SBAS

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United Republic of Tanzania
STRENGTHENING THE POLICY AND BUDGET LINK THROUGH
STRATEGIC BUDGET ALLOCATION SYSTEM (SBAS) IN
TANZANIA
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THE FOLLOWING AREAS WILL BE COVERED

• Introduction
• Salient Features of SP, MTEF and PER Process
• Implementation of NSGRP through the Budget
• Development and Application of SBAS
• Achievements and Challenges
• Conclusion then
• Brief Demonstration of SBAS

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1. Introduction

• Various reform initiatives has been taken by the
  Government of Tanzania in improving resource
  management and service delivery to the public and
  society as a whole.
• Such reforms include Strategic Planning (SP),
  Medium Term Expenditure Framework (MTEF) and
  Public Expenditure Review (PER).
• Tanzania also continued to implement Poverty
  Reduction Strategy PRS) from 2000/2001 up to
  2002/03 and a widely covered National Strategy
  for Growth and Reduction of Poverty (NSGRP)
  commonly known as MKUKUTA from 2005/06.

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• Significant efforts are being made, through these
  reforms in addressing the issue of ensuring
  consistency in policies and budgetary provisions
  and strengthening the budget process.
• The biggest challenge that emerged during
  implementation of NSGRP, was how to coordinate
  and provide adequate funding between complex
  cross - sectoral policy initiatives and budget
  activities.
• To that end, a Strategic Budget Allocation System
  SBAS was introduced to facilitate the resource
  allocation process.

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2. Salient Features of SP, MTEF and PER
Process

• (i) Strategic Planning (SP)
• Strategic Planning is a process that charts an
  institutions broad direction forward for
  achieving their broad mandates in the medium
  term.
• SPs encompass Institutions mission and vision
  statements objectives, strategies, targets and
  performance indicators.
• SPs take in consideration National
  strategy/policy frameworks i.e. Tanzania
  Development Vision 2025 and NSGRP and sector
  policies and strategies.

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• (ii) MTEF
• MTEF is a prioritised three-year performance
  budget to implement the Strategic Plan
• Based on available resources, it establishes the
  cost of implementing activities that will achieve
  the targets and meet set objectives
• MTEF takes the objectives and targets developed
  in the SP and prepare activities and budgets.

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• (iii) PER Process
• PER process is intended to enhance efficiency in
  public expenditure management.
• The process involves evaluation of performance
  against approved budget frame and output targets.
  
• Inputs from PER in terms of proposed policy
  issues and priorities are incorporated into the
  sector plans and budgets through the Plan and
  Budget Guidelines (PBG), which inform into the
  preparation of the annual Budget and MTEF.

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3. Implementation of NSGRP through the
Budget

• Background to the NSGRP
• Adoption of the PRSP in 2000 provided a new
  momentum for fighting poverty and guidance on
  strategic resource allocation.
• Under the PRSP initiative, the Government
  committed itself to accord priority status in
  resource allocation to PRS priority sectors,
  which were agriculture, basic education, primary
  health, water, rural roads, judiciary and HIV
  AIDS.
• Thus, during PRS I, expenditure policy
  intentions were assessed on the basis of progress
  made in rising the funding/budgets of these
  sectors.
• The next PRS II (National Strategy for Growth and
  Reduction of Poverty NSGRP) was adopted and
  implemented starting 2005/06.
• NSGRP is informed by the aspirations of the
  Tanzania Vision 2025 and Millennium Development
  Goals (MDGs).

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• NSGRP is addressing the need to become more
  outcome-oriented by adopting three clusters of
  interventions
• i) Growth and income poverty reduction
• ii) Improvement of quality of life and social
  well being
• iii) Governance and accountability.
• The clusters are the highest level and beneath it
  are goals and cluster strategies, which cut
  across sectors.
• Relevant actors, including MDAs, Regions and LGAs
  are linked to cluster strategies.
• In order to ensure that what has been articulated
  in the NSGRP are implemented, deliberate actions
  are taken in integrating them in the
  Institutional Strategic Plans (SP) and Budgets.

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Differences between PRS 1 and NSGRP/MKUKUTA
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• Linkage between NSGRP and Budgets
• The explicit linkage between the NSGRP cluster
  strategies and the budget are currently
  undertaken in a process of budget formulation at
  two levels.
• Level 1 is Budget formulation at Plan and Budget
  Guidelines Stage. This involves the inputting
  and processing of budget requests using a
  Microsoft Access software tool called SBAS.
  Resource ceilings are ultimately allocated to
  Institutions up to the level of targets.
• Level 2 deals with inputting data in the
  Integrated Financial Management System (IFMS) for
  preparation of Annual Budget Estimates and MTEFs.
  This stage involves going further to allocate
  resources down to activity and input levels.

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4. Development and Application of SBAS

• In order to implement the NSGRP and meet its
  requirements, a Microsoft Access software tool
  called Strategic Budget Allocation System (SBAS)
  was developed to manage the complexity of the
  budget data on cross-cutting strategies.
• SBAS is a software tool to facilitate resource
  allocation including preparation of budget
  ceilings by the Plan and Budget Guidelines
  Committee (PBGC).
• SBAS has two versions namely SBAS Micro and SBAS
  Macro.
• The Micro version is used by MDAs to fill out
  their budget requests electronically and
• The Macro version is used by the PBGC to analyse
  the requests and allocate resources according to
  the size of the resource envelope.

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• Inputting and Processing Budget Requests
• Using SBAS
• (i) SBAS Micro as an Interface for
• Budget Planning
• SBAS Micro was designed to be used by MDAs and
  Regions for inputting budget requests to the
  PBGC.
• The system was first designed to capture requests
  at the target level and inputs both NSGRP and
  non-NSGRP targets.
• MDAs and regions can see which NSGRP cluster
  strategies are relevant to them in the system.

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• Non-NSGRP targets come from existing Strategic
  Plans and MTEFs and are internal to the MDA and
  Region.
• MDAs can analyse and compare NSGRP and Non -
  NSGRP budget requests at this formulation stage.
• The updated software has facilities for costing
  of targets and activities financed through
  recurrent other charges (OC), local development
  and foreign development funds.
• SBAS Micro has also a facility for enabling the
  user Institution to prioritize the targets and
  link them to the NSGRP cluster strategies.

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• In year 2005/06, SBAS Micro assisted in
  developing an interface for budget planning
  between MDAs and the Ministry of Finance (MoF) by
  enabling MDAs to fill in their MTEF budget
  requests and submit the same to MoF.
• Requests inputted in the SBAS Micro were imported
  to the MoF at target level with textual
  explanations on
• Major policy commitments and the rationale for
  such requests
• Notable shifts or trends in policy with expected
  expenditure implications
• Summary of critical issues identified in PER
  studies or in any other studies with budget
  implications.

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• (ii) SBAS Macro as an Allocation Tool
• SBAS Macro was designed to aggregate the MDA
  requests and to strategically facilitate the
  setting of ceilings according to available
  resources.
• Requests at target level are submitted to the
  PBGC for consolidation, analysis and resource
  allocation using Macro version.
• The system provides different scenarios for
  distributing resources to both NSGRP and
  non-NSGRP targets.
• In year 2005/06 PBG resource ceilings were issued
  at vote and target levels, with a clear picture
  of how much was set for use in financing NSGRP
  cluster strategies.

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• (iii) Improvements made to the SBAS
• During budget allocation for year 2005/06
  2007/08, MDAs through SBAS, prepared their MTEF
  requests by replacing their existing SMART
  targets with pre-set NSGRP cluster strategies
• The NSGRP cluster strategies were in some cases
  too broad and general to effectively serve as
  SMART MTEF targets.
• Thus, in year 2006/07 2008/09, It was decided
  that cluster strategies should not be used to
  replace SMART MTEF targets.
• The targets were then derived by Institutions
  during their strategic planning processes and
  associated with a cluster strategy in the updated
  SBAS2 Micro.

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• MDAs and Regional Budget Committees were
  responsible for assessing the relevance of the
  association between MTEF targets and NSGRP
  cluster strategies prior to submission of their
  requests.
• Budget requests within SBAS2 Micro were inputted
  at the level of an activity rather than MTEF
  target.
• Regions also used SBAS for inputting budget
  requests to the PBGC.
• On the other hand, LGAs linked their budgets with
  NSGRP using a Planning and Reporting Database
  (PlanRep).
• Final output from PlanRep is ultimately
  downloaded to IFMS for annual expenditure
  management purposes.

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• Interfacing Budget Information from
• SBAS to IFMS
• As explained above, PBG is Level 1 and the Annual
  and MTEF Budget is Level 2 of budget formulation
  process.
• Final output from the SBAS Macro in terms of vote
  and target ceilings are interfaced into the
  Enhanced MTEF Model in the IFMS.
• The Enhanced MTEF Model is a computerised system
  enabling MDAs and Regions to plan, upload and
  define targets and activities.

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• Target-level ceilings are disaggregated to
  activities and inputs for the Annual Budget and
  detailed MTEF preparation.
• The model is, therefore, a tool designed to input
  performance based MTEF budgets into the IFMS.
• IFMS has many facilities including those for
  production of performance reports used for budget
  monitoring and control.

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5. Achievements and Challenges

• Achievements
• An outcome-oriented budget The outcome-oriented
  NSGRP is molding the budget to finance outcomes
  rather than sectors
• Consistency between policy and budget SMART
  MTEF targets are associated directly with NSGRP
  Cluster strategies. These targets are then mapped
  down to the Government Finance Statistics (GFS)
  input levels

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Linking Targets to Cluster Strategies
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• Standardized inputs to PBG MDAs and regions use
  a standardized template to fill out their MTEFs
  which are electronically imported into the Macro
  version of the Strategic Budget Allocation System
  for easy analysis
• Stakeholders scrutiny of the budget Public
  institutions, Development Partners and others can
  easily see the consistency between strategic
  allocations at target level in the PBG and final
  allocations made to activities directly linked
  with NSGRP in the annual budget
• Accuracy and consistent reports of estimates
  SBAS Macro version can produce output reports
  which analyze various categories of the budget
  i.e. targets directly linked with NSGRP, as well
  as others broken down to activities and
  distribution by institutions etc.
• Harmonization of recent reform initiatives A
  planning and budgeting manual has been developed
  and was used as a working document by MDAs,
  Regions and LGAs in the 2006/07 planning and
  budgeting process.

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Timing of the Planning and Budgeting Processes
S/NO. Process Timing Responsible
1 Review of macro-economic and performance of Sectors as a basis for Establishing National Budget priorities and policies and resource projection (PER Inputs) October - December PBGC
2. Revising and updating the SPs based on situational analysis and most recent performance including (NSGRP/ MUKUKUTA Inputs) September - October MDAs, Regions and LGAs
3. Preparation of budget requests based on revised SPs using SBAS-Micro version October - November MDAs, Regions and LGAs
4. Outlook and projection for the MTEF the financing aspect (SBAS Macro Inputs) October - December PBGC
5. Issuance of Plan and Budget Guidelines End of December Central Ministries MPEE and MOF
6. Preparation of Annual Budgets and MTEFs January Mid march MDAs, Regions and LGAs
7. Finalization of the National Budget Estimates and approval by Cabinet, Mid March - April MOF, Cabinet
8. Presentation of the Budget to the Parliament June Early August Respective Ministers
9. Budget Implementation July June Next Year MDAs, Regions and LGAs
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• Challenges
• For cross cutting NSGRP cluster strategies,
  whereby multiple MDAs affect joint outcomes,
  allocation to targets and activities with such
  joint outcomes requires close collaboration and
  streamlining
• The software that is intended for tracking NSGRP
  related and other expenditures has to be fully
  developed and operationalised.
• Establish a linkage between the PlanRep tool used
  by LGAs and SBAS used by MDAs and Regions in
  order to integrate the National Budget.

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6. CONCLUSION

• NSGRP is the national organizing framework which
  accords high priority to growth and reduction of
  poverty in Tanzanias development agenda.
• The strategic planning process, which involves
  formulation of interventions/strategies and
  targets is informed by NSGRP.
• MTEF on the other hand, operationalises the SP by
  identifying and costing the activities under each
  target.

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• Since the budget has to encompass all the fiscal
  operations of Government and has to address all
  major policy decisions in the background of hard
  budget constraint and competing demands, senior
  management in every MDA, Region and LGA have been
  involved in the whole planning and budgeting
  process.
• The process begins at preparation of SPs and goes
  further to the reviewing performance and
  indicating resource requirements using SBAS
  Micro.
• During this stage, sector policies and
  institutional priorities are defined and
• Resources needed to implement them are
  established.

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• SBAS Macro has been used as tool for facilitating
  resource allocation at target level and linking
  targets to NSGRP cluster strategies.
• Significant efforts have been made to
  explicitly link policy and budget in the MDAs,
  Regions and LGAs.
• However, in order to attain the desired NSGRP
  goals, strengthening inter-sectoral linkages and
  collaboration between institutions is still
  highly required.

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THE END

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