IDA uplift for TASAF III will touch many, fostering skills

09Oct 2019
Editor
The Guardian
IDA uplift for TASAF III will touch many, fostering skills

WELLWISHERS have for years been assisting targeted action in the poverty alleviation drive, since the responsible agency, the Tanzania Social Action Fund (TASAF) was formed in 2000. The IDA assistance which amounts to a $450m soft loan will cushion the second phase of TASAF III programme,-

-which organizers say it will focus on providing poor households with prerequisite entrepreneurship skills for generating incomes. Setting up small projects for household income aids poverty alleviation.

While the government and the public appreciate the gestures of support from the World Bank and other sources, it is still relevant to pose questions as to why poverty alleviation efforts in Africa are slow to the extreme, compared to other continents. Europe made rapid progress after World War II with a total credit sum of 50billion US dollars shared out among a number of countries, and rapidly recovered from the ravages of war. In comparison to funds that have poured into Africa since independence, the Marshall Plan total of 50bn dollars is dwarfed completely.

When African analysts and commentators talk about a Marshall Plan for Africa, what they actually seek to impute is the results of the plan, much less the said amounts. This particular IDA soft loan is for instance nearly a tenth of the Marshall Plan (at nearly 0.5bn dollars though the purchasing power is diminished substantially compared to the past). However it is only directed at a small portion of public welfare financing, on a few thousand households, which matters to a portion of the population but not a game changer in social welfare as a whole.

Incidentally, if the methods of the Marshall Plan were used, even Africa could make progress from all the aid amounts poured into the continent since independence. It means focusing on lending to central banks,, then they lend to commercial banks and then to clients. All the money is repaid to the banks and helps to build the financing capacity through a revolving credit lasting say 20 years before it is repaid.

While the financing of public agencies is vital to speed up income generating opportunities by improved infrastructure, rising individual incomes is only slowly affected by that method.  Only when private financing takes an upper hand shall poverty be alleviated, when the poor sell assets to those with savings and are liberated from labour-intensive activities like tilling the land, driving cattle for grazing or fishing at sunrise and take up commerce. That might be in the next two decades, perhaps.

Current efforts like the funds provided by the World Bank through IDA to support the implementation of the second phase of the TASAF III Productive Social Safety Net (PSSN) are positive but are often ensnared in the vicious cycle of poverty. People are not being hired by industries because the purchasing power is low, and when they start their own small businesses they often fail because the purchasing power is low. Only with private financing which buys fixed assets and sends the sellers on starting new projects as well as purchasing luxuries can the ‘take off gear’ be applied.

This support is expected to benefit over five million individuals, including acquiring entrepreneurship skills and a roadmap to manage business units. It diminishes the pressure momentarily but is hard to translate into a broad dynamic of poverty alleviation.