Local Government Seen as Best Avenue for Advancing Local Economic Development in Tanzania

18 July 2006: In line with its mandate to support innovative approaches to local development, the UN Capital Development Fund (UNCDF) has embarked on a new generation of programmes / projects focusing on local economic development in East Africa. As part of this initiative, the Fund, in partnership with the Government and the UN Development Programme, recently launched its Support to Local Economy in Mwanza Programme (SLEM) to pioneer an innovative approach to pro-poor local economic development in Tanzania – one which stresses the leadership of local government authorities and the joint involvement of the public and the private sectors.

UNCDF promotes the development of vibrant economies in support of poverty reduction in Least Developed Countries through both its Local Development and Microfinance Practice Areas. This approach provides support through both the public and private sectors, with the assumption that the former must be established in a transparent, accountable and sustainable manner in order for the latter to flourish. In line with this thinking, UNCDF programmes in the Local Development Practice Area, such as that being introduced in Tanzania:

• focus on rural and semi-rural areas of LDCs;
• stress the leadership of local governments in identifying local drivers of growth, stimulating local opportunities and securing the participation of community-based organizations and the private sector in supporting local economy;
• include poor rural areas in a comprehensive and holistic approach to LED - in spite of their lack of economic infrastructure, poor accessibility, poor levels of education, and absence of large commercial enterprises;
• stress the linkages existing between economic growth and the MDGs, by addressing pro-poor, community-based approach to local economic development; and
• integrate LED-related measures into a comprehensive approach aimed at improving and securing local livelihoods and building up local institutions.

The Tanzanian Context

UNCDF considers t he current political and institutional context in Tanzania to be conducive to a new approach combining democratic decentralization and local economic development. Factored into this consideration are the following:

• Tanzania is one of the poorest countries in the world (ranking 164 out of 177 countries on the UNDP Human and Income Poverty Index in 2004) ;
• Despite its extreme poverty, Tanzania is politically stable;
• Poverty remains predominantly a rural phenomenon with about 87% of the poor living in rural areas and employment is a major challenge (every year only 40,000 wage and salary jobs are available to 650,000 new people entering the labor market);
• Poverty reduction strategies strongly recognize that agriculture is the lead sector in the Tanzanian economy, and provides livelihoods for 82% of the population;
• Among the outcomes and goals identified by the national policy, particularly important is Growth of the economy and reduction in income poverty;
• Official documents (such as the Policy Paper on Local Government Reform, Medium-Term Plan 2005-2008 for Local Government Reform Programme, and Vision 2025) clearly set out its policy of decentralization by devolution and highlight the involvement of local governments in loc a l social and economic development (the Agricultural Sector Development Strategy lays down enabling roles for local government and the private sector in agriculture).

Major Strategic Aspects of the SLEM Programme

The new UNCDF Programme in Tanzania focuses on a range of pro-poor measures needed to unleash local entrepreneurship and to support the local economy (income raising, employment creation, and broad-base enterprise growth), poverty reduction and improvement of food security.

The Programme is completely owned by local stakeholders and is executed by the Prime Minister’s Office, Regional Administration and Local Government (PMO-RALG), which has jurisdictional authority on the local authorities and coordinates the activities of the relevant ministries.

Under the responsibility of the Regional Administrative Secretary (RAS), the Programme is establish ing two distinct and complementary financial tools:

• The Local Economic Development Capital Fund, provided through an earmarked District Agriculture Development Programme ‘basket fund’ within the framework of the Agricultural Sector Development Programme, will make possible capital investment to support the local economy. It will initially benefit a population of about 760,000 people in two Districts (additional financial resources will eventually allow the inclusion of other districts),
• The Capacity-building Capital Grant will make possible human and institutional capacity-building investment s in rural Districts (initially in the Mwanza region), by addressing the priorities of local small-scale entrepreneurs, civil society and private sector organizations and enhancing their effective participation in local development.

Expected Outcomes

UNCDF expects t he Programme to directly address local development priorities (particularly those which are spelled out in the National Strategy for Growth and Poverty Reduction, the policy paper on Decentralization by Devolution and the United Nations Development Assistance Framework). It will stress the leadership of local, democratically elected governments in local economic development and will support a sustainable and broad-based growth (through the intensification of agricultural activities; the diversification of a rural economy; the creation of local governments and economic development ; the reduction of income poverty; the improvement of the food security; and improved access to markets ).

By supporting local governments and the Regional Secretariat, the Programme will fully adopt the Joint Assistance Strategy (JAS), which strengthens national ownership of the development process, and harmonizes donor and government processes and procedures (according to the basic principles of the Paris Declaration on Aid Effectiveness ).

The various initiatives supported by the five -year Programme (starting in 2006) will mobilize actors, organizations and additional financial resources (in addition to US$1.5 million earmarked by UNCDF from its core resources and an initial $500,000 from UNDP). The programme also will develop new institutions and local systems through dialogue and strategic actions.

For more information:

• Project Document: Support to Local Economy in Mwanza (SLEM) [ pdf ]
• The Prime Minister’s Office, Regional Administration and Local Government: www.pmoralg.go.tz
• UNCDF Tanzania: www.uncdf.org/tanzania
• UNDP Tanzania: www.tz.undp.org