Three years have passed since the Norwegian government first discovered that US$30 million of its funding to a Tanzanian government-run natural resources project went missing. However, the Tanzanian public is only now learning of the scandal. In this guest post, Peter Bofin, a member of the Tanzanian peer review team for the Global Integrity Report: 2008, discusses Tanzania’s emerging national debate over corruption and foreign aid.
For ten years, the Norwegian-funded Management of Natural Resources Programme, managed by Tanzania’s Ministry of Natural Resources and Tourism, was touted for its achievements. Not until an independent evaluation in 2006 (and a subsequent external audit), was it realized that up to half of the funds were misused – or ‘eaten’ as Tanzanians say colloquially.
A report from the U4 Anti-Corruption Resource Centre, written by Eirik Jansen, a former NORAD staffer, made the Tanzanian press more than once this week. (See IPP Media for more local analysis.)
The report is fascinating as it is a rare example of development officials’ table talk transferred (relatively unfiltered) into a formal report. The allegation that half the funds may have been “spent on seminars, workshops, per diem, and travel expenses” may not be a surprise to those familiar with development initiatives in Tanzania. The leaked external audit report indicated that 30 percent of expenditures that went towards capacity building had no documentation, and that perhaps 50 percent of total programme expenditures were poorly accounted for.
But surely someone was checking?
The project was audited on an annual basis by Tanzania’s Comptroller and Auditor General (CAG). These audits only raised minor issues. The Norwegian Embassy didn’t have the time or capacity to properly review these reports, so they out-sourced their oversight to PriceWaterhouseCoopers, who okayed the CAG’s reports. Not until an independent evaluation carried out in 2006 were problems flagged, when independent auditors were brought in from Denmark.
The CAG’s annual report is pored over closely by media and special interest groups – exactly the sort of accountability processes donors profess to encourage. Jansen’s reflections make one wonder if CAG reports conceal more than they reveal. As for the Norwegians, in an interview this time last year on the issue, aid minister Erik Solheim admitted (translated from Norwegian): “Norwegian aid organizations are no different than any others and neither have we understood the extent of the problems that corruption in aid in fact represent.”
As Tanzania’s aid donors shift their assistance to direct budget support of line ministries (and away from more specific programs such as MNRP), Jansen concludes his report on a cautionary note:
“It is the Tanzanian CAG that reviews the accounts for the various activities, programmes, and projects which are financed through budget support. The donors are not able to access the level of detail or review accounts the way Norway did in MNRP. Activities and projects, the accounts and finance management system will be even further removed from the development partners [read: aid donors] when aid is provided as budget support.”
And the missing millions?
For at least a year now, the Norwegian and Tanzanian governments have been negotiating over the return of misused funds and future support for the natural resources sector. The negotiations continue.
— Peter Bofin
See this recent Commons post, for more on the relationship between aid effectiveness and budget monitoring in development policies.
There is certainly a lot more attention paid to the reports of the Controller and Auditor General these days, and timeliness has something to do with that. Mind you, the improvements in timeliness are not as dramatic as you suggest. According to the PEFAR to which you refer, for the years FY01, FY02 and FY03, the delays in completing the CAG reports were between 10 and seven months, not four to five years*. Maybe that was in the nineties. This suggests that in terms of acccountability, as opposed to oversight, it wasn't the delays that were key in the lack of sanctions and the lack of seriousness given to the findings. Oversight institutions and processes certainly were in existence, if imperfect. The effectiveness of the response is another matter, which couldn't be just down to delays of under a year.
With regard to MNRP specifically, timing does not appear to have been an issue. The U4 report, in outlining relevant processes, suggests that timely audit reports on the programme were presented each year by the CAG.
The questions raised by the case of MNRP are serious. The same PEFAR report refers to the great increase in unqualified opinions given during that time (FY01-FY05). During that same period the CAG was giving a positive verdict year after year on a programme that clearly didn’t deserve it. This clearly raises valid questions over the reliability of the audits – questions that I believe remain. And the questions about budget support arise from that.
More generally the CAG himself in this year's report for FY07/8 is not so optimistic, telling us in his introduction:
"The outcome of the audit for the year under review has not shown positive improvement….. Key dominant features include:
• Partial compliance with the International Public Sector Accounting Standards (IPSAS) – Cash basis of accounting
• Non compliance with the procurement laws and related regulations
• Weak internal control systems over management of assets, control of cash and revenue collections
• Non implementation of my previous years’ recommendations"
These things clearly take time.
sorry for the long url
The information in this article is definitely of concern, especially for the millions of Tanzanians whose taxes contribute 60% of the national budget. For this reason, I think we should clarify a few things to ensure that the information presented in this article is balanced and complete. Prior to 2005/06, the National Audit Office was generally 4 to 5 years behind in its audits for most government MDAs. Therefore, by the time a ministry was audited, it was 4 to 5 years after the fact. People had moved on, died, or forgotten what happened. As a result it was difficult to hold an accounting officer responsible for events that took place essentially before their time, and MDAs did not take the audit process seriously for this reason. To demonstrate this, it was reported in the 2005 PEFAR report that up for the last three years, on avetrage, only 7% of audit queries from what was then the Office of the Controller and Auditor General ever received a response from the relevant authority. Since then things have changed a lot. By 2005/06 all audit reports were up to date. When systems for oversight are non-esistent or thus ineffective, what happened in this article is bound to happen. Without budget support, internal and external stakeholders could be kept out of these systems and therefore would not be able to identify where the problems are, which is why this problem could be left unchecked for so long. Today, while there are still serious problems in some cases, NAO reports are taken far more seriously by the executive and the legislature of government and media reports reflect this. It is now far more difficult for such misdeeds to remain hidden than it used to be. I think an example of such corruption and/or mismanagement happening this year or last year would be far more worrying.
In a recent Daily News opinion piece (see below) the reporter challenges international aid donors to use budget transparency as more than an internal exercise. She argues that using these instances of misappropriation to rebuild regulatory systems may do more for developing nations than the programs for which the funding was initially earmarked.