2009-09-11 08:21:00 Dar to lose Sh400bn in World Bank cashBy Samuel Kamndaya and Mkinga Mkinga THE CITIZEN Tanzania stands to lose $312 million (about Sh405.6 billion) in soft loans from the World Bank in the next three years, having performed poorly on the key criteria for such lending, The Citizen can reveal. The country will see the money it badly needs slip through its fingers because of its dismal performance in the bank�s annual Country Performance Rating (CPR). The setback also comes at a time when Tanzania has slipped five places in the World Bank�s Doing Business due to its failure to initiate "business-friendly reforms". In the World Bank's just-released annual CPR, the country dropped seven places and now ranks below Ghana, Burkina Faso, and Madagascar. The CPR determines how much money a country can borrow from the World Bank. "The consequence of this drop in ranking is a reduction in the overall lending from the World Bank of $312 million (about Sh405.6 billion) for the period covering July 2008 to June 2011," an expert, familiar with workings of the bank, told The Citizen in Dar es Salaam yesterday. The World Bank compiles CPR by combining 17 criteria, including macro-economic management and debt policy, but also trade policies and the business environment. The rating covers gender, the quality of public administration and the performance of outstanding WB loans. Tanzania has dropped mainly due to a downgrading in financial management, transparency and accountability and corruption in the public sector. But contacted yesterday, Finance and Economic Affairs minister Mustafa Mkulo said he would only be able to comment after thoroughly reading the CPR report. "I have not read the report on the ratings so far. Please, give me time to read it before I make any comment," he told The Citizen by telephone. According to the report, Tanzania� s slip in rating has to a lesser degree been caused by changes in gender equity and exchange rate fluctuations. The country is now ranked 16th, down from the 10th position it held in the 2007 rating. Uganda improved by two places to 19th from 21st, while, Kenya dropped from the 27th to 30th place. "This ironically means that the ministry of Finance will have less access to soft loans from the WB. Instead of being able to borrow $2,157 million (over Sh2.8trillion) between 2008 and 2011, Tanzania will now be able to borrow $1,845 million (about Sh2.4 trillion). The money 'lost' will be re-allocated to other countries," the expert explained. But the country, which has yet to recover from being denied money that could have helped to finance the Budget, which donors supported by almost 40 per cent, is still in for more bad news. The 2010 Doing Business Report by the World Bank and the International Finance Corporation (IFC), which was launched on Wednesday in Washington, DC, places Tanzania among countries that have failed to ease business regulation. The country was ranked 131st, with zero reforms implemented between June last year and May this year. Just like Tanzania, Burundi, the poorest of the five East Africa Community partner states (the others are Kenya, Uganda, Tanzania and Rwanda), was at position 176, with zero reform being implemented during the same period. This is the second time Tanzania has performed poorly in the doing business report. In the same report in 2007, Tanzania ranked among the world�s top 10 reformers. But last year, the country slipped three places, clinching the 127th position out of the 181 countries surveyed. The EAC bloc's economic giant, Kenya, ranked 95th after making only one reform over the past 12 months. Uganda, just like Kenya, managed to only one reform to ease business regulation, and was ranked 112th. Ironically, Rwanda, which is among the 48 poorest countries in the world, just like Tanzania, Uganda and Burundi, was ranked as the top global reformer in easing the business regulations based on the number and impact of reforms implemented between June last year and May this year. According to the report, Rwanda reformed seven out of the 10 business regulation areas measured. The 10 regulations, considered in the report, include starting a business, issuing permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Rwanda's global ranking jumped up from the 143rd to the 67th position this year. In the past one year, Kigali has introduced new laws that simplified business start-up and strengthened minority shareholder protections. A Rwandan entrepreneur now needs to go through just two procedures within three days to start a business. Imports and exports are more efficient, and transferring property takes less time, thanks to a re-organised registry and statutory time limits. "Investors have more protection, insolvency re-organisation has been streamlined, and a wider range of assets can be used as collateral to access credit," the report reads in part. Being the seventh in a series of Doing Business publications by the WB and the IFC, the 2010 report shows that Mauritius is the business-friendliest country in Africa. Others in the Top 10, include South Africa, Botswana, Namibia, Rwanda, Tunisia, Zambia, Ghana, Kenya, and Papua New Guinea.