MILLENNIUM CHALLENGE COMPACT
BETWEEN
THE UNITED STATES OF AMERICA
ACTING THROUGH
THE MILLENNIUM CHALLENGE CORPORATION
AND
THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA
ACTING THROUGH
THE MINISTRY OF FINANCE MILLENNIUM CHALLENGE COMPACT
TABLE OF CONTENTS
Page
Article 1. Goal and Objectives.......................................................................................... 1
Section 1.1 Compact Goal ............................................................................................. 1
Section 1.2 Project Objectives ....................................................................................... 1
Article 2. Funding and Resources..................................................................................... 1
Section 2.1 MCC Funding ............................................................................................. 1
Section 2.2 Compact Implementation Funding ............................................................. 2
Section 2.3 Disbursement .............................................................................................. 2
Section 2.4 Interest......................................................................................................... 2
Section 2.5 Government Resources; Budget ................................................................. 2
Section 2.6 Limitations on the Use of MCC Funding ................................................... 2
Section 2.7 Taxes........................................................................................................... 3
Article 3. Implementation ................................................................................................. 3
Section 3.1 Program Implementation Agreement.......................................................... 3
Section 3.2 Government Responsibilities...................................................................... 4
Section 3.3 Policy Performance..................................................................................... 4
Section 3.4 Government Assurances ............................................................................. 4
Section 3.5 Implementation Letters ............................................................................... 4
Section 3.6 Procurement ................................................................................................ 4
Section 3.7 Records; Accounting; Covered Providers; Access ..................................... 5
Section 3.8 Audits; Reviews.......................................................................................... 6
Article 4. Communications ............................................................................................... 7
Section 4.1 Communications ......................................................................................... 7
Section 4.2 Representatives ........................................................................................... 7
Section 4.3 Signatures.................................................................................................... 8
Article 5. Termination; Suspension; Refunds................................................................... 8
Section 5.1 Termination; Suspension ............................................................................ 8
Section 5.2 Refunds; Violation...................................................................................... 9
Section 5.3 Survival....................................................................................................... 9
Article 6. Compact Annexes; Amendments; Compact Status ........................................ 10
Section 6.1 Annexes..................................................................................................... 10
Section 6.2 Inconsistencies .......................................................................................... 10
Section 6.3 Amendments ............................................................................................. 10
Section 6.4 Compact Status ......................................................................................... 10
Section 6.5 Additional Instruments.............................................................................. 10 TOC - ii
Section 6.6 References to MCC Website..................................................................... 10
Section 6.7 Exclusion Clause....................................................................................... 10
Section 6.8 References to Laws, Regulations, Policies and Guidelines ...................... 10
Article 7. Entry Into Force .............................................................................................. 11
Section 7.1 Domestic Requirements............................................................................ 11
Section 7.2 Conditions Precedent ................................................................................ 11
Section 7.3 Date of Entry into Force ........................................................................... 11
Section 7.4 Compact Term .......................................................................................... 11
Article 8. Consultations................................................................................................... 12
Section 8.1 Consultation .............................................................................................. 12
Annex I: Program Description
Annex II: Program Budget
Annex III: Summary of Monitoring and Evaluation Plan MILLENNIUM CHALLENGE COMPACT
PREAMBLE
This MILLENNIUM CHALLENGE COMPACT (this "Compact") is between the United States
of America, acting through the Millennium Challenge Corporation, a United States Government
corporation ("MCC"), and the Government of the United Republic of Tanzania (the
"Government"), acting through the Ministry of Finance (individually, each of the MCC and the
Government, a "Party" and collectively, the "Parties").
Recalling that the Government consulted with the private sector and civil society of Tanzania to
determine the priorities for the use of Millennium Challenge Account assistance and developed
and submitted to the MCC a proposal for such assistance; and
Recognizing that the MCC wishes to help Tanzania implement a program to achieve the goal and
objectives described herein (the "Program");
The Parties hereby agree as follows:
ARTICLE 1.
GOAL AND OBJECTIVES
Section 1.1 Compact Goal. The goal of this Compact is to advance economic growth and
poverty reduction in Tanzania through strategic investments in transportation, energy, and water
infrastructure (the "Compact Goal").
Section 1.2 Project Objectives. The objectives of the Projects (each, a "Project Objective")
are:
(a) To increase cash crop revenue and aggregate visitor spending through the
Transport Sector Project;
(b) To increase value added of businesses through the Energy Sector Project; and
(c) To increase investment in human and physical capital and reduce the prevalence
of water-related diseases through the Water Sector Project.
The Government shall take all necessary steps to achieve the Compact Goal and Project
Objectives during the Compact Term.
ARTICLE 2.
FUNDING AND RESOURCES
Section 2.1 MCC Funding. The MCC hereby grants to the Government, under the terms of
this Compact, an amount not to exceed Six Hundred Ninety-Eight Million One Hundred and
Thirty-Six Thousand United States Dollars (US$698,136,000) ("MCC Funding") for use by the
Government in the implementation of the Program, as more specifically described in Annex II to
this Compact. 2
Section 2.2 Compact Implementation Funding.
(a) Of the total amount of MCC Funding, the MCC shall make up to Eleven Million
Eight Hundred and Ninety-Six Thousand United States Dollars (US$11,896,000) ("Compact
Implementation Funding") available to the Government under Section 609(g) of the
Millennium Challenge Act of 2003 for:
(i) administrative activities for MCA-Tanzania (as defined below), including
start-up costs such as staff salaries, rent, cost of purchasing computers and other information
technology or capital equipment and other similar expenses; and
(ii) any other activities relating to the implementation of the Compact,
approved by the MCC.
(b) The Parties shall provisionally apply this Section 2.2, and Sections 2.6, 2.7 and
3.5 below, after the MCC and the Government sign this Compact until this Compact enters into
force under Section 7.3. Compact Implementation Funding also shall be subject to the
requirements, restrictions and procedures set out in writing by the MCC.
Section 2.3 Disbursement. In accordance with this Compact and the Program Implementation
Agreement (as defined below), the MCC shall disburse MCC Funding for expenditures incurred
in connection with the implementation of the Program (each, a "Disbursement"). The proceeds
of such Disbursements shall be made available to the Government either (a) by deposit to a bank
account established by the Government and acceptable to the MCC (a "Permitted Account") or
(b) through direct payment to the relevant provider of goods, works or services in furtherance of
this Compact, as appropriate. MCC Funding shall be expended solely to cover expenditures in
connection with the implementation of the Program as provided in this Compact and the Program
Implementation Agreement.
Section 2.4 Interest. The Government shall pay to the MCC any interest and other earnings
that accrue on MCC Funding in accordance with the Program Implementation Agreement
(whether by directing such payments to the bank account outside Tanzania designated by the
MCC or otherwise).
Section 2.5 Government Resources; Budget.
(a) The Government shall provide all funds and other resources, and shall take all
actions, that are necessary to carry out the Government's responsibilities and obligations under
this Compact.
(b) The Government shall use its best efforts to ensure that all MCC Funding it
receives, or is projected to receive, in each of its fiscal years is fully accounted for in its annual
budget on a multi-year basis.
(c) The Government shall not reduce the normal and expected resources that it would
otherwise receive, or budget, from sources other than the MCC for the activities contemplated
under this Compact and the Program.
Section 2.6 Limitations on the Use of MCC Funding. The Government shall ensure that
MCC Funding shall not be used for any purpose that would violate United States law or policy, 3
as specified in this Compact or as further notified to the Government in writing by the MCC, or
by posting at
www.mcc.gov ("MCC Website"), including but not limited to the following
purposes:
(a) for assistance to, or training of, the military, police, militia, national guard or
other quasi-military organization or unit;
(b) for any activity that is likely to cause a substantial loss of United States jobs or a
substantial displacement of United States production;
(c) to undertake, fund or otherwise support any activity that is likely to cause a
significant environmental, health, or safety hazard as further described in MCC environmental
guidelines posted on the MCC Website ("MCC Environmental Guidelines"); or
(d) to pay for the performance of abortions as a method of family planning or to
motivate or coerce any person to practice abortions, to pay for the performance of involuntary
sterilizations as a method of family planning or to coerce or provide any financial incentive to
any person to undergo sterilizations or to pay for any biomedical research which relates, in whole
or in part, to methods of, or the performance of, abortions or involuntary sterilization as a means
of family planning.
Section 2.7 Taxes.
(a) The Government shall ensure that the assistance provided by the MCC to the
Government under this Compact is exempt from any existing or future taxes, duties, levies,
contributions or other similar charges ("Taxes") by the Government (including any such Taxes
of a national, regional, local or other governmental or taxing authority) in accordance with the
terms of the "Agreement Providing For the Furnishing of Economic, Technical, and Related
Assistance" between the United States and the Government, entered into force on February 8,
1968.
(b) If any Tax has been levied and paid to the Government contrary to the
requirements of Section 2.7(a) above, the Government shall refund promptly to the MCC the
amount of such Tax out of its national funds, and no MCC Funding, proceeds thereof, or
Program asset may be applied by the Government in satisfaction of its obligations under this
Section 2.7(b).
ARTICLE 3.
IMPLEMENTATION
Section 3.1 Program Implementation Agreement. The Government shall implement the
Program in accordance with this Compact and as further specified in an agreement to be entered
into by the MCC and the Government, which agreement will address, among other matters,
implementation arrangements, fiscal accountability, disbursement and use of MCC Funding,
procurement and applicable tax exemptions (the "Program Implementation Agreement" or
"PIA"). 4
Section 3.2 Government Responsibilities.
(a) The Government shall have the principal responsibility of overseeing and
managing the implementation of the Program.
(b) The Government shall ensure that any assets or services funded in whole or in
part (directly or indirectly) by MCC Funding will be used solely in furtherance of this Compact
and the Program.
(c) The Government shall ensure that no law or regulation in Tanzania now or
hereinafter in effect makes, or will make unlawful, or otherwise prevent or hinder the
performance of any of its obligations under this Compact, the PIA or any other agreement related
thereto or any transaction contemplated thereunder.
(d) The Government shall fund all costs in excess of those budgeted for the Program,
as set forth in Annex II (as such may be modified in accordance with the terms thereof), in order
to ensure the full and complete implementation of the Program.
Section 3.3 Policy Performance. In addition to the specific policy, legal and regulatory
reform commitments identified in Annex I to this Compact, the Government shall commit to
maintain and improve its level of performance under the policy criteria (relating to just
governance, economic freedom and investments in people) identified in Section 607 of the
Millennium Challenge Act of 2003, and the selection criteria and methodology used by the
MCC.
Section 3.4 Government Assurances. The Government assures the MCC that:
(a) as of the date this Compact is signed by the Government, the information
provided to the MCC by or on behalf of the Government in the course of reaching agreement
with the MCC on this Compact is, taken as a whole, true, correct and complete in all material
respects;
(b) this Compact does not, and will not, conflict with any other international
agreement or obligation of the Government or any of the laws of Tanzania; and
(c) the Government shall not invoke any of the provisions of its internal law to justify
or excuse a failure to perform its duties or responsibilities under this Compact.
Section 3.5 Implementation Letters. From time to time, the MCC may provide guidance to
the Government in writing on all matters relating to MCC Funding, this Compact or
implementation of the Program (each, an "Implementation Letter"). The Government shall
apply such guidance in implementing the Program.
Section 3.6 Procurement. Under the exception set forth in Section 4 of the Public
Procurement Act No. 21 of 2004, the Government shall ensure that the procurement of all goods,
works and services by the Government or any Provider in furtherance of this Compact will be
consistent with and conducted in accordance with the procurement guidelines notified by the
MCC to the Government in writing or by posting on the MCC Website, or otherwise made
publicly available ("MCC Program Procurement Guidelines"). The MCC Program
Procurement Guidelines include, among others, the following requirements: 5
(a) open, fair, and competitive procedures must be used in a transparent manner to
solicit, award and administer contracts and to procure goods, works and services;
(b) solicitations for goods, works, and services must be based upon a clear and
accurate description of the goods, works and services to be acquired;
(c) contracts must be awarded only to qualified contractors that have the capability
and willingness to perform the contracts in accordance with their terms on a cost effective and
timely basis; and
(d) no more than a commercially reasonable price, as determined, for example, by a
comparison of price quotations and market prices, will be paid to procure goods, works and
services.
Section 3.7 Records; Accounting; Covered Providers; Access.
(a) Government Books and Records. The Government shall maintain, and shall use
its best efforts to ensure that all Covered Providers maintain, accounting books, records,
documents, and other evidence relating to this Compact adequate to show, to the MCC's
satisfaction, the use of all MCC Funding ("Compact Records"). In addition, the Government
shall furnish or cause to be furnished all Compact Records to the MCC when the MCC so
requests.
(b) Accounting. The Government shall maintain, and shall use its best efforts to
ensure that all Covered Providers maintain, Compact Records in accordance with accounting
principles prescribed by the International Accounting Standards Committee. Compact Records
must be maintained for at least five (5) years after the end of the Compact Term or for such
longer period, if any, required to resolve any litigation, claims or audit findings or any statutory
requirements.
(c) Provider; Covered Provider. Unless the Parties otherwise agree in writing, a
"Provider" is (i) any entity of the Government that receives or uses MCC Funding or any other
Program asset in carrying out activities in furtherance of this Compact or (ii) any third party that
receives at least US$50,000 in the aggregate of MCC Funding (other than as salary or
compensation as an employee of an entity of the Government) during the Compact Term. A
"Covered Provider" is (i) a non-United States Provider that receives (other than pursuant to a
direct contract or agreement with the MCC) US$300,000 or more of MCC Funding in any
Government fiscal year or any other non-United States person or entity that receives, directly or
indirectly, US$300,000 or more of MCC Funding from any Provider in such fiscal year or (ii)
any United States Provider that receives (other than pursuant to a direct contract or agreement
with the MCC) US$500,000 or more of MCC Funding in any Government fiscal year or any
other United States person or entity that receives, directly or indirectly, US$500,000 or more of
MCC Funding from any Provider in such fiscal year.
(d) Access. Upon the MCC's request, the Government, at all reasonable times, shall
permit, or cause to be permitted, authorized representatives of the MCC, an authorized United
States inspector general, the United States Government Accountability Office, any auditor
responsible for an audit contemplated herein or otherwise conducted in furtherance of this
Compact, and any agents or representatives engaged by the MCC or the Government to conduct 6
any assessment, review or evaluation of the Program, the opportunity to audit, review, evaluate
or inspect facilities and activities funded in whole or in part by MCC Funding.
Section 3.8 Audits; Reviews.
(a) Government Audits. Except as the Parties may otherwise agree in writing, the
Government shall, on at least a semi-annual basis, conduct, or cause to be conducted, financial
audits of all disbursements of MCC Funding in accordance with this Section 3.8(a). The initial
financial audit shall cover the period from signing of this Compact until the earlier of the
following December 31 and June 30, and all subsequent financial audits shall cover each sixmonth
period thereafter ending December 31 and June 30 through the end of the Compact Term,
in each case in accordance with the terms of the PIA. Upon the MCC's request, to conduct such
audits, the Government shall use, or cause to be used, an auditor approved by the MCC and
named on the list of local auditors approved by the Inspector General of the Millennium
Challenge Corporation (the "Inspector General") or a United States–based Certified Public
Accounting firm selected in accordance with the "Guidelines for Financial Audits Contracted by
MCA" (the "Audit Guidelines") issued and revised from time to time by the Inspector General.
Each audit shall be performed in accordance with the Audit Guidelines and be subject to quality
assurance oversight by the Inspector General. Each audit shall be completed and the audit report
delivered to the MCC no later than 90 days after the first period to be audited and no later than
90 days after each June 30 and December 31 thereafter, unless the Parties otherwise agree in
writing.
(b) Audits of United States Entities. The Government shall ensure that agreements
between the Government or any Provider, on the one hand, and a United States nonprofit
organization, on the other hand, that are financed with MCC Funding state that the United States
organization is subject to the applicable audit requirements contained in OMB Circular A-133.
The Government shall ensure that agreements between the Government or any Provider, on the
one hand, and a United States for-profit Covered Provider, on the other hand, that are financed
with MCC Funding state that the United States for-profit Covered Provider is subject to audit by
the cognizant United States Government agency, unless the Government and the MCC agree
otherwise in writing.
(c) Corrective Actions. The Government shall use its best efforts to ensure that
Covered Providers take, where necessary, appropriate and timely corrective actions in response
to audits, consider whether a Covered Provider's audit necessitates adjustment of the
Government's records, and require each such Covered Provider to permit independent auditors to
have access to its records and financial statements as necessary.
(d) Audit by the MCC. The MCC shall have the right to arrange for and conduct
audits of the Government's use of MCC Funding.
(e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used to fund the
costs of any audits, reviews or evaluations required under this Compact, including as reflected on
Annex II to this Compact. 7
ARTICLE 4.
COMMUNICATIONS
Section 4.1 Communications. Any document or communication required or submitted by
either Party to the other under this Compact shall be in writing and, except as otherwise agreed
between the Parties, in English. For this purpose, the address of each Party is set forth below.
To the MCC:
Millennium Challenge Corporation
Attention: Vice President for Compact Implementation
(with a copy to the Vice President and General Counsel)
875 Fifteenth Street, N.W.
Washington, DC 20005
United States of America
Facsimile: (202) 521-3700
Telephone: (202) 521-3600
Email:
VPImplementation@mcc.gov (Vice President for Compact Implementation)
VPGeneralCounsel@mcc.gov (Vice President and General Counsel)
To the Government:
The Government of the United Republic of Tanzania
Attention: The Permanent Secretary
Ministry of Finance
Madaraka Avenue
P.O. Box 9111
Dar es Salaam, Tanzania
Facsimile: 255 22 2110326
Telephone: 255 22 2111174
Email:
ps@mof.go.tz
With a copy to MCA-Tanzania:
Millennium Challenge Account-Tanzania
Attention: Chief Executive Officer
Kivukoni Front/Ohio Street
P.O. Box 8327
Dar es Salaam, Tanzania
Facsimile: 255 22 2124644
Telephone: 255 22 2124634
Email: To be designated in writing to the MCC by MCA-Tanzania
Section 4.2 Representatives. For all purposes of this Compact, the Government shall be
represented by the individual holding the position of, or acting as, the Permanent Secretary to the
Treasury, and the MCC shall be represented by the individual holding the position of, or acting
as, Vice President for Compact Implementation (each, a "Principal Representative"), each of
whom, by written notice to the other Party, may designate one or more additional representatives 8
for all purposes other than signing amendments to this Compact. A Party may change its
Principal Representative to a new representative that holds a position of equal or higher rank
upon written notice to the other Party.
Section 4.3 Signatures. With respect to all documents other than this Compact or an
amendment to this Compact, a signature delivered by facsimile or electronic mail shall be
binding on the Party delivering such signature to the same extent as an original signature would
be.
ARTICLE 5.
TERMINATION; SUSPENSION; REFUNDS
Section 5.1 Termination; Suspension.
(a) Either Party may terminate this Compact in its entirety by giving the other Party
thirty (30) days' written notice.
(b) The MCC may, immediately upon written notice to the Government, suspend or
terminate this Compact or MCC Funding under this Compact, in whole or in part, if the MCC
determines that any circumstance identified by the MCC as a basis for suspension or termination
(whether in writing to the Government or by posting on the MCC Website) has occurred, which
circumstances include but are not limited to the following:
(i) the Government fails to comply with its obligations under this Compact,
the PIA or any other agreement or arrangement entered into by the Government in connection
with this Compact or the Program;
(ii) an event has occurred that, in the MCC's determination, makes
achievement of any Project Objective improbable during the term of this Compact or makes it
improbable that the Government will be able to perform its obligations under this Compact;
(iii) any use of MCC Funding or continued implementation of this Compact
that would violate applicable law or United States Government policy, whether now or hereafter
in effect;
(iv) the Government or any other person or entity receiving MCC Funding or
using assets acquired in whole or in part with MCC Funding is engaged in activities that are
contrary to the national security interests of the United States;
(v) an act has been committed or an omission or an event has occurred that
would render Tanzania ineligible to receive United States economic assistance under Part I of the
Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.), by reason of the application of any
provision of the Foreign Assistance Act of 1961 or any other provision of law;
(vi) the Government has engaged in a pattern of actions inconsistent with the
criteria used to determine the eligibility of Tanzania for assistance under the Millennium
Challenge Act of 2003; and 9
(vii) a person or entity receiving MCC Funding or using assets acquired in
whole or in part with MCC Funding is found to have been convicted of a narcotics offense or to
have been engaged in drug trafficking.
(c) All Disbursements shall cease upon the expiration, suspension, or termination of
this Compact; provided, however, that MCC Funding may be used, in compliance with this
Compact and the PIA, to pay for (i) reasonable expenditures for goods, works or services that are
properly incurred under or in furtherance of this Compact before such expiration, suspension or
termination of this Compact, and (ii) reasonable expenditures (including administrative
expenses) that are properly incurred in connection with the winding up of the Program within
120 days after the expiration, suspension or termination of this Compact, so long as the request
for payment of such expenditures is submitted within ninety (90) days after such expiration,
suspension or termination.
(d) Subject to subsection (c) of this Section 5.1, upon the expiration, suspension or
termination of this Compact, (i) any amounts of MCC Funding not disbursed by the MCC shall
be released from any obligation in connection with this Compact without any action from the
Government or the MCC, and (ii) any amounts of MCC Funding disbursed by MCC but not
expended under Section 2.3 before such expiration, suspension or termination, plus accrued
interest thereon, shall be returned to the MCC within thirty (30) days after the Government
receives the MCC's request for such return.
(e) The MCC may reinstate any suspended or terminated MCC Funding under this
Compact if the MCC determines that the Government or other relevant person or entity has
committed to correct each condition for which MCC Funding was suspended or terminated.
Section 5.2 Refunds; Violation.
(a) If any MCC Funding, any interest or earnings thereon, or any asset acquired in
whole or in part with MCC Funding is used for any purpose in violation of the terms of this
Compact, the MCC shall have the right to require that the Government repay to the MCC, in
United States Dollars, the value of such misused MCC Funding, interest, earnings, or asset, plus
interest, within thirty (30) days after the Government's receipt of the MCC's request for
repayment. The Government shall use national funds (and no MCC Funding or assets of the
Program) to make such payment.
(b) Notwithstanding any other provision in this Compact or any other agreement to
the contrary, the MCC's right under this Section 5.2 for a refund shall continue during the term
of this Compact and for a period of (i) five years thereafter or (ii) one year after the MCC
receives actual knowledge of such violation, whichever is later.
Section 5.3 Survival. The Government's responsibilities under Sections 2.4, 2.6, 2.7, 3.7, 3.8,
5.1(c), 5.1(d), 5.2, 5.3 and 6.4 of this Compact shall survive the expiration, suspension or
termination of this Compact. 10
ARTICLE 6.
COMPACT ANNEXES; AMENDMENTS; COMPACT STATUS
Section 6.1 Annexes. Each annex attached hereto constitutes an integral part of this Compact.
Section 6.2 Inconsistencies. In the event of any conflict or inconsistency between:
(a) any annex to this Compact and any of Articles 1 through 8, such Articles 1
through 8 shall prevail; or
(b) this Compact and any other agreement between the Parties regarding the Program,
this Compact shall prevail.
Section 6.3 Amendments. The Parties may amend this Compact only by a written agreement
signed by the Principal Representatives of both Parties and subject to the respective domestic
approval requirements to which this Compact was subject.
Section 6.4 Compact Status. This Compact is an international agreement and, as such, will be
governed by the principles of international law.
Section 6.5 Additional Instruments. Any reference to activities, obligations or rights
undertaken or existing under or in furtherance of this Compact or similar language shall include
activities, obligations and rights undertaken by, existing under or in furtherance of any
agreement, document or instrument related to this Compact and the Program.
Section 6.6 References to MCC Website. Any reference in this Compact, the PIA or any
other agreement entered into in connection with this Compact, to a document or information
available on, or notified by posting on the MCC Website shall be deemed a reference to such
document or information as updated or substituted on the MCC Website from time to time.
Section 6.7 Exclusion Clause. This Compact and the other Compact Documents (as defined
below) and the performance by the Government of any of its obligations under this Compact or
the other Compact Documents shall not be made unlawful or otherwise prevented, hindered or
adversely affected by any laws of Tanzania that come into effect after the MCC and the
Government sign this Compact.
Section 6.8 References to Laws, Regulations, Policies and Guidelines . Each reference in this
Compact, the PIA or any other agreement entered into in connection with this Compact, to a law,
regulation, policy, guideline or similar document will, unless expressly set forth herein or
therein, be construed as a reference to such law, regulation, policy, guidelines or similar
document as it may, from time to time, be amended, revised, replaced, or extended and will
include any law, regulation, policy, guidelines or similar document issued under or otherwise
applicable or related to such law, regulation, policy, guidelines or similar document. 11
ARTICLE 7.
ENTRY INTO FORCE
Section 7.1 Domestic Requirements. The Government shall take all steps necessary to ensure
that (a) this Compact and the PIA and all of the provisions of this Compact and the PIA are valid
and binding and are in full force and effect in Tanzania, and (b) no laws of Tanzania (other than
the constitution of Tanzania), whether now or hereafter in effect, will take precedence or prevail
over the terms of this Compact or the PIA.
Section 7.2 Conditions Precedent. Before this Compact enters into force:
(a) the Government and the MCC shall execute the PIA;
(b) the Government shall deliver to the MCC:
(i) a certificate signed and dated by the Principal Representative of the
Government (or such other duly authorized representative of the Government acceptable to the
MCC) certifying that the Government has taken all steps required under Section 7.1;
(ii) an opinion from the Attorney General of Tanzania, in form and substance
satisfactory to the MCC, that states, among other things, (1) each of the Compact, the PIA and
any other agreement entered into in connection with this Compact to which the Government and
the MCC are parties (the "Compact Documents") have been duly authorized, executed and
delivered by the Government, (2) each Compact Document and all of the provisions of each
Compact Document are valid and binding and are in full force and effect in Tanzania, (3) each
Compact Document has the status, if stipulated in such agreement, of an international agreement,
(4) each Compact Document (and the execution, delivery and performance by the Government of
each) does not and will not conflict with any other international agreement or obligation of the
Government or any of the laws of Tanzania, and (5) MCA-Tanzania has been duly established as
an independent accountable entity, is validly existing as an office of the Government, and has the
power and authority to perform the functions and carry out the obligations contemplated by the
Compact Documents; and
(iii) complete, certified copies of all decrees, legislation, regulations or other
governmental documents relating to its domestic requirements for this Compact to enter into
force and the satisfaction of the requirements of Section 7.1, which the MCC may post on the
MCC Website or otherwise make publicly available; and
(c) The MCC must determine that, after signature of this Compact, the Government
has not engaged in any action or omission that is inconsistent with the eligibility criteria for
MCC Funding.
Section 7.3 Date of Entry into Force. This Compact shall enter into force on the later of (a)
the date of the last letter in an exchange of letters between the Principal Representatives
confirming that each Party has completed its domestic requirements for entry into force of this
Compact and (b) the date that all conditions set forth in Section 7.2 have been satisfied.
Section 7.4 Compact Term. This Compact shall remain in force for five years after its entry
into force, unless terminated earlier under Section 5.1 (the "Compact Term"). 12
ARTICLE 8.
CONSULTATIONS
Section 8.1 Consultation. Either Party may, at any time, request consultations relating to the
interpretation or implementation of this Compact or any relevant supplemental agreement
between the Parties. Such consultations shall begin at the earliest possible date. The request for
consultations shall designate a representative for the requesting Party with the authority to enter
consultations and the other Party shall endeavor to designate a representative of equal or
comparable rank. If such representatives are unable to resolve the matter within thirty (30) days
from the commencement of the consultations, then each Party shall forward the consultation to
the Principal Representative or such other representative of comparable or higher rank. The
consultations shall last no longer than sixty (60) days from date of commencement. If the matter
is not resolved within such time period, either Party may terminate this Compact pursuant to
Section 5.1(a). The Parties shall enter any such consultations guided by the principle of
achieving the Compact Goal in a timely and cost-effective manner and by the principles of
international law. Any dispute arising under or related to this Compact shall be determined
exclusively through the consultation mechanism set forth in this Section 8.1.
SIGNATURE PAGE BEGINS ON THE NEXT PAGEIN WITNESS WHEREOF, the undersigned, duly authorized by their respective
governments, have signed this Compact this 17th day of February, 2008.
Done at Dar es Salaam, Tanzania
FOR MILLENNIUM CHALLENGE
CORPORATION, ON BEHALF OF THE
UNITED STATES OF AMERICA
FOR THE GOVERNMENT OF THE
UNITED REPUBLIC OF TANZANIA
/ s /
George W. Bush
President of the United States of America
/ s /
Jakaya Mrisho Kikwete
President of the United Republic of Tanzania ANNEX I
PROGRAM DESCRIPTION
A. OVERVIEW
This Annex I to this Compact describes the Program that MCC Funding will support in Tanzania
during the Compact Term. The Program will include the Transport Sector Project, the Energy
Sector Project and the Water Sector Project (each, a "Project") and the activities related to the
Projects (each, a "Project Activity") as described in this Annex I.
1. Background.
The United Republic of Tanzania ("Tanzania"), comprised of the mainland and Zanzibar, is
surrounded by eight countries (consisting of Kenya, Uganda, Rwanda, Burundi, Democratic
Republic of Congo, Zambia, Malawi, and Mozambique) and the Indian Ocean. Tanzania is a
country of approximately 39 million people. Nearly 36 percent of the mainland population and
49 percent of the Zanzibar population live below the poverty line. An inadequate transportation
network, an inadequate and unreliable supply of energy and a shortage of potable water are three
key constraints to economic growth and private investment in Tanzania. The Program is
designed specifically to address these constraints.
2. Program.
The Program consists of the Transport Sector Project, the Energy Sector Project, and the Water
Sector Project, as further described below.
The Parties may agree to modify or eliminate any Project or Project Activity, or to create a new
project or project activity, in writing signed by the Principal Representative of each Party
without amending this Compact; provided, however, that any such modification or elimination of
a Project or Project Activity, or creation of a new project or project activity, shall not cause the
amount of MCC Funding to exceed the aggregate amount specified in Section 2.1 of this
Compact, cause the Government's responsibilities or contribution of resources to be less than
specified in this Compact, or extend the Compact Term.
3. Consultative Process.
The consultative process for the Program was informed by, and anchored in, the consultative
process conducted in connection with the Government's National Strategy for Growth and
Reduction of Poverty which was finalized in 2005 (commonly referred to by the Swahili
acronyms "MKUKUTA" and "MKUZA," for the mainland and Zanzibar, respectively). The
Government organized national outreach activities and held various meetings relating to the
Program proposal with key stakeholders, including representatives from local governments,
members of parliament, and non-governmental organizations. The Government also engaged the
media to inform the public about the proposal for Millennium Challenge Account assistance with
a series of press releases, radio and television interviews, and press conferences. ANNEX I - 2
4. Environmental and Social Sustainability.
Tanzania enjoys a complex and rich environmental and social resource base. In order to achieve
long-term sustainable growth and to achieve maximum Program impact, these natural resources
(including abundant wildlife and ecological diversity, cultural resources, and coastal and marine
life) will be safeguarded through the implementation of several programmatic and sectoral
mitigation measures for the Compact Term, as follows:
(a) The Government shall comply with MCC Environmental Guidelines and the
gender policy delivered by the MCC to the Government or posted on the MCC Website or
otherwise publicly made available (the "MCC Gender Policy"). The Government also shall
adhere to Tanzanian environmental laws and regulations, including the Government of Tanzania
National Environmental Policy of 1997, the 2004 Environmental Management Act, and the 2005
Environmental Impact Assessment and Audit Regulations. In addition, for projects on Zanzibar,
the Government shall ensure that all implementing entities comply with the 1992 National
Environmental Policy for Zanzibar and the Environmental Management for Sustainable
Development Act (No. 2 of 1996).
(b) On-Going Consultation. To ensure the environmental and social sustainability of
the Program, MCA-Tanzania shall develop and implement plans for comprehensive public
consultations in which various stakeholders in the Program (including women and other
underrepresented groups) are afforded meaningful consultation and opportunities to provide their
inputs to the design and implementation of the Program, which public consultations will
primarily be conducted by the special consultative committees described in Section 2(c) of part E
of this Annex I. In compliance with the MCC Environmental Guidelines, all environmental and
social impact assessments ("ESIAs") and all other relevant environmental and social assessment
documentation will be posted on the MCA-Tanzania website.
(c) Gender Integration Action Plan. To maximize the positive social impacts of the
Program, MCA-Tanzania shall develop and implement a gender integration plan (for both the
mainland and Zanzibar) that includes, among other things, approaches for meaningful and
inclusive consultations with women and other underrepresented groups, a gender analysis for
each Project Activity, as appropriate, and strategies for incorporating findings of the gender
analysis into the design of each such Project Activity (the "Gender Integration Action Plan").
The Gender Integration Action Plan will be posted on the MCA-Tanzania website.
(d) HIV/AIDS Awareness. MCA-Tanzania shall develop and implement an action
plan for incorporating targeted HIV/AIDS awareness programs into all phases of implementation
of the Program. Such action plan specifically shall ensure (i) the incorporation of the HIV/AIDS
awareness programs into the terms of reference (and the bidding documents) for the relevant
contractors (including design or supervisory firms, construction firms, independent technical
auditing firms and any project management advisors) and (ii) independent monitoring of each
such contractor's compliance with these awareness programs throughout the Compact Term.
(e) Capacity Building; Resource Management. MCC Funding may be used:
(i) To provide capacity building to the National Environmental Management
Council ("NEMC") and the Zanzibar Department of Environment ("ZDOE") in order (1) to
enhance both NEMC's and ZDOE's abilities to address issues arising in connection with the ANNEX I - 3
implementation of the Program and (2) to support MCA-Tanzania's hiring of an environmental
and social oversight consultant to assist MCA-Tanzania in ensuring their compliance with
various environmental and social requirements under the Compact; and
(ii) To support community-based natural resource and wildlife management
programs being undertaken by other donors, particularly where deforestation, wildlife migration
and trafficking risks have been identified as possible in connection with the implementation of
certain Project Activities.
(f) Mitigation Measures. MCC Funding will be used to implement all environmental
and social mitigation measures identified in the relevant environmental assessments (or as
otherwise may be appropriate) of the Program, including (i) up to a maximum amount specified
by the MCC, compensation for physical and economic displacement of individuals, residences
and businesses affected by the rehabilitation, consistent with the World Bank's Operational
Policy 4.12, (ii) implementation of HIV/AIDS awareness plans, and (iii) continuing advocacy,
training and support for community-based resource management.
5. Proposals.
Public solicitations for proposals are anticipated to procure goods, works and services, as
appropriate, to implement all Projects. MCA-Tanzania will develop, subject to MCC approval, a
process for consideration of all such proposals. Notwithstanding the foregoing, MCA-Tanzania
also may consider, using a process developed by MCA-Tanzania and approved by the MCC, any
unsolicited proposals it receives.
B. TRANSPORT SECTOR PROJECT
1. Background.
Transportation infrastructure in Tanzania is inadequate to meet the needs of the country's widely
dispersed population; less than seven percent of Tanzania's roads are bitumen surfaced, with the
remainder gravel or earth. The Transport Sector Project addresses this constraint to growth by
reducing transport costs and travel times, which will facilitate access to social services and
markets and will increase tourism potential. Additionally, in areas where the roads are currently
impassable for certain parts of the year, road rehabilitation will provide year-round access to
markets, thus facilitating increased agricultural activity.
Similarly, access to Mafia Island is limited by the poor condition of its airport and lack of
feasible alternative transportation options. Resurfacing the airport's runway and improving other
airport facilities will allow for easier, more efficient, and safer access to the island, resulting in
increased tourist and business travel to and from the mainland and additional jobs on the island.
2. Project.
The Transport Sector Project consists of the following Project Activities:
(a) Mainland Trunk Roads Activity.
MCC Funding will be used to make improvements to three trunk roads on the mainland.
Improvement of any such trunk roads will only be undertaken under this Compact and funded ANNEX I - 4
with MCC Funding if all necessary construction and construction supervision contracts for such
trunk road are executed and in effect prior to the first anniversary of the entry into force of this
Compact. Specifically, MCC Funding will support:
(i) Rehabilitation of the following three trunk roads:
(1) Tanga – Horohoro Road. Upgrading from gravel to asphalt
concrete of the 68 km stretch of highway located in northeast
Tanzania connecting the seaport of Tanga with Horohoro at the
Kenyan border;
(2) Tunduma – Sumbawanga Road. Upgrading from gravel to double
bituminous surfacing of the southernmost 224 km stretch of the T9
trunk road (known as the western corridor), with the exception of
the approximately two km stretch in Tunduma and the
approximately eight km stretch in Sumbawanga, both of which will
be paved with asphalt concrete; and
(3) Mtwara Corridor. Upgrading from earth to double bituminous
surfacing two sections of the Mtwara Corridor (known as the
southern corridor) consisting of (A) the 61 km stretch between
Namtumbo and Songea and (B) 78 km stretch from Peramiho
Junction (that is about 20 km west of Songea) to Mbinga.
(ii) Construction supervision of all rehabilitated roads under the Mainland
Trunk Roads Activity.
(iii) Additional environmental assessments, together with any resulting
resettlement action plans ("RAPs") (consistent with World Bank Operational Policy 4.12) and
environmental management plans ("EMPs"), each as satisfactory to the MCC, and wildlife
migration studies and aforementioned community-based natural resource and wildlife
management programs, as needed.
(iv) Capacity building for the Tanzania National Road Agency
("TANROADS") related to new staff and equipment required to manage the Mainland Trunk
Roads Activity.
(v) Assistance to TANROADS in preparation of design documentation and
bid packages.
TANROADS will be the Implementing Entity (as defined below) for the Mainland Trunk Roads
Activity.
(b) Zanzibar Rural Roads Activity.
MCC Funding will be used to make improvements to selected rural roads on the Zanzibar island
of Pemba. Specifically, MCC Funding will support:
(i) Feasibility studies, final design, and any additional environmental and
social assessments, together with any resulting RAPs (consistent with World Bank Operational ANNEX I - 5
Policy 4.12) and EMPs, each as needed and as satisfactory to the MCC, of the following five
roads (each identified together with its approximate length): (1) Mzambarauni Takao – Finya
Road (8.3 km), (2) Mzambarauni Karimu – Mapofu Road (8.3 km), (3) Bahanasa – DayaMtambwe
Road (13.1 km), (4) Chwale – Kojani Road (two km) and (5) Kipangani – Kangagani
Road (three km).
(ii) Rehabilitation and posting of signage and incorporation of other safety
improvements of the roads selected from the five roads described in Section 2(b)(i) above based
on, among others, technical construction plans capable of being completed during the Compact
Term, reasonable conformity to the priorities of Zanzibar's transportation master plan, and an
economic rate of return methodology acceptable to the MCC (agreed upon between the Parties
prior to the commencement of any feasibility study described in Section 2(b)(i) above).
(iii) Project management and construction supervision of all rehabilitated roads
under the Zanzibar Rural Roads Activity.
An engineering firm will be hired, following an international competitive procurement and
selection process, to implement this Project Activity. The Government will ensure that the
Ministry of Communications and Transport of Zanzibar cooperates with MCA-Tanzania to
oversee this selected firm.
(c) Road Maintenance Activity.
MCC Funding will be used to enhance Tanzania's capacity to maintain its road network.
Specifically, MCC Funding will support priority institutional and capacity limitations, as
identified and agreed to by the MCC and the Government prior to the second anniversary of the
entry into force of this Compact. Such support may be provided, among other ways, in
improvements of strategic maintenance planning, and management of routine and periodic
maintenance contracts of TANROADS and the Ministry of Communication and Transport of
Zanzibar.
(d) Mafia Island Airport Activity.
MCC Funding will be used to rehabilitate and upgrade the airport on Mafia Island. MCC
Funding will support:
(i) Refurbishment of the runway, apron and taxiway, establishment of
boundary security, refurbishment of the fire station, refurbishment of the terminal building and
its water supply, and installation of communication equipment, the scale and scope of which will
be contingent on the findings of a strategic environmental assessment.
(ii) Project coordination and construction supervision for the activities
described in Section 2(d)(i) above.
(iii) Additional environmental assessments, together with any resulting RAPs
(consistent with World Bank Operational Policy 4.12) and EMPs, each as needed and as
satisfactory to the MCC. ANNEX I - 6
(iv) Capacity building at the Tanzania Airports Authority ("TAA") related to
improvements in strategic maintenance planning and management of routine and periodic
maintenance contracts.
TAA will be the Implementing Entity for the Mafia Island Airport Activity.
3. Beneficiaries.
The upgrading of mainland and Zanzibar roads will benefit users of the roads directly by
reducing transportation costs and travel times. In addition, individuals living near the roads will
indirectly benefit from increased access to social services and markets. The improvements to the
Mafia Island airport will directly benefit approximately 12,000 passengers traveling to the island
each year, while indirectly benefiting the population of the island, particularly those engaged in
the service sector.
4. Donor Coordination; Role of Private Sector and Civil Society.
The MCC, together with the Government, will continue to pursue opportunities to coordinate
with the "Joint Technical Committee," the principal development partner for projects in the
transportation sector in Tanzania, consisting of representatives from the European Union, World
Bank, African Development Bank ("AfDB") and the governments of Norway, Denmark and
Japan. The mainland roads included in the Transport Sector Project originated in the
Government's ten-year "Transport Sector Investment Program" (also known as "TSIP"), which
has been reviewed, discussed and approved by the Joint Technical Committee and other
stakeholders.
The implementation of the Mafia Island Airport Activity will be coordinated with the feasibility
study, the ESIA and design for Tanzanian airport upgrades (including airside pavements and
other facilities) currently being funded by the World Bank.
Private sector firms are expected to participate in the bids, and perform, studies, design,
construction, and construction supervision associated with the Transport Sector Project.
5. United States Agency for International Development ("USAID").
While the USAID currently does not focus specifically on Tanzania's transportation sector, the
MCC and the USAID, with the cooperation of the Government, will work to identify potential
opportunities for coordination on the Transport Sector Project, including opportunities for
community-based natural resource and wildlife management programs within those regions
affected by roads rehabilitated under the Transport Sector Project.
6. Sustainability.
In order to provide continued institutional support for the Transport Sector Project, the
Government will undertake certain commitments described in Section 7 below. The Road
Maintenance Activity will enhance the Transport Sector Project's sustainability by improving the
Government's capability to perform maintenance (both on the mainland and on Zanzibar). The
Government is expected to commit additional resources to maintain the roads rehabilitated under
the Transport Sector Project. While it is unlikely that the Transport Sector Project will result in
any significant negative environmental and social impacts, the potential direct, indirect, induced, ANNEX I - 7
and cumulative environmental impacts of the Transport Sector Project will be examined through
the execution of appropriate environmental assessments to be conducted during the final design
phase of the Project Activities of the Transport Sector Project, and appropriate mitigation
measures will be implemented. The Mafia Island Airport Activity will be subject to the results
of a strategic environmental assessment. This assessment will help ensure that all MCC
investments in the airport result in improved conditions for tourism and private sector growth
and are implemented in the context of sustainable long-term development with a focus on natural
resource and wildlife management.
7. Policy, Legal and Regulatory Reforms.
The implementation by the Government, to the satisfaction of the MCC in its discretion, of the
policy, legal and regulatory reforms described below shall be conditions precedent to the
specified Disbursements.
(a) Prior to the initial disbursement of MCC Funding for the Mainland Roads
Activity, the National Road Act (as submitted to the President for Signature in July 2007) shall
have been enacted, and is in full force and effect, and the National Road Safety Policy and
Strategy (in form and substance as prepared by the Ministry of Infrastructure Development in
May 2007) shall have been adopted by the Government.
(b) In the interest of long-term sustainability of the mainland roads network, the
Government's expenditures for road maintenance shall be increased each Tanzanian fiscal year
during the Compact Term, which increase will take into account inflation and maintenance needs
of existing, improved and newly constructed roads.
(c) In the interest of long-term sustainability of the Zanzibar roads network, the
Government of Zanzibar's expenditures for road maintenance shall be increased each Tanzanian
fiscal year during the Compact Term, which increase will take into account inflation and
maintenance needs of existing, improved and newly constructed roads.
(d) Prior to the initial disbursement of MCC Funding for construction on the
Mainland Roads Activity, the Government shall finalize the TSIP or any shorter-term plan based
on the TSIP acceptable to the Joint Technical Committee that provides funding priority to those
projects identified in the TSIP.
(e) Prior to the initial disbursement of MCC Funding for construction on the
Mainland Roads Activity, the Government shall prepare and begin implementation of a plan, in
consultation with the Joint Technical Committee, for future legislative reform in the
transportation sector, including the increased autonomy of TANROADS.
C. ENERGY SECTOR PROJECT
1. Background.
Tanzania has one of the lowest electrification rates in the world, with only about ten percent of
the population benefiting from electric power service. Where electricity is available, the quality
of supply is poor and blackouts and service interruptions are common. Consequently,
businesses, individuals, and service providers suffer from the lack of access to reliable,
affordable and modern energy services. The Energy Sector Project aims to improve the quality ANNEX I - 8
and increase the quantity of electricity to businesses and households, thereby increasing
investment potential. The Energy Sector Project will add new supply and transmission capacity
to improve reliability and quality of energy and new distribution capacity to extend access to
electricity to communities and businesses not currently served with electricity.
2. Project.
The Energy Sector Project consists of the three Project Activities described below. Tanzania
Electric Supply Company Limited ("TANESCO") will be the Implementing Entity for each
Project Activity of the Energy Sector Project. For the Zanzibar Interconnector Activity,
TANESCO will coordinate and consult with Zanzibar Electricity Corporation ("ZECO").
(a) Zanzibar Interconnector Activity.
MCC Funding will be used to increase the electric power supply to Zanzibar's Unguja Island by
laying a submarine transmission cable, to make associated investments to increase the capacity
of certain overhead transmission lines and to rehabilitate the main substation near Zanzibar
Town. Specifically, MCC Funding will support:
(i) Final design, and an environmental assessment, together with any
resulting RAPs (consistent with World Bank Operational Policy 4.12) and EMPs, each as needed
and as satisfactory to the MCC, and occupational health and safety standards.
(ii) Construction and installation of an approximately 40 km-long, 132kV,
100MW capacity submarine electric transmission cable (including telecom fiber optic shield
wire) from Ras Kiromoni on the mainland to Ras Fumba on Unguja Island.
(iii) Installation of a 132kV switchgear at Ubungo substation and laying of an
approximately 20 km-long, supplementary 132kV overhead line along an existing transmission
line from Ubungo to Ras Kiromoni.
(iv) Laying of an approximately 22 km-long, supplementary 132kV overhead
line along an existing transmission line from Ras Fumba to Mtoni substation.
(v) Adding 120MVA of 132/33kV transformation capacity to the Mtoni
substation on Unguja Island.
(vi) Capacity building and technical support for TANESCO and ZECO,
including assistance with preparation of engineering design and bidding documents, tender
review, supervision of construction, project management, and quality control.
(vii) Project coordination and construction supervision of all improvements and
upgrades under the Zanzibar Interconnector Activity.
(b) Malagarasi Hydropower and Kigoma Distribution Activity.
MCC Funding will be used to construct a small (up to eight MW) run-of-river hydropower plant
on the Malagarasi River at Igamba Falls, and to construct a transmission and distribution
network along the Kigoma, Uvinza and Kasulu corridor to serve approximately 21,000
customers. Specifically, MCC Funding will support: ANNEX I - 9
(i) Final design, and supplemental environmental and social assessments
consistent with the sustainability issues identified below, together with any resulting RAPs
(consistent with World Bank Operational Policy 4.12) and EMPs, each as needed and as
satisfactory to the MCC, and occupational health and safety standards.
(ii) Engineering and construction of (1) civil works including an
approximately 24 km access road, a 300 m long concrete faced rockfill dam (of which about 200
m will be eight m high), and an approximately 650 m long headrace canal, (2) electromechanical
works including the powerhouse consisting of turbines, eight MW of power
generators and a voltage step-up substation, and (3) hydro-mechanical works including intake
gates, bottom outlets, and two steel penstocks (estimated to be 110 m long).
(iii) Engineering and construction of (1) transmission and distribution line
extensions including up to 392 km of 33kV distribution lines, ten km of 11kV lines, and 171 km
of low voltage lines to distribute power generated at the hydropower plant described in this
Section 2(b) to Kigoma, Uvinza, Kasulu and small settlements along the corridor, and (2)
associated upgrades including step-down substations, electrical protection and related minor civil
works.
(iv) Capacity building and technical support for TANESCO, including
assistance with preparation of the engineering design and bidding documents, tender review,
supervision of construction, project management, and quality control.
(v) Project coordination and construction supervision of all improvements and
upgrades under the Malagarasi Hydropower and Kigoma Distribution Activity.
(vi) Assessment and design of a public-private partnership for the independent
operation of the mini-grid system in Kigoma which includes the hydropower plant, transmission
and distribution network, and service delivery, and competitive procurement of an operator
concessionaire.
(c) Distribution Systems Rehabilitation and Extension Activity.
MCC Funding will be used to rehabilitate existing power distribution assets and to extend the
distribution network in six regions (consisting of Mwanza, Iringa, Mbeya, Dodoma, Tanga and
Morogoro) to serve approximately 215,000 customers. Specifically, MCC Funding will support:
(i) Final design, and environmental and social assessment frameworks,
together with any resulting RAPs (consistent with World Bank Operational Policy 4.12) and
EMPs, each as needed and as satisfactory to the MCC, and occupational health and safety
standards.
(ii) Construction of up to 247 distribution line extensions consisting of new
33kV, 11kV, and low voltage lines and customer connections in the six regions.
(iii) Reinforcement and rehabilitation of up to 22 substations in the six regions,
including new and replacement transformers and switchgear. ANNEX I - 10
(iv) Capacity building and technical support for TANESCO, including
assistance with preparation of the engineering design and bidding documents, tender review,
supervision of construction, project management, and quality control.
(v) Project coordination and construction supervision of all improvements and
upgrades under the Distribution Systems Rehabilitation and Extension Activity.
3. Beneficiaries.
The total number of beneficiaries of the Energy Sector Project by 2020 is estimated to be
252,000 households and businesses receiving better quality and availability of electricity, as well
as approximately 88,000 previously un-served households and businesses receiving electricity
for the first time.
The Malagarasi Hydropower and Kigoma Distribution Activity is expected to directly benefit
approximately 13,000 newly served households and businesses by 2020 through new
connections to the electricity grid; an additional 7,000 households, businesses and institutions
(such as port operations, fish and agricultural processing facilities, tourism facilities, and a
hospital) are likely to benefit from power that is more available and reliable, less costly, and of
better quality. In addition, the Distribution Systems Rehabilitation and Extension Activity is
expected to reach approximately 47,000 beneficiaries through newly served households and
businesses by 2020 and 187,000 beneficiaries through existing households and businesses.
Agricultural processing, small-scale retail and the service industry (such as commercial retailers
and restaurants) are among the main sectors that will benefit from the availability of increased,
more reliable, and better quality power supply. The Zanzibar Interconnector Activity is expected
to provide significant benefits to energy consumers in Unguja and to assist growth in its vital
tourism sector.
4. Donor Coordination; Role of Private Sector and Civil Society.
Donors, including the governments of Sweden, Norway, Japan, the World Bank and the AfDB,
among others, play an active role in improving Tanzania's energy sector through technical
assistance and infrastructure projects. The Energy Sector Project has benefited significantly
from these donors' activities. For example, the Malagarasi hydropower plant project benefited
from a pre-feasibility study financed by the AfDB. The MCC's due diligence review of the
Distribution Systems Rehabilitation and Extension Activity benefited from active support of the
Swedish International Development Cooperation Agency and the World Bank.
The Government has been engaged in an extensive consultative process that allowed civil
society, along with the business community, to discuss local needs and priorities relating to the
Energy Sector Project. Such consultation is expected to continue during the implementation of
the Energy Sector Project.
5. USAID.
The USAID currently does not have activities specifically in Tanzania's energy sector.
However, as appropriate, the MCC and the USAID, with the cooperation of the Government,
will work to identify potential opportunities for coordination on the Energy Sector Project,
especially in connection with community-based natural resource and wildlife management
programs in proximity to the Project Activities of the Energy Sector Project. ANNEX I - 11
6. Sustainability.
To enhance institutional sustainability of the Energy Sector Project, the Government will
undertake certain reforms described in Section 7 below. Hiring of qualified engineering, design,
construction and supervisory firms to implement the Energy Sector Project, and provision of
necessary technical assistance to TANESCO is expected to contribute to the sustainability of the
Energy Sector Project as well.
While it is unlikely that the Energy Sector Project will result in any significant negative
environmental impacts, the potential direct, indirect, induced, and cumulative environmental
impacts of the Energy Sector Project will be examined through the execution of appropriate
environmental assessments to be conducted during the final design phase of the Energy Sector
Project, and will be addressed through implementation of appropriate mitigation measures.
Specifically, potentially significant resettlement issues associated with the current transmission
line design under the Zanzibar Interconnector Activity will be mitigated through rerouting of the
cable through open or less densely populated areas. In addition, under the Malagarasi
Hydropower and Kigoma Distribution Activity, detailed studies will be required to assess the
impact of reduced water flows and determine minimum ecological flows, to assess needs for fish
migration to spawning grounds, and to study water quality impacts and potential impacts of
water-related diseases. Detailed access road alignments and distribution line alignments will be
completed and assessed, and land acquisition needs confirmed to allow for the preparation of a
RAP. Further study on the Malagarasi hydropower plant's relationship with other proposed
hydropower and irrigation activities on the Malagarasi River and potential cumulative effects, if
any, will be required, in addition to considerations of both upstream and downstream usage. The
environmental assessment to be undertaken in connection with the Distribution Systems
Rehabilitation and Extension Activity will include special attention to the Iringa site, in which
some of the distribution lines will cross within the boundaries of the Ruaha National Park.
7. Policy, Legal and Regulatory Reforms.
The implementation by the Government, to the satisfaction of the MCC in its discretion, of the
policy, legal and regulatory reforms described below shall be conditions precedent to the
specified Disbursements.
(a) An Electricity Act, agreeable to stakeholders including the MCC, is enacted and
in full force and effect prior to the initial disbursement of MCC Funding for the Energy Sector
Project.
(b) The Government shall support TANESCO's corporate objective of moving
towards financial self-sufficiency through, at a minimum, tariff reform that reflects full cost
recovery, prior to the initial disbursement of MCC Funding for the Energy Sector Project.
(c) The Government shall ensure that the composition of TANESCO's board of
directors is such that a majority of board members are independent and professional members,
with private sector representation, prior to the initial disbursement of MCC Funding for the
Energy Sector Project. ANNEX I - 12
D. WATER SECTOR PROJECT
1. Background.
Tanzania faces a serious shortage of access to potable water, resulting in a high incidence of
water-related diseases, decreased workforce productivity, and constrained business growth. The
Water Sector Project includes investments in bulk water supply for two urban areas, Dar es
Salaam and Morogoro, which investments will increase the quantity and reliability of potable
water for domestic and commercial use. By increasing the volume of water supply, the Water
Sector Project is expected to reduce the incidence of water-related disease, increase time
available for productive activities including education, promote greater investments in physical
capital, and, ultimately, lead to an increase in income.
2. Project.
The Water Sector Project consists of the three Project Activities described below. These Project
Activities are expected, individually and jointly, to improve significantly the water supply to Dar
es Salaam and Morogoro as described below.
(a) Lower Ruvu Plant Expansion Activity.
MCC Funding will be used to expand the capacity of the Lower Ruvu water treatment plant
serving the Dar es Salaam area, from about 180 million liters per day to approximately 270
million liters per day. Specifically, MCC Funding will support:
(i) Feasibility studies, final design and an environmental and social
assessment , together with any resulting RAPs (consistent with World Bank Operational Policy
4.12) and EMPs, each as needed and as satisfactory to the MCC, and occupational health and
safety standards.
(ii) Raw water system (e.g., grit chamber and pumps), treatment system (e.g.,
flow diversion chamber, crossflow clarifier, declining rate filters, and chemical feed facilities),
treated water system (e.g., high service pump station and clearwell), power and controls system,
and solid handling facility (e.g., sludge lagoon system).
(iii) Capacity building and technical support for Dar es Salaam Water and
Sewerage Authority ("DAWASA").
(iv) Project coordination and construction supervision of all improvements and
upgrades under the Lower Ruvu Plant Expansion Activity.
DAWASA will be the Implementing Entity for the Lower Ruvu Plant Expansion Activity.
(b) Non-Revenue Water Activity.
MCC Funding will be used to improve the system efficiencies of DAWASA through reduction
of non-revenue water via reduction in physical leaks and commercial losses. Specifically, MCC
Funding will support: ANNEX I - 13
(i) A comprehensive assessment of both (1) the locations and volumes of
physical leaks and (2) billing and collection deficiencies and losses.
(ii) An environmental assessment, together with any resulting RAPs
(consistent with World Bank Operational Policy 4.12) and EMPs, each as needed and as
satisfactory to the MCC.
(iii) Preparation of a performance-based contract with, and a procurement of, a
private operator that will implement the non-revenue water reduction program based on specific
benchmarks established in the assessment described in Section 2(b)(i) above.
(iv) Capacity building and technical support for Dar es Salaam Water and
Sewerage Company ("DAWASCO") and DAWASA pertaining to the performance-based
contract described in Section 2(b)(iii) above and system-wide planning and operations.
(v) Project coordination and construction supervision of all improvements and
upgrades under the Non-Revenue Water Activity.
DAWASA is expected to be the Implementing Entity for the Non-Revenue Water Activity.
(c) Morogoro Water Supply Activity.
MCC Funding will be used to improve water supply in Morogoro and to help Morogoro Water
and Sewarage Authority ("MORUWASA") move towards achieving financial sustainability.
Specifically, MCC Funding will support:
(i) Revised master plan, feasibility studies, final design and an additional
environmental assessment, together with any resulting RAPs (consistent with World Bank
Operational Policy 4.12) and EMPs, each as needed and as satisfactory to the MCC.
(ii) Rehabilitation of Mambogo water intake and water treatment plant,
including a water treatment plant with approximate capacity of 6,000,000 million liters per day,
and associated works.
(iii) Improvements of water transfer in the existing distribution network,
including rehabilitation of Mafiga water treatment plant facilities, about 1.9 km of pressure main,
and associated works.
(iv) Capacity building and technical support for MORUWASA.
(v) Project coordination and construction supervision of all improvements and
upgrades under the Morogoro Water Supply Activity.
MORUWASA will be the Implementing Entity for the Morogoro Water Supply Activity.
3. Beneficiaries.
The Water Sector Project is expected to benefit approximately 616,000 households in Dar es
Salaam and approximately 51,000 households in Morogoro by providing better quality and more
reliable water supply. Businesses relying on network water will also benefit from these service ANNEX I - 14
improvements. Benefits from the Project Activities under the Water Sector Project include
reductions in water-related disease, increased time available for productive activities such as
labor and education, and increased investments in physical and human capital.
4. Donor Coordination; Role of Private Sector and Civil Society.
All the components of the Water Sector Project are priority projects identified under the Water
Sector Development Program 2006-2025 ("WSDP"). The WSDP was designed under the sector
wide approach to planning with the objectives of equity of water access, water managment
capacity, and proper maintenance of water and sanitation sytstems, use of environmentally sound
technologies and effective water tariffs, billing and revenue collection mechanism. The donors
participating in the WSDP include the governments of Germany, the Netherlands, France, and
Japan as well as the United Nations Development Programme, the United Nations Children's
Fund, Food and Agriculture Organization and the AfDB (collectively referred to as the
"Development Partners Group - Water"). The MCC has been coordinating with the
Development Partners Group - Water, and will continue to explore opportunities to use various
features of the WSDP, to the maximum extent possible, in order to reduce transaction costs and
avoid building parallel structures.
Private sector firms are expected to participate in the bids, and perform, studies, design,
construction, and construction supervision associated with the Water Sector Project.
5. USAID.
Various USAID projects in Tanzania include components related to the water sector, although no
current USAID program is exclusively focused on the water sector. The USAID is actively
engaged in water policy matters in Tanzania, including through the USAID's participation in the
Development Partners Group - Water. The MCC expects to work with the USAID to identify
potential opportunities for coordination with respect to the Water Sector Project.
6. Sustainability.
By strengthening and enhancing operations of the water and sewerage authorities in two major
urban locations, the Water Sector Project seeks to enhance the sustainable operation of
Tanzania's water sector. The water and sewerage authorities will be required to submit rate
cases aimed at achieving operational and maintenance financial sustainability within the
Compact Term and a sustainable trend for recovery of asset depreciation. While it is unlikely
that the Water Sector Project will result in any significant negative environmental impacts, the
potential direct, indirect, induced, and cumulative environmental impacts of the Water Sector
Project will be examined through the execution of appropriate environmental assessments to be
conducted during the final design phase of the Water Sector Project, and appropriate mitigation
measures will be implemented. For those Project Activities of the Water Sector Project that
relate to water supply, MCA-Tanzania will ensure that feasibility studies include efforts to
identify the most appropriate and environmentally sustainable water sources to meet future
demand and are available to the poor. In addition, MCA-Tanzania will ensure that EMPs are
developed, implemented and monitored for all Project Activities of the Water Sector Project,
each in accordance with the provisions of this Compact and any relevant supplemental
agreements. MCA-Tanzania also will pay particular attention to gender issues to support the ANNEX I - 15
sustainability and enhance the design of each Project Activity of the Water Sector Project
through the Gender Integration Action Plan and final design.
E. IMPLEMENTATION
The implementation framework and the plan for ensuring adequate governance, oversight,
management, monitoring and evaluation and fiscal accountability for the use of MCC Funding is
summarized below. The MCC and the Government shall enter into the PIA, and any other
agreements in furtherance of this Compact, all of which, together with this Compact, shall set out
certain rights, responsibilities, duties and other terms relating to the implementation of the
Program.
1. MCC.
The MCC shall take all appropriate actions to carry out each of its responsibilities in connection
with this Compact and the PIA, including the exercise of its approval rights in connection with
the implementation of this Compact and the Program.
2. Government; MCA-Tanzania; Consultative Committees.
(a) The Government shall form an entity empowered to carry out the Government's
obligations and to implement the Program under this Compact and the PIA ("MCA-Tanzania,"
which, as an institution of the Government, is, for the avoidance of doubt, included in the defined
term "Government"), and shall ensure that MCA-Tanzania takes all appropriate actions to
implement the Program, including the performance of the rights and responsibilities designated
to it by the Government pursuant to this Compact and the PIA.
(i) Governing Board. MCA-Tanzania shall be governed by a governing
board ("Governing Board") that will have final decision-making authority over the
implementation of the Program. The Governing Board shall consist of: seven representatives
from the Government, including at least one representative of Zanzibar, and four representatives
from the private sector and the civil society, at least one of whom shall represent an
environmental non-governmental organization and at least one of whom shall be from Zanzibar.
The private sector and civil society representatives shall be selected as the result of a transparent
selection process approved by the MCC. The Governing Board composition shall be determined
taking to account the need for gender balance among the Governing Board members.
(ii) Secretariat. A secretariat ("Secretariat") shall support the Governing
Board in the implementation of the Program. A Chief Executive Officer will manage the day-today
activities of MCA-Tanzania and will be supported by: (1) Deputy Chief Executive Officer
(Tanzania mainland); (2) Deputy Chief Executive Officer (Zanzibar); (3) Director of Finance and
Administration; (4) Director of the Transport Sector Project; (5) Director of the Energy Sector
Project; (6) Director of Water Sector Project; (7) Director of Procurement; (8) Director of
Environmental and Social Impact; (9) Director of Monitoring and Evaluation; (10) General
Counsel; and (11) Internal Auditor; together with such other managers and officers as may be
agreed upon by the Government and the MCC. The senior staff shall be supported by
appropriate administrative personnel.
(b) With prior written consent of the MCC, the Government may designate an entity
to implement some or all of the Government's obligations or to exercise any rights of the ANNEX I - 16
Government under this Compact or the PIA. The Government's designation to an entity
(whether MCA-Tanzania or otherwise) will not relieve the Government of any designated
obligations and rights, for which the Government will retain full responsibility. For the
avoidance of doubt, upon any such designation, any reference in this Compact, the PIA or any
related agreement to an action or requirement of the Government or to an agreement to which the
Government is a party shall be a reference to the Government and each such designated entity.
(c) The Government shall establish special consultative committees that will continue
the consultative process throughout the Compact Term. These special consultative committees
shall be established satisfactory to the MCC and consistent with the MCC's Guidelines for
Accountable Entities and Implementation Structures delivered by the MCC to the Government or
posted on the MCC Website or otherwise made publicly available. The members of each special
consultative committee shall include non-governmental organizations, the private sector, civil
society, and local and regional governments from the applicable region. The membership of
these special consultative committees shall be determined taking to account the need for gender
balance among the special consultative committee members and shall be agreed to between
MCA-Tanzania and the MCC. Each special consultative committee shall provide advice and
input to the Governing Board and the Secretariat regarding issues related to the implementation
of the Program, shall meet regularly (in a format and on a schedule to be agreed to between the
MCC and the Government) and shall receive regular Program updates from MCA-Tanzania.
These special consultative committees will not have decision-making authority, but will serve as
a mechanism for ongoing consultations between the Government and the public.
(d) MCA-Tanzania may provide MCC Funding to one or more pre-determined
ministries, bureaus or agencies of the Government ("Implementing Entity") based on their
expertise to implement any Project, Project Activity or any of its components under an
agreement that sets forth the responsibilities of such Implementing Entity and any other
appropriate terms and conditions ("Implementing Entity Agreement").
3. Banking Services, Fiscal Management and Procurement.
(a) The Government shall ensure that a bank ("Bank") is appointed, and the
Permitted Accounts are established and banking services provided, in accordance with the terms
of this Compact and the PIA who will provide a broad range of banking services required by
MCA-Tanzania to implement the Program. The Government shall take all appropriate actions to
ensure that the Bank perform these services in accordance with the terms of this Compact, the
PIA and any other agreements to which the Bank is a party. The Government shall set out the
roles and responsibilities of the Bank in one or more agreements with the Bank to be entered into
between MCA-Tanzania and the Bank ("Bank Agreement").
(b) The Government shall ensure that a fiscal agent ("Fiscal Agent") is appointed in
accordance with the terms of this Compact and the PIA who will provide a broad range of
financial management services required by MCA-Tanzania to implement the Program. The
Government shall take all appropriate actions to ensure that the Fiscal Agent perform these
services in accordance with the terms of this Compact, the PIA and any other agreements to
which the Fiscal Agent is a party and in accordance with internationally accepted standards of
accounting and financial management. The Government shall set out the roles and
responsibilities of the Fiscal Agent in one or more agreements with the Fiscal Agent to be
entered into between MCA-Tanzania and the Fiscal Agent ("Fiscal Agent Agreement"). ANNEX I - 17
(c) The Government shall ensure that one or more procurement agents (each, a
"Procurement Agent") are appointed in accordance with the terms of this Compact and the PIA
who will provide specified procurement activities required by MCA-Tanzania to implement the
Program. The Government shall take all appropriate actions to ensure that each Procurement
Agent perform these services in accordance with the terms of this Compact, the PIA and any
other agreements to which the Procurement Agent is a party and in accordance with the MCC
Program Procurement Guidelines. The Government shall set out the roles and responsibilities of
each Procurement Agent in one or more agreements with such Procurement Agent to be entered
into between MCA-Tanzania and the Procurement Agent ("Procurement Agent Agreement"). ANNEX II
PROGRAM BUDGET
1. General.
The Multi-Year Financial Plan Summary below sets forth the estimated annual contribution of
MCC Funding for Program administration, Program monitoring and evaluation, and
implementing each Project. The Government's contribution of resources will consist of "inkind"
and other contributions or amounts required effectively to satisfy the requirements of
Section 2.5(a) of this Compact. In accordance with the PIA, the Government will develop and
adopt on a quarterly basis a detailed financial plan (as approved by the MCC) setting forth
annual and quarterly funding requirements for the Program (including administrative costs) and
for each project, projected both on a commitment and cash requirement basis.
2. Modifications.
To preserve administrative flexibility, the Parties may by written agreement (or as otherwise
provided in the PIA), without amending this Compact, change the designations and allocations of
funds among the Projects, the Project Activities, or any activity under Program administration or
monitoring and evaluation, or between a Project identified as of entry into force of the Compact
and a new project; provided, however, that any such change (a) is consistent with the Project
Objectives and the PIA, (b) does not materially adversely affect the applicable Project or any
activity under Program administration or monitoring and evaluation, (c) does not cause the
amount of MCC Funding to exceed the aggregate amount specified in Section 2.1 of this
Compact, and (d) does not cause the Government's obligations or responsibilities or overall
contribution of resources to be less than specified in Section 2.5(a) of this Compact. ANNEX II- 2
MULTI-YEAR FINANCIAL PLAN SUMMARY1
(US$ '000)
Project Year 1 + CIF Year 2 Year 3 Year 4 Year 5 Total
1. Transport
A. Mainland Trunk Roads Activity
B. Zanzibar Rural Roads Activity
C. Road Maintenance Activity
D. Mafia Island Airport Activity
Sub-Total 21,552 84,406 147,131 82,606 37,081 372,776
2. Energy
A. Zanzibar Interconnector Activity
B. Malagarasi Hydropower & Kigoma
Distribution Activity
C. Distribution Systems Rehabilitation and
Extension Activity
Sub-Total 16,646 45,501 53,435 59,083 31,806 206,471
3. Water
A. Lower Ruvu Plant Expansion Activity
B. Non-Revenue Water Activity
C. Morogoro Water Supply Activity
Sub-Total 5,845 16,959 17,786 16,838 8,908 66,336
4. Monitoring and Evaluation
Monitoring and Evaluation
Sub-Total 2,500 1,000 1,000 1,000 4,500 10,000
5. Program Administration and Audits
A. Program Admin. (MCA-Tanzania)
B. Fiscal Agent Support
C. Procurement Agent Services
D. Audit
E. Capacity Building and Technical
Assistance
Sub-Total 11,202 7,615 7,900 7,868 7,968 42,553
Total Estimated MCC Contribution 57,745 155,481 227,252 167,395 90,263 698,136
1
Costs indicated in the table above for all Project Activities under the relevant Projects include, as appropriate: engineering and environmental
studies; implementation of EMPs and RAPs; technical assistance; coordination; contingencies; project management; and, construction
supervision. ANNEX III
SUMMARY OF MONITORING AND EVALUATION PLAN
This Annex III to this Compact (the "M&E Annex") generally describes the components of the
monitoring and evaluation plan (the "M&E Plan") for the Program. Each capitalized term in
this Annex III shall have the same meaning given such term elsewhere in this Compact.
1. Overview.
The MCC and the Government (or a mutually acceptable Government affiliate or permitted
designee) shall formulate, agree to and the Government shall implement, or cause to be
implemented, an M&E Plan that specifies (a) how progress toward the Compact Goal and the
Project Objectives will be monitored, ("Monitoring Component"), (b) process and timeline for
the monitoring of planned, ongoing, or completed Project Activities to determine their efficiency
and effectiveness, and (c) a methodology for assessment and rigorous evaluation of the outcomes
and impact of the program ("Evaluation Component"). Information regarding the Program's
performance, including the M&E Plan, and any amendments or modifications thereto, as well as
progress and other reports, will be made publicly available on the MCA-Tanzania Website and
elsewhere.
2. Program Logic.
The Tanzania program monitoring and evaluation plan shall be built on the program logic model
below, which is a graphical representation of the program showing the sequence of results and
the causal links between outcomes, objectives, and ultimately the Compact Goal.
The Program's focus on infrastructure is an essential part of addressing Tanzania's development
challenges in accordance with the MKUKUTA/MKUZA. The Transport Sector Project is based
on the logic that improvements in the road network and airports can reduce transport costs to
regional, national and international markets, thereby catalyzing growth in sectors that rely on
MCA-Tanzania Compact Goal:
Economic Growth and Poverty Reduction through Investments in
Transport, Energy, and Water Infrastructure
Water Sector Project
Objectives:
•Increased investment in
human and physical capital
•Reduced prevalence of
water-related diseases
Road Upgrading
Outcomes:
•Reduced
transportation costs
and travel time
•Increased traffic
volume
Energy Sector Outcomes:
•Increased quantity of
electricity sold
•Increased number of
power customers
•Better quality and more
reliable power
Water Sector Outcomes:
•Increased number of
households and businesses
using improved water
sources
•Increased per capita water
consumption
Mafia Island Airport
Upgrading
Outcomes:
•Increased air
passenger traffic
Transport Sector Project
Objectives:
• Increased cash crop
revenue
• Increased aggregate
visitor spending
Energy Sector Project
Objective:
• Increased value added
to businesses ANNEX III - 2
good transportation links, such as agriculture and tourism. The Energy Sector Project will
provide reliable electricity to households and businesses, allowing for an increase in the scale
and scope of productive activities and increased value added for businesses in project areas. The
logic behind the Water Sector Project is that by increasing the supply of potable water for
households, mortality and morbidity from water-related diseases will decrease, leading to
increased investment human and physical capital. In addition, increasing the reliability of
potable water should lead to increased investments in productive assets by business.
3. Monitoring Component.
(a) Indicators. The M&E Plan shall measure the results of the Program using
quantitative, objective and reliable data ("Indicators"). Each Indicator will have one or more
expected results that specify the expected value and the expected time by which that result will
be achieved ("Target"). The M&E Plan will measure and report four types of Indicators. First,
the Compact Goal Indicators (each, a "Goal Indicator") will measure the impact of the Program
on the incomes of Tanzanians who participate or are covered by the Program (collectively,
"Beneficiaries"). Second, Objective Indicators (each, an "Objective Indicator") will measure
the final results of the Projects in order to monitor their success in meeting the Project
Objectives. Third, Outcome Indicators (each, an "Outcome Indicator") will measure the
intermediate results of goods and services delivered under each Project in order to provide an
early measure of the likely impact of the Projects on the Project Objectives. Fourth, Project
Activity Indicators (each, an "Activity Indicator")(each of Goal Indicator, Objective Indicator,
Outcome Indicator and Activity Indicator, an "Indicator") will measure the delivery of key
goods and services in order to monitor the pace of Project Activity execution. For each Outcome
Indicator, Objective Indicator, and Goal Indicator, the M&E Plan will define a strategy for
obtaining and verifying the value of such Indicator prior to undertaking any activity that affects
the value of such Indicator (such value, a "Baseline"). All Indicators will be disaggregated by
gender, income level and age, to the extent practicable. Subject to prior written approval from
the MCC, MCA-Tanzania may add Indicators or refine the Targets of existing Indicators.
(i) Goal Indicators. The M&E Plan shall contain the Goal Indicators listed in
the table below, with their definitions, unit of measurement, baseline, and Year 5 with and
without Projects. ANNEX III - 3
Goal Level Indicators
Result Indicator Definition Unit Baseline
Year 5
without
Project
Year 5 with
Project
Regional GDP increase due to
Transport Sector Project
Mbeya an Rukwa regions (Tunduma
Sumbawanga road) 1275.9 1635.3 1645.3
Tanga region (Tanga Horohoro road) 699.0 895.9 898.3
Ruvuma region (Namtumbo-Songea and
Peramiho Mbinga roads) 494.2 633.4 639.4
Zanzibar 366.8 470.1 471.2
Regional
GDP
Pwani region (Mafia airport)
US$
millions
235.3 301.5 302.3
Regional GDP increase due to Energy
Sector Project
Kigoma 366.4 441.4 441.5
Tanga 657.0 842.0 842.9
Dodoma 342.1 438.4 438.8
Morogoro 615.1 788.3 789.1
Iringa 618.1 792.2 793.0
Mwanza 959.8 1230.2 1231.4
Mbeya 809.2 1037.0 1038.1
Regional
GDP
Zanzibar
US$
millions
366.8 470.1 470.3
Regional GDP increase due to Water
Sector Project
Dar es Salaam 1821.1 2483.3 2505.1
Economic
Growth
Regional
GDP
Morogoro
US$
millions
75.3 102.7 103.1
(ii) Objective and Outcome Indicators. The M&E Plan shall contain the
following objective and outcome indicators to measure results at the Project level. ANNEX III - 4
Transport Sector Project
Objective and Outcome Level Indicators
Result Indicator Definition Unit Baseline Year 5
Objective Level Indicators
Tons of crops sold (in price per ton in zone of
influence of road)
Tunduma Sumbawanga 58.2 67.8
Tanga Horohoro 1.35 1.48
Namtumbo-Songea and Peramiho Mbinga 41.0 50.7
Increased cash crop
revenue Cash-crop revenue
Zanzibar/Pemba
US$
millions
8.0 8.5
Increased aggregate
spending by visitors
to Mafia Island
Aggregate visitor
spending2 Sum of spending by all visitors to Mafia Island US$
millions 3.2 4.2
Outcome Level Indicators
Measurement of pavement roughness on
targeted roads
Tunduma Sumbawanga 14.3 2.5
Tanga Horohoro 14.5 2.5
Namtumbo-Songea and Peramiho Mbinga 16.0 2.5
Reduced vehicle
operating costs and
travel times
International
roughness index
(IRI)
Zanzibar/Pemba
m/km
15.0 4.0
Number of vehicles by type on MCC-upgraded
roads
Tunduma Sumbawanga 470 810
Tanga Horohoro 530 915
Namtumbo-Songea 230 390
Peramiho Mbinga 110 180
Increased traffic
volume
Average annual daily
traffic (AADT)
Zanzibar/Pemba
vehicles
26 49
Increased air
passenger traffic to
Mafia Island
Passenger arrivals3
Number of passenger arrivals at Mafia Island
airport passengers 12,000 16,000
2
Reporting will be disaggregated by length of stay and visitor category: business, leisure and holiday (package and non-package), visiting
friends and relatives, government and other.
3
Reporting will be disaggregated by visitor category: business, leisure and holiday (package and non-package), visiting friends and relatives,
government and other. Baseline and target are annual totals but data will be reported quarterly. ANNEX III - 5
Energy Sector Project
Objective and Outcome Level Indicators
Result Indicator Definition Unit Baseline Year 5
Objective Level Indicator
Increased value added
to businesses in
Kigoma, T&D target
areas and Unguja
Island
Value added
Profits plus wages of enterprises,
disaggregated by Kigoma, T&D target
regions and Unguja Island4
US$ TBD TBD
Outcome Level Indicators
Increased quantity of
electricity sold
Electricity
(kWh) sold
Incremental amount of electricity sold, to
be disaggregated by target region and
customer types5
MWh/year TBD6
TBD
Number of new connections resulting
from MCC investment, disaggregated by
target regions and customer types
Malagarasi Hydopower and Kigoma
Distribution Activity 0 2,500
Distribution Rehabilitation and Extension
Activity 0 35,000
Increased number of
power customers
New power
customers
Zanzibar Interconnector Activity
number
0 TBD
Frequency and magnitude of voltage
fluctuations (% deviation from standard
voltage level each hour) at primary
substations feeding target regions/cities
Malagarasi Hydopower and Kigoma
Distribution Activity
Distribution Rehabilitation and Extension
Activity
Better quality power Power quality
Zanzibar Interconnector Activity
number and
magnitude of
voltage
deviations/day
TBD6
2%
improvement
over baseline
Amount of energy (MWh) not served to
target regions and customer types, as a
result of T&D failure (for all target
regions) and generation failure (for
Kigoma region)
Malagarasi Hydopower and Kigoma
Distribution Activity
Distribution Rehabilitation and Extension
Activity
Power
reliability
Zanzibar Interconnector Activity
MWh TBD6 15% fewer than
baseline per year
Duration of power outages disaggregated
by target regions and customer types
Malagarasi Hydopower and Kigoma
Distribution Activity
Distribution Rehabilitation and Extension
Activity
More reliable power
Power outage
duration
Zanzibar Interconnector Activity
hours/month TBD6 15% fewer than
baseline per year
4
Target regions include: (i) Kigoma region (which includes towns of Kigoma, Kasulu and Uvinza); (ii) Mwanza, Tanga, Morogoro, Dodoma,
Iringa and Mbeya for the Distribution Rehabilitation and Extension Activity; and (iii) Unguja Island.
5
Target customer types include T1, T2, T3, T4 and T5 (different tariff categories).
6
Baseline figures will be estimated during Year 1 of Compact by TANESCO and ZECO. After Year 1 baseline is determined, TANESCO and
ZECO will report annually on these indicators. ANNEX III - 6
Water Sector Project
Objective and Outcome Level Indicators
Result Indicator Definition Unit Baseline Year 5
Objective Level Indicators
Investment in
physical capital
Value of
household assets Total value of household assets US$ TBD7
TBD
Investment in
human capital
Average years of
education
completed
Average years of education completed years TBD TBD
Total number of diarrhea cases
Dar es Salaam Prevalence of
diarrhea8
Morogoro
diarrhea cases TBD TBD
Total number of cholera cases
Dar es Salaam
Reduced
prevalence of
water-related
diseases8 Prevalence of
cholera
Morogoro
cholera cases TBD TBD
Outcome Level Indicators
Improved source for drinking water is
defined as (a) type of source = household
connection (in-home or in-yard), public
standpipe, (b) <30 minutes (go, wait,
collect and return), (c) <400 meters, and
(d) supplied by provider acting within the
regulatory framework (incorporates
issues of water quality and
tariffs/affordability)
Dar es Salaam
Increased
number of
households
using improved
water source
Number of
households
using improved
source for
drinking water
Morogoro
households TBD TBD
Improved source comprises(a) business
connection, (b) 24-hours/day of supply
and (c) supplied by provider acting
within the regulatory framework
(incorporates issues of water quality and
tariffs/affordability)
Dar es Salaam
Increased
number of
businesses using
improved water
source
Number of
businesses using
improved water
source
Morogoro
businesses TBD TBD
Daily per capita water consumption by
type of primary water source: in-home,
in-yard, neighbor's yard, public tap,
other
in-home: 70 in-home: 150
in-yard: 40 in-yard: 87
neighbor's yard:
40
neighbor's yard:
87
public tap: 25 public tap: 87
Dar es Salaam
other: 10 other: 54
in-home: 100 in-home: 150
in-yard: 70 in-yard: 145
neighbor's yard:
40
neighbor's yard:
83
public tap: 40 public tap: 83
Increased per
capita water
consumption
Volume of
individual water
consumption
Morogoro
liters/capita/day
other: 25 other: 25
(iii) Activity Indicators. Prior to any Disbursement for any Project Activity,
the Implementing Entity of such Project Activity shall propose a set of Activity Indicators that is
7
Baselines and targets will be established no later than the last quarter before construction beings.
8
Reporting will be disaggregated by age group and data will be collected monthly. Monthly baselines will be established using 2007
administrative health data. ANNEX III - 7
approved in writing by MCA-Tanzania and the MCC. The M&E Plan shall be amended to
reflect the addition of such Indicators. The table below shows a notional list of Activity
Indicators that the M&E Plan may contain.
Transport Sector Project
Activity Level Indicators
Result Indicator Definition Unit Baseline Year 5
Kilometers of road upgraded from gravel or earth
to bitumen pavement
Tunduma Sumbawanga 0 224.9
Tanga Horohoro 0 65.7
Namtumbo-Songea and Peramiho Mbinga 0 139.0
Mainland and Pemba
roads rehabilitated
Kilometers of road
upgraded
Pemba Island
km
0 34.7
Roads maintained Road maintenance
expenditures
Amount spent on maintenance the previous fiscal
year / Amount budgeted for maintenance for the
previous fiscal year
percent TBD TBD
Mafia Island runway
upgraded
Percentage of
upgrade completed
Percent of the Mafia Island airport runway
upgrading completed percent 0 100
Energy Sector Project
Activity Level Indicators
Result Indicator Definition Unit Baseline Year 5
Additional MWh/day of
energy generated Energy generation Daily energy generated at the power plant
and transmitted to the grid (Kigoma) MWh/day 0 49
Additional transmission capacity (kVA)
Malagarasi Hydropower and Kigoma
Distribution Activity 0 20
Distribution Rehabilitation and Extension
Activity 0 146
Increased kVA of
transmission capacity
Transmission
capacity
Zanzibar Interconnector Activity
MVa
0 120
Monthly cash collection / Monthly invoices
Malagarasi Hydropower and Kigoma
Distribution Activity 95
Distribution Rehabilitation and Extension
Activity 95
Improved collection
efficiency Collection efficiency
Zanzibar Interconnector Activity
percent TBD9
95
(kWh received by substation – kWh billed) /
(kWh received by substation)
Malagarasi Hydropower and Kigoma
Distribution Activity 15
Distribution Rehabilitation and Extension
Activity 15
Decreased technical and
non-technical losses
Technical and nontechnical
losses
Zanzibar Interconnector Activity
percent TBD10
15
9
Baseline figures and annual targets will be developed during Year 1 of Compact by TANESCO and ZECO. After Year 1 baseline and annual
targets are determined, TANESCO and ZECO will report annually on these indicators. ANNEX III - 8
Water Sector Project
Activity Level Indicators
Result Indicator Definition Unit Baseline Year 5
Daily volume of water produced by treatment
facility
Dar es Salaam 235,294 325,294
Increased water
supplied
Volume of water
produced
Morogoro
m3
/day
18,000 300,000
Volume of non-revenue water (disaggregated
by commercial and physical losses) / Volume
of water produced
Dar es Salaam 68 56
Decreased non-revenue
water
Volume of nonrevenue
water
Morogoro
percent
40 32
Improved operations
and maintenance cost
recovery ratio
Operations and
Maintenance Cost
Recovery Ratio
(Total revenue – Routine and periodic
operations and maintenance expenses) /
Routine and periodic operations and
maintenance expenses
percent TBD 0
(b) Data Collection and Reporting. The M&E Plan shall establish guidelines for data
collection and a reporting framework, including a schedule of reporting requirements and
responsible parties. The M&E Plan will use both qualitative and quantitative methods for data
collection. The M&E Plan shall outline various data collection methodologies, assessments, and
surveys necessary to report the results of all Indicators included in the M&E Plan. It will also
draw quantitative information from the National Bureau of Statistics and other large household
surveys.
(c) Data Quality Reviews. From time to time, as determined in the M&E Plan or as
otherwise requested by the MCC, the quality of the data gathered through the M&E Plan shall be
reviewed by an independent third party to ensure that data reported are as valid, reliable, and
timely as resources will allow. The objective of any data quality review will be to verify the
quality and the consistency of performance data, across different implementation units and
reporting institutions. Such data quality reviews also will serve to identify where those levels of
quality are not possible, given the realities of data collection.
(d) Management Information System. The M&E Plan shall describe the information
system that will be used to collect data, store, process and deliver information to relevant
stakeholders in such a way that the Program information is at all times accessible and useful to
those who wish to use it. The system development will take into consideration the requirement
and data needs of the components of the Program, and will be aligned with the MCC's existing
systems, other service providers, and government ministries.
4. Evaluation Component.
The Evaluation Component of the M&E Plan shall detail the methodology, process, and timeline
for analyzing the Program efficiency, effectiveness, impact, and sustainability. At a minimum,
this component shall include at least two types of evaluations, an Impact Evaluation and a Final
Evaluation. With the agreement of the MCC, the Evaluation Component also may include ad
hoc evaluations and special studies. The cost of an independent evaluation or special study may
be paid from MCC Funding.
(a) Impact Evaluation. The MCC will engage an independent evaluator to conduct an
impact evaluation of specific Project Activities that lend themselves to rigorous evaluation
("Impact Evaluation"). The Impact Evaluation will be designed using rigorous methods to ANNEX III - 9
address selection bias and attribution issues. It will also take into consideration the anticipated
time lag for each Project to realize expected benefits. It is anticipated that the Impact Evaluation
may extend beyond the Compact Term and flexibility of design should be a priority. The
following table outlines the methodologies currently under consideration, which may be
modified to accommodate changes in Program design. In all cases, the most rigorous method
possible will be implemented.
Project/Activity Proposed
Methodology Comparison Group(s) Variables of Interest
Transport prices
Input and output prices for
agricultural goods
Households located in communities
affected by NORAD road upgrades
compared to households located in MCCaffected
communities Capital investment and
employment figures
Migration patterns
Household health and income
Pemba Rural Road Upgrading
Difference-in-difference
using Propensity Score
Matching Households living in communities without
anticipated road upgrades during the
Compact period compared to households
located in MCC-affected communities School enrollment (especially
for girls)
Transport prices
Input and output prices for
agricultural goods
Individuals living along recently upgraded
trunk roads compared to those living along
MCC-upgraded roads Capital investment and
employment figures
Migration patterns
Household health and income
Mainland Trunk Road
Upgrading
Difference-in-difference
using Propensity Score
Matching, or simple
difference-in-difference Individuals living at least 2 kilometers
from any trunk road compared to those
living along MCC-upgraded roads HIV/AIDS rates
Communities who receive electricity early
compared to those who receive electricity
late in the Compact
Improvements in health
Child schooling attainment
(or at least intensity of study)
Expansion of Energy
Distribution Networks
(Malagarasi Hydro and T&D
Activities)
Regression discontinuity Households who live at the end of the
distribution line compared to those who
live just beyond the end of the distribution
line
Small-scale businesses using
electricity
(b) Final Evaluation. MCA-Tanzania, with the prior written approval of the MCC,
will engage an independent evaluator to conduct an evaluation at the expiration or termination of
this Compact Term ("Final Evaluation") or at the MCC's election, the MCC will engage such
an independent evaluator. The Final Evaluation must at a minimum evaluate the efficiency and
effectiveness of the Program and provide lessons learned that may be applied to similar projects.
(c) Ad Hoc Evaluations and Special Studies. The M&E Plan shall identify and make
provision for special studies, ad-hoc evaluations, and research that may be needed as part of the
monitoring and evaluating of this Compact. Either the MCC or MCA-Tanzania may request
special studies or ad-hoc evaluations of Projects, Project Activities, or the Program as a whole
prior to the expiration of this Compact Term. If MCA-Tanzania engages an evaluator, the
evaluator will be an externally contracted independent source selected by MCA-Tanzania,
subject to the prior written approval of the MCC, following a tender in accordance with the MCC
Program Procurement Guidelines, and otherwise in accordance with any relevant
Implementation Letter or supplemental agreement. ANNEX III - 10
5. Other Components of the M&E Plan.
In addition to the Monitoring and Evaluation Components, the M&E Plan shall include the
following components for the Program, Projects and Project Activities, including, where
appropriate, roles and responsibilities of the relevant parties and Providers:
(a) Coordination of data collection. Efforts to synchronize data collection with
relevant national initiatives including the WSDP performance monitoring framework,
MKUKUTA monitoring plan and the MKUZA monitoring plan.
(b) M&E Budget. A detailed cost estimate for all components of the M&E Plan.
(c) Assumptions and Risks. Any assumptions and risks external to the Program that
underlie the accomplishment of the Project Objectives and Project Activity Outcomes; provided,
however, that such assumptions and risks shall not excuse performance of the Parties, unless
otherwise expressly agreed to in writing by the Parties.