Tanzania's National Strategy for Growth and Reduction of Poverty (MKUKUTA) has been the guiding framework for national development strategy (growth and poverty reduction). This strategy was adopted in 2005 following the signing of an MOU between the GOT and the Development Partners who agreed to support the initiative.MKUKUTA is a second generation of Poverty Reduction Strategies (PRSs) that has generated a strong agenda, aiming at sustaining broad-based growth along side improving quality of life, social well being and governance. Its implementation has introduced and strengthened several institutional structures through reform programs such as the Public Service Reform Program (PSRP), Local Government Reform Program (LGRP), Public Financial Management Reform Program (PFMRP), and Financial Sector Reform Program to mention some. These reforms were established to enhance performance results and accountability in the public sector service delivery.

Although the implementation of LGRP has realized some significant improvements ins trengthening the budget process making it a true catalyst for achieving the national economic growth and poverty reduction objectives, and the adoption and implementation of FBA has been a remarkable achievement in fiscal decentralization, there has been a concern regarding its reliability and effectiveness.As a response to this concern, MOFEA commissioned Mzumbe University to undertake the study on the assessment of the effectiveness of formula based budgetary allocation to LGAs as part of the review process of MKUKUTA implementation for the period 2005/2006 to 2008/09. The objective is to enhance the effectiveness and impact of implementation of the formula based resource allocation to the LGAs.