Swiss renew budget support for Tanzania

Doris Leuthard with Tanzanian Minister Zakia Hamdani Mehdji and other representatives of the 14 member donor group swissinfo.ch

Switzerland is granting SFr19 million ($15.8 million) in financial aid to the government of Tanzania in a bid to combat poverty and boost economic growth.

A three-year accord was signed during an official visit to the east African nation by Swiss Economics Minister Doris Leuthard.

The Swiss contribution goes directly towards the Tanzanian government and is known as General Budget Support (GBS). It is part of an international aid effort by 14 organisations and countries – including the World Bank, the African Development Bank and Britain.

GBS puts the emphasis on flexible funding, enabling the recipient government to decide on its own poverty reduction efforts.

The scheme makes up nearly 40 per cent of the total amount spent on development aid in Tanzania. Approximately $660 million flows into the GBS annually, with Switzerland accounting for less than one per cent.

At this week’s launch in Dar es Salaam of a new three-year GBS cycle, Leuthard commended the Tanzanian government for its efforts in making its economic growth programme more efficient.

She added it was still necessary to improve accountability in public spending. “We would eventually hope that discussions about GBS could be subsumed within a broader national dialogue, involving all stakeholders, including parliament and civil society,” Leuthard said.

Switzerland currently holds the rotating presidency of the 14-member development partner group.

Bilateral ties

In bilateral talks with Tanzanian government ministers, the visiting Swiss delegation called for investment protection, promotion of the private sector and efforts to combat corruption.

Tanzania is among Switzerland’s top four trading partners in sub-Saharan Africa. About 40 Swiss companies are doing business in Tanzania. The trade volume between the two countries was just over SFr100 million last year.

“Both sides agreed that more needs to be done to implement good governance rules and the adherence to legal agreements to protect foreign investments,” Leuthard told swissinfo.

Further measures are needed to attract bigger Swiss investors, notably from the financial and tourism sectors, but the minister said Tanzania did have “the necessary natural resources and political stability” even if it lacked the infrastructure.

Leading Swiss banks have also been importing a significant amount of raw gold from Tanzania over the past few years, according to the Berne Declaration development aid group.

Thomas Pletscher, senior member of the Swiss Business Federation which accompanied Leuthard, acknowledged the reforms and moves towards liberalising the Tanzanian economy.

No boom

Pletscher said some Swiss companies were expanding their investments, but did not expect a boom in the near future. “There is still a long way to go and it will be necessary to continue development aid activities on a project-oriented basis,’ he said.

Leuthard said she was happy that Switzerland was contributing to efforts to reduce poverty and spur economic growth. “It is in our own interest to help countries like Tanzania. In the long-term they can develop their economy,” she said.

She described Switzerland as a reliable and neutral partner who could provide quality and the necessary expertise, notably in capacity building and the financial sector.

Also discussed was the Tanzanian government’s goal to increase the number of households with access to clean water and electricity and the role Swiss firms could play in new infrastructure ventures.

swissinfo, Urs Geiser in Dar es Salaam

Key facts

Exports to Tanzania (2006): SFr75.4 million Mainly pharmaceuticals, machinery, chemical products, medical equipment.
Imports from Tanzania (2006): SFr27.1 million Mainly precious stones and metals, as well as agricultural products, including flowers, tobacco and coffee.

In brief

Economics Minister Doris Leuthard wrapped up a weeklong visit to Africa with a stop in Tanzania. It was the first to the east African nation by a Swiss government minister since 1999.

During her three-day trip to Tanzania, Leuthard also visited a number of beneficiaries of Swiss development aid, including a factory that produces insecticide-treated nets to combat malaria and a cashew nut processing plant.

She was also briefed on a SFr1.2 million micro-finance project targeting women.

Tanzania-Switzerland

Tanzania has been a major beneficiary of Swiss development aid and financial support since the early 1980s.

Switzerland has also been providing funds worth a total of SFr42 million ($34 million) in financial support for the budget of Tanzania since 2001, as part of GBS.

Last year, Switzerland contributed SFr29.3 million ($24.1 million), including SFr17.9 million in funds from the Swiss Agency for Development and Cooperation (SDC) and SFr11.4 million from the State Secretariat of Economic Affairs (Seco).

The trade volume between Tanzania and Switzerland was just over SFr100 million last year.