Tanzania has lost $472 million in development support after a United States agency suspended an aid deal over  governance concerns including Zanzibar elections re-run and anti-cybercrime law.

The decision, which comes days before Parliament in Dodoma discusses budget proposals, will likely affect rural electrification, water and infrastructure projects which are funded by the Millennium Challenge Corporation (MCC).

The international community had come out strongly to dispute the decisions to nullify Zanzibar election results and later to proceed with the re-run without the main opposition party that had boycotted the re-elections.

The US agency stance has sent fears that other development partners would take similar positions in the coming days, creating financing uncertainties for the government which relies on donors for 30 per cent of its budget.

The MCC Board – a US bilateral foreign aid agency -  said in a press statement that it had differed its support over the nullification of the elections results in Zanzibar last October “an otherwise orderly and peaceful electoral process”, and the government’s decision hold the re-elections without the main opposition party.

“On March 20, 2016, Tanzania moved forward with the new election in Zanzibar that was neither inclusive nor representative despite the repeated concerns of the US government and the international community,” the statement read in part.

MCC also took issue with the execution of the Cybercrime Act, saying it can be used to limit the freedom of association after arrest several people, accredited by the National Electoral Commission, were arrested during the elections last year.

“The Government of Tanzania has also not taken measures to ensure freedom of expression and association are respected in the implementation of the Cybercrime Act.”

Austerity measures

President John Magufuli’s government has been insistent on weaning off aid money for its budget with the president announcing a raft of austerity measures shortly after he was sworn-in last November.

Speaking after attending an Easter service at a church in Dar es Salaam on Sunday, President Magufuli called on Tanzanians to embrace hard work noting that the country was blessed with abundant natural resources that would help them wean off donor dependence.

“If we decide to work hard in whatever area we are in, the nation will prosper and get away with donor dependence which comes with a lot of conditions. We are blessed with abundant natural resources,” he said.

When efforts to mediate the Zanzibar crisis failed last December, the international community kept a low profile after Tanzania’s ruling party claimed they were interfering in the domestic affairs of a sovereign country.

Tanzania politician Zitto Kabwe, Kigoma Urban MP, warned the government over the likelihood of the European Union to also take a similar position in coming days over the Zanzibar impasse.

“I don’t like aid and foreign countries interfering in our domestic affairs but Tanzania isn’t an island and we live within the international community. There are things that we need to do in accordance with the principles of the international community,” Mr Kabwe said.