BUDGET BACKGROUND AND MEDIUM TERM FRAMEWORK 2012/ /15

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1 BUDGET BACKGROUND AND MEDIUM TERM FRAMEWORK 2012/ /15

2 Table of Contents List of Tables... iii List of Acronyms and Abbreviations... iv PREFACE... vii Chapter I... 1 BACKGROUND Introduction Organisation of the Report... 1 Chapter II... 3 THE MACROECONOMIC FRAMEWORK Recent Macroeconomic Development... 3 A: Annual GDP Growth and Sector Contributions... 3 B: Semi-Annual GDP Growth and Sector Contributions... 4 C: Price Development... 5 D: Money Credit... 7 E: External Trade... 8 F: Fiscal Performance Macroeconomic Targets and Budget Frame for 2012/ / A: global Economic growth and Outlook B: Macroeconomic Targets C: Budget Frame for 2012/ / Chapter III BUDGET PERFORMANCE FOR 2010/ / Performance of The Five Year Development Plan 2011/ Performance of MKUKUTA II A: Cluster I: Growth and Reduction of Income Poverty B: Cluster II: Improvement in Quality of Life and Social Wellbeing C: Cluster III: Good Governance and Accountability D: Cross-Cutting Issues Performance of Key Sectors A: Agriculture Sector B: Transport Sector C: Education Sector D: Health Sector E: Water and Sanitation F: Energy and Mineral G: Judiciary Performance of D-by-D Policy Chapter IV MEDIUM TERM EXPENDITURE OUTLOOK FOR 2012/13 14/ ii

3 4.1 Expenditure Outlook for The Five Year Development Plan Expenditure Outlook for MKUKUTA II A: Cluster I B: Cluster II C: Cluster III D: Cross-Cutting Issues Expenditure Outlook for Key Sectors A: Agriculture Sector B: Transport Sector C: Education Sector D: Health Sector E: Water and Sanitation F: Energy and Minerals G: Judiciary Expenditure Outlook for D-by-D Policy Chapter V CONCLUSION AND WAYFORWARD Annexes List of Tables Table 1: Real GDP Growth... 3 Table 2: Monthly Inflation Rate (Jan Dec, 2011)... 6 Table 3: Trends in Selected Macroeconomic Indicators, Table 4: Global GDP Growth Rates and Projections Table 5: Government Budgetary Operations Table 6: Trunk Roads Quarterly Physical Plan and Achievements Table 7: Regional Roads Quarterly Physical Plan and Achievements iii

4 AIDs ARVs ASDP BBMTF BOO BOOT BOT CD CDTIs CFS CMT CNG CPI CSOs CTC DADG DADPs D-by-D DCC DPs DRC DWSTs EAC EMA EPZ ESDP ESIA FDCs FDI FY FYDP GBS GDP GER GMO GRB GST HIV HSBF ICDs List of Acronyms and Abbreviations Acquired Immunodeficiency Syndrome Antiretroviral Agricultural Sector Development Programme Budget Background and Medium Term Framework Build-Own Operate Build-Own-Operate-Transfer Bank of Tanzania Community Development Community Development Training Institutes Consolidated Fund Services Council Management Team Compressed Natural Gas Consumer Price Index Civil Society Organizations Care And Treatment Clinics District Agriculture Development Grant District Agriculture Development Projects Decentralization by Devolution District Consultative Meetings Development Partners Democratic Republic of Congo District Water And Sanitation Team East Africa Community Environmental Management Act Export Processing Zones Education Sector Development Programme Environmental And Social Impact Assessment Folk Development Colleges Foreign Direct Investment Financial Year Five Year Development Plan General Budget Support Gross Domestic Product Gross Enrolment Ratio Genetically Modified Organisms Gender Responsive Budgeting Geological Survey of Tanzania Human Immuno-Deficiency Virus Health Sector Basket Fund Inland Container Depots iv

5 ICT IFMS LGAs LGDG LGRP M&E M1 M2 M3 MCC MDAs MDGs MDR TB MKUKUTA MMAM MNMA MoCDGC MOF MoHSW MRI MTEF MW NACP NDC NER NFA NFRA NMSF NRW NSGD NSGRP OPD PADEP PCBS PHSDP PLH PLHA PMO-RALG PMTCT PMUs POPC Information and Communication Technology Integrated Financial Management System Local Government Authorities Local Government Development Grant Local Government Reform Program Monitoring and Evaluation Narrow Money Supply which include physical money such as coins and currency Broad Money Supply Extended Broad Money Supply Millennium Challenge Corporation Ministries, Independent Departments and Agencies Millennium Development Goals Multidrug-Resistant Tuberculosis Swahili Acronym For NSGRP Swahili Acronym For Primary Health Sector Development Programme Mwalimu Nyerere Memorial Academy Ministry of Community Development, Gender And Children Ministry of Finance Ministry of Health And Social Services Mineral Resources Institute Medium Term Expenditure Frameworks Mega Watt National Aids Control Programme Net Domestic Credit Net Enrolment Ratio Net Foreign Assets National Food Reserve Agency National Multi-Sectoral Strategic Framework Non Revenue Water National Strategy For Gender Development National Strategy For Growth And Reduction Of Poverty Out-Patient Department Participatory Agricultural Development And Empowerment Project Polychlorinated Biphenyls Chemicals Primary Health Service Development Program People Living With HIV People Living With HIV/AIDS Prime Minister s Office -Regional Administration and Local Governments Prevent Mother to Child Transmission Procurement Management Units President Office, Planning Commission v

6 PPP Public Private Partnership PSMP Power System Master Plan RSs Regional Secretariats RWSSP Rural Water Supply And Sanitation Programme SACCOS Savings And Credit Cooperatives SAGCOT Southern Agricultural Growth Corridor SBAS Strategic Budget Allocation System SEZs Special Economic Zones SIDA Swedish International Development Agency SMEs Small and Medium Enterprises SMMRP Sustainable Management Of The Mineral Resources Project SPs Strategic Plan SSA Sub-Saharan Africa STAMICO State Mining Corporation TACAIDS Tanzania Commission for Aids TANZAM 2000 Tanzania American International Development Corporation (2000) Limited TASAF Tanzania Social Action Fund TBS Tanzania Bureau Of Standards TDV 2025 Tanzania Development Vision 2025 TFDA Tanzania Food and Drugs Authority THMIS Tanzania HIV/AIDSs and Malaria Indicator Survey TIC Tanzania Investment Center TMAA Tanzania Minerals Audit Agency TMTP Tanzania Mini Tiger Plan TSCP Tanzania Strategic Cities Project TSMP Tanzania Statistical Master Plan USA United States of America USD United States Dollar UWSAs Urban Water And Sewerage Authorities VETA Vocational Education Training Authority VICOBA Village Community Banks VMMC Voluntary Medical Male Circumcision Services VPO Vice President s Office WDCs Ward Development Committees WEO World Economic Outlook WSDP Water Sector Development Programme WSSAs Water Supply And Sewerage Authorities vi

7 PREFACE This is 2012/ /15 Budget Background and Medium Term Framework, which is published by Ministry of Finance as a complimentary document to traditional budget books. BBMTF is being used to explain the Government budget numbers in line with main macroeconomic assumptions and fiscal underpinnings of the past two years and current annual budget. The document highlights the linkages existing between Tanzania Development Vision 2025, Five Year Development Plan 2011/ /16 and National Strategy for Growth and Reduction of Poverty (MKUKUTA) Phase II, Sectoral strategies and institutional Medium Term Expenditure Frameworks. The linkage provides concrete foundation for allocating scarce resources approved during the medium term to identified strategic priorities and core government mandates implemented through Ministries, Independent Departments; Regional Secretariats and Local Government Authorities. On the basis of the macroeconomic performance, the BMTF reviews various strategic interventions and projects implemented by the Government in 2010/11 and 2011/12 in line with the FYDP and MKUKUTA II. The performance review focuses on main macroeconomic indicators such as Gross Domestic Product, inflation, revenue, expenditure, debts, external sector performance, money supply, interest rates and exchange rate. Furthermore, the BBMTF reviews budget performance in terms of recurrent and development components, key sectors, MKUKUTA cluster strategies, and D-by-D policy. On recurrent budget the Government continued to improve service delivery in all sectors; increased recruitment of qualified staff in education, health and agriculture sectors; enhanced peace and security; improved regional integration; and implemented public sector reforms. Some of the development projects noted among others were: construction and rehabilitation of transport infrastructures (road, railways, ports, and airports); capitalization of Tanzania Investment Bank, Tanzania, Women Bank, Tanzania Postal Bank and Tanzania Agricultural Bank; introduction of National Identification Project; improving availability and reliability of power energy; as well as construction and rehabilitation of infrastructure in education, health, water and agricultural sectors. The BBMTF also provides primary focus of the fiscal year 2012/13 budget and the medium term strategy, which consolidate the achievements of preceding years so as to speed-up implementation of the FYDP and MKUKUTA II. In this case, Government will continue to invest on strategic projects which include: (i) Improving infrastructure in energy, transport (ports, railways, roads and airports), water and sanitation and ICT; (ii) Agriculture, focusing on the transformation of agriculture for food self-sufficiency and export, development of irrigation particularly in selected agricultural corridors, and high value crops including horticulture, floriculture, spices, grapes/vine etc.; (iii) Industrial development specifically targeting industries that use locally available raw materials/inputs such as textiles, fertilizer, cement, coal, iron and steel, as well as development of special economic zones, using public-private partnerships; (iv) Human capital and skills development, with an emphasis on science, technology and innovations; and (v) Tourism, trade and financial services. vii

8 Lastly, I would like to express my sincere appreciation to those who devoted their time and effort to assemble this document. It is my hope that this document would serve the intended purposes and provide useful budget information to general public and other interested stakeholders, as it explain the budget performance for 2010/11 and 2011/12 as well as 2012/13 priority areas to be implemented by MDAs, RSs and LGAs. In this regard, I urge all stakeholders to read this document and share information with others while participating effectively in executing their parts and support the Government to bring about national development at all levels. Ramadhani M. Khijjah Permanent Secretary Treasury viii

9 Chapter I BACKGROUND 1.1 Introduction Budget Background and Medium Term Framework is a document produced by the Government for the purpose of informing stakeholders about the context of the budget and priority areas implemented during the two preceding years as well as the one allocated resourced in the current year. The document conveys the Government budget in a clear language which provides a critical analysis and description of the traditional budget books (Volumes I, II, II and IV). In other words, BBMTF highlights the analysis of both physical and financial performance of the budget, it provides an overview performance of key macroeconomic variables, as well as medium term focus aligned to the national planning and budgeting frameworks. As part of governance and accountability, the BBMTF is used as the Government s response to address stakeholders demand for enhanced communication and transparency of the budgeting process. Therefore, the Government will continue to ensure that stakeholders have access to basic information about the budget implementation in terms of allocation, actual implementation and performance (both financial and physical). In general, the major aim of this BBMTF is to communicate with stakeholders and explain the background of the budget, its guiding principles and strategic trends as well as the macroeconomic underneath in a simple and integrated way. The specific objectives of the BBMTF are as follows: i) To clarify performance of key macroeconomic variables as well as the strategic underpinnings of the national budget; ii) To analyze resource allocations among and within strategic areas, major sectors as well as by economic nature, and assess their consistency with MKUKUTA II priorities and the Five Year Development Plan; iii) To analyze budget execution, overall and by major sectors, in relation to the achievements and challenges encountered during budget implementation; and iv) To present a summary of key challenges facing the planning and budgeting system and the medium term targets. 1.2 Organization of the Report The report is organized in five chapters as outlined below: Chapter one is an introductory party which provides introduction and rationale of this document. Chapter two sets out the global economic status and put emphasis on Tanzania s recent macroeconomic developments, GDP growth and medium term outlook. This section provides an overview of Government s macroeconomic policies and recent macroeconomic performance. It also 1

10 provides a summary of the macroeconomic framework for the budget, explaining recent performance, medium term prospects, policy targets, and the resulting medium term budget frame. Chapter three provides analysis of budget performance and physical achievements for major sectors objectives in relations to MKUKUKUTA II Clusters. Further, it highlights performance of the FYDP 2011/ /16 as well as cross cutting issues such as environment, population, HIV/AIDs gender and social protection. Finally, the section discusses in detail main challenges emerged during implementation of different sectoral policies and objectives. Chapter four analyzes budget allocation outlook for the fiscal year 2012/13 and assesses its relevance with stated strategic national objectives. In other words, the section provides detailed analysis of budget allocation by key sector, MKUKUTA II clusters and D-by-D policy. Last but not least, the 2012/13 BBMTF contains Chapter five which provide conclusion and way forwards regarding challenges addressed in executing the preceding budgets for 2010/11 and 2011/12 as well as planning and budgeting for 2012/13 budget to MDAs, RSs and LGAs. 2

11 2.1 Recent Macroeconomic Development Chapter II THE MACROECONOMIC FRAMEWORK A: Annual GDP Growth and Sector Contributions Tanzania continued to record good economic performance in 2011, registering real GDP growth of 6.4 percent, which is above the target of 6.0 percent but lower than the 7.0 percent growth recorded in The slowdown in the overall GDP growth in 2011 emanated from the erratic power supply which affected particularly manufacturing and electricity economic activities during the period under review. GDP has grown by an average of 6.8 percent for the past five years. Consistent with rapid increase in mobile phone usage, the highest growth continued to be registered in the communication sub activity, which grew at 19.0 percent in Other sectors that recorded higher growth in 2011 were financial intermediation (10.7 percent); construction (9.0 percent); and trade (8.1 percent). Table 1: Real GDP Growth (Percentage Change) Economic Activity Av (06-11) GDP at market prices Agriculture, Hunting and Forestry Fishing Industry and construction Services Source: Ministry of Finance Figure 1: GDP Growth at Constant 2001 Prices ( ) 3

12 Growth in agriculture and livestock economic activities was 3.6 percent in 2011 compared with 4.2 percent in 2010 due to unfavourable weather conditions which affected crop production. The growth rate of crops sub activity decreased to 3.5 percent in 2011 from 4.4 percent in 2010 as a result of decrease in production caused by unfavourable weather in 2009/10 season. In 2011, agricultural activities accounted for 23.7 percent of GDP compared to 24.1 percent in The growth rate of industry and construction economic activities decreased from 8.2 percent in 2010, to 6.9 percent in 2011, as all sub-activities recorded slowdown in the growth rate, mainly associated with power shortage. Electricity economic activities decelerated significantly to 1.5 percent, compared to 10.2 percent recorded in The drastic slowdown in growth rate was partly due to drought especially in the hydro dam catchments areas, dilapidated thermal power plants and the servicing of gas turbines during the period. Growth in manufacturing sub- activity slowed down marginally to 7.8 percent in 2011 from 7.9 percent in 2010, mainly on account of the increase in the cost of production associated with power shortage, increase in the cost of imported raw materials, notably fuel. The growth rate of the construction sub-activity decreased to 9.0 percent in 2011, down from 10.2 percent recorded in The share of industry and construction economic activities to GDP increased to 22.7 percent in 2011 from 22.4 percent in 2010 In 2011, services economic activities grew by 7.9 percent, compared to 8.2 percent recorded in In line with the weak performance in electricity, growth was slower in hotels and restaurants, trade and repairs, and other services that rely on electricity. The share of services economic activities to GDP was 44.0 percent in 2011 compared to 43.9 percent in B: Semi Annual GDP Growth and Sector Contributions Real GDP is estimated to have grown by 7.0 percent in the first half of 2012 (January June), compared to 6.6 percent in the corresponding period in The highest growth rate was registered by transport and communication with the growth rate of 15.8 percent followed by financial intermediation with 14.4 percent, trade (8.4) and real estate (7.5 percent) and the least growth rate was recorded in hotel and restaurant with the growth rate of 3.1 percent. Figure 2: Semi-Annual Real GDP Growth Rates, (January June, ) 4

13 Growth in agriculture and livestock economic activities in the first half of 2012 was 3.8 percent compared to 3.2 percent registered in the similar period in Higher growth in agriculture was on account of good weather conditions in major agricultural producing regions which subsequently lead to the increase in the harvest of major food crops. Fishing recorded a growth rate of 3.3 percent in the semi-annual of 2012 compared to 1.1 percent in the corresponding period of The growth rate is mainly attributed to increase of demand for fish and fish products both at local and foreign markets. Hotels and restaurants recorded a growth rate of 3.1 percent in the semi-annual of 2012 compared to 2.9 percent in the corresponding period of The growth rate is attributed to slight increase in the number of international and resident visitors in hotels. The overall international bed occupancy increased to 303,781 in the semi-annual of 2012 from 293,372 in the similar period of 2011, while the domestic bed occupancy increased to 292,748 in the semi-annual of 2012 from 285,930 in the similar period of The Transport and Communication activity recorded a growth rate of 15.8 percent in the semiannual of 2012 compared to 15.9 percent in the corresponding period of The performance is attributed to an increase in the number of passengers carried and freight handled for all modes of transport and increased airtime used by cell phone customers during the period under review. Financial intermediation activity recorded a growth rate of 14.4 percent in the semi-annual of 2012 compared to 10.0 percent in the corresponding period of The performance is attributed to an increase in levels of deposits and lending by commercial banks. Real Estates and Business Services recorded a growth rate of 7.5 percent in the semi-annual of 2012 compared to a growth rate of 7.7 percent in the similar period of The growth rate is attributed to increase in business services, rented dwellings and owner occupied dwellings. C: Price Developments The overall annual average inflation rate for 2011 was 12.7 percent compared with an average of 5.5 percent in This was mainly caused by continued increase in the general price of oil in the world market; inadequate rain in the fourth quarter of 2010 that reduced agricultural production; Increase in electricity tariffs, prices of gas, cooking oil and sugar; shortage of power supply; depreciation of the shilling; and shortage of food supply in the Eastern Africa region resulting from drought in the region. Global oil prices rose by 35.8 percent, from an average of USD per barrel, for the year ending December 2010 to an average of USD per barrel in December Prices of various goods and services have been increasing due to the increase in the cost of production on the account of aforementioned reasons. Year on year headline inflation rate continued to decelerate mainly due to decline in prices of food, energy and transport. In October 2012, annual headline inflation was 12.9 percent compared to

14 Weight Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Weight Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Oct/12 percent in September 2012 and 17.9 percent recorded in October Annual inflation for food and non-alcoholic beverages eased to 14.9 percent in October 2012 from 15.6 percent recorded in September 2012 and 24.0 percent in the corresponding period in Annual non-food inflation rate was 10.1 percent in October 2012, compared to 10.5 percent recorded in September 2012 and 12.2 percent in October Meanwhile, annual inflation rate for energy and fuels was 18.4 percent, compared with 19.4 percent recorded in September 2012 and 37.4 percent in October Annual inflation excluding food and energy (proxy for core) eased to 8.6 percent in October 2012 compared to 8.9 percent in September 2012, but relatively higher than 8.5 percent registered in October Table 2: Monthly Inflation Rate (Jan Dec 2011) S/N 1 2 MAIN GROUPS Food and Non Alcoholic Beverages Alcoholic, Tobacco and Narcotics Clothing and Footwear Housing, Water, Electricity, Gas and Other Fuel Furnishing, Housing Equipment and Routine Maintenance of the House Health Transport Communication Recreation and Culture Education Restaurants and hotels Miscellaneous goods and services Inflation Rate OTHER SELECTED GROUPS 1 Food Energy and Fuels All Items Less Food All Items Less Food and Energy Source: Ministry of Finance 6

15 Figure 3: Price Movement D: Money and Credit In 2011/12, the Bank of Tanzania took a cautious monetary policy stance purposely to contain the second round effects of the sustained high domestic inflation, and manage the exchange rate volatility that occurred in the first half of 2011/12. In this regard, the Bank of Tanzania raised the minimum reserve requirement on government deposits held by commercial banks from 20 percent to 30 percent in November Further, the Bank rate was raised from 7.58 to 9.58 in October 2011 and further to 12.0 percent in November Other measures taken during the year include narrowing the banks prudential limit on foreign currency net open position from 20 percent to 10 percent and enforcement of the existing restrictions on non-residents access to Tanzania Shilling denominated credit facilities. The monetary policy measures taken by the Bank of Tanzania, led to shilling liquidity squeeze among banks, which was mirrored in the rising money market interest rates. Regarding commercial banks interest rates, lending rates charged by banks increased slightly, while deposit rates rose, supported by increased competition among banks, improvement in provision of banking services and deposit mobilization initiatives. Time deposit rates ranged between 8.50 percent and percent in August 2012, compared to a range of 6.19 percent to 7.08 percent registered in August During the period under review, overall weighted average lending rates increased marginally to percent compared to percent. The spread between 12-month lending and deposit rates narrowed to 3.82 percent in August 2012 from 7.67 percent recorded in August Annual growth of extended broad money supply (M3) decelerated to 9.0 percent in August 2012 from 21.4 percent recorded in the corresponding period of 2011 and 12.8 percent in July The 7

16 slowdown in the growth of M3 was explained by contraction of Net Foreign Assets (NFA) of commercial banks by 20.3 percent compared to the growth of 13.0 percent in August 2011, coupled with deceleration in the growth of domestic credit. The contraction of NFA of commercial banks was associated with the stability in nominal Shillings/USD exchange rate, and relatively low foreign interest rates compared to domestic interest rates. Similarly, broad money supply grew by 12.8 percent in August 2012 down from 17.0 percent recorded in the corresponding period of 2011 and 12.3 percent in July The exchange rate continued to be market determined in the Inter-bank Foreign Exchange Market (IFEM), with the Bank of Tanzania participating in the market for liquidity management purpose and to smoothen short term fluctuations in the exchange rate, while maintaining an adequate level of gross official reserves. During the period ended August 2012, the value of a Shilling against the USD remained relatively stable and appreciated by 2.3 percent to Shillings 1,567.2 compared to Shillings 1,604.8 recorded in the corresponding period in Annual growth of credit to the private sector slowed down to 16.8 percent, from 19.7 percent in the preceding month and 27.5 percent in August All economic activities recorded slow growth in credit except agriculture, manufacturing and personal activities. Trade activities registered the highest growth of 35.8 percent during the review period, consistent with improved business environment while manufacturing activities recorded a growth of 23.8 percent up from a negative growth of 2.1 percent recorded in the corresponding period mainly on account of improved power supply. In the year ending August 2012, the share of each activity in the outstanding loans showed that personal activities accounted for the largest share of 21.9 percent followed by trade 21.3 percent, agriculture 12.2 percent, manufacturing 10.9 percent, transport and communication 7.1 percent, hotels and restaurants 4.4 percent, and building and construction 4.0 percent. E: External Trade During the year ending August 2012, the current account deficit widened to USD 3,650.5 million from a deficit of USD 3,006.1 million recorded in the corresponding period in 2011, largely driven by the increase in global oil prices and domestic demand for oil, as well as import of machinery particularly for gas and oil exploration activities. Despite the widening of current account deficit, the overall balance of payments remained positive at a surplus of USD million at the end of August 2012, compared with a surplus of USD million recorded in the corresponding period a year earlier. This development was mainly on account of increase in inflows in the form of capital grants, Foreign Direct Investment and foreign borrowing. Consequently, gross official reserves amounted to USD 3,869.0 million, sufficient to cover about 3.6 months of total import of goods and services. During the year ending August 2012, the value of export of goods and services was USD 8,228.2 million compared with USD 7,185.9 million recorded during the corresponding period of 2011, 8

17 equivalent to an increase of 14.5 percent owing to the increase in receipts from travel, gold and traditional exports. The value of traditional exports amounted to USD million, which is 23.7 percent higher than the level exported in the corresponding period in This development was mainly attributed to the increase in both export volumes and prices of cotton, tea, cloves and cashew nuts. The export volumes went up due to increased production following favourable weather conditions, while the increase in export unit prices was mainly associated with increased demand of these commodities in the world market. Despite the good performance of traditional exports, the value of coffee exports declined by 6.4 percent to USD million following a fall in export volume due to a decline in production. The value of non-traditional exports was USD 4,186.8 million, compared to USD 3,657.8 million recorded during the year ending August 2011, with most of the increase occurring in gold and manufactured goods. The value of gold exports increased by 16.5 percent to USD 2,218.9 million, largely due to an increase in the world market price and export volume. The price increased by 17.2 percent to USD 1,662.3 per troy ounce, while the volume increased to 40.2 tonnes from 37.9 tonnes recorded during the year ending August Figure: Value Contribution to Total Non-Traditional Exports Oil Seeds 3.6% Edible Vegetables 2.7% Other Minerals 1.5% Horticultural 0.6% Fish and Fish Products 3.7% Re-Exports 4.1% Other Exports 6.1% Gold 53.0% Manufactured Goods 24.8% Source: Bank of Tanzania During the year ending August 2012, services receipt increased by 12.2 percent to USD 2,493.0 million compared with USD 2,221.2 million recorded in the corresponding period in 2011, driven mostly by travel and transportation receipts. The improvement in travel receipts was largely attributed to an increase in the number of international tourist arrivals; while performance in transportation receipts was mainly on account of an increase in the volume of transit goods. 9

18 The value of import of goods and services increased by 18.2 percent to USD 12,781.6 million in the year ending August 2012, largely driven by a rise in global oil prices, increase in domestic demand for oil and import of machinery particularly for gas and oil exploration activities. Services payment was USD 2,334.0 million, being 13.0 percent higher than the level recorded during the year ending August 2011, largely driven by an increase in payments of freight charges consistent with the increase in the import bill. F: Fiscal Performance Domestic Revenue: The overall domestic revenue collection including Local Government Authorities own sources reached shillings 7,220.9 billion in 2011/12 equivalent to 1 percent increase from the annual estimate of shillings 7,126.4 billion and 24.1 percent higher than the preceding year of shillings 5,816.7 billion. Collection from taxes during 2011/12 reached shillings 6,480.5 billion outshined by 4 percent of the annual estimate of shillings 6, Non-tax revenue (excluding LGAs own sources) for the period amounted to shillings billion, which is equivalent to 97 percent of the annual target of shillings billion. Revenue collection from LGA s reached Shillings 195 billion compared to the annual estimated target of shillings billion. The good performance in domestic revenue collection was attributed by improvement in administrative and tax policy measures. Also over performance in dividends received from parastatals was among the contributing factor. External resources: The total grants and loans received for 2011/12 were shillings 3,035.9 billion, equivalent to 77.4 percent against the annual estimates of shillings 3,923.7 billion. The annual foreign collection exceeded by 2.1 percent of the corresponding previous year. Of this amount, shillings 2,026.5 equivalent to 13.6 percent higher than the previous year was grants and shillings 1,009.4 was loans received. The grants received during the year consisted of Program support of shillings billion being 2.8 percent increase from the estimates; Project support shillings billion being 69.2 percent of the estimates; Basket support shillings 289 billion being 73.7 percent of the estimates and MCC - USA shillings billion being percent of the estimates. Disbursements under all categories exhibited a shortfall against their estimates and overall there was a growth of percent compared to the disbursements received in 2010/11. On the other hand, loan received consisted Programme loans amounting to shillings billion being percent of estimates of shillings billion, basket loans shillings billion and project loans shillings billion. Expenditure: The Government overall expenditure during FY 2011/12 stood at Shillings 10,764.5 billion, equivalent to 80 percent of the total budget estimate of 13, The actual expenditure in 2011/12 was 14 percent higher than actual expenditure of 2010/11 which was shillings 9,439.4 billion. The recurrent expenditure amounted to shillings 6,989.8 billion equivalent to 81.3 percent of the estimate of shillings 8,600.3 billion. Development expenditure for year under review was 10

19 shillings 3,774.7 billion equivalent to 76.6 percent of annual estimate of Shillings 4, Total development expenditure was below the estimate mainly due to shortfall in disbursement of foreign funds. Performance in key macroeconomic indicators in the past ten years is as indicated in the table below. Table 3: Trends in Selected Macroeconomic Indicators, NATIONAL ACCOUNTS Real GDP growth at market price 6.9% 7.8% 7.4% 6.7% 7.1% 7.4% 6.0% 7.0% 6.4% Agriculture, Hunting and Forestry 3.1% 5.9% 4.3% 3.8% 4.0% 4.6% 3.2% 4.2% 3.6% Fishing 6.0% 6.7% 6.0% 5.0% 4.5% 5.0% 2.7% 1.5% 1.2% Industry and construction 10.9% 10.9% 10.4% 8.5% 9.5% 8.6% 7.0% 8.2% 6.9% Manufacturing 9.0% 9.4% 9.6% 8.5% 8.7% 9.9% 8.0% 7.9% 7.8% Construction 13.8% 13.0% 10.1% 9.5% 9.7% 10.5% 7.5% 10.2% 9.0% Services 7.8% 7.8% 8.0% 7.8% 8.1% 8.5% 7.2% 8.2% 7.9% Trade and repairs 9.7% 5.8% 6.7% 9.5% 9.8% 10.0% 7.5% 8.2% 8.1% Communications 15.6% 17.4% 18.8% 19.2% 20.1% 20.5% 21.9% 22.1% 19.0% Financial intermediation 10.7% 8.3% 10.8% 11.4% 10.2% 11.9% 9.0% 10.1% 10.7% Nominal GDP growth at market price PRICES 15.9% 15.4% 14.3% 12.4% 16.8% 18.3% 13.8% 14.5% 16.2% CPI inflation (period average) 5.3% 4.7% 5.0% 7.3% 7.0% 10.3% 12.1% 5.5% 12.7% GDP deflator inflation 8.4% 7.0% 6.4% 5.3% 9.0% 10.1% 7.4% 6.9% 9.2% Short-term lending rate 15.6% 14.2% 15.7% 15.7% 15.0% 13.6% 14.0% 14.4% 13.7% Long-term lending rate 12.5% 12.6% 14.1% 14.9% 16.7% 16.5% 14.5% 14.6% 14.3% 12 month deposit rate 5.0% 5.8% 7.7% 8.8% 10.1% 8.3% 9.0% 7.1% 9.1% Savings rate 2.5% 2.6% 2.6% 2.6% 2.7% 2.7% 2.8% 2.4% 2.9% MONEY M3 growth rate 18.0% 13.5% 34.8% 21.5% 20.5% 19.8% 17.7% 25.4% 18.2% M2 growth rate 17.8% 19.8% 33.9% 16.7% 27.2% 24.4% 20.8% 21.8% 15% Growth rate of credit to private sector 42.8% 32.8% 29.3% 40.1% 43.1% 44.6% 9.6% 20.0% 27.2% BALANCE OF PAYMENTS (Ratio of GDP) Exports of goods 10.5% 11.5% 11.9% 12.2% 12.0% 15.0% 15.3% 18.8% 21.1% Exports of goods and services 18.6% 20.3% 20.9% 22.9% 23.1% 24.7% 23.9% 27.7% 30.9% Imports of goods 16.6% 19.3% 21.2% 27.1% 28.8% 33.8% 27.0% 31.0% 40.8% Imports of goods and services 22.8% 26.9% 29.8% 35.8% 37.1% 41.8% 34.9% 39.0% 50.0% Reserves (months of imports) 9.3% 7.7% 6.0% 5.0% 4. %8 4.3% 6.2% 5.8% 4.0% GOVERNMENT BUDGETARY OPERATIONS (Ratio to GDP) 2003/ / / / / / / / /12 Revenue 11.2% 11.9% 12.4% 14.1% 15.9% 16.2% 15.4% 16.4% 17.5% Expenditure 19.3% 21.2% 23.5% 23.0% 22.8% 25.7% 27.0% 26.6% 26.0% Recurrent expenditure 13.7% 14.0% 15.7% 16.2% 14.9% 17.7% 18.3% 19.0% 16.9% Development expenditure 5.7% 7.2% 7.7% 6.9% 7.9% 8.0% 8.6% 7.6% 9.1% Deficit (excl grants) -8.3% -9.7% -11.4% -9.9% -8.5% -9.5% -11.0% -11.6% -12.2% Deficit (incl grants) -2.9% -4.9% -5.5% -4.9% -1.6% -4.7% -6.4% -6.9% -5.8 Foreign borrowing 3.3% 3.9% 3.3% 3.7% 3.2% 3.6% 4.6% 3.4% Source: Ministry of Finance 11

20 2.2 Macroeconomic Targets and Budget Frame for 2012/ /15 A: Global Economic Growth and Outlook According to the World Economic Outlook Update (WEO) report of October 2012, the global economy growth rate has been revised down to 3.3 percent in 2012 and 3.6 percent in 2013, from 3.5 percent and 3.9 percent, respectively as projected earlier in July The downward revision was mostly on account of weaker activity in the Euro area, especially in the periphery economies such as Greece and Spain. Those economies were affected by the Euro debt crisis and other challenges including increased political and financial uncertainty, governments' inability to reform and deliver on the fiscal adjustment (tight fiscal policies) as well as the extent of partner countries' willingness to assist. Owing mainly to negative spillovers, including from uncertainty, growth in most other advanced economies will also be slightly weaker, although low oil prices will likely dampen these adverse effects. Overall, the global economic recovery is still uncertain. In view of recent global economic performance, growth in emerging and developing economies is projected at 5.3 percent in 2012 and then pick up to 5.6 percent in Economic performance in emerging and developing market economies is expected to be supported by expected low oil prices and a number of government measures to promote growth, including containing inflationary and credit pressures. Other measures are aimed at adjusting policies, given spillovers from weaker advanced economy prospects and slowing export growth and volatile capital flows. Growth in the Middle East and North Africa will be stronger in 2012 and 2013 relative to performance in This is due to the fact that key oil exporters will continue to boost oil production and domestic demand while activity in Libya is rebounding rapidly after the unrest in Similarly, growth in Sub-Saharan Africa (SSA) is expected to remain robust in 2012 and 2013 with GDP projected to stay above 5.0 percent in 2012 and 2013, supported by the region s relative insulation from external financial shocks and high commodity prices. However, being among lowincome countries which depend on aid, SSA faces risks of lower-than-expected budget support from advanced economies, while commodity exporters are vulnerable to further decrease in commodity prices. Table 4 portrays macroeconomic performance. 12

21 Table 4: Global GDP Growth Rates and Projections (Annual percentage change) Actual Projection World Advanced economies Emerging and Developing Economies Developing Asian Countries Middle East and North Africa Sub-Saharan Africa Burundi Kenya Rwanda Uganda Tanzania Source: IMF World Economic Outlook Update, October 2012 Growth in the EAC member states indicated a mixed trend. GDP growth in Rwanda is projected to slow down from 8.6 percent in 2011 to 7.7 percent in 2012 and 7.5 percent in 2013 as programmed fiscal consolidation reduces aggregate demand and also on account of global economic uncertainties. In addition, real GDP growth in Burundi is estimated at 4.2 percent in 2012, and then pick up to 4.5 in Further, real GDP growth rate in Kenya was estimated at 5.1 percent in 2012 and maintain upward trend to 5.6 percent in Furthermore, projections suggest that GDP growth in Uganda will slow down from 5.1 percent in 2011 to 4.5 percent in 2012 and rebound to 5.7 percent in 2013 mainly premised on good prospects in the oil sector. B: Macroeconomic Targets GDP Targets: The review of leading indicators of growth such as electricity generation, production and consumption-based tax revenues, importation of industrial raw materials, and exports of manufactured goods, mineral and agricultural commodities have shown positive progress during the first half of Given such performance of those leading indicators, coupled with continued efforts to stabilize power supply and implementation of the FYDP I and other economic policies, the actual GDP performance in the first half of 2012 was 7.0 percent and the overall performance of the economy in 2012 and beyond is expected to remain buoyant. Accordingly, the initial projected growth of GDP in 2012 has been maintained at 6.8 percent with prospects of being surpassed. In the medium-term, growth is expected to pick up further to an average of 8.0 percent supported by prospects of increase in FDI particularly in oil and gas explorations; continued implementation of infrastructure projects; favorable weather conditions; and stability in power supply among others. 13

22 Figure 5: Actual and Projected GDP and Real Growth ( ) Inflation is projected to slow down to 9.0 percent by December 2012, and maintained at a single digit in the medium term. The slowdown is expected to be driven by many factors including reduction in production costs associated with improved power supply; improved food supply in the neighbouring countries and implementation of prudent monetary and fiscal measures. In addition, implementation of strategic projects such as construction of Mtwara - Dar Es Salaam gas pipe line, Southern Agricultural Growth Corridor (SAGCOT) and contained global inflation will also further contribute to the inflation slowdown. Extended broad money supply (M3) target is set at 17.4 percent in the year ending June 2013, up from 11.8 percent recorded in June In the medium term, the growth in money supply is projected to slow down to 15 percent consistent with medium term single digit inflation target. The broad money supply (M2) is projected to increase from 12.7 percent in 2011/12 to 17.0 percent in the year ending June The projected growth of money supply is expected to provide room for private sector credit to grow by 20.0 percent in the year ending June Annual growth of credit to private sector will be maintained at an average rate of 17 percent consistent with the projected growth of economic activities. Export of goods is projected to increase to 14.8 percent during the period ending June 2013 from 14.0 percent in the corresponding period in 2012 driven by high export volumes of traditional exports. However, export prices are projected to decline on account of debt tension in the Euro Zone and weaker global demand prospects. Gold exports are projected to increase as prices in the 14

23 world market remain high. Exports of manufactured goods are expected to recover in 2012/13 following improvement in power supply. Import of goods is projected to record slower growth of 10.4 percent in 2012/13 compared to the preceding year as oil prices in the world market is projected to remain stable and imported volumes stabilize at the current levels. As a result, in 2012/13, current account balance is projected to record a deficit of 14.4 percent of GDP compared to 16.5 percent of GDP in 2011/12 and continue to narrow down in the medium term attributed to higher growth of exports relative to imports. Overall balance of payments in the medium term is projected to remain in surplus while official gross reserves will be sufficient to cover about 4 months of imports of goods and services (excluding FDI related imports). C: Budget Frame 2012/ /15 The budget frame for 2012/13 has considered the National priorities set in the Annual Development Plan 2012/13; National Strategy for Growth and Poverty Reduction phase II; the Millennium Development Goals 2015; CCM Election Manifesto and Public Sector Reform Programme with the goal of realizing the objective of Tanzania Development Vision In line with this guiding framework, the expenditure policy of 2012/13 will focus on the National strategic projects and other projects that will stimulate the national economy. The projects includes infrastructure development mainly on electricity, transport, clean and safe water, information technology and communication, agriculture, fishing and livestock husbandry, industrial development and human capital development, social services and tourism. Domestic Revenue: In the FY 2012/13 the Government target to collect domestic revenue (including LGA s own sources) amounting to shillings 9,149.2 billion equivalents to 18.8 percent of GDP. Out of this amount Shilling 8,070 billion and shillings 644 billion are Tax and Non - Tax revenue respectively. Total collection from Local Government Authorities own sources is estimated to be shillings billion in 2012/13. The projected revenue is expected to be realized by considering improvement in tax policies and administrative measures. In the medium term, the projected outlook indicates positive improvement in revenue collection. Domestic revenue (including LGA own sources) is expected to be shillings 10,733.2 equivalent to 22 percent of GDP in 2013/14. The recovery in domestic economic activities and improvement in tax policies and administrative are the contributing assumptions for the positive growth. External resources: The Government will continue receiving grants and loans in form of General Budget Support, Basket, Programme and Project Funds from Bilateral and Multilateral Institutions. The total grants and loans for 2012/13 is anticipated to reach Shillings 2,723.2 billion equivalent to 5.5 percent of GDP. In the medium term, the share of foreign assistance to GDP is projected to slow down to 4.6 and 3.5 percent in 2013/14 and 2014/15 respectively. 15

24 Expenditure: The Government expenditure for 2012/13 is projected to be shilling 15,192 billion equivalents to 31.2 as a percentage of GDP comprising the recurrent expenditure of shilling 10,592 billion equivalents to 21.7 percent of GDP and development spending shilling 4,600.1 billion equivalents to 9.4 percent of GDP. The components of local and foreign resources in development spending are estimated to be shillings 2,286 and 2,314.2 billion equivalent to 49.7 and 50.3 respectively as a percentage of the total estimate. The Government expenditure is projected to grow by 9.0 and 16.1 percent in 2013/14 and 2014/15 respectively compared to 2012/13. Budget frame for the medium term is shown below in table 2.2 Table 5: Government Budgetary Operations Actual In Billion TShilings Budget 2006/ / / / / / / /14 Total Revenue 2, , , , , , ,733.2 Tax Revenue 2, , , , , , , ,551.7 Total Expenditure 4, , , , , , , ,714.8 Recurrent Expenditure 3, , , , , , , ,322.7 Development Expenditure 1, , , , , , , ,392.1 O/W Local , , , ,592.9 Foreign , , , , , , ,799.2 Ratio to GDP (percent) Total Revenue Tax Revenue Total Expenditure Recurrent Expenditure Development Expenditure O/W Local Foreign Monthly Revenue Collection Nominal GDP (Bil) 19, , , , , ,364.0 Source: Ministry of Finance , ,

25 Chapter III BUDGET PERFORMANCE FOR 2010/ /12 This chapter presents budget performance for 2010/ /12 including the performance of the strategic projects under the FYDP. It reviews both physical achievements recorded in MKUKUTA Clusters and sectors and the challenges faced by the sectors during implementation. The performance analysis shows that the overall budget allocation to MKUKUTA clusters increased from 73.2 percent in 2010/11 to 75.5 percent in 2011/12. MKUKUTA development budget rose to 96.9 percent in 2011/12 from 90.2 percent in 2010/11. The increase in MKUKUTA development budget is attributed to higher capital investments in roads, water, transport and agriculture sectors supported by the implementation of the FYDP. The allocation of budget for 2011/12 in major sectors has also shown significant improvement in comparison to the previous years. In roads and energy sectors, for instance, the allocation increased from 13.0 and 2.8 percent in 2010/11 to 17.5 and 4.0 percent in 2011/12 respectively. The increase in budget allocation in these sectors has enabled completion of major roads and energy projects as a way to improve infrastructure and address power shortage challenges in the economy. Regardless of these achievements, the review has also revealed some challenges hindering effective implementation of the sector mandated functions. The major challenges noted include: shortage of skilled manpower; inadequate domestic and foreign resources; poor rural road networks and inadequate and unreliable electricity supply. The detailed performance, achievements and challenges faced by each sector is presented in the sub-chapters. 3.1 Performance of the Five Year Development Plan 2011/12 The Five Year Development Plan was launched in June 2011 following the recommendations of the 2010 review of Tanzania Development Vision It puts emphasis on the development of strategic interventions leading to the attainment of the TDV 2025 for the remaining period of the vision implementation. The FYDP interventions are also aligned to the other national planning frameworks including: National Strategy for Growth and Poverty Reduction II, Tanzania Mini Tiger Plan (TMTP) 2020 and Sector and Regional Strategic Plans. The overall objective of the FYDP is to mobilize the national resource potentials in order to improve service delivery and stimulate investment activities for economic growth. To achieve this, the plan targets to attain a GDP growth rate of 8 percent per annum for the FYDP implementation period and consistently maintaining growth rates of at least 10 percent per annum from 2016 until

26 The implementation of the FYDP started in 2011/12 by selecting few priorities with more positive impacts in economic growth and poverty reduction. The focus was directed to the following priority areas: Improve energy, roads, railways, ports, airports and communication infrastructure; Improve irrigation farming, extensions services and increase agriculture inputs and modern equipments supply; Improve business environment and investment in value addition industries; and Human capital development. The major achievements recorded under each sector during the year 2011/12 are narrated below: Roads: A total of 2, km (9375 km of earth work, of sub base, km of base and km of surfacing) of trunk road were upgraded to bitumen standard against a total target of 4, km; A total of km (244.0 km of earth work, km of sub base, km of base and km of surfacing) were rehabilitated to bitumen standard against a total target of 1,229.2 km; and A total of km of Regional Roads were rehabilitated to gravel stand and to bitumen standard against a planned target of 982 km and 29.1 km respectively. Railway: 5.5 km of rail formation though embankment widening between Kailua and Kineme stations were rehabilitated; Undertook detailed engineering for construction/upgrading of Dar Es Salaam Isaka Keza (km 1,287), Keza Kigali (km 186) and Keza Musongati (km 197) to standard gauge; and relaying of 3.5 km of rail between Mpanda and Kaliua stations. Ports: Completion of feasibility study for the development of Mbegani Port (Bagamoyo); Completion of feasibility study for the development of cargo freight station at Kisarawe; Shinyanga Inland Container Depot (ICD) construction is completed; and Completion of phase one of SPM and pipeline system replacement. Airports: Completion of Mpanda airport construction; Runway and access road at Songwe airport were completed; Mwanza aiport expansion and improvement was completed; and Msalato (Dodoma) airport access road construction was completed Energy Sub Sector: 422 MW of emergency power was generated out of a targeted plan of 572 MW; Completion of 33 KV lines construction for Mgwashi and Mbwewe; Construction of 105 MW gas fired power plant at Ubungo was completed; Installation of power generators in Songea and Sumbawanga towns and Ngorongoro, Kasulu and Kibondo districts; Construction of 33 KV power line for connecting Mtwara and Msimabti was completed; and Electrification of six (6) villages, namely; Songwa village in Shinyanga Region, Zuzu in Dodoma, Ipinda Kilimani in Mbeya, Utiga in Makambako, Kilole Mzee in Tanga and Itoju in Kagera 18

27 3.2 Performance of MKUKUTA II MKUKUTA II has remained the major national strategic key of development interventions for other 5 years. Like MKUKUTA I (2005/ /11), MKUKUTA II (2010/ /15) is built on three clusters, namely: Growth for Reduction of Income Poverty; Improved Quality of Life and Social Well being; and Good Governance and Accountability. However, MKUKUTA II is oriented more towards growth and enhancement of productivity, with greater alignment of the interventions towards wealth creation as a way out of poverty. This orientation as a result opens space for realignment of subsequent medium term strategies and calls for more active private sector participation. Therefore, the emphasis has been on prioritization of interventions and their resource allocation, as well as participation of the private sector in priority growth and poverty reduction areas. Other emphasis include alignment of strategic plans of MDAs and LGAs to MKUKUTA II, improvement in human resource, mainstreaming of cross cutting issues, better implementation of core reforms, Monitoring and Evaluation to determine the outcomes country s development. The allocation of Government budget to MKUKUTA II- related activities for 2011/12 has remained comparatively impressive. During 2011/12 total budget allocated for implementation of MKUKUTA II increased by 20.2 percent from Shillings 8,494.3 billion during 2010/11 to Shillings 10,207 billion during 2011/12. Generally, Government budget allocations in favour of MKUKUTA has been increasing consistently over time from 54.1 percent of total budget during 2005/06, to 73.2percent during 2010/11 and up to 75.5 percent during 2011/2012. This increase was the result of higher allocation for infrastructure investment spending while retaining the level of public spending in social service delivery, particularly in education and health. The allocation for MKUKUTA II interventions covers recurrent and development budgets for MDAs, RSs and LGAs. Recurrent budget allocated for MKUKUTA II interventions in 2011/12 increased by 8.0 percent to Shillings 5,420.7 billion from Shillings 5,017.7 billion allocated in 2010/11. In addition, the budget allocated to implement MKUKUTA II development programmes increased significantly by 37.7 percent in 2011/12 to Shillings 4,786.3 billion from Shillings 3,476.5 billion in 2010/11. Out of this, the local component of the total development budget increased to Shillings 1,799.6 billion, equivalent to 37.6 percent of the total development budget, up from 30.3 percent in 2010/11. This shows increased Government s commitment the towards raising the share of development budget on MKUKUTA II as well as reducing donor dependency. On the other hand, actual development budget as a ratio of GDP increased from 7.6 percent during 2010/11 to 9.5 percent during 2011/12 which signify Government s commitment in implementing development projects indicated in MKUKUTA II. However, implementation of MKUKUTA II has encountered some challenges which remain particularly in the area of adequate domestic and foreign resources; actual budget execution in most sectors being below the approved budget; increasing risks associated global economic slowdown, as well as erratic and unreliable power supply; and the assessment of MKUKUTA II being constrained by data limitations for several indicators. 19

28 A: Cluster I: Growth for Reduction of Income Poverty In 2011/12, the total budget allocated for Cluster I of MKUKUTA including transfer to LGAs was 36.3 percent, compared to 35.8 percent in 2010/11. Out of the total budget allocated to cluster I, recurrent budget accounted for 21.6 percent while development budget was 62 percent. The strong performance in budget execution has translated into tangible achievements in broad Cluster I due to investments in priority areas such as agriculture, infrastructure of (roads, energy, ports, and railways), lands and manufacturing which all contributed to expansion of private sector activities, creating employment opportunities as well as empowering the private sector to engage productively and profitably in the production and distribution of goods and services nationwide. In general, during the year under review, various key macroeconomic indicators related to this cluster has have shown impressive performance as detailed in chapter II above. Accelerated investment in infrastructure remains one of the important outputs and demonstrates government commitment to stimulating economic growth thereby creating jobs and reducing income poverty. Number of challenges that inhibits the economic growth and poverty reduction efforts include increased domestic food prices; soaring of oil prices in the world market; unreliable power supply; budget constraints especially in the critical sectors such as energy, agricultural irrigation, roads, ports, railway and manufacturing; as well as increased domestic debts. B: Cluster II: Improved Quality of life and Social Well being Under this cluster the focus is on improvement of quality of life and social well being, with particular attention on the poorest and most vulnerable groups but also on reducing inequalities in education, survival, and health across geographical, income, age, gender and other groups. The cluster cuts across three sectors which are education, health and water and sanitation. To attain the focus above, six goals have been laid down which are: (i) equitable access to quality education; (ii) expansion of vocational, technical, higher education, polytechnics and improving non formal and continuing education; (iii) improve survival, health, nutrition and well being; (iv) increase access to affordable clean and safe water, sanitation and hygiene; (v) developing human settlements; and (vi) provision of adequate social protection and rights to the vulnerable and needy groups. In 2011/12, the budget allocated to cluster II increased to 30.6 percent of the total budget from 28.5 percent in 2010/11. The actual budget allocated was Shillings 3,857.4 billion in 2011/12 compared to Shillings 3,374.9 billion allocated in 2010/2011, equivalent to an increase of 12 percent. Apart from financial performance noted above, the Government continued with the implementation of different programmes including; primary health service development programme (PHSDP) that 20

29 enabled expansion of students enrolment in health colleges, joint integrated early childhood development service delivery initiative in LGAs that aim in increasing enrolment ratios for both pre primary, primary and secondary school, education secondary development programme (ESDP) in the area of expanding access and enrolment in higher, technical, folk and vocational education, preparation of national programme for prevention and formalization of unplanned settlements, survey mapping activities were undertaken where by a total of 206 villages were surveyed, implementation TASAF third phase which focuses on involvement of community groups in analyzing their needs. C: Cluster III: Good Governance and Accountability Good Governance and accountability are fundamental components to shaping a favourable environment for economic growth and reduction of poverty. During 2011/12, the Government continued to strengthen capacities of public institutions dealing with issues of governance and accountability through the implementation of core reforms. The budget allocated to this cluster increased to Shillings 1,313.1 billion in 2011/12 compared to Shillings 1,181.6 in 2010/11. However, the resource allocated to Cluster III was 9.7 percent in 2011/12 of the total budget compared to 10.2 percent in 2010/11. The share of cluster in recurrent expenditure was 12.3 percent in 2011/12 of the total recurrent budget while share of cluster in development expenditure was 5.1 percent. Major achievements include the following: Procurement in LGAs: All LGAs have established Procurement Management Units (PMUs) and Tender Boards to handle the procurement function. To a large extent these structures were reported to have followed the established procurement legislation, regulations and procedures. MDAs, RSs and LGAs with Clean Audit Certificate from the National Audit Office The number of clean certificates for MDAs and RSs increased from 55 (71 per cent) to 69 (85 per cent) while qualified opinions decreased from 20 (26 per cent) to 12 (15 per cent) in the financial years 2009/10 and 2010/11. The LGAs financial performance, showed that the number of councils with clean certificates (unqualified opinions) increased by 5 percent from 66 (49 percent) in year 2009/10 to 72 (54 percent) in 2010/11. Moreover, the number of qualified opinions decreased by 6 percent from 64 (48 percent) in 2009/10 to 56 (42 percent) in 2010/11 respectively. However, the number of adverse opinions increased from 4 (3 per cent) in 2009/10 to 5 (4 per cent) in 2010/2011. Equal access to timely justice for all: the government continued to take several measures to ensure equal access and timely justice for all citizens. One such measure was to recall to duty retired Judges and Magistrates, especially for Primary Courts on contract basis, as well as frequent inspection of all prisons in the country. As a result of these and other measures, the number of court cases outstanding declined. In primary courts the number of resolved cases out of total outstanding 21

30 increased from 219,693 cases during 2010/11 to 510,996 cases during 2011/12. Likewise for district courts, the number of resolved disputes increased from 47,667 cases during 2010/11 to 83,082 cases during 2011/12, an increase of 74.3 percent. Cases determined at higher court levels led to a decline in the ratio of prisoners in remand for two or more years declined from 9.7percent during 2010/11 to 6.8 percent during 2011/12. Despite the noted achievements with regard to good governance and accountability there were number of challenges faced. The main challenges include; Delays in approval of work plans and budgets resulting in late disbursement of funds and late implementation of activities, as well as delays in preparation and submission of progress reports which decelerate core reforms; Inadequate capacity at various levels of Government continued to undermine performance on governance and management of public resources; Harmonizing conflicting policies and laws which weaken performance on governance; Poor performance of M&E undermines, among other aspects, the reporting framework across levels of government and affects the planning processes. However these challenges created an opportunity for undertaking strategic interventions to address them for better outcomes. D: Cross-Cutting issues Gender In Comparing with all resources allocate to MDA excluding RSs and LGAs; in financial year 2011/12 there are some increment in the share of recurrent allocated compared to the previous year were for total recurrent budget 0.27 percentage allocated compared to 0.59 percentage of year 2012/13. However, there are slight decline in the development budget were MoCDGC received 0.17 percent in year 2012/2013 compared to 0.50 percent in the last year. Major achievements for the year under review include training of 350 Women entrepreneurs on entrepreneurship skills; the legislation on child was translated into Kiswahili and submitted to the Attorney General Office for approval; Tanzania Women's Bank was funded to the tune of Shillings 2 billion in order to raise its capital; and provision of Women development funds to women in 16 Councils. However, challenges remains in addressing gender imbalances within the society especial in addressing the existence of retrogressive on traditional and customs within the communities; unwillingness of employees to work in peripheral and hard to reach areas; poor working environment in CDTIs and FDCs; inadequate number of Community Development personnel at LGAs; Multiplicity of Laws governing CSOs operations; high dependence on DPs; and declining of self help spirit which was there in past among our communities. Social Protection During the year under review, the Government continued to facilitate smoothly implementation of Child Act of Moreover, National Guidelines for quality improvement of care, support and protection of most vulnerable children has been developed; and Mtwara Remand Home has been constructed. In addition, the Government continued to provide food, health services and bedding 22

31 for 2000 vulnerable people in homes for elderly, retention homes, approve school, national children home and vocational centre for people with disabilities. Furthermore, regulations for Children homes, approved school and foster care and adaptation and retention homes have been developed. A total of 198 participants were trained on Community Justice Laws in nine LGAs to raise public awareness on the rights of people with different special needs; Conducted training for 278 community justice facilitators in 24 councils; scaled up the community based programme for care and support for most vulnerable children in 4 councils. Despite the all the achievements some challenges were encountered which included: capacity to provide basic needs to social welfare remand homes and elderly homes; and capability to carry on with improvement of infrastructure in social welfare institution and provide care for vulnerable groups and disabilities centres. Environment Government has been carrying out a number initiative to address challenges on global climate changes, deforestation, sustainable safety and clear water sources, as well as protecting and conserving environment. Protection and conservation of the environment is one of the mandates of Vice President s Office. Though environment conservation is also a responsibility of other sectors, the budget allocated to this VPO will be used as a proxy to gauging Government commitment towards environmental conservation; in year 2011/12, funds allocated for this Office was about 1.1 percent compared to 1.0 percent in year 2010/2011 these shows a slight increase of 0.1percent. During the year under review, some achievement has been recorded such as: three bio-safety manual has been prepared; the national Bio-safety Framework was translated in Kiswahili language; the Regulations for prohibitions of the manufacture and use of plastic bags and sachets of 2006 has been reviewed and amended; GMOs Emergency Response Manual, Socio-economic priority issue manual; and Manual on procedures for laboratory/green container trial on GMOs for contained use were developed. Training of 102 air-conditioning and refrigerator technicians on alternative gases to ozone depleting gases were conducted; Guidelines for Management of Polychlorinated Biphenyls Chemicals (PCBS) were developed; training on appropriate technologies for waste management was conducted for 57 participants from 9 regions; Training of 47 staffs from Ministry of Health and Ministry of Agriculture on effects of PCBS chemicals were conducted; Sustainable land use plans were prepared in six pilot Villages; and Dar es salaam city Environmental Outlook report has been prepared. Number of exhibitions was conducted for awareness rising on National Environmental Policy, Environmental Management Act and Multilateral Environmental Agreements. However, some challenges in counted in this financial year, out of date National Environmental Policy; inadequate resources to facilitate implementation, monitoring and evaluation of the national environmental policy; challenge in mainstreaming environment issues in MDAs and LGAs development activities; unsustainable consumption of natural resources and environmental degradation; conflicting policies, legislations, regulations and procedures between Governments of 23

32 United Republic of Tanzania and the Government of Zanzibar and low awareness on environmental issues and Union matters. HIV and AIDS The Ministry of Health and Social Welfare and Tanzania Commission for AIDS are the main actors in accomplishment of HIV/AIDS programmes and activities in the country. Which include procurement of AVRs and HIV and AIDS services provision. The actual expenditure for in the sector for 2011/12, for recurrent and development budget was Shillings 17.9 billion compared to Shillings 13.8 billion in 2010/11. The successful implementation of HIV/AIDS programmes and activities has been driven by some achievements recorded in: implementation of National Multi-Sector HIV/AIDS Strategy framework ( ); Doubled number of people receiving HIV testing and Counseling from 8.3 million in 2010 to 16.6 million at the end of 2011; 783,075 HIV and PLHIV have been enrolled into care and treatment Clinics (CTC) out of these, 412,108 initiated on antiretroviral therapy reaching 94percent of the 2012 target for PLHIV on ART. Increased number of health facilities offering care and treatment services for HIV/AIDS to 1,100 in 2010/2011. A total of 139,320 males were circumcised in Voluntary Medical Male Circumcision services (VMMC) in 8 Region with high burden of HIV infection and with low rate of male circumcision; a total of 4,603 (96percent) antenatal clinic provide PMTCT services whereby 1,682,886 pregnant women received the services; 93,770 (76.7percent) of all HIV positive pregnant women were identified at these clinic and out of them 86,875 (92.6percent) and 68,507 (56percent) children were given ARV prophylaxis to prevent Mother to Child Transmission of HIV. On preventive services training of 186 members of CHMT, RHMT and Facility in-charges on operation manual on provision of standard integrated HIV and AIDS services in primary health care settings were conducted; ART mini campaign to promote adherence to ARV s among PLHIV were conducted; PMCTC refresher training conducted for 120 Health Care Workers; 90 HCWs trained on PMTCT logistics management and HIV/AIDS commodity management; conduct supportive supervision activities on PMTCT in 7 Regions; PMTCT -M&E data audit was conducted in 4 Regions; A total of 7,615 copies of National Guidelines and training manuals in line with WHO recommendation 2010 printed and disseminated; furthermore, government will continue to promoting voluntary HIV counseling and testing. Despite of those achievements some challenges have been recorded in: fighting and managing the increased number of HIV/AIDS orphans; managing other HIV related diseases such as TB; The other challenge arising is managing the increasing number of other vulnerable groups such as elders and poor families due to the effects of HIV and AIDS. 24

33 Population The instrument establishing the Planning Commission mandates it with responsibility to continue administering the integration of population aspects in the sectors, programmes and the entire government. The total recurrent budget released of whole budget in percentage wise is 1.1 and 2.2 respectively in the years 2010/11 and 2011/12. In the year under review, the Government witnessed the successful completion of National Population and Housing Census in August 2012; Continued to facilitate issuance of National Identity Card; and continued with the implementation National Population Policy. However, controlling and sustaining the high increase of population remain a national challenge in all forms of aspects that is economically and socially. 3.3 Performance of Key Sectors A: Agriculture Sector Agriculture In the medium term, performance of the agricultural sector continued to perform well with the execution of recurrent budget being 56.8 percent in 2011/12 as compared to percent recorded in 2010/11. Provision of agricultural subsidies to farmers, irrigation infrastructure, and certified seeds among others remained priority in the execution of the 2011/12 budget. Execution of the sector development budget (local and foreign) was 44.9 percent in 2011/12 compared to 89.5 percent in 2010/11. The foreign component in 2011/12 continued to perform well by recording 54.4 percent while the local component was 22.6 percent. Figure 6: Agriculture Sector Recurrent and Development Budget Execution 25

34 The sector continued to perform well particularly in implementing KILIMO KWANZA interventions. In the period under review, the following achievements were recorded: Provision of agricultural inputs support to 1.8 million farmers in 20 regions through National Agriculture Inputs Voucher Scheme. A total of 202,439 metric tons of fertilizer and 24,277 metric tons of improved seeds were distributed to farmers; Stocking 277, tons of food through the National Food Reserve Agency (NFRA) which is the record achievement; Developed, promoted and disserminated improved agricultural technologies; Managed to control timely outbreak of crop pests in 8 regions and 173 villages; Promoted Cooperatives reforms; Released seven (7) new seed varieties for adoption by farmers; Sponsored a total of 3,500 Diploma and Certificate level students in Agricultural Training Institutes; Rehabilitated irrigation schemes included 24 schemes with 2,250 hectares in seven (7) zones; and Facilitated mechanized agriculture through DADPs, private sector and Agricultural Inputs Trust Fund loans. Challenges include: Dependence on rain fed agriculture; Inadequate research and extension services; Poor rural road networks; Inadequate storage and marketing infrastructure; Huge pre and post harvest losses due to outbreak pests and diseases; and Inadequate processing and preservation technologies. Livestock During the fiscal year 2011/2012, livestock sector registered the following achievements in accordance with the set targets:- A total of 11,190,000 doses of I-2; 225,100 doses of Blackquarter and 105,100 doses of Anthrax vaccines were produced; A total of 100,000 cattle were registered. Also, a total of 502,572 indigenous cattle were identified in Musoma Rural (177,312), Bunda (139,953), Tarime (111,419), Missenyi (61,823), Kishapu (9,418), Kwimba (2,131) and Bukombe (445); the Regulations for import and export of diary products, guidelines on livestock markets operation and feedlot ting were formulated; Three (3) standards for cheese were prepared in collaboration with TBS; 65 breeding stock were purchased for Sao Hill and Ngerengere LMUs; Meat production increased by 5.6 percent from 503,500 tones in 2010/11 to 531,749 tons in 2011/12; Fattened cattle increased by 10 percent, from 98,700 cattle in 2010/11 to 108,570 cattle in 2011/12; Production of eggs increased from 3.34 billion eggs in 2010/11 to 3.49 billion eggs in 2011/12; A total of 930,000 tons of animal feeds were produced by private sector in 80 factories; Milk production increased from 1.74 bilion litres in 2010/11 to 1.85 billion litres in 2011/12; At Artificial Insemination Center, a total of 172,000 doses of improved cattle were produced and distributed to farmers in 2011/12 compared to 150,000 doses produced in 2010/11; A total of 798 Heifers were produced in Government farms and distributed to farmers 2011/12 compared to 712 heifers in 2010/11; Rehabilitated ten staff houses, retooled livestock Nutrition Laboratory and completed office building at Naliendele, and rehabilitation of Embryo Transfer Laboratory; Construction of modern abbatoirs at Ruvu is 65 percent of completion; and a total of 3,362 live cattle and 4,060 goats worth 3.81 billion were exported in 2011/12, compared to 1,041 cattle and 657 goats worth million in 2010/11. 26

35 The livestock sub sector continued to face the following challenges:- Strengthening extension services by increasing the number of extension officers; Meet needs of the market, particularly on quality and safety of livestock products; Identify, demarcate and develop sustainable livestock production areas (grazing land) in order to control migration, reduce conflicts between farmers and other livestock keepers, reduce environmental degradation and control and prevent the spread of animal diseases; Increase the availability of better veterinary extension services to livestock keeper at affordable price; Improve and promote the use of technology to increase production and productivity of livestock; and Increased ability to control prevalent livestock diseases and possible emerging livestock diseases Fisheries Achievements includes: A total number of 5,964 mandays patrols were conducted, in which a total 665,141 beach seine nets, beach seine ropes 1,769,668 m, 2,694 Sardines nets, 1,109,884 Gill nets, 1,046 Monofilament nets, 129 Dynamites, 125 Diving shoes, 98 Spear gun, 10 modern spear gun, 199 Mosquito nets, 507 Paddles, 154 Ring nets, 578 Splash, 83 Harpoon gun, 334 Hooks, 373 Scoop nets, 81 Vehicles, 15 Motor cycles, 483 Canoes, 30 Engine and 69 Bicycles were confiscated; A total of Shillings 8,353,061, was collected from July 2011 to 22 June, 2012 which is equivalent to 73percent of the targeted annual revenue; Training on the concept of Ecosystem Approach to Fisheries management were conducted to 204 fisheries stakeholder in District Councils of Mtwara Mikindani (42), Mtwara Rural (42), Lindi Municipal (42) and Lindi Rural (42), Kinondoni (12), Bagamoyo (12) and Mkuranga (12); Construction of office building for Deep Sea Fishing Management Authority at Fumba Zanzibar, and construction of Mvuvi house completed; and Construction of fish and fisheries products receiving centers were completed at Kilwa (Masoko Pwani), Mafia (Kilindoni) and Rufiji (Nyamisati). The fisheries sector faces the following challenges:- Curbing increased use of illegal fisheries gears and methods; and trafficking of fish and fisheries products across the borders; Tapping the vast potential for aquaculture development that could contribute significantly to food security, employment and national income; Providing sufficient human and financial capacity and infrastructure for sustainable management and utilization of fisheries resources; Changing livestock farmers attitude from traditional to commercial livestock farming; and distribution networks), inappropriate technologies in fish handling and processing facilities; and Inventorisation, conservation and utilization of fisheries resource base. B: Transport Sector The Government is committed to improve transport infrastructure particularly roads, railway and ports in tandem with the requirement of the Five Year Development 2011/ /16. The focus was on construction and rehabilitation. Noted key achievements are detailed below: 27

36 In 2011/12, significant efforts have continued to be made by the Government to invest in transport sector especially in road subsector. Resource allocated to transport sector increased to shillings 2,374 billion in 2011/12 from shillings 1,505 billion, equivalent to an increase of 58 percent. Significant share was allocated to construction which received a total of shillings 1,942 (of which Shillings 944 billion were local funds) in 2011/12 compared to shillings 1,105 billion in 2010/11 (of which Shillings 381 billion were local funds). In a bid to preserve road infrastructures, road maintenance continued to receive attention albeit limited to other non-roads subsectors. Maintenance outlays for MDAs roads increased from shillings billion in 2010/2011 to shillings billion in 2011/12 which is an increase of 58 percent. The main financial sources for roads maintenance are mainly collected from the fuel levy. In spite of all these funds being earmarked for roads maintenance across the country, it is still inadequate given huge backlogs in roads maintenance especially in rural road networks. Given budget constraint to support transport sector, the introduction of public-private partnership is expected to support financing of the sector. Generally the performance of development project was impressive, the contractors claims were were paid for the works done. Notable achievements have been recorded in construction of Kigoma-Kidawe road including Malagarasi Bridge; Sumbawanga-Mpanda-Nyakanazi road; Marangu- Tarakea road, Kyaka-Bugene road, Korogwe-Handeni road, Nyanguge-Kisesa, Dodoma-Babati, Ndundu-Somanga road, Manyoni-Itigi road, Chalinze-Segera road, Nzega-Tabora, Kagoma- Lusahunga road, Nyaguge-Musoma road, Wazo Hill-Bagamoyo -Msata; upgrading strategic roads in the Dar Es Salaam City to tackle traffic congestion problem and also rehabilitation of regional roads. Specifically, during the period under review, the following achievements were recorded: Trunk road-upgrade: a total of km of earth work, km of sub base, km of base and, km of surfacing were upgraded to bitumen standard against the target of up grading a total of 1, km of earth work, 1, km of sub base, 1, km of base and, km of surfacing respectively. Trunk road-rehabilitation: A total of km of earth work, km of sub base, km of base and, km of surfacing were rehabilitated to bitumen against the annual target of rehabilitating a total of km of earth work, km of sub base, km of base and, km of surfacing respectively. This performance is equivalent to 93 percent, 47 percent, 56 percent and 74 percent of the annual target respectively. Regional Roads: A total of km were rehabilitated to gravel standard, km to bitumen standard and 4 bridges were constructed against the planned target of rehabilitating 982 km to gravel standard, upgrading 29.1 km to bitumen standard and construction of 24 bridges. In addition, a total of 11 bridges are at different stages of construction and rehabilitation. Moreover, 28

37 the construction of two new ferries, namely Mv Ujenzi (Rugenzi Kisorya) and MV Musoma (Musoma Kinesi) have been completed while construction of Msangamkuu and Kilambo ferries are in progress and Kilambo ferry is being assembled at Kilambo Mtwara. Trunk road construction: A total of km of trunk roads were constructed at surfacing level against target of km, or 56.5 percent of planned target while km of roads were rehabilitated to bitumen standard against planned target km or 56 percent of target. The table below depicts quarterly physical plan and achievement for trunk roads. Table 6 Trunk Road Quarterly Physical Plan and Achievements Type of Work Activity Annual Plan 4th Qtr Plan 4th Qtr Actual Percentage (%) Cumulative up to 4th Qtr percent of Annual Plan Earth Work (Km) 1, % % Upgrading bitumen to Sub-base (Km) 1, % % Base (Km) 1, % % Surfacing (Km) % % Earth Work (Km) % % Rehabilitation to bitumen Sub-base (Km) % % Base (Km) % % Surfacing (Km) % % Construction of Bridges Construction of Bridges (percent) 32% 17.7% 19.4% 109.6% 44.9% 60.5% Overall, owing to increased budget for transport sector in particular roads sub-sector, the annual physical progress on all the activities were on track despite challenges including delays in the release of funds. 29

38 Below are views of ongoing construction of Kigamboni Bridge. 30

39 Below is a view of ongoing construction of Malagarasi Bridge popularly known as Kikwete Bridge that links the western part of the country with the neighboring countries of Rwanda, Burundi, and DRC. Below is a view of recent ongoing periodic road maintenance works along Makambako-Lukumburu Trunk road (5km) 31

40 Modernization of Dar Es Salaam Roads: In a bid to decongest the City of Dar Es Salaam, the Government has embarked on modernization of the roads through implementation of Rapid Bus Transport project (BRT) so as to ensure seamless travel time and reduction of transportation costs. Below is the ongoing upgrading of Manzese-Kimara road to reduce traffic jam in Dar Es Salaam, while the second photograph depicts a BRT bus station. 32

41 Rehabilitation and Maintenance of Roads: On road maintenance, in a bid to sustain already constructed roads network in the country and therefore, reducing transportation costs by economic agents, the government continued to rehabilitate and maintain roads and bridges. The progress for regional roads rehabilitation during the reporting time was that km were rehabilitated to gravel standard, km to bitumen standard and 4 bridges were constructed against the planned target of rehabilitating 982 km to gravel standard, upgrading 29.1 km to bitumen standard and construction of 24 bridges. Table 7: Regional roads quarterly physical plan and achievements Type of Work Upgrading to bitumen (Km) Rehabilitation to gravel (Km) Construction of Bridges (No.) Annual Plan 4 th Qtr Plan 4 th Qtr Actual percent of Qtr Plan Actual Cumulative up to 4 th Qtr percent of Annual Plan % % % % % 4 17% The 4 th quarter and annual progress for all the activities of Regional Roads is low compared to plan mainly due to delay in paying Contractor s certificates. Nevertheless, the overall physical performance of upgrading to bitumen standard roads for both Trunk and Regional Roads was 76 percent. Airport Network: Other achievements recorded during the year under review were construction of airports to ease regional trade which include Mpanda, Songwe, Mwanza, Mafia, and Kigoma airports. Broad achievements recorded including completion of Mpanda airport; runway and access road for Songwe airport and extension of Arusha airport runway by 420m; commissioning of rehabilitation at Kigoma, Bukoba and Tabora airports to bitumen standard; expansion and improvement of Mwanza airport; construction of access road for Msalato (Dodoma) airport; and construction of pavements and furnishing of VIP lodge at Julius Nyerere International Airport in Dar es Salaam. Specific achievements noted at Mpanda Airport include rehabilitation of runway, taxiways and apron. The construction of pavement layers in runway, taxiway and apron has been completed to final layer (wearing course); runway marking (hot thermoplastic marking) and perimeter fence have been completed by 100percent; and construction of peripheral roads is on progress. 33

42 On the other hand, specific achievements recorded at Songwe Airport including construction of pavements (runway, taxiway, apron), drainage systems, navigation facilities, fire equipment, meteorological facilities, access roads, departure terminal. Other activities executed and completed during the period under review are: construction of runway, taxiway, access road and paving car park with bitumen; construction of base course on apron; construction of storm water drainage systems in progress; construction of terminal building was in progress, the Contractor is due to cast concrete on the first floor slab; roofing works for construction of meteorological observatory building was completed; and construction of waste water stabilization ponds and drilling of 3 deep bore holes with a total capacity of liters per hour was completed. Railway Network: Regarding the railway network, the Government continued to strengthen and expand the railway network to facilitate the flow of goods and services at lower costs. During the financial year 2011/12, the focus was on construction and rehabilitation of railways to meet international standard. The noted specific achievements including:- relaying of 3.5 km of rail between Mpanda Kaliua stations; rehabilitation of 5.5 km of rail formation through embankment widening between Kailua and Kineme stations; track repairs and drainage improvement between Kilosa and Gulwe section; detailed engineering study for construction/upgrading of Dar Es Salaam Isaka-Keza (km 1,287), Keza-Kigali (km 186) and Keza-Musongati (km 197) to standard gauge. Specific achievements recorded during the period under review including relaying of 80 km out of 197km of TRL with 80lb/yd tracks in central railway line in order to reduce accidents, improve train speed and rehabilitation of Tura Quarry. The procurement process for a Contractor for relaying of 89kms (Kitaraka-Malongwe) was finalized and a contract was signed with CCECC from China and thus, relaying work will be completed by September Meanwhile, rehabilitation of 9kms between Kaliua and Mpanda line, 5.5 kms of track out of 9kms were relayed and also embankment was widened from 1.5 to 2.5 meters for a total of 5 kms. Given the traffic congestion in the City of Dar Es Salaam, the Government through RAHCO has resumed its role to upgrade the railway infrastructure in Dar es Salaam so as to ensure seamless travel time. Meanwhile, the upgrading of the 12 km Ubungo railway line for commuter purposes to ease the Dar es Salaams metropolitan movements is on course and open for traffic. Below are views of recent ongoing railway upgrading in Buguruni-Mnyamani section in Dar Es Salaam to ease traffic flows in tandem with upgrade of roads in the city of Dar Es Salaam so as to ensure seamless travel time and reducing transportation costs to economic agents in the country. 34

43 35

44 In a bid to rejuvenate the central railway line as a strategy to enhance cargo movements to North- Western regions by railway, rehabilitation of Dar es Salaam to Dodoma Section was on course. Specifically, tender for construction of bridge between Bahi and Kintinku stretch was finalized and a contract signed with CCECC of China. Construction works is expected to be finalized by April 2013; tender for the procurement of workshop machinery at Pugu Plant was initiated; tender for construction of bridge between Kilosa and Mzaganza stretch was finalized and a contract signed with CCECC of China. This is 16 months contract which will be finalized in October Equally, procurement process for Consultant to undertake detailed engineering study was completed for constructing Isaka Kigali railway line. Furthermore, the procurement processes for the Consultants to undertake feasibility study and preliminary design of Arusha to Musoma railway line and detailed design for upgrading Tanga to Arusha, Tabora to Kigoma, Kaliua to Mpanda and Isaka to Mwanza railway line sections were finalized. With respect to Inland Container Depots, the construction of depots in Mwanza is on course. The site for construction of Mwanza ICD was handed over to the Nyanza Road Works Ltd who are the project s Contractor and the construction works is expected to be finalized in June Ports: During the period under review, the focus was on construction and rehabilitation of ports and ship assembling. The following projects were implemented: feasibility study for developing Mbegani Port, Bagamoyo was completed; pre-feasibility study for developing cargo freight station at Kisarawe was completed and the process of engaging a Consultant to carry out full feasibility study is underway; continued the construction of Kipiri, Lagosa, Sibwesa, and Karema berths in Lake Tanganyika and completion expected in December, Other achievements include: construction of Mafia jetty whereby construction works are almost complete by 84 percent; construction of Shinyanga Inland Container Depot; and rehabilitation of MV Clarias plying in Lake Victoria and MV. Songea plying in Lake Nyasa. Despite marked achievements during the period under review, the key medium term challenges include expanding the transport network capacity to cope with ever increasing traffic particularly in urban areas; improving connectivity countrywide and to landlocked neighbouring countries in a bid to bolster trade and investments; ensuring that roads, ports and railways are accessible throughout the year and therefore stimulating economic activities. These challenges will be addressed in the course of implementation of the Five Year Development Plan 2011/ /16 and also the Public Private Partnership Policy and Legislation through implementation of PPP related projects. This would be preceded by initial studies in order to identify potential areas of cooperation or opportunities before involving private sector in implementation of transport sector projects. Therefore, MDAs, RSs and LGAs that are considering involving eligible private sector in the execution of their development projects through the PPP 36

45 arrangement should prepare project write-ups giving full details of proposals to ensure achievement of value for money before engaging any private firms to execute such sector projects. In order to enforce implementation of the PPP Policy, the Government will enhance capacity of institutions so as to effectively manage implementation of PPP related project contracts. C: Education During the financial year 2011/12, educational sector budget had a total budget of Shillings 2, billion having an increase of Shillings billion from the sector budget of 2010/11 which was Shillings 2, billion. This budget is equivalent to 17.86percent of the total government budget of Shillings 13, billion. This represented a decrease of 1.04percent budget share for the sector, as compared to 18.90percent of FY 2010/11. During that period a total of Shillings 2, billion was released to finance education activities in key three sector ministries this is equivalent to 100percent of their total budget and 93percent of the total approved budget. The allocated resources for the education sector from 2011/12 Government budget the was used to finance prioritized activities. The sector managed to attain a number of remarkable performances, which includes expansion of enrolments at all levels of education, expansion and construction of education institutions, equity, quality, capacity building and increased number of students granted with higher education loans. Good governance and community commitment and awareness had also improved. In 2011/12 enrolment rates have increased at all levels of education except for pre-primary and primary levels. Gross Enrolment Ratio for pre-primary is 41.8percent in 2012 compared to 44.5percent in Net Enrolment Ratio for pre-primary in 2012 is 39.9percent while in 2011 was 42.4percent. There has also been some improvements in equity in the education system. For instance in 2012 the enrolment of girls in secondary, folk and vocational education and training, teacher education and higher education was high with the exception of pre-primary and primary schools as compared to A total of Shillings billion was disbursed to all Local Government Authorities as Capitation Grants for the purchase of text books and other teaching and learning materials. By the end of June 2012 the total number of students in all LGAs was 1,601,324 this implies that the rate of Shillings 21, per student per year was disbursed. The construction activities and fabrication of desks were carried out using Local Capital Development Grant of Shillings billion which was disbursed to schools. In 2011/2012 a total of 166,484 students were enrolled in 43 universities and university colleges out of which (11 Government and 32 Private) female students being 60,592 equal to 36 percent. This is an increase of 19 percent from 139,638 enrolment of 2010/2011. While the Government 37

46 universities and university colleges constitute about 75 percent, private universities and colleges enrolled only 25 percent of 2011/2012 students. Similarly, there was an increase of medical, dental and veterinary students from 1,750 in 2010/2011 to 1,900 in 2011/2012 studying in our universities and university colleges. The Government also continued to encourage the private sector to establish and operate higher education institutions to support the Government s effort particularly education, medical, business and engineering degree programmes. Three universities were established to offer education programmes these are; Eckenford Tanga University, University of Bagamoyo and Jordan University College, and Jomo Kenyatta University of Agriculture runs business programmes, Saint Francis University College of Health and Allied runs medical courses and engineering programmes by St. Joseph College of Engineering and Technology. During 2011/12 the Higher Education sub-sector was allocated Shillings billion for recurrent expenditure and Shillings billion for development expenditure. The release for recurrent expenditure was Shillings billion and the released fund for development expenditure Tsh billion. During the period under review the construction works for new VTCs in Lindi, Pwani, Manyara and Dar es Salaam were completed and enrolled students from January By 30th June 2012, 98percent of Makete VTC civil works had been completed. Students enrolment will be done after installation of equipment which is scheduled to take place in 2012/13. An amount of Shillings billion was released for VETA activities during the year under review. That amount was realized through Skills Development Levy, VETA income generated funds and Government Grants. In 2011/12, Construction of the Teaching block for Bububu Campus of the Mwalimu Nyerere Memorial Academy (MNMA) was completed resulting to an increase of enrolment capacity of 2100 students. Construction works for the teaching tower at Dar es Salaam Institute of Technology, hostel block at MNMA and at Arusha Technical College progressed well. Upon completion, the two will provide additional capacity to accommodate 2,000 students. Despite the recorded achievements, the education sector has been faced with challenges which affected its performance and some of these are:- increased enrolment which did not match with the available facilities and services at all levels; quality improvement at all levels of education and training; Increasing availability of furniture, infrastructure and learning and teaching materials including those for people with disabilities; improving pass rates especially in mathematics, science and english in primary and secondary schools; increasing demand of higher learning students loan and improving loan recovery; ensuring availability of teaching staffs at all levels; improving literacy rate by reducing the number of adults who do not have reading, writing and numeracy skills. 38

47 The Government is committed to address these challenges by implementing strategic priorities as stipulated in the FYDP and strengthen good governance so as to improve the provision of quality education. These will be achieved through collaboration with other education stakeholders including Development Partners, Non State Actors and the community at large. D: Health Sector During the financial year 2011/12, Health sector continued with the implementation of its activities which resulted into great achievement of the planned activities. The planned activities implemented were in line with the Millennium Development Goals, Vision 2025, Health Policy of 2007, Health sector Strategic Plan III ( ) and the Primary Health Sector Development Programme. In addition the sector prepared plans, strategies and guidelines which aimed on improving coordination and supervision in the provision of health services, preventive services, chemical management services, forensic services, food and drug quality services, promotional of traditional medicine, performance improvement and human resources management. During 2011/12, the health sector was allocated a total budget of Shillings 1,209 billion, out of which Shillings billion was for recurrent and Shillings billion was development expenditure. The overall execution of the budget has improved having an average of more than 90percent for both recurrent and development expenditures. However, absorption of foreign funds, especially non-basket funds, has been slow typical reasons always been the cumbersome procurement procedures. During the period under review, supervision on the implementation of the responsibilities of the Council Health Service Boards in 60 Councils were conducted. This resulted in all Council s Health Services Boards performing their responsibilities according to the guidelines. Pharmacy shops and hospitals Pharmacies in Mbeya, Manyara and Dar es Salaam Regions, were inspected in order to ensure professional quality services. In this exercise 106 shops inspected out of which 24 were closed due to failure to meet criteria and standards set. During this period, Regulations for the Public Health Act of 2009, the Pharmacy Act of 2010, the Law of the Child of 2009 and the Environmental Health Practitioners (Registration) Act of 2007 were prepared. Also a number of cooperation agreements were prepared with various institutions nationally and internationally and copies for status of Health and Social Welfare prepared. The sector continued on providing advocacy campaigns for people with disabilities caused by leprosy, whereby 59 patients were offered surgical services, while 3,036 pairs of special shoes and 57 artificial limbs (prosthesis) were also provided. In addition, educational and advocacy activities on prevention and treatment of eye conditions were conducted. Outreach treatment programmes were carried out in Dar es Salaam, Manyara, Iringa, Mwanza and Kilimanjaro regions. A total of 4,000 patients with eye problems were treated; of which 378 were operated. Maternal and Child mortalities have been reduced in Mara, Mtwara and Tabora following completion of renovation and expansion 39

48 work for 44 dispensaries. Further, 14 dispensaries are in the final stages of completion. Similarly, Health Centers namely; Nyasho, Murangi, Nagata, Ikizu, Kasahunga, Mata, Iramba, Kinesi, Muriba, Nyarwana, Likombe, Tere, Nanguruwe, Mahurunga, Chiwale, Michiga, Chihangu, Mahuta, Namikupa, Kitunda, Ipuge, and Choma are in the final stages of installation of medical/laboratory equipment while 19 staff houses in these centers have already been handled over. In addition, Theatre buildings in Musoma, Mugumu, Tarime and Mazinge hospitals are in the final stages of completion. During 2011/12, National and Zonal Blood Transfusion Centers were strengthened. A total of 155,000 blood units, equivalent to 86 percent of the expected 180,000 units were collected. These units were distributed to 209 hospitals out of 261 hospitals. 75 hospitals received 80 percent of their needs. Satelite centers for blood collection increased from the two centers of Dar es Salaam and Dodoma to six centers with the addition of four satellite centers of Kigoma, Kagera, Morogoro and Lindi. The availability of blood products increased from 7 percent to 12.5 percent. A total of Shillings 2.2 billion was spent on the construction of Cancer Treatment and Rehabilitation Center at Bugando Medical Centers. A total of Shillings 46.6 billion was spent for essential medicines, dental, diagnostics, medical equipment and supplies which were distributed to 4,190 dispensaries, 494 health centers, 111 District Hospitals, 24 Regional Referral Hospitals, Four Zonal Referral Hospitals, Four Super Specialized Hospitals, one National Hospital, two Military Hospitals and one Police Hospital. By using the new distribution programme, medicines and medical consumable were distributed to Tanga, Manyara, Dodoma, Dar es Salaam, Pwani, Shinyanga, Kigoma, Rukwa, Ruvuma and Lindi. The programmatic management of MDR TB at Kibong oto hospital was strengthened and 42 newly diagnosed MDR TB patients are on second line of treatment. Furthermore, the sector has launched the TB Prevalence Survey which will establish the actual burden of TB imposed to the community level. On Social Welfare services the Government facilitated the provision of food and health services and bedding to 2000 vulnerable person in homes for the elderly, retention homes, approved school, national children home and vocational centre for people with disabilities. TFDA continued to improve the systems and procedures for regulating the quality and safety of the food, medicines, cosmetics and medical devices in order to protect the health of the consumers. A total of 1,036 shops were evaluated for registration of medicines, 1,505 for food, 50 medical devices and 866 cosmetics. Moreover, TFDA inspected a total of 6,726 premises dealing with the regulated products, issued 4,931 permits for importation of food, medicines, cosmetics and medical devices, and also destroyed 104 metric tons of unfit food, medicines and cosmetics. Despite the number of achievement recorded, there were some obstacles which hindered the performance of the sector such as: Loss of personnel due to HIV/AIDS and other chronic diseases; Increasing number of most vulnerable groups; High occurrence of outbreaks, emerging and re-emerging diseases and environmental pollution; Increased occupational health, safety 40

49 environment, water and hygiene and sanitation hazards; Inadequate skilled and experienced human resources at all levels; Weak and poor infrastructure of health and social welfare facilities in delivery of preventive, curative, rehabilitative health services and dilapidated infrastructure and inadequate working equipment, drugs and hospital supplies; Inadequate Gender mainstreaming skills and lack of a system for collecting and using gender disaggregated data; High mortality, morbidity and disability especially maternal mortality; and High labour turnover. E: Water and Sanitation Water sector is paramount for reduction of poverty. The importance of water and sanitation sector include increase production because of the good health, reduction of water related diseases like diarrhoea, reduction of time spent fetching water by the population and especially women and the positive impact on maternal and children s health. The accessibility of safe and clean water as sanitation services raises the standard of living while the shortage of it poses serious health risks and leads to decline in the living standards and life expectancy. During the financial year 2011/12, the Government continued to strengthen Water sector. The sector through Water Sector Development Programme achieved the planned targets by strengthening the Basin Organizations on effective planning and management of water resources also provided support to LGAs and UWSAs on the provision of rural and urban water supply and sanitation services as well as providing support to institution strengthening and capacity building. The following highlights major achievements, challenges encountered and the way forward. During the period July 2011 to June 2012, slight improvement was recorded in terms of increased number of people accessing water services; and sanitation and hygiene facilities. Detailed progress in is reported below: Rural Areas: Towards this endeavour, the initiatives by Government and other stakeholders focused on increasing the proportion of rural households provided with improved sources of water. About 467,250 additional people accessed piped water or water from protected sources. Urban Areas and Small Towns: Water connections during 2011/2012 increased to 298,058 out of which 268,058 were metered (93 percent metering ratio) compared to 272,679 connections out of which 249,299 were metered (92 percent metering ratio) during 2010/2011. Water supply coverage was at 86 percent and hours of services were 18 hours on average while the total number of operational kiosks was 1,601. Water production in 19 Water Supply and Sewerage Authorities during 2011/2012 increased to million m3 compared to million m3 reported during 2010/2011. Water demand for the year was million m3. The ratio of production to demand was 66.5 percent. Non Revenue Water increased to 35.0 percent from percent reported by the end of 2010/2011. Iringa reported the highest Non Revenue Water of percent. The low percentages were due to old infrastructure and 41

50 frequent breakdowns. Revenue collection for all WSSAs during the year under review increased to Shillings billion from Shillings billion reported during 2010/2011 which is 24 percent increase. The main challenges facing water and sanitation sector include: Increase in water demand due to rapid increase in population and economic activities; Delay and inadequate release of WSDP funds; Climate variability and changes; and vandalism of water infrastructure F: Energy and Mineral The energy is a catalyst for economic growth including promoting industry development in any country. In the fiscal year 2011/12 the focus was on enhancing reliability, quality and access to energy services, and improvement of development and management of mineral resources. In order to expand and improve energy infrastructure to keep pace of increased energy demand in the country, a total resources spending increased to Shillings billion in 2011/12 from Shillings billion allocated in 2010/11 or an increase of Shillings 212 billion or 65 percent. Of which Shillings billion were for development expenditure in 2011/12 compared with Shillings billion spent in 2010/11 or an increase of Shillings 201 billion equivalent to 77 percent. Energy Sub-sector: Key achievements recorded during the period under review include: Generation of 422 MW emergency Power Plant out of the planned 572 MW; Completion of 105 MW gas fired plant at Ubungo (Ubungo II); Installation of power generators in Songea and Sumbawanga townships, Ngorongoro, Kasulu and Kibondo districts; Dar es salaam, Arusha and Kilimanjaro 132 KV transmission Network reinforcement; Construction of Makambako-Songea 132 KV line transmission line and electrification of Songea and Districts in Ruvuma; The construction of 100MW Power Plant at Ubungo in Dar Es Salaam has been completed and is currently operational. On the other hand, electrification of district headquarters and rural electrifications is going on in many areas and completed in some areas. Completed projects include: electrification of Mkinga & Kilolo Districts head quarters, electrification projects of Mbinga and Ludewa districts; Electrification of Zuzu Village in Dodoma Region; Songwa Village in Shinyanga Rural District; Ipinda Kilimani Mbeya; Utiga Makambako; Kilole Mzee Tanga; and Itoju Kagera; Completion of the construction of 33 KV power line connecting Mtwara and Msimbati; Construction of 33 KV lines for Mgwashi and Mbwewe were completed; Completion of Draft Liquid Biofuel Policy; Rehabilitation of 8 distribution sub stations in Dar Es Salaam (City Centre, Mbezi, Mbagala, Kariakoo, Buguruni, Oysterbay, Kipawa and Ubungo) was carried out; Review of the Power System Master Plan (PSMP); Mobilization and payment of compensation to pave the way for construction of Gas Pipeline was on course; Construction of natural gas transmission pipeline from Ubungo to Mikocheni light industrial area was on course, households/institutions and CNG Station for motor vehicles has been completed by 90 percent; Survey works in the Low Cost Design Standards Project 42

51 was finalized for pilot distribution networks in selected pilot project areas of Kilombero and Mbozi districts. The Environmental and Social Impact Assessment (ESIA) for these areas has been conducted. Mineral Sub-sector: The achievements include: Review of the Mining Act, Regulations The reviewed areas included: annual rents, application fees, processing fees, transfer fees, and charges; Draft Gas Policy of Tanzania was prepared; Signing of Buck Reef Joint-Venture Agreement between STAMICO and Tanzania American International Development Corporation (2000) Limited (TANZAM 2000) and forming a joint venture company with STAMICO holding 45percent shares and 55percent shares under ownership of TANZAM 2000; Signing of a Joint-Venture Agreement between STAMICO and Obtala Resources Limited for the formation and establishment of a percent mining joint venture company for operating gold buying centers; Completion of the construction of Singida Zonal Mines Office; Three areas namely Nyakunguru, Goronga Gibaso and Mogabiri with a total of 208 hectares in Tarime district, surrounded by villages of Kitawasi, Itandula, Gibaso, Mogabiri, Nyaruwana, Tagota and Genkuru, were demarcated for small scale mining; Construction of two seismic recording stations at Mtwara and Geita was completed and differential GPS was installed in Dodoma; Digitization of 15 analogue maps and computerization of 453 documents meta-data was completed; and New areas surveyed in three districts of Kilindi, Mbarali and Chunya to produce four (4) QDS geological and mineral occurrences maps and two (2) QDS geochemical maps. G: Judiciary The overall budget execution performance, both for recurrent and development was impressive. About percent of the funds budgeted for the implementation of recurrent activities were released and spent in 2011/12 compared to percent recorded in 2010/11. While development budget execution was percent recorded in 2011/12 as compared to percent that was recorded in 2010/11. In spite of the above low capital budget execution, notable achievements were recorded in 2011/12. These include: the construction of the buildings of the Law School of Tanzania, Office of the Attorney General and exercise to complete installation of a computer network known as Case Docket Management System. In implementing the decision of having High Court building in each Region the construction of the building of the High Court- Bukoba Division has been completed, Court of Tanzania facilitated the repair and improvement of the Registry and Office of statistics in the High Court the Dar Es Salaam Division. Also, a total of 260 officers and investigators were given modern methods and the use of ICT in the activities of a criminal investigation and money laundering. The key challenges include shortage of human resources which leads to the accumulation of unattended court proceedings; limited access by general public for justice and legal services; as well as limited awareness of the public about the existing system of laws and courts in the country. 43

52 A number of measures will be taken by the Government to address the challenges above. Such measures include increasing budget allocation to this sector; recruit more judges and lawyers; combating corruption in all levels of justice administration/delivery; addressing the issue of slow pace and accumulation of court proceedings and the concentration of inmates and detainees in prisons, Strengthening the provision of legal advice in the country and making Judiciary Fund operates 3.4 Performance of D-by-D Policy During the year 2010/11 and 2011/12, the Government implemented Decentralization by Devolution (D-by-D) policy as a vehicle of enhancing Phase II of Local Government Reform Program (LGRP II), which focuses on community empowerment and development. The policy has enabled Central Government to devolve its responsibilities and resources, both financial and human to LGAs and further from the higher level of LGAs to lower levels. In addition, the Government has started the process of establishing four (4) new regions, 19 districts and 16 LGAs in order to enhance devolved powers, responsibilities and resources to the people. Implementation of D-by-D policy increased Government commitment in resource allocation to RSs and LGAs by 17.6 percent from Shillings 2,633.6 billion in 2010/11 to Shillings 3,096.8 billion in 2011/12. Specifically, LGAs allocation increased from Shillings 2,477.2 billion which is equivalent to 25.1 percent of total national budget (excluding CFS) in 2010/11 to Shillings 2,937.9 equivalent to 25.3 percent in 2011/12. In this regard, actual performance of funds received by LGAs were Shillings 2,432.9 billion, equivalent to 98.2 percent of LGAs approved budget in 2010/11 and Shillings 2,792.2 billion or 95.4 percent in 2011/12. This performance enabled LGAs to execute their mandates and priorities in areas of jurisdiction, including fire and rescue services which was centralized since July, The overall performance for recurrent budget was Shillings 1,990.5 billion in 2010/11 and Shillings 2,316.0 billion in 2011/12 equivalent to percent and percent, respectively. Over performance of recurrent budget was mainly caused by massive recruitment of different cadres in education, health and agriculture sectors at LGAs level. On development side, LGAs received Shillings billion during the year 2010/11 and Shillings billion in 2011/12, which constituted 62.7 percent and 64.4 percent, respectively. Under performance of development budget was mainly resulted from long process in accessing loans that were meant for development projects, un-released foreign funds and under-reporting of D-funds. The data substantiate government commitment in allocating and releasing funds to LGAs as proportion of total budget excluding CFS. Overall performance of LGAs budget has increased by 0.1 percent from Shillings 2,433.0 billion in 20010/11 to Shillings 2,792.2 billion in 2011/12. In terms of budget share, the trend constitutes 20.6 percent, 21.2 percent and 21.7 percent of the total resource 44

53 envelope budgeted in 2009/10, 2010/11 and 2011/2012 respectively. In general, the recurrent allocation to LGAs budget increased from 71.4 percent in 2010/11 to 74.8 percent in 2011/12 while development budget decreased from 28.6 percent to 25.2 percent over the same period. The increase of recurrent budget is caused by increased government commitment on recruitment of professional staff for education, health and agriculture sectors as well as increased own source revenue by LGAs from billion in 2010/11 to billion in 2011/12. The funds received by LGAs in 2010/11 and 2011/12 substantiates the Government commitment in improving governance and accountability at LGAs, enhancing service delivery and expenditure efficiency to local communities. In this context, LGAs were empowered to implement the following activities in 2011/12: Improving water infrastructures, finalizing consultancy services, office management, vehicle operations, monitoring/supervision and training. Others were sanitation marketing, hand washing promotion, training to DWSTs and communities and safeguards (screening of projects as outlined in EMA); A total of 467,250 people accessed quality water services, 106,677 latrines constructed, 46,482 people sensitized for project implementation readiness, 328 san-plats were produced, 1,106 mason trained on construction of san plats, and 20,074 sanitations club formed; Increased Pupil Teacher Ratio from 1:48 in 2011 to 1:46 in 2012, pass rate from 53.5 percent in 2011 to 58.3 percent in 2012 and survival rate from 66.4 percent in 2011 to 72.3 percent in 2012; Increased Net Enrolment Ratio (NER) in ordinary level secondary education (Forms I-IV) from 34.5 percent in 2011 to 36.6 percent in 2012 and Gross Enrolment Ratio (GER) from 50.2 percent in 2011 to 51.4 percent in 2012; Net Enrolment Ratio (NER) for the advanced level of secondary education (Forms V-VI) increased from 2.01 percent in 2011 from 2.7 percent in 2012 and GER increased to 5.1 percent in 2012 from 5.03 percent in 2011; Increased pass rate in Form IV examination from 50.4 percent in 2010 to 53.6 percent in 2011 and Form VI examination from 92.1 percent in 2011 to 92.3 percent in 2012; Construction of 41 Administration blocks for secondary schools; Construction of 620 classrooms, 91 laboratories, 8 dining halls and 31 girls hostels for secondary schools. Further, LGAs enhanced local administration by conducting training of 155 Village Chairpersons, 808 Councilors, 595 Village and Ward Executive Officers on their roles, responsibilities and working relationship as well as 1,721 Councils staffs on various short courses; Construction of 4 Councils halls and 28 Councils offices; Construction/rehabilitation of 59 WEOs/VEOs offices at various councils has been completed; Construction/rehabilitation of 229 staff houses including those for teachers. Other activities were: Supporting short courses of 4,044 Extension staff on various aspects like improved livestock production, marketing and processing skills, fish production, Private Public Partnership, procurement and records and bookkeeping; 125 VICOBA and 25 SACCOS Board of Directors have been trained on their roles and responsibilities; Councils have constructed 13 dispensaries, 103 medical wards and 3 OPD blocks; Construction and rehabilitation of 28 irrigation schemes that will serve 140,095 producers with a total of 13,707 ha, construction of 32 dams serving 4,018 beneficiaries, and feasibility studies have been done to 132 schemes; 103 bulls and 294 cattle have been procured for 19,211 beneficiaries; 5,604 cockerels have been procured and distributed to 1,554 beneficiaries; 21 dip tanks were constructed out of 105 planned for 4,200 beneficiaries, as well as 45

54 4 veterinary clinics and 42 cattle sheds were constructed for 10,250 benegiaries; Construction of 716 abattoirs, 120 livestock markets, 31 hides and skins sheds, 14 milk collection centers, 51 slaughter houses, 33 slaughter slabs and one holding ground for improving the quality of livestock products; 1,207,367 livestock were vaccinated against communicable livestock diseases out of 1,119,100 planned animals; Increased food production to 12,792,220 tons resulting to excess of 1,440,003 tons as compared to actual requirement of 11,532,270 tons; Construction of 130 grains storage facilities, 100 crop markets and support farmers with 83 oil extracting machines, 61 milling machines and 805 other machines aimed at increasing value of agriculture produces; Purchase and distribution of 162 tractors and 133 power tillers for 16,005 beneficiaries; Preparation of 72 Village Land Use Plans; establishment of 73 tree nurseries; and Sensitization of 350 villages on prevention, behavioral change care, and treatment of opportunistic infection against HIV/AIDS. 46

55 Chapter IV MEDIUM TERM EXPENDITURE OUTLOOK FOR 2012/ /15 The 2012/13 expenditure focus has been directed to implement Government priority interventions in line with the implementation of the Five Year Development Plan. The major emphasis has been given to the implementation of strategic projects with potentials in addressing major economic challenges through PPP arrangement. As a result, allocation of resources in 2012/13 has been prioritized to those areas of growth potentials especially in roads, energy, agriculture, water and transport and industry while at the same time maintaining and improving other services like education, health, manpower development and science and technology. The detailed allocation of resources to FYDP strategic projects, MKUKUTA interventions and sectors is narrated in the sub-chapters. 4.1 Expenditure Outlook for the Five Year Development Plan During the financial year 2012/13 the FYDP emphasis has been on investments that can deliver quick wins in accelerating economic growth. The annual focus has been directed to strategic projects and programmes that can be implemented in collaboration with private sector and other stakeholders in line with Public Private Partnership framework. The 2012/13 budget has allocated a total of Shillings 4,527.8 billion for implementing development projects, of which Shillings 2,213.6 billion will be financed from domestic sources of revenue. Shillings 1,135.6 billion of the funds from domestic sources of revenue will be used for implementing FYDP strategic earmarked projects and Shillings 1,078.0 will be used for implementing other projects with potentials in economic growth. In implementing the priorities of the FYDP, the 2012/13 annual plan focuses on the following strategic projects: Construction of Kurasini Logistical/Trade Hub This project will be implemented in collaboration between the Government of Tanzania and Yiwu Panafrica International Investment Cooperation based in China. The completion of this project will make Tanzania a trade hub in Great Lakes Region. A total of Shillings 60.0 billion has been allocated in the 2012/13 budget for compensation of land and property. Railway Rehabilitation of existing central railway line (kms 2,707): Rehabilitation of the central railway line includes Singida/Manyoni, Kaliua- Mpanda, Dar Es Salaam Dodoma, procurement of workshop machinery for Pugu bridge yard and sleeper plant, rehabilitation of station buildings, procurement of communication equipment; relaying of 197 km with 80lb/yds tracks and construction of 5 dams at Mkondoa river to control floods. A total of Shillings 29.6 billion has been allocated in the 2012/13 budget for this project. 47

56 Rehabilitation of existing locomotives, wagons, plants and equipment: The focus under this project covers rehabilitation of existing Rolling Stock and equipment and purchase of new Stock. In the 2012/13 budget Ths billion has been allocated for implementation of this project. Ports Construction of Berths No. 13 & 14 and Dredging of Entrance Channel at Dar Es Salaam Port: The implementation of this project in the 2012/13 annual plan is aimed at increasing the capacity of the port to handle containers. The project is estimated to cost a total of Shillings 879,750 billion when completed. Dredging and Strengthening Quay for berths 1-7 at Dar Es Salaam for Handling Bulk Carriers: The aim of this project is to increase draft for berths number 1 7 from the current draft of less than 10 meters to at least 12 meters. The project is estimated to cost USD 510 million when completed. Other projects to be implemented in the year 2012/13 in line with the expansion of Dar Es Salaam port include; Construction of Kisarawe Cargo Freight Station, Construction of a new port at Mwambani in Tanga and expansion of Mtwara port. Energy Sector The major goal of the FYDP in the energy subsector is to improve production and transmission of electricity. To achieve this, the 2012/13 annual plan has put emphasis on the implementation of the following projects: Construction of Natural Gas Pipe Line from Mtwara to Dar Es Salaam: The objective of this project is to increase supply of natural gas for generation of electricity. The project is implemented by the Government with funding from EXIM Bank, China. During the financial year 2012/13 a total of Shillings 93 billion aslocal development funds has been allocated for this project. Construction of MW 240 Gas fired Plant in Kinyerezi: The implementation of this project will add a total MW 240 to the national grid. The project is financed partly by the Government and the remaining portion is financed by a loan granted by Sumitomo Agency based in Japan. In the 2012/13 budget, Shillings 5 billion has been allocated for paying compensation to Kinyerezi residents and completion of feasibility study. Construction of MW 150 Gas fired Plant in Kinyerezi: This is a gas fired plant which is expected to add MW 150 in the national grid. The project is entirely financed by the Government and it will be owned by TANESCO when completed. The government has allocated a total of Shillings 13 billion in the 2012/13 budget in favour of this project. 48

57 Kiwira Coal Mines and 200MW Power Plant: The project is planned to use Kiwira coal in production of electricity and it is expected that when completed it will increase MW 200 in the national grid. A total of Shillings 40 billion have been allocated in the 2012/13 budget for paying Kiwira Gold Mine outstanding debts and undertaking plant construction and power transmission feasibility study. Rehabilitation of Hale Power Plant: The project s main focus includes rehabilitating Hale Power Plant in order to make it capable of generating electricity at full capacity. The project is financed by the Government in collaboration with SIDA, Sweden, whereby SIDA will fund 60 percent of the rehabilitation cost and the government will fund the rest of 40 percent of the cost. During the year 2012/13 Shillings 4.5 billion foreign funds have been allocated. Dar Es Salaam Natural Gas Pipe Line: The aim of the Dar Es Salaam Natural Gas Pipe Line project is to convey natural gas from Ubungo to Mikocheni for industrial and domestic use under the supervision of TPDC. The target for 2012/13 is to connect 57 houses to the gas pipe line. North West Grid Extension 220 KV: The project involves 220 KV expansion of North West Grid from Shinyanga (Bulyanhulu) to Mbeya through Kigoma and Rukwa Regions. To commence the implementation of this project a total of Shillings 5 billion has been allocated in the 2012/13 budget. Iringa Sinyanga 400 KV Transmission Line: The aim of this project is to construct 670 Km transmission line from Iringa to Shinyanga through Dodoma and Singida Regions in order to improve the current 220 kv transmission capacity to 440 kv. A total of Shillings 5 billion local development funds and Shillings 7.5 billion as foreign development funds have been allocated for implementation of this project in the 2012/13. Makambako Songea 132 KV Transmission Line: The objective of this project is to connect Songea, Namtumbo, Ludewa and Mbinga towns to the national grid. The project involves construction of 132 KV transmission line covering a distance of 250 Km from Makambako to Songea Shillings 2 billion local development funds and Shillings 7.5 as foreign development funds have been earmarked in the 2012/13 budget to start implementing the project. Cross-border Electrification Project (Murongo Kikagati) The project focus is to supply electricity to Ugandans and Tanzanians citizens living along the common border. The MW 16 project is therefore being implemented in partnership between the Governments of Tanzania and Uganda. The Government has allocated a total of Shillings 12.0 billion in the 2012/13 budget to start implementation. Roads The FYDP priorities for 2012/13 in the roads sub sector include construction of roads, bridges and ferries. To achieve this, a total of Shillings billion have been allocated, of which Shillings

58 is local funds and Shillings billion is foreign funds. The focus for 2012/13 in the roads sub sector has been on: Construction of Roads to open up Economic Opportunities: The focus under this area is directed on construction of roads that open up investment opportunities in order to increase production and access to markets especially in the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). The earmarked SAGCOT roads project include; Kidatu-Ifakara-Lupilo-Malinyi-Londo- Lumecha/Songea as well as construction of Kilombero bridge. Construction and Rehabilitation of Roads that connect Tanzania with Neighboring Countries: The roads that have been earmarked for rehabilitation in the 2012/13 financial year include: Arusha Namanga; Tanga Horohoro; Nyanguge Musoma and Usagara Kisesa road. Regional and District Roads: The project is aimed at construction of roads to connect Regions and Districts in order to open up economic opportunities available in Regions and Districts. Decongestion of Traffic in Cities: In reducing traffic congestion in cities the FYDP has earmarked several road projects in the 2012/13 in order to improve transport services especially in Dar Es Salaam city. The roads that are involved under this project include: Kawawa Msimbazi Twiga (Jangwani); Ubungo Terminal Kigogo; Kimara Kilungule External; Jet Corner Vituka Davis Corner; Ubungo Maziwa External; Tabata Dampo Kigogo; Mbezi - Malambamawili Kinyerezi Banana; Tegeta Kibaoni Wazo Hill Goba Mbezi Luis; Tangi Bovu Goba; and Kimara Baruti Msewe Changanyikeni. This project will also include construction of flyovers at Dar Es Salaam roads junctions starting with Mandela-Nyerere road junction at TAZARA. Agriculture In agriculture sector the focus for 2012/13 will be on implementation of the following projects: The Sothern Agriculture Growth Corridor of Tanzania (SAGCOT): The project is aimed at increasing production of rice, maize and sugarcane through irrigation schemes. A total of Shillings 7.2 billion have been allocated in the 2012/13 budget for implementation of SAGCOT projects including construction of irrigation schemes at Mpanga Ngalimila, Itete, Sonjo and Lupiro. Industry Core investments under this sector focuses on development of SEZs, especially for electronic, goods, farm machinery, agro and mineral processing (Integrated textile industry, as well as large scale fertilizer production. Projects in the year 2012/13 budget include the flowing: Development of Special Economic Zones: The 2012/13 focus is to complete payment for land compensation to allow construction of Bagamoyo and Kigoma EPZ. A total of Shillings 50.2 billion has been allocated for effecting land compensation in the financial year 2012/13. 50

59 Liganga Iron and Mchuchuma Coal Project: This project is planned for implementation under PPP arrangement between NDC and Sichuan Hongda (Group) of China. The aim of this project is to develop coal mine and coal-fired power station (at Mchuchuma) and iron ore mine and steel complex (at Liganga). The project is estimated to cost of USD 3 billion when completed. In the 2012/13 the Government has allocated a total of Shillings 2.0 billion for improvement of Itoni Mkiu Mchuchuma and Mkiu Liganda roads and capacity building. Education Sector Core investments in this sector focused on training students in science, engineering and education. The 2012/13 budget emphasis is on the following projects: Muhimbili University Campus at Mloganzila: The 2012/13 focus will be on mobilization of necessary facilities for construction of the campus including set up necessary infrastructure such as roads and piped water connection. Shillings 2.0 billion has been allocated for construction of road infrastructure at Mloganzila. Rehabilitation and Expansion of Universities and Colleges: The specific projects to be implemented in the 2012/13 are: Rehabilitation and expansion of University of Dar Es Salaam, Sokoine University of Agriculture, Dar Es Salaam College of Education, Mkwawa University College of Education and Arusha Technical College. A total of Shillings 6.4 billion have been allocated for rehabilitation and expansion of the universities and colleges planned for 2012/13. Communication Sector The investments in this sector focused on countrywide coverage of the ICT backbone infrastructure and national address and postal code system. The 2012/13 earmarked projects are: National ICT Infrastructure Backbone: The aim of this project is to enable a countrywide internet connection and access in order to improve communication within and outside the country. In the financial year 2012/13 a total of Shillings 2.0 billion has been allocated for this project. Establishment of National Address and Postal Code System: The implementation of this project will involve installation of signage and house numbering all over the country, development of National Addressing Database, transformation of postal sorting system, procurement of ICT and software programmes, professional and public awareness fora. During the year 2012/13 a total of Shillings million has been allocated to start implementing the project. 51

60 4.2 Expenditure Outlook for MKUKUTA II The government focuses on aligning execution of the budget with both the FYDP (2011/ /16) and MKUKUTA II (2010/ /15) in medium term. However, MKUKUTA will continue to remain the strategic tool for poverty eradication. It should be noted that, in the absence of Five Year Medium Term Plans (which were to facilitate the operationalisation of the Vision s aspiration), MKUKUTA was served as an implementation strategy as well as the medium term plan to implement Vision Thus, implementation of the FYDP will provide further opportunity for MKUKUTA II to focus on poverty reduction. Over the medium term, the Government will continue to implement all priority interventions which are marked down in MKUKUTA II. Accordingly, the Government will continue to set out a prudent share of resources through MDAs, Regions and LGAs to implement the marked down priority interventions. The SBAS and MTEF will remain serving respectively as strategic and sector allocating tools for scarce resources to sectors. For effective implementation of the FYDP and MKUKUTA II objectives and targets, the Government has set aside a minimum threshold of 31percent of the Government budget to finance development expenditure for fiscal year 2012/13, particularly by ensuring that recurrent spending does not exceed 97 percent of recurrent revenue in 2012/13 and further decline to 95 percent in 2013/14 and beyond. The Government has maintained the allocation share of above 70 percent of budget resources to implement MKUKUTA II interventions. Conversely allocation to non- MKUKUTA II areas has remained under 30 percent. The budget resources allocated to implement MKUKUTA II, including transfers to LGAs in 2013 sums up to Shillings11, billion compared to Shillings 10,207 billion in 2011/12. This is equivalent to 73.8 percent of the total budget compared to 75.5 percent which was allocated in 2011/12. This implies that the share of MKUKUTA II has slightly decreased by 1.7 percent. On the other hand, when we exclude transfers to LGAs, the allocation of budget resources to MKUKUTA II in 2012/13 counts for 66.8 percent of the total budget, compared to 69.0 percent which was allocated in 2011/12. This is because transfers to LGAs have significant share in allocations to MKUKUTA II as large share of LGAs budgets is formed by delivery sectors such as education, health and water. Furthermore, allocation of reasonable funds to LGAs budgets has been retained to ensure that achievements are attained in those areas and services are continuously improved. Further, the allocation trend indicates that in 2012/13 the Government has allocated a total of Shillings 7,086 billion to MKUKUTA II in recurrent budget as compare with Shillings 5,420.7 billion which was allocated in 2011/12. In terms of percentage this allocation shows that there is an increasing share up to 66.9 percent of the total recurrent budget as compared to 63 percent which was the share in 2011/12. The increase in recurrent is likely contributed by establishment of new regions and LGAs. 52

61 In the meantime, in overall funds allocated for development activities, the share of MKUKUTA II strategies has been underplayed slightly from Shillings 4,786.3 billion in 2011/12 to Shillings 4,131.5 billion in 2012/13. Equally important, when analyzed in terms of percentage, the MKUKUTA II share in total development budget goes down by 7.3 in 2012/13 compared to 2012/13. Likewise, In terms of two components of development budget, the analysis exhibits a decreasing trend of MKUKUTA II share between 2011/12 and 2012/13 in both local and foreign funds. The share of MKUKUTA II in local development fund in 2012/13 is Shillings 1,879.4 billion as compared with Shillings 1,799.6 billion which was allocated in 2011/12. This allocation records a decrease share of about 14.1 percent as compared to 2011/12 development local fund. Similarly, the share of MKUKUTA II in foreign development component decreased from Shillings 2,986.7 in 2011/12 to Shillings 2,252.1 in 2012/13, which implies that MKUKUTA II share in this component has shifted down slightly in 2012/13 by 0.2 percent compared to 2011/12. This has been contributed by decrease of Development Partners contribution. In the medium term expenditure, the Government will focus on: Improving the productive capacity of the economy particularly in areas of efficiency in power supply, infrastructure development and value addition activities; Trickling down the macroeconomic gains to the individual (community) level to realize results of poverty reduction efforts; Sustaining the quality and quantity of social services delivered; Developing complementary strategies and plans; Prioritization and sequencing of interventions; and Deepening the implementation of core reforms particularly, public financial management reform, public service reform, local government reform, legal sector reform, and a national anti-corruption strategy. In addition, the Government will continue to support private sector led growth through a roadmap for improving the business climate: this roadmap has identified several quick wins and short-term actions that the Government intends to implement. The Government is also determined to maintain prudent fiscal policy in 2012/13 and beyond. In view of the above, total outlay is expected to drop to align with resource availability. In order to sustain financing core government activities in the next fiscal year, the Government will continue pursuing austerity measures to curtail recurrent expenditure in favour of financing development spending. A: Cluster I In the medium term, the focus in Cluster I will be on key priority areas that accelerate economic growth, create employment, and spur industrialization efforts. These are: control inflation to single digit, increasing GDP growth to 6.8 percent in 2012 from 6.4 percent of 2011, increasing generation, transmission and distribution capacities of electricity, construction and strengthen economic infrastructures (including energy, roads, railways and ports), develop agriculture, fisheries and livestock in order to increase production of food and ensure food security in our country. In 2012/13 Shillings 4,413.7 billion has been allocated to cluster I which is lower by 7.2 percentage when compared with Shillings 4,914 billion allocated in 2011/12 budget. In terms of Cluster I share to 53

62 the MKUKUTA II recurrent budget for 2012/13, the share of Cluster I in overall recurrent budget in 2012/13 is Shillings 1,796.2 billion or 17 percent of the total recurrent budget compared with Shillings 1,861.4 billion or 21.6 percent in 2011/12 reflecting a decline of 4.6 percentages. Accordingly, the analysis shows negative trend when compared with 2011/12 share. Based on percentage terms the Cluster share in MKUKUTA II development component has decreased from 62 percent in 2011/12 to 57 percent in 2012/13, representing a decrease of 5 percent. In absolute terms the Cluster I share in MKUKUTA II development budget has decreased from Shillings3, billion in 2011/12 to Shillings2, billion in 2012/13. B: Cluster II During the medium term the Government is committed to continue allocating significant budget allocation to MKUKUTA cluster II sectors through MDAs, RS and LGA s. This will ensure quality social services in education, survival, health and nutrition, clean and safe water, sanitation, decent shelter, and a sustainable environment to reaching more of the targeted poor. During the period under review, the government has allocated Shillings 4,652.9 billion for both recurrent and development budget in 2012/2013 compared to Shillings 3,885.5 billion in 2011/2012, which is 19.8percent increase. Out of Shillings 4,652.9 billion allocated in 2012/2013, Shillings billion is for recurrent budget and Shillings 1,177.6 billion is for development budget. In terms of cluster budget share to the MKUKUTA II budget, the cluster share has recorded increasing trend, whereby in 2012/2013 the cluster has formed 30.6 percent of the MKUKUTA II budget compared to 28.7 percent of the budget in 2011/2012. The increase in cluster share allocation is mainly attributed by some initiatives taken by the government to improve the quality of life and well being among other include implementation of ongoing water projects and facilitation of urban water authorities through WSDP. C: Cluster III Good Governance and Accountability focus is to ensure the poor have access to and control over natural resources for lawful productive purposes, checking waste and diversion of public financial resources, ensuring democratic participation in the monitoring of public resources, rule of law, human rights and in total, a conducive business environment for attracting investments. The resources which has been allocated to Cluster III in 2012/13 is billion compared to Shillings billion in 2011/12 and Shillings 1,181.6 billion in 2010/11. The share of cluster III in the overall MKUKUTA II budget has increase from 9.7 percent in 2011/12 to 12.6 percent in 2011/13. The share of cluster in MKUKUTA II recurrent expenditure increased from 12.3 percent in 2011/12 to 17.1 percent in 2012/13. The share of cluster in MKUKUTA II development expenditure has decreased from 5.1 percent in 2011/12 to 2.3 percent in 2012/13. 54

63 D: Cross cutting Issues HIV and AIDS In the year 2012/2013 government will continue with development of National Multi-Sectoral Strategic Framework III ; Review of health sector HIV strategic plan II ( ) under NACP; and application of THMIS III in strategies and prevention and control activities in national response and programmes that focus on reduction of risk of HIV exposure. Strengthen participation of non state actors at all levels, especially those led and composed of PLHIVs and AIDS. Enhancing proven and evidenced based prevention interventions with a focus on the most at risk populations. Facilitate provision of care, treatment and support of PLHIVs and AIDS and also fight stigma and discrimination. Government is targeting to eliminate new HIV infections among children with target of reducing HIV transmission rate from 26 percent to percent by To scale up implementation of measures to reduce TB among HIV patients. To roll out the Voluntary Medical Male Campaign in 8 selected regions to reach/avert more than 225,000 HIV infected adult yearly. Total budget allocation in 2012/2013 for HIV and AIDS is Shillings 36.4 billion which remains almost the same over the past two years. Out of this allocation, development budget is Shillings 33.6 billion and recurrent budget is Shillings 2.8 billion. Gender MKUKUTA addresses gender as a critical aspect among cross cutting issue. Social imbalances and inequalities existing in the entire society hinder the existing of full potential socio economic development in the country, different regional and international declarations emphasizes on elimination of gender imbalances and disparities within the society. This imbalance needs Government interventions and participation of all stakeholders; to be addressed, prevented and eliminated through government programme and budgeting. In year 2012/13 Government will rehabilitate FDCs and CDTIs buildings and also improve the teaching quality by reviewing the CDTIs and FDCs curricula and developing training manuals to meet the community demands; addressing gender issues and children s rights and welfare in order to focus on the existing gender gaps and imbalances in relation to community development various related aspects; this include development and monitoring of strategy for reducing street children; development and operationalised of Child Protection Management Information System (CP MIS); and monitoring of National Strategy for promoting child participation. Under women empowerment Government will continue to focus on provision of loan to 275 Women Economic Groups through Women Development Fund. The overall budget share for gender coordination activities in 2012/2013 is Shillings 15.7 billion. However, Government continued with its efforts to implement National Strategy for Gender 55

64 Development through integrating Gender Related Budget across all sectors which will promote allocation resources on various gender related activities within the Government budget. Environment Government has been carrying out a number of initiatives geared toward enhancing and prompting protection and conservation of environment at all levels aiming at national sustainable environment. Preservation of ecosystem is crucial for geological and economic development of a country in terms of creating employment opportunities as well as social well being of the entire population. In the financial year 2012/13 government will carry on intervention on protecting and conserving environment through implementation of the National Environmental Policy of 1997 and enforcement of Environmental Management Act No. 20 of 2004 and its corresponding Regulations. The aim is to have in place safe, healthy and sustainable environment and as a result it is the responsibility of all citizens to protect and manage the environment for current and future generations. In order to implement environmental protection and conservation programmes, and mitigate the environmental degradation problems in the 2012/2013, Government has allocated a total of Shillings billion compared to Shillings billion in 2011/2012. Population Availability of country demographic data and population statistics provides comprehensive socioeconomic indicator for focusing challenges of the future entire generation. In this case, MKUKUTA has put more emphasis of spending resources to pro-poor growth sectors for improving people s wellbeing. However, addressing high population growth in relation to economic growth is crucial for the development of a country. In the medium term, the government will continue to put emphasis on implementing Tanzania Statistical Master Plan Project by facilitating statistics and data management countrywide; continue to controlling population growth; facilitate household surveys and also using the available demographic data, statistics and analysis in the implementation of various Government programmes and projects. In 2012/13 the Government has allocated a total of Shillings 85.3 billion for the implementation of the National Population and Housing Census exercise, which is significantly higher compared with Shillings 31.5 billion allocated in 2011/12. 56

65 4.3 Expenditure Outlook for Key Sectors A: Agriculture Sector The main focus over the medium term includes: Increasing availability and utilization of agricultural inputs and implements as well as extension services especially for smallholder farmers; Implementation of sugarcane and paddy cultivation projects in Wami, Ruvu, Kagera, Kilombero and Malagalasi basins; Continue with implementation of SAGCOT projects; Construction and rehabilitation of irrigation infrastructures to enhance production and productivity; increased productivity of cash crops, horticultural crops and oil seed crops; Developing and improving livestock infrastructure; pasture and range management; Strengthening research activities in agriculture; provision of incentives to middle class to engage in agriculture; and Coordinate implementation of cooperative reforms in the country; Promoting fish farming and aquaculture production and services; and Promotion of value addition activities and improvement of market access. The budget for agricultural sector increased to Shillings 1,103.6 billion in 2012/13 from Shillings 927 billion in 2011/12. The increased budget is geared towards implementation of the earmarked medium term priority interventions as indicated above. B: Transport Sector The main focus over the medium term plan is to direct available financial resources to public investments in particular, to projects and programmes with quick-wins and with higher multiplier effects to the economy such as those aimed at creation of employment opportunities and investment in areas that will leverage private sector investment in the country as articulated in the FYDP 2011/ /16. Broadly, the priorities focus over the medium term is as follows: Roads Sector: The role of the road sector in the economy is critical for facilitation of all economic agents to access market both domestic and global markets. The main beneficiaries of improved and expanded road network in the country are the farmers and small and medium enterprises. Given the importance of the road sector in the economy, the focus over the medium term are as follows: continuing with construction and rehabilitation of roads to open up economic opportunities and specifically those which link Tanzania with neighbouring land locked countries and thus reducing transportation costs and travel time. With regard financing the roads sector, the Government allocated a total amount of Shillings 1,940 billion in 2012/13 compared with Shillings 2,373.7 billion allocated in fiscal year 2011/12 which is less by Shillings 434 billion or 18 percent. Of which development expenditure component amounting to Shillings 1,388.6 billion in fiscal year 2012/13 compared with Shillings 1,941.5 billion allocated in year 2011/12, which is less by Shillings 553 billion or 28 percent. The decrease is caused the following: Government commitment to pay accumulation of previous roads arrears in 2010/11 and 2011/12; and during the year 2011/12 there were substantial roads contracts signed between the Government and the Contractors which 57

66 required additional resources for implementation of those contracts compared with the year 2012/13. On the other hand, recurrent expenditure increased from Shillings billion in 2011/12 to Shillings billion which is equivalent to an increase of Shillings 119 billion or 28 percent. The increase is driven by the Government effort to allocating more resources for maintaining the already constructed roads infrastructure in the country. Railway Subsector: The focus will be on improving railway infrastructure and the operation of freight and passenger services. In order to achieve this aim, the Government has allocated Shillings billion for implementing railway infrastructure projects in 2012/13 compared to Shillings 62.5 billion which is an increase of Shillings 71.7 billion or 115 percent. Airport subsector: The medium term thrust is on improving air transport infrastructure and services to enhance air freight and passenger handling capacities; construction of new airports in strategic areas and rehabilitating existing ones; and creating conducive environment for private sector investment in air transport. To achieve this objective, the Government has allocated Shillings 53.4 billion in 2012/13 compared to Shillings 23.6 billion allocated in 2011/12 which is an increase of Shillings 29.7 billion or 126 percent for implementation of airport projects. C: Education Sector The provision of education in the country is the responsibility of the Government. The Government cognizant of the fact that the provision of quality education for all can best be attained by collaborative efforts involving all education stakeholders. For that reason the Government has invited education stakeholders to complement its efforts. During the financial year 2011/12 education sector faced with a number of challenges; Due to those obstacles the sector has set priorities to be implemented in 2012/13. These priorities as aligned to Education Sector Programmes, Ministries Strategic Plans, and Education Sector Review Milestones are embedded in the Plan and Budget Guidelines for the year 2012/13. The focus for 2012/13 is on the following key issues: Improving the quality of education at all levels with emphasis on creating conducive environment for teaching and learning, training adequate number of teachers and instructors; Increasing enrollment and retention at every education whilst access to the people and especially the disadvantaged families; Increasing student enrolment in science and engineering, education, agriculture and health profession and targeted skills development in the areas of natural gas, uranium, iron and steel, and petroleum; and Rehabilitate and retool the existing Folk Development Colleges and Community Development Training Institutes as well as the Vocational Education Training Centre. A total of Shillings 2,962.5 billion equivalent to 19.5 percent of the Government budget of Shillings 15,191.9 billion has been allocated in 2012/13, reflecting an increase of 1.64percent from 58

67 17.86percent budgeted in 2011/12. The budget allocated to recurrent expenditure amounts to Shillings 2,778.9 billion, funds allocated for development activities is Shillings billion out of which Shillings 88.3 billion will be contributed by the Government while DPs will contribute Shillings 95.2 billion. D: Health Sector The focus for 2012/13 is on the following key issues: Improving the human resources management for health and social welfare. Wish specific with focus on improving training institutions by ensuring availability of tutors, learning material, equipment and conducive infrastructure; the Government will enhance quality and access to maternal, newborn and child health services. The centre for attention will be on provision of integrated and comprehensive antenatal, natal and postnatal care services, new born and child health services as well as strengthening immunization services and cold chain system. Other areas will include adolescent services and family planning and sexual and reproductive health commodities; another focus will be on strengthening supervision, monitoring and evaluation and also continue with research that aims at improving provisional of health services. Furthermore, quality and access to social welfare will be among the priority; The Government is planning to continue with the roll out of all services for prevention, care treatment of HIV/AIDS and support with special focus on the key populations. The ultimate goal is to expend these services to make them universally accessible by 2015; On Malaria the focus is to introduce a pilot keep up strategy programme for the distribution of Long Lasting Insecticide Treated Nets (LLINs) through schools in three regions of Mtwara, Lindi, and Ruvuma. Also the activities spreading of Larvicides in Dar Es salaam implemented through Tan Cuba Project to cover all the 90 wards of Dar Es Salaam will be scaled up. The Government intends to spend Shillings 1,288.8 billion to facilitate the provision of health and social welfare service in 2012/13. The budget allocated for recurrent expenditure amounts to Shillings billion and the budget for development expenditure amounts to Shillings billion whereby Shillings 68.9 billion is the Government commitment and Shillings billion will be contributed by the Development Partners. E: Water and Sanitation In order to achieve sector broad objective, resource allocation and expenditure focus will be on the following priority areas:- Management and development of water resources; implementation of special programme for improving water supply and sewerage services in Dar es Salaam City; implementation of rural water supply and sanitation programme; Extending the implementation of Lake Victoria Shinyanga Kahama Water Project to neighbouring districts of Nzega, Igunga and Tabora including villages and townships along the project; and implementation ongoing water projects and facilitating Urban Water Authorities to control water leakages and rehabilitate water supply infrastructure. 59

68 Generally, in the medium term the focus will be to enhance water resources management for socioeconomic development and sustainable environment. These improve the health of the population and are crucial indicators of human development and key ingredients of sustained development The budget allocated for water sector in 2012/13 is Shillings billion compared to Shillings which was allocated for this sector on 2011/12. However, the share of water sector budget in the total Government budget has slightly decreased by 0.5 percent in 2012/13 compared to year 2011/2012 With regard to implementation of D-by-D Policy, the overall budget has increased in absolute terms up to Shillings billion in 2012/2013 from Shillings billion in 2011/2012 to for MDAs. F: Energy and Mineral Sector Energy The role of the energy sector (electricity and gas) in the economy extends beyond its direct contribution to GDP which enhance people s wellbeing and in turn reducing poverty. Indeed the sector has a significant positive multiplier impact on the performance of all sectors, particular, in the small and medium enterprises (SMEs). In order to achieve the target for increasing installed power to 2,780MW by 2015, specifically the medium term focus will be on construction of natural gas pipeline from Mtwara-Dar es Salaam, construction of 240 MW Kinyerezi gas fired plant, construction of 150 MW gas fired plant at Kinyerezi; strengthening transmission lines and promoting rural electrification; increasing capacity and diversifying power generation sources; promoting investments in renewable energy sources; and development of Gas Utilization Master Plan. In order to achieve these initiatives, the Government has allocated Shillings billion in 2012/13 compared to Shillings billion in 2011/12, which is an increase of Shillings 193 billion or 36 percent. Of which Shillings 1,388.6 billion is for implementing development projects. Mineral With regard to the mineral subsector, focus will be on the following key initiatives: promotion of mineral value addition activities to enhance revenue collection; upgrading of geo-scientific, mineral occurrence information and monitoring of geo-hazards; infrastructure Development for GST, MRI and TMAA/TANSORT; development of Small Scale Mining Sub-sector; and implementation of the Sustainable Management of the Mineral Resources Project (SMMRP); improving legal and regulatory framework for natural gas utilization; improving availability of mining tools and equipment for small scale miners; and strengthening research, prospecting, exploration, and mineral management capacities. 60

69 G: Judiciary The Judiciary's foremost role as the third pillar of the Government is to defend and uphold the Constitution and ensure prevalence of the rule of law. Under this general duty and mandate, the daily work of the judiciary is being reflected in the protection of each person's Constitutional, human, civil and legal rights. Moreover, the Judiciary plays a crucial role in securing domestic tranquility by providing a structured institutionalized forum for the resolution of discords and disputes and the vindication of civil and criminal wrong-doing. The sector priorities for 2012/ /2016 among others include: Recruiting and deploying a good number of state attorneys on one-year- contract basis who will be dealing with a large number of unattended cases; Also the Government will continue to work on a plan for attending cases through Telejustice system; Facilitating the establishment of criminal court; Enhancing public education on Constitutional rights and basic laws; Improving legal and regulatory framework across the Government. During the medium term the expenditure budget for Judiciary sector will be Shillings billion in 2012/2013 compared to Shillings billion in 2011/2012. The expenditure share has stood at the average of 1.2 percent of the total national budget annually. With regard to D-by-D policy, the sector is still committed to devolve functions and resources from the centre to the periphery in order to bring the services closer to the people. The initiatives undertaken to establish high court offices at regional and district levels are among the efforts towards implementing D by D policy. The sector is further working on expanding the respective operational services and offices closer to the people. 4.4 Expenditure Outlook for D-by-D Policy During the year 2012/13, the Government will continue to implement D-by-D policy in terms of both recurrent and development budgets. Central government will strengthen and restructure regional administration in order to provide LGAs with backstopping and advisory role effectively. The restructuring includes among others: establishment of two units of Legal Services and ICT; separation of social services cluster into three divisions of Education, Water and Health services; and strengthening coordination of Government business in areas of jurisdiction. Furthermore, the Government will fully commence the operationalization of four newly established regions and 19 districts in order to put administrative services closer to majority of the citizens. As part of D-by-D policy, LGAs will be restructured to meet devolved functions, responsibilities and resources at both higher and lower levels. Restructuring of LGAs will includes among others, establishment of three units of Beekeeping, Election and ICT Services; establishment of one department for Environment and Sanitation; shifting one department which was responsible for Fire and Rescue Service from LGAs to the Ministry of Home Affairs; and separating the Agriculture and 61

70 Livestock department into two departments of Agriculture and Cooperative Development as well as Livestock and Fisheries Development. Likewise, the Government will commence operationalization of eleven new town councils and three district councils, as well as upgrading of one municipal council to city council and one town council to municipal council. With regard to resource allocation, the Government will continue allocate 25 percent of total budget excluding CFS to LGAs in order to provide better services to the local communities. In 2012/13, total allocation for D-by-D intervention will be Shillings 3,279.8 billion of which Shillings 2,735.6 billion will be used for recurrent activities (Shillings 2,031.1 billion PE and Shillings billion OC) and Shillings billion for development activities (Shillings billion local and Shillings billion foreign). This allocation has increased by 30.0 percent from Shillings 2,530.5 billion allocated to LGAs in 2011/12. In order to balance local development among LGAs, resources will be allocated based on agreed formulae as well as top-up for earmarked expenditure needs, such as meals for boarding secondary schools and special primary schools. Furthermore, underserved LGAs will be allocated additional resources based on specific needs. The Government will provide some incentives in terms of infrastructure and basic needs (non monetary incentives) to underserved LGAs in order to attract and retain qualified staff. Notwithstanding the D-by-D policy, other subventions will be channeled through MDAs for implementation of various activities and projects under vertical programmes such as road-fund, TB and Leprosy, Malaria, Agriculture inputs, MKURABITA and TASAF II. In this regards, the share of funds allocated to LGAs by economic classification and share of major expenditure items are shown in the figure below. Figure 7: Share of Funds Allocated to LGAs in 2012/13 LGA share of economic classfication Current Capital Total 2011/ / Change 7.1 (7.1) - LGA share of total budget 2011/ /13 PE Goods & Services Maintena nce Infrastr ucture Studies Change (0.1) (6.9) (1.3) (15.1) (0.3) 62

71 Figure 7 above indicates the share of funds allocated to RSs and LGAs for execution of D-by-D policy. The allocation of fund by economic classification shows that, current expenditure has increased by 7.1 percent in 2012/13 at the expense of capital expenditure. In terms of total budget share, LGAs budget constitute 52.7 percent of total Personnel Emoluments; 11.4 of total goods and services as well as 0.5 percent of total infrastructure in 2012/13. This trend shows a decline of 0.1 percent; 6.9 percent and 15.1 percent respectively, as compared to 2011/12 budget allocation. With regard to absolute figure, LGAs budget in 2012/13 has increased by Shillings billion equivalent to 11.6 percent from Shillings 2,792.2 billion allocated in 2011/12. The data substantiate government commitment in allocating Shillings 3,279.8 billion equivalent to 26.5 percent of total Government budget excluding CFS. In terms of budget share, LGAs constitutes 21.7 percent of total resource envelope set for 2011/12. The increase of resource allocation will enhance the sense of ownership and accountability that serve to strengthen local autonomy and governance to LGA levels. In 2012/13 the recurrent budget allocation to LGAs will increase by Shillings billion equivalent to 24.5 percent while development budget will decrease by Shillings billion or 26.5 percent over the same period. The increase of recurrent budget will mainly result from establishment of four new regions, 19 districts and 16 LGAs; recruitment of qualified personnel in education, health and agriculture sectors, as well as increase of examination expenses for primary and secondary schools. Nevertheless, development budget will go down in 2012/13, mainly due to phasing-out of PADEP and VTTP programmes; decrease of DPs pledges for RWSSP, TSCP and Core-LGDG programmes as well as structural administration of road fund which shifts resource allocation from individual LGAs to PMO-RALG. Some of major activities that will be implemented by LGAs in 2012/13 include the following: a) Improving own source collection measures including reviewing by-laws and appropriate enforcements within areas of jurisdictions; b) Enhancing public financial management at the local level by operating only six bank accounts and linking 133 LGAs to the centralized Epicor-based Integrated Financial Management Information System; c) Continue with recruitment, remuneration and retaining of qualified staff especially for education, health and agriculture sectors; d) Continue with construction and rehabilitation of infrastructures for education, health, water, road and agriculture sectors; e) Speed-up implementation of development projects financed by LGDG, DADG, RWSSP, HSBF, PEDP, SEDP, NMSF (HIV/AIDS) and Road fund; f) Enhancing implementation of Tanzania Strategic Cities Projects, Sustainable Wetland Management, Participatory Forest Management, UNDP and UNICEF projects; g) Strengthening governance and decision making bodies including Full Council, DCC, Council Standing Committees, CMT, WDCs, Village Governments and Village assemblies; 63

72 h) Put in place basic infrastructure for establishing new administrative areas (new regions, Districts, LGAs, wards and villages) as well as newly established departments and units. i) Building capacity of LGAs staff, councilors, and village government in various skills based on needs assessments; and j) Enhancing implementation of routine mandates as identified in the Local Government Legislations, circulars and instructions provided by appropriate authorities. In fulfilling Government commitment on D-by-D policy, LGAs will be allocated resources to enhance implementation of their mandate that empowering and facilitating local communities to participate in planning, execution, monitoring and evaluation of day to day activities. In 2012/13 LGAs will further be facilitated to prepare their plans and budgets for 2013/14 based on their core mandates, priorities and decisions made at various levels. This arrangement will enable the LGAs to perform their functions and responsibilities economically, efficiently and effectively thus hastening the process of D by D at the local level. 64

73 Chapter V CONCLUSION AND WAY FORWARD The Budget Background and Medium Term Framework informs the citizens, development partners and other stakeholders on implementation of Government budget and the medium term focus in line with implementation of the Five Year Development Plan. Certainly, the Document is designed to give narrations to the contents of the traditional budget books approved by the Parliament (Volumes I, II,III and IV) in each fiscal year. It also serves as an integrated document that put together the reviews of the macroeconomic framework, the achievements and strategic challenges in the course of implementation of FYDP and MKUKUTA II, and the analysis of budget execution, expenditure trends and medium term focus, with the strategic priorities of FYDP and MKUKUTA as a background. Indeed, the main thrust of the BBMTF report is to communicate to the stakeholders and explain the background of the Government budget, its guiding principles and strategic trends as well as the macroeconomic underneath in a simple and integrated way. The BBMTF will continue to provide comprehensive background information to the general public and particular, for different review processes such as Public Expenditure Review, MKUKUTA Cluster Working Groups, Sector Reviews, GBS Annual Review etc. The BBMTF for 2012/13 covered five chapters including chapter I of the introductory party which provides introduction and rationale of this report. Chapter II reviewed the Government s recent macroeconomic developments which mirrors with that of global outlook. It also explains in a summarized fashion the main macroeconomic assumptions and fiscal underpinnings of the annual budget and the medium term expenditure framework. While Chapter III provided analysis of budget performance and physical achievements for major sectors objectives in relations to MKUKUKUTA II Clusters during the period 2011/ /13. Further, it also highlighted performance of the Annual Five Year Development Plan (FYDP 2011/ /16) and MKUKUTA II performance and performance of key sectors and finally, it underscored main challenges that have continued to surface in the course of budget implementation. Chapter IV underscored Medium Term Expenditure outlook for 2012/13 consistent with the FYDP requirements. In other words, the Chapter documented budget outlook and strategies to address sectoral challenges over the medium term, while Chapter five provides a conclusion and way forwards. Regarding overall macroeconomic and budget execution performance, Tanzania continued to register an impressive both in macroeconomic and budget performance despite the domestic shocks and global recession. In 2011, real GDP growth recorded 6.4 percent, which is above the target of 6.0 percent but lower than the 7.0 percent growth recorded in 2010 mainly driven by the erratic power supply which affected particularly manufacturing and electricity economic activities during the period under review. However, the annual average inflation rate for 2011 was 12.7 percent compared with an average of 5.5 percent in 2010 mainly attributed to continued increase in the 65

74 general price of oil in the world market and supply constraints in the economy which caused food shortages in other part of the country. On the other front, budget implementation performance both financial and physical in 2011/12 was on track including improving and expanding socioeconomic infrastructure particularly, on major sectors of economy such as roads, energy, and agriculture. The government has also continued to improve citizens access to basic social services such as universal primary education, primary health care and water. However, in the course of budget implementation, the Government has continued to face major challenges including aligning scarce resources with priority areas. The Government will continue to sustain achievements recorded in recent past by enhancing and expanding socioeconomic infrastructure and thus, ensuring citizens better standard of living over the medium term. Given resource constraints, the Government appeals to the private sector through the Public-Private Partnership framework to provide additional financial resources to implement priority projects identified in the FYDP. Alongside this, MDAs have continued to identify potential PPP project proposals in collaboration with POPC for scrutiny and approval prior to awarding private sector projects contracts. In the case of RSs and LGAs, such projects should be submitted to PMO-RALG for scrutiny and onward submission to POPC. Further, the Government will enhance capacity of institutions in order to effectively manage formulation and implementation of PPP project contracts to be established by the private sector. 66

75 Annexes 67

76 Annex 1: Government Expenditure by Strategic Allocation and Major Sectors (billion TShs) All Sectors 2011/ /13 Recurrent Development Total Rec Development Total D-L D-F Total D-L D-F Total A. By Strategic Classification: MKUKUTA (transfer to LGA not included) MKUKUTA 3, , , , , , , , , ,838.1 Cluster I 1, , , , , , , , , ,206.3 Cluster II , , , ,344.5 Cluster III , ,287.3 Cross Cutting Non-MKUKUTA 3, , , ,900.8 Total 6, , , , , , , , , ,738.9 B. By Strategic Classification: MKUKUTA (Including transfer to LGAs) MKUKUTA 5, , , , , , , , , ,218.2 Cluster I 1, , , , , , , , , ,413.7 cluster II 2, , , , , , ,652.9 Cluster III 1, , , ,921.4 Cross Cutting Non-MKUKUTA 3, , , ,973.7 Total 8, , , , , , , , , ,191.9 C. By Major Sectors Education 2, , , ,962.5 Health , ,288.8 Water Agriculture ,103.6 Roads , , , ,940.0 Judiciary HIV-AIDS Energy Others 4, , , ,361.7 Grand Total 8, , , , , , , , , ,191.9 D. By Broad Functions Administration 1, , , , , ,317.0 CFS 1, , , ,745.1 Defense and Security , ,135.5 Economic Services , , , ,083.7 Production Services Social Services 3, , , , , , ,364.9 Grand Total 8, , , , , , , , , ,

77 Annex 2: Government Expenditure by Strategic Allocation na Major Sectors (Percent share) MKUKUTA 2011/ /13 Non-MKUKUTA Cluster I Cluster II Cluster III Cross Cutting 2011/ /13 All Sectors 2011/ /13 Rec Development Total Rec Development Total D-L D-F Total D-L D-F Total A. By Strategic Classification: MKUKUTA (transfer to LGA not included) MKUKUTA Cluster I Cluster II Cluster III Cross Cutting Non-MKUKUTA Total B. By Strategic Classification: MKUKUTA (Including transfer to LGAs) MKUKUTA Cluster I Cluster II Cluster III Cross Cutting Non-MKUKUTA Total C. By Major Sectors Education Health Water Agriculture Roads Judiciary HIV-AIDS Energy Other sectors Grand Total D. By Broad Functions Administration CFS Defense and Security Economic Services Production Services Social Services Grand Total

78 Annex 3: Government Expenditure by Economic Allocation Total budget in billions 2011/ /13 Overall Government Budget billions Recurrent Development Total Recurrent Development Total MDA 6, , , , , ,738.9 LGAs+Regions 2, , , ,453.1 Total 8, , , , , , / /13 Overall Government = MDAs + LGAs : expenditure in billions Recurrent Development Total Recurrent Development Total Current PE B/Salaries (incl Public Ente s) Pension Good and Services (incl. PE) o/w Allowances Maintenance Current Transfer Interests Capital Total Infrastructure Construction Rehabilitation Equipment Other Capital Studies Overall Government = MDAs : expenditure in billions Recurrent Development Total Recurrent Development Total Current PE B/Salaries (incl Public Ente s) Pension Good and Services o/w Allowances Maintenance Current Transfer (incl PE) Interests Capital Infrastructure Construction Rehabilitation Equipment Other Capital Studies Total Overall Government = LGAs : expenditure in billions Recurrent Development Total Recurrent Development Total Current PE B/Salaries (incl Public Ente s) Pension Good and Services o/w Allowances Maintenance Current Transfer Interests Capital Total Infrastructure Construction Rehabilitation Equipment Other Capital Studies

79 Annex 4: Budget Allocation by Economic Nature: Current vs Capital Spending (percentage share) 2011/ /13 Overall Government Budget % shares Rec Dev Total Rec Dev Total MDA LGAs+Regions Total Shares of overall budget Overall Government = MDAs + LGAs : expenditure in % shares 2011/ /13 Rec Dev Total Rec Dev Total Current PE Basic Salaries (incl Public Ent.) Pension Good and Services (incl. Public Ent.) o/w Allowances Maintenance Current Transfer Interests Capital Infrastructure Construction Rehabilitation Equipment Other Capital Studies Total Overall Government = MDAs : expenditure in % shares Rec Dev Total Rec Dev Total Current PE Basic Salaries (incl Public Ent.) Pension Good and Services (incl. Public Ent.) o/w Allowances Maintenance Current Transfer Interests Capital Infrastructure Construction Rehabilitation Equipment Other Capital Studies Overall Government = LGAs : expenditure in % shares Rec Dev Total Rec Dev Total Current PE Basic Salaries Pension Good and Services o/w Allowances Maintenance Current Transfer Capital Infrastructure Construction Rehabilitation Equipment Other Capital Studies Total

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