This Country Program Evaluation assesses the relevance and effectiveness of the World Bank Group’s support to Tanzania from July 2011 to June 2022. It looks at the Bank Group’s strategic and operational approaches over the period FY 2012–22. This period included two Bank Group strategies: (i) the FY12–15 Country Assistance Strategy, which was extended to FY16 and was aligned with Tanzania’s 2010 development strategy, and (ii) the FY18–22 Country Partnership Framework, which was aligned with Tanzania’s high-level development priorities in its Development Vision 2021 that focused on industrialization, human development, and public sector reforms. A gap was left in the strategy coverage—FY17—when the World Bank committed more than $1 billion. This Country Program Evaluation contains thematic chapters on Bank Group support to private sector–led growth and spatial transformation.

Bank Group support was aligned with Tanzania’s developmental needs and achieved notable results, even though it did not always fully align with the government’s policies and faced implementation challenges. The World Bank and the International Finance Corporation (IFC) made important contributions to access to energy and finance, skills development, and urban development.

However, effectiveness was weakened by several aspects of the World Bank portfolio design and shifts in government policy. Bank Group support to education and the private sector in the second strategy period was set back by changes in government policies on the private sector’s role in the economy and the schooling of pregnant girls. The World Bank portfolio performance was also challenged by overly complex project designs, monitoring weaknesses, limited local counterpart capacity, and insufficient risk analyses.

During the past decade, Tanzania’s economy continued to grow, and poverty declined but at a slower pace than in the decade before. Tanzania’s annual growth in real GDP was 5.5 percent during the evaluation period. Annual per capita GDP growth averaged 2.2 percent from 2012 to 2022, compared with 3.6 percent from 2000 to 2011, with an annual population growth of 3 percent. Poverty declined during the evaluation period but at a slower pace than the decade before—the poverty head count ratio declined from 28 percent in 2011 to 26 percent in 2018,1 , 2 compared with 36 percent in 2000. Although Tanzania’s risk of debt distress was low at the beginning of the evaluation period, the risk increased significantly thereafter because of the need to borrow for increasing infrastructure spending.

Government policies, including the economic development model, changed significantly in 2015 with the election of a new president. Tanzania implemented various public sector reforms between the late 1990s and the early 2000s, but those reforms lost momentum by the end of the 2000s. In 2015, a newly elected government embarked on an ambitious reform campaign. The new administration prioritized efforts to clamp down on corruption, invest in infrastructure, and enact protectionist economic policies. This new economic model gave preference to domestic firms over firms benefiting from foreign direct investment or foreign firms. While the government recognized the private sector’s essential role in economic development, it gave preference to safeguarding national interests and the goal to better distribute economic benefits. Other policy shifts that challenged the Bank Group’s engagement included the new president’s rejection of recognizing the COVID-19 pandemic, support for a law that banned pregnant girls from attending school, and the government’s push to greatly centralize economic management.

Adapting Support to Changing Priorities

Bank Group support remained relevant to the development challenges in Tanzania and the government’s high-level development vision. Over the evaluation period, the Bank Group prioritized private sector–led growth, infrastructure development, public institutional capacity building, human capital development, and social inclusion. The Bank Group committed $8 billion to Tanzania during FY12–22. By the end of FY22, Tanzania was the Bank Group’s seventh-largest borrower in Sub-Saharan Africa, after the Democratic Republic of Congo, Ethiopia, Kenya, Niger, Nigeria, and Uganda. This included 61 financing operations divided among the World Bank, IFC, and the Multilateral Investment Guarantee Agency. World Bank investments totaled about $7.5 billion, and IFC investments totaled about $0.4 billion. Most of the World Bank’s support focused on infrastructure, human development, and public administration, with particular emphasis on health care, safety nets, and emergency in the later part of the evaluation period, in response to the onset of the COVID-19 pandemic. IFC support focused on providing credit and long-term financing to small and medium enterprises and supporting mineral exploration, with investments in oil, gas, and mining. The Multilateral Investment Guarantee Agency issued one political risk guarantee to an agribusiness company in 2014.

Overall, Bank Group support showed positive outcomes in road, energy, and social services but limited progress in improving the business environment, advancing financial services, and increasing agriculture productivity and commercialization. The Independent Evaluation Group (IEG) rated the overall development outcomes of the Bank Group’s support to Tanzania in its two Completion and Learning Review Validations that cover the evaluation period as moderately unsatisfactory.3 The Implementation Completion and Results Reports identified several shortcomings in program design, monitoring, stakeholder engagement, and institutional capacity-building efforts. Meanwhile, project validations show that IFC had some success in advisory services, particularly related to access to finance, but none of its investments achieved their objectives because of low profitability, low loan volumes, changes in global markets, and delayed feasibility studies.

For example, the Bank Group focused on improving access to finance for firms throughout the evaluation period. This aligned with the government’s focus on promoting industrial capacity and the recommendations from the World Bank’s 2017 Systemic Country Diagnostic. In the second strategy period (FY18–22), the Bank Group canceled projects in support of policy reforms related to secured transactions because of the changed approach of the government to involving the private sector in certain areas of the economy. The second strategy period focused more on infrastructure investments in the energy sector and less on energy policy reforms that would support private sector–led power generation, again reflecting the change in the new government’s views on private sector involvement.

Over the evaluation period, World Bank lending shifted from investment project financing to Program-for-Results and became more selective. The World Bank shifted in the first strategy to Program-for-Results to support service delivery and sector reforms, enabling the government to use its own reporting mechanisms. Both the Completion and Learning Review Validation for the first strategy and the FY18–22 Country Partnership Framework recommended the Bank Group be more selective and better coordinate with development partners (World Bank 2018a, 2018b). IEG’s Completion and Learning Review Validation of the first strategy period also highlighted that the use of multiple lending instruments with different reporting requirements slowed government implementation because of a lack of capacity. The Bank Group took these lessons into account in the second strategy period by approving more targeted operations as manifested by the reduction in the number of investment project financing and development policy operations from 37 to 14, along with the increase in total commitments from $3.3 billion to $4.1 billion.

COVID-19 led to shifts in the portfolio and posed significant challenges to the World Bank program. In response to the onset of the COVID-19 pandemic during the second strategy period, the World Bank redirected resources toward health care, social safety nets, and emergency response efforts. Project supervision, monitoring, and coordination also became more challenging during COVID-19, and there were implementation delays to several World Bank projects, particularly those that involved construction works and public consultations. Despite these challenges, the World Bank and its partners leveraged remote technologies, digital platforms, and virtual communications tools to ensure business continuity and stakeholder engagement. The pandemic’s economic fallout also affected the Tanzanian government’s ability to co-fund projects with the World Bank, along with increasing health care spending and lowering government revenues. This created a financing gap of nearly $250 million and threatened the country’s development efforts. Further complicating factors were the president’s attitudes toward COVID-19 and the efficacy of masks and vaccines. Tanzania was declared free from COVID-19, and the government stopped publishing data on COVID-19 cases and deaths as the virus was spreading. Only after 2021 did government policy become aligned with global health and data-sharing practices.

The World Bank was slow to redesign an education project to address the gender impacts of a federal policy banning pregnant girls from public schools. In 2017, a World Bank education project focused on school infrastructure and improvements in education quality. However, the initial Project Appraisal Document did not include a gender assessment of the government’s policy banning pregnant girls from public schools, although it did include a disbursement-linked indicator to incentivize the government to increase the number of girls enrolled in government schools. After engagement with the development partners, the project was withdrawn from Board approval in 2019 and redesigned in 2020 with a gender component. The redesign included several gender-smart solutions. For example, the World Bank identified alternative education pathways as a way for pregnant girls to reenter school. Project monitoring showed that alternative education pathways reached more than 3,000 female students over the period 2020–23. The World Bank’s dialogue with the government in relation to its pipeline of education projects and strong engagement with development partners helped inform the reversal of the policy banning pregnant girls from public schools in 2021.

More selective programming, simpler project designs, and greater focus on building capacity could have improved the portfolio’s performance. Lessons drawn from IEG’s Implementation Completion and Results Report Reviews, particularly for the Poverty Reduction Support Credit series, suggest that concentration on the most critical development policies could yield more tangible outcomes for Tanzania, compared with broader more dispersed initiatives. The 2016 Project Performance Assessment Report for the Poverty Reduction Support Credit (World Bank 2013) series showed the risks of broad programming and demonstrated the importance of carrying out simple project designs, adjusting projects to local capacity, and having an adequate understanding of political economy issues. For example, the complexity of the first Business Environment and Competitiveness for Jobs development policy operation series strained the capacity of the government, and the World Bank’s support for decentralization was undermined by low local-level subnational capacity.

Evolving Support for Private Sector Development

The Bank Group’s private sector support was relevant to the sector needs but was affected by the government’s changed sector priorities after 2015. The main constraints to private sector development were identified by the Country Economic Memorandum, the Diagnostic Trade Integration Study, the Economic Update, the Systematic Country Diagnostic, the 2013 Enterprise Survey, and four Investment Climate Assessments as corruption; informality; limited access to finance, job skills, and electricity; and weak regulatory environment. Bank Group support addressed these constraints, except for informality, and during both strategy periods, it was in line with the government’s strong anticorruption commitment, including the new administration’s “zero tolerance” policy toward corruption after 2015. The Bank Group also had operations to strengthen different aspects of the business regulatory environment, such as taxation, business registration, licensing and permits, and cross-border trade. However, the 2015 government’s view of private sector development, which promoted domestic firms and restricted foreign firms in certain sectors, undermined several of the Bank Group’s efforts for private sector development.

The government’s change in policy direction regarding private sector participation in the electricity sector required the Bank Group to adapt its approach. The Completion and Learning Review, the Project Performance Assessment Report for the Poverty Reduction Support Credit series, and the Implementation Completion and Results Report Reviews for two Power and Gas Sector development policy operation projects highlighted the importance of understanding and mitigating political economy risks. These risks materialized in the energy sector portfolio when the new government canceled the third Power and Gas Sector development policy operation. The Bank Group adapted its approach to regain relevance in the energy sector, moving away from policy-based operations and concentrating on infrastructure operations that provided improved connectivity. These infrastructure projects successfully increased access to electricity for firms.

The Bank Group provided support for increasing access to finance in the first strategy period, whereas only IFC remained engaged after the change in government priorities. The Bank Group supported Tanzania with financial and technical assistance to help address constraints to access to finance, but World Bank lending in this sector ceased during the second Country Partnership Framework period because the government’s overall interest in private sector development changed after 2015. The World Bank approved the first loan in the Business Environment and Competitiveness for Jobs development policy operation series in late 2015, which focused on private sector reforms and was meant to be a three-part series. However, the World Bank canceled the second and third Business Environment and Competitiveness for Jobs operations in April 2017 because of the change in government reform priorities, such as not pursuing the Secured Transactions Act. IFC found opportunities to more than double its investment volume through commitments in 2021 and 2022 to two of the largest banks, which accounted for half of IFC’s total portfolio during the evaluation period.

World Bank support enhanced Tanzania’s financial system, but outcomes were limited because of a lack of demand-side support measures. The World Bank helped develop the legal and regulatory framework for 25 new financial products. In 2014, the World Bank’s additional financing for the Private Sector Competitiveness Project strengthened the financial sector’s framework for deposit insurance, and in 2022, its first Inclusive and Resilient Growth development policy financing enhanced financial stability and sector resilience. However, the World Bank did little to increase financial literacy or boost financial services in Tanzania. Stakeholders pointed out that educating consumers on financial products was a crucial missing component for strengthening Tanzania’s financial system.

World Bank support helped create a more skilled labor force for Tanzania’s private sector. World Bank support had significant success in reducing skills gaps in the labor market. The capacity of the education system improved, reflected in an increase in the number of science and technology graduates from 1,300 to 6,700. In addition, the World Bank helped deliver 135 programs in technical and vocational education and training, and the number of program beneficiaries was estimated at 66,700 in FY22. IEG-validated technical and vocational education and training projects received highly satisfactory ratings. The Skills Development Fund was operational and provided about 45,700 trainees with internships. Employability of short-term students one year after graduation was estimated at 80 percent. Partly as a result, surveys of businesspeople in Tanzania show that “inadequately educated workers” was less of a constraint in 2017 than it was in 2012.

Increasing Priority of Supporting Spatial Transformation

World Bank operations have increasingly integrated spatial transformation concepts into designs. Since 2010, the World Bank has financed 10 operations that address elements of spatial transformation by supporting actions that established cadaster and land tenure systems, prepared land-use master plans, promoted transport-oriented development, and enhanced urban resilience to natural disasters.

The World Bank’s urban road portfolio upgraded road networks without contributing to urban sprawl. Many of Tanzania’s secondary cities are expanding extremely fast with very low population densities, making them inefficient, inequitable, costly to service, and susceptible to additional urban sprawl. As part of the Tanzania Strategic Cities Project and the Urban Local Government Strengthening Program, World Bank support financed the improvement of more than 400 kilometers of urban roads in secondary cities that reduced travel times and generated savings. There is also evidence that World Bank–supported road improvements increased land values in those areas. The projects did not finance any new roads that would extend settlements or contribute to urban sprawl.

The Dar es Salaam Rapid Transit (DART) system has improved public transport, but failure to adequately consider climate change and risks of flooding has led to disruptions that disproportionately affected poor communities. DART is the largest Bus Rapid Transit system in Africa and improved mobility within Dar es Salaam, with 15 percent of the city’s residents having easy access to the line. However, the project did not adequately identify flood risks during the planning and execution of line 1. IEG geospatial analysis showed that line 1 is in a topographically flat area that has a high degree of imperviousness,4 with both factors contributing to a high risk of flooding. DART users experienced multiple service interruptions during rainy seasons, and flood risks disproportionately affected poor communities.

The World Bank’s land-use planning support has underperformed because projects implemented master plans for spatial transformation too late, and impacts have not been systematically monitored. World Bank projects have financed 45 master plans for nearly a quarter of all local authorities in Tanzania. Ideally, project teams would produce master plans in the project’s early years to guide implementation and then monitor them. Interviews, project documents, and advisory services and analytics suggest that these plans have not been effective or were implemented too late to be fully effective. IEG also found that the World Bank had not adequately monitored the impact of urban and transport investments through geospatial baselines or systematic evaluations.

The World Bank’s programmatic approach and centralized implementation units have made its spatial transformation support more effective in complex institutional and technical settings. The establishment of a centralized implementation unit within the President’s Office helped coordinate projects, development partners, and government agencies. A programmatic approach also ensured the World Bank’s long-term engagement with Tanzania’s emerging megacities. The series of projects in Dar es Salaam is emblematic of this approach: the series of projects is a multiproject phased approach to developing the city over a 10- to 15-year period.

Key Lessons

Selectivity, combined with simple project designs and a long-term programmatic approach, could help the World Bank improve its performance in Tanzania. A scaled-back portfolio with simple project designs that is more tightly focused on government priority areas and aligned with institutional capacity could enhance traction between the government and other partners. The report suggests that filters for selectivity include areas where there is a strong potential for achieving development results, based on the Bank Group’s comparative advantage and presence of government demand. As in the case of the education sector, government demand can also be fostered by sound analytics and policy dialogue to demonstrate the development justification. The need for simplicity of design is similarly linked to the government’s implementation capacity. The most successful programs were focused on specific objectives, operated at substantial scale, targeted, structured with programmatic approaches, grounded in strong analytical foundations, and implemented with comprehensive quality assurance and control systems. At the same time, efforts to support capacity constraints during implementation were observed only for part of the program.

Maintaining strong partnerships can enable the Bank Group to adapt more efficiently to changing circumstances. The cancellation of projects that supported private sector participation in energy generation and a project aimed at increasing access to finance, on the one hand, and the Bank Group’s successful work with partners and civil society organizations in relation to the pregnancy ban, on the other hand, showed the importance of continuously adapting to the local environment and maintaining partnerships in situations of complex political economy. Indeed, the collaboration with local and international partners (along with analytic work) helped inform the government’s decision to reverse the ban of pregnant girls from education in 2021 and facilitated the approval of a redesigned education project that better addressed the issue.

Better monitoring of growing climate risks, such as risks of flooding, could help avoid expensive remedial actions. As IEG’s review of the DART’s flood vulnerability concluded, the region was at high risk of flooding, which should have been anticipated by using available technology. Similarly, the lack of an adequate monitoring and evaluation system has undermined the World Bank’s ability to learn and adjust to these often-evolving risks. These issues have led to disruptions along DART routes that disproportionately affected poor populations and required additional World Bank financing to resolve. More generally, with increasing climate-related risks, strategies (such as for land-use planning) and operations should reflect the increasing focus on adaptation measures and programmatic approaches to mitigate such risks. Risk mitigation can also be supported by new methods, such as enhanced geospatial analysis.