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Business Case and Intervention Summary Intervention Summary

Title: Big Results Now

What support will the UK provide? The UK will provide the Government of Tanzania with £4.95 million to establish a transformational Big Results Now! programme to identify and resolve constraints to results delivery in the following six key priority areas: energy, transport, agriculture, water, education and resource mobilisation. In each of these six areas the programme will run an intense eight week, heavily focused problem-solving ‘lab’, produce a concrete action plan with clear milestones and targets, and then ensure that it is incorporated into the 2013/14 annual budget of the Government of Tanzania. The Government of Tanzania will commission the expertise of the Government of Malaysia’s Performance Management & Delivery Unit (PEMANDU) to design and implement the programme, run the labs and establish a President’s Delivery Unit, based on the successful Malaysian model.

Why is UK support required? What need are we trying to address? The Government of Tanzania has a credible poverty reduction strategy, the National Growth and Poverty Reduction Strategy (Mkukuta II)1, but it remains a highly ambitious and permissive document that includes a wide range of objectives. Implementation remains a challenge as evidenced by the low execution rate of the development budget, which declined to 59% in 2010/11. To address this there is a critical need for much greater prioritisation and operationalization within Government policy and planning, and a clearly phased, targeted approach to implementation. Success requires strong, visible government leadership at the political as well as bureaucratic level, complemented by a stronger ability to monitor and evaluate progress – and hold those responsible for delivery to account. The Government of Tanzania’s response The Government of Tanzania recognises that ‘business as usual’ will not deliver the step-change required: new methods of working are required to achieve the desired acceleration in delivery of results. In this context, the President of Tanzania and a government delegation visited Malaysia to learn about the principles, methodology and techniques of the transformational government programme implemented by PEMANDU, to learn how these could be adopted and customised in Tanzania to deliver results in identified priority areas. Subsequently Cabinet resolved that “…the Government commits itself to adopt and customize the Malaysian BIG FAST RESULTS model to suit the Tanzanian environment” and to work with PEMANDU to deliver this. As one of eight governments implementing this radical eight-step transformational approach, PEMANDU brings a tested and proven methodology with a team highly experienced in delivering similar programmes with government. Why is UK support required? The Big Results Now! proposal has received the strongest commitment and support from the highest levels of the Government of Tanzania, including the President, Prime Minister, and the 1 National Strategy For Growth And Reduction Of Poverty II, (NSGRP II) Ministry Of Finance And Economic Affairs July 2010

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Chief Secretary. Phase I needs to take place prior to April 2013 so that the plans emerging from the ‘labs’ can be integrated into the 2013/4 budget. It is absolutely vital that the lab process is synchronised with the budget cycle to close the circle between planning and funding, and ensure that plans are adequately resourced for delivery within the agreed timeframe. However, as the Government’s 2012/3 budget has already been set they do not have the resources available to fund this themselves in this financial year. Thus the UK was approached by the President to assist with the funding of this critical initial stage in the programme. The Government itself will be dedicating significant resources to the programme in terms of senior Government decision-makers from all relevant ministries, departments and agencies who will be participating full-time in the six labs for eight weeks. The Government has committed to incorporate the implementation of the action plans and the second wave of ‘labs’ into their own 2013/14 budget. This demonstrates their financial commitment and determination to embed this transformational programme within Government systems for future years.

What are the expected results? The impact of this funding will be improved delivery in key national results areas. There will be enormous potential for leveraged impact on the economy and public services over 2-10+ years, which is expected to contribute to improved performance of Government programmes and increased execution of the Government development budget, including the contribution the UK makes to this through budget support and sector-specific funding. After the six national results areas in Phase I, the methodology will be applied to another 15 national priorities, directly influencing budget allocations for subsequent years. In Malaysia, PEMANDU’s program directly contributed to a 17-21% rise in Gross National Income since implementation in 2009.2 The outcome will be an improved planning process with greater prioritisation, implementation, monitoring and delivery of specified results in the six key national results areas of Phase I. The outputs from this funding (Phase Ib of the larger Big Results Now! programme) will be:

1. Delivery Unit established. 2. Concrete action plans agreed in key priority areas. 3. Funding requirements established and incorporated into the Government Budget.

These outputs will be delivered through ‘labs’: intensive eight week full-time exercises focused on the agreed priority areas, following eight weeks of setup. Designed and facilitated by highly skilled experts from PEMANDU, these labs will bring together 25-35 people from a cross-section of the public and private sectors to focus on generating an implementable solution to the identified problem. When the lab is over the participants return to their respective organisations and are given key roles in managing the implementation of the action plans. This creates a powerful link between planning and implementation.

2 2011 Government Economic Transformation Programme Annual Report, Government of Malaysia

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Business Case Strategic Case A. Context and need for a DFID intervention Although Tanzania is no longer one of the five poorest countries in the world, as it was in the 1980s, it is still in the bottom 253. 68%4 of the population (30 million people) live on less than £20 a month and 34%5 (15 million people) live on less than £7 a month, which means that they cannot buy essential goods such as soap and clothes. Only 34% of children enrol in secondary school6, 74% of people use inadequate sanitation7, 42% of all children are stunted through chronic malnutrition8, natural resources are over exploited, it is one of five countries in the world with the most malaria deaths and one woman in every 23 will die in childbirth9. The recent dramatic expansion in some services, such as education, has been an achievement but quality of services is now a major issue, as demonstrated by low pass rates in schools. 53% pass rate for primary school leavers and only 10% pass rate at lower secondary school (Form IV), with girls performing worse in learning achievements compared to boys10. The Government of Tanzania has a credible poverty reduction strategy11, the National Growth and Poverty Reduction Strategy (Mkukuta II), which acknowledges and seeks to address these challenges. Government spending is broadly aligned with the Mkukuta strategy but it remains a highly ambitious and permissive document that includes a wide range of objectives. DFID’s 2011 Country Governance Analysis stated:

The role of the Mkukuta is to set priorities but it has lacked prioritisation, resulting in a weak basis for a prioritised budget.

A prioritised budget is needed to meet significant budget constraints and therefore the success of the Government’s wider policy framework depends on how effectively they are able to prioritise within it, match this to resources and then develop clear implementation plans. The President’s Office of Public Service Management final report on The Effectiveness of Public Policies in Tanzania (August 2010) found that:

Policy implementation strategies have not been developed in many sectors. Priority settings in government undertakings and interpretation of identified synergies and linkages across sectors are other crucial constraints.12

3 World Development Indicators, World Bank 4 $1.25 a day (PPP) Source: UNSD 2011 original source: World Bank PovCalNet 5 Tanzania Household Budget Survey 2007, National Bureau of Statistics 6 Basic Education Statistics in Tanzania 2011, Ministry of Education and Vocational Training 7 Tanzania Demographic and Health Survey 2010 8 Tanzania Demographic and Health Survey 2010 9 Maternal mortality ratio = 790 deaths per 1,000 live births. Trends in Maternal Mortality: 1990-2008. WHO/UNICEF/UNFPA/WB. Fertility rate = 5.4 children per woman (TDHS 2010). 23 = 790/5.4*100,000 10 Basic Educations Statistics in Tanzania 2011, Ministry of Education and Vocational Training 11 National Strategy For Growth And Reduction Of Poverty II, (NSGRP II) Ministry Of Finance And Economic Affairs July 2010 12 President’s Office Public Service Management, The Effectiveness Of Public Policies In Tanzania Final Report, Economic and Social Research Foundation (ESRF), August 2010

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From their assessment of how existing policies had been implemented and review of the consequences of the current policy-making practices they concluded that:

The  effectiveness  of  public  policies  in  Tanzania  is  below  average.

There is some evidence of willingness to address these key policy issues, particularly driven by the President’s Office Planning Commission (POPC), who recently published the Five Year Development Plan13. This makes some progress in establishing priorities but is light on how reform will be achieved. For example, the Plan restates the President’s high profile commitment to infrastructure and agricultural development but it remains unclear on the extent to which agricultural reform will be centrally driven – an echo of the socialist past - rather than relying on private sector engagement. In 2009 the percentage of a sample of policies which were feasible, effective and consistent within and across sectors was only 56% (PSRP II Annual Review). In this context, discerning clear Government policy priority and direction remains a challenge. Broadly speaking, Tanzania also has the institutional framework in place to deliver its policies: Government is present throughout Tanzania and it therefore retains the capacity to respect, protect and fulfil fundamental responsibilities of the State. In practice though, the overall capacity weaknesses of the State, in particular in local government, limits its impact and effectiveness. Since the mid 1990s central government has held the responsibility for policy formulation, regulations and monitoring in Tanzania, whilst service delivery is decentralised to local government. Since the Structural Adjustment Programmes of the mid 1980s the private sector and civil society have also had a role in providing health, education and water and sanitation services, and the private sector of course have a critical role to play in a wide range of policy areas such as agricultural development, wealth creation, transportation and management of energy and natural resources. Effective implementation of policy therefore requires the involvement of a number of critical stakeholders – inside and outside Government, and at different levels within – but responsibility for driving forward delivery remains with central Government. Recently there has also been concern about the slowing pace of implementation of reforms including in the core governance reform programme areas of anti-corruption, public financial management, local government, the legal sector, the public service and business environment strengthening. To address the public services’ capacity to deliver, in 1999 the Government designed an eleven-year public service reform program that seeks to improve accountability, transparency and resource management for service delivery. The implementation of these institutional reforms is, however, taking more time than originally envisaged. The first phase was meant to conclude in 2004 but had to be extended to 2007. The second phase commenced in 2008 and is expected to conclude in December 2012. It is achieving results but continues to suffer from a slow pace of implementation. In the meantime the Government’s ability to deliver for its people remains constrained. DFID Tanzania’s 2011 Country Governance Analysis reported that:

Government effectiveness and service delivery performance has been a mixed bag. Overall it is difficult to assess the quality of public administration as anything other than remaining at about the same level over the past 3-4 years.

13 The Tanzania Five Year Development Plan 2011/12-2015/16: Unleashing Tanzania’s Latent Growth Potential, President’s Office, Planning Commission, June 2011

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In the long-term addressing the systemic, institutional and capacity constraints which are limiting the public service’s ability to deliver quality public services continues to be critical. But whilst this is ongoing, within the Government and driven by the President himself, there is the desire and recognition of the need to accelerate delivery of results in the immediate present. In particular, there is a need for improved prioritisation and operationalization within Government policy and planning. DFID Tanzania’s 2011 Country Governance Analysis reinforced this finding:

The adoption of the new PRSP [Mkukuta II] presents a potentially encouraging agenda of relevant development goals for the next five years. However for this potential to be translated into reality a clear, prioritised strategy with a robust implementation plan and sound monitoring and evaluation is crucial.

The Final Report Study to Assess the Extent to which various Government Institutional Reforms and Processes are Aligned and Contribute to the Implementation of MKUKUTA (June 2010), conducted by KPMG Development Advisory Services at the request of the President’s Office Reform Coordination Unit, highlighted this as central to their finding that:

On all reforms there is a significant gap between what was intended to be achieved and what has been achieved… The slow pace of implementation in current phases of all reforms has not met the expectations of either party [Government of Tanzania or Development Partners].

To overcome this, specifically in relation to the five core reform programmes assessed, the report was clear that a phased, targeted approach to implementation is critical:

The core reforms need to be realistic about what can be achieved with the resources available and take a phased approach which focuses on only a few targeted priority areas where there is the best potential for impact.

The report also reinforces the need for strong, visible government leadership at the political as well as bureaucratic level to drive a wider commitment to delivering change across both government and society as a whole. This must be complemented by a stronger ability to monitor and evaluate progress towards achieving change, described as “widely accepted by government and DPs as an essential ingredient”, and stronger, clearer and more direct accountability structures to ensure implementation. It cites the positive impact of the recently adopted practice of the Chief Secretary of holding Permanent Secretaries accountable for reforms through Inter-Ministerial Technical Committee meetings, which “sets the right tone at the top” and concludes:

Putting the right incentive and accountability structures in place and then making them work will take some time but behaviour and attitudes will not change until this has been achieved

It is clear therefore that ‘business as usual’ will not deliver the step-change required: new methods of working are required to achieve the Government’s desired acceleration in delivery of results. In this context, President Kikwete accepted an invitation from the Government of Malaysia to attend the Langkawi International Dialogue in June 2011 to learn more about their experiences in delivering government transformation. In 2009 the Malaysian Government established a Performance Management & Delivery Unit

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(PEMANDU) under the Prime Minister’s Department. PEMANDU conducted a series of intense problem-solving ‘labs’ on a set of six key priority issues. The labs represented an innovation in terms of how government formulates problem-solving action plans. The model developed by PEMANDU has over the course of three years demonstrated that it can deliver significant impact and results across a range of areas: crime, corruption, education, poverty, rural basic infrastructure and transport. For example, street crime in Malaysia was reduced by 39 percent between 2010 and 2011 and the percentage of people perceiving that the government’s fight against corruption was effective rose from 28 percent in 2009 to 49 percent in 2011. Attracted by the model and keen to consider its applicability in the Tanzanian context, President Kikwete visited Malaysia again later in 2011 with a wider Tanzanian delegation to attend a seminar on PEMANDU’s ‘Big Fast Results’ programme. On the basis of the compelling evidence provided at these meetings, the Government of Tanzania then invited PEMANDU to visit Tanzania in August 2012 to present to the Cabinet on the fundamental principles, methodology and techniques of the Malaysian model and how these could be adopted and customised in Tanzania. The Resolution agreed at the end of the workshop stated:

The Government commits itself to adopt and customize the Malaysian BIG FAST RESULTS model to suit Tanzanian environment.

including through an agreement that:

The Government will strengthen existing good relationship with PEMANDU in order to facilitate the process of building institutional framework for BIG FAST RESULTS NOW.

It concluded with a strong direct endorsement by the President:

The President is committed to Government efficient and effective delivery for BIG FAST RESULTS NOW.

On behalf of the Government of Malaysia PEMANDU subsequently submitted a detailed proposal to the Government of Tanzania, outlining how they could support them to design and implement a transformational delivery programme. As one of only eight governments in the world implementing the radical 8 step transformational approach, PEMANDU bring a tested and proven Big Fast Results (BFR) methodology with a battle-trained team who have hands-on experience in the delivery of a BFR Transformation Program. This proposal has received the strongest commitment and support from the highest levels of the Government of Tanzania including the President and the Chief Secretary. Phase I needs to take place prior to April 2013 so that the plans emerging from the labs can be integrated into the 2013/4 budget. It is absolutely vital that the lab process is synchronised with the budget cycle to close the circle between planning and funding, and ensure that plans are adequately resourced for delivery with the agreed timeframe. As the Government’s 2012/3 budget has already been set they do not have the resources available to fund this themselves and thus DFID was approached by the Government to assist with the funding of this critical initial stage in the programme. Were this narrow window of opportunity to be missed, it is unlikely that there would be another feasible time to adopt and deliver this programme given the timetable of domestic political developments including the Constitutional Review Referendum which will probably take place in early 2014 and the run-up to the 2015 elections. The timing is therefore

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imperative, as is the need to capitalise on the existing momentum and political will, determination and drive.

B. Impact and Outcome that we expect to achieve The impact of this funding will be improved public service delivery in key national results areas. The outcome will be an improved planning process with greater prioritisation, implementation, monitoring and delivery of specified results in key national results areas. The outputs from this funding (Phase Ib of the larger Big Results Now! programme) will be:

1. Delivery Unit established. 2. Concrete action plans agreed in key priority areas. 3. Funding requirements established and incorporated into the Government Budget.

These outputs will be delivered through ‘labs’: intensive eight week full-time exercises focused on the agreed priority areas, following eight weeks of setup. Designed and facilitated by highly skilled experts from PEMANDU, these labs will bring together 25-35 people from a cross-section of the public and private sectors to focus on generating an implementable solution to the identified problem. When the lab is over the participants return to their respective organisations and are given key roles in managing the implementation of the action plans. This creates a powerful link between planning and implementation. Once the specific results targets for the six key priority areas have been set they will be used to closely monitor and report on progress against them.

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Appraisal Case A. What are the feasible options that address the need set out in the Strategic case? Theory of Change Big Results Now is predicated on the concept that by implementing some key innovations at critical points in the way government does business, the existing system can be made to deliver more effectively and efficiently. The diagram below graphically depicts the effect in the Malaysian context of the Prime Minister’s Performance Management and Delivery Unit (PEMANDU). Utilising the power and authority conferred on it by the Prime Minister and Cabinet, PEMANDU drives forward delivery at Ministry level and down to the front line. The strength of this connection is crucial, and regular senior monitoring meetings are essential to maintain the line of sight and ensure that the wheels keep turning.

PEMANDU define eight steps in their Big Fast Results methodology:

1. Strategic direction and prioritization Prioritization ensures focus, of both efforts and resources, which maximises the likelihood of delivery. It forces decision makers to clarify and specify what they are aiming to achieve, and to articulate this to the public so that they can hold them to account.

2. Running labs

Labs have yielded remarkable results in overcoming the structural barriers – the siloed approach, disparate agendas, and competition for funding – which prevent effective all sections of government working jointly together to address a problem. Labs create a powerful link between planning and implementation: participants feel

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absolute ownership of the plan because they have painstakingly developed it, vigorously debated it, and deeply understood it; they are also typically given positions of responsibility for implementation.

3. Open Day At the end of the ‘lab’ process an Open Day is held where the results of the labs are publicly revealed and discussed with stakeholders. More than 20,000 people attended Malaysia’s Government Transformation Programme Open Days and these are credited as helping build both public pressure on the Government to deliver and public support to assist in this delivery.

4. Clear roadmap

The culmination of the labs is a roadmap setting out for each National Priority Area measurable targets, a clear delivery chain and a transparent reporting framework. It is critical that these are published and made available to the public.

5. Target setting

Establishing the right performance indicators for each priority is critical. They must measure outcomes, not inputs. Instead of targetting an increase in technology spending or an increase in the total number of police officers or teachers they should rather target a certain level of reduction in crime or improvement in education. Where possible, performance should be measured against international benchmarks, in part to ensure the robustness and integrity of targets and in part to help deal with a skeptical public.

6. Implementation

The existing systems of government will be used to deliver the newly clarified and agreed targets: the real transformation is in the means of tracking, monitoring and ensuring delivery. Evidence shows that performance improves when it is explicitly managed, particularly when you focus on managing the performance of people involved in the priority areas, beginning with assigning accountability for outcomes to individuals. Once accountability structures are established, performance dialogues – intensive, regular conversations between the leader of the government and the leader accountable for each outcome – are essential, informed by clearly presented, reliable and regularly updated performance-management data. Pakistan’s Education Reform Roadmap testifies to the power of this.

A central delivery unit can help ensure that implementation is effectively managed across Government. Four characteristics have been identified as critical to the success of these, as demonstrated in Malaysia: • A clear, unwavering mandate from the top echelon of government. • A successful leader with top-level access. • A small, focused unit staffed by driven, effective problem solvers able to

collaborate with the civil service. • A delivery chain to connect policy makers to end users.

7. International panel and audit Independent verification of results is a critical step introduced to the Malaysian process to ensure that from the bottom up and the top down, all stakeholders can have confidence that what is said to have been delivered has actually been achieved. In Malaysia an International Performance Review Committee, composed of senior international experts, meets annually to both review and confirm progress and provide comment and critique about the direction of the programme.

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8. Annual Report The Annual Report makes publicly available the verified results of the programme, ensuring the continuation of the link with the public and stakeholders who participated in the previous steps in the process from the labs and open day to the ongoing implementation. In his preface to the 2011 Government Transformation Programme Annual Report, the Prime Minister of Malaysia writes:

In the true spirit or transparency, accountability and unbiased disclosure, this Annual Report provides an accurate account of the GTP’s wins and shortcomings, the key lessons learnt, and our plans going forward to safeguard the interests of the rakyat [people].

Option 1: Supporting the Government of Tanzania to implement a Big Results Now! programme with the assistance of the Malaysian Performance Management and Delivery Unit (PEMANDU) As set out in the Strategic Case, the Government of Tanzania engaged in dialogue with the Government of Malaysia to consider whether and how to apply in Tanzania the Big Fast Results methodology developed by Malaysia’s PEMANDU. PEMANDU has developed a highly effective approach to delivery of ‘Big Fast Results’ in the public sector through support to ministries in delivery planning at an executable level of detail. The evidence supporting the programme is discussed below. Centred on the use of intense problem-solving ‘labs’ complemented by rigorous performance management and problem-solving mechanisms to make progress – or lack thereof – transparent, and ensure full accountability of the responsible departments, the approach is distinctive in that it:

1. Establishes concrete and aspirational outcome targets 2. Takes the level of detail in planning ‘from 30,000 to 3 feet’ 3. Breaks down silos and includes all relevant agencies and stakeholders in intensive

co-creation mode 4. Provides additional delivery capacity to the public sector institutions.

The Tanzanian Big Results Now! programme is the culmination of discussions between the Governments of Tanzanian and Malaysia about cooperating to adapt the Malaysian delivery model for the Tanzanian context. In August 2012 the Cabinet passed a Resolution stating “the Government commits itself to adopt and customize the Malaysian Big Fast Results model to suit the Tanzanian environment” and work with PEMANDU to this end. Subsequently PEMANDU submitted a proposal outlining how they could support the Government of Tanzania to take this forward and implement their own Big Results Now! programme. It is necessary that the programme begin before the next budget is finalised so that it can be fully incorporated into future years’ budget. The Government is prepared to dedicate significant resources to the programme in terms of senior Government decision-makers from all relevant ministries, departments and agencies who will be participating full-time in the six labs for eight weeks. However, the Government’s 2012/3 budget has already been set so they do not have the resources available to fund this themselves in this financial year. External funding was therefore sought for Phase I of BRN with a direct request made verbally by the President and Chief Secretary for DFID support and confirmed in writing by the Permanent Secretary of the Ministry of Finance. The Government has committed to incorporate the implementation of the action plans and the second wave of ‘labs’ into their own 2013/14 budget. This further demonstrates their financial commitment and determination to embed this transformational programme within Government systems for future years.

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In the six month Phase I of BRN for which DFID funding is sought, PEMANDU would work with the Government of Tanzania to implement the following critical next steps:

1. Define the highest priority areas for Tanzania. The President and Cabinet agreed on a set of priority areas at a Cabinet retreat in October 2012, based on analysis of the importance in Tanzania’s development plan, the number of beneficiaries, the relative impact on the quality of life, and the feasibility of achieving measurable impact within a relatively short timeframe. These six, which will now need careful defining and scoping prior to the commencement of the labs, are as follows:

i. Energy ii. Transport iii. Agriculture iv. Water v. Education vi. Resource mobilisation

2. Develop the governance of the programme and design the delivery unit. This

design will draw on lessons from Malaysia, UK and other international examples but will be tailored to the context and requirements of Tanzania.

3. Run a programme of six eight-week labs to deliver four outputs:

• Targets and trajectories for each priority area (e.g. 7,000 miles of rural roads in 3 years) supported by a baseline and relevant benchmarks

• Action plans defined with targets, key milestones, specific steps to deliver results and clear accountabilities for each step

• Funding requirements estimated and, ideally, the source of funding secured. This requires participation of relevant Ministries in the lab

• Senior stakeholder buy-in secured through the intense syndication that happens while the lab is running.

Typically, 25-35 senior people from a cross-section of the public and private sectors are involved full-time in a lab, with visits from all the relevant top level leaders from the public and private sector up to and including the President. They work together in one location. The full-time commitment is vital to break down organizational boundaries, win ownership of the plans and cement commitment to implementation. When the lab is over the participants return to their respective organisations and are given key roles in managing the implementation of the action plans.

4. Integrate the lab results into the Government budget process. The program is

designed to target the budget session in April 2013. By focusing on this budget session as a target, the Government of Tanzania would be able to prioritise resources to delivering against the plans developed during the lab process. The Government would also be able to align Development Partner funding priorities with its own development priorities in a seamless and public manner. Given the time taken for steps 1-3 above, any delays would therefore result in the process not being concluded in time for this budget session. This integration component will also involve holding the ‘Open Day(s)’ to showcase the recommendations from the labs. Civil servants, the media, and the general public could all be invited. PEMANDU would assist with developing content and preparing civil servants for the Open Day(s).

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Option 2: “Do Nothing” counterfactual Were DFID not to fund Phase I of the Big Results Now! programme, the Government of Tanzania would be unable to secure alternate source funding within the current financial year and thus the programme would not be implemented in 2012/13. As noted above, the wider domestic context and timetable of events mean that missing this budget cycle would not simply mean a delay of a year: were the programme not instituted in 2012/13 then the entire agenda would be jeopardised and it would be highly unlikely that it would be possible for it to be revived in 2013/14. B. Assessing the strength of the evidence base for each feasible option Option 1: Supporting the Government of Tanzania to implement a Big Results Now! programme with the assistance of the Malaysian Performance Management and Delivery Unit (PEMANDU) The ‘Big Fast Results’ methodology developed by PEMANDU in Malaysia has amassed strong evidence of its ability to deliver impressive development results, as presented below. Whilst PEMANDU has developed a unique formula for delivery, there is also evidence from other countries where progress has been made as a result of similar well-designed and executed delivery programmes that share many, if not all, of the following seven identified best practices: define the priority outcomes to be delivered; unleash the power of ‘delivery labs’; deliver more for less; intensify the internal and external pressure to perform; establish small, high-powered delivery units; ensure visible sponsorship from top leaders; don’t just communicate with stakeholders - engage them. According to the report Delivery 2.0: The new challenge for governments14 the introduction of these delivery programmes can be credited with the following results:

One Asian country reduced the overall crime rate by 15 percent and street crime by 35 percent in the first year of a transformation program. In the same year, it also connected 35,000 rural households to a clean water supply, compared with 6,000 households in previous years. A South American government reduced hospital waiting lists by over 80 percent and increased by more than 50 percent the number of top graduates choosing teaching as a profession. An emerging-market government, within two months, introduced a social-security scheme to hundreds of thousands of workers who previously had been ineligible. A South Asian country increased the number of tourists by more than 70 percent in 12 months.

Evidence from Malaysia The delivery model refined and pioneered by Malaysia has been described above. They are one of only eight governments in the world implementing this type of transformational delivery approach, and even fewer have applied this across the whole of government rather

Quality of Evidence Option Evidence rating 1 Medium 2 Medium

14 Delivery 2.0: The new challenge for governments, Eoin Daly and Seelan Singham, October 2012, McKinsey & Company

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than solely within specific sectors. PEMANDU therefore bring a tested and proven Big Fast Results (BFR) methodology with a highly trained team who have hands-on experience of delivery in a non-high income context, through Malaysia’s Government Transformation Programme. The 2011 Annual Report of the Government Transformation Programme attests to the achievements of the system across all the seven National Key Results Areas (NKRAs). Highlights of which include:

• A 39.7% reduction in street crime (Reducing Crime NKRA) • Largest ever increment of new pre-school classes with 3,089 new pre-school classes

built in 2011, double 2010’s figure (Improving Student Outcomes NKRA) • 40.25% drop in low performing schools nationwide (Improving Student Outcomes

NKRA) • Over 63,147 poor households benefitting from poverty eradication programme and

over 12,000 poor people given micro credit loans (Raising Living Standards of Low-Income Households NKRA)

• 3.2 million people benefitted from rapid, large scale rural development in the last two years: 1,796km of additional roads built (longer than the breadth of Peninsular Malaysia), 109,500 rural homes were connected with clean water supply, 54,270 units of houses were electrified and 31,327 rural homes were built or refurbished (Improving Rural Basic Infrastructure NKRA)

• Ground-breaking Corporate Integrity Pledge launched and signed by 64 companies, and novel reward and recognition guidelines for public servants who report incidences of corruption and graft developed for the first time in the history of the civil service (Fighting Corruption NKRA)

• Largest rollout of buses in the Klang Valley and largest ever bus stop refurbishment exercise (Improving Urban Public Transport NKRA)

These results were independently audited and verified by Pricewaterhouse Coopers who confirmed their validity prior to publication. Furthermore, an International Performance Review (IPR) Committee, an independent, international third party, appraised and assessed Malaysia’s GTP in 2010 and 2011 GTP and noted the success of the approach in translating vision into action. In particular they highlighted the impressive speed of implementation and delivery, the clarity of purpose in goals and measurable results and the high level leadership and accountability. One of the IPR Committee members, the former Head of the UK Prime Minister’s Delivery Unit (2001-2005), Sir Michael Barber, concluded in relation to the 2010 results:

The successes achieved were nothing short of amazing. The following year he said:

Once again, the GTP has outdone itself and produced a string of impressive results for Malaysia. Personally speaking, I do not know of any other government in the world that has adopted such an approach and delivered such big fast results across such a wide range of public sector outcomes.15

Evidence from Pakistan In Pakistan, the government of Punjab developed a 2-year Education Reform Roadmap 15 2011 Government Transformation Programme Annual Report, Government of Malaysia

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under the direct leadership of the Chief Minister. The Roadmap used delivery methodology to focus on a small number of distinct priorities and key indicators; clearly articulated a "3 feet" approach to what needed to be done; collected reliable monthly data against those key indicators; and applied an independent team to monitor and track progress. Performance is tracked on a monthly basis and in progress reviews chaired by the Chief Minister. Issues were problem-solved daily against clear targets for each district in each quarter. During 2010-11, the Roadmap is credited with having helped achieve the following:

• Reduction in teacher absenteeism from 19% to 12%, meaning 700,000 more students have a teacher each day

• Increase in student attendance to 87% • Increased monthly education monitoring visits from 54% to 88% • Re-training of 180,000 primary school teachers using standardised guides to provide

better quality service, improving standards for over 3 million students • Increased availability of basic services (electricity, potable water, toilets) from 69% to

84% of facilities improving the education experience for over 2.5 million students • Intake increased by 100,000 of additional students from poor families in the Punjab

Education Voucher program In their October 2012 review, the Independent Commission on Aid Effectiveness assessed the programme and reported that:

the Punjab Education Reform Roadmap is an excellent example of how a well-designed monitoring system can be integral to the design of a reform programme... the education programme [of which the Roadmap is a part] is sophisticated, multi-dimensional and innovative, with a balanced approach to access, equity and quality... These are strong results, suggesting that learning outcomes are improving against a low base.

Evidence from Ethiopia In Ethiopia, the government aimed to dramatically improve agricultural productivity to spur economic development. Following a diagnostic analysis of key agricultural inputs (for example seeds, fertilisers), value chains (maize, livestock) and the enabling environment (for example water, finance), the government developed a multi-year transformation program comprising over 100 initiatives organised into five areas - irrigation, industry, productivity, land management, and strategic enablers. The delivery methodology was then applied to create the Agriculture Transformation Agency to drive the overall strategic agenda and monitor results. This Agency now employs over 100 staff with a heavy emphasis on local government ownership and Ethiopian capability building. It is widely praised as an example of a high-calibre transformation delivery unit in Africa. For an investment of approximately US$5 million in this new system, the Government achieved the following:

• Launched a series of quick win interventions across value chains in coordination with other donors and government organizations (e.g., extension system improvements at farmer training centres).

• Aligned federal government, donors, regional governments, and implementation agencies against a common roadmap, with changes in funding to priority projects and initiatives.

• Established a legal framework and created the Agriculture Transformation Agency to enable performance delivery principles to be applied to the entire agricultural sector.

• This agency, now in its second year of operation, has been fully funded by

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Government of Ethiopia and donor partners, and has launched a range of initiatives including work in smallholder productivity of key value chains, private sector partnerships, and policy reform.

• Aligned government policies between agriculture and the overall government economic growth plans, putting Ethiopia on track to expand GDP by an additional $20 billion by 2025.

Option 2: “Do Nothing” counterfactual The Strategic Case establishes the evidence of need for this intervention and sets out the direction and trend in delivery which can be expected to continue were the UK not to support BRN! This is based on analysis of the evidence of systemic constraints apparent to both the Government, and development partners including DFID, over a significant period of time. The evidence base for the assessment that the ‘do nothing’ option will fail to achieve the desired impact is therefore determined to be Medium. As previously noted, the Government of Tanzania has made it clear that were the UK not to be able to make funding available, the programme would not be able to go ahead in this financial year. The Cost Benefit Analysis presented below confirms the implications of this in terms of financial returns. Climate and Environment Assessment The impacts of climate change are already being felt in Tanzania e.g. 2005/6 droughts, changes in seasonal rains and higher mean annual temperatures. Tanzania’s economy is based on climate sensitive sectors: agriculture, water for hydro, tourism and infrastructure – making the country extremely vulnerable to climate change. It is estimated that climate change will reduce economic growth by 1.5-2% per annum, enough to prevent Tanzania graduating by 2025. In 2011, the IMF down-scaled projected growth in Tanzania from 7.2% to 6% due to “weather related impacts on energy production”. To understand how well Tanzania is addressing these impacts, DFID Tanzania recently undertook a Climate Change Strategic Evaluation of General Budget Support (GBS). The GBS evaluation assessed the MUKUKUTA II as being strong on climate change and environment, with clear commitments for mainstreaming and prioritising both as part of Tanzania’s long-term growth trajectory. However, the Five Year Development Plan (FYDP) and the Long Term Prospective Plan (LTPP) deviate away from this, deprioritising climate and environment and instead proposing a strong focus on industrialisation, with a much greater use of fossil fuels. There are good reasons why Tanzania might want to go down this path, and the previous MKUTUTA II plans may not have been sufficient to transform the economy along the growth pathway set out in the Vision. Nonetheless, the FYDP and LTTP are not wholly compatible with a low carbon development strategy and are not aimed at building an economy which is resilient to climate change. The GBS screening report therefore highlighted that Tanzania’s FYDP and the LTTP should be further examined to see how they could adopt a low carbon, climate resilient agenda. Furthermore, it was recommended that DFID should strengthen its relationship with the President’s Office Planning Commission in order to help better mainstream climate and environment into Tanzania’s long-term planning policies and processes. In response, DFID Tanzania is working with UNDP and the World Bank to support the Government of Tanzania to integrate climate and environment into their long-term planning and decision making, and are supporting the development of sectoral climate change plans

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for example in agriculture, water, urban planning and energy. The Big Results Now! programme offers the opportunity to further strengthen the UK’s relationship with Tanzania and in particular with the Planning Commission in delivering results that are sustainable in the long-term. Option 1: There are limited risks associated with Option 1. These are associated with the hosting of workshops including flights and printing of documents / reports. To mitigate these risks, it is strongly recommended that a) the use of virtual meeting space is used where ever possible to minimise the number of flights taken b) that printing of material is kept to a minimum and recycled paper is used where possible for all printing material. Whilst funding through Option 1 does not give DFID Tanzania direct leverage over the prioritisation of results and sectors, it could present opportunities for the UK to support the government in ensuring the sustainability of these results through better mainstreaming climate and environment. It is strongly recommended that where possible, the UK raises climate change and sustainable growth as part of any dialogue with the Government in the implementation of the BRN! programme. Option 1 presents the opportunity for the Government to achieve better value for money though its budget. Only 0.3% of the current budget is spent on responding to the impacts of climate change. This is inadequate given Tanzania’s vulnerability. Efficiency savings in spend, could free up a greater proportion of the budget to improve Tanzania’s ability to cope with and mitigate the impacts of climate change. Option 2: The climate and environment risks of the UK not supporting Big Results Now! are minimal: whilst it would be shame to give up an opportunity to strengthen the UK’s relationship with the Government in prioritising development results, this would not present any significant risks to the climate or environment. There are no opportunities presented by the counterfactual of ‘do nothing’.

Likely impact on climate change and environment Option Climate change and environment

risks and impact category* Climate change and environment opportunities category*

1 C B 2 C C

* Where A = high potential risk / opportunity; B = medium / manageable potential risk / opportunity; C = low / no risk / opportunity; or D = core contribution to a multilateral organisation. C. What are the costs and benefits of each feasible option? The President’s Office Planning Commission (POPC) is the lead architect of the country’s strategic public investment strategy. In the past lack of clear mandates of ministries and institutions involved in public investment planning and weak coordination have been major weaknesses. Significant scope for reprioritization of spending has been identified by the Government and partners, as illustrated in the following examples. Studies on economic rates of return to education in Tanzania (Kerr and Quinn (2010)) indicate that high returns (13% in primary and 19% in secondary) are achievable though significant disparities exist across the population. A similar situation exists in health, with very substantial difference in spending and staffing levels across districts. The number of health workers in some regions is twice the level in others. The number of nurses per 10,000 of population can vary by more than a factor of ten, suggesting high potential returns to

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spending in some underserved areas. Agriculture is a key sector for growth and poverty reduction, and is a high priority for the Government. There is a need for improvements in the functional composition of the agricultural sector budget to focus on improved property rights, and action to address non-tariff barriers to exports which deter investment by farmers and commercial agribusiness companies. In addition to raising rural incomes, rural roads can have a major role in improving access to schools and health facilities. Targeted investments can, according to World Bank estimates, achieve economic rates of return of in excess of 19%. Given the level of power shortages in Tanzania investments in energy are also a priority for economic growth. Power was recently identified a binding constraint to growth by the Tanzania Growth Diagnostic Study. Only 14% of the Tanzanian population have access to electricity, while in rural areas less than 5% have access. Investments which focus on the reliability of supplies can offer high returns. Valuing benefits The economic benefits of the Big Results Now! initiative derive from gains in allocative efficiency of the Tanzanian government budget resulting from improved prioritisation (i.e. in order to achieve a sharper focus on the MKUKUTA). Wider benefits include impacts on economic growth through initiatives which focus directly on the private sector (e.g. tourism, ports, oil and gas). Valuing improvements in the composition of the government’s budget presents challenges since the opportunity cost of spending (i.e. in the counterfactual situation) is not zero. Small changes in resource allocation within sectors can yield large efficiency gains, as resources are redirected from low to high return investments. Break-even points – i.e. hurdle efficiency gains at which benefits equate to costs – can be estimated as described below. In Phase I the Big Results Now! initiative will focus on spending in education and agriculture among other areas. Attention in subsequent waves will include a focus on health and roads. The composition of national spending in these and other priority sectors, including recent trends, is shown in the table below. Priority sector spending as per cent of total budget

At current levels of expenditure in education and agriculture (approx. £965m per annum and £382m per annum respectively) the efficiency improvements (discounted at 10% per annum over 5 years) needed to justify the cost of the intervention is calculated as 0.1% of overall sector expenditure. If improvements in health and roads (expected to be addressed in the subsequent phases of BRN!) are included in this analysis, the efficiency gains needed to

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Education Health Water Agriculture Roads Energy Total

2007/08 Actual 2008/09 Actual 2009/10 Actual 2010/11 Actual 2011/12 Budget

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break even falls to 0.05% of sector expenditure. In some cases improvements in sector composition of spending may persist for a longer than five years reflecting long lead time for new investments for example in ports and the power sector. The effect would be to further reduce hurdle rates; however no account is taken here since concrete proposals are yet to be agreed. These improvements are small both in absolute terms and in relation to efficiency gains expected under the General Budget Support and Public Financial Management Reform Programme IV programmes. In view of the political traction provided by the Big Results Now! initiative the efficiency gains obtained from sharper prioritisation of sector budgets can be expected to exceed hurdle rates and comfortably outweigh costs. Wider stimulus provided to private sector growth will add significant additional economics benefits, however this is not amenable to quantification. International experience As discussed in the section above, there is considerable evidence from Malaysia as well as Pakistan and Ethiopia. A comparable initiative with the government of Punjab in Pakistan led to a two year Education Reform Roadmap, the benefits of which have been outlined above in the section on evidence. The net present value (NPV) of the initiative is estimated at about £89 million with a Benefit Cost Ratio of around 20, providing overwhelming economic justification for the programme. A recent ICAI report concluded that the programme had delivered important early results and provided an excellent example of a well-designed monitoring system. D. What measures can be used to assess Value for Money for the intervention? The following metrics are used to assess Value for Money: Economy Unit costs: The cost per day of experts to be provided through the Big Results Now! initiative are in line with DFID norms. They reflect market rates for high level international expertise and are marginally lower than the unit costs of running similar events in Malaysia and Pakistan. Inputs will be procured from PEMANDU by the Government of Tanzania. PEMANDU operates procurement policies and practices which emphasize Value for Money, follow international best practice and are as rated as fully satisfactory through independent audit. 3rd party inputs: The input of expertise funded by DFID amounts to 5,760 days (Full time Equivalent) of expert time. The contribution provided by GoT is expected to be 6,600 days comprising senior and middle level staff. Private sector/civil society input is expected to be 2,400 days. In overall terms third parties will provide the majority of input to the Big Results Now! initiative in terms of staff time (60% of total) minimising costs to DFID. Efficiency Cost per unit output, measured in terms of the deliverables of each laboratory, is approximately £780,000 per lab. This compares favourably with costs in Malaysia of £1.8 – 3.1 million. Differences reflect higher cost structure in Malaysia than in Tanzania (e.g. venue costs) and larger number of participants (60 participants per lab compared with 30 in Tanzania).

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Effectiveness Effectiveness is measured in terms of increased allocative efficiency of the budget in specific sectors as described above. Further metrics will depend on detailed proposals to emerge from the labs, but may include numbers of people reached through education interventions, and economic rates of return in the power and transportation sectors. The architecture of Phase I of the initiative is designed to generate a results audit capability situated in the Government of Tanzania’s new Delivery Unit which will become the main source of results monitoring information. E. Summary Value for Money Statement for the preferred option The initiative provides strong value for the money since it will improve the impact of public spending in Tanzania across a broad range of different sectors, and provide a stimulus to growth. Costs to DFID have been minimised. Significant contributions will be provided the Government of Tanzania and the private sector.

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Commercial Case Direct procurement A. Clearly state the procurement/commercial requirements for intervention The majority of the programme will be indirect procurement, but 1.5% (£75,000) has been set aside to meet costs associated with a potential evaluation or expenditure incurred in participating or otherwise supporting events connected with the programme. A decision will be taken later as to whether a process evaluation would be beneficial, once the wider evaluation plans for the programme have been clarified. B. How does the intervention design use competition to drive commercial advantage for DFID? The procurement of an independent evaluator would take place in line with DFID procurement regulations designed to drive commercial advantage. If there is to be an open tender, the competition will be conducted in an open and transparent manner and the agreed contract will adhere to DFID standard terms and conditions (e.g. relating to travel and subsistence) to keep costs down. There may also be a need for DFID to provide short-term high-level technical input for example in providing an external speaker for the Open Day. This will be limited in value but the procurement for this would also prioritise value for money and ensure full compliance with DFID requirements and best practice. C. How do we expect the market place will respond to this opportunity? It is reasonable to expect an good level of interest in the opportunity to conduct an independent evaluation of the programme. Within the development field Tanzania has a reputation as an attractive environment in which to work given its political stability and security. There are a sizeable number of organisations equipped and experienced in conducting evaluations. Furthermore, a considerable number of international organisations have experience of working within Tanzania or the region. D. What are the key cost elements that affect overall price? How is value added and how will we measure and improve this? The key cost element will be the personnel fees levied. As part of the process of contract negotiation we will ensure these costs are at an appropriate level and benchmarked against other similar programmes, with competitive fee rates commensurate with the skills and experience of staff. E. What is the intended Procurement Process to support contract award? At this stage this remains to be determined based on whether there is a need to contract an independent evaluator and/or other specialist services. F. How will contract & supplier performance be managed through the life of the intervention? Should we proceed with contracting an independent evaluator and/or other specialist services, this will be managed by DFID Tanzania and arrangements will be put in place for this.

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Indirect procurement A. Why is the proposed funding mechanism/form of arrangement the right one for this intervention, with this development partner? This programme will use indirect procurement, as the majority of the funds (98.5% or £4.875 million) will be channelled to the Government of Tanzania. It is a DFID requirement that for all grant agreements with Partner Governments, irrespective of the value, a Partner Government Memorandum of Understanding must be used. Funds are transferred directly by DFID to the Bank of Tanzania, from where it is disbursed to the spending department. Controller and Auditor General’s reports and DFID’s Fiduciary Risk Assessment are used to check that the Government of Tanzania’s internal controls are robust enough to ensure that funds are used for the intended purpose. B. Value for money through procurement The Government of Tanzania will be responsible for procurement of services to deliver their Big Results Now! programme and for contract negotiation with the Malaysian Prime Minister’s Performance Management and Delivery Unit (PEMANDU) for their support services. This will follow the Government’s procurement regulations and procedures, which are set out and assessed below. DFID has emphasised the importance of securing value for money and we understand that negotiations have taken place with PEMANDU to ensure costs are reasonable. Procurement capacity assessments Tanzania was one of 22 countries to pilot the OECD-DAC’s procurement assessment methodology – MAPS – in 2007. This assessment drew a series of conclusions regarding the legislative framework, institutional and management capacity, procurement operations and system integrity. The results of this exercise were then compared with the 2006 light touch update on the (latest) detailed 2003 Country Procurement Assessment Review (CPAR) conducted by the World Bank. The comparison showed improvements across all of the assessment pillars. Nonetheless, notable weaknesses in the procurement system remained and as a result, the Government used the outcome of these assessments to develop plans to improve the procurement system in the years since. Some of the findings have been reflected in the new and strengthened 2011 Public Procurement Act (see below for further details). Legislation and policies Public procurement in Tanzania is governed by the Public Procurement Act (PPA) 2011, which was passed by Parliament in November 2011, and which recently received Presidential assent thus repealing the existing PPA No. 21 of 2004 and its regulations. The improvements which PPA 2011 will bring are detailed below. PPA 2004 Over the last decade, the procurement system has undergone tremendous reform including the enactment of the PPA 2004. The Act fully decentralized the procurement functions to procuring entities and established the procurement oversight body – the Public Procurement Regulatory Authority – PPRA. The Act also encouraged competitive pricing through open

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competition processes which is transparent and non-discriminatory among bidders. The Act was also put in place as one of the measures to control public expenditures in order to ensure that there is value for money in public procurement. Other reforms included the establishment of the Public Procurement Appeals Authority - PPAA to deal specifically with complaints and disputes relating to public procurement. Also, the establishment of a new professional body i.e. Procurement and Supplies Professional & Technicians Board late in 2009. Overall, the law provided for competitive tendering procedures as the preferred method of procurement. The regulations set out thresholds (in monetary terms) for various methods of procurement, with international competitive tendering conforming to international standards and ensuring value for money to the public. The law also define clearly circumstances under which single source procurement or direct purchasing may be permitted. The use of such methods is subject to approval by respective tender boards. Rationale for the new PPA 2011 Whilst the basic principles of PPA 2004 have been maintained in the new Act, the following improvements have been made following observed weaknesses by various stakeholders after more than six years of PPA 2004’s application:

• Establishment of a Procurement Policy Division in the Ministry of Finance. This Division will, amongst other activities i) develop a national procurement policy and monitor its implementation ii) review procurement policies, regulations, circulars and other related directives iii) advise the central government, local authorities and statutory body on issues related to procurement policies iv) and develop and manage the procurement cadre.

• The Public Procurement Regulatory Agency (PPRA) has been given more powers to execute its regulatory functions. These powers include cancellation of procurement proceedings where a serious breach of the law is established; powers to intervene where an accounting officer decides to reject tenders and where any mis-procurement is reported to it.

• The Act also provides sections which make PPAA independent from the Ministry of Finance, hence enabling it to discharge its functions more efficiently and effectively.

• The functions of Procurement Management Units (PMU) have been enhanced in particular, with regard to preparation and submission of Annual Procurement Plan (APP) and quarterly reports on the implementation of APP.

• It will also make it mandatory for entities to procure from the Government Procurement Services Agency (GPSA) using procedures to be prescribed in the Regulations.

• Others amendments include, introduction of a system for procurement of used aircrafts, ships and railways machinery where national interest demands that such procurement should be done; procurement under Public Private Partnerships (PPPs); further grounds for blacklisting firms have been provided; the Section on offences has been amended to provide for more stringent sentences in breach of the law; e-procurement is being introduced.

Compliance to the PPA The PPRA annually monitors compliance to procurement legislation through 13 indicators

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that examine the independence of procurement functions, compliance with procurement controls, transparency with procurement processes and record keeping amongst other things. This data shows that procurement compliance levels have improved in recent years from 39% in 2006/7 to 75% in 2010/11 based on follow-up audits. These improvements are also corroborated by the jump in the PEFA assessment rating on ‘competition, value for money and controls in procurement’ from D+ in 2005 to B in 2009. However, concerns over the integrity of procurement processes remain and as a result, we continue to rate risks in procurement processes as ‘substantial’ in our 2011 FRA. As an illustrative example, the latest National Audit Office (NAO) reports show that goods procured, paid for but not delivered amounted to Tsh 13,866 million (USD 7.9 million) in the 2009/10 financial year. PPRA’s 13 compliance indicators also do not highlight the relationship between the value of procurements in monetary terms versus the use value of the procured goods, works or services. They therefore do not look at the extent to which the procuring entities maximised their value-for-money. PPRA has, however, started to conduct some procurement audits, focused on value for money, especially in the roads sector. Capacity building PPRA has been organising both tailor made and large scale training programmes for Procurement Entities (PEs), which has helped improve compliance rates. The procurement profession is also gaining ground and recognition in the country with the establishment of the Procurement and Supplies Professionals and Technician Board in late 2009. The Board of Directors has been appointed and a code of ethics developed and disseminated to its members. Future Improvements Our 2011 FRA noted that PPRA has started to conduct procurement audits which focus mainly on value-for-money, particularly in the roads sector using outsourced experts. In addition DFID with support from DPs, will also seek to influence a revision in PPRA’s compliance indicators to reflect more accurately the evaluation process and value for money issues. This is identified as a safeguard in our 2011 FRA. DFID will also continue to support PPRA’s capacity building efforts through Phase IV of the PFM Reform Programme which started in July 2012. Progress will be monitored through a PAF indicator on the average level of compliance of i) all procuring entities and ii) the top 20 procuring entities with the revised 2011 Procurement Act. From a baseline of 68% in 2011, the target of 75% has been set for 2012. Improvements of a further 5% and 10% of the baseline are then aimed for in 2013 and 2014 respectively.

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Financial Case A. What are the costs, how are they profiled and how will you ensure accurate forecasting? The Government of Tanzania has provided DFID the breakdown of costs for Phase Ib of the programme, which has been the subject of negotiation between the Governments of Tanzania and Malaysia to ensure value for money. DFID has discussed and agreed a schedule of payments with the Planning Commission and Ministry of Finance, who in turn have confirmed this with PEMANDU. The schedule of payments for Phase Ib will be as follows: Stage Date of payment Proportion of overall

costs Value of payment

1. Mobilisation Commencement of labs – mid/end Jan

40% £1.95 million

2. Completion of labs Six weeks after commencement – start/mid March

40% £1.95 million

3. Project completion 14 weeks after commencement – end May/mid June

20% £0.975 million

Total 100% £4.875 million DFID is also be providing support through an existing programme (Improving the Effectiveness of Budget Support) for the ‘readiness’ phase that precedes the implementation of Phase Ib. A sum of £75,000 or 1.5% will be set aside to meet costs associated with evaluation or expenditure incurred in participating or otherwise supporting events connected with the programme. This will bring the total value of the programme to £4.95 million. B. How will it be funded: capital/programme/admin? The intervention will be funded from programme resources (RDEL), under DFID Tanzania framework and has been budgeted for in DFID Tanzania’s programme allocations. C. How will funds be paid out? As per the standard procedure for financial aid, DFID and the Government of Tanzania will sign a Memorandum of Understanding (MoU) governing the arrangements for provision of this non-budget support financial aid. As set out in this MoU, the Government of Tanzania will be required to requests funds from DFID at the stages outlined above, and to provide written confirmation of the activity undertaken in the previous stage, a copy of the receipt of funds for these from PEMANDU, and a copy of the invoice from PEMANDU for their services for the forthcoming stage. This will ensure that the milestones indicated above have been completed prior to disbursement of funds. D. What is the assessment of financial risk and fraud? DFID defines fiduciary risk as the risk that funds are not used for their intended purposes; do

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not achieve value-for-money; and/or are not properly accounted for. Understanding the fiduciary risk environment, mitigating risks to the proper use of funds and monitoring risks, performance and use of funds on an on-going basis underpins the management of all DFID financial aid. It is therefore a mandatory requirement to conduct fiduciary risk assessments (FRAs) where DFID provides financial aid to partner governments. DFID’s 2011 FRA concluded that on a scale of high, substantial, moderate and low, the level of fiduciary risk in mainland Tanzania at both central and local levels remains as ‘substantial’ – unchanged from the last FRA in 2008. The specific risk of corruption occurring was also assessed as ‘substantial’. Tanzania has put in place many of the fundamentals required to tackle corruption successfully including a credible anti-corruption legal framework. This framework includes a commitment to UNCAC, although its implementing mechanism, the NACSAP (National Anti-Corruption Strategy) and Action Plan, has suffered from a lack of focus and buy-in from Government and donors. Tanzania’s corruption framework was bolstered by the June 2007 legislation that strengthened the Prevention and Combating of Corruption Bureau (PCCB). In 2008, the Ministry of Finance established a Financial Intelligence Unit (FIU) to investigate or report cases of suspicious or unusual financial transactions. The FIU is now scaling up to improve compliance with international standards on Anti Money Laundering (AML): at present Tanzania is on a watch-list for strategic deficiencies in compliance and if it fails to progress, it may be subject to counter-measures from other countries, such as loss of international banking relationships. More recently, the Election Expenses Act (2010) was a further piece of legislation aimed at tackling corruption. The Act established a reporting regime aimed at achieving more transparency in campaign finance. The Act, applied for the first time in the 2010 elections, has clearly not solved campaign finance issues, but anecdotal evidence suggests that the Act and the PCCB’s constituency-level investigations did act as a deterrent in the run-up to the October 2010 Elections. A number of prosecutions in relation the Election Expenses Act are on-going with one conviction to date. The main issue is therefore not with the legislative framework. Concerns in tackling corruption centre more around the application of legislation, the effectiveness of the various institutions charged with investigating, prosecuting and adjudicating over corruption cases, and the level of political will required to address it. Ultimately the application of the framework and the incentives in place to do this, are more important factors than the quality and extent of the framework itself. Anti-Corruption Dialogue DFIDT is a significant player in the GoT-DP dialogue structure across the governance agenda in Tanzania. Specifically we take the lead on tackling corruption. In mid-2011 DFID chose not to continue as overall DP governance lead, a strategic decision to enable DFID to take over the anti-corruption lead for GBS donors (and jointly co-lead on AC with the UN for all development partners in Tanzania). DFID also took on the Deputy Chair of the PFM group. Prior to 2011, donors including DFID were becoming increasingly concerned about the absence of a well-structured informed dialogue with Government on corruption issues. In February 2011, GBS donors invoked a provision under the GBS Partnership Framework Memorandum that instigated a HLD (High Level Dialogue) process in respect of an underlying principle (in this case the active fight against corruption). This was prompted by

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the unsatisfactory assessment of the Government’s efforts to tackle corruption reached at the 2010 GBS Annual Review and by wider concerns that anti-corruption activity had slowed and that dialogue on the issue was poor.

As anti-corruption lead for GBS donors, DFID has played an important role in what has been a significant improvement in anti-corruption dialogue. There is a strong sense amongst donors that dialogue on corruption has improved since early 2011 - largely as a result of the HLD. Under the auspices of this dialogue, and chaired by the Minister of Finance, donors and Government have met 6 times. The meetings have been attended by Permanent Secretaries and other senior officials (Governor of the Bank of Tanzania, Director General of the anti-corruption authority etc.). Arising from these meetings Government published a long awaited Governance and Corruption Survey together with an official Government response. Government also provided updated information on the progress of key grand corruption cases and of the internal governance reforms being implemented at the Bank of Tanzania. The dialogue was largely responsible for turning an unsatisfactory assessment of tackling corruption in 2010 into a satisfactory assessment in 2011. More recently, GBS donors have secured the Government’s on-going commitment to the HLD and it is an important element of DFID’s Chairmanship of GBS which began in May 2012. In particular, DFID is pushing for a greater focus on results from the improved processes and dialogue seen since February 2011. Nonetheless, the ability of developing partners to influence Government policy, including that on corruption, is an on-going debate. A subset of this is discussion is the extent to which GBS can be deployed to influence policy. There is some evidence to suggest that the use of GBS has influenced, in some cases, the Government’s approaches to anti-corruption processes if not overall policy. For example, the suspension of GBS commitments in the light of the EPA corruption case revelations in 2008/9 prompted GoT to fast track the drafting of an action plan to deal with the EPA issues. More recently, lobbying through a GBS-initiated high level dialogue on corruption with Government, secured the delivery of a number of outstanding anti-corruption process issues. Therefore, a percentage decline in donor support could, potentially reduce the effectiveness of GBS donors to influence in these respects although it is unlikely to impact high level (and vital) contextual factors such as levels of political will which are less subject to direct donor influence. Procurement Recent procurement reforms, as detailed in the Commercial Case, will help to reduce fiduciary (including corruption) risks going forward. For example, the recent 2011 Public Procurement Act (PPA) provides more powers and freedom to the Public Procurement Regulatory Agency (PPRA) and the Public Procurement Appeals Authority (PPAA). These heightened powers include further grounds for blacklisting firms. Risks should also be reduced by the increasing emphasis on professionalising the procurement field. Procurement professionals have been required for some time to be registered but the new PPA places greater focus on this. The MoU between PPRA and the Prevention and Combating of Corruption Bureau (PCCB) to exchange information on suspected corruption cases will also remain in place. However, potential risk reductions going forward may be limited by the fact that political interference can’t be entirely ruled out as PPRA will continue as an executive agency under the Ministry of Finance. PPRA is also likely to continue facing resource constraints in terms of staff numbers, adequate skills and sufficient finances to conduct its compliance audits. Safeguards

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As set out in the DFID Business Case for Growth and Poverty Reduction, and Education Sector Delivery Grants (Budget Support), DFID Tanzania is already taking forward a set of safeguards to mitigate the risks identified in the FRA. These will contribute to short-term risk management by reducing the risk of leakage and inefficiency in the use of funds, whilst also strengthening PFM systems longer-term. These are detailed again below, and were approved as part of our FRA. SAFEGUARD IMPLEMENTATION STATUS

BUDGET CREDIBILITY

Make accessible in a systematic and timely way approved estimates within two weeks of appropriation

Improved budget transparency is both a PAF Key Policy Action and objective of PFMRP IV. Safeguard expected to be implemented in the next 2 years.

Ensure that information on actual expenditures, rather than just transfers are publicly available on an annual basis for the education sector.

Discussions on PFM matters have re-started in the sector’s Technical Working Group. Influencing for the safeguard will start shortly.

COMPREHENSIVENESS AND TRANSPARENCY

Systematically include on a website and in newspapers all grant transfers to LGAs including the amount and date of transfer

The PAF includes an indicator which will monitor the timing of funds transferred to Regional Secretariats and LGAs. Together with the PAF commitment for improved budget transparency this safeguard could be implemented in the next 2 years.

Improve the sharing of information on budgets/financial statements of public authorities and organizations (allied institutions) across the whole education sector

Discussions on PFM matters have re-started in the sector’s Technical Working Group. Influencing for the safeguard will start shortly.

Re-introduce the notification of transfers (including capitation grants) to schools and require the information to be displayed on school and local notice boards

Discussions on PFM matters have re-started in the sector’s Technical Working Group. Influencing for the safeguard will start shortly.

POLICY BASED BUDGETING

Simplify capitation grant guidelines for Primary Education and Secondary Education Development Plans.

Discussions on PFM matters have re-started in the sector’s Technical Working Group. Influencing for the safeguard will start shortly.

PREDICTABILITY AND CONTROL IN BUDGET EXECUTION

Simplify inter-governmental transfers A mapping exercise of the inter-governmental (central to local level) fiscal transfer system and a resultant action plan to rationalise and simplify the system is a PAF Key Policy Action and an objective in PFMRP IV. The mapping exercise is expected to be completed by November 2012 and the action plan will start to be implemented from early 2013.

Make accessible the in-year budget execution reports within four weeks of the end of the quarter

Improved budget transparency is both a PAF Key Policy Action and objective of PFMRP IV. Safeguard expected to be implemented in the next 2 years

Improve the timeliness and transparency of fund transfers to LGAs and onwards to school

Improved budget transparency and the simplification of the inter-governmental fiscal transfer system are both PAF Key Policy Actions and objectives of

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PFMRP IV and Education sector dialogue. Safeguard expected to be implemented in the next 2 years

ACCOUNTING, RECORDING AND REPORTING

Make accessible in a systematic and timely way audited Financial Statements once tabled

Improved budget transparency is both a PAF Key Policy Action and objective of PFMRP IV. Safeguard expected to be implemented in the next 2 years.

EXTERNAL AUDIT AND SCRUTINY

Improve the presentation of audit reports

As part of the improved transparency drive, the NAO has recently agreed to the idea of a ‘Citizens’ audit report (i.e. non-technical and easily understood). Performance against this will be assessed as part of PFMRP IV’s M&E framework. In parallel, continued influencing on improving the presentation for the technical audience too.

Publish, or at least making available to relevant stakeholders, the actions taken (management response) on audit recommendations

Part of the improved transparency drive but still needs to be discussed with GoT and the NAO. A PAF indicator on measuring the value of outstanding audit matters will support the eventual implementation of this safeguard. But implementation timeframe for the safeguard is currently unknown.

Ensure sufficient provision of technical support to parliamentary committees to improve their capacity to effectively scrutinize budgets and audit reports

Parliamentary Account Committees will benefit from PFMRP IV and support through DFID’s own Deepening Democracy Programme. Performance will be assessed through both programme’s M&E frameworks.

Ensure that audit reports/management letters for all organizations within the education sector are available on the web

Part of the improved transparency drive but still needs to be discussed with GoT and the NAO. Implementation timeframe currently unknown.

PROCUREMENT

Change PPRA’s procurement indicators (used to monitor procurement law compliance) to reflect more accurately the evaluation process and value for money issues

Performance against procurement compliance indicators is being assessed as part of the PAF. This will open up dialogue over the next year on changes to ensure that the indicators are appropriate.

Provide short-term oversight of procurement processes by DFID and AfDB in education and infrastructure during the bidding process

For education sector, short-term implementation to start immediately. For infrastructure sector, safeguard was primarily for AfDB – our partners in the FRA. Their implementation status is unknown.

Ensure that the breakdown of contract evaluation criteria and scores for the winning bidder are made available to all bidders and confidentially on ad-hoc requests to budget support donors

Implementation to start over coming months and underpinned by supporting revisions to DFID’s bilateral agreements with GoT.

OTHER

Request improved information on AfDB and DFID’s flow of funds through the Bank of Tanzania and copies of the BoT’s audit

Implementation to start over coming months and underpinned by supporting revisions to DFID’s bilateral agreements with GoT.

Discuss with other DPs opportunities to simplify their funding channels to LGAs in order to reduce the transaction costs

Mapping of the inter-governmental fiscal architecture mentioned above will inform discussions to start around October/November 2012.

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and complexities which the current multiplicity of channels have on the system Continue to encourage civil society’s engagement in PFM processes, whether through publication of a citizen’s budget or social audits of particular infrastructure projects

Improved transparency drive under PFMRP IV will support CSOs in engaging better with PFM processes.

E. How will expenditure be monitored, reported, and accounted for? Section C above outlines the specific obligations in connection to this financial aid with respect to providing confirmation of activities funded, together with the invoice from PEMANDU for the funds requested, prior to disbursement. On receipt of this DFID will verify that the activities (in particular the labs) have taken place as indicated before releasing funds. Funds will be accounted for through normal Government of Tanzania accounting and auditing procedures. Annual audited statements prepared by the National Audit Office in accordance with Tanzanian law, will be provided to DFID and other DPs no later than 9 months after the end of the Government of Tanzania’s financial year. All assets created by the project will be the property of the Government of Tanzania.

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Management Case A. What are the Management Arrangements for implementing the intervention? The Government of Tanzania will be responsible for delivering Phase I of Big Results Now! with the support of PEMANDU. The President’s Office Planning Commission will be the government body directly responsible for the implementation of the programme, under the oversight of the Chief Secretary, although line ministries, departments and agencies will be required to participate and take forward specific actions relating to their areas. DFID Tanzania’s Head of Office will continue to actively engage at a high level with the Government about the progress in implementing BRN! and expect to participate in elements of the programme, such as the Open Day(s). Within DFID Tanzania, the programme management will rest with the Governance Team, who have strong experience of managing financial aid programmes to government. Advisory support will continue to be provided by the Head of Office team, specifically the Policy and Programme Adviser. B. What are the risks and how these will be managed? The overall assessment of Phase I programme is that carries risks with high impact but low/medium probability. The assessment of probability is heavily informed by our assessment of the level of high-level support and commitment to this programme, which has been repeatedly demonstrated. Risk Probability Impact Mitigation 1. Failure to get tri-

Governmental agreement in place in time for Phase I to complete before April 2013

Low High • Ensured strongest support from GoT before commencing the programme

• Close working-level dialogue with both GoT and directly with PEMANDU representatives

• Escalation to higher level dialogue if necessary to ensure urgent action by all parties

• Payment by instalments so that disbursement can be withheld if no progress has been made

2. Delay in flow of funds causes PEMANDU to halt support for Phase I

Medium High • Clear agreement on payment schedule prior to commencement

• Ensure timely disbursement of DFID funding

3. Attendance at labs is poor or at insufficiently senior level

Low High • Reinforce in discussions with Government the importance of prioritising lab attendance, escalating as necessary

• Build wider support for lab process through through GBS Chair and development partner dialogue structure

4. Labs produce plans that are untenable within the 2013/14 Budget

Medium High • Highly experienced and expert lab facilitators provided by PEMANDU

• Facilitate Development Partner input to development of action plans to ensure realism about the scale of

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future DP contribution 5. Plans are not made

widely publicly available Medium Low • Utilise wider CSO/NGO network of

contacts to build external pressure • Reiterate to GoT the importance of

transparency to the overall success of BRN!

C. What conditions apply (for financial aid only)? The project is subject to the Government of Tanzania’s commitment to the following four principles, as defined in the DFID Technical Note of February 2011:

1. Poverty reduction and the Millennium Development Goals; 2. Respecting human rights and other international obligations; 3. Improving public financial management, promoting good governance and transparency

and fighting corruption; and 4. Strengthening domestic accountability.

As set out in the Memorandum of Understanding (MoU) if DFID considers that (a) there has been a failure to fulfil the commitments of the MoU or (b) to fulfil the commitments made under this Arrangement by the United Republic of Tanzania or (c) if any changes occur which in the opinion of DFID impair significantly the development value of the project/programme, and if dialogue does not lead to a satisfactory resolution, DFID’s response will be based on the following range of options:

a. Signal a possible future response; b. Delay all or part of the Budget Support instrument to government; c. Change the way DFID delivers aid to government; d. Switch some or all of UK’s aid away from government to other channels; e. Reduce/stop aid to Tanzania

The appropriate response will depend on:

i. the seriousness of the specific situation and the circumstances that led to the breach of the partnership commitments. In particular DFID will consider the scale, severity and trend of the change;

ii. the impact that any decision will have on poor people and longer term poverty reduction efforts.    

D. How will progress and results be monitored, measured and evaluated? Progress against the milestones identified to trigger release of funds will be confirmed to DFID by the Government of Tanzania. Given the short time frame of the programme, after Year 1 a Project Completion Review will be completed in place of an Annual Review. Prior to this a decision will be taken as to whether to conduct a Process Evaluation. This would evaluate the process of implementing the intervention and provide an independent but general assessment of contribution towards outcomes and impact. It would be carried out by professional evaluators/researchers and fully independent in terms of governance. It could provide useful evidence to inform future phases of BRN! in Tanzania, as well as decisions about adopting similar deliver models elsewhere, with or without DFID support. The necessity of such an evaluation will in part depend on the nature of independent audit processes established as part of the BRN! programme, but funds have been set aside for this should they be necessary.

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Lograme Quest No of logframe for this intervention: 3723288