President of Tanzania at Jubilee Debt Campaign conference

The address of President Benjamin William Mkapa of Tanzania to Jubilee Debt Campaign's annual conference in February 2005.

Co-Chairs of the Jubilee Debt Campaign;
Distinguished Leaders of the Jubilee Debt Campaign;
Campaigners and Concerned Citizens;
Ladies and Gentlemen:

I thank you Co-Chair, Stephen Rand, for that most wonderful introduction and for the kind words you have spoken about us. It is, indeed, a great pleasure for me to be with you this morning.

I have come, first, to thank you all personally, and on behalf of our people, for what the Jubilee movement worldwide has done to ensure that poor countries like mine do not have to choose between the life of a child—dying of a preventable disease—and the servicing of an external debt that, ultimately, is not payable anyway.

I have, secondly, come to tell you, in person, what we have done with the debt relief that, with your support, we got under the Enhanced Highly Indebted Poor Countries Debt Relief Initiative in 2001.

I have, thirdly, also come to encourage you in your advocacy for total debt cancellation for poor countries because, frankly, it is a scandal that we are forced to choose between basic health and education for our people and repaying historical debt.

And, fourthly, I have come to tell you what else we could accomplish immediately if we were to get a clean slate on our historical debt.
Fellow Campaigners:

I bring you all greetings of solidarity from the people of Tanzania who join you in advocating, here and now, that debt for poor countries should be wiped out in 2005.

I know what the people of Tanzania feel about the historical debt that hangs over their heads like the Sword of Damocles. And, I know what it means to be President of a Highly Indebted Poor Country, for I have been one for almost 10 years now. For those who, unlike us here, do not yet fully subscribe to the need and urgency of total debt cancellation for countries such as mine, I ask them to stop and consider how they would have felt if they were in my shoes in 1995 when I came to office. What did I find?

I found that we had, by then, an external debt of about £ 6 billion, and that if we were to apportion this debt to every man, woman and child, each one of them would be indebted to the magnitude of their total incomes for 2½ years. And, if we were to spend all our foreign exchange earnings to repay this debt it would still take us over 12 years to do so.

I found in 1995 that we were spending about 35% of our recurrent revenue to service only a part of our debt obligations. In the first financial year of my presidency, we spent about £ 100 million to service our national debt, an amount sufficient in that year to meet the budgeted expenditures of seven major government ministries.

I also found that Tanzania was spending more on debt service than it was spending on health and education combined. For every pound we spent on health, we spent 4 pounds on debt service. The same was the case with education. Under these circumstances it was obviously impossible to attain the goal of eradicating poverty and accelerating the development process. This situation was also unsustainable, both politically and economically. And, eventually, we had to ask: Shall we let our children die of curable or preventable illnesses; prevent them from going to school; let people drink polluted water – just to pay off this debt? For this is indeed what was happening.

I almost told our creditors to go to Hell. Then I remembered the story of the deceased groceryman who, upon passing on, knocked at the gates of Hell and asked entrance.
“Why do you come here?” demanded Satan.
“I want to collect some old accounts from a couple of my former customers who died before me.”
“How do you know they are here?”
“Well, every time I tried to collect, this is the place they recommended me to.”

So, I did not tell our creditors to go to Hell and instead asked my people to accept austerity measures as I tried to restructure the economy further and improve the macro-economic fundamentals. This included increasing our repayments for loans in the hope that once our track record of acknowledging our debt, and of pursuing prudent economic policies and public finance management had been established, we would get more aid and have our debt burden relieved. For this was the only way that we could have continued with economic reform without drastically sacrificing our social objectives and other poverty eradication policies and strategies.

My government won the commendation of the IMF, World Bank and the donor community for our strong track record of reform – both political and economic. In 1998 we established a Multilateral Debt Relief Fund (MDF) and asked donor countries to contribute to it. The United Kingdom, Sweden, Ireland, Norway, Finland, Denmark and the Netherlands gracefully did so. The savings were absorbed in the budget to protect priority items in the social sector. In other words, debt relief was immediately, and in a transparent and accountable manner, used to support education, health and water.

The Government also formulated a National Debt Strategy to give guidance to debt management and debt reduction efforts in future.

Fellow Campaigners:
With your support, for which I am truly grateful, and with the prudent financial and monetary policies we pursued, Tanzania reached, in November 2001, the completion point for the Enhanced HIPC debt relief which created a direct saving in our budget of about £ 80 million a year at that time.

Like with the Multilateral Debt Fund, we put in place an open and transparent system of using this debt relief, in a consultative and participatory way involving government, civil society and donor countries. And all the money was directed to priority interventions in education, health, water, rural roads and HIV/AIDS. None of it was diverted to my personal account or those of people in my government.

And let me also put the record straight. It is not true that all loans to African countries were misappropriated or used for military purposes. Tanzania is a very good example where neither was the case. We invested heavily in social service delivery infrastructure. We invested in industries. And we invested in economic infrastructure. Regrettably, the economy did not grow fast enough to ensure sustainability, hence the debt overhang. This was compounded by the war on Idi Amin in the late 1970s, the collapse of the commodity markets and the oil crisis. But we did not loot the loans. If we used loans properly in the past, we can certainly be trusted to use new debt relief and aid wisely, for the intended purpose. And we now have in Tanzania such open and transparent procedures that every cent can be accounted for.

I am sure you would then want to know what exactly we did with the partial debt relief and renewed donor funding we began to get in the late 1990s. For starters, we increased funding for education and health fourfold. Let me take you through the education sector more closely.

In the mid-1990s, almost all indicators for basic education were in free fall. The Gross Enrolment Rate had fallen from 98 percent in the early 1980s to 77.6 percent in 2000. The net enrolment rate had likewise fallen, from over 80 percent to only 58.8 per cent. Even an important sector such as education was operating on a shoestring budget. Consequently, thousands of qualified teachers remained unemployed even as teacher-student ratios were unacceptably high. Science students completed secondary school without ever having conducted a real experiment in a proper laboratory, for many schools had none. In some schools, a whole class would share less than 5 textbooks. The pass rate in primary schools was a pitiful 19.3 per cent in 1999.

Then several things happened. We decided at the top political level that basic education would be a top priority, and adopted a five-year Primary Education Development Plan (PEDP) to achieve universal basic seven-year education by 2006 – nine years ahead of the MDG target.
Good governance produced more government revenues, which have increased five-fold over the last nine years. As I pointed out earlier, in November 2001, we received further debt relief. Subsequently, more donors put aid money directly into our budget or into a pooled fund for the PEDP.
After only three years of implementing PEDP, tremendous successes have been achieved in improving access, quality and capacity building.
With regard to access:

• The Government abolished school fees in primary schools.
• There was a 50 per cent increase in primary school population between 2000-2004. An additional 2.7 million children are now in school, raising the Gross Enrolment Ratio from 77.6 per cent to 106.3 per cent; and the Net Enrolment Ratio (NER) from 58.8 per cent in 2000 to 90.5 per cent in 2004. Gender parity has now been attained.
• In the first 3 years of PEDP, 31,825 classrooms were built, 7,530 teachers’ houses were built, mostly in rural areas, and 2,035 new schools were built.
We did not only improve access; we also improved quality of education:
• In the first 3 years, there was a 106.3 per cent increase in the number of teachers. An additional 62,643 teachers were recruited or retrained.
• The book/student ratio has improved from 1:8 to 1:3 in class I – IV, and from 1:10 to 1:6 in class V – VII.
• About 9,100 science-teaching kits were supplied along with other teaching and learning materials by end-2003.
• The pass rate in the primary school leaving examination has risen from 19.3 per cent in 1999 to 48.6 per cent in 2004.

Fellow Campaigners:
The Yoruba from Nigeria have a proverb: “The man who has bread to eat does not appreciate the severity of a famine.” And opponents of debt cancellation and increased ODA will tell you Africa does not have the capacity to absorb substantial new resources. They will tell you the problems of Africa are not just about money. I agree, it is not only about money. But I am here to tell you that there are today more African governments than ever that have put in place all the other requirements for more robust growth, and faster poverty reduction, such that with each new injection of financial resources progress can be seen on the ground.
Let me tell you how prepared we are in Tanzania to immediately absorb and put to effective and efficient use the additional budgetary resources we can get with a 100 per cent debt cancellation, and increased ODA. I will focus on our efforts to meet the Millennium Development Goals (MDGs).

The Growth and Poverty Reduction Strategy
It is true we should not count our chicks before they are hatched. But in anticipation of increasing government revenues, further debt relief and increased ODA, we have conducted a thorough review of our Poverty Reduction Strategy, 2001-2004, and have earlier this month taken a Cabinet decision to start a more robust 5-year National Strategy for Growth and Poverty Reduction, 2005-2010; a strategy that will not only act as our road map towards meeting the MDGs, but will ensure the economy grows, thereby building a national capacity for sustainability and reduced dependency. The new strategy, again developed through a very wide consultative and participatory process, has three main components:

• Growth and reduction of income poverty;
• Quality of life and social well-being;
and
• Governance and accountability.

This strategy is now ready for take-off. It will ensure that Tanzania gets back on track to meet all the Millennium Development Goals. It has the full political support within the country and the donor community. The capacity to implement it has been ascertained. The major problem is a rather large financing gap which can be substantially narrowed if we did not have each year to set aside in our budget £ 68 million (USD 130 mi.) at current rates to repay debt. The Growth and Poverty Reduction Strategy budget for both the Central and Local Government is £ 2 billion for the first year, 2005/06. But ascertained available resources from our own internal resources, and multilateral and bilateral development partners, are only £ 1 billion, half the actual requirements.
Let me now tell you what we could do with more resources in a few key sectors.

Education
I have already told you of the tremendous successes in ensuring a free, quality, basic education. These successes have to be sustained, and further improvements have to be made in the syllabus, the learning environment, and the welfare of teachers and pupils. We will apply new resources to these areas, and here, I assure you, there is no shortage of absorptive capacity.
But successes in primary education have created a new problem of low transition rates to secondary schools. So we now have to invest heavily in the expansion of secondary schools, training of teachers, improving access by lowering secondary school fees, and improving quality.
Last year, 512,000 pupils completed their primary education. In view of the recent large increases in enrolment, we expect that in 2008 there will be 1.4 million pupils—three times last year’s numbers—who will have completed their primary education. The pressure for places in secondary schools will be enormous. The situation is bad as it is, and it will get worse if we do not make heavy investment in expanding secondary education now. Consider the following facts:

• In 2003, only 6 per cent of children between 14 - 17 years were enrolled in ordinary level secondary schools.
• In 2003, out of all children who completed primary school, only 22 per cent found places in secondary schools.
• In 2003, only 39 per cent of students who sat for the ordinary level secondary school final examinations passed in division I to III.

We have the challenge, therefore, to improve access and quality. We certainly can’t make bricks from straw. And immediate debt cancellation will help us. And here, once again, there is no shortage of absorptive capacity. To that end, we have promulgated the Secondary Education Development Plan, 2004-2009, with the following five broad goals:

1. To ensure that by 2010, half of all 14 – 17 year-olds would be enrolled in ordinary level secondary schools, and that half of those who pass their exams get a place in Advanced Level Secondary Schools.
2. To increase enrolment numbers fourfold, from 433,000 in 2004 to 2 million in 2010.
3. To build 1,500 new secondary schools in the next five years, as well as teacher houses, and hostels for girls to ensure they complete a full secondary education.
4. To improve access for the poor by reducing school fees. Already in the current budget we have slashed by half school fees for day secondary schools from about £ 18 a year to only £ 9 a year beginning last month. For orphans and children from destitute families, both the central government and local governments have set aside funds to cover their fees to ensure the poor are not excluded. This year, we will double the number of such students being supported by the government from 6,000 to 12,000.
5. To improve pass rates (in Division I – III) for those completing ordinary level secondary school from 39 per cent in 2003 to 70 per cent by 2010.

Fellow Campaigners:
The total estimated cost for the Secondary Education Development Plan is £ 661 million or £ 132.2 million each year for the five years. We have a three year World Bank credit of USD £ 78 million, or £ 26 million a year. This leaves a funding gap of £ 106 million a year, to be filled partly by domestic government revenues, community participation, other multilateral and bilateral donors, as well as—hopefully—debt cancellation and increased ODA. Again here, there is no question of absorptive capacity. Everything is in place to absorb a lot more resources. With your unwavering support we can get those new resources through complete debt cancellation.

Health:

Fellow Campaigners:
Of the 8 Millennium Development Goals, 3 are entirely about health.

• Goal 4 is to reduce by two-thirds, between 1990 and 2015, the under-five mortality rate.
• Goal 5 is to reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio.
• Goal 6 is to halt, by 2015 and begin to reverse, the spread of HIV/AIDS, malaria and other major diseases.

Now, I will tell you of the preparations we have made in Tanzania, using our own budgetary resources and the support of multilateral and bilateral development partners, to make progress on all these fronts, as well as to prepare the capacity to immediately use new resources if we get full debt cancellation and increased ODA.

Malaria

Fellow Campaigners:
Malaria contributes the largest share of the burden of disease in Tanzania. Yet, the main strategies for controlling malaria are simple and straightforward:

• Ensure access to appropriate early diagnosis and treatment;
• Intermittent presumptive treatment of pregnant women;
and
• Use of insecticides treated nets (ITNs).

We now have the capacity to manufacture required mosquito nets within the country. The distribution and marketing system, including social marketing, is in place. Community awareness on the effective use of ITNs is high and increasing. And Tanzania has managed to secure some resources from the Global Fund Against AIDS, Malaria and Tuberculosis (GFATM) to finance a National Voucher Scheme which provides subsidized ITNs to pregnant women and under-five children, the group most susceptible to malaria.
The Fund will also be used to procure anti-malarial combination therapy to deal effectively with drug resistant malaria. The major draw back is the high cost of Artemisinin-Class Combination Therapy (ACT). The cost of treating malaria in Tanzania with ACT is £ 13 million per year, against the entire government budget for medicines of £ 17 million. Total debt cancellation can immediately help us scale up the use of ACT to effectively treat drug resistant malaria, and save thousands of lives.

HIV/AIDS

Fellow Campaigners:
Tanzania is one of the countries most affected by HIV/AIDS in the world. We have an estimated 2.2 million people living with HIV/AIDS, and about 500,000 cases of full-blown AIDS which require antiretroviral treatment (ARV). If they are not treated they will all die soon, leaving behind thousands of orphans. Tanzania has secured funding from GFATM, Canada, Norway, Sweden and USA for a care and treatment plan for people living with HIV/AIDS. In 2004/05 we expect to put 44,000 of them under ARV treatment. But this is only 8.8 per cent of those who need treatment. With more resources, we have the capacity to put more patients under care and treatment, thereby saving lives and reducing the incidence of orphans.
There is need also for reliable and continuous supply of antiretroviral drugs, and HIV test kits enough to test an estimated 25 million people. We need enough laboratory reagents to test 2 million people. Yes, there is much we can do to save lives if given more resources, including through debt cancellation.

Tuberculosis

Fellow Campaigners:
Tanzania recorded great achievements during the 1980s and early 1990s in controlling tuberculosis. This was due to a well-planned and managed National Tuberculosis and Leprosy Control Programme. However, due to HIV and AIDS, tuberculosis incidence and prevalence is increasing. It is estimated that almost 50% of tuberculosis patients have HIV co-infection. Thus TB and AIDS are very closely linked.
We have a very well established and efficient National Tuberculosis and Leprosy Control Programme. Tanzania has been awarded funds by GFATM for the introduction and scaling up of TB/HIV activities in 45 districts. The programme is curing 81% of all TB patients put on treatment, which compares favourably with WHO targets of 85%. However, we detect only 50% of the estimated TB cases in the country. We need resources to roll out those TB/HIV activities to the rest of the districts.
All TB services in the country are provided free of charge. But there has been an increase of Multiple Drug Resistance (MDR) tuberculosis to first-line drugs. The country needs to start specialized treatment of these cases by training health workers and introducing second-line drugs; but these drugs are very expensive.

Reduction of Child Mortality

Fellow Campaigners:
Immunization of under-five children is one of the most cost-effective strategies to reduce child mortality.
Tanzania has introduced DPT hepatitis B Vaccine since January 2002, with support from the Global Alliance Vaccine and Immunization (GAVI), which now saves the lives of 25,000-30,000 under five children annually. Immunization coverage is now 89%. With more resources we can scale up this coverage.
Tanzania also adopted the WHO strategy of Integrated Management of Childhood Illness (IMCI) in 1996 in its efforts to reduce under-five mortality. The strategy has been scaled up in more than half of the country. In 2 pilot districts, IMCI strategy was accompanied by a modest budget top up. Evaluation of these two districts has shown reduction of under-five mortality by over 40% within a period of 2-3 years only. If we were to cover the whole country, we could save thousands of more lives.
But, the GAVI support for DPT Hepatitis B Vaccine comes to an end next year. We would, therefore, like to get support to continue immunizing children across the country so that we can have a future generation free of hepatitis B.

Human Resources

Fellow Campaigners:
The crisis of human resources in health service delivery is well documented. This includes shortage of skilled personnel to deliver the essential health services, attrition, improper skills mix, low productivity and low motivation/morale. At the same time, the country faces increased demand to respond adequately to the changing epidemiology driven by HIV/AIDS. According to staffing norms, 33% of all positions remain vacant. An additional 22,000 health workers are needed. With debt relief we could train and employ more.
We also need more resources to provide adequate incentives to attract health workers.

Water

Fellow Campaigners:
Within MDG 7, there is the goal to halve, by 2015, the proportion of people without sustainable access to safe drinking water. Tanzania has prepared itself well to absorb new resources to meet this goal, well ahead of the 2015 MDG target date. We have a medium term water development plan that seeks to attain the following intermediate targets.

• To increase access to safe, clean, affordable and reliable water in rural areas (within a radius of 400 meters and 30 minutes of time taken to fetch water) from 53% in 2003 to 60% in 2007 and 65% in 2009, compatible with the MDG intermediate indicators.
• To reduce the number of rural districts with rates of access to safe water coverage below the national average from 50% in 2003 to 25% in 2009.
• To increase the proportion of urban populations with access to piped water or protected water as their main drinking water source from 73% in 2003 to 78% in 2007 and 90% by 2009.

We have set aside a substantial share of our own budget for the implementation of this plan, and we have received support from multilateral and bilateral development partners. But the funding gaps—for projects that are ready to take off—are still large, and immediate debt cancellation will help immediately.

I will give you one example. We have an on-going project, financed by our own budgetary resources, to draw drinking water from Lake Victoria to benefit more than one million people currently very poorly served in Shinyanga region. In the current financial year, we set aside, in our budget, £ 13.2 million for the project, out of a total requirement for the year of £ 19.8 million. As I speak, our people at the Treasury are looking for ways to make reallocations within the budget to raise an extra £ 6.6 million between now and June to fully fund the project this year. For we believe that it is a top priority that these one million people get potable water as soon as possible.

But the entire project, which if we get the resources, should end in 2006, requires a total budget of £ 84 million. If we did not have to service our debt, we could have, immediately, more resources to ensure the target date for giving a million people clean water is met by next year.
The project is ready, it is ongoing, and the contractors are on site. To meet the target date, all that is now needed is financial resources. There is no problem of absorptive capacity. The only problem is the political will in rich countries to wipe out our historical debt, and increase ODA to 0.7 per cent of GNP, as promised decades ago. Those who are not ready to give us a clean slate on our historical debt should listen well to another Yoruba proverb: “Before you ask a man for clothes, look at the clothes he is wearing.” If they look at all these demands for resources to save lives and improve the quality of life, they will realize it is unethical to continue demanding payment of our external debt.

Let me also use this occasion to thank the UK Government for its valuable bilateral support, for its clear timetable to increase ODA to the agreed target of 0.7 per cent of GNP, and for the leadership it is showing in promoting initiatives for debt cancellation. During his visit to Tanzania last month, Chancellor of the Exchequer Gordon Brown announced that the UK Government will finance 10 per cent of our multilateral debt service. This relief comes to about £ 38.8 million over the next ten years, and already this year will provide an extra £ 1.8 million in our budget. This is enough to build about 800 primary school classrooms in Tanzania. If more countries could follow Britain’s example, we could certainly make faster progress towards meeting MDGs.

Ladies and Gentlemen:
We ask for debt cancellation on our historical debt. This does not mean we are not borrowing. We still borrow but only from institutions that grant us concessionary terms, such as those of the International Development Agency of the World Bank. That is why Tanzania’s debt stock does not look much different them it was when we first received debt relief. The difference is that all new loans are now concessionary, and the economy is growing at an annual rate above 6% which can build our capacity to repay when the new loans fall due.

Conclusion

Fellow Campaigners:
I could go on and on to tell you what we have done, in a transparent and fully accountable manner, with the extra resources we got from debt relief. I could also go on and on to tell you what we are ready and poised to do immediately should we get full debt cancellation on our historical debt.
But I should now bring my speech to a conclusion. And I have one thing to leave with you. The signs are manifest that 2005 may be the year to get the G8 countries to endorse full debt cancellation for countries like Tanzania. Let us together make the final big push to sweep away all obstacles in our path. Victory is in sight, and the hope of attaining the MDGs is not, arguably, a mirage.
Let us all go and make sure that questions of increased aid, of debt cancellation and of fair trade, become burning political issues on the domestic scene of each rich industrialized country. Let us make sure the conscience of every politician is driven to this repair. Let us press their governments to stop their prevarication and take the hard decision that, with better governance and accountability on our side, would ensure this indeed is the year we begin to make poverty history. There is no better way to begin than to say: “WIPE OUT DEBT IN 2005”.
And invite more of you to Tanzania to see what we have achieved with previous partial debt relief, and how prised we are to absorb new resources to get back on track to meet the MDGs. Only when you have seen this will you be emboldened in the quest we all share to bring this message to hearts and minds of people and leaders in all rich industrialised countries.
Ladies and Gentlemen:
54 years ago this month, Winston Churchill, the great wartime leader of this great country, in a radio broadcast that would capture the will of President Roosevelt of the USA, said, “Give us the tools, and we will finish the job.”

And speaking for Tanzania, I can only say this: The battle plans for the war on poverty are drawn, and certified correct. There is no better way for me to end my speech than to say to the leaders of the rich industrialized countries:
"Give us the tools, and we will finish the job".

WIPE OUT DEBT IN 2005!!
ON TO THE JUBILEE!!

I thank you for your kind attention.