In 2012, the Government of Tanzania launched the implementation of the Productive Social Safety Net (PSSN) programme, which is a nation-wide conditional cash transfer programme targeting the extreme poor population. Although the PSSN was fully donor-funded from the beginning, it was agreed that around 2015 the government would increasingly take financial responsibility of the programme and fully fund it by 2020. However, as of yet, the government has only provided minimal fiscal contributions from own sources. Furthermore, given the government’s current budgetary constraints and its priority of infrastructure and productive sectors, the future financing of the PSSN remains uncertain.

The purpose of this sub-project is to explore how the government and the donors bargain over the financing of the PSSN. In order to analyse this bargaining process, the paper contributes to the revenue bargaining literature by developing a theoretical framework that includes the game theoretical perspective of signalling. Methodologically, we rely on interviews with key stakeholders and supporting official documents, as they are available.

Tentative findings suggest that, in response to the donors’ push for taking over financing of the PSSN, the government plays a double-sided bargaining strategy: While openly claiming commitment and support for the programme, the government chooses to prioritise other programmes, particularly in infrastructure and production. The government does so partly because it expects donors to remain committed to a programme that fits their agenda, and because – should donors choose to withdraw – the PSSN beneficiaries constitute an insignificant political constituency in that they are poorly organised and have little bargaining power. Moreover, although the donors originally pushed through the implementation of the programme by emphasising its productive components, the PSSN remains to be understood as a ‘free’ cash programme, which meets resistance among most influential stakeholders in Tanzania. Thus, we also contribute to the international aid literature by illustrating that long-term commitment by aid-receiving governments can only be maintained, if a programme remains of sufficient importance to the government.