51km /1,000km2 in 2011 to 70km/ 1,000km2 in 2013.

- Increase in paved national roads from 18.8% in 2011 to 19.9% in 2015.

-

- Civil works for Singida-Babati-Minjingu Road Project and aA total of 272 km of road have been upgraded to bitumen surface standard

-- Civil works for

Arusha-Namanga-Athi River road project (Multinational) have been completed:

- Transport Sector Review Competed

Proposed: - Transport Sector Support

Program- TransAfrica Highway

Corridor/North-South Corridor Study

- Lake Victoria Maritime Transport Study

- RN3 Manyouvu—Kasalu- Kikoma Dar es Salaam Isaka Kigali Railway

- Mueda-NegomanoOngoing: - Zanzibar Roads Upgrading Project - Singida-Babati-Minjingu Road Road Sector Support Project I - Multinational: Arusha-Namanga-Athi River Development Project Road Sector Support Project II : (i) Dodoma-Babati; and (ii) Tunduru-Mangaka - Multinational: Arusha-Holili/Taveta-Voi Road- -Transport sector review study

AGRICULTURAL To enhance rural incomes and food security on a sustainable basis

- Limited access to agricultural services (research, extension, inputs, credits, etc.)

- Inadequate marketing infrastructure including markets, warehouses, storage facilities (including cold storage)

- Poor feeder road network - Lack of postharvest

management skills by farmers

- Productivity increase of 20% for major crops

- Increase in farm gate prices of 20% for major crops

- Reduction in post-harvest losses from 22– 14%

- for maize and 13– 9% for rice

- .

- Provision of agricultural services increased by 50% from current levels

- 70 (36 markets-25 with cold-storage; 2 ice plants; 32 warehouses) market/storage facilities constructed/ rehabilitated

- 16 post-harvest training centers rehabilitated / resourced

- 1550 km of feeder roads upgraded

-

- Productivity increase of 10% for major crops

- An increase of 10% of farm gate prices for major crops

- Reduction in post-harvest losses from 22– 18%

- for maize and 13– 11% for Rice

- - Provision of agricultural services increased by 20% from current levels

- 30 (market/storage) facilities constructed/ rehabilitated

- 600 km of feeder roads upgraded

- 8 post-harvest training centers rehabilitated / resourced

- 44 market/storage facilities have been constructed/ rehabilitated

- 1 Post-harvest training center rehabilitated / resourced

- 164.2km of feeder roads upgraded

- 5 Strategic Market centers developed

- 11,375 Participatory Farmer Groups (PFGs) trained

Proposed: District Agricultural Sector Investment Project (DASIP II) Bagamoyo Rural Infrastructure ProjectOngoing: - District Agricultural Sector Investment Project (DASIP) Market Infrastructure, Value Addition and Rural Finance Program (MIVARFP)

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Country’s Sector Development Goals

Constraints hindering achievement of desired

outcomes

Final Outcomes(by 2015)

Final Outputs(by 2015)

Mid-Term Outcomes(by 2013)

Actual Outcomes at Midterm

Mid-Term Outputs(by 2013)

Actual Outputs at Midterm

Bank Group Interventions: Previous

CSPs & current CSP period (ongoing &

proposed)WATER SUPPLY AND SANITATION

Improve access to reliable water and sanitation facilities in both rural and urban areas

- Limited resources to meet development targets

- Implementation capacity constraints, particularly at sub-national level.

- Underinvestment and weaknesses in water resources management, including vulnerability to climate change.

- Inadequate sustainability of completed facilities, including operation and maintenance weakness; and poor billing and revenue collection for urban systems.

- Increase in the proportion of households with access to reliable water supply: (a) Mainland:

- In rural areas to 65% &Urban Areas 80%( b) Zanzibar: (to 95% in urban areas) - In rural areas to 75% Improved sanitation: (a) Mainland: - Increase in proportion of rural population with improved toilets to 35% (b) In Zanzibar: - Increase in proportion of population with access to basic sanitation to 90%

- 600 RWSS village water projects implemented.

- 70 km of water distribution network in Unguja urban (Zanzibar)

rehabilitated and extended

- 2.0 million rural household latrines upgraded.

- Increase in proportion of households with access to reliable water supply:

(a) Mainland: - In rural areas to 61.5% (b) Zanzibar: - In urban areas to 87% Improved sanitation: (a) Mainland: - Increase in proportion of the rural population with improved toilets to 29%

- - 300 RWSS village water projects implemented

- 35kmof the water distribution network in Unguja urban (Zanzibar) rehabilitated and extended.

- 1.0 million rural household latrines upgraded

- From RWSSP II, more than 300 village water projects completed, and more than 3.9 million people served

- Under ZWSSP 4 out 9 reservoirs and 10 out of 19 boreholes completed in Unguja and Pemba rural in Zanzibar.

- Also 4 out 6 reservoirs are at foundation stage in Pemba urban

Proposed: -- Urban Water Supply and Sanitation Ongoing: - Rural Water Supply and Sanitation Program II - Zanzibar Water Supply and Sanitation Project - Lake Victoria Water Supply and Sanitation Program.- Zanzibar Urban Water Supply and Sanitation

ENERGY Enhance generation capacity to increase customer connection

Inadequate generation, transmission and distribution infrastructure.

500,000 additional customers connected (100,000 new customers per year)

- Increase in power generation capacity by 980 MW (from 865 MW in 2010 to 1583 MW in 2013) in 8 plants

- 300,000 additional customers connected (100,000 new customers per year)

- Completed energy sector review study

Increase in power generation capacity by 980 MW (from 865 MW in 2010 to 1583 MW in 2013) in 6 plants

Increase in power generation capacity by 980 MW (from 865 MW in 2010 to 1583 MW in 2013) in 6 plants51

Proposed: - Regional Rusomo Falls Hydroelectric - Energy Sector Reform Program- Geothermal development-Tanzania Kenya Interconnector Ongoing:

- Iringa-Shinyanga transmission Project (Dodoma Singida 217 Km, 400 KV section)

- Electricity V project

-28-

Country’s Sector Development Goals

Constraints hindering achievement of desired

outcomes

Final Outcomes(by 2015)

Final Outputs(by 2015)

Mid-Term Outcomes(by 2013)

Actual Outcomes at Midterm

Mid-Term Outputs(by 2013)

Actual Outputs at Midterm

Bank Group Interventions: Previous

CSPs & current CSP period (ongoing &

proposed)PILLAR II: GOVERNANCE WITH FOCUS ON ENABLING INSTITUTIONAL AND BUSINESS ENVIRONMENT HUMAN RESOURCE DEVELOPMENT

Improvement of social well-being and reduction in income poverty

- High attrition rate & shortage of qualified teachers.

- Inadequate infrastructure especially for vocational training and science education.

- Lack of employable skills among young people and mismatch between skills training and labour market needs.

- Limited access to finance for small enterprise development particularly by women and the youth

- Ordinary level examination pass rate increased from 11.5% in 2010 to 20% by 2015

- Gender parity achieved in primary, secondary and vocational education.

- Unemployment amongst young people aged 15-24 reduced from 14.9% in 2006 to 10% by 2015.

- Reduction in Financial exclusion from 56% in 2009 to 54% by 2015

Reduction in financial exclusion from 56% in 2009 to 54% by 2015.

Improvements in rates of maternal and child health morbidity and mortality

- Enrolment in Skills Development Institutions increased from current 116,613 per annum to 260,000 students per annum (50% female)

- 4 Alternative Learning Centers and 5 Skills Development Centers constructed in Zanzibar by 2015

- Selected TVET institutions and Science Laboratories rehabilitated by 2015.

- 600,000 people accessing micro finance by 2015

- Ordinary level pass rate increased to 20% from by 2013 from 11.5% in 2010

- Improved access to secondary vocational education with an emphasis on relevant and transferable skills

- Reduction in financial exclusion from 56% in 2009 to 55% by 2013.

- Enrollment in Skills Development Institutions increased from 116,613 annum to 180,000 per annum by 2013

- Curricula for skills development institutions revised to reflect labour market needs.

- 300,000 people accessing micro finance by 2013

- 53 Out Patient Department units (OPDs) and 9 Obstetric theaters completed and handed over to authorities.

- Training Curriculum revised & aligned to Labor market needs

- 17 core staff trained.

- Governance Review conducted

- A total of 50 CSOs staff trained by 2013.

- 93,364 clients reached with microfinance loans

- 361 loans delivered to financial intermediaries

- 10 MFI trained - 209,658 new jobs

created by small entrepreneurs

A total of 4,532 small entrepreneurs trained

Ongoing: - Technical and Vocation

Training I - Small Entrepreneurs

Loan Facility –SELF II - Alternative learning and

Skills Development Project – ALSD II

Proposed- Technical and Vocational

Education Training II

ECONOMIC AND FINANCIAL GOVERNMANCE Strengthen economic and financial governance, reduce incidence of corruption and improve business enabling environment

- Lack of continued political commitment from Government towards economic and financial reforms.

- Limited predictability of flow of funds - Delays in implementation of administrative processes and procedures - Weak regulatory framework as a constraint to the enabling environment

- Increased predictability and control of budget execution - Increased domestic resource mobilization - Reduced incidence of grand and petty corruption - Increase in Tanzania‘s competitiveness - More conducive environment for PPP‘s

- Implementation of all recommendations from 2011 Country Fiduciary Risk Assessment - Ratio of total tax revenue to GDP increased - Improved value of Corruption Perception Index (CPI) - Increase in exports - Increased investment in infrastructure sector through PPPs

- Aggregate expenditure deviation from budgeted expenditure not more than 5%

- Increased tracking of revenues in the mining sector by TRA

- Outcome indicators related to corruption in cluster 3 of the PAF are all met

- Minimum of 2 National Competitiveness reports published

- PPPs legal framework finalized, and PPP unit operational

- - Fiduciary Risk Assessment was completed.

- 16.5% of total tax revenue to GDP in 2013

- CPI improved from 2.7 in 2010 to 3.0 in 2013

- Increase value f exports by 10%

- Increase in receipts of PPP proposals by 30%

-

- Fiduciary Risk Assessment was completed and follow- up measures agreed in 2012.

- Operational Manuals on PPP prepared.The 2012 CPI index 35 out of 100 vs 2011 CPI index of 3 out of 10

- Implementation of reforms satisfactory and GBS annual reviewed for 2011 and 2012.

- Domestic Revenues 17.7% of GDP in 2012/13

- The EITI compliant since 2012.

Proposed:- Policy Based Lending

Operation to support reforms in the energy sector

- Advisory Services through the Bank’s Africa Legal Support Facility (ALSF)

Ongoing: - Budget Support

Operation- Institutional Support for

Good Governance II

-29-

Table 10: Revised Results-based Framework for the Period 2014-15

Country’s Sector Development Goals

Constraints hindering achievement of desired outcomes

Final Outcomes(by 2015)

Final Outputs(by 2015)

Bank Group Interventions during CSP period (ongoing & proposed)

Improved transport system that links centers of economic activity, enhance socio-economic development, poverty reduction and regional integration

Inadequate level of periodic and routine maintenance. Poor condition of feeder road network Level of road user charging below the needs of the road network.

Reduction of travel time from 5hrs to 2hrs between Dodoma and Babati, and from 4hrs to 1.5hrs between Tunduru and Mangaka and Arusha-Holili/Taveta-Voi Road

- 490km of gravel roads upgraded to bitumen surface standard.

- Increase in paved road density from 6.86km /1,000km2 in 2011 to 7.25km/ 1,000km2 in 2015.

- Increase in paved national trunk roads from 18.8% in 2011 to 21% in 2015.

- Construction of 19km of Bus Rapid Transit (BRT) along Kilwa Road, Changombe Road and Kawawa Road as part of traffic decongestion in Dar-es- Salaam City.

- Construction of 42 km of Bypass road around Arusha city

- Construction of 14.1 km of Dual Carriageway in Arusha.

Proposed: - Transport Sector Support Program- TransAfrica Highway Corridor/North-South Corridor Study- Lake Victoria Maritime Transport Study- RN3 Manyouvu—Kasalu- Kikoma Dar es Salaam Isaka Kigali

Railway- Mueda-NegomanoOngoing: - Zanzibar Roads Upgrading Project - Singida-Babati-Minjingu Road Project Road Sector Support Project I - Multinational: Arusha-Namanga-Athi River Development Project Road Sector Support Project II : (i) Dodoma-Babati; and (ii) Tunduru-Mangaka - Multinational: Arusha-Holili/Taveta-Voi Road- -Transport sector review study

To enhance rural incomes and food security on a sustainable basis

Limited access to agricultural services (research, extension, inputs, credits, etc.) Inadequate marketing infrastructure including markets, warehouses, storage facilities (including cold storage) Poor feeder road network Lack of postharvest management skills by farmers

- Productivity increase of 20% for major crops- Maize from 1,200 kg/ha to 1,440 kg/ha; - paddy from 1,800 kg/ha to 2,160 kg/ha; - Sorghum from 1,100 kg/ha to 1,320 kg/ha - beans from 750 900 kg/ha- Increase in farmers per capita income from USD 466

to USD 500per by year 2015 - Reduction in post-harvest losses from 22– 14%- for maize and 13– 9% for rice- Rural roads that are passable (good and fair

conditions) increased from 61% in 2013 to 64% in 2015

- 70 (36 markets-25 with cold-storage; 2 ice plants; 32 warehouses) market/storage facilities constructed/ rehabilitated

- 16 post-harvest training centers rehabilitated / resourced- 1550 km of feeder roads upgraded

Proposed: District Agricultural Sector Investment Project (DASIP II) Bagamoyo Sugarcane OutgrowersOngoing: - District Agricultural Sector Investment Project (DASIP) Market Infrastructure, Value Addition and Rural Finance Program (MIVARFP)

Improve access to reliable water and sanitation facilities in both rural and urban areas

Limited resources to meet development targets Implementation capacity constraints, particularly at sub-national level. Underinvestment and weaknesses in water resources management, including vulnerability to climate change. Inadequate sustainability of completed facilities, including operation and maintenance weakness; and poor billing and revenue collection for urban systems.

- Increase in the proportion of households with access to reliable water supply: (a) Mainland: - In rural areas to 65% &Urban Areas 80%( b) Zanzibar: (to 95% in urban areas) - In rural areas to 75% Improved sanitation: (a) Mainland: - Increase in proportion of rural population with improved toilets to 35% (b) In Zanzibar: - Increase in proportion of population with access to basic sanitation to 90%

600 RWSS village water projects implemented. 70 km of water distribution network in Unguja urban (Zanzibar) rehabilitated and extended 2.0 million rural household latrines upgraded.

Proposed: -Urban Water Supply and Sanitation Ongoing: - Rural Water Supply and Sanitation Program II - Zanzibar Water Supply and Sanitation Project - Lake Victoria Water Supply and Sanitation Program.- Zanzibar Urban Water Supply and Sanitation

Enhance generation capacity to increase customer connection

Inadequate generation, transmission and distribution infrastructure.

- 500,000 additional customers connected (100,000 new customers per year)

- Increase in power generation capacity by 1200 MW ( from 865 MW in 2010 to 2065 MW in 2015) in 8 plants

- 300,000 additional customers connected (100,000 new customers per year)

- Construction of 480 km, 33 kV OH-line and 217km, LV-line

- Construction of 667 km of 400 kV lines and Construction of four 220kV substation bays

Proposed: - Regional Rusumo Falls Hydroelectric - Energy Sector Reform Program- Geothermal development-Tanzania Kenya Interconnector Ongoing:

- Iringa-Shinyanga transmission Project (Dodoma Singida 217 Km, 400 KV line section)

- Electricity V project

-30-

Country’s Sector Development Goals

Constraints hindering achievement of desired outcomes

Final Outcomes(by 2015)

Final Outputs(by 2015)

Bank Group Interventions during CSP period (ongoing & proposed)

Improvement of social well-being and reduction in income poverty

- High attrition rate & shortage of qualified teachers.

- Inadequate infrastructure especially for vocational training and science education.

- High level of unemployment among Youth- Lack of employable skills among young

people and mismatch between skills training and labor market needs.

- Lack of employable skills among young people and mismatch between skills training and labor market needs.

- Limited access to finance for small enterprise development particularly by women and the youth

- High maternal and child mortality as a result of inadequate health services

- Ordinary level examination pass rate increased from 11.5% in 2010 to 20% by 2015

- Gender parity achieved in primary, secondary and vocational education.

- Unemployment amongst young people aged 15-24 reduced from 14.9% in 2006 to 10% by 2015.

- Enrolment in Skills Development Institutions increased from current 116,613 per annum to 260,000 students per annum (50% female)

- 4 Alternative Learning Centers and 5 Skills Development Centers constructed in Zanzibar by 2015

- Selected TVET institutions and Science Laboratories rehabilitated by 2015.

- 600,000 people accessing micro finance by 2015

Ongoing: - Technical and Vocational Education Training II - Small Entrepreneurs Loan Facility –SELF II Alternative learning and Skills Development Project – ALSD II

Strengthen economic and financial governance, reduce incidence of corruption and improve business enabling environment

- Lack of continued political commitment from Government towards economic and financial reforms.

- Limited predictability of flow of funds - Delays in implementation of administrative processes and procedures - Weak regulatory framework as a constraint to the enabling environment

- Increased predictability and control of budget execution - Increased domestic resource mobilization - Reduced incidence of grand and petty corruption - Increase in Tanzania‘s competitiveness - More conducive environment for PPP‘s

- Implementation of all recommendations from 2011 Country Fiduciary Risk Assessment - Ratio of total tax revenue to GDP increased - Improved value of Corruption Perception Index (CPI) - Increase in exports - Increased investment in infrastructure sector through PPPs

Proposed: - Budget Support Operation - Country Fiduciary Risk Assessment - Report on the Observance of Standards and Codes, Accounting &Auditing Ongoing: - Institutional Support for Good Governance II

-31-

ANNEX 6: LIST OF ACTIVE NATIONAL AND MULTINATIONAL LENDING PROJECTS

Table 11: The National and Regional Portfolio for Tanzania – December 2013

ADBADF Loan

ADF Grant IPPF

RWSSF

FAPA Grant

AWTF

7.00

1 District Agricultural Sector Investment Project 24-Nov-2004 11-Feb-2005 20-Jul-2005 31-Dec-2013 nil 36.00 0.00 nil nil nil 36.00 28.35 78.75% 2.58 3.00 NonPP/PPP 9.23District Agricultural Sector Investment Project 24-Nov-2004 11-Feb-2005 20-Jul-2005 30-Jun-2012 nil 0.00 7.00 nil nil 0.00 7.00 7.00 99.94% 2.58 3.00 NonPP/PPP 9.23

2Marketing Infrastructure, Value Addition & Rural Finance Program (MIVARFP)

29-Jun-2011 12-Sep-2011 22-Mar-2012 31-Dec-2016nil 40.00 nil nil nil nil 40.00 5.41 13.53% 3.00 3.00 2.54

83.00 40.76 49.10%

4.37

3 Singida-Babati-Minjingu Road Project 17-Sep-2007 19-Nov-2007 8-Apr-2009 31-Dec-2014 nil 60.00 nil nil nil nil 60.00 51.68 86.13% 2.57 3.00 6.384 Tanzania Road Sector Support I 12-Feb-2009 31-Mar-2010 17-Feb-2011 31-Dec-2015 nil 152.00 nil nil nil nil 152.00 65.09 42.82% 2.64 2.75 4.955 Tanzania Road Sector Support II 5-Apr-2012 23-May-2012 30-Sep-2017 nil 140.00 nil nil nil nil 140.00 0.25 0.18% 1.76

352.00 117.02 33.24%

4.74

6 Rural Water Supply & Sanitation Phase II 15-Sep-2010 11-Mar-2011 24-Nov-2011 31-Dec-2015 nil 59.00 0.00 nil nil nil 59.00 53.50 90.68% 2.57 3.00 3.34Rural Water Supply & Sanitation Phase II 13-Sep-2006 11-Mar-2011 24-Nov-2011 31-Dec-2015 nil nil nil 5.80 nil nil 5.80 5.80 100.00% 2.57 3.00 7.41

7 Zanzibar Water and Sanitation 11-Nov-2008 22-Dec-2008 14-Oct-2009 31-Dec-2013 nil 25.00 nil nil nil nil 25.00 14.30 57.20% 2.36 2.75 5.21Zanzibar Water and Sanitation 11-Nov-2008 22-Dec-2008 14-Oct-2009 31-Dec-2013 nil nil 2.76 nil nil 2.76 1.89 68.48% 2.36 2.75 5.21

8 Zanzibar Urban Water and Sanitation 19-Dec-2012 11-Mar-2013 31-Dec-2017 nil 14.00 nil nil nil nil 14.00 0.10 0.71% 1.059 ArushaStrategic Sanitation Plan 22-Nov-2007 4-Oct-2008 4-Oct-2008 30-Jun-2013 nil nil 0.65 nil nil nil 0.65 0.65 100.00% 6.20

107.21 76.24 71.11%

4.52

10Alternative Learning Skills Development Phase II

29-Jun-2011 12-Sep-2011 23-Mar-2012 30-Dec-2016nil 15.00 nil nil nil nil 15.00 0.56 3.73% 2.15 3.00 2.54

11 Support to Maternal Mortality Reduction 11-Oct-2006 29-Nov-2006 5-Mar-2007 30-Jun-2014 nil 40.00 nil nil nil nil 40.00 30.46 76.15% 1.92 2.00 NonPP/PPP 7.3312 Small Entrepreneurs Loan Facility II 10-May-2010 6-Jul-2010 22-Oct-2010 31-Dec-2015 nil 20.00 nil nil nil nil 20.00 11.67 58.35% 2.38 3.00 3.70

75.00 42.69 56.92%

2.70

13 Institutional Support for Good Governance II 20-Sep-2010 12-Oct-2010 23-May-2011 31-Dec-2014 nil 5.20 nil nil nil nil 5.20 3.03 58.27% 2.07 2.25 3.33

14Governance Economic Competitiveness Support Program (GECSP)

16-Dec-2011 19-Dec-2011 21-Dec-2011 31-Dec-2013nil 100.00 nil nil nil nil 100.00 100.00 100.00% 2.09 2.50 2.07

15Governance Economic Competitiveness Support Program (GECSP) supplementary

18-Dec-2013 20-Dec-2011 22-Dec-2011 1-Jan-2014nil 39.39 0.02 nil nil nil 39.41 39.41 100.00% 0.04

144.61 142.44 98.50%

5.17

16 Electricity V 14-Dec-2007 6-Mar-2008 16-Jun-2010 30-Jun-2014 nil 28.68 0.00 nil nil nil 28.68 4.29 14.96% 2.00 3.00 6.14Electricity V 14-Dec-2007 6-Mar-2008 13-Nov-2009 30-Jun-2014 nil 0.00 1.32 nil nil nil 1.32 1.01 76.52% 2.00 3.00 6.14

17 Iringa-Shinyanga Transmission Line 26-Oct-2010 11-Mar-2011 14-May-2012 31-Dec-2014 nil 45.36 nil nil nil nil 45.36 3.49 7.69% 2.08 3.00 3.2375.36 8.79 11.66%

837.19 427.94 51.12%

Age (Yrs)

F. ENERGY

Social - Sub Total

Multisector - Sub total

GRAND TOTAL FOR PUBLIC SECTOR OPERATIONS

Agriculture - Sub Total

B. TRANSPORT

Transport - Sub Total

C. WATER AND SANITATION

Water and Sanitation - Sub total

D. SOCIAL

Energy - Sub total

A. AGRICULTURE

Approval Date

Signature Date

Effectiveness

Date

Serial No.

E. MULTISECTOR

Project DescriptionPFI

STATUS

Net Commitments (UA million)

Amount Disbursed

(UA million)

Disbursed (%)

IPClosing Date

Approved Amount UA million

DO

-32-

5.46

18 CRDB SME Partial Credit Guarantee Facility 22-Jul-2008 23-Sep-2008 - 1-Apr-2016 4.90 0.00 nil nil nil nil 4.90 0.00 0.00% 5.52CRDB SME Partial Credit Guarantee Facility 22-Jul-2008 23-Sep-2008 - 4-Jan-2016 0.00 0.00 0.94 nil nil -0.54 0.40 0.00 0.00% 5.52

19 Equity Investment in Access Bank-Tanzania 23-Sep-2008 24-Sep-2008 25-Sep-2008 30-Dec-2013 0.55 nill nil nil nil nil 0.55 0.55 100.00% 5.35Equity Investment in Access Bank-Tanzania 0.35 nill nil nil nil nil 0.35 0.00 0.00% 0.00

20 EFC TANZANIE FAPA GRANT 12-Jun-2012 28-Dec-2013 30-Dec-2016 0.00 nill nil nil 0.62 nil 0.62 0.00 0.00% 1.586.82 0.55 8.06%

844.01 428.49 50.77%

5.22

21Arusha-Namanga-Athi Rivert Road Upgrade (TZ/ KEN)

13-Dec-2006 8-Feb-200728-Oct-08

30-Dec-2013nil 0.00 0.54 nil nil nil 0.54 0.21 38.15% 2.57 3.00 NonPP/PPP 7.15

Arusha-Namanga-Athi Rivert Road Upgrade (TZ/ KEN)

18-Dec-2006 2-Aug-20075-Nov-07

30-Dec-2013nil 0.00 3.50 nil nil nil 3.50 2.99 85.43% 2.57 3.00 NonPP/PPP 7.14

22East Africa Transport and Trade Facilitation (EAC)

29-Nov-2006 8-Feb-2007 22-Aug-2007 30-Dec-2013nil 0.00 6.20 nil 0.00 nil 6.20 3.26 52.52% 1.93 3.00 NonPP/PPP 7.19

East Africa Trade and Transport (TTFA) 29-Nov-2006 17-May-2007 3-Jun-2009 30-Nov-2014 nil 0.00 1.00 0.32 nil nil nil 1.32 1.08 81.74% 1.93 3.00 7.1923 Lake Victoria Water Supply & Sanitation 17-Dec-2010 4-Apr-2011 23-Nov-2011 31-Dec-2015 nil 0.00 17.48 nil nil nil 17.48 1.10 6.29% 1.92 3.00 3.08

24 Dar-Isaka-Kigali/ Keza-Musongati Rail Study II17-Nov-2009 31-Mar-2010 12-Jan-2011 30-Nov-2014

nil 1.66 nil nil nil nil 1.66 0.71 42.77% 2.14 3.00 NonPP/PPP 4.18

25Support to Lake Tanganyika Integrated Regional Development Programme (PRODAP)

17-Nov-2004 11-Feb-2005 19-Nov-2008 31-Dec-2013nil 4.99 nil nil nil nil 4.99 4.24 84.97% 2.25 1.50 NonPP/PPP 9.25

26 Arusha-Holili/ Taveta-Voi 16-Apr-2013 16-Jun-2013 18-Nov-2013 5-Jan-2018 nil 79.90 nil nil nil nil 79.90 0.00 0.00% 0.7227 East African Community (EAC) - Payments 5-Dec-2012 28-Jan-2013 9-Sep-2013 30-Jan-2017 nil 15.00 nil nil nil nil 15.00 0.00 0.00% 1.0928 Rusumo Falls Hydropower 27-Dec-2013 22.41 0.20 22.61 0.00%

130.59 13.58 10.40%

974.60 442.07 45.36%

5.20

29SADC: Shared Watercourses Support Project for Buzi, Save & Ruvuma River Basins

25-Jan-2006 18-May-2006 1-Feb-2008 30-Dec-2013nill nill

9.38nil nil nil nil

9.38 6.5269.51% 2.17 3.00 NonPP/PPP 8.05

30SADC: Strengthening of Institutions for Risk Mngt of Transboundary Animal Diseases (TADs) - Angola/ Malawi/ Moz/ TZ/ Zambia

5-Jul-2006 13-Dec-2006 26-Sep-2007 30-Dec-2013nill nill

13.71nil nil nil nil

13.71 12.3389.93% 2.29 2.50 7.60

31SADC: Support to the control of communicable diseases ( HIV/ AIDS, Malaria & TB)

31-May-2006 19-Jun-2006 15-Dec-2006 31-Dec-2014nill nill

20.00nil nil nil nil

20.00 10.9354.65% 2.67 3.00 7.70

32Programme to Build Statistical Capacity for MDGs Monitoring and Results Measurement (40 countries)

18-Jan-2012 9-Mar-2012 9-Mar-2012 30-Dec-2016nill nill

20.00nil nil nil nil

20.00 20.00100.00% 1.98

33Songwe River Basin Development Programme (Malawi and Tanzania)

25-May-2010 4-May-2011 4-May-2011 31-Dec-2014nill nill nill nil nil nil 0.49

0.49 0.2142.86% 3.66

25-May-2010 4-May-2011 4-May-2011 31-Dec-2014 nil nill nill nil nil nil 2.65 2.65 0.81 30.57% 3.6628-Apr-2010 9-Mar-2012 9-Mar-2012 31-May-2014 nil nill nill 1.07 nil nil nil 1.07 0.29 27.10% 3.73

67.30 51.09 75.91%1041.90 493.16 47.33%GRAND TOTAL INCLUDING NATIONAL, MULTI NATIONAL AND PRIVATE SECTOR PROJECTS and OTHER MULTINATIONAL

Other Multi National Projects- Subtotal

I. OTHER MULTI NATIONAL PROJECT

Private Sector Operation - subtotal

GRAND TOTAL INCLUDING NATIONAL, MULTI NATIONAL AND PRIVATE SECTOR PROJECTS

G. PRIVATE SECTOR OPERATION

H. MULTI NATIONAL PROJECT

Multi National Projects- Subtotal

GRAND TOTAL FOR PUBLIC SECTOR OPERATIONS AND PRIVATE SECTOR OPERATIONS

-33-

ANNEX 7: REVISED COUNTRY PORTFOLIO IMPROVEMENT PLAN, 2013

Table 12: Revised Action Matrix to Enhance Portfolio Quality - 2013Main Issues/Challenges/Constraints Recommendation/Remedial Action Responsible Milestones/TimingCounterpart funding: Delays in the provision of counterpart funds to projects hamper implementation progress. The delays have been attributed to government budgetary constraints.

The Government is invtied to fullfill its contractual obligations. Bank should consider on a case-by-case basis to finance 100% of project costs.

AfDB (ORPC). Starting with ADF13 operations.

Compensation costs: Delays in payment of compensation usually holds up project start-up. These delays are caused either by budgetary constraints or difficulties faced in identifying rightful beneficiaries.

The Government is invtied to fullfill its contractual obligations. The Bank should consider financing compensations costs on case-by-case basis, especially where the amounts involved are large.

In cases where there are difficulties identifying the rightful beneficiaries, the use of escrow account on selected basis where funds dedicated to compensation can be deposited is encourage. It is also suggested for the Bank to consider financing compensation as part the program/project funding. A thorough investigation of ownership during preparation should be ensured.

AfDB (ORPC).

GoT (Ministry of Finance and Line Ministries).

Starting with ADF 13 operations.

Government approval processes: The approval process for contract procurements, awards changes and cancellations is very long and slow, especially when the Attorney General Department’s clearance is required.

A revision of the threshold of contracts that would require the AG’s approval, to allow more contracts to be approved by the legal teams in the sector ministries, could be an effective way to address this issue.

The procurement act is under review and sector ministries to ensure that appropriate suggestion are table during public forums and parliamentary forums. The committee of PS to consider making inputs on the process.

GoT (Line Ministries and the Committee of PS).

Continuous.

High frequency of task managers turnover: This results in slow down of project activities due to disruptions in communication and no proper handover system in place.

The Bank must strengthen its decentralization process by ensuring that all projects have at least 2 task Managers with at least one based in the Field Office.

AfDB Sector Managers and Resident Representative

Continuous.

Pre-approval of procurement activities: for small contracts tend to over delay implementation.

The Bank should consider increasing the threshold of contracts that would require post-procurement reviews in Tanzania, taking into account the prevailing fiduciary and decentralized environment in the country.

AfDB Task Managers, ORPF.

Immediate.

Contract award to firms with weak implementation capacity: weaknesses in bid evaluation process.

Government’s policy of blacklisting non-performing contractors should be rigorously enforced.

Government of Tanzania (line Ministries)

Immediate.

-34-

ANNEX 8: IMPLEMENTATION PROGRESS AND DEVELOPMENT OUTCOMES

Table 13: Tanzania Project Ratings in 2013 Sector/Projects Fulfilment of

conditionsProcurement Performance

Financial Performance

Activities and Outputs

Implementation Progress (IP)

Impact on Development (D0)

Overall Assessment

AGRICULTURE 2.50 2.50 3.00 2.50 2.79 3.00 2.671. District Agric. Sector Inv. Program 3.00 2.00 3.00 3.00 2.58 3.00 2.672. Marketing Infrastructure, Value Addition and Rural Finance Programme (MIVARFP)

2.00 3.00 3.00 2.00 3.00 3.00 2.67

TRANSPORT 3.00 2.50 2.00 3.00 2.61 2.88 2.673. Singida – Babati- Mijingu Road Upgrading 3.00 3.00 2.00 3.00 2.57 3.00 2.674.  Road Sector Project I 3.00 2.00 2.00 3.00 2.64 2.75 2.675.  Road Sector Project II - - - - - - -ENERGY 2.50 1.50 2.50 2.50 2.04 3.00 2.236. Electricity V Project 3.00 2.00 3.00 2.00 2.00 3.00 2.197.Iringa-Shinyanga Backbone Transmission Line 2.00 1.00 2.00 3.00 2.08 3.00 2.27WATER SUPPLY AND SANITATION 2.50 3.00 3.00 2.00 2.47 2.88 2.568. Zanzibar Water Supply & Sanitation Program 2.00 3.00 3.00 2.00 2.36 2.75 2.449. Rural Water Supply and Sanitation II 3.00 3.00 3.00 2.00 2.57 3.00 2.6710. Zanzibar Urban Water Supply and Sanitation - - - - - - - 11. Arusha Strategic Sanitation plan - - - - - - -SOCIAL 2.67 1.67 2.67 2.00 2.15 2.67 2.2112. Support to Maternal Mortality Reduction 3.00 1.00 3.00 1.00 1.92 2.00 1.9413. Small Entrepreneurs Loan Facility II 3.00 1.00 2.00 3.00 2.38 3.00 2.3514. Alternative Learning Skills and Development PhaseII

2.00 3.00 3.00 2.00 2.15 3.00 2.35

MULTISECTOR 2.50 2.50 2.00 2.00 2.08 2.38 2.1615.  ISP for Good Governance II 2.00 2.00 2.00 2.00 2.07 2.25 2.1116. Poverty Reduction Support Loan IV (GECSP) 3.00 3.00 2.00 2.00 2.09 2.50 2.20

3 GREEN (satisfactory and above) when rating is > 2.1 2 YELLOW (below satisfactory) when rating is >1.5 and <= 2.1 1 RED (below moderately unsatisfactory) when rating is <= 1.5

Note: To highlight the status of the portfolio, a traffic light monitoring system has been utilized. Some project are not reported because they use either a different rating sheme or are not yet effective.

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Tanzania Project Ratings, cont’dSector/Projects Fulfilment of

conditionsProcurement Performance

Financial Performance

Activities and Outputs

Implementation Progress (IP)

Impact on Development (D0)

Overall Assessment

PRIVATE17. Equity Investment to Access Bank - - - - - - -Additional Equity Investment to Access Bank - - - - - - -18 CRDB Partial Guarantee Scheme - Loan** - - - - - - -19. Tanzania Enterpreneur Finance Centre - - - - - - -REGIONAL 2.40 1.50 2.80 2.00 2.14 2.70 2.2718. Arusha –Namanga-Athi River Road (EAC) 3.00 2.00 2.00 2.00 2.57 3.00 2.6719. East Africa Transport & Trade Fac.(EAC) 3.00 1.00 3.00 1.00 1.93 3.00 2.17East Africa Transport & Trade Fac.(TTFA) - - - - - - -20. Support to Lake Tanganyika Integrated Dev.TZ only

1.00 2.00 3.00 3.00 2.15 1.50 2.00

21. Lake Victoria Water Supply & Sanitation-TZ only 2.00 1.00 3.00 2.00 1.92 3.00 2.19

22. Phase 2: Isaka-Kigali/Keza -Musongati Railway Study- TZ only

3.00 3.00 2.00 2.14 3.00 2.33

23. Arusha-Holili/Taveta-Voi - - - - - - -24. EAC payments - - - - - - -Average Performance 2.58 2.17 2.57 2.29 2.32 2.78 2.40

3 GREEN (satisfactory and above) when rating is > 2.1 2 YELLOW (below satisfactory) when rating is >1.5 and <= 2.1 1 RED (below moderately unsatisfactory) when rating is <= 1.5

Note: To highlight the status of the portfolio, a traffic light monitoring system has been utilized. Some project are not reported because they use either a different rating sheme or are not yet effective.

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