MCC makes good on its Sh1 trn threat Withholds funds over Z'bar poll, Cyber Crime law

BY LYDIA SHEKIGHENDA
19th December 2015

Chief Secretary Ombeni Sefue
 The Tanzania government has been denied – at least for the time being - the $472.8m (over Sh1trn) Millennium Challenge Corporation (MCC) grant from the United States, the Guardian has learnt.

The decision comes in the wake of the ongoing political impasse arising from cancellation of October elections in Zanzibar and the government’s implementation of the Cyber Crime Act, which was rushed through the National Assembly last year and passed by a majority of Chama Cha Mapinduzi (CCM) parliamentarians.

In a statement availed to The Guardian, the Millennium Challenge Corporation (MCC) board of directors said it had ‘deferred a vote on Tanzania’s reselection’ for 1trn/- (US dollars 472.8 million) assistance for fiscal year 2016 after the country failed to fulfill the conditions given by the donor for it to access the grant.

Last month, MCC questioned Tanzania’s commitment to good governance and personal freedoms following the Zanzibar political standoff after the Zanzibar Electoral Commission (ZEC) nullified the general election held in the isles in October, and implementation of the Cyber Crime Act that saw people, especially those in opposition parties, being arrested during the general election.

MCC noted that the two issues would determine the donor’s final decision in a meeting which was held on Wednesday (December 16) in the US.

According to a Report on the Selection of Eligible Countries for Fiscal Year 2016 availed to the media yesterday, the board emphasized the seriousness with which it took a country’s commitment to MCC’s eligibility criteria.

The report said the board discussed the fact that, due to ongoing concerns about the Zanzibar election, as well as the use of Tanzania’s Cyber Crime Act in the context of the nation’s elections, a vote on reselection “would be premature at this time.”

It said the board may revisit its decision over the course of the year 2016 as more information became available.

The   board also denied Lesotho assistance due to ongoing concerns over the rule of law and accountability in the country pending an expected report from the Southern African Development Community (SADC) on the same issues.

The board, however, selected Cote d’Ivoire, Kosovo and Senegal as eligible for assistance for fiscal year 2016 and reselected Niger, Nepal and the Philippines as eligible for fiscal year 2016 compact assistance.

According to the report, the board also reaffirmed its support for Mongolia’s continued effort to develop its compact proposal that would access funds appropriated to MCC when Mongolia was a candidate country.

In accordance with the Act and with the ‘Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in Fiscal Year 2016’ formally submitted to Congress on September 22, 2015, selection was based primarily on a country’s overall performance in three broad policy categories: ruling justly; encouraging economic freedom, and investing in people.

The report says the board relied, to the maximum extent possible, upon transparent and independent indicators to assess individual countries’ policy performance and demonstrated commitment to the three broad policy areas.

Contacted yesterday, Chief Secretary Ombeni Sefue declined to comment, saying he was waiting for official communication between the two governments.

“I cannot comment before getting official government communications…but what I know is that the decision/vote about Tanzania has been postponed… it is not true that Tanzania has been denied the funds,” he said.

Commenting on the issue yesterday, Dr Oswald Mashindano, a Principal Research Associate at the Economic and Social Research Foundation (ESRF), said the decision would affect ongoing projects which were being implemented with MCC support.

“This is a huge amount of money and many sectors will be affected, including roads and energy, which involve majority Tanzanians,” Dr Mashindano said.

According to him, preparations for the country to qualify for the MCC grants started many years back, which included teams of experts from the US and Tanzania, to ensure that the country got the funds.

“We spent a lot of time, expertise and manpower to ensure that the country gets the money. According to my knowledge, MCC had started releasing the funds to the country and they were being used in implementing various projects,” he said.

He said by denying Tanzania the money many ongoing projects would stall as the government looked for alternative sources of funds to finance the projects. He added the situation would also demoralize the people because they had high expectations from the projects.

Dr Mashindano, however, noted that the board’s decision was a reminder to the country to be cautious on issues related to good governance.
“Good governance is one of the commitments of the country’s policies …it is a shame for the nation to be reminded about good governance by donors,” he noted.

Other economists had earlier warned that the government had to play its cards right to save the money, taking into account its resolve to cut spending with a view to channeling the saved funds to development projects.

Prof Honest Ngowi of Mzumbe University Business School in Dar es Salaam said changes in the economy after the general election were inevitable
 “If Tanzania does not comply with the US conditions and is denied the grant it will be required to find alternative sources of funds to cover the deficit,” the don said, adding:
 “Tanzania will need to play its cards well, taking into account the government’s intention to cut spending”.

 Dr Donath Olomi, an economist-cum-chief executive officer of the Institute of Management and Entrepreneurship Development (IMED), said that if the US government denied Tanzania this huge amount of money it would affect a number of projects which were expected to be implemented through the grant, such as road construction and energy.

He said the step taken by the US government was among mechanisms to press the country to ensure it abided by the principles of good governance.

Last month MCC wrote to the government expressing deep concerns about the ongoing electoral crisis in Zanzibar and recent arrests made under the new Cyber Crime legislation.

 This was  largely an unexpected development  as  the MCC announced  two months ago (in September) that Tanzania had met Washington’s control of corruption index demands and hence qualified for the grant for next year.

The letter, which was addressed to the Finance ministry, warned that all MCC country partners were expected to maintain a commitment to good governance that would include strict adherence to democratic principles and protection of the freedom of expression.

 The letter stated that the two events made MCC and its stakeholders question Tanzania’s commitment to good governance, warning that this could ‘complicate’ the partnership between Tanzania .