Magufuli nightmare over MCC funding

Saturday December 19 2015

President John Magufuli holds the first cabinet

President John Magufuli holds the first cabinet meeting at State House in Dar es Salaam on Thursday. Second right is Vice President Samia Suluhu Hassan and left is Prime Minister Kassim Majaliwa. PHOTO | STATE HOUSE 

Dar es Salaam. It is not an early Christmas gift that President John Magufuli would desire from Washington but his US counterpart Barack Obama may have delivered a poisoned chalice instead.

By a decision of the Millennium Challenge Corporation (MCC) board on Thursday, Tanzania now stands to lose $472 million (Nearly Sh1 trillion) in development funding from the US in 2016.

The MCC board deferred a vote on Tanzania’s eligibility to receive the funds, dealing a blow to the government that planned to use the funds to roll out more electricity supply projects. The negative vote means President Magufuli would need to tighten the belt on expenditure even further to fill the gap left.

The President who is currently overseeing a rigorous clampdown on tax evasion alongside cuts in unnecessary public expenditure, would be warry of the effect of the blockage of the US support, the largest bilateral funding by any single country.

The MCC which acts as President Barrack Obama’s development funding arm issued a brief statement on its meeting on Wednesday in which it revealed Tanzania’s fate. Lesotho, which recently faced political unrest following a power struggle also suffered a similar fate.

No specific reasons were cited in their statement but MCC recently expressed concern over the political impasse in Zanzibar as well as the arrests of several people over the cybercrime law in the October elections.

“The board deferred a vote on the Tanzania and Lesotho for compact eligibility until relevant governance concerns in both countries have been addressed,” read the MCC statement.

But the two reasons would later be confirmed by US ambassador to Tanzania Mark Childress in a statement sent to the media yesterday. “The board’s governance concerns reflect longstanding MCC principles. The nullification of election results in Zanzibar halted an otherwise orderly and peaceful electoral process. The use of the Cybercrimes Act of 2015 during the elections to arrest individuals accredited by the National Electoral Commission inhibited fundamental freedoms of expression and association,” said Mr Childress.

The US envoy, however, said the board may revisit Tanzania’s eligibility over the course of 2016. “I remain hopeful that the Government of Tanzania will take steps to resolve MCC’s governance concerns in the near future. The Board could then vote to re-select Tanzania and approve compact development,” said the ambassador.

Mr Childress conveyed the MCC board’s satisfaction with the direction that Dr Magufuli was taking early in his administration.

“MCC has been encouraged by newly-elected President Magufuli’s recent steps to strengthen the fight against mismanagement and corruption, and hopes those efforts will continue and result in systemic change,” said the envoy.

In Dar es Salaam, Chief Secretary Ombeni Sefue said they were not heartbroken but remained optimistic that US would reconsider its decision in due time.

“We believe we have met their criteria unless they have changed the goalposts.” Mr Sefue said Tanzania has not been disqualified but the MCC has just deferred the vote.

“We are ready to continue with further discussions with the US,” he said, adding that by the time MCC meets again to vote, Tanzania would have met the criteria the board prefers. Tanzania was on course to landing the $472 million second compact to become the only country in Africa to receive that type of support from the US in a row. In 2008, it was among a few countries around the world that were selected for the first compact funding, and received a record $700 million (Sh1.4 trillion).

The funding helped expand roads, water supply and electricity distribution between 2009 and 2015, some which became signature projects under the government led by President Jakaya Kikwete.

The now suspended compact II funding was earmarked to speed up clean energy supply besides anticipated policy reforms to raise Tanzania Electric Supply (Tanesco’s) efficiency.

The government’s earlier optimism in landing the second round of US funding was owing to the fact that initial stages of vetting had been successful. Already, due diligence on the projects proposed in the concept notes had been approved. In November 2014, the government and MCC signed an agreement for release of $9.78 million (Sh19.5 billion) to be used in study, design and develop of the II compact program.

But that was not until the spiraling of corruption out of control first threatened to derail the relations. President Kikwete however intervened during a visit to New York last September convinced the board of the government’s plan to fight corruption.

However, the second impediment would follow soon during and after the General Election, with the annulment of the Zanzibar presidential election outcome mid-counting, eliciting widespread protest internationally.

There has been little outcome in ongoing talks to find a solution on whether the elections would be repeated as announced by the Zanzibar electoral agency. US, EU, The Commonwealth, SADC and EAC observer teams in the elections opposed a repeat.

Development partners have also questioned the application of the new cybercrime law, demanding that the government clarify its wider objective, especially after a number of people were arrested during the election on accounts of breaking the law. The critics say the law as interpreted would infringe on the fundamental rights and freedoms of the people.