US donor agency expresses grave concern in wake of IPTL scandal

The Board of Directors for the United States of America Government’s Millennium Challenge Corporation (MCC) has expressed serious concerns on the fight to control corruption in Tanzania, including the implications of the recent case involving Independent Power Tanzania Limited (IPTL).

A statement from the US Embassy circulated to the media yesterday said even though the board voted to allow Tanzania to continue developing a second compact programme, it strongly encouraged the government to take firm, concrete steps to combat corruption as a prerequisite to the board’s approval of any final compact. 

The board held its annual country selection meeting on December 10, 2014 where the concerns were raised. The full text of the Board’s December 10, 2014 public statement is available on the MCC website.

In the statement, the board acknowledged the importance of the government to follow-through on the Tanzanian State House’s December 9 statement that it would act promptly and decisively on the late November parliamentary resolutions regarding the IPTL scandal. 

The US Ambassador to Tanzania Mark Childress noted, “Progress in combating corruption is essential to a new MCC compact, as well to an overall improved business climate in Tanzania. We are encouraged by the State House’s announcement of December 9 this year that it will soon address the parliamentary resolutions linked to IPTL, and we urge quick government action, given the impact on several key development issues.”

 The Board also referenced a series of agreed upon structural policy and institutional reforms the government of Tanzania has committed to undertake in order to improve the efficiency and transparency of its energy sector institutions more broadly. 

“We also want to stress that these commitments must be met before the United States will finalize any new compact with Tanzania,” Ambassador Childress said.Tanzania was one of 10 countries discussed by the MCC Board, which met to determine the eligibility of countries to begin or continue the compact development process. If finalized, this would be Tanzania’s second MCC compact. 

Between 2008 and 2013, MCC funded a $698 million (roughly 1.1trn/-) compact of investment projects in water, roads, and electric power throughout Tanzania. The compact programme led to the construction of over 3,000 km of power lines, 450 km of trunk roads, two water treatment plants, and an airport runway.

The Millennium Challenge Corporation is a United States Government agency that provides assistance to developing countries.

 MCC is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people that promote economic growth and the elimination of poverty.