Tanzania faces aid freeze as Ballali clings on to job

-EMBATTLED CENTRAL BANK GOVERNOR SEEN AS LIABILITY TO PRESIDENT KIKWETE’S GOVERNMENT

THISDAY REPORTER, Dar es Salaam.

TANZANIA now faces a serious threat of aid freeze from some of the country’s biggest donors if the government does not show more seriousness in addressing widespread corruption allegations sooner rather than later.

The United States, United Kingdom and more recently Netherlands, have all made a chorus of calls for decisive government action against wrongdoers in graft allegations.

Diplomats are concerned that corruption could see billions of shillings in aid money line the pockets of dishonest officials while ordinary Tanzanians continue to struggle in conditions of abject poverty.

But as development partners are making repeated public warnings on aid cuts, the embattled Governor of the Bank of Tanzania, Dr Daudi Ballali, who is at the centre of most of these allegations is trying desperately to cling on to his job.

Analysts say a freeze in international aid could considerably weaken the position of President Jakaya Kikwete?s government in the anti-poverty drive and derail many of the 2005 election promises that guaranteed a landslide victory for the ruling party.

’’The message from donor countries to the government is clear -- get your act together on fighting corruption or we are cutting off our aid,’’ a well-placed government source told THISDAY on condition of not being named.

He added: ’’Ballali has obviously become a liability to both the government and millions of Tanzanians who depend on donor aid for better healthcare, education, water and roads.’’

Ballali himself has rejected calls for his resignation from some members of parliament to pave way for an official investigation. The government, on the other hand, seems reluctant to take any action against the governor, citing an ongoing special audit on the central bank.

’’The government can keep on defending officials facing well-known corruption allegations at its own peril,’’ warned another source. Donors are largely disappointed with the way the Tanzanian government has been handling the allegations of high-level corruption by failing to take any real action, diplomats told THISDAY.

In the strongest warning yet to the government, the Dutch Ambassador to Tanzania, Mr Karel van Kesteren, warned that the government faces a possible aid freeze because of its inaction in fighting corruption.

’’I am very concerned about the corruption allegations we read so much about these days. Allegations related to the Bank of Tanzania (its external payment account, which is now subject to an independent external audit and the construction costs of the BoT’s twin towers) as well as strong indications for corrupt practices related to management of the natural resources of the country, to mention just the most conspicuous examples,’’ he said.

Ambassador Kesteren, speaking at a function at his Dar es Salaam residence on Thursday evening, said ’’timely, robust and credible responses by the government on the corruption allegations were needed’’.

It is necessary for the Tanzanian government to send positive signals to the outside world, potential investors as well as to other governments, parliamentarians and tax payers in donor countries, he remarked.

’’Delays in government action could delay aid commitments by donor countries and could deter investors,’’ he warned.

The Dutch ambassador was vividly amazed at the embarrassment of riches in natural resources that Tanzania has, yet the nation was paradoxically still one of the world?s poorest countries.

’’Africa is lagging behind in the world unnecessarily because the potential is there particularly in Tanzania. And, I do not refer to tanzanites, gold or natural gas,’’ he said.

He added: ’’I have the privilege of being Dutch ambassador to some other countries as well, among them Mauritius ? a small island in the middle of the ocean. It has no gold, no gas ? nothing. And they are doing well, with a per capita income of $5,000 per year, instead of the $350 here in Tanzania.’’

The former US ambassador to Tanzania, Mr Michael Retzer, recently publicly criticised the Prevention and Combating of Corruption Bureau (PCCB) for dismissing corruption allegations due to a person’s current or previous position.

Like the American envoy, Britain’s High Commissioner to Tanzania, Philip Parham, also challenged the Tanzanian government to make serious follow-ups on what he described as ’big stories’ on suspected grand corruption appearing in the local media to establish the facts behind them. He cited stories like the Richmond power generation contract, the Buzwagi gold deal involving Barrick Gold Corporation, military trucks and helicopters purchases.

In its latest country report on Tanzania, the London-based Economist Intelligence Unit (EIU) echoes similar concerns about Tanzania’s commitment to remove high-level corruption despite recently passing a new anti-graft legislation ostensibly aimed at strengthening this stated resolve.

Denmark cut aid worth $3.16 million to Tanzania late last year over delays passing the new anti-corruption legislation.

In the past few years, chiefly thanks to donor aid, Tanzania has made impressive strides in reducing poverty indicators by building more schools, hospitals, rural roads and improving access to clean and safe drinking water.

All this progress now appears to be undermined by the cost of corruption to continued aid flow to Tanzania, diplomats say. Around 42 per cent of the Tanzanian government’s total budget expenditure depends on donor aid.