Southern African Regional Poverty Network (SARPN) SARPN thematic photo
Country analysis > Zambia Last update: 2020-11-27  

Republic of Zambia
Zambia: Poverty Reduction Strategy Progress Report - July 2003-June 2004

International Monetary Fund Country Report No. 05/112

Government of Zambia

March 2005

SARPN acknowledges the IMF website as the source of this document:
[ Share with a friend  ]

Executive Summary


The second Poverty Reduction Strategy Paper (PRSP) Implementation Progress Report reviews status of the PRPs for the period July 2003-June 2004. The report notes improvement in funding to priority Poverty Reducing Programmes (PRP’s) from K140 billion in the period January 2002 - June 2003 to K430 billion in the period July 2003 to June 2004. Major improvements in public finance management were achieved in the first half of the budget year 2004, mainly due to the introduction of the Medium Term Expenditure Framework (MTEF) and Activity Based Budgeting (ABB). Disbursements to the key social sectors, including the respective releases to district levels are all well in excess of 40 percent of the annual budget.

Despite these achievements, a number of sectors continued to experience implementation problems. Apart from this, an accurate assessment of progress was hampered by data limitations especially on output and impact indicators.

Efforts were made to strengthen stakeholder involvement in reviewing the implementation of Poverty Reduction Programmes (PRPs). In this regard the Sector Advisory Groups (SAGs), as part of the monitoring framework, played an important role in the review process.

At macroeconomic level, significant progress was recorded. Real GDP growth increased from 3.3 percent in 2002 to 5.1 percent in 2003. The domestic budget deficit was contained at less than 2 percent of GDP by June 2004 from 5 percent at close of 2003. This led to a fall in the level of interest rates. Inflation rate fluctuated between 17.2 percent in December 2003 and 18.6 percent in June 2004. The exchange rate remained generally stable. The improvements in fiscal performance paved way for reaching an agreement on a new Poverty Reduction and Growth Facility (PRGF) with the IMF in June 2004. This restored credibility with the cooperating partners thus allowing for increased external inflows.

Notable developments in the area of policy reforms included the Public Expenditure Management and Financial Accountability Reforms (PEMFAR) and Financial Sector Reforms, Legal, Regulatory and Administrative Reforms.

Sector Implementation Progress

In agriculture, major PRSP interventions were the Input Pack Support Programme, out-grower schemes, land and infrastructure development, technology development, agriculture extension and maize marketing in support of small-scale farmers. In addition, Government continued to develop commercial farming through the development of new farm blocks.

A total of K 56.9 billion and K142.3 billion was allocated to the sector in 2003 and 2004 budgets respectively. Total funding to the programmes of intervention were K46.1 and K79.6 billion for 2003 and January to June 2004 respectively. Most of the resources were spent on the Input Support Programme for the purchase of inputs such as fertilizer and seed, as well as maize marketing or the procurement of maize from farmers. Hence for the second year running, a surplus food balance was experienced.

In the mining sector, there was little progress in the PRSP implementation. The gemstone exchange was yet to be established and only some movable assets for operations were procured. For plant hire scheme, no progress was made, although K500 million was released in 2004. This fell short of the requirements estimated at approximately K12.5 billion for the acquisition of a complete set of mining equipment.

The creation of the revolving fund proceeded at a slow pace though efforts were made to determine modalities of how such a fund could be administered. Further, the mining diversification fund, a subsidised commercial loan facility provided by the European Investment Bank, continued to be out of reach for most of the indigenous small-scale miners, mainly for lack of appropriate collateral. However, the mining sector as a whole recorded an improvement due to the sustained global demand for copper coupled with high prices. This in turn increased copper production. Although export earnings from gemstones did not reach the exceptionally high levels of 2002, the long-term positive trend continued in 2003, reaching US $ 23.8 million, against only US $ 11.5 million in 1998.

In the tourism sector, major interventions focused on infrastructure development through the rehabilitation of access roads mainly in the Mosi o tunya National Park, Kafue National Park, Lower Zambezi and the South Luangwa National Park. Tourism and Marketing promotions continued to be undertaken through trade fairs and the production of promotional materials. Additionally, the Tourism Development Credit Facility (TDCF) established in 2003, was enhanced with 43 small-scale Zambian entrepreneurs benefiting.

In order to strengthen the institutional framework in the energy sector, Government implemented institutional and legal reforms. In this regard, the entry-point-action for the commercialisation of ZESCO was undertaken while the Electricity Act and the Energy Regulation Act were amended in December 2003. Parliament also enacted the 2003 Rural Electrification Authority Act. Other key interventions over the period included initiation and development of major power supply projects to increase export and domestic supply of electricity. These projects were the Zambia–Tanzania interconnector and the Zambia-Namibia transmission line. Other major intervention in the sector was the rural electrification programme whose implementation was stepped up during the period under review. Government also aimed at establishing the petroleum reserves by encouraging strong private sector participation.

In the manufacturing sector, Government continued to target investment, trade and export promotion, rural industrialisation and Micro, Small and Medium Enterprises (MSMEs) Development. In the area of investment promotion, efforts were made to attract both local and foreign investors into the country. In this regard, the Zambia Investment Advisory Council was launched to facilitate the design and implementation of investment programmes. The National Investment Plan was also finalised. In order to promote exports, Government created the Zambia Export Processing Zone Authority (ZEPZA) to facilitate the promotion of investments in Export Processing Zones (EPZs). Government continued to focus on rural industrialisation and MSMEs. This was mainly done through the Small Enterprises Development Board (SEDB), which is facilitating the promotion, training and sensitisation of MSMEs while providing them with marketing support services.

In the Roads sector, the second version of Road Sector Investment Program (ROADSIP), renamed the Rehabilitation and Maintenance Program (RRMP), was negotiated with Cooperating Partners. During the period under review, Zambia Railways Limited was concessioned and a feasibility study on the private sector participation in Tanzania-Zambia Railway Authority (TAZARA) was commissioned. Furthermore, the development of the Information Communication Transport (ICT) policy reached an advanced stage. However, there was slow progress in the building of support infrastructure at the new Katima Mulilo and Chirundu bridges.

Government continued its commitment towards the improvement of social service delivery especially in the areas of education and health.

In education, the total releases in 2003 amounted to K691 billion, representing 142 percent of the original budget allocation of K 486 billion. Even without the personnel emoluments, which in this sector had to be increased to 151 percent of the budgeted amount, releases to the sector stood at 123 percent of the budget allocations? In 2004, the allocation was scaled up to K784 billion, representing 20.8 percent of the discretionary budget, from 20.6 percent in 2003. By end of June 2004, disbursements against this budget already amounted to K 385 billion (49.2 percent). The sector also attracted significant support from Cooperating Partners through the sector-wide approach, benefiting in particular basic education at district level. The major Programmes implemented in the sector were the expansion of the school infrastructure, curriculum development, provision of education materials, provision of bursaries to vulnerable children and orphans, equity and gender and HIV/AIDS. These interventions led to improvement, in terms of access to education at all levels. For example, there was a clear positive outturn in terms of basic enrolment, which increased to 75.5 percent for girls and 77.2 percent for boys. In 2003, completion rates also increased to 66.7 percent for girls and 80.3 percent for boys from 63 percent and 77 percent respectively in 2002. In spite of this, the sector continued to face problems as the sector could not engage new teachers to fill vacant positions due to the employment freeze in the public service. The impact was more in rural areas.

In the health sector, Government allocated K58.8 billion out of which K34.8 billion was released in 2003. In 2004, a total of K36 billion was released by June against the total allocation of K74.5 billion.

Major Programmes implemented in the health sector included the Integrated Malaria Control (Roll-back Malaria), acquisition and distribution of essential drugs, child health survival, reproductive health and rehabilitation of health facilities. ARVs were Procured and distributed to 12,000 patients. These interventions contributed to improvements in the sector. Favourable outcomes in terms of utilization of the services in the sector included the increase in the utilization rate of the health centres for the under-five year olds (2.15 as against 2.0 in 2002) and the percentage of supervised deliveries by skilled health personnel (excl. trained Traditional Birth Attendants) which increased to 39% in 2003 from 35% in 2002. However, due to the delay in the availability of drugs, the full immunisation coverage rate for children under one year of age only slightly improved to 75% in 2003 from 74% in 2002. Impacts attributable to the improved services delivery included the reduced Malaria incidence, which in the first half of 2004 was estimated at 114/1000 compared to 122/1000 in the first quarter of 2003.

Government continued to implement programmes relating to crosscutting issues of Gender, HIV/AIDS and Governance. The focus in Gender was on improving women participation in decision-making and economic empowerment through land ownership. By means of a focused appointment policy, the percentage of women in decision-making positions increased from 10 percent in 1997 to 18 percent as at June 2004. Government also embarked on a land survey whose aim was to facilitate the allocation of at least 30 percent of land to women.

In tackling the HIV/AIDS problem, Government focused on reducing the number of infections as well as the social economic impact of the disease. In this regard, Government released a total of K4.5 billion for the period January to June 2004 as compared to K7.11 billion for the period July to December 2003. The total budgeted allocation for HIV/AIDS for the period July 2003 to June 2004 was K53.8 billion. Major interventions included HIV/AIDS prevention campaigns, Voluntary Counselling and Testing (VCT), Prevention of Mother to Child Transmission (PMCT), Anti-Retroviral Therapy (ART), home based care, care for Orphans and Vulnerable Children (OVCs) and the work place programme. Most of these Programmes were implemented using a multi-sectoral approach. As a result of the continuous efforts, HIV/AIDS prevalence rate reduced from 20 percent in 2001 to 16 percent in 2003. There is evidence that Young people started delaying sexual activity, at least for males, the starting age increased from 16 years in 1998 to 17 years in 2003, while it still remained stagnant for females at 17 years. Condom use increased among males from 28 percent in 1998 to 43 percent in 2003 and from 24 percent to 34 percent among females.

In the area of Governance, interventions focused on improvements in the electoral reform process, improvements in the equitable and transparent use of public resources as well as ensuring guaranteed justice for all. In addition, Government continued to receive submissions in the constitutional review process in order to come up with a new constitution. Other activities in the area of Governance included the construction and rehabilitation of court rooms.

With respect to regional development, Government focused on infrastructure development, land resettlement and industrial development, infrastructure development included the rehabilitation and construction of schools, hospitals, health posts, dams, feeder roads and resurfacing of aerodromes and airports. In the Land Resettlement Programme, Government demarcated plots, drilled boreholes and gravelled roads in major resettlement areas. In addition, small-scale industrial development Programmes included activities such as the promotion of bee keeping and honey processing.

The implementation of the PRSP resulted in some progress for at least some of the social indicators. With respect to achieving the Millennium Development Goals (MDGs), Zambia is potentially capable of achieving MDG targets by 2015 in the areas of nutrition, enrolment ratios in primary education, gender equality, literacy rate, HIV infection and HIV prevalence rates. This potential was largely attributed to strong Government support to the social sectors during the period under review. Nevertheless, other indicators such as maternal mortality rate may not improve much in the next ten years.

In realizing the difficulty in achieving some of the MDGs as set by the Millennium Summit, Government has started to localize some of the MDGs targets in order to make them conform to the local socio-economic and institutional capacity. With these efforts in place and more support from Co-operating Partners, prospects are high that most of the MDGs will be achieved by 2015.

Lessons and Conclusions

During the PRSP Implementation in the last twelve months, Government recognised the importance of fiscal discipline and increased spending towards priority poverty reducing programmes. Prudent fiscal policy resulted in improved macroeconomic environment and allowed funding to poverty reduction programmes to increase. This outturn restored credibility with the donor community.

The spreading of resources across too many projects as seen in the rural electrification programme, only delayed implementation, progress and undermined the efficient utilisation of resources.

Even though, funding improved to PRP’s in the first half of 2004, late disbursement of funds especially in 2003 affected the execution of some programmes in particular those of a seasonal nature such as rehabilitation of feeder roads and Monitoring. There is need to improve on project/programme profiling. In addition, the tender thresholds delayed progress in execution. All programmes with expenditure above K 5 million had to seek tender authority from the Zambia National Tender Board. This delayed progress in many interventions especially at provincial level. In 2004, Government received recommendations to increase the spending thresholds.

The process of determining priority programmes has not been systematically defined or applied and the criteria for prioritisation are still not clear. Similarly, monitoring to determine the success of implementation was still weak. This affected the measuring of progress in particular at the level of outcomes and impacts, for a number of interventions. For example, input indicators on budgets, releases, and expenditure, as well as some output indicators on clearly defined services provided have been reported. However, indicators on the utilisation of these services (outcomes) and direct benefits attributable to particular interventions (impacts) are only meaningful on a yearly basis when surveys have been undertaken. In view of these difficulties, there is need to improve and strengthen the institutional framework for priority setting, planning, budgeting, implementation, monitoring and reporting, emanating from the grass root level.

Data capture from Cooperating Partners on their contributions to PRSP priority interventions continued to be difficult. This is problematic, since about 67 percent of the resources to implement the interventions are funded from external sources. The Harmonization-In-Practice (HIP) initiative is expected to improve monitoring and coordination of donor funds. With the joint identification of priorities through the SAGs, donors are expected to provide more transparency on projects carried out under their responsibility.

The PRSP (2002-2004) which Government began implementing in July 2002 comes to an end in December 2004. When the New Deal Government took office in January 2002, the Ministry of Finance and National Planning was tasked to prepare the Transitional National Development Plan (TNDP) 2002-2005 and five-year development plans from 2006 onwards. In response to the challenge, the TNDP was prepared and published in October 2002. The TNDP encompasses all the areas in the PRSP and includes others such as the Judiciary, law, order, Defence and security. With the coming to an end of the PRSP, the TNDP, which still has a year to run, will be employed as the national development document for 2005. Within the course of 2005, the successor to the TNDP will be prepared to guide the development process. As with the TNDP, the next five year development plan will encompass poverty reducing programmes.

Octoplus Information Solutions Top of page | Home | Contact SARPN | Disclaimer