World Bank, EU suspend aid to Tanzania

International donors have cut aid to Tanzania in reaction to repressive policies by the government of tough-talking president John Magufuli.

A poster of President John Magufuli on a 24-kilometre wall built around a mine at Merelani, near Kilimandjaro, 11 April, 2018. Joseph Lyimo / AFP

The European Union and the World Bank announced the suspension of aid to Tanzania following the government’s crackdown on human rights.

The EU, Tanzania’s biggest development partner, said it was freezing 88 million euros in annual financial support while the World Bank scrapped a 265 million euro loan for girls' education in protest against a move to expel pregnant girls from school and forbid them to continue their education after giving birth.

The sanctions are the result of calls in mid-December, by four US senators for the creation of a common front with "diplomatic partners" to put pressure on the Tanzanian government.

They come as a major setback to President John Magufuli who had earned international respect for fighting corruption since his election in 2015.

Honest Ngowi, professor of economics at Nzumbe University in Dar es Salaam, told RFI that for a country whose domestic resource mobilisation is relatively low, the foreign aid was crucial in containing the deficit.

Nzumbe underlines that the inflow from donors appeared prominently in the statement on the implementation of the finance law halfway through the 2018/2019 fiscal year, presented by finance and planning minister Philip Mpango.

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Professor Honest Ngowi

“That gap will now be felt, with the inflows from outside to the budget not forthcoming,” the economist noted. “The implication is that maybe one [will have] to borrow,” Ngowi predicted.

Debt Burden

Tanzania’s public debt burden stood at 16.6 billion euros in the first quarter of 2017, representing 34.2 percent of the country’s GDP, according to official statistics. Ngowi says in the 2018/2019 budget, almost 30 percent of resources were set aside for debt repayments.

He rules out any prospects to see the donors redirect the frozen funds to poor and vulnerable beneficiaries through other players such as civil society organisations. He argues that the funds were intended as direct support to Tanzania’s budget, which is why they cannot be converted overnight.

Professor Ngowi backs President Magufuli’s defence of Tanzania’s “true, long time Chinese friends who continue to provide funds without condition,” –such as a state-of-the-art library in Dar es Salaam entirely funded by Beijing recently inaugurated the President – as opposed to “people who don’t want the good of the country.”

African China policy

"China is not asking the hard questions that the West is asking" says Ngowi. However, he concludes by urging African countries to design a common policy for business with China, in order to prevent Beijing from taking what it likes from African countries that default on debt payments.