Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
_____________________________________________________
_______________________________________
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
MKUZA FINANCING AND STRATEGIC ALLOCATION OF
RESOURCES INTO AREAS THAT SUPPORT PRO-POOR
GROWTH
Draft Report
Prepared by
Deograsias P. Mushi
Salum S. Ali
Iddi Salum Haji
January 2010
_____________________________________
____________________________________________________________
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 2
Table of Contents
1. INTRODUCTION...................................................................................................................... 3
1.1 BACKGROUND ......................................................................................................................... 3 1.2 OBJECTIVE OF THE REPORT ................................................................................................... 4 1.3 APPROACH AND METHODOLOGY ........................................................................................... 4
2. ANALYSIS OF THE GENERAL BUDGETARY RESOURCES, ALLOCATION
AND PUBLIC EXPENDITURE FOR THE IMPLEMENTATION OF MKUZA ............. 5
2.1 ISSUES, IMPLICATIONS AND RECOMMENDATIONS .............................................................. 5
3. ANALYSIS OF ALLOCATION OF RESOURCES AND ACTUAL EXPENDITURE BY MKUZA CLUSTERS AND SPECIFIC INTERVENTIONS ......... 8
3.1 RESOURCE ALLOCATION TO MKUZA CLUSTERS: ISSUES AND RECOMMENDATIONS...... 8 3.2 RESOURCE ALLOCATION TO MKUZA SECTORS: ISSUES AND RECOMMENDATIONS ..... 10
3.2.1 Allocation of Resources within MoEVT ........................................ 11
Community contributions to the Education sector .................................... 14
The impact of the spending on the Education sector ................................ 14
3.2.2 Allocation of Resources in the MoHSW ....................................... 15
The impact of the spending on the Health sector ..................................... 19
4. THE CONTRIBUTION OF THE PRIVATE SECTOR IN PUBLIC SOCIAL
SERVICE PROVISION AND PROSPECTS FOR PUBLIC-PRIVATE PARTNERSHIP IN ZANZIBAR ................................................................................................ 19
5. EMERGING GENERAL ISSUES AND SUMMARY OF RECOMMENDATIONS 21
REFERENCES ................................................................................................................................... 23
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 3
1. Introduction
One crucial aspect of MKUZA financing is strategic alignment of budgetary and other
resource allocations into the clusters and the strategic interventions of MKUZA by
reflecting on its general and specific goals. A critical issue in the process is mainstreaming
resource allocation into those areas that support pro poor growth. In this regard, the
MKUZA Implementation Monitoring Secretariat determined to commission a study, of
which this document is a draft report, with a view of determining a better and an effective
strategic allocation of resources to MKUZA. The report is organized to give a brief
background to MKUZA Strategy, an analysis and discussion of the findings of the study on
financing of MKUZA, emerging issues and implications, and a summary of
recommendations.
1.1 Background
The second generation Strategy for Growth and Poverty Reduction for Zanzibar (ZSGRP)
or MKUZA was launched in January 2007. The strategy constitutes the continuing effort by
the Revolutionary Government of Zanzibar to ensure the attainment of sustainable growth
that will reduce both the income and non-income poverty to the majority of Zanzibaris. It
is thus a part of the strategies to implement the long term development plan, the Vision
2020. The ZSGRP comes as the second generation of the first three-year Zanzibar Poverty
Reduction Plan (ZPRP) that was launched in 2002. The ZPRP recorded significant
achievements; the challenges encountered during its implementation have been taken as
strength towards development of the second generation strategy, MKUZA, which has
generated a strong agenda aiming at sustained broad-based growth whilst emphasizing
equity and good governance.
MKUZA has three but not mutually exclusive clusters for growth and poverty reduction
outcomes. These are (i) Growth and Reduction of Income Poverty (ii) Social Services and
Well-being, and (iii) Good Governance and National Unity. Each cluster contains key
issues, a defined broad outcome, goals, key strategic interventions and lead actors to
coordinate implementation.
MKUZA offers recommendations cum interventions on how the Government, the Non
State Actors including Development Partners, the Private Sector, Civil Society
Organizations and the Community can engage their actions and approaches to
significantly enhance economic growth and thus poverty reduction. The ultimate objective
is to achieve high standards of social well being for all the citizens of Zanzibar.
Implementation of MKUZA entails aligning sector strategies, programs and projects and
Local Government plans through the Medium Term Expenditure Frameworks. In addition,
efforts have been made to align various systems, processes, reforms, and programs with
MKUZA. For example, with regard to resource mobilization, several instruments including
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 4
the Zanzibar Budgetary Allocation System (ZBAS) have been developed to align
budgetary allocations with MKUZA interventions.
The costing of MKUZA in 2007/2008 indicated that Cluster One (Growth and Reduction of
Income Poverty) would need US$ 232.7m in 2008; US$ 226.5m (2009); and US$ 233.9m
in 2010. Analogously, Cluster II (Health, Education, and Water/Sanitation) would need a
total of US$ 625.9m. The implementation performance trend so far shows that 66% of
MKUZA development expenditure went to Cluster I; 28.5% to Cluster II, and 5.4% to
Cluster III.
The main sources of revenue for financing MKUZA have largely been domestic which
constitute about two thirds of the total budgetary financing. External sources of finance
have remained to be one third of the total budgetary financing. The foreign financing has
been channeled through various modalities, including Government Budget Support (GBS)
– the most dominant and the biggest, project support, etc. Efforts to reduce this
dependency have included measures to increase domestic resource mobilization (tax and
non-tax revenues) as well as community contribution; and of late, the Public-Private
Partnerships (PPP) has been sought as one of the important sources of financing.
A crucial aspect of MKUZA financing, as indicated earlier is strategic alignment of
budgetary and other resources into the clusters and the strategic interventions of MKUZA
by reflecting on its general and specific goals. And as also observed earlier, one critical
issue is mainstreaming resource allocation into those areas that support pro poor growth
– and thus impact simultaneously and directly on growth and poverty. This requires a
continuous detailed assessment of resource allocation and the extent of strategic
allocation into MKUZA Clusters and interventions – the subject matter of this report.
1.2 Objective of the Report
The overall objective of this report is to assess the financing of MKUZA and the extent to
which resource allocations are aligned to MKUZA, especially allocation into areas that
support pro-poor growth. This entails assessment of the overall and specific budgetary
allocation to MKUZA Clusters and interventions, including the extent to which these
resources reach lower levels – communities in particular. The assessment includes the
role played by the private sector through the PPP arrangement, and community
contributions to MKUZA.
1.3 Approach and Methodology
Preparation of this report involved general and specific approach focusing on the scope of
the work as outlined in the terms of reference; this was to ensure that each item of the
scope of work is adequately addressed and the objective of the study is achieved. Desk
work reviews constituted the main task in the implementation of the assignment. This
involved going through public expenditure reports and all the relevant documents relating
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 5
to plans and performance of MKUZA financing as obtained from the various government
Ministries and Departments and a few other sources. Thus, the main source of information
and data were published and unpublished reports as cited in the relevant sections of this
report.
In addition, the study team made field visits in selected service outlets in Zanzibar as
follows: Unguja: Kandwi, Chaani, Gamba, Mkokotoni, Pale, Kizimkazi, Makunduchi, Paje,
and Bwejuu; and Pemba: Vikunguni, Kiuyu Mbuyuni, Kiuyu Maziwa, Ngombe, Mgwiye and
Micheweni Urban. The objective of the field visits was to assess the extent to which
services are available and accessible – a proxy measure of resources reaching community
level; and also to establish the extent to which communities contribute resources to
complement government efforts.
2. Analysis of the General Budgetary Resources, Allocation and Public Expenditure for the Implementation of MKUZA
Ideally, this section presents an assessment of the trends of allocation of financial
resources generally to the MKUZA clusters, and specifically to the interventions of MKUZA
particularly those areas that by design or default support pro poor growth. We would want
to establish the absolute and relative allocations to the MKUZA interventions. This
involves tracking budgetary and non budgetary allocations and expenditures in various
public institutions that are implementing MKUZA; basically covering the period 2007/08,
2008/09 and 2009/10. The analysis shows the composition of the sources of financing and
the strategic allocations to the major clusters and interventions of MKUZA and potential
beneficiaries therein. The presentation is organized to point out the observed issues and
therein the evidence and implication on the attainment of the objectives of MKUZA.
2.1 Issues, Implications and Recommendations
I. Budget growth is somehow aligned to growth of domestic revenue
Table 1 provides analysis of variability in resource allocation for financing public
expenditure in Zanzibar. Notwithstanding the current dependency on external resources
of about one third of the total budget, it is observed that growth of the government
budget of about 24 percent somehow matches the growth of domestic revenue that
averaged 24.7 percent for the past two years. By implication, growth in domestic revenue
mobilization has helped to hold constant the ratio of external budget dependency
although public spending has been increasing throughout. This records a credit for good
tax policy and effort in Zanzibar. However, as we indicate later in this section, the trend of
the flow of external resources has not been as smooth as expected.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 6
Table 1: Analysis of Variability in Resource Allocation for Financing Public Expenditure in
Zanzibar
2006/07 2007/08 2008/09 2009/10
Total Domestic Revenue
89,629,586,532 110,652,537,776 139,561,305,544 58,804,953,905(up to November)
Domestic Revenue Growth (%)
23.5 26 -
Government Budget 214,801,618,000 266,942,535,000 331,234,881,000 410,255,000,000
% growth of government budget
24.3 24.1 23.9
Actual Government Expenditure as a % of the total budget
82.7 67.1 70.2 N/A
MKUZA Costing* (000,000)
504,960 523,800 554,040 N/A
Foreign sources
(i)Expected (Tshs)
156,305,000,000 173,751,83 5,000 199,188,000,000 N/A
(ii) Actual (Tshs)
63,762,352,402 47,122,646,239 15,517,128,414 ( up
to October)
N/A
(ii) As a % of (i)
41 27.12 7.8 N/A
* The figures do not include costing for Cluster III
N/A = Not available/applicable
II. Actual expenditure falls short of budget by a big margin
It is observed from Table 1 that actual expenditure by the government has averaged 73
percent, indicating that expenditure falls short of budget by 27%. For example, in the
financial year 2008/2009, it was only 70% of the total budget that was realized as actual
expenditure – this is a resource gap that challenges attainment of budgetary objectives in
Zanzibar.
Recommendation: Align government budget with the actual resource flows to the public sector
By either asking Development Partners to honour their commitments or to be concrete in their
kind support to the development of Zanzibar. Second, improve government revenue prediction
in Zanzibar by outsourcing expertise in the short term and more training in the long term.
III. Actual flow of external resources is far below the corresponding commitments
We observe further in Table 1 that actual external financing has never exceeded 50% of
the total commitments from Development Partners for the past three years – the trend is
generally worsening with time. This constitutes the major source of volatility in the public
sector actual spending versus budget commitments in Zanzibar. Much of the external
resources are usually used to finance development expenditure which is directly linked to
MKUZA implementation and attainment. By implication then, attainment of the objectives
and goals of MKUZA will largely depend on the trend of the inflow of external resources.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 7
Recommendation: Improve the flow and reliability of external support by asking
Development Partners to be more concrete to their budget support to Zanzibar
IV. Annual cost of full implementation of MKUZA is not affordable to Zanzibar
Table 1 shows further that the annual costs of the implementation of MKUZA is slightly
more than half a trillion excluding costs for cluster three; and also more than twice the
annual total government spending. Attainment of the objectives of MKUZA sounds
unrealistic given that the total annual government domestic revenue is less than 20% of
the total estimated annual costs of implementation of the strategy. By implication, more
external sources of finance are necessary to achieve the objectives of MKUZA because the
strategy is too ambitious as compared to the available resource envelop.
Recommendation: Mobilize more external and domestic budgetary resources for
Implementation of MKUZA. Prioritize items to be implemented every fiscal year within the
MKUZA framework and the actual available resource envelop.
V. Actual development expenditure for MKUZA is far below budgetary commitments
Table 2 shows development budget for MKUZA and the actual spending on the same for
the period 2007/08 through 2009/2010. Actual development expenditure for MKUZA for
the period hardly exceeds 50% of the budgetary commitments. By large, the observed
resource gap is a limiting factor to the implementation of MKUZA.
Table 2: Performance of the development budget for MKUZA - Summary
Development Budget 2007/08 2008/09
2009/2010
Amount budgeted
135,646,424,000
376,824,249.00
239,913,000,000.00
Actual development expenditure
73,906,404,402
134,993,724.00 31,785,651,414.00
Actual expenditure as a % of the budget
54.5 35.8 13.2% (by October 2009)
We observe too sources of underfunding for MKUZA; one is the general annual budget
ceiling for each sector, as issued by the Ministry of Finance and Economic Affairs, and may
also involve monthly limits; the second is the resultant underfunding that is generated by
the difference between the approved budget and actual disbursement of funds. The latter
introduces reprioritization of spending in order to accommodate the resource gaps, and
thus may potentially be misaligned with the original budget priorities.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 8
Recommendation: Ensure that the Government sources of finance for development
projects are concrete and financial support committed for development by the Development
Partners is fully realizable.
3. Analysis of Allocation of Resources and Actual Expenditure by
MKUZA Clusters and Specific Interventions
3.1 Resource Allocation to MKUZA Clusters: Issues and Recommendations
Tables 3a – c provide an analysis of financial commitments and actual development
expenditure for the implementation of MKUZA for the period 2007/08 – 2009/10. A
number of issues and observations with regard to the financing of the implementation of
MKUZA emerge from the three tables as we discuss next.
I. Development budget for MKUZA is too much dependent on external sources which
are not smoothly realizable/predictable
It is observed from Table 3 that more than eighty percent of the development budget is
from external sources which are not smoothly predictable and realizable. Although small,
government contributions to the development expenditure have been more realizable
than external sources.
Recommendation: Reduce dependency of the development budget on external resources by
Allocating more domestic resources to the MKUZA development budget.
II. The actual development expenditure for MKUZA sectors is far below the
corresponding budgetary commitments
Table 3b shows that in 2008/09 the actual development expenditure for the three clusters
of MKUZA was 35.8% of the total budget commitment. This is observed to be too low
compared to the actual annual costing of MKUZA. The source of such an underfunding, as
underscored throughout this report, is mainly the external support which is not
predictable or smoothly realizable.
Recommendation: Ensure that financial commitments from external sources for MKUZA
implementation are reliable and realizable to avoid underfunding and reprioritization
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 9
Table 3a-c: Analysis of development financial commitments to MKUZA clusters in FY 2007/2008 - 2009/10
(a) 2007/08
Source of Funds
CLUSTER Total
I II III Budget Actual Budget Actual Budget Actual Budget (000
Tshs) % share
% of the total financial commitment
66.1 - 28.5 - 5.4 -
135,646,424
100
% of SMZ contribution 9 - 13 - 47 - 16,277,570.88 12
% of External sources 91 - 87 - 53 - 119,368,853.12 88
(b) 2008/09
Source of Funds
CLUSTER Total
I II III
Budget Actual Budget Actual Budget Actual Budget (000
Tshs) Budget %
share Actual (000
Tshs)
Actual as a % of
budget
% of the total financial commitment
32.8 29.6 16.2 19.2 51 51.2 376,824,249.00 134,993,724.00 35.8
% of SMZ contribution
7.5 28.5 9.9 18.1 9.6 26.8 33,766,000.00 9 34,579,358.00 102.4
% of External sources
92.5 71.5 90.1 81.9 90.4 73.2 343,058,249.00 91 100,414,366.00 29.3
(c) 2009/2010
Source of Funds CLUSTER Total
I II III Budget Actual Budget Actual Budget Actual Budget (000
Tshs) % share
% of the total financial commitment
60.7 33.5 5.7 239,912,883.00
% of SMZ contribution
16.3 12 53 40,725,105.00 17
% of External sources
83.7 88 46.8 199,187,778.00 83
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 10
III. Additional financial resources for strategic implementation of the Cluster One
objectives and goals are necessary in order to enhance achievement of the rest of
MKUZA objectives and goals
Growth and reduction of income poverty is a pre-requisite for sustainable availability and
access to social services, reduced morbidity, improved nutritional and calorific intake,
reduced mortality, improved learning capacities, etc. Accordingly, more resources for
implementation of cluster one of MKUZA is necessary to speed up growth and reduction of
poverty. For example, in 2008/09 priority by spending was Cluster III, and in 2009/10
priority by budget commitment is cluster I (Tables 3b & c).
Recommendation: Prioritize and increase actual allocation of resources going to the
implementation of Cluster One for strategic attainment of the other objectives and
goals of MKUZA
3.2 Resource Allocation to MKUZA Sectors: Issues and Recommendations
I. Priority sector in resource allocation in Zanzibar is Education
The general budgetary allocation of resources to government ministries in Zanzibar is
provided in Table 4. Clearly, the priority sector is Education and Vocational Training
(MoEVT). The Ministry of Finance and Economic Affairs (MoFEA) comes second to the
allocation, and the Ministry of Health and Social Welfare (MoHSW) ranks third in terms of
government budget and spending priorities. Over all, allocation to Ministries favours
Cluster II as the priority in the general budget and actual expenditure – which is a good
and strategic allocation to trigger growth and poverty reduction (Cluster I) in the long
term.
Table 4: GoZ Budget Allocation to Ministries
MDA FY05/06 FY06/07 FY07/08
Budget Expenditure Budget Expenditure Budget Expenditure
Rank % Rank % Rank % Rank % Rank % Rank %
MoEVT 1 25.5 1 27.6 1 25.8 1 23.3 1 26.8 1 28.5
MoFEA 2 10.1 2 11.3 2 9.8 2 10.2 2 11.1 2 8.9
MoHSW 3 8.5 3 9.4 3 8.1 3 8.8 3 8 3 9.3
HoR 4 6.8 4 5.6 4 6.3 4 5.9 4 5.4 4 6.5
MoALE 5 6.1 5 6 5 6.3 5 5.9 5 5.7 5 6.3
Source: PER MoHSW 2008
Recommendation: Continue prioritizing the Education Sector in resource allocation for
long term and sustainable growth and reduction of poverty in Zanzibar.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 11
3.2.1 Allocation of Resources within MoEVT
Analysis of allocation of financial resources within MoEVT, as provided in Table 5 and
Figure 1&2, compares budgeted resources by item of expenditure, actual release of funds
and actual expenditure by category and item of spending in the ministry. Accordingly, the
analysis raised a number of issues as we discussed next and make proposals for further
improvement.
II. Actual expenditure falls short of the sectoral budget by a big margin
In 2007/08 the MoEVT actual expenditure as a percentage of the sectoral budget, as
indicated in Table 5 and Figre 2, was 67 percent. The resource gap was thus 33 percent.
The situation was much better for the previous years as indicated further in Figure 2. The
underfunding varies by items of expenditure leading to reallocation of resources.
Recommendation: Match approved budgets with actual resource availability in the public
sector to avoid reallocation that is potentially associated with outside-budget reprioritization
III. Financial commitments to development expenditure are not binding and thus
difficultly realizable
It is observed from Table 5 that it is only 28% of the budgeted development expenditure
that was finally realized in the financial year 2007/08. Loans were not smoothly accessible
as had been budgeted, which is actually the main source of the short fall. The share of the
development expenditure varied from the budgeted 37% to only 15%; and thus, MoEVT
was not able to implement 72% of the planned development projects in the sector – this
is a profound setback on the implementation of cluster II of MKUZA.
Recommendation: The GoZ and Development Partners will have to find a way of rationalizing
Financial support and commitments in order to institute a more realistic development budget
for MKUZA. Notwithstanding, thanks to DPs for their continued support for the
people of Zanzibar
IV. The current resource allocation in the public sector leaves too little for development
expenditure
Attainment of MKUZA will involve massive investments in the key sectors as indicated in
the costing exercise for the same. Incompatibly, the current allocation cannot afford a big
share for development expenditure. For example, Table 5 shows that actual expenditure
for development in the education sector was 15%. In the previous tables, we also observe
that development expenditure was too small – in 2008/9 the realizable expenditure for
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 12
Table 5: Resource Allocation within the Ministry of Education and Vocational Training (MoEVT) in 2007/08
S/N Particulars Budget Actual Expenditure Item share out of
the total actual
expenditure
Budgeted item share out
of the total MoEVT
budget
Actual expenditure on
the item as a share of
the budget on the
Item
Recurrent
1 Salaries & Allowances 21,640,066,000 20,959,681,550 70 49 97
2 Non-wage 1,995,090,000 1,383,000,345.10 4.61 4 69.32
3 Subvention 4,371,000,000 3,020,097,069 10 10 69
Sub Total 28,006,156,000 25,362,778,964 85 63 91
Development
1 GoZ contribution 1,340,000,000 1,289,996,210.50 4 3 96
2 Loans 12,350,000,000 390,061,399.97 1.30 28 3.16
3 Grants/Donations 2,846,610,000 2,955,113,445.95 9.85 6 103.81
Sub Total 16,536,610,000 4,635,171,056.42 15 37 28
Grand Total 44,542,766,000 29,997,950,021 100 100 67
88% 88% 89% 89% 90% 90% 91% 91% 92% 92%
2004/5 2005/6 2006/7 2007/8 Budget Performance 100%
Figure 2: Percentage of budget performance
Source: MoEVT PER 2007/08
Figure1: MoEVT Recurrent Expenditure 2007/08
78%
1% 5%
16%
salaries& allowances Capital Non-wage Institutional contri.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 13
development was only 35% of the budget for development. Clearly, some measures must
be taken to address the situation.
Recommendation: In addition to rationalizing flow of external financial support, the GoZ
should find means of increasing the local share of development expenditure. It may involve
fund mobilization outside the tax system in addition to being prudent in the current allocations
V. Do the funds allocated to the MoEVT reach the targeted communities?
There is no a clear evidence from the Public Expenditure Review Reports for MoEVT that
indicates explicitly how funds are spent at the community level; the reports show general
allocation for educational materials but not the actual purchases or expenditure at the
service outlet level. However, there are two points to observe and discuss to illustrate the
community-level incidence of expenditure of funds allocated to MoEVT. One is further
analysis of Table 5, and second is field work observations and assessment by the study
team of this report.
It is quiet unusual to divert funds for personal emoluments because these are earmarked
for personnel in the respective sector. Development and other charges funds are however
the point of focus. Since most of the school materials are procured centrally, it is fairly
easy to control OC funds in the education sector. But whether or not development funds
reach their target communities is an issue of deeper analysis.
The study team travelled to selected communities in Unguja and Pemba to make
assessment of whether MoEVT and other funds allocated to projects reach communities.
Annex 1 of this report indicates funds reaching communities by different projects in
Micheweni. There is clear evidence that funds allocated through special interventions and
transferred directly to communities reach the target. However, whether the funds are
spent as planned to benefit communities is a different issue that needs auditing.
Nevertheless, the fact that education services are running smoothly despite the normal
problems as observed by other studies is a clear indication that recurrent funds allocated
to the education sector reach communities though reallocation as observed earlier may
lead to reprioritization. But we cannot make the same general conclusion for development
funds; much detailed analysis involving physical auditing is needed.
Recommendation: Carry out expenditure tracking study regularly to establish the
extent to which recurrent and development funds allocated to Ministries and
Government Departments reach grassroots beneficiaries including an assessment of
Whether the Services realized at the service outlets match the funds disbursed.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 14
Community contributions to the Education sector
Cost sharing in education is widely practiced according to MoEVT PER 2007/08. There are
three types of community contributions to the education sector. These are fees and other
financial contributions payable directly to schools, in kind direct contribution to schools in
the form of labour and materials, and household direct expenditure on school materials
and other needs.
The MoEVT PER 2007/08 mentions that primary school pupils are required to pay 3,000
shillings annually, secondary school students pay 5,000 shillings annually and upper
secondary pay 7,000 shillings. The report says further that some schools do not remit
funds collected to the head quarters instead they use the funds at school level. The report
concludes that cost sharing is widely practiced in schools. However, no clear data cum
information are available to elaborate the actual financial resource base attributable to
direct contributions by communities.
In terms of in kind direct contributions in the form of labour, communities have continued
to support government efforts by participating in various construction works in schools.
This includes contribution of materials ranging from construction to learning facilities.
Again data on these contributions are not properly compiled and archived.
At the household level, direct expenditure on school-related materials has continued to be
the main household contribution to the education sector not only in Zanzibar but also in
the mainland Tanzania.
Recommendations:
1. Carry out an assessment of the potential of fees in schools as a source of revenue.
2. Consider fund raising for schools by putting the liability on the respective entire
Community rather than those households with pupils in schools. In this regard, fund raising
Can be a biannual event that may involve different invitees.
3. Community authorities should organize fund raising and other contributions to schools
rather than the schools themselves. Additionally, sensitization for raising such funds or
contributions should be done by local leaders including religious leaders, not the schools.
The impact of the spending on the Education sector
With the onset of MKUZA gross enrolment in basic education has increased from 91.5% in
2004 to 95.7% in 2008. In particular, gross enrolment for boys increased from 92% in
2004 to 94.1% in 2008; and enrolment for girls increased from 91.1% in 2004 to 97.3%
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 15
in 2008. Clearly, this is an increasing trend that has seen adult literacy rising to 75.8% by
2008.
Class-pupil ratio has declined from 81 in 2004 to 68.5 in 2008. This is a remarkable
achievement given that enrolment is increasing simultaneously with the improvement of
the learning environment.
The pass rate for basic education improved from a rate of 44.4% in 2004 to 53.9% by
2008. Enrolment in Universities has remarkably increased from a total of 857 students in
2004 to 2,910 in 2008.
Recommendations:
1. Clearly, more effort is needed to further improve enrolment in Schools; in particular, the net
enrolment in basic education should be the focus in this regard. Involvement of communities – Shea,
is deemed crucial to ensure early enrolment in schools
2. The pass rate and thus the transition rate at form two is too low; more effort is
necessary to raise the rate in order to ensure that more Zanzibaris get access to advanced
education, college training and university.
3.2.2 Allocation of Resources in the MoHSW
Analysis of resource allocation in the Health sector is provided in Tables 6 – 10. In
general, budget performance in the MoHSW is much better than that of the Education
sector. Both domestic and external sources have performed well according to the results
indicated in Table 6. However, there are several issues that are clearly observable from
the analysis.
I. Real expenditure in the Health Sector has been increasing with time
Table 6 indicates that real expenditure in the Health sector has been increasing both in
total expenditure and per capita expenditure. In 2005/06, per capita USD expenditure in
the Health sector was USD12.6; by 2007/08, per capita expenditure had reached USD
13.7, which is an indication that more resources have been made available for the Health
sector.
II. Except for the year 2007/08, performance of the Health sector development
budget has been good compared to the performance of the general development
budget
Table 7 shows the breakdown of expenditure into recurrent and development categories.
With an exception of the year 2007/08, the actual development expenditure as a
percentage of the corresponding budget was more than 85%. However, in 2007/08,
actual release of development funds was only 50% of the budgeted resources.
REVOLUTIONARY GOVERNMENT OF ZANZIBAR
Resource Allocation and Strategic Financing of MKUZA January 2010 Page 16
Table 6: Budgetary Allocation and Actual Spending in the Health Sector
Source FY05/06 FY06/07 FY07/08
Budget (1) Expenditure(2)
Share
(2) as % of
(1)
Budget (1) Expenditure(2)
Share
(2) as % of
(1)
Budget (1) Expenditure(2)
Share
(2) as % of (1)
GoZ(Tshs m) 6,108 5,775 34% 95 6,621 6,727 48% 102 9,184 7,967 40% 87
External
Funding(Tshs m)
10,860 65% 7,101 6,997 51% 99 12,318 11,868 59% 96
Cost-sharing(Tshs
m)
107 0.6% 162 1% 166 164 1% 99
Total Tshs(m) 16,742 100% 13,722 13,886 100% 101 21,668 19,999 100% 92
Total Tsh per capita 14,976 11,880 12,022 101 18,157 16,758 92
FX Rate(USD1=Tsh 1,192 1,318 1,221
Total USD(m) 14.1 10.4 10.5 101 17.7 16.4 92
Total USD per capita 12.6 9.0 9.1 101 14.9 13.7 92
Source of Data: MoHSW PER 2007/08
Table 7: Nominal MOHSW spending, FY2005/06 - FY2008/09(Tshs m)
FY2005/06 Budget (1) Expenditure(2)
(2) as % 0f
(1)
FY2006/07
Budget (1) Expenditure (2)
(2) as % 0f
(1)
FY2007/08
Budget (1) Expenditure (2)
(2) as % 0f
(1)
FY2008/09 Budget
Recurrent
Development
6,108 5,775
233 291
95
125
6,351 6,489
270 239
102
86
8,384 7,562
800 405
90
50
9,553
1,550
Total 6,341 6,066 96 6,621 6,727 102 9,184 7,967 87 11,103
% growth 2% 26% 4% 11% 39% 18% 21%
Source of Data: MoHSW PER 2007/08
Table 8: External Funding by Category, FY2006/07-2007/08(Tshs m)
Category
FY2006/07 FY2007/08
Budget
Total %
Expenditure
Total %
Budget
Total %
Expenditure
Total %
Drugs and medical supplies 2,134 30 2,043 29 3,658 30 4,390 37
In-service training 1,181 17 1,383 20 1,097 9 1,535 13
Other running costs(stationery, minor repair) 563 8 708 10 692 6 1,332 11
Staff costs(salary ,top-ups, allowances etc) 1,201 17 748 11 1,245 10 1,348 11
Transport and fuel 287 4 264 4 1,543 13 1,540 13
Total Recurrent Costs 5,366 76 5,146 74 8,235 67 10,146 85
Long-term training 64 1 47 1 678 6 137 1
Other Capital costs 38 1 38 1 27 0 27 0
Physical infrastructure 1,089 15 1,392 20 2,713 22 848 7
Purchase of equipment(including vehicles) 543 8 375 5 666 5 709 6
Total Capital Costs 1,735 24 1,851 26 4,084 33 1,722 15
Total 7,101 100 6,997 100 12,318 100 11,868 100
III. The Health sector financing is too dependent on external sources
It is observed in Table 6 that more than 50% of the total financing in the Health sector
comes from external sources. In fact in 2007/08, the proportion was 59%. Though in
general the flow of external sources is smooth and predictable compared to the general
budget, the observed dependency is too high and unhealthy to sustainable development
of the Health sector in Zanzibar.
IV. About one third of the external resources in the Health sector go to drugs and
medical supplies
Table eight indicates that 80% of the external resources in the Health sector are used to
finance recurrent expenditure of which the main item is drugs and medical supplies. It is
only about 20% of the external resources which is used for development in the sector. As
observed earlier, the sector is too much dependent on external financing; and even more
worse, much of the recurrent expenditure in the sector is externally financed.
Recommendation: Mobilize more domestic resources in the long term to address external
dependency in the Health sector. This can involve establishment of local basket fund for the
Health sector similar to the Road Fund. This could include such funds at various levels.
For example sale of crops and small businesses could include special fee/contribution to a
locally agreeable health fund
V. Much of the spending in the health sector outside the MoHSW happens at Mnazi
Mmoja National Referral Hospital
The National referral hospital, Mnazi Mmoja, takes the lion share of the spending in the
Health sector outside the MoHSW as indicated in Table 9 below.
Table 9: Estimated allocations for running of health facilities, FY07/08(Tsh m)
FY2007/08 Personal Emoluments (PE) Actual
Other Charges (OC) Actual
Total Percentage of the total allocation
OC as a % of category of facilities allocations
PHCU 1,095.6 13.4 1,109.0 23 1
PHCC 388.8 50.9 448.7 9 11
DH 930.7 27.1 957.8 20 3
MMH 2,205.8 71.6 2,277.4 48 3
Total 4,620.9 171.9 4,792.8 100 4 Source of Data: MoHSW PER 2007/08
The national referral hospital is fairly reachable by all the people of Zanzibar at a cost, but
not so for many people during an emergency. As such, decentralization of the services will
make them more accessible and affordable by all the people. In this regard, deliberate
effort should be taken to improve district hospitals and primary health facilities – even a
selected few ones to begin with.
Recommendation: Improve selected district and primary health facilities so that
resource allocation and thus services in the Health sector reach more people at a
close distance.
VI. The OC allocation is too small and thus limits actual and discretional spending by
health facilities
Table 9 shows further that OC allocations to health facilities is only about one digit
percentage of the total allocation for each level of facilities. This is too small compared to
expenditure needs of health facilities. In addition to cost sharing, health facilities should
be given more OC facilities to cover expenditure at the facility level – this may include
regular rehabilitation, addressing shortages of supplies, cleaning and gardening, food for
patients, fuel, etc.
VII. Cost sharing contributes about 1% of the total resource envelop
Cost sharing contributes about 1% of the total health sector financing and about 50% of
the total OC for health facilities. Viewed from the central level, cost sharing appears to
have insignificant contribution to the total resources available for the Health sector in
Zanzibar; but at the facility level. Cost sharing contributes about 50% of the total
expenditure. But also households incur costs in terms of transport cost and purchase of
other medical supplies as part of the expenditure on health.
Cost sharing makes it possible to introduce effective accountability at the health facility
level because every supply must be fully accounted for and audited. However, critics of
cost sharing have argued that such a system constitutes a barrier to the poor households
to access medical services. A general solution and a long term one will be establishment
of a social insurance system. In the short term however communities may opt to establish
local health basket funds for which contribution is completely independent from the
incomes of patients and their access to services.
Recommendation: Work to establish a social insurance system in the long term; in the
short term sensitize communities to establish community basket health funds.
VIII. The MoHSW takes the lion share of expenditure in the Health system
About 50 percent of the total spending on health in the public sector is done by the
MoHSW (Table 10). This is too much centralization which leaves too little for discretional
expenditure by health facilities. By implication much of the planning is done at the central
level living communities with little say when it comes to expenditure decision. This affects
the extent to which local contributions can be effectively mobilized. Decentralization will
make communities more responsible to the delivery of health services and thus more
willing to contribute for them.
Table 10: Crude expenditure breakdown by category, FY07/08(Tshs m)
Category ZANZIBAR Percentage allocation
Planning 1,056.8 10.7
Preventive 1,052.0 10.6
Curative 2,107.5 21.3
SW & SA 446.2 4.5
Chief Chemist 277.2 2.8
MoHSW 4,939.7 50.0 Source of Data: MoHSW PER 2007/08
IX. Do the funds allocated to the MoHSW reach the targeted communities?
In general the funds allocated to the MoHSW reach communities but those who live close
to the national referral hospital have a better access to quality services than those living
far away. Decentralization is deemed crucial for improved access to health services in
Zanzibar.
However, in terms of availability of services at the grassroots level and services outlets, a
more thorough study is needed to carry out physical assessment and auditing.
The impact of the spending on the Health sector
The impact of the spending in the health sector is outstanding. Majority of people in
Zanzibar have access to health facilities within 15kms. Life expectancy in 2004 ranged
from 53.5 to 58.4 by regions, but by 2008, the range was 55.9 to 60.8.
Other health indicators are also improving. The infant mortality rate had decreased from
75.3 in 1996 to 61 in 2005. Analogously, the under-five mortality rate declined from
107.5 to 101. The MDG evaluation report for Zanzibar shows that with regard to the
targets on reduction of mortality rates, the sector is on track. Needless is therefore to
underscore that the increasing expenditure on health in Zanzibar has impacted positively
on the health of the general population and other health indicators. However, Zanzibar is
still far from the objectives enlisted in its development vision and even much far away
when compared to same achievements elsewhere in Africa and the developed world.
Definitely, more effort is needed.
4. The Contribution of the Private sector in public social service provision and prospects for Public-Private Partnership in
Zanzibar
There is a growing recognition of the importance of the private sector contribution in the
attainment of national objectives in Tanzania. The contribution of the private sector has
taken two forms – the traditional one and a more innovative way – or the so called Public-
Private Partnership.
In the traditional approach, the private sector provides services to those who can afford to
pay – it is a system of pay to get service. This is common in the sectors of education,
health, security services, etc. The private sector plays a big role in this regard. Of the
298,777 total enrolment in basic and lower secondary education in Zanzibar, 15,538
students or 5% are in private schools. Also, of the 277 basic education schools in
Zanzibar, 45 or 16% are private. At the secondary level, the private sector has seven out
of seventy eight schools. Clearly, the contribution of the private sector in the education
sector in Zanzibar is growing though still marginal. One way of increasing the contribution
of the private sector in education services is for the public sector to give incentives that
will attract more investment in education by the private sector. This may include
earmarked land plots for schools, tax incentives, building materials in the form of loans,
etc. There should be specific consideration to benefit the rural population because private
sector services are in most cases urban based.
Recommendation: Consider a package of incentives for the private sector to Increase their
investment in the education sector. This may include earmarked land plots for schools, tax incentives, building materials in the form of loans, etc
In the health sector, of the 225 health facilities in Zanzibar, 82 or 36% are private. As
indicated earlier most of these facilities are found in urban areas, and are mainly primary
health facilities. However, private health facilities constitute an important part of the
health system in Zanzibar. For example, private pharmacies complement public health
facilities which may sometime run out of medical supplies. One critical factor in the health
system is medical staff, which many health facilities in both the public and the private
sector have high demand. One way of complementing the effort of the private health
providers is for the public sector to provide short and long term training to their medical
staff. Once trained, medical doctors will work for Zanzibaris regardless of whether they
are in the public or private sector – the benefits to the public are the same. Also, other
forms of support to the sector like medical equipment would improve provision of health
services by the private sector.
Recommendation: Provide support to private health providers to improve their services.
Consider short and long term training of medical personnel and other forms of support such
as medical equipment deemed necessary for better and reliable services.
In the new approach of engaging the private sector in public service provision, a more
innovative and efficient model has been developed and adopted. This is famously called
Public-Private Partnership – PPP. This may be formally new in Zanzibar but widely
practised in the mainland Tanzania. The PPP involves contractual arrangement between
recognized and registered private institutions/dealers and the public sector with regard to
provision of specified services. The contractual specification includes details of the
services to be provided, payment schedules, supervision, etc. In the mainland Tanzania
the initiative started some years back, and the 2008 impact evaluation indicated a
remarkable improvement in quality and service availability in the areas of security
services, cleaning and gardening services and catering services in public hospitals.
However, the costs of provision for catering escalated but those of the other services did
not. Therefore, it was observed that with careful outsourcing, services in the public sector
could be improved substantially with the same costs or marginal increase. In fact in some
cases the costs went down. The PPP approach makes accountability and supervision fairly
easy and efficient in the public sector. This gives more time to the public sector staff to
deal with policy effectiveness and issues rather than managerial issues and therefore
raising efficiency in the public service delivery. Obviously, the PPP stands to be beneficial
to Zanzibar if carefully adopted and supervised. This may start with selected services like
cleaning and gardening, catering services for patients, reception services, distribution
services, etc.
Recommendation: Pilot the PPP approach in Zanzibar towards its adoption for improving
Service provision in the public sector. Learn best practices of PPP from the mainland
Tanzania and other countries.
5. Emerging General Issues and Summary of Recommendations
The analysis of resource allocation in the public sector in Zanzibar, as carried out in this
report, has indicated a number of issues and made proposals as recommendation for
improvement towards the attainment of MKUZA objectives. One major issue which has
surfaces throughout the report is resource gap that emanates from internal constraints
and also failure on that of external resources to flow in as expected. In this regard, there
has been always a big gap between the budgeted resources and the actual expenditure.
This has been most problematic and common in development budget and expenditure
leading to too little resources for development and sometimes leading to reallocation and
thus reprioritization within spending units. This compromises smooth implementation of
MKUZA and thus on-schedule impacts and outcomes.
The report has come up with several recommendations that include measures to mobilize
more resources for development expenditure and at the same time ask the Development
Partners to be more concrete to their kind support to Zanzibar.
Community contributions in the form of cost sharing have to be reviewed with a few of
engaging local communities to contribute effectively without compromising the ensured
universal access. For example, it has been mentioned in some reports that students pay
school fees, but there are no clear figures on compliance, the amount collected and
expenditure thereof. This information is important input to making concrete decision on
cost sharing in the education sector. In the health sector, cost sharing contributes just
1% of the total spending of the sector, but forms 50% of OC spending at the facility level.
Looking forward to establish a local basket fund that will culminate into a social insurance
appears to be the way forward for improving community contributions in the health
sector.
The PPP approach for selected services is potentially good for Zanzibar. It will complement
government efforts in service provision and improve efficiency in the sector.
Dependence on external resources has been observed as a major issue in the public
sector financing in Zanzibar. Efforts to reduce it in the long term are necessary for
sustainable provision of good and reliable public services. Economic growth and increased
mobilization of fiscal resources will provide long term solutions to resource gaps and
dependency in Zanzibar. Therefore, investment in cluster one of MKUZA either from
domestic or foreign sources should be encouraged.
The current arrangement for external funding includes budget support, basket funding
and programmes/project support. These modalities are expected to undergo full
assessment in the on-going evaluation of JUST in Zanzibar. However, each of those
approaches has significance depending on the purpose of financing and the targeted
beneficiaries. For example in the Health sector, basket funding, programmes and projects
appear to be common, and they have had a profound impact on the health system in
Zanzibar. However, on the basis of JUST and the general budget support reviews, there
should be an agreeable way forward for the modalities of external financing.
The annual budget ceiling for MDAs in Zanzibar constitutes a challenge to the MKUZA
implementing units in Zanzibar. MDAs have to strive with the limited allocation they get in
relation to what they really need. The government has had to introduce the budget ceiling
approach to make planning more realistic and less tedious by avoiding recasts. However,
the question and a challenge indeed is how the ceilings are determined. This is a crucial
process which should be as participatory by MDAs as possible. Just like the priorities, the
rationale for the ceilings must be elaborative and common knowledge to MDAs as much as
possible.
With regard to the impact of the resource allocation on service provision, the report has
found improving social service provision which to some extent meets the Millennium
Development Goals and partly MKUZA targets. Notwithstanding, more resources and
efforts are needed to achieve full implementation of MKUZA.
References
1. Serikali ya Mapinduzi ya Zanzibar: Wizara ya Elimu na Mafunzo ya Amali,
Hotuba ya Waziri wa Elimu na Mafunzo ya Amali, 2008/2009
2. Serikali ya Mapinduzi ya Zanzibar: Wizara ya Elimu na Mafunzo ya Amali,
Hotuba ya Waziri wa Elimu na Mafunzo ya Amali, 2009/2010
3. Serikali ya Mapinduzi ya Zanzibar: Wizara ya Elimu na Mafunzo ya Amali,
Hotuba ya Waziri wa Elimu na Mafunzo ya Amali, 2007/2008
4. The Revolutionary Government of Zanzibar: MUKUZA Annual Implementation
report,2007/2008.
5.Serikali ya Mapinduzi ya Zanzibar : Hotuba ya Wizara ya Fedha ya
Uchumi,2008/2009
6. Mkuza Monitoring Master Plan,2007
7. Serikali ya Mapinduzi ya Zanzibar: Hotuba ya Wizara ya Fedha ya
Uchumi,2009/2010
8.Mapitio ya Hali ya Uchumi na Utekelezaji na Mpango wa Maendeleo
Zanzibar,2006/07,2007/08,2008/09/2009/010
9.Serikali ya Mapinduzi ya Zanzibar: Wizara ya Kilimo, Mifugo na Mazingira,
Hotuba ya Makadirio ya Mapato na Matumizi, 2006/07, 2007/08, 2008/09,
2009/2010.
10. .Serikali ya Mapinduzi ya Zanzibar: Wizara ya Maji, Ujenzi, Nishati na Ardhi,
Hotuba ya Makadirio ya Mapato na Matumizi, 2006/07, 2007/08, 2008/09,
2009/2010
11. Serikali ya Mapinduzi ya Zanzibar: Wizara ya Afya na Ustawi na Jamii,
Hotuba ya Makadirio na Mapato na Matumizi, 2006/07, 2007/08, 2008/09,
2009/2010
12. Michel Schaeffer (2009), Strengthening the Budget Preparation Process.
13. Zanzibar Health Sector Public Expenditure Review, 2008
14. Revolutionary Government of Zanzibar: Office of Chief Government
Statisticians, Zanzibar statistical Abstract,2007
15. MKUZA Costing Exercise,2008
16. Revolutionary Government of Zanzibar: Government Budget Guideline,
2008&2009
17. Revolutionary Government of Zanzibar: Office of Chief Government
Statisticians, Social- economic survey,2008
18. Revolutionary Government of Zanzibar: Zanzibar Human Development
Report,2009
19. Revolutionary Government of Zanzibar: Education Sector Public Expenditure
Review, 2009
20. Revolutionary Government of Zanzibar: Zanzibar Strategy for Growth and
Reduction of Poverty ( ZSGRP), 2007
Annex 1: Special allocations to specific interventions
JP5. MICHEWENI INTERVENTIONS
Funds allocation To Implementing patners and Activities for project Period SEPT 2009 TO DEC. 2009
First Trip Second Trip Third Trip TOTAL
Ministry of agriculture,Live stock and
Environment
Beekeeping
21,809,000.00
11,104,400.00
-
32,913,400.00
Irrigation infrustructure
25,000,000.00
26,014,000.00
-
51,014,000.00
Adoptive research for soil and crops
31,590,500.00
4,659,800.00
36,250,300.00
Alternative source of energy for cooking
11,267,000.00
2,085,000.00
13,352,000.00
Promote dairy Goats and Poutry
husbandary
40,883,750.00
14,760,800.00
55,644,550.00
Promote Seaweed and Fish Catch quality
10,420,000.00
9,898,000.00
20,318,000.00
TOTAL
140,970,250.0
0
68,522,000.0
0
-
209,492,250.00
Ministry of eduction and Vocational Training
Construction of Pree-Nursery School 69,041,900.00
34,848,000.00
103,889,900.00
TOTAL
69,041,900.00
34,848,000.0
0
-
103,889,900.00
Ministry of Labour ,Youth women and child
Development
Reduce child labour activities
38,004,400.00
38,004,400.00
TOTAL
-
38,004,400.0
0
-
38,004,400.00
Ministry of Information ,Culture and Sports
-
Raising community awareness,challenge
and opportunities for reducing poverty
23,571,000.00
6,480,300.00
30,051,300.00
TOTAL
23,571,000.00
6,480,300.00
-
30,051,300.00
-
Ministry of health and social Welfare
-
Constructuction of Twin house for service
provider
76,073,522.00
49,694,000.00
125,767,522.00
TOTAL
76,073,522.00
49,694,000.0
0
-
125,767,522.00
-
Ministry of Trade ,Tourism and Investment
-
Increases promotion of Eco-Tourism
9,996,000.00
24,222,100.00
34,218,100.00
TOTAL
9,996,000.00
24,222,100.0
0
-
34,218,100.00
Zanzibar Water Authority
-
Provision of clean and safety Water
81,416,320.00
187,057,000.0
0
TOTAL
81,416,320.00
187,057,000.
00
-
-
-
Ministry of Finance and Economic Affairs -
Project Operational Cost
102,354,600.00
187,532,000.0
0
247,632,000.00
537,518,600.00
TOTAL
102,354,600.0
0
187,532,000.
00
247,632,000.0
0
537,518,600.00
TOTAL INTERVENTIONS
503,423,592.0
0
558,355,400.
00
247,632,000.0
0
1,040,937,672.
00