Tanzania Receives US$250 Million To Support Government’s Efforts To Reduce Poverty

Washington, May 29, 2003 – The World Bank’s Board of Directors has approved this week $250.08 million to support efforts by the Tanzanian Government to reduce poverty in the country through an approach that fully involves the target population.  The funds will support  three main operations:   a Poverty Reduction Support Credit, a water supply and sanitation project for Dar es Salaam, and an agricultural development project. 

“The Government is committed to the goal of reducing poverty… However, the total resources available to the Government are insufficient to implement poverty-reducing policies.  Time is needed firstly to expand the revenue base from a higher growth rate of the economy and secondly to observe tangible results from those policy actions implemented to raise revenue.  In light of these factors, the Government views the support from the IDA… as a crucial part of [the World Bank’s] support in the effort to reduce poverty” said Basil Pesambili Mramba, Tanzania’s Minister of Finance.

“The programs approved today represent concrete evidence of the WB and other development partners, under Government leadership,  working together in mutual trust towards the common goal of poverty reduction” said  Judy M. O’Connor, World Bank Country Director for Tanzania.

The First Poverty Reduction Support Credit (PRSCI), supported by a $100 million credit* and a $32 million grant, will be integrated into the Government’s budget to implement key strategies aimed at reducing poverty throughout the country by improving the management of Government services and developing the private sector, laying the foundation for attacking income poverty more effectively.

“PRSCI will support macroeconomic stability, growth that targets the poor and the creation of jobs.  It is also closely harmonized with budget support provided by 11 donors and will help to support budgetary needs in the priority sectors which have a strong identifiable link to poverty reduction” said Benno J. Ndulu, World Bank Team Leader for the operation.

PRSCI will accelerate growth by promoting private investment, reducing the cost of doing business, and enhancing the efficiency of the economy.  It will align the country’s development budget with the strategic public investment requirements to meet the Government’s goals to reduce poverty and support the growth of private sector contributions to livelihoods and the economy.  It will also fund initiatives to increase efficiency of public service delivery by strengthening accountability mechanisms combined with capacity building at the local and central government levels.

The Dar es Salaam Water Supply and Sanitation Project, supported by a $61.5 million credit, will help improve water supply and sanitation in Dar es Salaam and part of the Coast region.

“The Project is a first step in the long term effort the Government has embarked on to improve water supply and sanitation services in the Dar es Salaam area.  It is also a very important one, as the Government has addressed key issues, such as management arrangement, cost recovery and commercial policies, before implementation starts.  The entire population, in particular its poorest segment which has to rely on unsafe and expensive substitutes, and most businesses will benefit from more reliable and affordable public water and sanitation services” said Alain R. Locussol, World Bank Team Leader for the  operation. 

The project objectives will be achieved through a partnership that combines private management of the technical and commercial operations by an international professional operator, and public financing of the rehabilitation and extension of the systems.  The project will also help identify a new source of water for the capital city and prepare sustainable longer term water supply and sanitation projects.  It will be co-financed by the African Development Bank and the European Investment Bank.

The Participatory Agricultural Development and Empowerment Project (PADEP), supported by a $56.58 million credit, will fund efforts to raise agricultural productivity in rural areas by empowering communities to make important decisions, sharing the costs of production, increasing their purchasing power, promoting improved farming practices, and assisting in the maintenance of infrastructure to improve access to the market place. 

By empowering the rural community, PADEP hopes to raise production of food, incomes, and assets of participating households and groups in about 840 villages.  This project will expand the impact of growth to the rural poor by enhancing the profitability of agriculture and export products through improved quality and productivity, the reduction of marketing costs, and by eliminating barriers that inhibit products from reaching markets.

Tanzania has remained one of the poorest countries in the world and is heavily dependent on agriculture, which accounts for 50 percent of it’s Gross Domestic Product (GDP).  The country has continued to improve its growth and poverty focus over the past several years as evidenced by its GDP growth that reached an estimated 5.9 percent in real terms in 2002. 

In addition, Tanzania must deal with the added challenge of high rates of HIV/AIDs infection - as President Mkapa remarked at a recent meeting with senior Government officials, “HIV/AIDS… is perhaps the greatest threat ever to face our country.  It is a real national threat… to our development, to our way of life and to our national security.”  Donors, including the WB, are redoubling efforts to help accelerate the impact of both government and non-government AIDS prevention programs, and deal with those already affected by this disease.  The WB will shortly present to its Board of Directors for approval a program to help Tanzania in this connection.

* The credit is on standard International Development Association (IDA) terms, with a commitment fee of 0.5%, a service charge of 0.75%, and a maturity of 40 years, including a 10-year period of grace.

For more information about the World Bank’s work in Tanzania:  www.worldbank.org/tz

For more information about Tanzania:  www.tanzania.go.tz