Tanzania Poverty Reduction Support Credit 3

(i) Sustain and accelerate economic growth and broaden its impact: Reducing income poverty is one of the key focus areas of the MKUKUTA. Private sector and rural development are the two areas where reforms are expected to have the biggest impact on reducing income poverty in Tanzania. Reforms in the areas of agricultural and rural development are intended to improve producer incentives and raise agricultural profitability and thus enhance incomes in rural areas, where poverty is most widespread and most deeply entrenched. Measures include improving export crop quality, reducing marketing cost and the tax burden on farmers and improving access to markets and finance. With respect to private sector development, the focus will be on strengthening of the business environment, in particular for SMEs, and legal and administrative reforms to enhance the functioning of land, credit, and labor markets. (ii) Support results orientation of public service delivery: The second area of impact is through monitoring and leveraging progress in the implementation of sectoral programs to reduce poverty, covering the priority sectors identified in the first Poverty Reduction Strategy (PRS), i.e., primary education, basic health, water, rural roads, agricultural research and extension, the judiciary, and HIV/AIDS. The PRSC-3 policy dialogue focuses on the establishment of a robust monitoring and evaluation system that allows an assessment of the impact and results of sectoral programs. The information derived from the monitoring and evaluation system will then feed into the assessment of progress towards the MKUKUTA objectives. Finally, the resources provided through the PRSC-3 complement government and other donor resources in financing priority programs for poverty reduction. The well developed participatory Public Expenditure Review and Medium Term Expenditure Framework (PER-MTEF) process provides a mechanism for the monitoring of the use of resources. (iii) Enhance public sector performance: Measures in this area will have a direct impact on poverty reduction as they enhance public sector capacity to implement poverty reduction programs in the priority sectors and generate additional funds for poverty reduction by reducing leakages in the form of low allocative or operational efficiency of public expenditures. Key areas of reform include strengthening of financial management through the implementation of the public financial management reform program, strengthening of the national audit office, implementation of pay reform coupled with improved performance management in the public sector, procurement reform, the implementation of anti-corruption strategies, and enhanced efficiency in the use of development assistance. (iv) Strengthen environmental management: Finally, the PRSC-3 also supports government#s efforts to enhance the environmental sustainability of Tanzania#s development program. The MKUKUTA identifies this as an important element of efforts to improve the quality of life and social well-being.