- Aug 2, 2010
By Athuman Mtulya | The Citizen, Tanzania
2 December 2014
The US Congress has approved an allocation of $9.78 million (Sh16.14 billion) to help Tanzania lay the groundwork for the much anticipated Millennium Challenge Corporation (MCC) funding.
The October 28 approval means the government was in good stead to finally get the critical funding for MCC compact whose amount in project support is estimated at $700 million (Sh1.15 trillion).
This development would come as a big relief to the government whose image and reputation recently took a severe knock thanks to the Tegeta escrow account scandal. The Parliament approved a resolution at the weekend requiring the President to sack three ministers, the Attorney General and other top bureaucrats in the ministry of Energy and Minerals over the scandal in which up to Sh306 billion in tax-payers' money could be lost in a fraudulent conspiracy between government officials and private businessmen.
There were fears that the US could cancel the MCC over corruption concerns around the Tegeta escrow rip-off, following a similar move by the General Budget Support (GBS) group of donor countries that suspended aid totalling nearly Sh1 trillion to Tanzania pending conclusion of the investigations into the escrow scandal. During the debate in Parliament of the escrow Tegeta account report by the Public Accounts Committee (PAC), Kigoma South MP Mr David Kafulila claimed that the US had cancelled Tanzania's MCC compact over corruption concerns. He said that other countries such as Ghana which was nominated alongside Tanzania had already signed its compact in October.
However, minister for Finance Saada Mkuya denied Mr Kafulila's claim and told Parliament the country was still on track for the project whose first compact saw rapid construction of road network, electricity installation and water supply across the country.
Documents seen by The Citizen now show that Ms Mkuya indeed signed, mid last month, a grant agreement with the MCC Vice President of Compact Operations, Mr Kamran Khan to start groundwork.
The government's operationalisation of the Big Results Now (BRN), commitment to reform the debt-ridden Tanesco and the establishment of the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) were key to unlocking the initial commitment.
The released Sh16.15 billion is for feasibility studies and other preparatory activities to develop the proposed compact programme. It will also assist MCC officials in assessing the expected impact of the proposed investments.
The second MCC project will largely focus on the power sector, including investments in infrastructure as well as policy, regulatory and institutional reforms. Tanzania still earmarked electricity supply and road infrastructure as a priority for the MCC compact 2.
The first MCC compact executed from 2008 to 2015 spent $698 million (Over Sh1 trillion) with projects in water, roads and electric power. That compact programme led to the construction of over 3,000km of power lines, 450km of trunk roads, two water treatment plants and Mafia Airport runway.
The feasibility studies are expected to be carried out in five areas and final report delivered not later than mid-2015. The final study will be on establishment of the proposed accountable entity (MCA-Tanzania). The office will be the key organ of the projects and will oversee its progress.