Main Lessons from Evaluating Budget Support to Tanzania

A Joint Evaluation of Budget Support to Tanzania from 2005/06 to 2011/12 was completed earlier this year, with the results discussed this month in Brussels. While the general consensus is that its use has been positive, showing good results, some important lessons arose during its implementation, and can be applied to other Budget Support situations.

Klaus Rudischhauser, Deputy Director General of EuropeAid, pointed out that, where feasible, the European Commission is providing Budget Support. As Budget Support is under high scrutiny by the controlling bodies, evaluations are of increasing importance.  

They provide accountability to the public, who need to know that money is being spent effectively. Importantly, lessons are learned from evaluation findings, which are spread throughout the organisation and shared with partners and stakeholders, easing the way for further improvements in the utilisation of this aid modality

“We have carried out Budget Support evaluations in several countries,” said Juergen Lovasz, Team Leader for Budget Support Evaluations at EuropeAid, “and have seen that it has made a contribution towards the development of those countries. In particular, with regard to the social sectors and Public Finance Management.” 

In addition, budget support has been seen to create dynamism within policy dialogue between government and donors in the countries, allowing better space for communications, he added.

This process has been seen clearly in Tanzania where, in the wake of the Budget Support Evaluation, government and stakeholders are developing an action plan for the coming years, to address the challenges raised in the evaluation. 

As Team Leader of the Joint Evaluation of Budget Support to Tanzania, Andrew Lawson, of Fiscus UK, is pleased with the results. “(The budget support) has been very successful,” he said at the presentation of the evaluation in Brussels on 15th October, “despite the noise surrounding it”.

The evaluation showed that budget support monies have been spent in ways that made an impact the priority sectors of education, and infrastructure rehabilitation and expansion. “There has been a knock-on effect on growth and, to a slightly lesser degree, on poverty,” said Lawson.  

‘The noise’ he referred to is that, despite the fact that budget support worked well and the main use of resources was positive, policy dialogue between the government and its development partners was often difficult. 

According to Lawson, this restricted the potential of the budget support. 

“In many ways, what happened in Tanzania was that the key areas of influence were from the funds themselves, whereas budget support should be a combination of additional money for the budget, good policy dialogue to help improve policy, and technical assistance and capacity development to help improve capabilities,’ he said. 

In the Tanzanian case, he continued, the first aspect worked well, the second two were ‘less good’. 

His thoughts are echoed by Peniel Lyimo, Deputy Chief Executive Officer of the President’s Delivery Unit in the United Republic of Tanzania, who considers the evaluation to be ‘extremely useful’.

Budget support fell in line with the government’s development priorities, and national system and procedures for delivering aid.  Lyimo said that he saw a good future for this aid modality in Tanzania.

“We have been able to use the instrument not only to support development programmes but also to enhance our internal capacity for the management of public finances,” he said.  “We have been able to develop a very robust integrated financial management system.” 

“Without an evaluation, it is very easy just to criticise, “ he continued. “The evaluation has come out with important issues in terms of the advantage of the instrument, but it is also very important in terms of what are the additional measures we need to take to improve the instrument, “ he concurred, “and in my view, it is the area of policy dialogue.”  

Dr Servacius B. Likwelile, Permanent Secretary of the Ministry of Finance said that to improve policy dialogue, expectations needed to be managed on both sides. ‘This is important as otherwise we probably won’t do justice to this instrument. There is a tendency to forget that we moved to budget support due to weaknesses of the other modalities; projects could not be delivered in the way people were expecting,” he said.

Going forwards, the Government is now discussing how best to take advantage of the recommendations coming from this exercise. The main consideration is the dialogue structure. 

“We think that a theme or issue-oriented dialogue structure will help,” said Likwelile. 

Lawson considers it imperative that this recommendation of the evaluation is taken up. 

“Despite the fact that there was a tense dialogue in Tanzania, and much criticism of the budget support modality, there were actually good results,” he said. “So if one was to learn what is working and what is not, and to keep a more balanced view of that to drive policy, then I think the whole instrument would work more successfully in the future,” he concluded. 

This collaborative piece was drafted with input from Juergen Lovasz and Adrian Costandache, with support from the capacity4dev.eu Coordination Team.