December 6, 2006

Zambia

Ownership

1.  Partners have operational national development strategies

a.  Coherent long-term vision with medium-term strategy derived from vision

  1. The Government is engaged in the preparation of a long-term vision called Vision 2030. Following a participatory process, a draft version of the Vision 2030 was prepared in conjunction with the medium-term strategy and is expected to be finalized by end-2006.
  2. In June 2006, the Government had prepared a draft version of its medium-term strategy, the Fifth National Development Plan (FNDP) for 2006-10. The FNDP follows both the PRSP, which covered the 2002-04 period, and the Transitional National Development Plan (TNDP), which covered 2002-05.[1] The Implementation Progress Report of the 2002-04 PRSP included a ‘Supplement of Policies and Objectives for 2005,’ effectively extending the PRSP through 2005, to coincide with the final year of the TNDP.
  3. The Government has several sector strategies that have guided implementation of the PRSP/TNDP and have fed into the FNDP, including a 2003-07 Strategic Plan for the education sector, a National Health Strategic Plan for 2005-09, a National Water Policy, a Water and Sanitation and Hygiene Education Strategy, an Environmental and Sanitation Strategy, a Rural Development Sector Strategy, a Public Sector Reform Program, a Financial Sector Development Plan for 2004-09, a Private Sector Development Initiative, a National Agricultural Policy for 2004-15, an Energy Sector Implementation Plan for 2005-10, a National Strategic Framework for HIV/AIDS Control and a transport sector program. The Government is reworking the National Water Policy and has advanced drafts of the Water Resources Action Plan and of the National Rural Water Supply and Sanitation Program, both of which have been used as inputs to the preparation of the FNDP. A cross-sectoral Social Protection Strategy is forthcoming.
  4. At the local level, District and Provincial Development Plans have been developed following consultative processes and have informed the FNDP. The implementation of these plans depends on full implementation of a decentralization policy, which was approved in 2004 and is complemented by a draft Decentralization Implementation Plan that is pending approval by the Cabinet.

b.  Country specific development targets with holistic, balanced, and well sequenced strategy

  1. Building on lessons from the previous strategy period, the FNDP recognizes macroeconomic stability as necessary for achieving sustainable high rates of growth and substantial poverty reduction. It focuses specifically on greater pro-poor growth through higher growth in labor intensive sectors—notably, agriculture, agro-processing and other manufacturing, and tourism. The FNDP, continuing the thrust of the previous PRSP/TNDP, also emphasizes improved service quality and delivery to address HIV/AIDS and access to education and health care.
  2. Cross-cutting issues such as HIV/AIDS, governance, the environment and gender are addressed in the FNDP, as they were in the PRSP/TNDP. HIV/AIDS received an important emphasis in the PRSP, and PRSP Implementation Progress reports have identified further organizational and operational challenges in the efforts coordinated by the National HIV/AIDS Council. Governance issues were also addressed in the PRSP/TNDP, and action has been taken through the work of the Constitutional Review Commission. Environmental issues have been given more prominence in the FNDP as compared with the PRSP, following the establishment of the National Policy on the Environment, although the work on indicators to measure progress and analysis of proposed policy actions needs strengthening. A Natural Resources Consultative Forum was established, providing an arena for dialogue with stakeholders. Gender-related concerns were also addressed in the PRSP/TNSP, and steps have been taken to institutionalize standards for their protection. Throughout the development planning process, strong intra-sectoral linkages were established at all levels of policy implementation.
  3. FNDP indicators, particularly those for the social sectors, are in line with the MDGs. Discussions on progress toward the MDGs in the context of Vision 2030 preparation and MDG progress reports have informed FNDP preparation. The Government integrated new financial projections into the FNDP, mapping out how it intends to use the resources from debt relief agreements reached in 2005 towards meeting the MDGs. In April 2005, Zambia became the 17th country to reach the HIPC Completion Point. Implementation of the Multilateral Debt Relief Initiative would effectively cancel the bulk of its remaining public debt, significantly improving the debt sustainability outlook and freeing resources for allocation toward development needs. The prospect of these additional resources allowed a more positive assessment in the 2005 MDG progress report prepared with the UN Country Team and other partners. In the 2005 report, five targets were judged likely to be achieved, eradicating extreme hunger and poverty, universal primary education (UPE), gender equality and halting the spread of HIV/AIDS, whereas in the 2003 MDG progress report, only one MDG target, gender equality, was judged likely to be achieved.

c.  Capacity and resources for implementation

  1. Although stronger links are needed in certain sectors between development policy action plans and respective budget allocations, notable progress has been made since 2004 to strengthen the links between the strategy and budget allocations and to strengthen the budget process. Modifications to the financial management system and the shift to activity-based budgeting in 2004 have allowed the Government to improve the tracking of poverty-related expenditures. The budgeted resources for poverty reduction in 2006 mark an increase with respect to the previous year, with increases in expenditures for the health and education sectors. Improvements in the budget process include the launch of the MTEF, progress in the timeliness of budget execution and increased transparency in budget reporting. The 2006 budget initiates the 2006-08 MTEF, a significant milestone in the Government’s efforts to improve the management of public resources. The 2006 budget and the 2006-08 MTEF are consistent with the priorities of the different sector strategies and the FNDP, as well as with local government plans and budget allocations. To strengthen planning and budget preparations further, the Ministry of Finance and National Planning (MFNP) is preparing a draft of the next MTEF covering 2007–09 for submission to the Cabinet. With the 2006 budget, the MFNP has introduced the practice of issuing summary tables as part of the budget submission to the National Assembly that use the activity-based budgeting classification and identify poverty-reducing programs. Budget execution reports using the activity-based budgeting classification are published quarterly starting in 2006. However, according to these reports, a considerable gap still exists between expenditure budgeted and expenditure released to line ministries.
  2. Despite progress on budget reforms and processes, weaknesses in capacity within MFNP may hinder sustained progress in implementation. Successful implementation is also contingent on substantial strengthening of planning and budgeting capacity as well as financial management systems within line ministries.

d.  Participation of national stakeholders in strategy formulation and implementation

  1. The MFNP coordinates the planning, implementation, and M&E of the national development strategy through its Planning and Economic Management Department. Inter-ministerial coordination is developing. A Cabinet Committee on Development reports monthly and quarterly to the Cabinet on implementation of the national development strategy.
  2. Building on PRSP formulation and implementation, government-stakeholder dialogue is being institutionalized and is shaping national policy-making. Initially, eight working groups composed of government representatives and other stakeholders provided input to sector strategies that fed into the original PRSP. Sectoral Advisory Groups (SAGs), established for the preparation of the PRSP, have become an important voice in strategy development and monitoring. SAGs also provide a mechanism to review budget allocations and their alignment with the FNDP. Twenty-one SAGs, chaired by the relevant sector ministries and including stakeholder representatives, drafted the FNDP. The periodicity of different SAGs’ meetings has varied, with, at times, significant time lapses between meetings for some sectors. All SAGs are expected to attend joint, biannual conferences to discuss progress in strategy implementation at the national level. Dialogue between the SAGs and the MFNP and line ministries otherwise occurs on an ad hoc basis. The MFNP has plans to use the SAGs as a platform for sector policy dialogue, planning, budgeting, and monitoring and evaluation, but further clarification of their mandate and requirements for the frequency of meetings is needed.
  3. While many CSOs participate in SAGs, the impact of civil society in monitoring has varied. The Government has aimed to address capacity constraints by proposing a training program among SAG members; a training needs assessment was conducted in 2004 and was concluded in 2005. Separately, Civil Society for Poverty Reduction (CSPR), an umbrella NGO established in 2000, contributed to the PRSP through an autonomous consultative process. The CSPR conducted an independent evaluation of PRSP implementation and provided independent inputs into the FNDP. The CSPR has been an active member of SAGs, and its views have been taken into account in preparing the FNDP.
  4. During the formulation process of the FNDP, consultations on local needs took place in each of the 72 districts. Following these consultations and with assistance from the MFNP, District Development Coordinating Committees prepared District Development Plans, although ambitious timeframes and deadlines at times limited stakeholder input. The district plans were consolidated at the provincial level before submission to the national level as inputs to the FNDP.
  5. Private sector representatives participate in SAGs, and individual businessmen participated in the provincial consultations. At the national level, private sector groups including the National Farmers Union and the Zambia Chambers of Commerce and Industry participated in the formulation of the FNDP. In addition, private sector representatives from District chambers of commerce participated in the formulation of District Development Plans.
  6. The National Assembly approved the 2006 budget, which was designed to launch the programs of the draft FNDP. The current timetable foresees formal presentation of the forthcoming FNDP to the National Assembly by the end-2006. While the National Assembly is involved in the national development strategy through the budget process, the Constitution does not provide for parliamentary approval of the development planning, and the National Assembly has not formally approved the strategy in the past. Some external partners have plans to engage in dialogue with the Government to encourage a parliamentary discussion on the FNDP. Select committees of parliament have the authority to summon senior civil servants to provide information on government policy. The mandate of the Estimates Committee and the Public Accounts Committee of the National Assembly give these committees a role in monitoring the development strategy. The Public Accounts Committee has the power to summon Permanent Secretaries for inquiry on budget execution following presentation of the Auditor General’s report.

Alignment

2.  Reliable country systems

  1. The Government has undertaken significant efforts aimed at improving country systems. In June 2004, it launched a Public Sector Reform Strategy, and ongoing dialogue with external partners has resulted in further specifications of the Government’s public expenditure management and financial accountability reform program. In addition to the budget reforms, the Finance Act was amended in December 2004, with a focus on enhancing accountability. The Payroll Management and Establishment Control system adopted in 2004 has resulted in significantly improved budget expenditure control. The Government is finalizing new regulations and revised accounting manuals for the new Finance Act to improve procedures for treasury management at the MFNP. The Accountant General has issued rules and procedures for implementing and enforcing a new cash management system, and it is tasked to prepare reports for the Cabinet on compliance with the commitment control system by Ministry, Province and spending agency. The 2005 World Bank Country Policy and Institutional Assessment (CPIA) performance criterion that assesses the quality of budgetary and financial management places Zambia at 3.0 on a scale of 1 (very weak) to 6 (very strong).
  2. The Government is taking action to strengthen fiduciary systems, particularly financial management systems. The authorities continue to strengthen the existing financial management system and to install the infrastructure required for the establishment of an Integrated Financial Management and Information System (IFMIS), including its computerization in all line Ministries, provinces, and government agencies, although the launch of an IFMIS pilot in a limited number of Ministries has encountered delays due to difficulties in the procurement process. Full implementation of the IFMIS is expected by 2009. The procurement system is bound by a fragile legal framework, and enforcement of procurement regulations has been irregular in the past, raising concerns with regard to efficiency and accountability in the use of public funds. The reforms outlined in the Public Sector Reform Strategy include measures to address public procurement. In addition, the Zambia National Tender Board established a Strategic Plan (2002-06) for government procurement that envisaged minor adjustments to legislation and delegation of procurement authority to 51 Procurement and Service Units. However, the capacity of these units is in need of strengthening.
  3. The Office of the Auditor General is Zambia’s Supreme Audit Institution. The Auditor General is appointed by the President subject to ratification by the National Assembly. The term of the Auditor General lasts until he reaches the age of 60. The Auditor General is mandated to conduct annual audits of public accounts, which follow INTOSAI international auditing standards, and report to the Public Accounts Committee. It produces these annual reports with a one-year time lag, showing a marked improvement as compared to the two- to three-year time lag incurred in the past. In addition, it may produce individual reports on specific issues of public interest, such as the audit of the Task Force on Corruption which resulted in the replacement of its Chairman. The Office of the Auditor General has made efforts to improve capacity among its ranks through both national and international training programs and the hiring of qualified personnel, but it remains understaffed. The budget of the Auditor General is defined by the MFNP and is itself subject to annual audits; audited statements of the Office of the Auditor General are submitted to the MFNP for inclusion in the financial report.
  4. Zambia’s Transparency International Corruption Perceptions Index has marginally improved from 2.5 in 2003 to 2.6 in 2006, ranking 111th out of 163. A 2003 World Bank business climate survey indicated that companies spent an average of 1.7 percent of revenue on bribes, an outcome that does not compare unfavorably with East African countries. The 2006 Doing Business database places Zambia in 102nd place out of 175 countries ranked by the cost of doing business. Several important anti-corruption initiatives have been launched in 2005. Following a National Governance Baseline Survey conducted in 2004, an ongoing Constitutional review will translate the survey findings to tangible actions aimed at reducing corruption, since several structural reforms hinge on the passing of proposed constitutional amendments. An Anti-Corruption Commission has prepared a draft National Corruption Prevention Strategy, and consultations with stakeholders are underway to collect feedback on the draft strategy. The Task Force on Corruption, mandated to investigate and prosecute leading figures allegedly responsible for the misuse of public funds during previous governments, has recorded some progress. Several high-profile criminal proceedings are ongoing in Lusaka and civil cases are being pursued in the High Court in London.

3.  Aid flows are aligned on national priorities