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Assessment of DP practices in Tanzania in financing

allowances, salary top-ups, civil servant salary

payments, and parallel and/or integrated PIUs

Assessment Report January 2012

Erika Rubin

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Summary of main trends and issues to be taken forward Allowances

The key conclusion from the assessment in terms of allowances is that most DPs follow GoT regulations to a certain extent but not fully. Exceptions are mostly made in regards to types of allowances eligible or rates used. The reason behind this is not entirely clear but contributing factors seem to be that:

GoT regulations are not clear and spread out in numerous circulars and various sections of

standing orders.

GoT regulations have not been transparently and comprehensively shared with DPs.

For the GoT regulations that have been shared with DPs the following contributing factors to why the DPs are not following GoT regulations fully appear to be that:

Many DPs do not internally have a coherent understanding of their own policies or how to

apply the GoT regulations.

DPs do not agree with some of GoT regulations.

The corresponding recommendations for moving forward are as follows:

1. The DPG should seek clarification on all GoT regulations on allowances.

2. DPG should consolidate these in a comprehensive document and ensure that this is shared

with all DPs.

3. The information should be shared with all levels of staff within each agency.

4. Instead of having a policy that simply states that DPs should follow GoT regulations the DPG

could develop common and clear guidelines that interpret GoT regulations and possibly

adapt these according to what DPs do and do not wish to fund.

Salaries and salary top-ups

Payments of salaries and salary top-ups to civil servants were deemed to be a less

complicated issue than allowances.

The general trend is that these have been or are in the process of being phased out.

However, regarding top-ups a few DPs are finding it challenging to do so and/or are

seemingly not entirely committed to removing all salary top-ups.

Project Implementation Units (PIUs)

There is lot of blurriness on what PIUs are and a more thorough understanding is needed

before any recommendations can be made or a way forward can be identified.

Most DPs have phased out parallel PIUs or are in the process of doing so.

There are some parallel PIUs in existence and a few DPs are not committed to removing

these in the near future.

The reasons given to not phasing out parallel PIUs was mainly that it was felt that the reality on the ground did not allow for this as DPs did not feel that the projects could be run efficiently and without fiduciary risk without the controls that parallel PIUs offer.

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Baskets

Basket regulations and practices for payment of allowances, salaries and salary top-ups are

generally based on GoT rules.

However, certain allowances normally eligible to GoT civil servants are not allowed.

The baskets generally focus on funding development expenditure and not recurrent.

expenditure. It thus follows that no salaries, salary top-ups or certain allowances can be

funded from the DPs contribution to the basket.

The current practices used by individual DPs in their funding of allowances in GoT

projects/programmes are not always coherent with the regulations of baskets they are

contributing to.

Keeping the above in mind, an important decision for the DPG to make in order to move forward is:

Whether there should be one set of guidelines applicable to all DP funded projects,

programmes and baskets or if baskets should be treated separately.

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Table of Contents Assessment of DP practices in Tanzania in financing allowances, salary top-ups, civil servant salary payments, and parallel and/or integrated PIUs ....................................................................................... 1

Summary of main trends and issues to be taken forward ....................................................................... 2

1.0 Background ....................................................................................................................................... 6

2.0 Methodology ...................................................................................................................................... 6

2.1 DPs and baskets included in study ................................................................................................ 7

2.2 Overview of the report .................................................................................................................... 7

3.0 DP practices in funding allowances, salaries and salary top ups...................................................... 8

3.1 Mapping of types of allowances financed by DPs ......................................................................... 8

3.1.1 Policies and practice ................................................................................................................... 8

3.1.2 Types of allowances funded by DPs .............................................................................................. 8

3.1.4 Practices when funding allowances – examples and challenges .................................................... 10

3.1.5 DPs future intentions and strategies ........................................................................................... 11

3.2 Mapping of DP financing practices of salaries and salary top-ups ........................................................ 12

3.2.1 Policies and practices ................................................................................................................ 12

3.2.3 Future intentions and strategies ................................................................................................ 12

3.3 Challenges and way forward for DP practices in funding allowances, salaries and salary top-ups for civil servants ....................................................................................................................... 13

4.0 Project Implementation Units........................................................................................................... 14

Parallel or integrated PIUs ............................................................................................................. 14

4.1 Policy ........................................................................................................................................ 14

4.1.2 Practice ................................................................................................................................... 15

4.1.3 Future intentions and strategies ............................................................................................ 15

4.2 Challenges and way forward .................................................................................................... 15

5.0 Mapping of basket funds financing practices of allowances, salaries and salary top-ups .......... 16

5.1 Way forward for basket funds financing practices of allowances, salaries and salary top-ups 17

6.0 Bibliography ..................................................................................................................................... 18

Annex 1: Government circulars and DPG and GoT letters ................................................................ 19

Annex 2 NGOs .................................................................................................................................... 19

Annex 3 List of allowances eligible to the Government of Tanzania .................................................. 20

Duty facilitating allowances ............................................................................................................. 20

Remunerative allowances ................................................................................................................ 21

Duty facilitating ................................................................................................................................ 22

Remunerative Allowances ................................................................................................................ 22

Annex 4 Overview of baskets’ practices in funding allowances, salaries and salary top ups for GoT civil servants ......................................................................................................................................... 24

Annex 5 Coming baskets ...................................................................................................................... 26

Investment Climate Programme Comprehensive Action Plan ....................................................... 26

Trade sector development Programme .......................................................................................... 26

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List of abbreviations

MoF Ministry of Finance

DPG Development Partners Group

DPs Development Partners

FA Financial Agreement

GoT Government of the United Republic of Tanzania

LGRP Local Government Reform Programme

LSRP Legal Sector Reform Programme

MoU Memorandum of Understanding

PFMRP Public Financial Management Reform Programme

PIUs Project Implementation Units (Parallel or Integrated)

PS Permanent Secretary

PSRP Public Sector Reform Programme

TSDP Trade Sector Development Programme

TSMP Tanzania Statistical Master Plan

WSDP Water Sector Development Programme

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1.0 Background Under the framework of the Joint Assistance Strategy for Tanzania and with a purpose of enhancing aid effectiveness in programming, execution and policy dialogue, Development Partners (DPs) and the Government of the United Republic of Tanzania (GoT) have embarked on a number of reform areas aiming at strengthening a coordinated engagement from the DPs and an improved capacity on GoT side to effectively and efficiently manage aid.

To this end and stretching back to year 2000, DPs strived to align to country systems and sought to align project and program support to the Government standards for allowances and per diem of civil servants. This is part of the wider efforts in using country systems and at the same time strives towards aid effectiveness. Letters sent between DPG and GoT on allowances as well as GoT circular 1 2008 are annexed in an annex 1.

The unclear nature of GoTs regulations on allowances, lack of transparency as well as lack of harmonization among DPs has contributed to a lot of time spent by DPs discussing with government counterparts on the acceptability of various forms and volumes of allowances.

In 2010 and 2011, the Development Partners Group (DPG) agreed on a set of principles that comprehensively address a number of challenges regarding the use of allowances. The main points of these principles are that DPs will follow GoT regulations on allowances, will refrain from paying salaries and salary top-ups to civil servants and that all parallel PIUs are to be phased out. In addition, trainings and workshops are expected to only be carried out when necessary and trainings outside duty stations should be limited. DPG has also requested GoT to develop a manual for basket funds outlining regulations for allowances, salaries and salary top-up.

The overall objective of this assessment is to provide an accurate and current detailed overview of the practices used by DPs in Tanzania in financing allowances, salary top-ups, civil servant salary payments, and parallel and/or integrated Project Implementation Units (PIUs).

2.0 Methodology The major sources of information for the assessment are the responses received from questionnaires sent to DPs and basket leads. Completed questionnaires were in most cases sent to the consultant via email. In a few cases the questionnaires were completed during a meeting with the consultant. After receiving the questionnaires follow up questions were posed via email, phone or in person.

Case studies were also part of the methodology in order to get concrete examples to enrich the more general information generated by the questionnaires. DP representatives were asked to identify 2 projects or programme as case studies for a more in-depth inquiry. However, only 8 out of all 30 responding DPs provided the consultant with case studies. The information gathered for the case studies included project appraisals, budgets, work plans, interim financial reports.

For the baskets funds Memorandums of Understanding (MoUs), work plans, budgets and interim financial reports from 2009/10-2010/11 have been reviewed.

The assessment is furthermore based on a review of reports, documents, GoT circulars and letters between GoT and DPs including Section L of the Government Standing Orders for the Public Service (2009).

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2.1 DPs and baskets included in study Bilaterals: Germany(GIZ), Denmark, Japan, JICA, Netherlands1, Sweden, Department for International Development, Swiss Development Cooperation, French Embassy, Belgian Technical Cooperation, Finland, Canada, Norway, Irish Aid2, United States Government

Multilaterals: African Development Bank, European Union delegation to Tanzania, World Bank

UN agencies: ILO, UN Women, UNDP, UNICEF, UNESCO, UNHCR, UNFPA, WHO, IFAD

Vertical fund: Global Fund to Fight Aids, Tuberculosis and Malaria (GFATM)

National NGOs: Policy Forum and Foundation for Civil Society

When DP practices in funding allowances, salaries, salary top-ups and PIUs are discussed in the report it is understood that this relates to DP funded projects and programmes but excludes Sector Budget Support and General Budget Support. Basket rules and regulations are discussed separately from DP projects and programmes. DPs will not be mentioned by name in the report as per decision by the DPG main in December 2011. When DPs are discussed this refers to all DPs included in the study except for the two National NGOs which are dealt with in annex 2. GFATM is included in the report as one of the DPs and not mentioned separately.

Baskets included in study:

Health sector basket

Legal Sector Reform Programme (LSRP) basket

Local Government Reform Programme (LGRP) basket

Public Financial Management Reform Programme (PFMRP) basket

Public Sector Reform Programme (PSRP) basket

Tanzania Statistical Master Plan Programme (TSMP)basket

Water Sector Development Programme (WSDP) basket

2.2 Overview of the report The report starts with going over DPs’ policies and practices in funding allowances, salaries and salary top-ups for GoT civil servants. DPs future intentions and strategies for these are also reviewed. The chapter ends with a discussion of challenges and possible ways forward. The next chapter deals with PIUs and gives an overview of DPs’ policies, practices and future intentions and strategies. After this, a chapter on basket funds follows. Basket funds regulations and practices of funding allowances, salaries and salary top-ups for GoT civil servants are discussed here. Some proposals for moving forward with these issues are posed at the end of the chapter which also marks the end of the assessment report.

1 The Embassy of the Netherlands is phasing out all bilateral support to Tanzania before 2013.

2 Irish Aid only provides basket and GBS funding to the Government of Tanzania and have recently

approved a new 5 year strategy to continue doing so.

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3.0 DP practices in funding allowances, salaries and salary top ups

3.1 Mapping of types of allowances financed by DPs Various forms of allowances are frequently found in both GoT funded and DP funded projects and programmes. A list of allowances eligible to GoT civil servants can be found in annex 3.

Allowances are generally classified according to two different categories, remunerative and duty facilitating allowance. Duty facilitating allowances such as costs related to trainings and workshops are often considered as more beneficial to improvement of service delivery and productivity. Remunerative allowances (e.g. housing) are less clearly associated with these positive impacts. (Policy Forum 2009; Cooksey 2010).

3.1.1 Policies and practice

Roughly speaking, around 7 DPs have their own written policies or manuals that with varying degree of clarity and scope regulate funding of allowances for Government Civil Servants. Where these written regulations are in existence they mostly relate to payment of per diems - outlining domestic and international rates. A few DPs’ written regulations also clarify which other types of allowances are eligible or ineligible.

In their response to the questionnaire all DPs explicitly stated that they in general follow GoT rules and regulations. Many made reference to GoT circular 1 2008. A handful of DPs also referred to DPG joint decisions, circulars and letters.

Probably as a consequence of this general policy of following GoT regulations and DPG joint guidelines most DPs do not have separate written policies of their own. This might seem straightforward and clear enough in theory but in practice challenges arise when DPs are implementing these policies.

3.1.2 Types of allowances funded by DPs

The below table summarizes the general trends on what types of allowances DPs currently do and do not fund. The last column marks whether the allowance is allowed within GoT regulations. Although almost all DPs say that they in general follow GoT regulations there is a lack of coherence in how these regulations are interpreted and implemented across DPs.

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Table 1 Types of allowances funded by DPs

DPs generally strive to only fund actual costs incurred as part of a project or programme such as per diems and transport. This is consistent with the refusal by some DPs to fund honoraria, extra-duty, upkeep and such but it is not consistent with GoT regulations as these allowances are eligible according to GoT regulations.

3 For DPs training allowance is normally the payment of fees for long or short term, national or

international trainings. The GoT also pays training allowances instead of per diems for long term courses.

Type of allowance All DPs Some DPs Not allowed by some DPs

Allowed by GoT

Extra-duty allowance

X X X

Field allowances X ?

Honoraria X X X

Housing allowance X X X

Per diem X X

Settling in allowance

X X

Sitting allowance X X Not for DP funded projects/programmes

Training allowances3

X X

Transport costs (lump sum or reimbursement against receipt)

X X

Upkeep allowance X X X

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3.1.3 Rates used for per diems An overview of DP practices of per diem rates for GoT civil servants is provided in the table below.

Table 2 Per Diem rates used by DPs for GoT civil servants

Per Diem rates GoT rate4 UN rate DP country rate

Domestic Majority Few DPs - when implementing projects themselves

International Majority Some Some & sometimes

As can be seen above a majority of DPs follow GoT rates for per diems. This was most prominent concerning domestic duty travel. For international travel the rate used often varied between GoT, UN and DP country rates depending on the project/programme.

Some DPs expressed that GoT counterparts would often put in a “bid” for the highest per diem scale (i.e. 80 000 shillings for Dar es Salaam) regardless of the salary scale of the civil servant actual travelling. This later becomes a source of negotiations and possible disagreements between DPs and GoT. An interesting example from a case study highlighted this practice. Within this project the highest level of per diem was applied across the board. This was done without stating the level of salary scale of participants in workshops, trainings and field visits. It is not likely, although possible, that all the participants were at the highest salary level.

3.1.4 Practices when funding allowances – examples and challenges

As already noted above some DPs do not fund certain allowances, commonly honoraria, extra duty and sitting allowance, whereas others do. Most of the DPs would still in their answers to questionnaires state that they follow GoT regulations in general and that exceptions were not made. It was only when asked again as part of follow up what they do not fund, or when these allowances were seen in budgets that different practices became known.

Some DPs also develop their own practices in paying allowances which are outside the GoT regulations. One potentially challenging practice connected to this is the payment of lump sums for transport within Dar es Salaam. Examples of one DP paying 5000 shillings to another DP paying 30 000 shillings was observed. As most workshops and trainings take place within Dar es Salaam addressing this coherently is an important challenge for DPs. The GoT policy on this is that either a kilometre allowance is paid or transport is reimbursed against actual cost of public transport.

When looking at case studies and through interviews with DP representatives it become known that DPs and GoT counterparts often ended up discussing eligible expenditures regarding other types of allowances than per diems. This would commonly concern allowances such as extra duty, honoraria and sitting allowance. GoT counterparts would include these in budgets, work plans or expenditure reports. If “discovered” by DP counterpart it would be commented on and later removed by GoT counterpart and often ended up as part of GoT contribution instead. One DP expressed that some ineligible allowances (such as sitting, honoraria, extra duty) are excluded if noticed in random checks but otherwise sometimes “slips through the cracks”.

4 The main difference between GoT and UN rates are that GoT rates are given according to salary

scale and location whereas UN rates only vary depending on geographical location of duty travel.

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Another consideration is that when allowances are not allowed to be paid with DP funds they might gradually be moved into GoT contributions thus not changing the system only moving the allowances. This issue forms part of the wider policy dialogue around pay and incentives but is highlighted here as it was a commonly observed phenomena throughout the assessment when looking at case studies and baskets.

In some instances ineligible allowances allowance were paid for from DP funds by the implementing GoT counterpart. When this was later discovered it was difficult to ensure that funds were repaid to the DP without risking causing serious harm to the working relationship with the implementing GoT agency or ministry.

Allowances often form part of capacity building components and mostly in relation to trainings and workshops. Volumes of funds spent on Per Diems and travel expenses are normally negotiated during project/programme design or in annual work plans. These allowances will of course have specific budget lines. However, the budget lines tend to become lumped together at later stages of project or programme implementation. It then becomes a very difficult and time consuming task to follow up on how much was actually spent on allowances or even which types of allowances were paid.

A few DP representatives stressed the difficulties involved in monitoring allowances as no particular system is in place for this. To monitor more closely would require systematic and frequent review of very detailed budget and expenditures. This could also lead to a situation of micro managing projects and programme and risk putting strain on working relationships with GoT counterparts.

The outcome of this assessment shows that GoT regulations seem not to be applied across the board by DPs. There are two sides to this. Firstly, there is an unwillingness of many DPs to fully follow some of the GoTs regulations such as paying GoT rates for international per diems or paying honoraria –despite that the eligibility of these have been spelt out in circulars shared with DPs. Secondly, some of the GoT regulations have not been shared with DPs in a transparent, comprehensive and clear manner. This together has created a situation where practices differ although most DPs say they follow the same set of rules.

3.1.5 DPs future intentions and strategies

In general, rationalization and decreasing levels of (volume) allowances were mentioned by many DPs as future strategies. One such rationalization described by some DPs is to use only one per diem rate for all levels of civil servants.

Most of the DPs that are currently paying allowances other than per diems, travel costs say they will work on phasing out these allowances in accordance with DPG decision. 3 DPs are currently internally reviewing their practices on funding allowances.

Many DPs mention the value for money principle and that they are trying to make sure that this principle is followed. This means ensuring that workshops and trainings are suitable and brings about intended development results. These DPs want to focus more on this rather than trying to limit allowances per se.

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3.2 Mapping of DP financing practices of salaries and salary top-ups

3.2.1 Policies and practices

Most DPs refer to the joint DPG decision that DPs should refrain from paying salaries and salary top-ups for civil servants. The below two tables give an overview of DP policies and practices of funding salaries and salary top-ups.

Table 3 DPs policies s of funding salaries and salary top-ups.

Policies Follows DPG decision Own written policy

Salaries Majority 2 DPs allow

1 DP does not allow

Salary top-ups Majority 2 DPs allow – 1 with 50% of basic salary as ceiling for top up

1 DP does not allow

Table 4 DPs practices of funding salaries and salary top-ups.

Practices Do not fund Fund

Salaries Majority 1 DP

Salary top-ups Majority 6 DPs

Only one DP reported that they pay basic salaries of GoT Civil Servants. This is done within one specific project/programme. Interestingly this programme is co-funded with other DPs that did not report on paying salaries.

As shown in the two tables above only 2 DPs report that their policies allow for salary top-ups but a total of 6 DPs currently still fund these5.

Often, salary top-ups are paid to civil servants working partly on a DP project and partly with their normal GoT duties. Many of these Civil Servants receiving salary-top ups are working as part of PIUs or coordination units at central ministries.

One case study showed how a new programme funded by multiple DPs allows for 30-40% increase in salary for civil servants due to increased work load of the programme. The increase is said to be performance based. Another DP project was planning to pay performance based increases but after the DPG decisions against this practice this was to be funded by government contribution instead.

3.2.3 Future intentions and strategies

3 out of the 6 DPs funding salary top-ups for civil servants report that they are phasing this out this. On the other hand, one DP instead explicitly said that they do not see any possibility under the current circumstances to phase out salary top-ups. The other 2 currently paying salary top-ups

5 It should be noted that the DPG decision that DPs should not fund salaries and salary top-ups was

only reached in March 2011. Therefor a period of adjustment and phasing out is to be expected.

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indicated that they would like to rationalize the payment of salary top-ups as much as possible but did not specify how.

One of the DPs saying that they plan to gradually phase out salary top-ups stress the difficulty in doing so as it is not part of a HQ strategy and reviewing process and can therefore easily go by unquestioned by staff at Tanzania office.

3.3 Challenges and way forward for DP practices in funding allowances, salaries and salary top-ups

for civil servants

The problematic part for DPs funding allowances is not necessarily the regulations themselves but instead the lack of clarity and transparency of these regulations and consequently there is a lack of coherent practices in how to apply the regulations. Many DPs also feel that the system of paying allowances and salary top-ups is abused and provides little value for money.

Many of the DP representatives contacted for the assessment were less than clear themselves about what their regulations were except the generic “We follow GoT regulations” - something that later proved not to be fully correct as shown throughout this report. A number of DP staff responded that “We do not fund allowances”. However, after further discussions it became clear that this generally was not the case.

Keeping the above in mind, an important step towards more coherent and harmonized policies and practices across DPs is actually an internal exercise for each DP. There needs to be a common understanding, on all levels within the agency, about what allowances are as well as of own policies and goals within each DP agency.

A key conclusion from the assessment is that DPs tend to follow GoT regulations to a certain extent- but not fully in regards to types of allowances eligible or rates used. The reason behind such DP practices in funding allowances is not entirely clear but there seem to be three broad explanations:

GoT regulations are not clear and often spread out in numerous circulars and various

sections of standing orders.

GoT regulations have not been transparently and comprehensively shared with DPs.

DPs do not agree with some of GoT regulations that have been shared.

The corresponding recommendations to address these challenges are as follows:

1. DPG should seek clarification on all GoT regulations on allowances and consolidate these

in a comprehensive document. The overview of eligible allowances in annex 3 is a starting

point.

2. DPG should ensure that the above is shared with all DPs. As mentioned it is important that

the information is shared with all levels within each agency.

3. Instead of having a policy that simply states that DPs should follow GoT regulations it

would be a step forward for the DPG to develop common and clear guidelines that

interpret GoT regulations and possibly adapt these according to what DPs do and do not

wish to fund.

The suggested adaptation of GoT regulations is already, in a manner, often done in individual financial agreements for projects and programmes as well as for some baskets. Developing simple and clear guidelines on all types of allowances for all DPs to lean on would reduce the need for

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discussions between individual DPs and GoT on eligible allowances as well as making practices more harmonized and transparent.

In addition another complementing approach, already championed by some DPs, could be the focus on value-for money and efficient use of funds principles rather than trying to reduce allowances across the board.

4.0 Project Implementation Units Project Implementation Units exist in different forms and shapes on a gradual scale from parallel to fully integrated. The OECD DAC has developed a checklist to guide the understanding and definitions of parallel versus integrated PIUs (see box 1 below)

Box 1 OECD DAC guidelines on definition of parallel and integrated PIUs

In the Tanzanian context, as well as for many other countries, what constitutes a parallel PIU, an integrated PIU or for that matter a PIU at all is somewhat unclear and is often understood differently by different DPs and by different individuals within the same agency.

4.1 Policy

Many of the DPs that responded to this question refer to the joint DPG decision on PIUs. Some refer to the Paris Declaration and to following GoT procedures. Some DPs did not seem to differentiate between parallel and integrated PIUs when responding to the questionnaire. In addition some DPs stressed the effort to streamline integrated PIUs within GoT ministries and others stated that they (would) only fund or support (integrated) PIUs if or when GoT asked them to do so.

Only one of the DPs responding to the questionnaire had any own written regulations specifically on the use of PIUs. This policy clearly states that not only should parallel PIUs be phased out but even integrated PIUs should be avoided. Another DPs’ regulation reads that they should not create parallel structures but does not mention PIUs explicitly.

Parallel or integrated PIUs When providing development assistance in a country some donors establish Project Implementation Units (PIUs).These are dedicated management units designed to support the implementation and administration of projects or programmes. A PIU is parallel when it is created and operates outside existing country institutional and administrative structures at the behest of a donor. In practice, there is a continuum between parallel and integrated PIUs. The criteria below have been designed to help donors and partner authorities draw a line within this continuum and identify with greater certainty parallel PIUs. (OECD/DAC)

PIUs are said to be parallel when there are three or more ‘Yes’ to the four questions below (anything less counts as integrated):

1. Are the PIUs accountable to the external funding agencies/donors rather than to the country implementing agencies (ministries, departments, agencies etc)?

2. Are the terms of reference for externally appointed staff determined by the donor (rather than by the country implementing agencies)?

3. Is most of the professional staff appointed by the donor (rather than the country implementing agencies)? 4. Is the salary structure of national staff (including benefits) higher than those of civil service personnel?

Checklist from OECD/DAC glossary http://www.oecd.org/document/19/0,3746,en_21571361_39494699_39503763_1_1_1_1,00.html#P

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4.1.2 Practice

5 DPs report to currently be funding or using one or several parallel PIUs. At least 4 DPs have integrated PIUs but it was difficult to assess the use of integrated PIUs because many DPs simply chose not to answer questions about these. For most of the DPs that declared using integrated PIU it also proved impossible to get any clear answers on the number of PIUs they were using or on the structure of these PIUs.

Some DPs claimed to use some kind of mix between integrated and parallel PIUs – a sort of “hybrid PIU”. These DPs had difficulties to define whether the PIUs were mainly accountable to GoT or DPs. The question of the direction of the flow of accountability and reporting is broadly speaking the key element of the distinction between parallel and integrated PIUs (OECD/DAC). Often these PIUs reported back both to DPs and GoT and there was a mix between civil servants employed by GoT and contract staff or consultants paid for sometimes by DPs and sometimes by GoT.

The OECD/DAC definitions of parallel and integrated PIUs do go into some detail and the definitions above were enclosed to the DP questionnaire. Therefor it is felt that DPs might deliberately choose to call their PIUs “hybrid” or “close to integrated” when they are in fact according to these definitions parallel.

4.1.3 Future intentions and strategies

Those DPs still funding parallel PIUs all declared that they were in the process of phasing them out. One DP plans to phase out both parallel and integrated

One DP with a number of parallel PIUs explained how they did not see any possibility of phasing these out in the near future. This DP expressed that they were caught between what was prescribed by the Paris Declaration and what they saw as the reality on the ground. The DP felt that GoT capacity was not strong enough to only operate projects through fully integrated PIUs. Using fully integrated PIUs was something they had tried with several projects. Another DP cautioned their commitment to phasing out all parallel PIUs with adding the words “where possible”.

4.2 Challenges and way forward

Almost all parallel PIUs have been phased out or are in the process of being so. There are some lingering parallel or hybrid PIUs. Choosing to see the PIU as integrated is possibly a way for DPs to follow Paris Declaration and DPG commitments but still enable them to exert some control and mitigate any perceived fiduciary or other risk. In reality these PIU might be closer to a parallel structure than to an integrated one.

It proved difficult to obtain information on PIUs. This was partly due to that there is a lot of blurriness on what PIUs are and how to define them. A more thorough understanding – including the GoT perspective is needed before any recommendations can be made or a way forward can be identified.

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5.0 Mapping of basket funds financing practices of allowances, salaries and salary top-ups Basket funds are a funding mechanism for government development programmes where funding from multiple DPs are pooled together. The funds are earmarked for the specific programme being implemented through the basket. It should be noted that a programme (e.g. the Water Sector Development Programme) can also commonly be funded by other sources outside the basket. This assessment only discusses the part of the programmes funded through the baskets.

Below, a broad overview of general trends and exceptions to these trends will be presented. For a more complete overview of each basket funds’ regulations and practices can be found in annex 4. Two coming baskets are presented in annex 5.

Each basket is managed based on a common MOU and by respective basket DPs Financing Agreements (FA). The MoU is not a legal document whereas FAs are. The regulations for allowances, salaries and salary top-ups are very similar across all baskets assessed. The main differences between baskets are in which degree of detail these regulations are being spelled out in writing in MoUs or other side agreements, letters or manuals.

Generally the baskets regulations and practices for payment of allowances, salaries and salary top-ups are:

Based on GoT rules but with some exceptions.

Baskets are generally only funding development expenditure and incremental expenditure

for carrying out the programme and do not fund recurrent expenditure.

In consequence no salaries, salary top-ups or certain allowances such as honoraria, sitting

allowance, housing, extra duty and acting allowance can be funded from the DPs

contribution to the basket.

The basket funds thus tend to be a bit more specific than individual DPs in writing about what is allowed. Most baskets describe eligible expenditures and sometimes state explicitly what is ineligible in terms of allowances (often sitting, sometimes honoraria). However, this still leaves room for questions regarding other types of allowances such as upkeep, housing, extra-duty, acting allowances – if these are considered to be part of incremental expenditure. Some baskets have specified that they do not pay these allowances. Others just declare that they do not pay remunerative allowances

which these could be considered to be part of6.

In addition, around half of the MoUs state that minor civil works, goods, consultants' services, training and workshop expenses are eligible. In terms of allowances this gives some room for negotiation and interpretations. The question is what can be included as training and workshop expense. In some instances FAs go into greater details on allowances. In addition allowances are often regulated in annual work plans.

Most of the baskets do not envision to change their policies on allowances, salaries or salary top ups in the near future.

6 However, the categorization of allowances in to remunerative and duty facilitating is not always

straightforward. The GoT classifies housing as a duty facilitating whereas the World Bank and Policy Forum (2009:9) considers it remunerative.

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5.1 Way forward for basket funds financing practices of allowances, salaries and salary

top-ups

An important decision for the DPG to make in order to move forward is whether there should be one

set of guidelines applicable to all DP funded projects, programmes and baskets or if baskets should

be treated separately. The current practices used by individual DPs in their funding of allowances in

GoT projects/programmes are not always coherent with the regulations of baskets they are

contributing to.

If separate regulations for baskets are deemed necessary then the below can be ways to move

forward with this.

One way forward would be to:

Include an overview of regulations on eligible and ineligible allowances in each baskets

MoU.

As mentioned, a MoU is not a legally binding document but it could be a suitable place to include, at

least in an annex, regulations regarding allowances. This can bring about some clarity and a needed

overview. Some baskets like the LSRP have agreed with GoT counterparts on which allowances are

not eligible for funding. The LGRP has the same approach to an extent. The LGRP has put these in

their financial guide whereas the LSRP has not. This way forward can be taken if DPs feel that more

common regulations are not suitable.

Another option if coherence across baskets is desired would be to:

Develop a common manual for all baskets.

The DPs have asked the Government to provide them with a manual that guides the use of

allowances similar to the LGRPs financial management guide. This has so far not been done. It is

recommended that if DPs want this kind of manual, representatives from each basket lead and GoT

counterparts should develop this jointly. The overview provided in this report including annex 4 can

form the basis of such manual.

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6.0 Bibliography Christian Mikkelsen Institute, 2009 Benefits and drawbacks of per diems: Do allowances distort good

governance in the health sector? U4 brief November 2009 ‑ No. 29 Policy Forum (2009b) Reforming Allowances: A Win-Win Approach to Improved Service Delivery, Higher Salaries for Civil Servants and Saving Money. Policy Brief 9/09. Dar es Salaam: Policy Forum with Twaweza,.

Policy Forum (2011) Tanzania Goverance Review 2008-2009. Tanzania Development Research Group (TADREG) Dar es Salaam, Tanzania

Policy brief EA.01/2010E. Can people follow their money? Budget transparency in East Africa. Uwazi-Twaweza in association with the International Budget Partnership (IBP). Uwazi, P.O. Box 38342, Dar es Salaam, Tanzania

Søreide, Tina; Tostensen Arne and Aagedal Skage, Ingvild (2011) Study of Allowances and Per Diems in Sub-Saharan Africa. Inception Report, Chr. Michelsen Institute, 27 May 2011

Cooksey, Brian 2010 Allowances in Tanzania Final Draft, PreStudy September 2010, NORAD Mutahaba,Gelase 2005 Pay Reform and Corruption in Tanzania’s Public Service. Dar es Salaam. President’s Office Public Service Management Memorandum of Understanding for The Partners (Government of Tanzania & Development Partners) participating in the pooled funding (“Basket”) of the Health Sector 2008-2015. Memorandum of Understanding between the Government of the United Republic of Tanzania and Development Partners who are supporting Local Government Reform (Decentralization by Devolution. December 2009. Memorandum of Understanding Between The Government of the United Republic of Tanzania And Development Partners In Support of a Harmonized Approach to the Implementation of the Public Financial Management Reform Programme. 2009 Memorandum of Understanding for the implementation of the Water Sector Development Programme. Amendment Revised Final Draft. June 28th 2011. Memorandum of Understanding between the United Republic of Tanzania and Development Partners. PIU Checklist from OECD/DAC glossary http://www.oecd.org/document/19/0,3746,en_21571361_39494699_39503763_1_1_1_1,00.html#P

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Annex 1: Government circulars and DPG and GoT letters

Please click on the links below to access the circulars and letters:

Allowances Response from POPSM August 2011

DPG Letter on allowances and salary top-ups 14.03.2011

DPG Letter on allowances to PO_PSM 16.10.2008

GoT circular 2005

GoT circular 2008

Government Circular on Per diems to EAC local meetings

Government Circular on Honoraria and extra duty

Government Circular on Per diems Foreign Safaris

Government Circular on Per diems Local Travelling

Government Circular on Sitting Allowance

Government Circular on Transport of Personal Effects

Annex 2 NGOs

The two National NGOs included in the assessment have their own manuals and guides for paying allowances which quite clearly sets out rates and regulations. These first and foremost apply to staff but do spell out some regulations applicable to other participants (such as GoT Civil Servants) in the organisations workshops, trainings or meetings. It should be noted that the two NGOs in the study mostly cooperate with persons from civil society and less so with GoT Civil Servants.

The two national NGOs have their own rates which vary according to geographical location of the duty travel. For one of the NGOs the per diems for non-staff are only slightly lower than the highest grade of domestic GoT Per Diems. For the other NGO the non-staff Per Diem are half of that of the highest possible GoT domestic rate or almost the same as the lowest GoT rate.

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Annex 3 List of allowances eligible to the Government of Tanzania The list of types of allowances eligible to GoT Civil Servants below is compiled mainly from Section L of the Standing Orders for the Public Service (2009) and GoT Civil Service circular 1 (2005 & 2008) On subsistence allowance and other allowances paid to government officials. Other sources are programme budgets, MTEFs, various programme, project or basket work plans. The below list does not claim to be exhaustive and more allowances could be eligible to GoT.

Allowances are generally classified according to two different categories, remunerative and duty facilitating allowance. Duty facilitating allowances such as costs related to trainings and workshops are often considered as more beneficial to improvement of service delivery and productivity whereas remunerative allowances (e.g. housing) are less clearly associated with these positive impacts. (Policy Forum 2009; Cooksey 2010).

It is not always apparent which category some allowances belong to. For simplicity the categorization below generally follows the World Banks categorization with the exception of housing, electricity and telephone allowances were the GoT definition is followed).

Duty facilitating allowances Daily Subsistence Allowance (DSA) ( Per Diem)

Entitled to public servants for every night spent away from duty station. To cover expenses (accommodation, food and other miscellaneous costs) incurred during non residential duty travel for such things as training, workshops, meetings, project supervision, field visits. Applies to International and National travel according to rates to be determined by the Permanent Secretary (Establishments) from time to time

Duty facilitating allowances7

These include housing, electricity and telephone allowances paid only to senior Officials whose terms and conditions of employment as specified in their letters of appointment entitle them to be paid such allowances. Rates are specified from time to time by the Permanent Secretary, Public Service Management.

Entertainment allowance Allocated to all accounting officers for entertainment under their respective items for Government Hospitality. This is the provision to be used to meet expenditure on any form of entertainment.

Extra-Duty and Overtime

Paid to officials as and when they are required to work beyond normal working hours and on weekends to accomplish pre-agreed tasks or when the work is considered to be over and above ordinary work. The payment is authorized by Accounting Officer and dependent on certain conditions being met.

Overtime is paid to salary scales TGOS, TGS.A and TGS.B salary scales according to a formula where the amount of time worked is increase by 2 for weekdays and by 3 for Saturdays, Sundays and Public Holidays.

Extra Duty is paid to employees in TGS.C salary scale and above. Rates are determined by P.S (Establishment) from time to time

7 Classified as such in GoT standing orders – the World Bank classifies these as remunerative

allowances

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Honorarium

This allowance is paid to staff whose special contributions to the service lead to greater efficiency or enhanced reputation of the organization. The amount of honoraria is determined by the respective PS as he/she considers reasonable and justified under the circumstances. (GoT Public Circular No. 1 of 2005).

Incidental Allowance when travelling on duty outside Tanzania

If subsistence expenses are met by host government or organisation Public Servants allowed 20% of DSA for incidental expenses

Kilometer allowance Paid to public servants using their own vehicles for official duties. Authorized by Accounting officer based on certain conditions being met. Rates are determined by P.S (Establishment) from time to time

Sitting allowance

Subject to approval of the PS (Establishment), can be paid to the Chairman, Deputy Chairman, Secretary, Deputy Secretary and members of a commission, Board or Committee established by any written law or order of the President or Prime Minister. List of these bodies and of rates are to be determined from time to time by the PS (Establishments).

Also paid to Members of Parliament for attending “Bunge”.

Transport/travel costs national and international – reimbursed according to actual costs or lump sum

Fares such as airplane tickets, bus transport can in some cases also mean fuel allowance for private cars at a fixed rate (kilometer allowance see below) etc for non residential duty travel for such things as training, workshops and meetings. It can also include transport with project or programme vehicle.

Training allowance Allowance paid instead of DSA for long term courses. It can also include the fees for short term or long term courses.

Remunerative allowances Acting Allowance Payable to a public servant authorized to act in the Superlative

Substantive (SS) post. The rate of the difference between the public servants’ substantive salary and that of the post in which he/she acts.

The Chief Secretary can authorize payment of acting allowance to a public servant required to act in a post other than SS posts if circumstances are deemed to justify this.

It is only applicable if public servant takes up a post for periods longer than 14 days.

Disturbance allowance on transfer 10% of basic salary - paid when Public Servants are transferred from one station to another within the country. Intended to assist with cost of packing, shipping etc

Luggage allowance No definition available

Maintenance allowance No definition available

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Outfit allowance Eligible to all public servants who travel outside of the country to whether on short duty visits, attend conferences, seminars or study tours, or to undertake formal courses of in-service training. Generally paid every 2 or 3* years to staff travelling on duty or on training outside the country to enable officials to purchase suitable clothing.

*Standing orders says 2 years whereas GoT circular 2008 1 states every 3 years

Police force and Prisons, Fire and Rescue Services allowance

No definition available

Public Servants Travelling for Medical Examination

These are also entitled DSA as they are regarded as travelling on duty

Special Duty Allowances for Medical Staff Includes on call allowance for certain medical staff on nightshifts, Post-Mortem Allowance for certain medical staff and Part-Time Medical Duty Allowance for certain medical staff taking on additional clinical duties.

Subsistence allowance on Arrival of First Appointment

As above

Subsistence allowance on transfer from one duty station to another within Tanzania

Paid for travel nights for Public Servant, spouse and dependants en route to new duty station. On arrival subsistence is paid for 14-30 days for the above mentioned. Children are granted 50% of DSA

Uniform allowance Eligible for some public servants including:

Nursing staff of and above the rank of Nursing Officer or Nurse in charge

Senior staff nurses

Judges, magistrates. State attorneys and parliamentary draftsmen

Upkeep allowance No definition available

In addition to the above, the Word Bank (Tanzania) list of GoT allowances compiled as part of an internal exercise includes the following:

Duty facilitating Remunerative Allowances Assesors Allowance Accommodation in Lieu of Quarters

Compassionate leave - foreign Councillors Allowance

Constituency Allowance Court Attire Allowance

Expertriate Personnel Destitute

Field (Practical Allowance) Foreign Service Allowance

Internship Allowance Hardship Allowance

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Invigilators Allowances Inmate allowances

Passages Allowances Leave Travel

Postmortem Allowance Maternity Leave

Release Travel Medical and Dental Refunds

Overseas Bursary Allowance

Professional Allowances

Ration Allowance

Responsibility Allowance

Risk Allowance

Special Allowance

Uniform Allowance

Uniforms

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Annex 4 Overview of baskets’ practices in funding allowances, salaries and salary top ups for GoT civil servants Basket WSDP basket Health Sector

basket PFMRP basket LSRP basket LGRP basket TSMP basket PSRP basket

Written policy MoU not explicit on allowances or salaries. IDA-GoT FA is

MoU not explicit on allowances

MoU not explicit on allowances or salaries

N/A MoU not explicit on allowances. Has detailed Financial Management Guide

Allowances and salaries, salary top-ups regulated in MoU

Allowances and salaries, salary top-ups regulated in MoU

Eligible expenditures for DP funds

Focus on development expenditures

No Personal Emolument and No Other Charges can be funded only funds development expenditures

Minor civil works, goods, consultants' services, training and workshop expenses, and incremental operating costs required for the carrying out of PFMRP Activities

No recurrent expenditure

No funding of everyday activities

Goods, works, consultants’ services, operation costs, training & workshops and dissemination

Works, goods, consultant’s services, training and workshop expenses and incremental operating costs as specified in annual work plan

Allowances Per diems and travel allowances mainly. Other types according to GoT rules but excluding the below.

Per diems, honoraria and training fees. Other types according to GoT rules but excluding the below.

Per diems and transport

Per diems and transport according to receipt except local. Very seldom international travel

Per diems, transport, other GoT eligible allowances

Per diems, travel allowances as well as lunch allowances

Per diems, transport and other non remunerative allowances

Per diem rates Domestic - GoT

International – GoT

Domestic – GoT

International - GoT

GoT ? Domestic – GoT

International - ?

Domestic- GoT

International - GoT

Domestic – GoT

International -UNDP

Domestic – GoT

International - GoT

Allowances not allowed

Sitting, honoraria (as per new IDA regulations)

Sitting allowances Sitting, upkeep Sitting allowances, Allowances for tender boards, Salary top-ups for civil servants, Acting allowances, Per diems to write

Sitting allowances, honoraria, other compensatory or motivational allowances

Sitting Remunerative allowances

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reports

Basket WSDP basket Health Sector basket

PFMRP basket LSRP basket LGRP basket TSMP basket PSRP basket

Salaries and salary top-ups

Not allowed. Top-ups not explicitly mentioned in MoU or IDA-GoT FA but in IDA regulation 2011 it is not allowed

Not allowed – does not fund P.E or O.C

Not allowed as per MoU

No salary top-ups from DP or GoT contribution. No salaries from DPs as no recurrent expenditure

Not allowed as per MoU

Not allowed as per MoU

Not allowed as per MoU

Future Plans Continued focus on investment; and efficiency in using per diems and transport allowances etc

New MoU so not likely to change anything soon. The DPs would like to better understand how funds are used by spending units in PMO-RALG and LGA and might work with JICA on this.

No change planned. The only change discussed currently is to possibly explicitly state the position on allowances in the MoU.

N/A No change. Want to focus on value for money

Aim to keep allowances to a minimum

No change

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Annex 5 Coming baskets

Investment Climate Programme Comprehensive Action Plan

Sida, Danida and DfID are at the final stages of appraising funding for the *Investment Climate Programme CAP (Comprehensive Action Plan)* which will be financed through a joint basket-fund. It is a continuation of the BEST programme but slightly redesigned. Since we haven't committed for funding yet, let alone finalized the agreement, there is little information to give at this stage. It is also not clear yet if there will be a new basket-fund or if we will use the old one. However, in the new programme the ambition is to include the jointly agreed principles on top-ups and allowances as an annex in the agreements, MoUs and Operational Procedures Manual for the basket-fund.

Trade sector development Programme

Sida is also at the final stages of approving funding for the Trade Sector Development Programme (TSDP) that will be jointly financed by Sida (only DP) and Government of Tanzania, through a joint basket-fund. Also there it is the ambition to include the jointly agreed principles on top-ups and allowances as an annex in the agreements, MoUs and Financial Mechanism Manual for the basket-fund.