Tanzania has been newly selected as a Korea's priority partner country for development cooperation and the Korean government is currently developing a Country Partnership Strategy (CPS) which will be effective starting from 2016. Tanzania is not only one of the Korea's pivotal development cooperation partners but also is a country of high economic and strategic importance in East Africa. The country shows relatively stable political and social conditions in comparison to other African countries; and its fast growing economy and abundant resources raise the potential for development and economic cooperation. Nonetheless, the country still remains as one of the least developed countries in the world. Tanzania faces multiple development challenges such as its weak industrial base, lack of human resources, simple economic structure, and poverty. To achieve effective development aid delivery, therefore, requires a comprehensive study on the complicated development context in Tanzania.
This study aims to provide an in-depth analysis on the development context in Tanzania, propose potential priority areas for Korea-Tanzania development cooperation, and ultimately contribute to the process of establishing the CPS for Tanzania with policy suggestions on cooperation strategies based on the analyses. In order to set the objectives and priority areas for development cooperation with Tanzania, this study has considered the following four criteria: i) the development environment in Tanzania by sector to meet its development needs; ii) Tanzania's policy directions to align with its development policies; iii) the cooperation strategies of other donors for aid harmonization and iv) assessment of the Korea's comparative advantage along with the continuity of its current assistance to Tanzania.
Against this backdrop, the study consists of the following structure. Chapter 2 discusses the development environment and needs in Tanzania to identify development prospects and challenges by sector. Chapter 3 examines Tanzania's mid- and long-term national development plans and poverty reduction strategy to analyze its development strategy implementation system, governance, and obstacles. Chapter 4 presents the overview of development assistance by international community in Tanzania and case studies of major donors to draw implications for harmonized assistance strategies of Korea. Finally Chapter 5 proposes objectives and strategies for Korea-Tanzania development cooperation and makes suggestions on the potential priority areas and assistance plans, based on the analyses of earlier chapters as well as in accordance with the Korea's current assistance status to Tanzania and its improvement plan for CPS formulation.
The GDP per capita of Tanzania remains around USD 700. 75 percent of its population is engaged in subsistence agriculture and 25 percent lives in absolute poverty. Development needs in all sectors are considered to be high. Agriculture accounts for the majority of the country's economy, but its infrastructure such as irrigation system is found to be poor; and its productivity is extremely low. In education, the country's enrollment rate has increased significantly since 2000s yet the drop-out rate remains high and the quality of education needs serious improvement. Although health sector has shown relatively good performance compared to other African countries, sanitation and hygiene in Tanzania are still poor and a lack of safe drinking water poses remaining challenges. In addition, transportation infrastructure such as roads, railways, air transport, ports is in extremely poor conditions, hindering the country's economic development. Lastly, while the government of Tanzania has shown some improvements in governance, it is found to lack capacity to lead the country's development process and the problems of corruption and transparency still remain as big obstacles.
Tanzania's mid- and long-term development challenges can be summarized into three pillars: i) eradication of poverty and human resource development; ii) improvement of industrial structure and expansion of infrastructure; and iii) improvement of economic system and business environment. A long-term Tanzania Development Vision 2025 introduces overall policy directions whereas the mid-term Five Years Development Plan (FYDP) and the National Strategy for Growth and Reduction of Poverty (MKUKUTA) support these visions by providing specific policies. The six core priorities proposed in the FYDP include i) infrastructure, ii) agriculture, iii) industry, iv) human capital development and social services, v) health, and vi) tourism, trade and financial services.
Each core priority includes a set of specific financial plans and operational objectives. Furthermore, MKUKUTA is organized around the three interdependent clusters, namely i) growth for reduction of income poverty; ii) improvement of quality of life and social well-being; and iii) governance and accountability. Specific strategies and policy interventions are mentioned for each cluster. After reviewing its development policies, it can be concluded that the focal areas that the Tanzanian government is promoting with special emphasis are: infrastructure development (e.g., road, railway, water), agriculture for food self-sufficiency, and good governance including institutional reforms, strengthening of public administration, and anti-corruption strategy.
Tanzania is one of the donor darlings due to its strategic importance and political and social stability. In 2013, the net ODA to Tanzania was USD 3.4 billion. Tanzania is in fact the second largest recipient of ODA in Sub-Saharan Africa, following Ethiopia. Over the last decade, foreign aid has doubled in size and is gradually increasing despite the global financial crisis in 2008. While social infrastructure and services sector, including health, water supply and government, captures more than a half of the total ODA to Tanzania, a rapid increase in economic infrastructure and services sector, including transportation, energy and agriculture, has been observed since 2010. In terms of type of aid, project type intervention still occupies a considerable portion of the total aid. In addition, budget support takes up about a quarter of the total aid which is of relatively great importance compared to those of other recipient countries. Moreover, a number of basket funds is being operated at the sectoral level. Most of the donors participate in more than one basket funds. In terms of harmonization among donors, Tanzania presents an exemplary case. For example, donors have established the Development Partners Group (DPG) and provide support based on the Joint Assistance Strategy for Tanzania (JAST).
Likewise, the Korean government has been expanding its support to Tanzania since 2010. In fact, Korea is the sixth largest donor in Tanzania according to the disbursement from the year 2011 to 2013. This is the largest aid provided by the Korean government to a country in Sub-Saharan Africa. Concessional loans are primarily provided to transportation, energy and health sectors. The size of the concessional loans has increased rapidly in recent years, placing Tanzania at the center of the EDCF's operation in East Africa. On the other hand, grants are mainly given to agricultural development, health and medical services, education, and public administration. The size of the grants has been somewhat stagnated since the Tanzania's elimination from the priority partner countries in 2010. Nevertheless, the Korean government has strengthened its development cooperation base with Tanzania by expanding support to multilateral cooperation and/or NGO projects in place of implementing new KOICA projects. In addition, other public agencies such as the Korea Foundation for International Healthcare (KOFIH) and NGOs are gradually increasing their development activities in Tanzania.
Based on the analyses on Tanzania's development needs, development policies, other donors' assistance strategies, and the Korea's comparative advantage along with its assistance experiences to Tanzania, it is recommended that the future strategy for Korea-Tanzania development cooperation focus on the following four areas: i) strengthening public administration capacity; ii) increasing agricultural productivity; iii) improving transportation and electric power infrastructure; and iv) improving industrial capacity in manufacturing.
First, strengthening public administration capacity is the area of the Tanzanian government's keen interests as well as one of the core development objectives of other major donors in the country. The Korean government has also provided continuous support in this sector through the Modernization of Tanzania's Customs Administration Project and National ID System Data Center Project. The study suggests programs for establishing administrative infrastructure using ICT and capacity building based on Korea's development experience in a way of fully utilizing Korea's comparative advantage.
Second, in agriculture sector the study recommends the Korean government to focus on increasing productivity by supplying agricultural skills and materials, providing farmer trainings for commercialization of agricultural products, and establishing a distribution network and storage facilities to increase productivity. As Tanzania has achieved substantial improvements in education and health sectors in rural areas as a result of pursuing Millennium Development Goals (UN MDG-2015), it is desirable to put the emphasis on continuous and self-sustainable growth in rural areas by increasing agricultural productivity as well as rural households income.
It is feasible to implement agricultural development programs with focus on increasing productivity while incorporating social service elements such as education and health when necessary.
Third, improving infrastructure is the top priority of the Tanzanian government as it serves as the foundation for economic growth and industrialization. The study recommends the Korean government to concentrate on expanding transportation infrastructure and stable electric power for industrialization so that Tanzania can realize its potential as the hub of shipping and logistics in East Africa. Korea's assistance in this sector is primarily in the form of concessional loans; yet, other types of support such as grant programs for management capacity building, joint projects with multilateral development banks and public-private partnership can be considered to enhance effectiveness.
Finally, improving industrial capacity is at the center of economic growth as highlighted in the Sustainable Development Goals (UN SDGs-2030). The government of Tanzania likewise has set industrialization as one of the key objectives in the next FYDP acknowledging that industrialization through manufacturing development forms the backbone of the economic growth. As Korea has an experience in implementing government-led strategy to advance its manufacturing industry, the Tanzanian government expects a great deal of support from Korea in this area. In order to improve industrial capacity, a multifaceted approach is necessary. For instance, the Korean government may offer a combination of support through building institutional environment and human resources, supplying infrastructure, industrial technology, vocational training and training for skilled workforce, and strengthening administrative capacity to establish and implement industrial promotion policy. The Korean government may provide support through both grants and loans, Knowledge Sharing Program (KSP), budget support for establishing market-friendly governance and system, and participate in basket funds.
A number of risk factors should also be recognized in the process of establishing development cooperation strategy. From the partner government side, there are risks of failure in fulfillment of financial commitment due to its weakness in public finance, a gap between the data on public documents and reality, the lack of implementing capacity of public agencies and the vestige of socialism, and so on. In addition, insufficient number of Project Management (PM) agencies who are well aware of the local conditions is a big challenge for Korean development agencies. It is essential, therefore, to consider such risks in advance and establish a contingency plan.
Futhermore, it is important to cooperate with other donors to enhance aid effectiveness. There are various aid harmonization channels institutionalized in Tanzania such as the JAST, the DPG and sectoral working groups, and annual consultative group meetings with the partner government. It is critical for the Korean government to actively participate in these meetings and lead the agendas. Tanzania may serve as a platform to pursue joint projects with other donors with more experiences. In doing so, the Korean development agencies can take advantage of this learning opportunity to build their own capacity in development cooperation. Participating in basket funds or providing budget support, which are rather new forms of assistance for Korea, can be also considered in Tanzania where the relevant systems are relatively well established.
The future government-wide CPS can direct and coordinate the development activities of Korean agencies operating in Tanzania by providing principles and strategic guidelines on Korea-Tanzania development cooperation. Establishing the CPS based on rich information and detailed analyses is the key to enhance aid effectiveness and can further provide a foundation for diverse forms of economic cooperation with Tanzania. This study is expected to serve as such preliminary study for establishing the future CPS as well as to provide useful information for the Korean development agencies in Tanzania for their development activities.