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Government urges end to donor dependence as MCC cancels aid

Volume 13, Issue 1  | 
Published 21/07/2016
  |

Tanzania’s newspaper, The Guardian of 30th March 2016, carried the following report (an extract) by Lydia Shekighenda, titled ‘Government urges end to donor dependence as MCC cancels aid’:

President John Magufuli yesterday reiterated his call for Tanzanians to work hard and end the country’s dependence on donor money as a United States government agency confirmed its cancellation of a $472 million (over 1 trillion/-) aid package due to Zanzibar’s disputed election.

According to a statement from the president’s office, Magufuli told a public rally in his home village in Chato District, Geita Region that it was time for the country to wean itself off foreign aid “which comes with strings attached.”

"We have to stand on our own … Tanzania will persevere,” the statement quoted Magufuli as saying, albeit without referring directly to the latest aid freeze by the US Millennium Challenge Corporation (MCC) programme.

The Minister for Finance and Planning, Dr Philip Mpango, told The Guardian earlier yesterday that the MCC aid freeze was not likely to affect the national budget for this year.

Mpango said the government hadn’t made any provisions in its upcoming 2016/17 fiscal year budget for the MCC programme support due to its unpredictability.

"We saw it coming, so we made our preparations," Mpango said when asked how the MCC aid freeze might affect the implementation of the Magufuli administration’s maiden budget.

"We did not include the expected MCC funds in our financial plans,” the minister stated.

. . . MCC, an independent US government foreign aid agency, said in a statement it was shelving its aid to Tanzania because the March 20 election rerun in Zanzibar was "neither inclusive nor representative." . . . "Tanzania has also not taken measures to ensure freedom of expression and association are respected in the implementation of the (country's) Cybercrimes Act," MCC said  . . .But according to Ahmed Salim, a senior associate at the Teneo Intelligence consultancy firm, the cancelled aid will have little impact.  “In contrast, European Union donors are divided partly because of the promise shown by Magufuli’s four-month old administration in tackling corruption, government inefficiency and wastage,” he added . . . .

This article appeared as AwaaZ was going to press. Yash Tandon, author of Trade is War, in response reminded us of a passage (see below) from his book, Ending Aid Dependence, Foreword by Benjamin W Mkapa. Published jointly by the South Centre (Geneva) and Fahamu (Oxford), 2008:

7 Steps to Ending Aid Dependence

 Step 1. Adjusting the mindset: Ending aid dependence is not a one-day project. Deeply embed­ded structures and the power of vested interests do not disappear overnight. Neither do they disappear on their own.

 Step 2. Budgeting for the poor not for the donors: Whilst the psychological leap from aid dependence to aid exit is gathering momentum, groups of citizens might already begin to work on the essential task of budgeting for the poor as opposed to budgeting for the donors.

Step 3. Putting employment and decent wages upfront: The labour force is one of the most important productive resourc­es. There is, however, an imbalance between the returns to the labour force and the rate of capital accumulation, especially by foreign investors. This imbalance should be redressed in favour of labour

 Step 4. Creating the domestic market and owning domestic resources: The primacy of the domestic over the export market is unassail­able in both logic and history.

 Step 5. Plugging the resource gap: One of the reasons advanced by orthodox economists as to why Africa needs aid is that there is a ‘savings’ or ‘resource gap’ in Africa. This is both an historical and logical fallacy. Surpus from developing countries are drained away. This drainage has to be plugged.

 Step 6. Creating institutions for investing national savings: Whilst the leaky holes are being plugged, it is also important, in parallel, to create in institutions for ensuring that the national savings are properly invested.

 Step 7. Limiting aid to national democratic priorities: The aid medicine contains two overdoses: an overdose in the quantity of aid, provided structures are first put in place for its "efficient use and democratic governance" as defined by the donors; and an overdose of donor monitoring, evaluation, and effective control. This is utterly wrong. Some kinds of aid, such as in natural disaster relief, may be acceptable. All “aid” should be subject to national, democratic control.

Conclusion: In contrast to the donor strategy on development aid, the strategy proposed in this book puts the peoples of the developing countries in the driver’s seat. This is a long haul: first, because it takes time and the evolution of independent political processes to empower people (the national project); and second, because the donors are not about to leave the driver’s seat, which they have a vested interest in occupying.

 

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