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How to be a friend of Africa

Mark Ashurst, director of Africa Research Institute, introduced the topic of the debate and outlined the relevance of Tanzania’s recent experience of increased political accountability …
“Western aid agencies often ask themselves how the G8 can more effectively harmonise their policies or what is the best way to deliver aid – budget support, basket support, project aid? Efficiency, accountability, and local ownership preoccupy donors, worried that general budget support (GBS) has not proved a final solution. Tanzania, as one of the largest recipients of GBS, is often cited as evidence of its inconclusive results.

Yet what emerges in all these debates is that the actions of donors are never decisive. It is what Africans do that matters. It is the effectiveness of the institutions in which they work that makes a difference. The success of development initiatives in Africa depends on making local institutions effective and accountable.

Tanzania has more to offer the development industry than lessons on GBS. In the past two years, the political landscape in Tanzania has changed quite fundamentally, thanks to a small but assertive group of parliamentarians. Traditionally weak, Tanzania’s parliament recently pushed the prime minister to step down, after his government was embroiled in a corruption scandal. In contrast, South Africa’s president was ousted by 80 members of the governing party’s national executive committee, without any involvement from parliament.

What can friends of Africa learn from the experience in Tanzania?”

Harrison Mwakyembe, chairman of the parliamentary committee of enquiry into the Richmond Power Supply Contract, pointed out the importance of transparent procurement processes …

“A true friend of Africa is one who would offer us the proverbial fishing gear. Unfortunately, our development partners have, all too often, been keen to give us the fish.

More than 80% of our budget goes to procurement. It is the area which most stinks of corruption. Every year, the Controller and Auditor General (CAG) reveals grotesque procurement abuses both in local in national government. For example, cases of over-invoicing, payments without supporting documents, payments made for undelivered goods and services, violation of tendering procedure.

I would be happy, as an MP, to see true friends of Africa working to strengthen parliamentary oversight and the role of extra-parliamentary institutions of accountability such as the PAC or the ethics committee.

Among the numerous procurement scandals we have had in Tanzania, the Richmond scandal was probably the biggest. In late 2005, we had serious power problems and the company employed to provide extra power did not deliver. MPs wanted to know why, so we decided to set up a parliamentary select committee of enquiry, which I headed. We found out that Richmond Development Company LLC was just a briefcase company. The ministry of energy and minerals had not conducted itself properly.

We made 23 recommendations to the government, all of which were adopted by the House. Had it not been for the bold position taken by parliament, I’m sure that the corruption that occurred would have been condoned by the powers that be.

If we have strong accountability, like we did in the Richmond enquiry, we can save large sums of money – money that comes from donors and often goes straight back out again.”

Iddi Simba, former minister of trade and industry, emphasised the damage done to African trade by unequal negotiating capacities …

“The multilateral trade system has failed in three areas: production, regional cooperation, and negotiations.

Production and regional integration – Any form of trade is a function of competitive production, in terms of quality, price and regularity of supply. Whatever you produce must be up to market standards in these three things. So, have we been able to participate in world trade? Let me ask you some questions to which the answers may surprise you. Who is the world’s biggest coffee exporter? Germany. Which is the largest exporting country of cocoa? Belgium and Switzerland. Developing countries are still exporting raw commodities. But this is not real world trade. Real world trade is manufactured goods.

Several attempts over a long period have been made, supposedly, to enable us to participate in world trade. The United Nations Industrial Development Organisation (UNIDO) was established in 1966 to help our countries with their manufacturing sector. The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 in order to promote trade and development. After all these years of their existence, African countries are still not industrialised. We have seen some emphasis on trade by UNCTAD but nothing on development. We still cannot add value to our commodities. As long as we are unable to add value to the materials we are producing, we cannot be responsible, reliable participants in the world market.

Regional integration is key to improving our ability to engage in international trade. As Tanzania alone, we cannot be competitive. But as part of a regional grouping we have some chance. Turn a group of countries into one investment area then you will be able to produce more competitively and ensure that you can be a player in global trade. The economic rational behind regional integration is not that we can trade among ourselves, it is that by working together we can produce competitively for the international market. That is how we will develop.

Negotiations – The World Trade Organisation (WTO) is essentially a series of rules that have to be followed. These rules govern world trade.

When I was minister of trade, I went to Geneva to negotiate these rules. I left Tanzania with one assistant to advise me on matters of international trade, because I didn’t know much about it. Unfortunately, I discovered that my advisor knew even less.

Our ambassador in Geneva was very knowledgeable on the subject, but he had only one or two assistants. I took the ambassador and one of his assistants to make a four-man delegation. The British delegation had 30 people, the American 65, and the Japanese 70!

You have to negotiate with large delegations of people who are very well trained, very experienced and have built up expertise. I believed I was intelligent enough to negotiate but I had no knowledge, and there was nobody in Tanzania to whom I could refer our problems. Between the ambassador and myself we were the most knowledgeable people in Tanzania on world trade!

We knew so little, it was a shame we were even there. But we had sovereign authority; we had to negotiate on behalf of our country. And what is the result? You end up signing things you do not even understand, and yet afterwards you are bound by it. And the rules just continue. The world will not wait for you because you did not understand.

I had to meet the EU commissioner for trade, in Brussels, in preparation for the Doha round – it had already been decided that there would be another round. I told the commissioner we were not yet ready for a new round of negotiations because we had not fully understood the series of rules. We needed more time to prepare. I asked why we had not been consulted when the new round was decided. I asked what would happen if we didn’t agree to the round? He responded: “Then we shall deal with you bilaterally.”

After that, I went to a conference of less developed countries and I told them we were in trouble, because there would be a round of trade talks. I invited them all to Zanzibar, to form a negotiating bloc. We managed to have this meeting and we went to Doha with one voice. That is how I got involved in the so-called “green room” at Doha, where all the deals are made. We were put together with powerful people from developed countries, and there we were, negotiating on behalf of least developed countries. We tried … but we struggled.

So we say to our development partners – if you are our friends, assist us to build up our internal capacities to negotiate with you.”

Freeman Mbowe, leader of opposition party CHADEMA, argued that donors should stop sending aid to Africa. The continent’s leaders, he said, must be prepared to step up to the challenge …

If you are asking yourselves how to be friends of Africa, you must look at the existing relationship between Africa and the western world. More often than not, being a friend of Africa is defined by pouring aid into the continent. But we should look at the problem of leadership.

Tanzania has been one of sub-Saharan Africa’s largest recipients of aid for the last 10 years. It is a shameful record. We have abundant natural resources, abundant opportunities and yet we still rely on handouts. This is shameful for us and for donors. Our leaders must take responsibility for that. There is a social contract between a people and their leaders. The people forfeit a portion of their freedom to give leaders the power to rule, to guide. In return, leaders must be up to the role.

Tanzania is a country in crisis. We are so used to peace and tranquillity that we have become complacent, but we could lose them, and if we do it will be a problem for everyone. Take the example of Ivory Coast – it was once one of the most prominent countries in Africa but it quickly dissolved into chaos because of poor leadership. That’s where our country is heading. It is fragmented as never before. Tanzanians are struggling, they have no hope. People who have no hope will revert to their baser instincts. We have political divisions, class divisions, ethnic and tribal divisions – and they are getting larger.

So what do we need from the international community? We need them to understand the problem of our country. We need them to rethink how they push their assistance into the continent. You have been generous with assistance for education, health, and infrastructure, and with your good intentions. But you have turned us into a continent of beggars. We can’t make anything locally; we don’t have our own solutions to our problems. We just have the quick fix of rushing to Bretton Woods for aid.

The global financial crisis might be good for Africa. It might make Europe rethink its aid programmes. If you do, we will wake up and start thinking about how to make use of our local resources. And since we know that leadership is a major problem in Africa, we will wake up and try to elect the right leaders.”

Ludovick S.L. Utouh, Controller and Auditor General, argued for strong budgetary processes …

“A serious government, which is truly accountable to its people, needs many things. It needs a strong parliament to perform an oversight function. But in order for parliaments to be strong they, in turn, need strong and independent national institutions like the supreme audit institutions.

It is the responsibility of the government to build these institutions. A parliament needs sufficient funding to be independent and effective. Audit institutions, too, need sufficient funding. These institutions and others, such as bodies dealing with corruption and ethics, are funded by government. How much funding they get, is a measure of government’s commitment to their work. A government that does not want to be scrutinised will downplay the role of these institutions so that they can’t work effectively.

As far as the National Audit Office (NAO) is concerned, we have received full support of both government and parliament. It is thanks to this support that we have seen our recommendations being implemented. For example, we recommended that the Speaker of parliament form an additional oversight parliamentary committee. He did, and we now have three such committees: one looking at central government, the Public Accounts Committee; one looking at local government; and one looking at parastatals.

Strong audit procedures are part of the government’s anti-corruption efforts. It is though audit that we discovered the famous Bank of Tanzania (BoT) external payment arrears scandal. We contracted Ernst and Young to do a full forensic audit of the BoT. It revealed that about 90 billion shillings had been stolen and a further 42 billion may have been stolen – we think it was, but couldn’t establish that there was outright theft. We recommended that the government embark on an additional investigation to establish the truth.

In our report, we came up with 17 recommendations, almost all of which the government has implemented. Donors and the public, called for everyone involved to be prosecuted, but we recommended that government should use all its power to recover as much of the stolen funds as possible. Out of the 90 billion, it has recovered 70, which is commendable. So, we have a government that listens to advice and implements it.

A recent high profile case relating to government contracts with Alex Stewart Government Business Corporation is another example. Two former ministers are being taken to court. So we are seeing the government action. Thanks to freedom of the press and stronger parliament we are now seeing these things coming out.

Contrary to what Freeman Mbowe said, we do need donor assistance at this point in time. But let this assistance be owned and controlled by recipient governments. I support general budget support for governments that are working to bring about development. Government and parliament in Tanzania are committed to good budgetary processes – the Public Audit Act is evidence of this. It is a major development as far as oversight is concerned.”

The discussion – a digest

Questions and comments focussed on transparency and aid ….

Ludovick Utouh responded to questions on per diem allowances for seminar attendance and auditing the ministry of foreign affairs. He noted that per diems are not just a Tanzanian problem. It is a culture that has been created by donors who first started using cash payment to entice people to “sensitisation” workshops. However, he acknowledged that per diems posed a transparency problem and cost the state a lot of money. “We are working on this. We need to establish value for money. If they don’t work the use of funds is questionable.”

In reference to an adverse opinion by National Audit Office on the Ministry of Foreign Affairs, after a 2005/6 audit, Mr Utouh explained that main problem had been mismanagement of resources in some foreign missions. On his recommendation, the government made a resolution that all high commissioners and ambassadors would be considered “sub-warrant holders” and as such each overseas mission would be audited individually. “I will issue an audit opinion on each one.” Therefore the accountability chain has been lowered from permanent secretary to head of mission.

Mr Utouh also addressed national government efforts to ensure transparency and efficient in local government. He argued for a revision of the legal framework of local government and for capacity building. “I’m talking with the government to ensure that the NAO establishes its presence at the district level. We are currently only present at regional level. A large amount of money now goes directly to the community for development purposes, and we think we should be there to monitor this.”

Harrison Mwakyembe responded to questions about areas that might benefit from more parliamentary oversight. He said that procurement of medical supplies was “an area that stinks of corruption” and noted that the Tanzanian parliament’s rules of procedure allows member of the public to petition the House. He hopes that people will avail of this right, and that a select committee enquiry will follow. “It is an area which demands close scrutiny. We could save billions of shillings on procurement of medical supplies.”

Dr Mwakyembe also referred to the proceeds of natural resources, arguing that the country does not make the most of its natural resource wealth. “We have enormous natural resources but they haven’t helped us much”. He said that the parliamentary standing committee on natural resources has produced recommendations on this subject. They have been reviewed by the president and are currently waiting to be passed by parliament. They include raising the level of royalty, removing generous tax exemptions to mining companies, and adding value. “We should try to add value. We send copper and nickel concentrates to Japan. We have 100 years of nickel reserves. Can you imagine sending nickel concentrates to Japan for 100 years? We are telling people who want mining concessions– you must build a smelter.”

Freeman Mbowe responded to concerns that removing donor aid would increase poverty in the country. He acknowledged that a sudden removal of overseas assistance would cause short-term hardship, but insisted that it would be beneficial in the long run. “We need to learn to have discipline. We need to hold our leaders responsible. It’s true that it will be catastrophic at the beginning, but unless we go through this pain we will never be able to be self reliant.”

Mr Mbowe said he did not have an alternative solution to donor money. It is up to Tanzanians to find that solution together, he argued. “We need a national consensus. Are we benefiting from aid? Look at Kenya under Moi, it did not receive aid for 10 years and instead their economy grew. Their economic base expanded, compared to Tanzania. We need to ask how we can work together, and we need to have hope. We are a country of beggars today, we have no hope.”

Iddi Simba agreed with Mr Mbowe’s criticisms of aid and argued for more equal trading relationships. He said that Tanzania needed to focus on leadership so that it would no longer have to take lessons on good governance from the international community. Then, he said, the country can address the international trade system, and reposition its external relationships. “Relations between other countries are based on trade, between goods and services, not aid.”

Mr Simba suggested that a “Tobin tax” would be a fairer way of transferring funds from rich to poor countries. “About 40 years ago, James Tobin talked about a Tobin tax – a financial transaction tax. We African’s are exporting our commodities and these transactions are handled by foreign banks, not our own. James Tobin was suggesting that all these financial transactions should be slightly taxed by developing countries. Monies released by this tax would be many times more than all the aid we are receiving. What did western countries do? They resisted it, in the same way that they resist removing aid programmes. Some of us are committed to the removal of aid. If you take the sum total of benefits and costs to our self-respect –the amount of corruption, the crippling of the minds of our leadership and of our societies – aid dependency has become a real disease. Aid donors are resisting a Tobin tax, because the moment you apply it you have money in your economy, to do with what you will – if you have the discipline.”

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