French agency set to enhance economic ties with Tanzania

Thursday November 12 2020
French pic

The country director of the French Development Agency (AFD), Stéphanie Mouen (right), at a signing ceremony for the agency’s financing with the permanent secretary of thee Tanzania ministry of Finance and Planning, Dotto James (left). Looking on in the background is the French Ambassador to Tanzania, Frederic Clavier. PHOTO | FILE

By John Namkwahe

QUESTION: I understand that Agence Française de Development (AFD) has been in Tanzania for over a decade now. How has your journey been?

ANSWER: AFD is the public financial development operator of the French government. The French bilateral development agency was created 80 years ago to fight poverty and promote sustainable development in a world that we view as a shared world. As a bilateral donor, we cooperate as much as we can with public development banks, which are set up and founded by the national governments with the same objectives, and of course with all other bilateral or multilateral banks/agencies.

We think that solutions to achieve the Sustainable Development Goals (SDGs) are being built jointly. Development indeed entails collective and inclusive action carried out at the proper scale. This is why AFD co-finances around half of its projects worldwide with donor-partners. Co-financing helps to multiply the effects, attract other investors, and make the most ambitious projects possible.

In Tanzania, we have been participating, since 2009, in the multi-donor fund supporting the National Water Sector Development Programme (WSDP), for a total amount of 70 million euros. We have been funding a project to improve access to drinking water and sanitation in the towns around Lake Victoria for a total amount of 220 million euros, together with the European Investment Bank and the European Union. We are used to co-finance projects in cooperation with multilaterals - such as for the electricity interconnection between Tanzania and Zambia in co-financing with the World Bank and the European Union - or other projects in discussion with the African Development Bank. More recently, AFD, together with the International Union for Conservation of Nature, supported an aquaculture program in Zanzibar to create income-generating ventures for the local people, which appears quite promising.

What are AFD’s successes in the areas that you work?


Our focus is in line with the priorities of Tanzania’s five-year development plan on energy, water & sanitation and transport.

For nearly 12 years, our agency has been directly contributing to achieving the goal of providing for the needs of the people as outlined by the government. Ideally, every home should have access to safe and clean drinking water to keep away water-borne diseases such as cholera, typhoid and dysentery that often cause many deaths; or access to reliable power.

However, this is not always possible due to lack of funds to implement projects to supply treated water or electricity network to the people. This is why we are keen to work with the Tanzanian Government to make this possible.

And there is no better confirmation of this than the total of 760 million euros (Sh1.9 trillion) committed in the last ten years by our Agency in the country.

We have doubled the amounts of yearly commitments for Tanzania in the last three years and expect to be able to continue to do so for the direct benefit of the Tanzanians. So far, at least 800,000 people have seen improved access to drinking water and some 275,000 gained better sanitation systems. In terms of impact in the energy sector, 50,000 users will now benefit from a significant improvement in electricity service.

What are some of the projects you have worked on - and how have they contributed to Tanzania’s economic growth?

For ten years, AFD has dedicated its funding’s towards the financing of infrastructures for the development of the country: infrastructures - such as a power plant or electrical transmission/distribution lines, for instance - are essential to the economic growth, as no development of enterprises can be conceived without a safe, reliable and competitive access to energy. The same applies for the transport sector of course: AFD is contemplating the financing of the phase-5 of the Bus Rapid Transit (BRT) in Dar es Salaam, which is key to the development of a mega city with more than ten million people by 2030.

How do you work with other stakeholders in and outside Tanzania?

AFD in Tanzania works with the main government and parastatal actors in each of its sector of intervention. As such, AFD works with technical ministries for water, energy, transport, and obviously with the Ministry of Finance and Planning and with the implementing agencies in charge of the sectorial interventions.

AFD has supported the private sector in Tanzania offering subsidized long term credit lines to commercial banks wishing to develop their portfolio. AFD is contemplating a support to the Tanzanian development bank dedicated to agriculture financing, Tanzania Agricultural Development Bank (TADB).

The aim for this project is to improve and strengthen the agriculture and financial sector, by supporting the activity of a growing public bank and the idea of launching its wholesale lending and credit guarantee diversification strategy.

By supporting TADB we believe in increasing access to smallholder farmer loans through the commercial banks infrastructure network in the rural regions.

This aims at supporting development of the population of the low-middle income segment by improving their access to agriculture activities, and thus contribute to a reduction of inequality.

In addition, the project ambitions to promote best practices for modern and smart agriculture activities (optimization of resource use) and to remain consistent with a low-carbon trajectory. It will be a platform to develop innovative financing products for women and the youth and to design appropriate projects for these groups. The feasibility study should be launched before end of year.

How important is this year’s ‘Finance in Common’ Summit held in Paris this week?

This would be the first Finance in Common Summit, an initiative of the World Federation of Development Finance Institutions (WFDFI) and the International Development Finance Club (IDFC), of which AFD as well as the Eastern and Southern Africa Trade and Development Bank are members.

This edition is convened by AFD with the support of Multilateral Development Banks, regional associations of Public Development Banks, International institutions (UNDP, DESA, UNEP, OECD and the European Commission), the French Caisse des dépôts et consignations and the COP26, the COP15 and the Generation Equality Forum.

The summit has three immediate objectives. First, to bring together for the first time the 450 Public Development Banks worldwide, and discuss their role, ambitions, challenges and opportunities.

Second, to bring together the financial community at large to design, in a spirit of cooperation, a financial system that recognizes the full potential of Public Development Banks in promoting sound climate policies and SDGs, including mobilizing financial flows towards these objectives. Third, to contribute to the reinvention of a multilateralism that promotes new forms of cooperation. The coalition of actors and the dynamics of cooperation that will be formed during the forum thus wishes to be a long-term initiative.

What deliverables can we expect from this summit?

The summit will highlight, through concrete elements, the key role that those banks play in our economies and societies, particularly in support of a sustainable economic recovery. Among the deliverables expected from the summit include a joint declaration of all PDBs, which will be a roadmap for the signing of 10 thematic commitments (gender, climate, biodiversity, agriculture, etc...) during the high-level discussions taking place on the 11th.

Others are research papers explaining the role of PDBs in building sustainable finance and the actions needed to reveal their full potential as well as databases to guide a sustainable recovery and concrete projects and initiatives that support the alignment of BDPs with SDGs.

AFD is working with the European Commission and other European partners on the international Fin4Dev initiative, which seeks to bring about positive developments towards COP21 and SDGs at the local level, within the financial and PDB sectors.

In the context of the Covid-19 pandemic which has led to a global socioeconomic crisis, how is AFD committed to reconciling short-term countercyclical responses to the crisis with sustainable recovery measures that would have a long-term impact on Tanzania’s economy?

In April, the French government launched the ‘Covid-19: Health in Common’ initiative in response to the worldwide public health crisis caused by the global pandemic, with specific focus on Africa to bring a short term (health and sanitary impacts) - but also medium and long term responses (economic impact) to the consequences of the crisis.

As a short and medium term response AFD partnered with the Aga Khan Hospital in Tanzania in close collaboration with the Health ministry to help setting up, through a grant, an Infectious Disease Unit which could serve in the fight against Covid-19 but can also be used for other infectious diseases.

In the region, we have been able to mix reallocations of funds (fast response, ten percent of our responses), to finance new projects with grants (fast answer) and long term loans (long-term answers).

In particular, AFD is able to provide public policy loans and budgetary loans to support the government budgets impacted by the crisis or to implement sustainable recovery measures in the long run.

Through our subsidiary Proparco, we have also been able to provide significant credit lines to banks to help support the private sector and in particular SMEs which are the most vulnerable to economic crisis.