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A total of US$30 million (over 36bn/-) given to Tanzania as aid by the Norwegian government in the past 12 years may have been squandered through corruption and mismanagement, an independent report has revealed.
The just-released Anti-corruption Resource Centre Report entitled `Does Aid work?`, which considers the challenges to aid effectiveness in major natural resources programmes, says half of the US$60 million did not make it to the primary targets and ended up lost.
The report is authored by Erik Jansen, a senior advisor at NORAD Evaluation Department.
A former programme officer at the Norwegian Embassy in Tanzania quotes in the report an evaluation by independent consultants in 2006 as having established these facts.
``Those who have control over the natural resources are in a powerful position and usually have easy access to money... Tanzania has not been successful in managing its natural resources in a sustainable and equitable manner, nor has the country been able to achieve significant economic growth in its utilisation of these resources,`` notes the report.
Norway financed the Management of Natural Resources Programme (MNRP) in Tanzania from 1994 to 2006 and the report names the Natural Resources and Tourism ministry as being in charge of managing the forestry, fisheries and wildlife resources.
``The Ministry had three separate divisions, each dealing with one of these resources. MNRP had projects in the forestry, fisheries, and wildlife sectors that were closely connected to these three divisions of the Ministry. In all of the three sectors there has been pervasive corruption during the last decades. Management and staff in the Ministry, together with politicians and people from the local population, have plundered the resources and exploited the resources in a way that is not sustainable. Often this has been in collaboration with foreign investors,`` writes Jansen.
The example is given of assistance from the Kuwait Fund for Arab Economic Development, the OPEC Fund for International Development, and the Saudi Fund for Development, which resulted in one of the largest bridges in Africa. It was built over the Rufiji River in 2003.
``The bridge led straight into a natural forest of about 20,000 square kilometres that had remained fairly unexploited until then. A comprehensive study conducted after the completion of the bridge showed extensive illegal exploitation of the forest,`` says the report.
It adds: ``Logs worth tens of million of US dollars were exported illegally to China and other countries in Asia. Taxes and royalties were paid for only four per cent of the forests that were harvested.``
According to the study, illegal logging cost Tanzania about US$ 52 million of its potential revenue annually.
The reports further notes that corrupt politicians and representatives of the fisheries and wildlife sectors allowed these resources to be plundered by national and international companies, provided they themselves obtained a share of the resultant profit.
``Both in the fisheries and wildlife sectors, licences are allocated to investors at a price that is only a fraction of the market price. Corrupt representatives of the Government earn huge amounts of money that should have gone into the Treasury,`` the report states.
``The development partners in Dar es Salaam recently notified the Government that the fees which the Government received from the wildlife sector were minimal. The Government only charged US$ 8,000 for hunting blocks that had a much higher market value.
``The Government accepted the complaint by the development partners and increased the fees to US$ 40,000 for each block. However, many of the politicians and ministers who controlled these hunting blocks complained that the increased fees would lower their profit and therefore demanded that fees should remain at the old levels,`` it adds.
Some 150 trawlers from EU member countries and the Far East operating within Tanzania`s Exclusive Economic Zone in the Indian Ocean are said to have been paying a paltry US$18,000 annually to obtain a licence. But on a good day of fishing, the trawlers are able to catch fish of the same value.
The report says that, if the Government had charged market value for these licences, the Treasury could have collected US$20 million annually for the trawlers` licences.
``It is also well known that the export of Nile perch from Lake Victoria has been underreported for many years in order to avoid taxation. There is much money to be earned by government officials and politicians who contribute to increased export of natural resources without it being taxed,`` it adds.
The Natural Resources and Tourism ministry is viewed as being in a special position in the government set-up because of its opportunity to generate its own resources from taxes, fees and royalties. It also receives allocations from the Treasury.
``It is difficult to estimate how much money the Ministry transfers to the Treasury and how much disappears due to corruption. With all the potential income from natural resources, the Government of Tanzania should have been able to manage its own natural resources without depending on funds from development partners,`` notes the report further.
A report from the World Bank enforces this view, saying: ``Because of policy failures, Tanzania’s natural resource endowments are not harnessed in an optimal way to achieve both economic growth and poverty reduction. On the contrary, owing to weak governance regimes in revenue-generating sectors, resources are offered below market price to the benefit of a few powerful winners and the loss of the majority of the rural population.``
It adds: ``Yet these natural resources provide substantive potential for income to communities in the rural areas. The weakness in governance regimes in forestry, wildlife and fisheries include primarily the lack of transparency and accountability in issuing rights to extract resources and accrue revenues from them, inequitable sharing of benefits with communities, and monitoring and surveillance of stocks.
``In all four principal sectors providing natural capital in the growth equation – forestry, wildlife, fisheries, and mining – royalties are set arbitrarily and do not reflect scarcity. Royalties are hence not used as a policy instrument of intertemporal resource pricing and sustained yield management (Pfliegner 2008).``
The World Bank report stresses that the problem is not lack of legal acts and instruments, policies, strategies and plans that explains the mismanagement and corruption in the natural resources sector but lack of the political will to follow up on the adopted instruments.
``The Government of Tanzania has a complicated relationship to its task of managing the natural resources. On the one hand the government has, with the support of its development partners, spent much time and resources in developing legal acts, policies, strategies, national plans, and sector strategies for its forestry, fisheries, and wildlife resources which are compatible with those of the international community.
No doubt many government officials in Tanzania do their utmost to comply with and follow up these adopted plans and strategies.`
``On the other hand, there are also many government officials and politicians who undermine the policies they themselves have been central in having Parliament adopt.
Many of these politicians and government officials have held high positions in the Ministry. These leaders can force honest government officials to adopt corrupt practices,`` it adds.
Published as part of the project named `Corruption in Natural Resource Management`, the paper suggests a more sophisticated approach to budget and programme support.
``If we are to improve and understand the relationships between a plan and the reality, it is important that we are open and share experiences made in development aid.
It is therefore a good thing that the political leadership in the Ministry of Foreign Affairs and Norad welcomes a broader and more open debate on development aid,`` writes Jansen.
Renewable natural resources in Tanzania play an important role both for the population in rural areas of the country and for the economy as a whole.
Of Tanzania`s total population of about 40 million people, 75 per cent live in rural areas.
Most of the rural population has access to forestry, fish and/or wildlife resources.
It is estimated that on average 40 per cent of the income in rural households comes from one of these three natural resources.
Agriculture is the main economic sector in the rural areas but most people living off the land use simple technology and land productivity is very low.
Efforts to improve the agricultural sector are slow and income and food from forests, fisheries and wildlife will for many years continue to play an important role for the rural population.
Natural resources are important at the national level too. Timber from the forests is important for economic activities in the country and it is also a major source of foreign exchange.
The country also receives substantial foreign exchange from the export of Nile perch from Lake Victoria and shellfish from the coastal areas. Wildlife brings income from tourism and hunting licences.
Traditionally, local people have used their own rules of management for the various natural resources they have found of interest. But this has changed during the last few decades.
A new set of actors, very often foreign investors, have discovered the value of Tanzania`s natural resources and stiff competition for scarce natural resources has changed the constellation among the actors.
The just-released Anti-corruption Resource Centre Report entitled `Does Aid work?`, which considers the challenges to aid effectiveness in major natural resources programmes, says half of the US$60 million did not make it to the primary targets and ended up lost.
The report is authored by Erik Jansen, a senior advisor at NORAD Evaluation Department.
A former programme officer at the Norwegian Embassy in Tanzania quotes in the report an evaluation by independent consultants in 2006 as having established these facts.
``Those who have control over the natural resources are in a powerful position and usually have easy access to money... Tanzania has not been successful in managing its natural resources in a sustainable and equitable manner, nor has the country been able to achieve significant economic growth in its utilisation of these resources,`` notes the report.
Norway financed the Management of Natural Resources Programme (MNRP) in Tanzania from 1994 to 2006 and the report names the Natural Resources and Tourism ministry as being in charge of managing the forestry, fisheries and wildlife resources.
``The Ministry had three separate divisions, each dealing with one of these resources. MNRP had projects in the forestry, fisheries, and wildlife sectors that were closely connected to these three divisions of the Ministry. In all of the three sectors there has been pervasive corruption during the last decades. Management and staff in the Ministry, together with politicians and people from the local population, have plundered the resources and exploited the resources in a way that is not sustainable. Often this has been in collaboration with foreign investors,`` writes Jansen.
The example is given of assistance from the Kuwait Fund for Arab Economic Development, the OPEC Fund for International Development, and the Saudi Fund for Development, which resulted in one of the largest bridges in Africa. It was built over the Rufiji River in 2003.
``The bridge led straight into a natural forest of about 20,000 square kilometres that had remained fairly unexploited until then. A comprehensive study conducted after the completion of the bridge showed extensive illegal exploitation of the forest,`` says the report.
It adds: ``Logs worth tens of million of US dollars were exported illegally to China and other countries in Asia. Taxes and royalties were paid for only four per cent of the forests that were harvested.``
According to the study, illegal logging cost Tanzania about US$ 52 million of its potential revenue annually.
The reports further notes that corrupt politicians and representatives of the fisheries and wildlife sectors allowed these resources to be plundered by national and international companies, provided they themselves obtained a share of the resultant profit.
``Both in the fisheries and wildlife sectors, licences are allocated to investors at a price that is only a fraction of the market price. Corrupt representatives of the Government earn huge amounts of money that should have gone into the Treasury,`` the report states.
``The development partners in Dar es Salaam recently notified the Government that the fees which the Government received from the wildlife sector were minimal. The Government only charged US$ 8,000 for hunting blocks that had a much higher market value.
``The Government accepted the complaint by the development partners and increased the fees to US$ 40,000 for each block. However, many of the politicians and ministers who controlled these hunting blocks complained that the increased fees would lower their profit and therefore demanded that fees should remain at the old levels,`` it adds.
Some 150 trawlers from EU member countries and the Far East operating within Tanzania`s Exclusive Economic Zone in the Indian Ocean are said to have been paying a paltry US$18,000 annually to obtain a licence. But on a good day of fishing, the trawlers are able to catch fish of the same value.
The report says that, if the Government had charged market value for these licences, the Treasury could have collected US$20 million annually for the trawlers` licences.
``It is also well known that the export of Nile perch from Lake Victoria has been underreported for many years in order to avoid taxation. There is much money to be earned by government officials and politicians who contribute to increased export of natural resources without it being taxed,`` it adds.
The Natural Resources and Tourism ministry is viewed as being in a special position in the government set-up because of its opportunity to generate its own resources from taxes, fees and royalties. It also receives allocations from the Treasury.
``It is difficult to estimate how much money the Ministry transfers to the Treasury and how much disappears due to corruption. With all the potential income from natural resources, the Government of Tanzania should have been able to manage its own natural resources without depending on funds from development partners,`` notes the report further.
A report from the World Bank enforces this view, saying: ``Because of policy failures, Tanzania’s natural resource endowments are not harnessed in an optimal way to achieve both economic growth and poverty reduction. On the contrary, owing to weak governance regimes in revenue-generating sectors, resources are offered below market price to the benefit of a few powerful winners and the loss of the majority of the rural population.``
It adds: ``Yet these natural resources provide substantive potential for income to communities in the rural areas. The weakness in governance regimes in forestry, wildlife and fisheries include primarily the lack of transparency and accountability in issuing rights to extract resources and accrue revenues from them, inequitable sharing of benefits with communities, and monitoring and surveillance of stocks.
``In all four principal sectors providing natural capital in the growth equation – forestry, wildlife, fisheries, and mining – royalties are set arbitrarily and do not reflect scarcity. Royalties are hence not used as a policy instrument of intertemporal resource pricing and sustained yield management (Pfliegner 2008).``
The World Bank report stresses that the problem is not lack of legal acts and instruments, policies, strategies and plans that explains the mismanagement and corruption in the natural resources sector but lack of the political will to follow up on the adopted instruments.
``The Government of Tanzania has a complicated relationship to its task of managing the natural resources. On the one hand the government has, with the support of its development partners, spent much time and resources in developing legal acts, policies, strategies, national plans, and sector strategies for its forestry, fisheries, and wildlife resources which are compatible with those of the international community.
No doubt many government officials in Tanzania do their utmost to comply with and follow up these adopted plans and strategies.`
``On the other hand, there are also many government officials and politicians who undermine the policies they themselves have been central in having Parliament adopt.
Many of these politicians and government officials have held high positions in the Ministry. These leaders can force honest government officials to adopt corrupt practices,`` it adds.
Published as part of the project named `Corruption in Natural Resource Management`, the paper suggests a more sophisticated approach to budget and programme support.
``If we are to improve and understand the relationships between a plan and the reality, it is important that we are open and share experiences made in development aid.
It is therefore a good thing that the political leadership in the Ministry of Foreign Affairs and Norad welcomes a broader and more open debate on development aid,`` writes Jansen.
Renewable natural resources in Tanzania play an important role both for the population in rural areas of the country and for the economy as a whole.
Of Tanzania`s total population of about 40 million people, 75 per cent live in rural areas.
Most of the rural population has access to forestry, fish and/or wildlife resources.
It is estimated that on average 40 per cent of the income in rural households comes from one of these three natural resources.
Agriculture is the main economic sector in the rural areas but most people living off the land use simple technology and land productivity is very low.
Efforts to improve the agricultural sector are slow and income and food from forests, fisheries and wildlife will for many years continue to play an important role for the rural population.
Natural resources are important at the national level too. Timber from the forests is important for economic activities in the country and it is also a major source of foreign exchange.
The country also receives substantial foreign exchange from the export of Nile perch from Lake Victoria and shellfish from the coastal areas. Wildlife brings income from tourism and hunting licences.
Traditionally, local people have used their own rules of management for the various natural resources they have found of interest. But this has changed during the last few decades.
A new set of actors, very often foreign investors, have discovered the value of Tanzania`s natural resources and stiff competition for scarce natural resources has changed the constellation among the actors.
SOURCE: Ippmedia
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