MCC’s Vice President of Compact Operations, Kamran Khan
By TZ Business News Staff.
The United States Government has threatened to disapprove issuance of a Tsh. 16.43 bn/- (USD 9.79 million) grant to Tanzania if firm, concrete steps are not taken to combat corruption—especially as pertains to the recent ‘Escrow Account’ saga.
The saga refers to corruption in which $122 million (TSh. 201 bn) held in the escrow account at the Bank of Tanzania (BoT) was transferred to a dubious private company’s bank account owned by Pan Africa Power Solutions (Tanzania) Ltd (PAP) between November 28 and December 8, 2013, and the money shared among various people–including government ministers.
The US government issued the following statement in Washington DC during the second week of December, 2014, after the U.S. Government’s Millennium Challenge Corporation (MCC) Board of Directors met to discuss donations to developing countries, to warn Tanzania:
“MCC takes seriously all of its country partners’ commitments to combat corruption…. [The] MCC’s Board expressed continued concern over corruption in Tanzania, including the implications of the recent case involving Independent Power Tanzania Limited (IPTL).
“The Board noted that Tanzania has experienced a significant decline over the past seven years on the key indicator measuring efforts to control corruption.
“While the Board voted to allow Tanzania to continue working to develop a compact proposal—given its passage on MCC’s policy scorecards and its strong previous performance as an MCC partner—the Board stated its expectation that the Government of Tanzania must take firm, concrete steps to combat corruption before a compact is approved.
“Further, the Board voted to continue MCC’s engagement with Tanzania with the understanding that, in accordance with the Tanzanian State House December 9 statement, the Tanzanian government would act promptly and decisively on the late November parliamentary resolutions regarding IPTL. The Board also reaffirmed more broadly that Tanzania must undertake a series of previously agreed upon structural reforms to improve the efficiency, effectiveness and transparency of the energy sector, and more generally to deal with wider corruption,” the Statement said.
This new stand pokes a hole on an earlier commitment announced in November, when the US signed an agreement with Tanzania to set the stage for the disbursement of a USD 9.78 million grant to Tanania.
United States Ambassador to Tanzania, Mark B. Childress (c) presided over the signing of the grant agreement at the Ministry of Finance in Dar es Salaam. The agreement was signed by MCC’s Vice President of Compact Operations, Kamran Khan (L), and Tanzania’s Minister of Finance, Saada Mkuya Salum.
The United States Government, through the Millennium Challenge Corporation (MCC), agreed on November 14, 2014, to provide up to $9.78 million for the development of high-impact investment projects in Tanzania’s energy sector.
United States Ambassador to Tanzania, Mark B. Childress presided over the signing of the grant agreement at the Ministry of Finance in Dar es Salaam. The agreement was signed by MCC’s Vice President of Compact Operations, Kamran Khan, and Tanzania’s Minister of Finance, Saada Mkuya Salum.
The grant agreement was reported to build on a strong partnership between the United States and Tanzania. Between 2008 and 2013, MCC implemented a compact of investment projects in water, roads, and electric power throughout Tanzania totaling $698 million. That compact program led to the construction of over 3,000 km of power lines, 450 km of trunk roads, two water treatment plants, and an airport runway.
Given its successful implementation of the first compact program – the largest in MCC’s history – MCC designated Tanzania eligible to develop a second compact program with a focus on the power sector, including investments in infrastructure as well as policy, regulatory and institutional reforms. Through the November, 2014 signed grant agreement, Tanzania was given the green light to mobilize consultants to undertake detailed feasibility studies and other preparatory work on project ideas that are most likely to stimulate long-term economic growth.
The grant was meant to allow Tanzania to fully develop projects to reform the power sector; improve the technical, financial, and operational performance of the Tanzania Electricity Supply Company Ltd. (TANESCO) and the Zanzibar Electricity Corporation (ZECO); and to expand access to electric power in rural areas. These proposed projects are expected to form the basis of a second MCC compact of investments between the United States and Tanzania.
This plan is now in danger of going down the drain on account of the Escrow Account saga.
The Board of Directors of the U.S. Government’s Millennium Challenge Corporation (MCC) held its annual country selection meeting on December 10, 2014. In that meeting, the Board expressed serious concerns about the fight to control corruption in Tanzania, including the implications of the recent case involving Independent Power Tanzania Limited (IPTL).
Although the Board voted to allow Tanzania to continue developing a second compact program, it strongly encouraged the Government of Tanzania take firm, concrete steps to combat corruption as a prerequisite to the Board’s approval of any final compact.
In its public statement, the Board acknowledged the importance of follow-through on the Tanzanian State House’s December 9 statement that it would act promptly and decisively on the late November parliamentary resolutions regarding IPTL.
U.S. Ambassador to Tanzania Mark Childress noted, “Progress in combatting corruption is essential to a new MCC compact, as well to an overall improved business climate in Tanzania. We are encouraged by the State House’s announcement of December 9 that it will soon address the parliamentary resolutions linked to IPTL, and we urge quick government action, given the impact on several key development issues.”
The Board also referenced a series of agreed-upon structural policy and institutional reforms the Government of Tanzania has committed to undertake in order to improve the efficiency and transparency of its energy sector institutions more broadly.
Ambassador Childress commented further that, “We are pleased the compact development process will continue over the coming months, and we also want to stress that these commitments must be met before the United States will finalize any new compact with Tanzania.”
Tanzania was one of 10 countries discussed by the MCC Board, which met to determine the eligibility of countries to begin or continue the compact development process. If finalized, this would be Tanzania’s second MCC compact. Between 2008 and 2013, MCC funded a $698 million compact of investment projects in water, roads, and electric power throughout Tanzania. That compact program led to the construction of over 3,000 km of power lines, 450 km of trunk roads, two water treatment plants, and an airport runway.
The Millennium Challenge Corporation is a United States Government agency that provides assistance to developing countries. MCC is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people that promote economic growth and the elimination of poverty.
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