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February 25, 2008
MCC Signs Largest Compact to Date ($698m) with Tanzania
Posted by Amy Crone at 12:06 PM
Last weekend, as part of his whirlwind tour of five African countries in six days, President Bush signed the Tanzania Compact – MCC’s 16th and largest to date. Although concerns about possible expansion of U.S. military presence in Africa overshadowed the development focus of his trip, President Bush was nevertheless able to draw attention to U.S. investments in “smart power,” like results being achieved through foreign assistance programs in the areas of health, infrastructure, and education.
Tanzania is the 9th African compact signed by the MCC. The $698 million agreement will focus on the infrastructure, energy, and water sectors. The infrastructure projects consist of improving mainland trunk roads, resurfacing airport runways on Mafia Island, and rehabilitating rural roads on Zanzibar and Pemba islands. The energy component is comprised of three projects to improve island electricity, build a hydropower dam in western Tanzania, and repair transmission lines in six regions. The water projects focus on increasing the volume and quality of potable water to supply two urban areas – Dar es Salaam and Morogoro; where pollution has been caused by unplanned urban growth and adverse environmental effects of a dam. The selection of projects in the Compact to mitigate past mistakes speaks to the longer-term view of the Tanzanian government, which is also evidenced by the development coordination body Development Partners Group. The program is in line with Tanzania’s poverty reduction strategy (MKUKUTA is the Swahili acronym) which aims to increase economic growth through improved business and tourism conditions along with stimulating rural development.
As the Tanzania compact process unfolds, there are a couple of interesting things to watch. First is the extent to which smart sequencing of MCC assistance programs will yield greater, and perhaps faster, results. Tanzania is the first country to complete a threshold program and subsequently sign a compact, and also received a pre-compact grant for environmental and feasibility studies. This use of 609(g) funding could be a best practice for sequencing – the $9.8 million grant will launch the studies which must be completed for implementation. The accountable entity will be working concurrently towards meeting prerequisites to entry into force, at which point the clock starts ticking on the five-year agreement. This substantive and ordered preparatory work – addressing corruption issues through the threshold program, getting a head start on implementation with feasibility studies, and forming the accountable entity prior to compact signing – could all add up to efficient entry into force, effective and swift disbursements, and a program that can spend the $142 million each year to raise the income of every Tanzanian by about $3.50.
The second issue to watch will be how the MCC and Tanzanian authorities manage the impact of rising oil prices, depreciation of the dollar and increasing materials costs (which are derailing implementation progress on infrastructure projects in other compacts) on achievement of Compact goals. The MCC is currently reviewing its entire portfolio, as are other donors, to gauge the impact of these global economic trends. We look forward to an open dialogue on their findings.
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Comments
Dear Colleagues
Now $698 million is a lot of money. One of the biggest issues in the relief and development sector is the accounting and control dimension of the use of funds.
I am a former corporate cost accountant and CFO ... and I know something of how easy it is to lose track of money even when there is a commitment to accounting excellence. But interestingly, when I was a corporate CFO I was able to get absolutely excellent accounting and control in our African operations. I wonder why?
Bottom line ... I was never very tolerant of second class accounting staff, and in Africa I was able to recruit excellent staff who, with some modest training and decent oversight did excellent work.
Subsequently I have done a fair amount of work in developing countries in the public sector ... and again, found that much of the accounting at the clerical level was very good. The reporting was often inadequate, and usually because of the conflicting instructions from the top, including the donors, all of whom insist on the government doing it the donor's way rather than helping to get the government's way to be adequate ... no good.
My colleagues have helped me to develop a system of community impact accountancy that will help to address the issues of accountancy in the relief and development sector and provide a strong basis for measuring performance. I would be happy to share this with others who might be interested.
Sincerely
Peter Burgess
Posted by: Peter Burgess at May 13, 2008 03:29 PM