VZCZCXYZ0002
PP RUEHWEB

DE RUEHDR #0771/01 3160355
ZNR UUUUU ZZH
P 120355Z NOV 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC PRIORITY 9007
INFO RUEHNR/AMEMBASSY NAIROBI 1423

UNCLAS DAR ES SALAAM 000771 
 
SIPDIS 
 
DEPT AF/E FOR JTREADWELL 
DEPT H FOR LYNNEA SHANE 
 
E.O. 12958: N/A 
TAGS: OREP TZ
SUBJECT: SCENESETTER FOR CODEL PAYNE VISIT TO DAR ES SALAAM 
 
¶1. Your visit to Dar es Salaam comes at a time when our bilateral 
relationship with Tanzania has never been stronger, in part because 
of our expansive assistance efforts in multiple sectors.  Tanzania's 
political stability, sound macroeconomic management and enormous 
development needs have made it a favored recipient of donor funds, 
although the recent slow pace of reform and of efforts to fight 
corruption are increasingly of concern to donors.  Roughly one third 
of the government's budget is financed by direct budget support. 
The U.S. has its largest Millennium Challenge compact with Tanzania, 
significant PEPFAR and PMI programs, and a range of other foreign 
assistance activities. 
 
-------------------- 
Political Background 
-------------------- 
 
¶2. Tanzania's long record of peace and stability make it an example 
for the region.  President Kikwete's landslide election in 2005 
marked the country's third peaceful presidential transition; he is 
expected to stand again and is heavily favored for the elections due 
in October 2010.  Multi-party democracy, reintroduced in the early 
1990s, has not shaken the dominance of the Chama Cha Mapinduzi 
(CCM), the ruling party since independence.  However, the long 
dormant parliament is increasingly exercising its oversight function 
on an executive branch accustomed to governing unchecked.  While 
elections on the mainland have generally been free and fair, serious 
irregularities and violence have marred elections in the 
semi-autonomous islands of Zanzibar, where support is evenly divided 
between CCM and the main opposition party.  Voter registration for 
2010 has already been disrupted by boycotts and clashes between 
opposition supporters and security forces. 
 
-------------------- 
Regional Leadership 
-------------------- 
 
¶3. Under the leadership of President Kikwete, a former Foreign 
Minister, Tanzania has played an increasingly prominent role in 
regional issues.  Kikwete finished a one-year term as Chairman of 
the African Union (AU) in January 2009.  In that role, he spoke out 
against military coups in Mauritania and Guinea and the 
unconstitutional change in power in Madagascar.  Within the Southern 
Africa Development Community (SADC), Tanzania has played a 
relatively quiet but positive role with respect to Zimbabwe. 
 
---------------------- 
East African Community 
---------------------- 
 
¶4. The 2005 establishment of a customs union in the East African 
Community (EAC) has increased Tanzania's regional trade, especially 
with Kenya.  However, Tanzania's concerns about economic 
competition, particularly from Kenya, and the designs of its 
neighbors on Tanzania's abundant land, have led it to resist more 
rapid and more comprehensive integration within the East African 
Community.  Tanzania has balked at provisions that would permit 
other EAC citizens to buy land, establish residence, or enter 
without a passport.  The EAC leaders are scheduled to conclude an 
agreement on a common market protocol at a summit in Arusha in late 
November. 
 
--------- 
Refugees 
--------- 
 
¶5. Tanzania has long hosted refugees from the region's conflict 
areas.  The number has declined from more than a million in the late 
1990s to about 100,000 currently (the U.S. has provided significant 
support for UN operations in the refugee camps and is one of the 
main resettlement destinations), mainly from Burundi and the 
Democratic Republic of Congo.  Tanzania has offered naturalization 
to more than 100,000 Burundi who came as refugees in 1972, an 
unprecedented act.  Tanzania is also host to the International 
Criminal Tribunal for Rwanda, which is set to end in 2010. 
 
------------------- 
Economic Background 
------------------- 
 
¶6. Tanzania began an incomplete transition from socialism towards a 
free-market system with macroeconomic reforms in the mid-1980s, 
which have provided a basis for sustained moderately high economic 
growth.  However, even with growth averaging 7 percent in this 
decade, the percentage of people living in poverty has declined only 
slightly, to one-third of the population, while continued rapid 
population growth has increased the absolute numbers of the poor by 
more than a million since 2001 and threatens to overwhelm an already 
fragile social service system.  Roughly 80 percent of the population 
is engaged in mostly small-scale agriculture, while per capita GDP 
is about USD 415.  Although the global financial crisis has 
significantly affected the tourism industry, one of Tanzania's top 
foreign-exchange earners, economic growth of 5 percent is projected 
for 2009.  High food prices since a spike in 2008 have contributed 
to a rise in inflation to over ten percent, a substantial increase 
from more moderate inflation earlier in the decade. 
 
------------------------------- 
Business and Investment Climate 
------------------------------- 
 
 
¶7. Two years after the World Bank Doing Business Index called 
Tanzania a "top reformer," the pace of reform has stalled.  In 
addition to bureaucratic obstacles, investors face poor 
infrastructure, a population with a limited skills base, and 
widespread corruption.  Strained capacity at the port of Dar es 
Salaam delays cargo twice as long as at the competing port of 
Mombasa.  Power generation, heavily reliant on hydropower, has run 
far behind rising demand, leading to frequent blackouts.  The 
Kikwete government's efforts to fight corruption have been fitful. 
Late 2008 saw the first major court cases on grand corruption, with 
the arrests of individuals whose companies allegedly siphoned funds 
from the Bank of Tanzania, along with several Bank employees, and 
the separate arrests of two long-serving former ministers on 
corruption-related changes.  Since then, the cases have progressed 
slowly and several other well-publicized scandals have yet to result 
in prosecutions. 
 
---------------------------------------- 
U.S. - Tanzanian Bilateral Relationship 
---------------------------------------- 
 
¶8. Since the election of President Kikwete in December 2005, 
U.S.-Tanzanian bilateral relations have significantly deepened. 
President Kikwete's pro-American stance, coupled with an increasing 
level of U.S. assistance, has been the catalyst for this change, 
enhancing cooperation in sectors from health and education to 
counterterrorism and military affairs.  President Kikwete has 
visited the U.S. several times since taking office, including an 
official visit in August 2008 and a meeting with President Obama in 
May 2009 (the first African Head of State received in the White 
House by President Obama).  The public signing of the MCC compact 
during President Bush's February 2008 visit to Tanzania, and the 
favorable public reaction to the visit, had earlier deepened the 
relationship. 
 
--------------- 
USG Assistance 
--------------- 
 
¶9. The U.S. is one of the top donors in Tanzania, with total FY08 
bilateral assistance of nearly USD 400 million.  Taking into account 
the U.S. share of contributions from multilateral donors such as the 
World Bank and African Development Bank, U.S. assistance totaled USD 
662 million in 2008.  This does not include major private U.S. 
benefactors such as the Gates Foundation.  Other major bilateral 
donors include the U.K., Sweden, Netherlands, Denmark, Norway, and 
the European Commission; for several of the other donors, Tanzania 
is among the top recipients of assistance. 
 
----------------- 
Health Challenges 
----------------- 
 
¶10. HIV/AIDS: Tanzania faces a mature generalized HIV epidemic, with 
a prevalence rate of approximately 5.8 percent and 1.4 million 
people living with HIV/AIDS.  An estimated 440,000 individuals are 
clinically eligible for antiretroviral treatment; however, available 
services can support less than half of those in need.  In FY 2008, 
PEPFAR provided Tanzania with over USD 313 million to support 
treatment, care, and prevention programs.  In FY 2009, the PEPFAR 
planning budget is USD 308 million, and will have access to an 
additional USD50 million under an approved Partnership Framework. 
The PEPFAR program has exceeded its original PEPFAR targets of 
providing anti-retroviral treatment for 150,000 individuals and care 
for 750,000 individuals, including orphans and vulnerable children. 
Although the U.S. has fostered positive relationships with the 
Tanzanian government in the health sector, significant challenges 
remain, including: the need for stronger leadership in line 
ministries; poor health infrastructure; a shortage of health care 
workers; a weak government procurement system; and allegations of 
corruption in the public and private sectors.  We recently entered 
into very productive negotiations with the GOT on a PEPFAR 
Partnership Framework Agreement, which would deepen our relationship 
over the coming five years. We are also working to increase our 
coordination with - and the effectiveness of - Global Fund grants to 
Tanzania for HIV/AIDS, HIV/TB and malaria. 
 
¶11. Malaria: Malaria is the number one killer of children in 
Tanzania and continues to be a major cause of maternal mortality. 
As a focus country under the President's Malaria Initiative (PMI), 
Tanzania received USD 36 million in FY 2008 to support the delivery 
of long-lasting, insecticide treated bed-nets (LLINs), the care and 
treatment of malaria, the malaria in pregnancy program, and indoor 
residual insecticide spraying (IRS).  The 2007-2008 Malaria 
Indicator Survey (MIS) shows malaria prevalence at less than 1 
percent on the islands, advancing Zanzibar to a pre-elimination 
phase in malaria control.  While support to the Zanzibar Malaria 
Control Program continues focusing on capacity building and systems 
strengthening for sustainability, PMI interventions in mainland 
Tanzania are rapidly scaling up through IRS and partnership with GOT 
on a multi-donor campaign to distribute LLINs to children under five 
and pregnant women with the goal of achieving universal bednet 
coverage in the near term. 
 
¶12.  Maternal and Child Health and Family Planning: USG assistance 
through USAID has played a role in reducing infant mortality by 32 
percent since 1999, but the rate is still unacceptably high (112 per 
1000 lives births; 2004 DHS).  Maternal mortality and fertility 
rates remain unacceptably high (578 per 100,000 and 5.7 per woman 
respectively; 2004 DHS) and have not changed appreciably for the 
past 15 years.  USAID will continue to use Child Survival and Health 
funds (USD 19 million in FY08) to reduce infant mortality by 25 
percent over the next five years by controlling malaria, providing 
six to eight million children with life-saving nutritional 
supplements, providing training and improving facilities for 
maternal health, and scaling up family planning services for better 
reproductive health.  USG programs work in partnership with the 
Government of Tanzania and NGOs to upgrade health care systems, 
norms and standards at the national and local levels. 
 
---------- 
Education 
---------- 
 
¶13. Like other countries undergoing a rapid expansion of their 
education system, Tanzania is faced with challenges of capacity and 
education quality.  Schools lack sufficient teaching and learning 
materials at all levels.  Classrooms are overcrowded despite double 
or triple shifts.  There is an acute shortage of teachers and the 
majority of teachers lack adequate qualifications, particularly in 
English, science and mathematics.  USAID and GOT have recently 
approved a new Education Objective with USD 11 million in FY09 funds 
focused on: improved quality in lower primary education (reading, 
math and science); teacher training; learning materials such as 
provision of textbooks; and improved educational quality through 
capacity building for educational management systems. 
 
-------------------------------- 
Millennium Challenge Corporation 
-------------------------------- 
 
¶14. In September 2008, the MCC Compact signed by Presidents Kikwete 
and Bush entered into full force and effect.  It is the largest 
Compact signed to date (USD 698.136 million) and is targeted to 
address significant weaknesses in Tanzania's long-neglected 
transport (roads and an airport), energy, and water infrastructure. 
A significant amount of required preparatory work (environmental 
studies, finalization of technical designs, and planning for 
resettlement and compensation) has been completed.  Construction 
supervision contracts for all main roads have been competed and 
awarded, and the first construction works contract should be awarded 
in the next few weeks.  Several other contracts for energy 
activities are currently being tendered.  On the strategic political 
front, our message continues to be that a Compact is an agreement of 
reciprocal responsibilities; to sustain it over five years, Tanzania 
must pay heed to its corruption index and be vigilant at all levels 
to ensure transparency and accountability in governance.  A planned 
hydropower plant in Kigoma was recently stalled due to the discovery 
of three newly identified endemic species (two fish and a snail) 
whose habitat would be destroyed or critically altered by the plant 
as designed.  However we are working closely with GOT to come up 
with a substitute activity that could be completed by MCC's 
September 2013 deadline and help bring power to Kigoma. 
 
-------------- 
Food Security 
-------------- 
 
¶15. While Tanzania performs relatively better than its neighbors in 
food self-sufficiency, malnutrition is rampant among children under 
five.  USAID's proposed food security program is designed to 
increase food production and availability (staples), and strengthen 
secondary value chains (horticulture and livestock), in order to 
improve household income diversification and nutrition, particularly 
for women and small holder farmers.  The plan is aligned with 
Tanzania's Agricultural Sector Development Plan (through 2015) and 
the 2009 "Agriculture First" initiative. The USD 37.7 million 
Financial Crisis Initiative (FCI) for Tanzania announced this month 
is targeted at enhancing food security in the short-term through 
school feeding and employment programs in areas most affected by the 
global economic slowdown.  FCI funds will also contribute to 
improved access to credit for agri-businesses and strengthening of 
economic forecasting and budget processes at the central level to 
cushion the effects of future economic shocks. 
 
--------------------- 
Democratic Governance 
--------------------- 
 
¶16. With USD 4.2 million in FY09 funding, USAID is supporting 
ongoing programs to build civil society capacity and accountability 
and transparency in local government spending through Public 
Expenditure Tracking at the community level.  Governance funds will 
also be used for election monitoring and civic education in the 
run-up to the October 2010 elections. 
 
------------------------------ 
Military-to-Military Relations 
------------------------------ 
 
¶17. Under the Kikwete administration, the GOT has begun 
participating in international peacekeeping operations.  Most 
significantly, Tanzania is in the process of deploying a battalion 
to Darfur as part of the UN peacekeeping mission.  The U.S. provided 
training to that battalion and plans to train others through the 
African Contingency Training and Assistance (ACOTA) program. 
Evidence of deepening military-to-military ties between the USG and 
GOT include the establishment of a Civil Affairs Team, which is 
carrying out humanitarian projects and helping build civil military 
operations capacity within the Tanzania Peoples Defense Forces 
(TPDF), increasingly routine U.S. naval ship visits (the one in 2007 
was the first since Tanzania's independence), and an expanding DOD 
PEPFAR program. 
 
ANDRE 
SENSITIVE BUT UNCLASSIFIED