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The U.S. maybe bringing development cash, but conditions must be met
2005-11-16 06:54:53
By Mireny John
Tuesday last week, the U.S. Aid agency, the Millennium Challenge Corporation (MCC), selected Tanzania as one of the 23 countries eligible to apply for funding during the 2006 fiscal year that began on October 1.
MCC administers the Millennium Challenge Account (MCA), President’s Bush initiative that seeks to promote democratic change and sound economic policies in developing countries by linking additional U.S aid to reforms designed to combat corruption and stimulate growth.
Countries which pass the eligibility criteria may receive as much as USD100m of additional U.S. development aid, having demonstrated their commitment to ruling justly, investing in people and encouraging economic freedom.
Last financial year, Tanzania was unfortunately considered ineligible for this financing window, and it now becomes the first East African country to qualify for application.
This is all good news indeed, yet it implies taking economic sensitivities to yet another great level of excellence.
As the program works, it doesn’t mean a lot for a country to be certified as eligible for funding.
The next daunting step is for the eligible country, in collaboration with MCC, to develop a compact – or formal agreement—that binds both parties to meet agreed performance benchmarks.
MCC may provide some guidelines that shed light on what the donor expects of the development outcomes, but countries are supposed to identify their highest priorities for achieving sustainable economic growth and poverty reduction.
Hence, despite the quality of policies and concrete actions presented to MCC for possible funding considerations, ownership of policy decisions is regarded critical to economic growth.
So far, there is no guarantee that Tanzania will reach a Compact agreement with MCC or will receive any actual funding.
That will largely depend on the quality of Tanzania’s program proposal.
If the program is regarded as rather shaky, it may take even more than two years before we get badly needed development cash.
One of the strategies for advancing an acceptable development program is to frame one which seeks to add synergies to the very positive factors which facilitated getting the certificate for application in the first place.
For instance, the government must show it willfully plans to enhance its ability to plan and implement sound policies geared to stimulating economic growth and poverty alleviation.
Maybe it comes as an appropriate time for the government to showcase its ability to articulate National Economic Growth and Poverty Reduction (NEPR) popularly known as Mkukuta into implementable and measurable social results.
We have made commendable improvements in public expenditure in health and education, though more could be achieved in the sectors if some key areas could be identified that would need strategic intervention through the MMC’s funding mechanism.
Most probably, enhancement of the rule of law and control of corruption, are amongst the key areas the MMC experts would take a keen interest in before disbursement of the funds.
The proposal kit could also indicate our resolve to encourage economic freedom by lowering the cost of starting up a new business in Tanzania as well as lessening the burden of regulations on business.
In order to forward to MCC a winning development program, the private sector, think tanks, and civil society organizations have to be engaged.
And for the poverty alleviation projects, the rainbow funding model of managing finances needs to be verified, with the proof that monies will reach the target communities.
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