The Art of Conditioning Aid

The conditioning of foreign aid is an art not very well mastered by the donor community. Take Tanzania. Here we have a new president who has embarked with vigour, originality and courage on a new path to fight corruption. Six weeks after he was elected as an accidental candidate of his forever ruling Revolutionary Party „Chama cha Mapinduzi“ (CCM) John Pombe Magufuli has transformed the public discourse on and the practice of corruption in his country. After decades of anything goes and total impunity errant ministers and civil servants have been sacked, or live in fear. The whole leadership of the Tanzanian Tax Revenue Authority (TRA) was recently fired, together with its cronies in the Dar es Salaam Port Authority, which seems to have functioned as the countries deepest pit of corruption and tax loss. The all permeating allowance culture has been attacked viciously by presidential decrees banning foreign travels, long lunches and luxury vehicles. Ministers, following the president’s new directives, locked their office buildings at the reporting time of 7.30 am in the morning, only to find out that just a small percentage of their staff where inside and at work. It remains to be seen how long President Magufuli can keep this pace and commitment and how quickly he can support his unprecedented attack on lackadaisical or criminal attitudes by putting in place supporting legislation and the necessary constitutional changes; and how he reacts if the army of enemies he is in the process of making will start sabotaging his anti-corruption campaign. But one thing is certain – John Pombe Magufuli is serious and courageous in his efforts. So what should the international donor community do? Support the new president with a carefully tailored aid program that, firstly, applies all the anti-allowance directives to its own all too generous programs; and which, secondly, supplies quick, specific, limited and conditioned support for the government’s efforts to clean up the country’s public institutions. No way. It just watches and compliments the president, yet has not even started to discuss changes to its own corresponding allowance culture. Moreover, it defers, like the board of the US Millennium Challenge Coroporation (MCC) just decided, a promised payment of $ 472 Million, much needed to fill the state coffers. Anybody who starts reforming a country’s corrupt institutions and increase its tax system base has a problem of timing. Before President Magufuli can reap the profits from his new anti-corruption and tax policies, he will need to increase the paltry saleries of at least the lower ranked civil servants and teachers who need to exploit the possibilities of a corrupt system to make a decent living. Its a problem of sequencing, where donor’s might come in and help the president by subsidizing some salaries under strict conditions and time limits – until the system can correct itself. One might call this short term transformational assistance. This would be an example of how foreign aid could be temporarily used to mobilize domestic ressources, an approach that was discussed at the recent „Financing for Development“-Conference in Addis Ababa - and then sabotaged by the developed countries. No, the international system of administering foreign aid is not at all designed for such transformational situations. By the time donors will have corrected their ways and adapted to the new situation, John Pombe Magufuli might be history – sidelined by the profiteurs of the old patronage system and his inability to provide quick relief for the majority of its victims. Yet, apart from this structural inflexibility of the donor system in general, the case of the MCC acting in the name of the US-government might illustrate the considerable problems of applying a kind of conditionality that tallies with rapidly changing political necessities. The witholding of almost half a billion dollars by the US-body is justified by two indeed very serious cases of flouting democratic rules by the Tanzanian authorities: the questionable annullment of recent election results on Zanzibar which the opposition and international observers deemed free and fair; and the use of a new draconic Cybercrime Law to prevent any independent tabulation of the Tanzanian election results from all 66.000 voting stations. Indeed, manipulation of election results and draconic media bills are a serious matter. And President Magufuli has not said a word about either of these highly questionable methods applied during the October election process which brought him to power. This leaves those donor countries applying conditionality in a quandary. Insist on clean democratic elections and forego the support of the President’s convincing anti-corruption campaign? Or help with the systemic transformation of the country and excuse concurrent democratic failures? With a donor darling like Tanzania conditionality of aid has so far been more rhetoric than reality. Through decades of generous development aid there have been many complaints, even cases of withholding development aid in the 90s and in 2014. Yet, in the end the Tanzanian government could always count on the monies being disbursed again – knowing only too well that Western countries did not want to hand over Tanzania to China, the new aid competitor who is at least pretending not to tie any political conditions to its financial support. Thus, the art of conditioning aid remains difficult to practice. There are fine lines between a preaching neo-colonial attitude, a convincing democratic correctness and a purely business-like approach. Yet, there is no reason to stick to the current inflexible system of foreign aid which has more to do with the interests and buereaucratic structures of the donor industry than with the actual needs of recipients like the new government of Tanzania.