Documentof TheWorldBank FOROFFICIAL USE ONLY Report No. 29048-ZA THE REPUBLIC OF ZAMBIA Poverty Reduction Strategy Paper-Progress Report Joint Staff Assessment June 15,2004 Prepared by the Staff of the International Development Association and International Monetary Fund This document has a restricteddistributionand maybeusedby recipientsonly inthe performanceof their official duties. Itscontents may nototherwisebedisclosedwithoutWorld Bankauthorization. FOROFFICIAL USEONLY INTERNATIONALMONETARYFUNDAND THE INTERNATIONAL DEVELOPMENTASSOCIATION ZAMBIA Poverty Reduction Strategy Paper-Progress Report Joint Staff Assessment Preparedby staff ofthe IntemationalMonetaryFund andthe IntemationalDevelopment Association Approved byAnupamBasuandG. RussellKincaid(IMF) and CallistoMadavo andGobindNankani (IDA) May20,2004 1. The first Poverty Reduction Strategy Paper (PRSP) Progress Report' of the Government of the Republic of Zambia (GRZ) presents a complete review of the Government's implementation of the PRSP for the period January 2002-June 2003. This ProgressReport (henceforth the Report) presentsthe results inthe implementation of the PRSPpresentedto the Boards of the IMF andIDA on May 29`h, 2002 andJuly 1gth,2002 respectively. The Report incorporatesinputs from Govemment, civil society, andthe donor community. The Joint Staff Assessment (JSA) on the Report ddiesses the following key areas: (a) Zambia's macroeconomic framework; (b) progress inpoverty reduction; (c) implementation of sector policiesandprograms; (d) public expenditure management;(e) monitoringandevaluation; (f) consultation; and(g) risksto the strategy. I. OVERALLASSESSMEYT THEREPORT OF 2. The Report concluded that the implementation of the PRSPhas beenweaker than intended because of the extreme pressures placed on the budget by extra- budgetary expenditures, which reducedthe funding available to PRSP programs and activities. Stakeholders concurredwith this conclusion. The Report also acknowledgedthat Zambia's economic programsupported by the Fund's Poverty ReductionandGrowthFacility(PRGF) arrangement has beenoff track since April 2003 due to fiscal slippages, inparticular salary andwage overrun, which ledto highdomestic borrowing.The lack of a macroeconomic program with the IMF ledbotbto a delay in reachingthe CompletionPointunder the EnhancedHeavilyIndebtedPoor Countries (HIPC)Initiativeandto a withholdingofbudget support by donors.2 3. Notwithstanding the reduced availability of financial inputs, outcomes as measured in per capita GDP growth, investment, export diversification and ` Governmento f Republic of Zambia (2004), Zambia First PRSP Implementation Progress Report January 2002-June 2003, Ministry of FinanceandNationalPlanning. Note that the government andthe IMF agreedto an Extended StaffMonitoring Programin December 2003. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. - - 2 - improvementsinthe externalenvironmentwere in2003 betterthan foreseen inthe PRSP.As articulated inthe Report, the government's strategy to reduce poverty focuses on promoting economic growth through diversification and improving the quality o f service delivery, while addressing the cross-cutting issues o f governance, HIV/AIDS, gender andthe environment. The Report notes that although improvements have been recorded inthe last two years, Zambia's macroeconomic environment still remains unbalanced, largely due to slippages infiscal policy, especially in2003. The Report makes a candid assessmento f Zambia's current situation with regard to the MDGs. It states that it would require growth rates inexcess of 8 percent and a scaling up o f the govemment efforts inthe areas that are coveredby the MDGs. Staff concurs with the Report's assessmentthat reaching the MDGs therefore calls for continuous concerted efforts and scaling up o f the implementation o f the PRSP bythe government, cooperating partners, and other stakeholders. 4. The Reportnotedthat the actualallocationof funds to the various programs and activitiesenvisagedunderthe PRSPwas hamperedinthe absence of a Medium- TermExpenditureFramework(MTEF) underpinnedbyActivity BasedBudgeting (ABB), which contributedto a lack of specific targetingof budgetresources towards PovertyReductionPrograms.Duringthe periodunder evaluation, the government, however, made good progress inimproving the institutional set up o f its public expenditure management system to tackle the identified shortcomings. The government introduced ABBYdeveloped a MTEF, and implementeda commitment control ~ystem.~ The Report indicates that the introduction of ABB will allow the adoptionof abroader and more adequate definition o fpoverty-reducingexpenditures. Thus far, GRZ's efforts at monitoring and evaluation o f poverty-reducing expenditures have focused on expenditures financed from a designated account for HIPC savings. The intention to adopt a broader definition o f poverty reducing expenditures is welcome and will bring GRZ's practice more inline with the practice o f other countries. 5. TheReportprovidesa descriptionof the implementationof the sectoraland policyreformsidentifiedinthe PRSP,butit does not always show how the programsandprojectsimplementedperformedagainstthe baselinethat hadbeen presentedinthe originalPRSP.The Report contains partial information about how progress inimplementing reforms helped achieve the strategic objectives and outcomes specified inthe PRSP. To a large extent, the limitedquantitative reporting inthe Report reflects a lack o f relevant data. This together with a monitoring and evaluation system still inits infancy has continued to hamper prioritization o f various PRSP programs. Indeed, still more work inthe area o f monitoring and evaluation i s needed to be able to linkinformationon (intermediate) outcomes with expenditure allocations and show how the sectoral actions implementedunder the PRSP are part o fpriority plans and resource allocations inthe national budget both at the central andthe regional level. 6. The Reportconfirmsthat the PRSPstrategyremainsvalid and thereforeis a fundamentalpointof referencefor the dialoguebetweenthe government,the civil The 2004 budget is fully basedon an ABB system and framed within a medium termbudget framework, which was widely discussed with relevant stakeholders. - 3 - society, and donors. Diversification o f the economy, a growth conducive macroeconomic environment, development o f supportive infrastructure, and improvement of governance are considered necessary to consolidate and amplify the recent positive trend o f economic growth. 11. PROGRESSINIMPLEMENTATIONOF THE POVERTY REDUCTION STRATEGY A. MacroeconomicFramework 7. After more than two decades of economic decline and inflation averaging over 50 percent, since 2000 growth has averaged 4 percent per annum and inflation has been sharply reduced. In2002, real GDP grew by 3.3 percent, despite difficulties in the miningsector and the impact o f a severe drought. In2003, GDP growth reached 5.1 percent, supported by a recovery inthe agricultural sector, highcopper prices, and strong growth innon-traditional exports. The 12-month inflation rate, at 17.2 percent in December 2003, was the lowest intwo decades. However, the Report recognizes that the average GDP increase in2002-2003 was lower than the rates neededto accelerate poverty reduction (5-8 percent) andthat macroeconomic stability remains very fragile and dependent on strong fiscal discipline. 8. The Report indicates that slippages infiscal policy significantly affected government ability to execute budgeted allocations on poverty-reducing programs. Overruns o f the wage bill in2002 and2003 andad hoc extrabudgetary expenditure were financed by domestic borrowing and diversion o f resources from priority items. As a consequence, in2003 domestic debt and interest payments rose considerably, along with an accumulation o f arrears on domestic spending. Actual spendingon the tracked subset o f poverty-reducing programs remained about 1percent o f GDP, ie., halfthe level budgeted in2002 and 2003. The Report properly indicates that the lack o f an MTEF in support o f the 2002 and 2003 budget cycles was a relevant cause o f the weak fiscal discipline andthe insufficient provision o f finding to PRSP. 9. The Report recognizes that a front-loaded fiscal adjustment i s critical for macroeconomic stability. Although the document does not discuss detailed fiscal measures for the 2004 budget, the 2005-2007 medium-term expenditure framework indicates that expenditures are reduced and re-orientedto poverty reduction and that the strong revenue performance is maintained. These interventions lead to phase out o f domestic financing and a considerable increase inpoverty-reducing spending. The adjustment o f the level and composition o f spending i s to be supported by a Public Sector Reform Program, a three-pillar program aiming at strengthening public expenditure management and financial accountability; rightsizing the government and streamlining the compensation system for civil service employees; and decentralizing relevant government operations and improving participatory governance. 10. Inaddition to weak fiscaldiscipline, the Reportrecognizes that absorptive capacity of spending agencies has limited actual use of funding provided. The authorities indicate that the reasons for the weak absorptive capacity varied from sector to sector and district to district, but common among them was the lack o f information on - 4 - timingof disbursements, seasonally inconsistent timingo fdisbursements,insufficient provision o f counterpart funds to match donor-financed capital projects, inadequate provision o f capital equipment to facilitate implementation o f infrastructureworks, and long and complicated tender procedures. The introduction inthe 2004 budgetcycle o f an MTEF,the government's commitment to avoidunbudgetedexpenditure, the integration o f the commitment control system inthe computer-based financial management system and implementationo f the structural reforms included inthe Public Sector Reform Program are key to increasing short andmedium-term absorptive capacity. 11. The implementationof structuralreformshas beenmixedsince January 2002. Progress was made insome public expenditure management areas (introduction o f MTEFs insupport o f2004 budgetcycle, implementationo fa strengthened commitment control system, timeliness o f financial reporting), intax policy and administration, inthe foreign exchange market, inrestructuringstate-owned enterprises (inparticular, the Zambia EnergySupply Authority), andinstrengthening governance and fighting corruption. However, delays and shortcomings affected implementation of the Integrated Financial Management and Information System, civil service pay andpension reforms, the preparationo f a planfor clearing domestic expenditurearrears, and the privatization o f the Zambia National Commercial Bank. B. ProgressinPovertyReduction 12. The analysisof progressin reducingpovertyis constrainedby data availability.The Report is basedon data providedbysector-specific surveys, the census, andpublic administrations. The results o f the 2003 integrated householdbudget survey will provide important informationwith regardto poverty and its underlying characteristics. For monitoring and evaluatingthe impact o f the PRSP, it i s more important to focus on intermediate outcomes as the relatively short period o f PRSP implementationmakes it difficult to attribute progress inpoverty reduction, e.g. reducing the poverty head count between 1998 and 2003, to PRSP implementation. Fiscal data were inadequate to assess progress inpoverty reducing expenditure programs giventhe absence o f ABB andtherefore the limitednumber o f monitorable PRSP programs. The authorities underline that the ABB introduced inJanuary 2004 will allow full tracking o f poverty-reducing spending, while the ongoing exercise to reclassify spendingbudgeted and executed from 2000 to 2003 will allow comparisons over time. C. ProgressinSectoralPoliciesandPrograms EconomicSectors 13. Inthe economic sectors, the PRSPobjectiveof diversifyingthe economy away from copper and cobaltto agriculture, tourism, gemstone mining,andthe manufacturingsector recordedmixedresults.Inthe agricultural sector the mainthrust o f the government's strategy was to promote commercial farming, landand infrastructure development, adoption o f new technologies by smallholder farmers through increased extension services, andtargeted support (through the Food Security Pack program) for vulnerable households to improve food security. The normal rainfall pattern o f the 2002/2003 farming season coupled with the government's strategy of subsidizing - 5 - agricultural inputs (fertilizers and seeds) for smallholder farmers, as well as the promotion o f out-grower schemes inexports crops (tobacco, paprika, coffee, vegetables and cotton) contributed to a significant recovery inagricultural production in2003 compared to 2002 (whenboth drought and inadequate supply o f agricultural inputs resulted inlower yields). While this helpedto reduce the food security problem inrural areas, other poverty reduction programs that are key to long-term sustainable productivity of smallholder agriculture remained largely unfunded.These include animal diseases control programs, extension services, adoption of appropriate technologies, and rural infrastructure, e.g., feeder roads, dams for irrigation as well as dip tanks. 14. Inthe tourismsector, the government'sstrategywas to completethe preparationof the tourismdevelopmentmaster plan,create a tourismdevelopment revolvingfund, andimproveinfrastructureinthe maintourismareas. The PRSP Report i s silent on the status o f the preparation o f the tourism development master plan. On the other programs, the Report shows that some progress has been made, especially the Tourism Development Credit facility andthe promotion and marketing o ftourism programs. With regardto investment ininfrastructurefacilities inthe maintourism areas, a lot remains to be done andthe Government has negotiated the Support to Economic ExpansionandDiversificationproject with the Bank that will help to accelerate infrastructuredevelopment inthe Livingstone area (around Victoria Falls) and the Kafue National Park. 15. Inthe miningsector, the PRSPstrategyfocused on diversificationthrough small-scalegemstoneminingdevelopment,establishmentof the gemstone exchange, creationof a planthirescheme andthe creationof a miningcommunity development(revolving) fund. The Report acknowledges that only the gemstones exchange and the miningsector diversification programs (MSDP) were included inthe Government budget. The private sector ledNational Economic Diversification Task Force (that was created after the June 2002 Diversification workshop held inKitwe) has been assigned to develop the Gemstone Exchange and it i s expected to be operational by the thirdquarter o f 2004. The conditions attached to the MSDP have limitedaccess to this facility, despite arecent review o fthe conditions. Beinglargelyprivate sector led, the miningsector has recordedincreased activities, especially the opening o fthe Greenfield operations inthe North-Western Province o f Zambia. Continued development o f the miningsector requires investments inkey infrastructuresuch as roads andrailways. 16. The PRSPindustrialstrategyof investmentandtrade promotionand Small andMediumEnterprisesdevelopmentinbothurbanand ruralareashasrecorded increasedbudgetallocations.The funding for the industrial sector Poverty Reduction Programs have been dominated by the Export Processing Zones Program (EPZ), that i s being implementedthrough the new EPZ authority, andthe investment opportunities identification program to create a national investment plan (by the Investment Center). The government has recognized the proliferation o fpublicly financed private sector development institutions (the Investment Center, Zambia Privatization Agency, the Export Processing Zone, the Export Board of Zambia, the Small Enterprise Development Board, etc.) that needto be rationalized to make investmentpromotion cost-effective and efficient. - 6 - 17. The PRSP crosscutting strategies inthe energy, communications and transport sectors aimed at increasingthe national accessibility of electrical energy, reducing the cost of electricity, developing an ICT policy, and rehabilitating and extending the road network. A lot o fprogress has beenmade inthis area, butthe governmentfunding of capital projects still remains a major area o f concern. It is expected that through the implementation the ongoingpublic expenditure management reforms future fundingo f capital projects will improve. Social Sectors 18. In education, the focus of interventionswere aimed at increasing access to primary, secondary, and tertiary education, improving the quality and relevance of the education provided at these levels, and reducing disparities in education provision by promoting gender equality. Significant progress was made inmeeting these sector objectives, especially at the primaryschool level. InFebruary 2002, the government introduced a free primary education policy, which saw all user fees abolished for grades 1-7, andmade school uniforms no longer compulsory. Duringthe review period, a total o f 106primary and 18 secondary schools were constructed, and the provision o f school materials such as books improved. Reflectingthese improvements, enrolment at the primary school level increased by 7 percent (compared to a target o f 2 percent); enrolment at secondary school level increased by 5 percent; the mean mathematics score increased from 36 percent to 39 percent; and the mean Englishscore increased from 33 percent to 35 percent. Overall reading levels improved, including improvements inreading and writing levels o f children inschools inGrade 1. However, while the recent gains inlearning achievements and enrolments are encouraging, there is concern that these gains are at riskbecause o f the teacher employment crisis, and the high attrition rate o fteachers due to HN/AIDS. The number o f basic schoolteachers, which had increased in2002, fell back in2003. There were about 9,000 teaching vacancies, mostly inrural areas in2003. 19. Inhealth, most of the interventionswere directed at the provision of a health care package, the Integrated Malaria Control Programmes, and the rehabilitation of existing health facilities and construction of additional health facilities. The Report underscores that significantly less than planned resources were released to purchase essential health drugs (TB, STI and anti malaria drugs) and anti-retroviral drugs and the provision o f Basic Health Care Package (purchase o f drugs inthe hospitals, including TB second line drugs, anti-trypanosoma1 drugs), but provides no specific explanation for this. Under the Integrated Malaria Control Programme (Rollback Malaria Programme) government resources were spent (a total of Kwacha 500 million) to supplement those from donors. However, the incidence o fmalaria continued to rise from 387 per thousand population in2002 to 428 in2003. Without significantly scaled up interventions, it i s unlikelythat the battle against malaria couldbe won. Zambia's proposal to the Global Fundon scalingupmalaria control andmanagement was approvedin2003 for funding, which could help the efforts to scale up interventions. Interms o f rehabilitation o f provincial and district hospitals, less than one-third of the allocation was released to provinces. Given the low level o f actual funding against allocations andneeds, however, progress was slow interms o fhealth outcome^.^ 20. Innutrition,the focus was on deliveringof appropriatemicronutrientsto childrenunder 5, strengtheninginstitutionalcapacityofthe NationalFoodand NutritionCommission,and developinga nationalnutritionpolicy.The Report acknowledges that actual funding for nutritional programs and activities fell short o f what was planned inthe PRSP. Nonetheless, some progress was achieved duringthe period underreview. Interms of improving micronutrients, the mainactivities ofthe National FoodandNutritionCommission included fortification o f sugar and maize meal with Vitamin A. Through the national ChildHealthWeek andNational Immunization Days, about 4.4 million children under the age o f five were administered with Vitamin A supplement during 2002, a national coverage o f 88 percent. Maize meal fortification trials, which had started in2000, were expanded to six selected hammer mill sites in2002 (Chipata, Chaisa, Bauleni, George, Chawama and Kanakatapa). While the trials are gaining acceptance by the communities involved, significant scaling up is neededto have impact on nutrition outcomes such as stuntingand wasting. A draft nutrition policy document was submitted to Cabinet in2003, and the National Food andNutrition Commission i s currently revisiting its structure to strengthen its capacity to scale up interventions as well as increase its effectiveness. 21. Inwater and sanitation,the maininterventionsfocused onwater resources managementanddevelopment,andprovisionofwater and sanitationservices. The Report notes that steps were taken towards improving water resources management and development, but the progress remainedinadequate andless than expected. The main intervention were: (i) a formulation o f a Water Resources Action Programme, which aims at establishing a comprehensive framework for effective use, development and management of the Zambia's water resources ina sustainable manner; and (ii) water resource infrastructure development program which involved dam construction and rehabilitation, borehole drilling, construction o f weirs andwells. To this effect, 8 dams were completely rehabilitated in3 provinces, 153 boreholes were drilled in 6 provinces while work on 379 boreholes in3 provinces i s still on going. Notwithstanding the impact this development has hadon the supplyofwater inrural areas, notmuchprogress was made inthe development o f water supply infrastructure due to insufficient funds. 22. To improvewater supply and sanitation,the governmentimplemented reformsinthe water sector, but their impacton services was limited.The reforms included devolution o f service delivery from Central Government to the local authorities; establishment o f several commercial water utilities allowing for competition amongst the providers (9 commercial utilities by 2002). Limited improvements were seen interms o f service delivery and access to bothwater supply and sanitation inareas serviced by the commercial utilities. Notwithstanding this improvement, the situation incouncil operated areas continues to deteriorate and to be a source o f concern. A number o f districts go without water supply, sometimes for days, due to equipment breakdown and lack o f Changes inInfant Mortality Rate, Under Five Mortality Rate, and Maternal Mortality Rate could not be assessed, as data for the Living Conditions Monitoring Survey I112003 are not yet analyzed. - 8 - maintenance. The water and sanitation services inrural areas still remain poor, due mainly to lack o f adequate funding. 23. Interventionsinsocial safety netsfocused on poor andvulnerablepersons, includingfund transfersfor use as schoolfees and other requisites,repatriationfor strandedpersons, health-exemptionfees as well as purchaseof food rations.The Report underscores that some limitedprogress was achieved inproviding safety nets to the most vulnerable and needy. The interventionswere carried through the Public Welfare Assistance Scheme (PWAS), the Peri Urban Self Help, andthe Food Security Pack programs. In2002, the PWAS programme was extended to 27 districts and continued its restructuring inorder to minimize targetingproblems.The Food Security Pack programme i s implementedon behalf o f govemment through a Non Government Organisation called the Programme Against Malnutrition, which receives a grant from government. It i s estimated that the programs covered all the districts inthe country and involved over 50,000 persons. Given Zambia's exposure to natural, health and external shocks, staffs believe that greater attention shouldbe givento social safety nets programs inthe future. Cross CuttingInitiatives 24. Zambia's PRSP identifieda number of crosscutting issues that are critical for poverty reduction inZambia. These include govemance, HIV/AIDS andgender. 25. To improvegovernance,the governmentundertookseveral positivesteps duringthe reviewperiod.The govemment announced inearly 2002 a policy of"Zero Tolerance on Corruption", and launched the National Movement Against Corruption, an alliance of strategic partnerships from govemment, civil society organizations and the private sector. The Anti-Corruption Commission was strengthened through increased funding, andconstructionofnew offices and staffhouses inprovinces. The process of investigating former political leaders as well as senior public officers suspected o f corruption was initiated in2002, and some assets were forfeited to the state while some highprofile cases are currentlybeing prosecuted inthe courts o flaw. To further strengthen political govemance as well as the rule o f law, in2003, the government initiated a constitutional review process aimed at removing serious conflicts and inconsistencies contained inthe Constitution. Inaddition, a process o f Electoral Reform was initiated, and an Act o fParliament was passedto mandate continuous voter registration. 26. The effort to combatthe HIV/AIDS pandemichasbeensomewhat strengthened,but a lotmoreremainsto be doneto containthe spreadof the disease, andreducethe incidenceandthe socio-economic impactof the disease.The govemment inDecember 2002 enacted the National HIV/AIDS/STL/TBCouncil and Secretariat to coordinate and support the development, monitoring and evaluation o f the multi-sectoral national response to HIV/AIDS and other diseases. There was a limited increase inthe number o f Voluntary Counseling and Testing Centers, provision o f preventive TB vaccines, andprovision o f Anti-Retrovirals inpublic hospitals. Recent data from the ZambiaDemographic Health Survey 2001/2002 report shows that the majority o f Zambians are now aware o f how HIV/AIDSi s transmitted. The survey also - 9 - shows that the prevalence rate among the adult population has slightlydeclined, compared to previous results. While these are encouraging signs, staffs believe that greater effort i s neededby the authorities to effectively mainstreamanti-HIV/AIDS initiatives ina multi-sectoral context, review and assess coverage o f existing programs, and consolidate the monitoring andevaluation systems for HIV/AIDS, which tendto be fragmented due to interventions by many stakeholders. 27. Effortswere madeto improvegender equality, andpromotethe empowermentof women, but resultswere limited.Interventions included improving the participation o f women indecision-making, promotion o f women's economic empowerment and development of the National Gender and Development Information System. To increase participation o f women indecision-making, efforts were made to appoint women to various decision-makingpositions at Cabinet Minister andDeputy Minister levels with a view to movingtowards a thirty percent minimumrepresentation.' However, as of 2003, the representation o f women at the ninthsession o fparliament stood at only 14percent. O f all the selected positions indecision-making, women accounted for only 18 percent. To promote women's economic empowerment, government focused on improving access to landbywomen (who are discriminated against due to customary practices o f land allocation inthe rural areas o f Zambia). The draft landpolicy, currently under discussion, proposed 30 percent of the land to be demarcated and allocated for women and other vulnerable groups. Limited grants were also providedto supportwomen inpoultry, fish, and crop farming, tailoring and designing, andinrunningorphanages. However, since the actual funding for gender programs and activities was only 11percent o f the budget allocations inboth 2002 and 2003, the impact was very minimal. The setting up o f a National Gender and Development Information System has commenced with assistance from donors, but further efforts are needed to complete the system, anduse such information to generate better public awareness and inform decision-making about gender inequality. 28. A reviewof a regionalperspectiveof PRSPimplementation6,whichfocuses mainlyoninfrastructuredevelopmentandlandresettlementschemes inthe regions, indicatesthat progresswas less than expected. The main activities carried out included construction andrehabilitation o f feeder roads, drilling o fboreholes andrehabilitation of wells, anddemarcation, clearing and development of farm-blocks. Progress was less than expected inalmost all areas because o f significant shortfalls inbudget releases to these programs and activities. Staffs believe that the authorities should focus on correcting the weaknesses inexpenditure policy and control, and speed up public sector and structural reforms to better reorient expenditures toward pro-poor activities such infrastructure development and land resettlement schemes. 'The 30 percent representation indecision-making is stipulated by the 1997 Southern African Development Community (SADC) Gender Declaration. Zambia's regional development issues are addressedinZambia Transitional National Development Plan (TNDP), a development planthat complements the PRSP insome areas. - 10- D. PublicExpenditureManagement 29. The governmentinitiatedsome reformsinpublicexpendituremanagement to improveaccountability,transparency, and managementofpublicresources. Such reforms includedthe designing o f the IntegratedFinancial Management Information System, development o f a MTEF anchored inan ABB system and implementation o f a Commitment Control System for public expenditures. The government has also initiated reforms aimed at payroll control, and streamlining and rationalizationo f the civil service. While these are a promising start, staffs would urgethe government to speedup the implementation o f a comprehensive program o f public expenditure reforms, as articulated inthe recently completedPublic ExpenditureManagement and FinancialAccountability Review, and follow through with the civil service restructuring and right-sizing. These latter reforms would enable to bringthe size o f civil service into line with the resources available to pay for salaries and wages, while ensuring adequate staffing to the education andhealth sectors. The new budgetclassification and the MTEFprovide the basis for a better prioritization and a higher execution of spending on poverty-reducing programs. E.MonitoringandEvaluation 30. A significantefforthasbeenundertakenbythe GRZ inthe area of results basedmonitoringandevaluationfor the PRSP.AnInput-Output-Outcome-Impact model has beenproposed that aims to involve the National, Provincial, and District Governments and the sector ministries.This program i s comprehensive inits design and recognizes the needfor significant support from the National Statistics Office to carry out the new monitoring mandate. Progress inimplementing the structures has been slow, partly because o f its elaborate institutional set-up. It i s important for the government to decide promptly on the priority set o f indicators that it wants to use to monitor progress underthe PRSP, with a focus on intermediate (poverty) indicators andwhen andhow the data will be collected, as well as settle on a simplified institutional structure such that it facilitates the flow o f information betweenthe relevant government agencies. Staffs recommend that government first prepares an implementation strategy and clarifies roles and (institutional) responsibilities of different actors involved. The Bank and other donors are assisting the government inthis endeavor. It i s expected that the proposedrevisions will bereflected inthe nextReport and will facilitate the prioritization ofpoverty reductionprograms. F. Consultations 3 1. Inthe JSA accompanyingthe full PRSP,it was acknowledgedthat the process of preparationhadbeenhighlyparticipatory.The implementationphase of the PRSP i s actively monitoredby civil society. The Civil Society for Poverty Reduction (CSPR), an umbrella organization o f some 90 civil society groups, independently evaluates progress o f the implementation o f the PRSP and its reports are posted on its website: http://www,cspr.org.zm or can be found at http://www.sarpn.org.za/index.php. 32. The monitoringand evaluationframework allows and supportsthe regular participation-at alllevelsof government-of implementinginstitutions,civil society - 11- organizations, private sector, and cooperatingpartners in monitoring and evaluating PRSP implementation. Sector Advisory Groups, andprovincial and district Development Coordinating Committees periodically provide inputs to the Ministryo f Finance and National Plan, to issue-specific consultative fora, andto the Annual Poverty Forum, whose recommendations are submittedto Cabinet for information anddecision- making. It i s important to ensure that such a participatory process i s institutionalizedand can meaningfully be linkedinto the decisionprocess o f PRSP implementation and monitoring. G. Risks to the Strategy 33. Instaffs' view the PRSPcontinues to be subject to severalimportant political, institutional, and economic risks. To improve PRSP implementation, the Govemment will face demands for additional resources for PPRSP expenditure programs. However, the elections planned for 2006 mightleadto "short-termism," which could displace the poverty reduction agendaas a priority and hence increased appropriations for PRSP expenditure programs might not materialize, leading to a continuation o f current trends inPRSP implementation. Important institutional risks to program execution are posed by weaknesses in implementation capacity and financial management inline ministries and other government agencies. Inparticular slow progress inexecutingprograms to contain the impact o fthe HIV/AIDS pandemic carries serious potential risks to Zambia's future. Zambia remains vulnerable to droughts andto terms o f trade shocks. Risks stemming from the dependency on international copper prices were partially addressedby sectoral policy to promote economic diversification, namely in agriculture, non- copper mining, manufacturing, andtourism. The recent increases incopper prices mightre-ignite the hope that Zambia can rely once again on the copper sector for economic prosperity. Weak fiscal discipline could generate significant risks to macroeconomic performance. Inthe short run,risks could stem from potential difficulties infully implementingexpenditure andtax reforms. Inparticular, pressures from civil service unions for increasingwages and demands for additional resources from non-priority sectors, e.g. defense, constitute substantial risk to the fiscal program. Inthe medium term, risks could also stem from pension liabilities. 34. These risks are not evaluated by the Report. Staffs recommendthat the authorities incorporate a section inthe next PRSP Report, detailing their importance, possible impact on attaining PRSP/MDG goals, and outlining possible strategies to mitigate these risks. - 12- 111. CONCLUSIONS 35. Staffs conclude that the Report adequately reflects the accomplishments and shortcomings in the implementation o f the poverty reduction strategy since its adoption. Despite constraints o f data availability the Report candidly identifies the main obstacles to stronger implementation o f the PRSP. Staffs welcome the authorities' restated commitment to the strategy proposed inthe PRSP. Staffs concur with the priority measures indicated inthe Report. 36. Insum, inthe view of staff of the World Bank andthe IMF,Zambia's Poverty Reduction Strategy continues to articulate a sound set o f policies and programs. However, despite satisfactory growth performance and some progress on reforms related to public expenditure management processes, satisfactory implementation o f the PRSP still needs to be established. Nevertheless, inlight o f the recent reforms and policy commitment staffs consider that the strategy continues to provide a credible framework for FundandWorld Bank concessional assistance. Staffs recommend that the respective Executive Directors o f the World Bank and the IMFreach this conclusion. ZAMBIA FirstPRSPImplementation Progress Report January 2002 - June 2003 MINISTRY OFFINANCEAND NATIONALPLANNING PLANNINGAND ECONOMIC MANAGEMENT DEPARTMENT P.0 BOX 50062 LUSAKA March 2004 1 Table of Contents CHAPTER 1 INTRODUCTION .................................................................................................................................................. 8 CHAPTER 2 MACROECONOMICPERFORMANCEAND STRUCTURAL REFORMS ................................................. 9 2.1 MACROECONOMIC SITUATION 9 DEBTSTOCK......................... ................................................................................................................................ 2.2 2.2.2Domestic Debt Stock........................................................................................................................................................ 11 2.4 STRUCTURALREFORMS 2.5 2004 Macroeconomi ................................................... 13 CHAPTER 3 STATUSOF POVERTY ...................................................................................................................................... 15 3.1 PRSPMONITORING INDICATORS ............................................................................................................... ....... 3.2 STATUS OF STATISTICAL POVERT 15 3.3 PRSPIMPLEMENTATIONAND THEMILLENNIUM DEVELOPMENT GOALS ..... CHAPTER 4 SECTORIMPLEMENTATIONPROGRESS ................................................................................................... 20 4.1 ECONOMICSECTORS ............................................................................................................................................. 20 4.1.1 ulture............................................. ........................................................................................ 20 4.1.2 ................................................................................................................................................................ 22 4.1.3 4.1.4 ................................................................................................................................................................ 24 4.1.5 4.1.6 4.2.1 Education............................................................................................................................................................. 30 4.2.2 4.2.3 Nutrition .............................................................................................................................................................. 34 4.2.4 Water and Sanitation 4.2.5 4.3.1 Governance.................................................................................................... 4.3.2 HIV/AIDS........................................... ........................................................................................ 42 4.3.3 Gender................................................................................................................................................................. 44 CHAPTER 5 REGIONALIMPLEMENTATION PROGRESS ............................................................................................ 45 5.1 CENTRALPROVINCE ........................................................................................................................................................ 45 5.2 COPPERBELT PROVINCE ................ .................. 5.3 EASTERN PROVINCE .. 5.4 LUAPULA PROVINCE . ................... 5.5 LUSAKA PROVINCE .... 5.6 NORTHERN PROVINCE ..................................................................................................................................................... 47 5.7 SOUTHERNPROVINCE................... NORTH WESTERNPROVINCE....... ................... 5.8 ................... 5.9 WESTERN PROVINCE ........................................ ....................................................................... CHAPTER 6-INSTITUTIONAL FRAMEWORKFORPRSP IMPLEMENTAION.MONITORING AND EVALUATION .................................................................................................................................................................................. 51 6.1 INTRODUCTION ................................................................................................................................................................ 51 6.2 INSTITUTIONAL STRUCTUREFORMONITORINGIMPLEMENTATION OFTHE PRSP/WDP THE ...... 6.3 IMPLEMENTATIONAND MONITORING INSTRUMENTS ..................................................................... 6.4 IMPLEMENTATIONOFTHE FRAMEWORK ....................................................................................... CHAPTER 7 LESSONSAND RECOMMENDATIONS ON THE IMPLEMENTATION OF THE PRSP ..................... 54 7.2 OTHERFINDINGS. 7.1 MAINOBSERVATIONS ............................................................................................................................................................... 54 ........... ................................................................... ................................... 55 11 *. APPENDIX1.1: PROJECTS WHICH BENEFITED FROM RIF .......................... ............................................................................ 58 APPENDIX1.2: DISBURSEMENT OFFUNDSAND STATUS OF REHABILITATIO MPIKACOLLEGE......................... APPENDIX1.3: NRDC PERFORMANCEOFREHABILITATIONPROGRAMMEAND DISBURSEMENTS......................... APPENDIX1.4: MONZE COLLEGE OFAGRICULTURE PERFORMANCEOF REHABILITATIONPROGRAMMEAND DISBU APPENDIX1.5: LANDDEMARCATION STATUSAND DISBURSEMENTS ................................. ..................................................... 60 APPENDIX1.6: IRRIGATIONAND EARTH DAMDEVELOPMENT ....................................................................................................... 61 APPENDIX3: PROGRESS ONRURAL ELECTRIFICATION ......................................................... ...................................... 62 APPENDIX4 PARTICIPATION INDECISIONMAKINGBY SEX FOR SELECTED POSITIONS: JANUARY2002 - JUNE 200 APPENDIX5. STATUS ONTHE IMPLEMENTATIONOFMACROECONOMICACTIONS. POLICY ........................................ .................................... APPENDIX6. STATUSONIMPLEMENTATION OF AGRICULTUREPOLICY ACTIONS APPENDIX7. MININGPOLICY ACTIONS................................................................................................... APPENDIX8: GOVERNANCE POLICY ACTIONS..................................................... ................................. APPENDIX9. EDUCATIONPOLICY ACTION.......... ................................................................................................................. 72 APPENDIX10: WATER AND SANITATION POLICY ACTIONS ....................................................... ...................73 APPENDIX11. TRANSPORTAND COMM~ICATION APPENDIX12: HEALTH POLICY ACTIONS................................................................... ................................................................... .................. APPENDIX13: NUTRITIONPOLICY ACTION ............................................................... ... 111 ACRONYMS ABB Activity BasedBudget ACC Anti-Corruption Commission ACHPR African Charteron HumanandPeople's rights ADB Africa DevelopmentBank ARV Anti Retroviral APAS Annual PerformanceAppraisal System BOZ Bank of Zambia CBNRM Community BasedNationalResourceManagement CBOH CentralBoard ofHealth CBOs Community BasedOrganizations CBZ Coffee BoardofZambia CEMP Community Environment ManagementProgramme CEDAW Convention on the Elimination ofall Forms ofDiscriminationAgainst ccs Women Commitment Control System CDT Cotton DevelopmentTrust CFS cso Crop ForecastingSurvey Central StatisticsOffice CTGA Central TobaccoGrowers Association DACO District Agricultural Coordinators DDCC District DevelopmentCoordinating Committees DSA Debt Sustainability Analysis D-WASHE District Water, Sanitation,Health andEducation EBZ Export Board ofZambia EPZ Export ProcessingZone FDI Foreign Direct Investment GDP Gross Domestic Product GER GrossEmolument Ratio GIDD Gender InDevelopmentDivision GRZ Government ofthe Republic ofZambia HIPC Highly IndebtedPoor Country ICT Information andCommunicationTechnology IEC Information, EducationandCommunication IFMIS Integratedfinancial ManagementInformation Systems ITN Insecticide TreatedNet IMF International Monetary Fund KCM Konkola Copper mines KTZ Kafue Textiles ofZambia LCMS Living Condition Monitoringsurvey MAC0 Ministry ofAgriculture andCooperatives MLGH Ministry of LocalGovernment andHousing MCDSS MinistryofCommunity Developmentand Social Services MCTI MinistryofCommerce, Trade andIndustry MDGs MillenniumDevelopmentGoals MoFNP Ministry o f FinanceandNationalPlanning MMMD MinistryofMinesandMineralDevelopment MPSA Ministries, Provincesand SpendingAgency MSDP Mining Sector DiversificationProgramme MSME Micro Small andMedium Enterprises iv MTEF MediumTermExpenditureFramework NCZ Nitrogen Chemicals of Zambia NEDT National Economic Diversification Task force NPRAP National Poverty ReductionAction Plan NPRSF NationalPoverty ReductionStrategyFramework NRDC Natural Resource DevelopmentCollege NSSN National Social Safety Net NWASCO National Water Supply and SanitationCouncil PAC0 Provincial AgriculturalCoordinators PAM ProgrammeAgainst Malnutrition PDCC Provincial DevelopmentCoordinatingCommittees PEMFAR Public ExpenditureManagementandFinancialAccounting Reforms PHS PostHarvest Survey PRGF PovertyReductionGrowth Facility PRPS PovertyReductionProgrammeslprojects PRSP Poverty ReductionStrategyPaper PSCAP Public ServiceCapacityBuildingProgramme PSMD Public ServiceManagementDivision PSRP Public serviceReformProgramme PUSH Peri Urban SelfHelp PWAS Public Welfare Assistance RAMCOZ RoanAntelope MiningCooperationofZambia RDA RoadDevelopmentagency RDCS Recurrent DepartmentalCharges FWA RoadFundAgency RIF Rural InvestmentFund RWSS RuralWater Supply and Sanitation ROADSIP Road Sector InvestmentProgramme RTSA RoadTransportand SafetyAgency SADC SouthernAfrican DevelopmentCommunity SAGS Sector Advisory Groups SEDB Small EnterpriseDevelopmentBoard SYSMIN Small Scale Mining STI Sexually TransmittedInfections TAZARA Tanzania-ZambiaRailways Authority TB Tuberculosis TBZ Tobacco BoardofZambia TDCF Tourism DevelopmentCredit Facility TEVET TechnicalEducationVocation and EntrepreneurTraining TNDP TransitionalNational DevelopmentPlan UFFA UrbanFoodfor Assets UTH University TeachingHospital VCT Voluntary Counseling andTesting WRAP wss Water ResourceAction Programme Water Supply and Sanitation ZCCM Zambia ConsolidatedCopperMines ZDHS ZambiaDemographic Healthsurvey ZESCO Zambia Electricity Supply Corporation ZRL Zambia Railways Limited 1 Executive Summary In July 2002, the Zambian Government officially launched its first Poverty Reduction Strategy Paper (PRSP) for the period 2002 - 2004. The PRSP has the overriding objective of attaining sustained and high economic growth, improving access and quality in the provision of social and public services (especially education, health and water and sanitation), and mainstreaming the cross cutting issues of HIV/AIDS, gender and the environment. The strategy correctly recognises that little can be achievedto reduce poverty unless measures are taken to revive Zambia's economy. Diversifying the economy is considered key to reviving the economy with agriculture and tourism, particularly given priority. Attaining macroeconomic stability, improving supportive infrastructureand good governance are also given priority in attaining high growth envisagedinthe PRSP. The purposeof this report, therefore, is to account for the first one andhalf years of PRSP implementation in four strategic areas vis a vis economic and social sectors, governance and cross cutting issues. Although improvements have been recorded in the last two years, Zambia's macroeconomic environment still remains unbalanced, largely due to slippages in fiscal policy, especially in 2003. In 2002, a domestic deficit of 4.1 percent of GDP was recorded, which was higher than the programmedtarget of 3 percent. In 2003, the domestic fiscal deficit is estimated at over 5 percent of GDP against the target of 1.55 percent. The persistent higher deficits have been financed largely through borrowing, which reached 2.3 percent of GDP in 2002 and 4.6 percent of GDP in 2003. This high level of domestic borrowing by Government contributed to a less than expected decline in inflation and interest rates. Inflation declined from 26.7 percent in 2002 to 17.2 percent in 2003 while nominal lending interest rates are in excess of 35 percent. This situation has obviously been holding back attainment of a stronger real GDP growth that is necessary for poverty reduction. Real GDP growth averaged 3.7 percent inthe lasttwo years, which was below the PRSP average target of 4 percent for the period 2002-2003 and much lower than the desired growth rates of at least 8 percent envisagedunder the MillenniumDevelopmentGoals (MDG's). The high borrowing levels also resultedin a mounting public debt, further increasing the fiscal burden in terms of servicing the debt and thereby, affecting government's ability to increase spending on priority growth and Poverty ReducingProgrammes. Even with the high levels of domestic borrowing by government, funding to PRSP programmeswas below expectation. This situation is mainly attributed to the delays to undertake fiscal adjustment and the necessary reforms requiredto contain non-priority expenditures inline with the PRSP strategy. In 2002, priority Poverty Reduction Programmes(PRP's) expenditures were allocated K450 billion (K210 billion from donors and K240 billion from Government) representing2.2 percent of GDP. However, by end December, only K110 billion was disbursedby Government. In2003, the budget allocation for PRP's was K410 billion (280 billion from Government and K130 billion from donors). As at November 2003, K212 billion was disbursed by Government. It should be noted however that within the PRSP, there are other programmes of a growth enhancing and service delivery nature such as roads o f which funding was also falling behind. A serious consequence of the fiscal slippages in 2003, especially with regard to salary and wage overrun and domestic borrowing, was that Zambia could not conclude anew Poverty Reduction and Growth Facility (PRGF) programme with the International Monetary Fund (IMF) in 2003. This also led to a delay in reaching the Completion Point under the Enhanced Heavily IndebtedPoor Countries (HIPC) Initiative in 2003 and thus Zambia missedout inaccessingthe bulk of relief estimatedat US $3.8 billion. The lack of a programme with the IMF also led to the withholding of budget support by the donor community, further affecting budgetexecutionincluding spendingon PRP's. 2 The Government however, made steady progress in implementingthe other triggers for reaching the HIPC Completion Point. These include the stepping up of measures to combat W / A I D S , raising the starting compensation of teachers in rural areas above the poverty line, implementingand scaling up of the roll back action plan for malaria. The Commercialisation o f Zambia Electricity Supply Corporation (ZESCO) was ahead o f schedule while negotiations with the preferred bidder for the sale o f 49 percent shares in the Zambia National Commercial Bank (ZNBC) was in progress. Other structural reforms include the designingo fthe IntegratedFinancialManagement Information System(IFMIS) andthe development ofthe MediumTerm ExpenditureFramework(MTEF). Externally, Zambia's terms of trade continued to weaken, deteriorating by 8 percent in2002 and a further 2 percent in 2003. The price o f metals, Zambia's principal exports fell in 2002 before picking up in 2003. The value of merchandise exports, however, increasedfrom U S $884 million in2001 to US $916 million in 2002 and U S $1.1 billion in 2003. This was mainly on account o f an increase in non-traditional exports. These increased from U S $294 million in 2001 to U S $357 million in 2002 and U S $407 million in 2003. The improvements in the general business environment includingmaintenance of a competitive exchange rate have provided an impetusto the growth innon-metal exports andthe diversification strategy. PRSPImplementationStatus Agriculture is a key sector in Zambia's poverty reduction efforts, since most o f the poor are predominantly in agriculture and also because of the presence of a large resource endowment and conditions suited for agriculture development. The strategy for agriculture is two pronged: (i)ensuring food security and (ii) diversifying agriculture production through promotion o f both large-scale and small-scale producers (under out-grower schemes as well as opening up farm blocks). Government budgetary allocation to the agriculture sector innominal terms was raised from K104 billion in 2001 to K119.2 billion in 2003. A number of interventions were implemented in close partnership with other key players inagricultural development. Inthe area o f promoting food security, the major programme undertaken was the Fertilizer Support Programme (FSP). The FSP is a three-year programme, which started in 2001 and provides subsidized fertilizer to viable but small-scale farmers who inthe last few years had their income bases eroded by the effects of the recurring droughts. A total o f K81.2 billion has been spent onthis programme with a total of 120,000 farm families benefiting. Together with improved weather conditions in 2003, this programme contributed to the increase in food production in the 200212003 season and overall improvements inthe food security position ofthe country. In the area of promoting small scale and commercial farming, the major programmes undertaken were support towards out-growers schemes, rural infrastructure investment programme and animal production and healthprogramme. However, programme implementation was constrained by irregular and insufficient release o f financial resources and therefore not much progress was made. For the out-grower schemes, government supported small-scale farmers by working with various large private sector enterprises. The major crops supported were tobacco, cotton, fresh vegetables and coffee. For cotton, 4,222 farmers were supported while under paprika 3,030 were supported. The financial support and technical assistancewas provided through Agro companies. With regards to commercial farming, the major intervention was the identification o f farming blocks. To this effect, three farm blocks, namely NasangaMunte, Kalumwange and Luena were identified with a total hectarage of 300,000.ha. It is expected that in2004, there will be infrastructure development on these farms. Not much progress was made inthe miningsector with regardto programme implementation. Although the Gemstone Exchange was planned to be established, only a committee to carry out a study was established. 3 Similarly, the Plant Hire Scheme, which was to be created, is yet to be put in place. However, the Mining Sector Diversification Programme (MSDP) under the SYSMIN fund from the European Union took off. But effective implementationwas plaguedby stringent loan conditionsand administrativebottlenecks. As such, only one mining company accessed part of the 16.5 million meant for the credit facility. The stringent conditions attached to the disbursementof funds for credit resulted inthe low utilization of funds underthis facility. In the energy sector, much of the focus and activity was concentrated on rehabilitating the current generation, transmission and distribution infrastructure so as to improve on reliability and efficiency of supply. This programme known as the Power Rehabilitation Programme, has recorded satisfactory progress. The rehabilitation of the transmission component both on the Copperbelt and Southern region was completed in2003 while for the generationcomponent at Kafue Gorge civil works were expected to be completed by the end of 2003. Other works involved the replacementof generators at Kafue Gorge, Kariba North Bank and Victoria Falls, where more than 40 percent progress was recorded and the works are expected to be completed by 2005. In contrast, little progress was made under the Rural Electrification Programme. This was due to poor funding. Intourism, the programmewas mainly directedtowardsthe developmentofinfrastructureinLivingstone as the premier tourist destination in Zambia and creating linkages with other tourist development areas or zones, tourism promotion and marketing and facilitation of tourism financing through a Tourism DevelopmentCredit Facility (TDCF). Inthis regard, a total of 15 kilometres of roads inthe Mosi-oa-tunya national park were rehabilitated. However, the road network inthe Livingstone area continued to be in a deplorable state, despite the status of the city as the Tourist Capital. The rehabilitation of the Livingstone Museum also commenced in 2002. Similarly, the rehabilitation of the Livingstone International Airport runaway and terminal buildings was completed, allowing for increased traffic and tourist arrivals. Aircraft movements increasedfrom 1,517 in 2001 to 2,874 in.2003. Similarly, the number of passengers passing through the airport increased from 35,246 in2001to 63,861 in2003. The rehabilitation of airstrips and airports inother towns also progressedwell. The rehabilitation of Lusaka International Airport was undertaken. The rehabilitation works were also extended to communication equipment. In this first phase, the works involved upgrading and resurfacingof the runway and taxiways which have since been completed. In the second phase, which is still on going, the works include renovationofthe terminal building and installation ofelevators. The Tourism Development Credit Facility (TDCF) was created and a total of K5 billion was disbursedto the fund inearly 2003. However, no disbursementsto eligible beneficiaries hadbeen as the modalities for disbursementswere still beingworked out. In industry, the focus inthe last one and half years has been on three programmes, namely: investment, trade and export promotion, and MSMEs development'rural industrialization. The total funds disbursedto PRPs in 2002 were K2 billion of which K1.2 billion was for export promotion. The Export Processing Zones Act was passed in 2002 and the Export Processing Zones Authority was established in 2003 to promote investment in the EPZ's. By June 2003, K850 million was released for the Export Processing Zones promotional activities. However, in the same year, processing of applications was suspended to allow for a completereview ofthe potential revenueloss arising from possible abuse ofthe incentive. Government, with the support from the co-operating partners continued implementing the Road Sector Investment Programme (ROADSIP) phase one. The ROADSIP is a sector wide approach to the development of the road sector, which was started in 1997. ROADSIP is financed by donors, government andthe RoadFund(for periodic maintenance). 4 Significant progress has been made under ROADSIP to improve the condition of the paved road network. The condition of the paved road network totalling 6,476 Kilometre, has improved tremendously. For instance in 1995, 20 percent or only 1,295.2 Kilometre was in good condition and over 3,000 Kilometre or 51 percent was in deplorable condition. However, by 2002, about 60 percent was in good condition and only 19 per cent in poor condition. However, not much progress has been made on the remaining 27,000 Kilometre o f unpaved road network, which includes feeder roads and the paved road network within the urban centres. Duringthe period under review, disbursements from Government were poor thereby affecting the progress on roads entirely funded by Government. Out of the budgeted K150.9 billion for roads in 2002, only K99 billion was released while in2003, K 118 billion or 64.8 percent o fthe budgetedK182 billion was released. Most ofthese resourceswent towards rehabilitationof feeder roads androutine and periodic maintenance. Under the education sector, the focus o f interventions inthe last two years were aimed at increasing access to basic, high and tertiary education as well as improving the quality and relevance of the education provided at these levels. Reducing disparities in education provision by promoting gender equality was another key intervention. Remarkable progress has been made inmeetingthese sector objectives, especially at basic school level. In the period 2002-2003, a total of 106 Basic schools were constructed, bringingthe cumulative total of basic schools to 4,662 by 2003. The Government also introduced the free primary education policy in February 2002, which saw all user fees abolished for grades 1-7 and uniforms were no longer compulsory. In 2001, total basic education enrolment was 1.8 million pupils, which increased to about 2 million in2003. Thus in 2003, the Gross Basic School Enrolment Rate (GER) was 79 percent compared to 71 percent in 2002 and 75 percent in 2002. Enrolment between 2002 and 2003 increased by 7 percent per annum, exceeding the annual target o f 2 percent. A total o f 1,987 classrooms and 1,374 teachers houses were constructed surpassingthe target of 1,123 classrooms and 828 teacher's houses. Inaddition, the enrolment, at highschool level, increasedby 5 percent from 168,538 in2001 to 210,061 in 2003. The number of high schools also increased to 353 in 2003 from 335 in 2002. The provision of school materials such as books has also improved. Similarly, there were improvements in reading and writing levels o f children inschools in Grade 1. The reading levels improved from 34 percent in 1999 to 64 percent in 2003. In addition, between 2001 and 2003, the mean mathematics score increased from 36 percent to 39 percent, while the mean Englishscore increasedfrom 33 percent to 35 percent. However, while the recent gains in learning achievements and enrolments are encouraging, there is concern that these gains are at risk because of the teacher employment crisis. The number of basic school teachers which had increasedto 40,488 in2002 from 37,793 in2001, fell back to 38,891 in2003. There were about 9,000 teaching vacancies, mostly in rural areas in 2003. This situation was largely attributed to budgetary constraints. Zambia's health situation remains precarious. Maternal Mortality Rate (MMR), which was estimated to be 649/100,000 inthe period between 1990 and 1996 rose to 729/100,000 in2000. This could be attributedto poor accessibility to basic health care facilities, the high malaria incidence and the HTV/AIDS pandemic The Under 5 Mortality Rate also showed a rising trend. In 1990, the rate was 151 and increasedto 162 in 2000. The Infant Mortality Rate (IMR) however is showing signs o f improvements according to census data. This declinedfrom 123 per 1000 live births in 1990 to 110 per 1000 live births in2000. The ZDHS for 2001/2002 surveys also shows a similar trend with the IMR reducing to 95 in 2000 compared to 107.7 in 1996. 5 In 2002 and 2003, most of the health sector interventions were directed at the provision of health care package, the IntegratedMalaria Control Programmes and the constructionof additional health facilities. In addition, the rehabilitation of existing health facilities was undertaken. In terms of rehabilitation of provincial and district hospitals, K5.2 billion was disbursed for this exercise against an allocation of K19 billionto all provinces. Given the low level of funding, againstthe allocation, progress was slow. Interms of drug supply, a total of K13.2 billion was used for the purchase of drugs in 2002. The drugs procured include TB, STI and anti malaria drugs. Each rural health centre received, on a monthly basis, about 1,025 drug kits, meeting an annual requirement of 12,300 for ruralhealth centres. In2003 a total of K12 billion were used to purchase essential health drugs, which included Anti-retroviral drugs. This, however, will only cater for 6,600 patients against the target of 10,000 patients in the phased approached programme, which is intendedto run in selected health facilities. Further, a total of K3.5 billion was used for the provision of Basic Health Care Package. This was used for purchase of drugs in the hospitals, which included TB second line drugs. Further, part ofthe funds was usedto buy Anti-Trypanosoma1drugs in response to the request from the Copperbelt and Northern Provinces where trypanosoma1 cases were reported. Malaria is the major cause of morbidity and mortality (about 50,000 deaths per year) in Zambia. Thus, under the PRSP, combatingofthis disease is one ofthe major interventions. This is being done under the Integrated Malaria Control Programme (Rollback Malaria Programme). Inthis regard, between 2002 and 2003, a total of K500 million was spent on ITN's, from government resources, to supplement those from donors. A total of 82,349 ITN's were distributed by Government inaddition to what the other stakeholders are doing. The incidence of Malaria though still continues to be high and is increasing. The incidence rate per thousand population rose from 387 in 2002 to 428 in 2003. This will require that malaria roll back interventions be scaled up. Zambia's proposal to the Global Fund on scaling up malaria control and management was approvedin 2003 for funding and these efforts are therefore expected to be stepped up in the comingyear. The mainsocial safety net programmescontinuedto be inthe Public Welfare Assistance Scheme (PWAS), the Peri Urban Self Help (PUSH) and the Food Security Pack programme. The programmescover all the districts inthe country and involved over 50,000 poor and vulnerable persons who were targeted to benefit from the fundtransfers for use as school fees and other requisites, repatriation for stranded persons, health- exemptionfees as well as purchase of food rations. In2001, the redesignedprogramme under PWAS that ensures exclusion and inclusion was piloted innine districts. In 2002, the programme was extended to 27 districts and continued it's redesigning in order to ensure that exclusion and inclusion problemswere removed. PWAS has remainedwith only 14 districts to extend nationwide and complete it's redesigning. In 2002, PWAS received K300 million for Health, Educationand other socialsupport. The Food Security Pack programme is implementedon behalf of Government through a Non-Government Organisation called the Programme Against Malnutrition (PAM). The programme's main objective is to improve agriculture productivity and household food security among the targeted vulnerable but viable farmers. This programme is inform of a grant. In early 2002, Government made a policy pronouncement of "Zero Tolerance on Corruption", and as a result, the National Movement Against Corruption (NAMAC) was launched. NAMAC is an alliance of strategic partnerships from government, civil society organisations and the private sector. In order to effectively implement the policy of Zero Tolerance, the Anti-Corruption Commission (ACC) was being strengthened. Funding to the Commission was increased thereby enabling the Commissionto effectively carry out its functions. Further, new offices and staff houses were constructed in three provinces that 6 previously had no ACC representation. These are North-western, Luapulaand Western Provinces. In2002, Government initiated the process of investigating former political leaders as well as senior public officers suspectedto have plunderednational resources. Several assets have inthis regard been forfeitedto the state while a number of highprofile cases are currently beingprosecuted inthe courts of law. Government in 2003 initiated the Constitutional Review Process aimed at removing serious conflicts and inconsistencies contained inthe Constitution. Along with the Constitutional ReviewProcess, government is also developing a legal and judicial framework with clear laws and an enhanced independent Judiciary which will further support the promotion of constitutionalism and the rule of law and respect for human rights. Additionally, government began the process o f Electoral Reform. To this effect, an Act of Parliament was passedto mandate continuous voter registration. In the area of economic governance, government sped up reforms inpublic expenditure management and financial accounting so as to improve accountability, transparency and management of public resources. Such reforms included the designing o f the IFMIS, development of the MTEF and implementation o f the Commitment Control System(CCS). As for combating the HIV/AIDS pandemic, there has been an intensification of the collaborative effort across the whole spectrum o f society. This involved the pullingtogether o f all efforts andresources in order to combat the pandemic. The government in December 2002 enacted the National HIV/AIDS/STI/TB Council and Secretariat to coordinate and support the development, monitoring and evaluation o f the multi- sectoral national response for the prevention and combating of the spread o f HIV/AIDS, STI and TB. Within the context of the multi-sector response, implementation of these interventions across society has been scaled up. Some encouraging results of these efforts are being observed as evidenced by an increase inthe Voluntary Counselling and Testing Centres, the provision o f TB preventive therapy, provision o f ARV's in public hospitals, and the expansion o f Community Home Based Care. Similarly, recent data from the Zambia Demographic Health Survey 2001/2002 report shows that the majority o f Zambians are now aware o f how the HIV/AIDS is transmittedandhow it can be avoided. The same report also indicates that the prevalence rate among the adult population is estimated at 16per cent indicating a reduction from the previousyear. However, monitoring and evaluation systems are still highly fragmented as the HIV/AIDSinterventions are being implemented across a wide spectrum o f society and by many stakeholders. It is important to strengthen data management capacities and improve co-ordination among stakeholders. This has been identifiedas an arearequiringsupport. The overall coordination as well as the monitoring and evaluation of the PRSP rests with the Ministry of Finance and National Planning with the participationand support of all stakeholders. A Poverty Monitoring and Analysis Framework (PMA) was designed to provide timely information to policy makers on what really works towards the reduction o f poverty. The PMA is supposed to be a national monitoring and evaluation system for both the PRSP interventions and the Transitional National Development Plan (TNDP) inparticular andany other development plans ingeneral. The first one and half years of PRSP implementation brought with it important lessons. Firstly, the extreme pressures placed on the budget by extra budgetary expenditures adverselyaffectedthe execution o f some poverty reducingprogrammes To the extent that fiscal adjustment andthe necessary reforms were also delayed so as to . curbonnon-priority expenditures, fundingto PRSPprogrammeswas adversely affected. Part o fthe reason is that the implementation of the PRSP, in the Zambian case, preceded the development o f the Medium Term Expenditure Framework (MTEF). This development may have resultedin poor releases due to the lack of specific targeting of the budget towards Poverty Reduction Programs. The fiscal adjustment as well as the 7 introduction of the MTEF, Activity Based Budget, is expected to address some of these concerns. Fiscal adjustment and the necessary reforms to reduce or limit the size of government non -priority operations are especiallycriticalandwillrequiretobeaccelerated. Secondly,the listingofsome PRSPprogrammesasPRP's affectedoverallPRSPmonitoring.The Report focused mainly on programmes classifiedas PRP' s in the yellow book, ignoring those that have direct poverty reducing effort but classifiedunder other lines like capital expenditure or grants. It is important that the future progress reports should focus not only on programmes classified as PRP' s, but also include all poverty reducing programmes by Government and Cooperating partners. With the introductionof Activity BasedBudgetingunderthe MTEF,this is expectedto beaddressed. Thirdly, baseline data for most interventions was absent makinganalysis, especially comparison of inputs and outcomes very difficult. Not only was baseline data missing, but also getting overall information fiom line ministries was problematic andthis is reflectedinthe gaps insome sectors. The inputs from the line ministries intothis progressreport, inmost, cases were poor, indicatingthat there is either inadequatecapacity inthese ministriesto conduct such analysis or there is absence o f informationand management reporting systems. There is needtherefore, to buildcapacity insector ministries. Fourthly, getting informationon donor-fundedprogrammesfiomthe line ministries anddonors was problematic. The PRSP is supposedto be a fiamework through which donor aid is channelled to Zambia. There is needto developafiamework for improvedinformationcapturebetweenMOFNP,the donorsandsectorministries. Fifthly, even though financingwas a problem, in some cases where disbursements was effected, there were some absorptionproblems. The money remained inthe banks, unutilizedfor longperiods oftime, depriving other programsandprojects that may have hadthe capacity to efficiently utilizeit. The reasonsfor this lack of absorption are many and vary from program to program and from district to district. Common among them, however, is the lack of information regarding timing of disbursements, inadequate provision of capital equipment to facilitate implementationof infrastructure works and long and complicated tender procedures. Finally, although implementationwas slow inthe last two years, the PRSP strategy is still valid and remains an importantpointofreference betweenGovernment,the civilsociety andthe donors. Addressingthe shortcomings discussed above, could very much improve on the implementationrate of the PRSP. Some of the corrective measureshavebeeninitiatedandwillrequireto beaccelerated. 8 CHAPTER 1 INTRODUCTION In July 2002, the Zambian Government officially launched its first National Poverty Reduction Strategy Paper (PRSP) for the period 2002-2004. This was the product of a wide participatory process that involved all stakeholders, (e.g. local Authority government Ministries, Academia, Cooperating Partners and Civil Society). The PRSP i s one o f Zambia's development planning and resource programming tool and as such, it is considered to be within the overall framework for national planningand interventions for poverty reduction. In addition to the PRSP, the government prepared the Transitional National Development Plan (TNDP) covering the period 2002-2005. The TNDP, which was launched inDecember 2002, complements the PRSPby bringinginsome sectors ofthe economy that were not included inthe PRSP. The purpose ofthis report is to account for the first one and halfyears o fthe implementationofthe PRSP in four strategic areas, namely economic and social sectors, governance, infrastructure and crosscutting issues. The second chapter covers the Macroeconomic performance; budget and structural reforms with regard to the PRSP refined indicators. The chapter focuses on the progress made inundertakingstructural reforms to support the policy and institutional changes requiredto effectively implement the PRSP. The chapter also examines the weaknesses in the execution of the 2002 and 2003 budgets and suggests ways of improving the budget execution processes through planning and budgetingreforms as well as mechanisms that are being introduced within the context of the Medium Term expenditure Framework (MTEF), Integrated Financial Information System(IFMIS) and the Activity BasedBudgeting(ABB). Chapter three o f this progress report has provided concrete data where available, emphasizing on the analysis o f the input-output and to some extent outcome and impact indicators. In this chapter, there is provision o f trend data on the progress made in key sectors because no comparable survey to that o f the 1998 Living Condition Monitoring Survey (LCMS) has been under taken. In chapter four and five, the report examines the Sectoral and Regional overall budget allocations against the releases and actual expenditures. The major sources o f this data are the financial reports and yellow books for 2001, 2002, and 2003 as well as other data from the sectoral and provincial reports that were submitted. The main thrust with regard to what was planned for in each sector in a particular year, has been examined in view of the specific performance o f these sectors. An attempt has also been made to explore some o f the reasons for the failure to achieve the giventargets. Chapter six provides an overview o f the institutional framework for the implementation of the PRSP. Inthe last chapter, the report highlights some o f the lessons learnt and gives recommendations for fbture intervention. It should be notedthat the achievements reported by the useof an appropriate mix of indicators was done in order to make the indicator system simple, feasible and more measurable. 9 CHAPTER 2 MACROECONOMIC PERFORMANCE AND STRUCTURAL REFORMS 2.1 Macroeconomic situation The attainment of macroeconomic stability has continued to be elusive largely due to the effects of unsustainablefiscal deficits and occasional exogenous shocks. RealGDP growth was 3.3 percent in2002 and is estimated at 4.2 percent in 2003. To the extent that the country was faced with unforeseen difficulties such as the withdrawal of Anglo American Corporationfrom KCM inFebruary andthe drought that affected agricultural production, overall growth in 2002 was satisfactory. In 2003, the recovery of agriculture largely explainsthe expectedpick up ingrowth. Other sectors that are expectedto contributeto the positive GDP growth are transport and communications, energy, construction, wholesale and retail trade and tourism. The growth rates are, however still dismally low to make any significant impact on poverty. Due to a sharp acceleration in food prices arising from the drought, the 12-month inflation rate shot up to 26.7 percentin2002 from 18.7 percent in2001. In2003, 12-monthinflationfell to 17.2 percent. This is however, still highconsideringthe year target ofasingle digit figure. The domestic fiscal deficit in 2002 reached4.1 percent against the target o f 3 percent while in 2003 the domestic deficit, is estimated at 3.5 percent comparedto the target of 1.6 percent. The deficits have been financed largely by domestic borrowing, which reached 2.1 percent of GDP in 2002 and it is estimated at over 5 percent in 2003. This fuelled a higher than targetedmoney supply growth which also contributedto a slower pace inthe decline in inflation, while the high levels of borrowing have beena major factor inthe prevailing high real and nominal interest rates. The weighted commercial bank lending rates were 43 percent in 2002 and only declined slightly to 39 percent in 2003. Such high levels of interest rates have heldback stronger and robust private sector activity andthereforereal GDP growth. Inthe externalsector, the current account deficit (including grants) improved from 10.8 per cent of GDP in 2001 to 6.5 percent in 2002 and is estimated at 5.6 percent in2003. Inabsolute terms, the deficit narrowed from U S $758 million in 2001 to US $652 million in 2002 and a projectedU S $627 million in 2003. The narrowing in the deficit has been due to a narrowing in import growth and a higher export growth. Merchandiseexports in2002 amountedto U S $916 million, up from U S $884 million in2001. Merchandise exports are estimated at U S $1.1 billion in 2003. There are signs that the economy is diversifying as evidenced by the impressive growth in non-metal exports which have continued to register double-digit growth. In 2002, they grew by 35.2 percent to reachU S $357 million from U S $264 million in 2001. In 2003, non-metal exports grew by 13 percent to U S $405 million. This impressive growth in non-metal exports is attributed to the improved export regime including fiscal incentives and a competitive market based exchange rate. The attainment of macroeconomic stability will be important in consolidating these gains. 10 Table 2.1: Trends in selected Key Macroeconomic Indicators 2000-2003 2003 Indicator 2000 2001 2002 est Real GDP Growth 3.6 4.9 3.3 5.1 CPI Inflation end Year 30.1 18.7 26.7 17.2 CPI Inflation annual average 26.1 21.7 22.2 21.5 Domestic Fiscal Deficit (percent of GDP) -3.3 -4.7 -4.2 -3.2 Domestic Revenues hercent o f GDP) 19.4 19.1 18.0 18.4 Expenditures (percenf of GDP) 31.9 30.6 Domestic Financed Capital Expenditure percent 2.3 3.8 2.6 2.5 of GDP Poverty Reduction Programmes (percent of 1.4 0.7 1.4* GDP) Money Supply Growth (percent Change) 74.1 10.8 31.4 13.8 Government Borrowing from BoZ (inK Billion) 1,517.9 1,900.1 1,700.8 Government Borrowing from BoZ (annual 80.5 25 -10.5 percent Change) Government Borrowing from Commercial Banks 357.1 777.3 916.3 (InK'billion) `Government Borrowing from Commercial Banks 54 117.7 17.9 ____________ (annual percent change) Nominal Weighted Commercial Bank lending 45.9- 54.6- 50.0- 44.8 rates Nominal ExchangeRate Depreciation endperiod 58.0 -7.9 13.2 25.3 Exports c.i.f (US$Million) 746 884 916 1,134 Metal Exports (US$Million) 497 590 560 729 Non-Metal Exports 249 295 357 405 O fwhich agriculture (US$Million) 102.3 115.1 134.2 ___ Gross Intemational Reserves (Months of Import 2.8 1.4 2.2 1.3 Cover) Balance ofPayments Support (US $ Millions) 186.0 74.6 137.3 55 Current Account Balance (including grants) (11.4) (10.8) (6.5) (5.6) (percent o f GDP) Foreign Direct Investment (US Millions US 278 301 178 233 Dollars Extemal Debt Stock (US$) 6,253.1 7,270.4 7,140.4 6,495.1 Stock o fDomestic Debt (inK, Billion) ___ 3,971 3,077 3,695 Stock o fDomestic Arrears (InK Billion) 433.6 635.5 Source:Ministty of FinanceandNationalPlanningandBankofZambia Under HIPC Initiative 2.2 Debt Stock 2.2.1 External Zambia's external debt overhang continues to be enormous. As at end June 2003, the external debt stock stood at US$6,862.6 million or 182 percentof GDP (See Table2.2). Total debt service paymentsamounted to U S $285 million in2002 and U S $196.8 million in2003. Because of shortfalls inexternal support, some of the external debt service has hadto be paidfrom domestic revenues. As a Highly IndebtedPoor Country (HIPC), Zambia is eligible for relief under the HIPC Initiative and has already reachedthe Decision Point, at which stage creditors provided interimrelief and pledgedto provide the bulk of the relief on condition that Zambia meets certain conditionalities or triggers. The point at which these triggers would have been satisfactorily met is called the Completion Point. Zambia was expectedto reachthe Completion Point in December 2003 uponwhich, it was expectedto obtain relief amountingto US$3.8 billion. However, due to slippages infiscal policy in2003 and the resultant failure to reacha new Poverty ReductionGrowth Facility (PRGF) programme with the International Monetary Fund (IMF) the attainment of the Highly Indebted Poor Country (HIPC) Completion Point has beendelayedand is now expectedin2004. 11 As a result of failure to conclude a new PRGF arrangement with the IMF, the donor community withheld budget support. As of October 2003, only US $9.6 million was disbursed out o f the expected US $56 million for the year. The withholding of programme support affected the execution of some poverty reducing programmes. Table 2.2: ExternalDebt Stock2000-June 2003 (US$ Million) 2000 2001 2002 June 2003 Bilateral 2,438.5 3,091.8 2,614.8 2,013.5 Of which: Paris Clubll 22,638.5 2,713.9 2,343.1 1,728.2 Non Paris Club/2 459.3 377.9 271.7 285.3 Multilateral 3,404.3 3,346.1 3,854.9 4,106.8 Of which: ADWADF 328.4 318.7 296 4,016.8 World Bank 1,788.7 1,837.1 2,491 2,527.5 IMFl3 1,128.5 992.0 965.9 1065.1 Other Multilateral 158.7 198.3 102 96 Privatel3 410.3 832.3 670.4 832.3 Total Debt Stock 6,453.1 7,270.2 7,140.1 6,862.6 Source: MOFNP 2.2.2 Domestic Debt Stock In 2002, the domestic debt stock continued to increase. As at end of June 2003, total domestic debt stock rose to K 4,988.7 billion from a total o fK 3,976.1 billion as at end of December 2002. The stock o f treasury bills increased from K611.8 billion in 2002 to K1, 134.7 billion at the end of June 2003. The increase in debt stock was largely attributed to the continued Government deficits, which are mainly financed through borrowing from the banking sector. In addition, the increase in domestic debt was also attributed to financing o f parastatals and accumulation of interest on various other liabilities such as domestic arrears, awards and compensations. Domestic arrears have increased from K433.6 billion at end December 2002 to K635.5 billion as at end June 2003 representing an increase of about 47 percent. The accumulation o f domestic arrears is attributed to unpredictable and inadequatebudgetary releasesand lapses inthe procurement procedures. Table 2.3: DomesticDebtPortfolioAs at end June 2003. 2002 End June 2003 DEBTCATEGORY K billion I<' Billion Treasury bills 611.9 1,134.7 Bonds and stocks 882.4 2,793.70 loansloverdrafts Forex bridgeloan 1,233.5 Kwachabridging loan 467.0 Arrears Suppliers arrears 433.6 635.5 Pensioncont. arrears 270.7 273.8 Awards & compensation 70.0 61.6 Continaentliabilities 6.2 RecapGalisationbonds 3,976.1 4,908.7 Source: MOFNP 12 2.3 BudgetPerformance The execution of the budget in 2002 and 2003 continued to be faced with difficultiesmainly due to extra budgetary pressures and the withholdingof support from donors. In 2002, the Government hadto import food so as to mitigate the effects of the drought. Additional pressures arose from purchase of agricultural inputsfor the 2002l2003 agriculturalseason, whichwere neededto ensure food security. Consequently, the government recorded a deficit of K674.3 billion representing4.2 percent of GDP compared to a target of 3.0 percent of GDP. In 2003, the budgetary situation worsened and was compounded by the decision in April to award wage and salary increments and housing allowances to civil servants, which were far in excess of budget allocations. In addition, the Government in September 2003 started paying out retrenchment cost to miners at RoanAntelope MiningCorporationof Zambia (RAMCOZ). This was being done inaneffort to facilitatethe privatisationofthe Luanshyamine. These budget overruns were largely financed through domestic borrowing, which by October 2003 had reached 4.6 percent of GDP compared to 2.1 percent in 2002. The consequence of extra budgetary expenditures in both 2002 and 2003 meant that poverty reduction programmes and capital projects were suppressed. In 2002, the allocation for Poverty ReductionProgramme (PRP's) was K450 billion, out of whichK240 billion was to be disbursedfrom the domestic budgetandK210 from donors. Out ofthe K240 billion that was supposed to be domesticallyfinanced, a total of K110.2 billion was released representing 45.9 percent of the total budgetedamount. In 2003, allocationsfor PRP expenditures amounted to K420.7 billion out of which K240.8 billion was to be financed by Government and K179.9 billion by donors. By November 2003, the Government had disbursed K212 billion representing 89 percent of the government PRPallocation.Most of these resources were disbursedinthe secondhalfofthe year. 2.4 StructuralReforms The Public Service ReformProgramme(PSRP), which startedinthe 1990'~~ the objectiveof improving has the efficiency and service delivery in the public sectors. Through the PSRP, strategic plans have been developed for almost all government ministries and other spending institutions. Similarly, almost all ministries have been restructured with job descriptions and specifications done. In addition, the Annual PerformanceAppraisal Systems (APAS) were introducedin 12 ministriesand 3 institutions. Despite these efforts inthe PSRP,the cost ofrunninggovernment has continuedto beenormous. Governmenthasalso beenundertakingPublicExpenditureManagement andFinancialAccountingReforms (PEMFAR), which are aimed at improving on fiscal discipline, effectiveness in resource allocation and realizationofvalue for money inthe execution ofexpenditures. A number ofactions are beingimplemented within the PEMFAR. These are: Development o f a MediumTerm ExpenditureFramework (MTEF), which is aimed at ensuring that over the mediumterm, resources are allocated accordingto Governmentpriorities as outlined in the PRSP; The designing o f the Integrated Financial Management Information System (IFMIS) which, is aimed at tracking expenditures on a timely basis and the Commitment Control Systems (CCS) which, is aimedat ensuringthat no expenditure is made without beingbackedby cash so that arrears can be minimized. Work on the various components of these reforms was at different stages. The Ministry of Finance and National Planning (MoFNP) introduced CCS in some ministers Programmes and Spending Agencies (MPSA's) in January 2003 and considerable improvements on the time inwhich MoFNPreceives monthly expenditure returns from line ministries have been recorded. This has helped to limit to some extent the accumulation of arrears. In addition work on the Medium Term Expenditure Framework (MTEF), is advanced and the 2004 budget is being prepared according to the MTEF. In an effort to improve on the 13 efficiency of the financial system, Government, working with cooperatingpartners is preparinga Financial Sector DevelopmentPlan. Other reforms undertaken were the approval of the National Transport Policy in order to address fragmentation in the road transport sector. The policy advocates for the establishment of three agencies, namely, Road Development Agency (RDA), Road Fund Agency (RFA) and Road Transport and Safety Agency (RTSA). The agencies would be responsible for Management and disbursement of road fund, construction, maintenance and rehabilitation of all roads inthe country and the enforcement of roadtraffic and safety regulations inthe country respectively. In the education sector, the Government introducedthe policy of Free Primary School Education from grades 1-7. Additionally the Judicial, Electoral, Parliamentary andDecentralizationreforms are beingimplemented(See Appendix 5). 2.5 2004 MacroeconomicFrameworkand MediumTerm Outlook The macroeconomicframework outlined inthe PRSP has undergoneseveral revisionsbased on changes in the economic circumstances. Taking into account the developments in 2003, especially with regard to slippages in the budget and the attendant larger than expected domestic financing, Government has proposed revisions to the macroeconomic framework for the period 2004-2007 (See table 2.4). These revisions are also expectedto be made to the MTEF and will be regularly reviewed depending on economic circumstances. Inthe light ofthe larger levelsofdomesticborrowing in2003 andthe failure to reachthe HIPC Completion Point inthe same year, Governmenthas placedfiscal adjustmentat the center ofmacroeconomicpolicies in 2004. To this effect, a tighter fiscal policy has been proposedwhich envisages to reduce the overall fiscal deficit to 4 percent of GDP and domestic financing to 2 percent from 5.1 percent of GDP in2003. This is expected to be achieved mainly through expenditure restraint. The containment of domestic borrowing should help in bringing down the high interest rates and the domestic interest costs. Based on the developments in2003, inflation is not expectedto exceed20 percent in2004. Inthe mediumterm (2005-2006), Governmentplans to sustainthe growth momentumto at least 5 percent and to raise it to 6-7 percent beyond 2006; further bring down inflation to around 10 percent by 2006 and single digit levels thereafter; contain the overall fiscal deficit to no more than 1.4 percent of GDP; and to build gross internationalreserves to about 2 monthsof import cover by 2007. The growth objectives are premisedon continued expansion in mineral production as a result of favorable world prices, re-investmentsinthe domestic mines and the coming on stream of two large mines inthe net two years. The other growth sectors will be agriculture especially that most poverty is in rural area, tourism, and light manufacturing. The continuedimprovements inthe business environment including the investment climate, a drop in interest rates and inflation, stability in the exchange rate coupled with continued improvements in infrastructure should contribute favorably to the growth prospects. Thus beyond2006, Governmentwill aim at attaininggrowth of at least 6 percent. The fiscal objectives are expected to be achieved mainly through expenditure restraint, while domestic revenue are expected to be sustained at around 18.6 percent of GDP in the medium term. In addition to domestic revenue, donor inflows are also expectedto support public expenditureprogrammes. Inthe externalsector, metal exports are projectedto grow by an annualaverage ofat least 12percent inthe period 2005-2006 premised on increasedprices and domestic production. Government expects that Zambia will reach the HIPC Completion Point in 2004 as a result of a firm fiscal policy. This together with improved export outlook, is expected to contribute to a favourable external sector position. As discussed earlier, Government is on course in meeting the other HIPC triggers. These are the combating of 14 15 CHAPTER3 STATUS OFPOVERTY This chapter presents an overview of the status of poverty using selected socio-economic indicators as obtained from recent surveys, census and administrative records. It attempts to bring out some of the outcome and impact indicators as agreed upon in the list o f PRSP indicators. Although not all the PRSP have their outcome/impact indicators collected and analyzed, the available ones will give a rough idea of the direction the country is heading towards achieving the PRSP goals and targets. Ideally, the chapter should have presented the changes on the country's poverty status by using the 1998 Living Conditions Monitoring Survey as a baseline and 2003 Living conditions to measure progress. However, this could not be done because o f the differences in Methodologies. As a result, the chapter does not provide measurable progress in poverty indicators such as head count o f poverty, poverty gapldepth, gini-coefficient etc. Nonetheless, the chapter provides a brief analysis o f progress on selectedsector indicators such as education health, HIV/AIDS, tourism, mining and macroeconomic indicators. Due to very weak monitoring and evaluation system, the chapter is not able to present a clear input-output-outcomehmpactmodel. However, the government is putting in place measures to strengthen the monitoring and evaluation systems by strengthening the sector and the provincial planning units. The sector and provincial planning units are encouraged to set up effective Information Management systems. 3.1 PRSPMonitoringIndicators After the official launch o f the PRSP in July 2002, it became clear that the original PRSP Monitoring indicators would not suffice. A more systematic elaboration o f a consistent indicator system was requiredto be undertaken for the annual PRSPMonitoring. Itwas therefore decided to refer this task back to the former PRSP working groups. As a first step, a limited number of participants from each of the PRSP working groups received methodological guidance for indicator development. The results arising from the activities of the introductory step were the basis for the refinement o f indicators by the PRSP working groups. The completed indicator sets were presented and endorsed by the participants from all the PRSP working groups. These indicator sets have formed the basis for monitoring of the PRSP inZambia in general andthe first annual report inparticular. The PRSP list of indicators is verified by means o f administrative data collection that is done on a routine basis by the responsible sector agencies. There are a few indicators that may require more intensive survey work such as a Living Conditions Survey. The Central Statistical Office conducts periodical surveys that could be usedfor evaluating poverty interventions. 3.2 Status of Statistical Poverty indicators The headcount poverty is 73 percent as indicatedinthe 1998 LivingConditions MonitoringSurvey 11. Box 1: Selected Statistical Poverty Indicators HeadcountPoverty 73% in 1998 - Life expectancyat birth: 49.5 years in 2000 Childrenunder-5 with low weight for age (%): 28.3% male/27.9% female in2001/2 Childrenunder-5 with chronicmalnutrition/ who are stunted(%): 47.9% Male/45.6% female in2001/02 Literacyrate-Population aged 15 and above: 67.2% in2000 16 According to the 2000 Census Report, there has beenan increase inLife expectancy at birthfrom 46.9 years in 1990 to 49.5 years in2000. There has also beenan increase inthe literacy rate since 1990. The literacy rate ofthe populationaged 15 and above has increasedfrom 66.0 percent in 1990to 67.2 percent in2000. Notwithstanding the gains in Life expectancy and Literacy rates, nutrition status o f children under the age of 5 years has continued to deteriorate. According to the Zambia Demographic Health Survey (ZDHS) 200112002, the percentage of children under 5 years with low weight for age increased from 24.5 percent in 1996 to 28.3 percent in 200112 for males and 22.8percent in 1996 to 27.9 percent in 200112 for females. There has been an increase o f 5.1 percentagepoints inthe proportion of low weight for age among females under 5 years compared to an increase of 3.8 percentage points among males o f the same age. Further,the rate of children under 5 with chronic malnutrition has increased from 43.lpercent for males in 1996 to 47.9 percent in 2001/2 and 41.7 percent for females in 1996 to 45.6 percent in 2001/2. Unlike low weight for age, chronic malnutrition increasedmore among males by 4.8 percentage points compared to 3.9 percentage points among females. 3.2.1 Macroeconomic status The PRSP set out to achieve an average annual growth rate o f at least 4 percent and also to bring down inflationto single digits. Box 2: SelectedMacroeconomic Indictors Real annual GDP growth: 3.3% in2002 and 4.3 percent in2003 Level oflending portfolio (K'millions); 1,026,209 in2002 Annual growth inValue ofExports: 3.6% in2002 Inflow ofFDI (%m): 147 in2002 Endyear Market Capitalization (K'millions): 565,870 in2002 Inthe last two years, generally, there have beensome improvements to the macroeconomic environment as evidenced by continued positive growth, reduction o f inflation from 26.7 percent in2002 to 17.2 percent in 2003. The current account deficit(inc1uding grants) has also improved to 5.6 percent o f GDP in2003 from 6.5 percent in 2001, with non-metal exports showing impressive growth from U S $295 million in 2001 to US $405 million in 2003. However, the macroeconomic environment is still unbalanced and the unsustainable fiscal deficits have contributedto this situation, although exogenous shocks such as droughts, the pullout of Anglo American Corporation from its subsidiary, Konkola Copper Mines also played a part. Interms ofthe PRSPtarget, the macroeconomic performance is still well offthe desired levels. At the Lusaka Stock Exchange (LUSE), all performance indicators except the endyear market capitalisation showed a declining trend. End year market capitalisation increased from K356, 362 million in 2001 to K565, 870 million in 2002. The level of lendingportfolio declined from K1, 127, 481 million in 2001 to K1, 026,209 million in2002. This levelwas evenlower than the 2000 levelof lendingportfolio, which was K 1,080, 827 million. The annual growth invalue of exports also declined from 18.5percent in2001 to 3.6 percent in2002. 17 3.2.2 Status On Selected Socio-Economic Indicators Table 3.1: Performancein Economic Sectors usingSelected Indicators Name of Indictor 2001 2002 a RealAnnual GrowthinAgriculture GDP -2.6 6.3 a Mining GDP GrowthRate(percent) 14.0 16.4 a Tourism GDP GrowthRate (percent) 2.3 4.9 a ManufacturingGrowthrate (percent) 5.7 5.7 a Energygrowth rate (percent) 1.1 5.2 a Total of peopledirectly employedinthe mining sector NO. 38,442 Mineral output (zone) Copper 298,773 330,600 Cobalt 4,376 3,913 Total value ofExport from Gemstones($m) 29,558 Growth invalve of manufactureproducts(K'millions) 1,293.1 ForeignExchangeEarningsfrom Tourism(US$M) 116.9 145.3 No. of Tourismenterprisesregistered 34 BedOccupancy Rate (percent) 45.9 43.6 RoomOccupancy rate (percent) 51.1 48.3 No. ofTourist arrivals 491,992 556,043 Source: MOFNPEconomicReportfor 2001 and2002 During the first year of the implementation of the PRSP, economic sector indicators did not show significant improvements. Inthe Tourism Sector, there has been an increaseinthe numberoftourist arrivals from 491, 992 in2001 to 556, 043 in2002. However, the room and bed occupancy rates declined from 51.1 percent and 45.6percent in 2001 to 48.3percent and 43.6percent in 2002 respectively, The reduction in room and bed occupancy rates could be attributedto preference for campsites by some internationaltourists. Table 3.2: Performancein the Social Sectors usingselected indicators SelectedIndictors 2001 2002 a Proportionof populationwith access to clean water (percent) 49.1 (2002) a Under 5 Mortality rate(Per 1000) 162(2000) 168 InfantMortality rate (per 1000) 110(2000) 95 a MaternalMortality Rateper 100,000 729 (2000) a Numberof children 12-23 monthsImmunised 395,765 380,352 a Malaria Incidenceper 1000 393.8 375.7 Undenve3ightratio for under 5s (percent) 22percent a PupiVTrainedteacher ratio 46 46 a Gross enrolment rates(percent) 78 81 Ratio ofboysto girls insecondaryschools (per 123.8 121.2 a 100girls) a Gross Enrolmentrate (primary) 86.6 (2003) a Grossenrolmentrate (secondary) 13.56 (2003) a Net enrolmentrate (primary) 76.16 (2003) a Net enrolmentrate (secondary) 10.59 (2003) Source: Complied by MOFNP Generally, the social sector indicators are showing a mixed status. In the Health Sector, the mortality indicators have been showing a declining trend. Using the census data, the infant mortality rate declined from 123 per 1000 live births in 1990 to 110 per 1000 live births in2000. The ZDHS for 2001/2002 surveys also shows a similar trend. In 1996, the Infant Mortality rate was at 107.7 and reduced to 95 in 2001/2. However, the maternal mortality rate, which, is estimated to be 729/100,000 in2000, is high as compared to 18 649/100,000 in the period between 1990 and 1996. In addition, Under 5 Mortality Rate has also shown a rising trend. In 1990, Under 5 Mortality Rate was 151and increased162 in2000. (See table 3.2) The number of new cases of malaria diagnosed is still high. The Malaria per 1000 population has risen from 387 in 2002 to 428 by 2003. With regard to immunization, the percentage of children aged 12-23 months immunized against measles by 12 months reducedfrom 95 percent 395,765) in 2001 to 89 percent (380,352) in 2002. The percentage of children fully immunized Under 1 year has also declined from 84 percent (350,321) in 2001 to 73 percent 312,423) in 2002. Despite the unfavorable performance in some health indicators mentioned above, the health sector has recorded an increase in the percentage of supervised deliveries from 42 percent 230,545) in 2001 to 47 percent 264,183) in 2002. The supervised deliveries have a bearingon bothmaternaland childhealth. The educationsector indicatorshave generally beenimproving. The Gross Enrolment Rate (GER) has gone up from 78 percent in2001to 81 percent in2002. However, there are differentials ingross enrolmentrates between primary and secondary schools. The gross enrolment rate for primary school in 2002 was 86.6 percent while for secondary school it was 13.5 percent. In both primary and secondary schools, the gross enrolment rates have increased from 86.6 percent and 13Spercentin2002 to 91.7 percent and 13.6 percent respectively in 2003. The net enrolment rates have equally increased from 72 percent in 2002 to 76.2 percent in 2003 for primary schools and from 10.4 percent in 2002 to 10.6 percent in 2003 for secondary schools. Further,the ratio of boys increasedfrom 107.6 boys per 100girls in2001 to 108boys per 100 girls in 2002 at primary school level while at secondary school level, it reducedfrom 123.8 boys per 100girls in 2001 to 121.2 boys per 100girls in2002 Box 3: Cross Cuttingthematic indicators HIV/AIDSprevalencerate (15-49): 16% in 2001/2 % of 15-49years requestingfor an HIVIAIDStest: 73.3% in 200112 % of personswith advance HIV infectionreceivingARV combinationtherapy: 0.1% (155,000) in 2001/2 % of pregnant HIV+women receivingARVs: 3.09% (3,064) in 2002 % of infants bornto HIV infectedmothers: 39% in 2001/2002 % of women in parliament: 12.03% in 2003 % of budget allocationto actual disbursementon PRPs:45.9% in 2002 No. of cases of human rights abuses: 1100 in 2002 *% of reported human rights abuses prosecutedthat are: Successfully Resolved: 19% in 2002 * Withdrawn: 1% in 2002 * Discontinued:27% in 2002 ** Rejected:28% in 2002 Referredto other Authority: 25% in 2002 HIV/AIDS, Gender, and Environment issues were considered as cross cutting while issues of Governance were treated separately inthe PRSP, though in the indicator system, they were consideredas cross cutting. This sectionthereforetreats all the four thematic issues as cross cutting. Ideally, the crosscutting indicators shouldhave beenintegratedinall the sectors discussed above. Most data on HIV/AIDS was obtained during the 2001/2002 ZDHS. However, the Ministry of Health has been collecting data on HIV prevalence among young women age 15-24 years and HIV Sero-prevalence (positive) in sexually active subpopulationusing the sentinel surveillance survey that obtains its data from the antenatalcare attendees. According to ZDHS 2001/2, the HIV/AIDSprevalencerate (15-49 years) is 16 percent. The HTV/AIDS Sentinel Surveillance Report also indicates that the HIV sero-prevalence in the sexually active subpopulationwas 19.7 percent in 1999 andHIV prevalence among women aged 15-24was 17 percent. The percentage of the population aged 15-49 years requesting for HIV/AIDS testing was 73.3 percent in 2001/2. The high percentage of the population requesting for an HIV/AIDS testing could be attributed to an increase in Voluntary Counselling and Testing (VCT) programmes that are being 19 implemented.Interms of administeringan ARV combinationtherapy, only 0.1 percent of persons with HIV infections are receiving ARV's while only 3.1 percent ofpregnantHIV positive womenare receiving ARV's. The low rate couldbe as a result ofthe cost ofmakingARV's available and also the cost associated with administering the drug. With regard to gender indicators especially, women in decision-making, the percentage of women inParliamentstood at 12.0 percent in 2003. This is far much below the SADC target o f 30 percent. According to the Permanent Human Rights Commission Report of 2002/2003, a total of 1,100 Human Rights cases were reported in 2002 out which, 19 percent were prosecuted and successfully resolved, lpercent withdrawn, 27 percent discontinued, 28 percent rejected and 25 percent referred to other authorities. 3.3 PRSPImplementationand the MillenniumDevelopment Goals The implementation of the PRSP is one of the strategies for achievingthe MillenniumDevelopment Goals (MDGs). The MDGs indicators are an integral part of the PRSP Monitoring Indicators. Therefore the progress in achievingthe PRSP goals and targets will have an effect on the achievementof the Millennium DevelopmentGoals. The first report of the PRSP has been producedalong side the first Country Report on the Millennium Development Goals. The same working groups for the PRSP have been used for the preparation of the MDG Report. However, there are plans to integrate the reporting o f the MDGS into the PRSP Annual Progress Report. Box 4: MDGs Status at a Glance Target Will the target be met State of national support Halve, between 1990, and 2015, the proportionof people living in extreme poverty Unlikely Weak but Improving Halve, between 1990 and 2015 the proportion of people who suffer from hunger Unlikely Weak but Improving Ensurethat by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling Potentially Strong Eliminategender disparity in Primary and Secondary Educationpreferably by 2005 and to all levels of educationno later than 2015 Probably Fair Reduceby two thirds, between 1990and 2015, the Under 5 mortality rate Potentially Fair Reduce by three quarters, between 1990 and 2015, the maternalmortality ration Unlikely Weak but Improving Have halted by 2015, and beganto reverse the spread of HIWAIDS Potentially Fair Have halted by 2015, and began reversing the incidenceof malaria and other major diseases Potentially Fair Integratethe principlesof sustainable developmentinto country policiesand programmes to reverse the loss of environmentalresources Potentially Weak but Improving Halve by 2015 the proportionwithout sustainable access to safe drinkingwater and basic sanitation Potentially Weak but Improving ISource: MDG Report Basedon Box 4 above,itseems likely that most of the MDGswill be attained.Thistherefore callsfor continuousconcertedeffortsand scaling upof !he implementationof PRSPinterventionby the Government,cooperatingpartnersand otherstakeholders. 20 CHAPTER 4 SECTOR IMPLEMENTATIONPROGRESS 4.1 ECONOMIC SECTORS 4.1.1 Agriculture Agriculture inZambia has potential of enhancing economic growth and reducing poverty. To this effect the PRSP objective is to reduce poverty by promoting food security and economic growth. The overall sector strategy has been to promote self-sustaining export-led agriculture sector which ensures increased household income and food security. This was to be achieved through; promotion o f commercial agriculture; land and infrastructure development; technological development and provision of agriculture extension services for food security; and targeted support system for food security. In line with the above, Government increased budget allocation to the agriculture sector in nominal terms from K104 billion in 2001 to K119 billion in2003 although inpercentage of the total budget declinedto 1.7 percent in2003 from 2.1 percent in 2001. PRSPImplementation Although budget allocation to the sector increased, the overall PRP allocations have been below 20 percent of total budget. Consequently, a number o f programmes were not implemented. Nevertheless, some progress has beenmade infew areas of intervention. Duringthe period under review a total of K76.21 was allocated to PRPs, of which K48.1 billion was releasedfor the programmes. Promotionof CommercialAgriculture. During the period under review, critical areas of intervention under PRSP were to establish out-grower schemes, out-growers training and provision o f credit to small-scale farmers. However, due to inadequate funds released,the programme o fout-grower schemes was the only one undertaken. Out-growerSchemeSupportProgramme There were four main out-grower schemes programme undertaken. These included Coffee, Cotton, Tobacco Out-grower schemes as well as Support to Farmers Associations Project (SFAP). The crops supported under the Out-grower scheme programmes are cotton, Paprika, Coffee, FreshVegetables and Tobacco. In order to finance the production o f the afore mentioned crops and to provide financial support to small-scale farmers willing to participate on the programme, the Government provided support through four organizations namely; the Tobacco Board of Zambia (TBZ), Support to Farmer Association Project (SFAP); the Coffee Board of Zambia (CBZ) and the Cotton Development Trust (CDT). A total o f K5 billion was releasedfor the programme. The Coffee Out-grower Schemes were undertaken on the Copperbelt, Central and Lusaka Provinces. A total of K1.2 billion of which 50 percent was for capital investment, 30 percent input procurement and 20 percent was used for extension services. A total of 121 farmers benefited and 132 ha of coffee crop was cultivated from which approximately 214tons o f raw coffee were expected. 21 The Cotton Development Trust (CDT) received K 1.1 billion to spearheadCotton Out-grower Programme activities. A total o f 4,222 farmers covering 5,166 hectares of cotton benefited from the fund, with an expected output o f 3,156 tones of cottonyield. The Tobacco Board o f Zambia received a total of K 1.4 billion, which was disbursed to support Tobacco Out-grower activities through tobacco associations. The associations acquired flue pipes and chemical inputs from the fundand various farmers groups with atotal of 869 farmers benefited. InadditionFreshVegetable andPaprika Out-grower Schemes programme receivedK1.22 billionto Support Farmers Association Project (SAF). Under the Freshvegetable programme a total of 160 farmers received baby corn maize and mangeout bean seeds, fertilizer and input chemicals. About 155 farmers groups with a total o f 3,030 farmers of which 779 were women benefited under paprika support programme. Out of the total beneficiaries, 1,555 grew rain fed paprika on 791 hectares with production capacity o f 78,420kgs o f paprika for exports. Land and Infrastructure Development The objective o f the advocacy for land demarcation programme was to identify agricultural land, carry out planning on such land, provide basic infrastructure (roads, dams, service centers, electricity, etc.) inorder to attract agricultural development and investment. Duringthe period under review, a total of K600 million was spent on land development and advocacy, land identification and production o f economic mass for ZCCM properties. Three farm blocks (Nasangdmunte, Kalumwange and Luena) with a total of 300,000 Ha of land were identified. However, not much progress was done to develop these farm blocks with only demographic surveys and landutilization at Nasangdmunte farm block (see Appendix 1.5). Irrigation Development and Earth Dam Construction was another aspect undertaken under this objective. An amount of K3 billion was budgeted for in the year 2002 out of which K2 billion was for irrigation development while dam construction was allocated K 1 billion. Out of the K3 billion, an amount of K1.88 billion was released for dam construction and irrigation development in 2002. Drip irrigation installation, dam rehabilitation and construction and spill way were undertaken. (See appendix 1.6) Infrastructure rehabilitation and livestock restocking was undertaken at three Agriculture Colleges in Zambia. A total of K1.5billion was releasedfor the programme (see appendix 1.2, 1.3, 1.4). In addition, the Rural InvestmentFund targeted the building of production capacity for poor small-scale farmers. In the year 2002, an amount o f K 5 billion was released to RIF to finance community-based projects under P W s such as borehole drilling, fish ponds construction and mushroom growing in 45 districts throughout Zambia. Most ofthe programmes have been undertaken (see appendix 1.1) Technology Development and Provision of Agriculture Extension Services The donkey and power equipment acquisition activity was undertaken under Animal Draught Power Programme. An amount o f K150 million was released in the period under review o f which two farmer groups in Monze, Chikuni and Sefula were identified as beneficiaries. The amount was use to procure 60 donkeys and 4 rotavators (Power Tillers) which have not yet been distributed due to operational problems and are still at PalabanaDairy Training Institute. In the period under review, K 3.2 billion was released to support activities pertaining to animal disease control and livestock production. The livestock production programme was allocated K 200 million, which was channeled, to small-scale farmers inorder to improve their livestock production systems. The activities 22 undertaken included; training of farmers indairy, sheep and goat production; purchase and distribution of goats to resource poor farmers (pass on the gift basis); and dairy goats multiplication for small-scale farmers. Golden Valley Agriculture Research (GART) facilitated training in suitability dairy husbandry from which 120 farmers benefited. However, the training is still on going. In addition Heifer Project International (HPI) carried out Goat Production promotion to small holder farmers and 20 female farmers benefitedwith eachreceiving seven goats for rear. On the other hand, K 3 billion was releasedfor purchase of animal vaccines. About 52,721 animals were vaccinated against anthrax, 26,665 vaccinated against foot and mouth disease and 6000 screened for tyrpanosomiasis. In2002, Soils andCropResearchreceivedK 100millionunderPRP's for seedsupply system andprovision of Agro-forestry tree seedling for the establishment of improved fallow plots to small-scale farmers. An additional K 150, 000 was released for seed multiplication programme for promotion of the multiple crop from varieties of improvedseed on farm inorder too increase food security. TargetedSupport SystemFor FoodSecurity In a bid to increase food security as a poverty reducing intervention, Government undertook two programmes; the fertilizer support programme (50 per cent subsided fertilizer) and the Food Security pack programme which has beenadministeredby ProgrammeAgainst Malnutrition (PAM) The fertilizer support programme is a three years temporal programme (2002-2004), which was meant to help farmers that had lost income as a result of 2000/2001 drought. Duringthe period under review a total of K 81.2 billion was released to support agriculture programmes, which would enhance food security. Under the fertilizer support programme a total of 24,000tonnes of D-compoundand 24,000 tonnes of Urea fertilizer were distributedto about 120,000 farmers. The support of 120,000 small-scale farmers under the programme led to an incremental production of over 360,000metric tones of maize valued at over K200 billion. Inaddition 3,140 tonnes of basaland 3,217 urea fertilizer was distributed through PAM. Maize (50 tonnes) and sunflower (23 tonnes) were distributed. The targetedfood security pack Programmetargets the vulnerable but viable farmers. For the performanceofthe programmerefer to social safety nets. 4.1.2 Tourism The mainthrust ofthe PRP inthe tourism sector for 2002/2003 were: 0 To completethe preparationof a comprehensivetourism developmentMaster Plan at all levels and create atourism investmentcredit facility; To develop air and road transport infrastructure in the main tourism areas mainly in Southern, Easternand Western provinces. PRSPImplementation Inorder to achieve the above objectives the total sector allocation in2002 was K73.6 billion accountingfor 1.2 percent of the national budget. The allocation for poverty reduction projects during the same year was K8.1 billion accounting for 11.O percent of the total sector allocation. A total of K1billion was released for the rehabilitation of Mosi-o-Tunya road. About 15 Kilometers of the Mosi-o-Tunya access road was rehabilitated. 23 In2003, the total sector allocationwas K43.2 billion accounting for 0.6 percent ofthe nationalbudget. The allocation for poverty reduction Projects during the same year was K14.1 billion accounting for 32.6 percent o f the sector allocation. By August 2003, a total o f K5.9 billion was released for the creation of a Tourism Development Credit Facility and for promotion and marketing o f tourism programmes. 4.1.3 Mining The overall budgetary allocation of the mining sector as a percentage of the total national budget has significantly declined since the privatisation of the sector in the 1990s. In 2002, the total allocation to the sector accounted for 0.9 percent of the nationalbudget and 0.1 percent in2003. Since the sector is largely in private hands, the first PRSP identified few interventions, which were mainly targeted towards the small- scale miningsector. With regard to the large scale miningsector, and although a set of policy actions were developed, the first PRSP indicated that sub-sector interventions would be considered in the second PRSP phase. Four programmes were plannedto be undertakeninthe small- scale-mining sub-sector. Inorder of priority, these were, the SYSMIN (MiningDiversification) Programme, establishment of the Gemstone Exchange, introduction o f Plant Hire Scheme and the creation of a MiningCommunity Development Fund(Revolving Fund). During the period under review, the sector budgeted for the implementation of only two major programmes identified as PRP's. These were the establishment of the Gemstone Exchange Scheme and the promotion o f the Mining Sector Diversification Programme (MSDP) under the SYSMINFund. The MSDP is a programme funded by the European Investment Bank to provide credit and technical skills to small- scale miners. Overall, the amount o f money disbursed for PRPs for 200212003 was K1.l billion, which was targeted towards the small-scale mining sector and was specifically meant for the establishment of the Gemstone Exchange. Out of the total amount o f Kl.lbillion only KlOO million was disbursed in 2002, while the remaining amount was disbursed inthe first halfo f 2003. Establishmentof the GemstoneExchange The disbursed amount of K 100 million in 2002 was later transferred to the National Economic Diversification Task Force (NEDT) in order to assist the process o f diversification. The K 1billion which was disbursed to the sector in 2003 was used to facilitate the work o f the Gemstone Exchange Steering Committee, which was appointed to oversee the establishment o f the exchange system. To this effect officials were sent into the field to conduct a scooping exercise on the viability o f the exchange and assess the adequacy of available production to satisfy the minimumvolume requirement to warrant sustainability. The preliminary results indicate increased enthusiasm by many miners on the idea of the Gemstone Exchange. It is expected that with the continued work being under taken by the Exchange Steering Committee, a privately led exchange will become operational by the third quarter o f 2004. To this effect, consultations between government and the privet sector continue to be undertaken. The delay in the establishment of the Gemstone Exchange was, in part, due to the procedure o f creating an independent account for the Gemstone Exchange. 24 MiningSectorDiversificationProgramme(MSDP) Under the SYSMIN Fund (Mining Sector Diversification Programme), only one Non-traditional sector miningcompany has accessedpart of the K90.8 billion (16.5 million)'* meant for the credit facility. The stringent conditions attached to the Facility, in terms o f accessibility, have been revised in order to make them commensurate with the prevailing situation on the ground where a majority o f miners were unable to raise the requiredcollateral for the loan. Preliminary information being received seems to suggest that the relaxed conditions have not createda significant impact interms o f accessibility to the SYSMINFund. This development needs careful study so as to ascertainthe problembefore a practical solution is proposed. Generally the mining sector has shown an increased level o f activity since the near completion o f the privatisation process. The number of licences issued in the last three years exemplifies this. The total number o f issued licences increasedto 236 in2003 from 178 in2001. Refer to the table below. Table 4.1: Number of licence issued,2001 to 2003 Type of Licence 2001 2002 2003 Small scale mining 17 22 37 Prospectingpermits 12 24 22 Gemstone Licences 43 57 62 Artisan Mining Rights 106 95 115 Total 178 198 236 Source: Ministry of Mines Other developments(Large scale mining) Government concluded the search for a strategic partner for KCM and negotiations commenced. Further, the feasibility study to facilitate the development of the Lumwana Joint Venture Copper Project was completed while a contract to construct a new power line with increased capacity to service the two mines was awardedto ZESCO. 4.1.4 Industry The major programmes linedup inthe PRSP (2002-2004) were, Investment promotion, Trade and Export promotion and Micro Small and MediumEnterprises (MSME)and Rural Industrialization. Releasesand actual expenditure to the sector in 2002 and 2003 were quite satisfactory as indicatedby actual expenditure as a percentage of the total sector budget, which stood at 63.2 percent. Similarly, PRP actual expenditure as a percentage of PRP allocation stood at about 90 percent. This in turn partly contributed to the growth inthe sector, with output increasing from 4.2 percent in2001 to 5.8 percent in2002. By October 2003, releasesfor PRP were about K1.l billion against an estimate of K 1 billion indicatinga more than 100 percent commitment by government to the sector. (See table. 4.2) '*le =K5,500 25 90.9 25.00 0.0 22.41 23.40 89.6 52.3 1.oo 0.5 1.43* 1.10 143.0 7.4 the K22 billion for NCZ andKTZ. *Overall expendituresfor 2003 includecarryoversfrom the previousyear PRSPImplementation ExportsProcessingZones Programme(EPZ) An amount of K850 Million was disbursed and spent on the EPZ programme. By the end of June 2003, three companies had their EPZ licenses approved and recommendation made to this effect as provided for by the EPZ Act. The amount was spent on Investment Promotions to various investment destinations, and participationinmedia awareness programmes. RuralIndustrializationand Micro Smalland MediumEnterprisesPromotion Rural industrialization and MSME promotional activities were undertaken through the Small Enterprise Development Board (SEDB)utilizing PRP funds. A total amount of K198.6 million was utilised for skills training and sensitisation, acquisition of equipmendmachinery renovations/office maintenance, monitoring and networking marketing support services and consultancy services. Under skills training and sensitisation, a total number o f 634 new beneficiaries were reached in fifteen districts of the various provinces inZambia. (See appendix 9). InvestmentOpportunitiesIdentificationProgramme The Zambia Investment Centre embarked on an Investment Opportunities Identification Programme to create the National Investment Plan. Seventy-two workshops inall the districts o fthe country were planned at a total cost of K 852 million. However, only four workshops were conducted inthe Copperbelt, Eastern, Western and Southernprovinces covering about sixteen districts at a total cost of K 38.8 million. 4.1.5 Energy The main poverty reductioninterventions inthe energy sector were to: 0 Increaseaccess to power inrural areas by intensifyingpromotionof off-grid power supplies not only through solar energy but also small and mini-hydro schemes. 0 Reducethe cost o f electricity for irrigationby 50 percent. 26 PRSPImplementation In2001 about K18.9 billion, accounting for 0.3 percentof the national budget was allocated to the energy sector. Inthe same year, K8.5 billion accounting for 45.0 percent of the total sector allocation was spent on PRP's. A total o f K4.0 billion was spent on implementing rural electrification projects. This amount represents 47.1 percent of the PRP allocation. In 2002 about K 16.2 billion of the national budget was the total sector allocation. The allocation for poverty reduction Projects during the same year was K 5 billion accounting for 30.9 percent of the sector allocation. A total o f K 5 billion was spent on implementing mainly rural electrification projects representing 100 percent of the PRP allocation. About 35 percent of the work has been done on the rural electrification projects for over 55 Kilometers of 330 KV line in various parts o f the rural areas. (See appendix 3) In2003, the total sector allocationwas K 12.5 billionaccounting for 0.2 percent ofthe nationalbudget. The allocation for PRPs duringthe year was K 6.0 billion accounting for 48.0 percent o f the sector allocation. By September, no amount was releasedagainstthis allocation. 4.1.6 Communicationsand Transport The government recognises that in order to attain a high and sustained growth, infrastructure plays a catalystic role. A functioning infrastructure will enhance the drive for exports competitiveness in view of the country's land-lockedstatus as well as linkingpoor rural areas to urbanmarkets and social amenities. In this regard the strategic focus for the period 2002 and 2003 inthe Communications and Transport sector was to; 0 Create an efficient Communications and Transport system that will promote economic growth and reduce poverty 0 Expand, rehabilitate and invest inthe road sector so as to improve accessibility, mobility and bring a core road network o f 40,015 kmupto maintainable condition. PolicyDevelopment The government approved the National Transport Policy in order to address fragmentation in the road transport sector. The policy advocates for the establishment o f three new road sector agencies, namely; Road Development Agency (RDA), National Road Fund Agency (NRFA) and the Road Transport and Safety Agency (RTSA). The agencies will be responsible for management and disbursement of funds, construction, maintenance and rehabilitation o f all roads inthe country and the enforcement o f road traffic and safety regulations respectively. For the period 2002 to 2003, the sector received a total o f K970 million out o fthe budgeted amount o f K1.5 billion for PRP's representing63.1 percent of the total PRP budget. The PRP implementation for the year 2003 was quite satisfactory as all the funds releasedwere fully utilized. (See table 4.3 below). 27 2003* I 17.08 I I I 2.75I 0.50I 0.85I 0.85I - I Source: Ministry of FinanceandNationalPlanning :Overallactualexpendituresfor 2003 awaitFinancialReport :ActualExpendituresfor PRPare preliminary Water Transport Of the released funds, a total of K 900 million was spent on rehabilitation of canals and waterways in Western, Northern, and Luapula provinces. The canals and waterways that were identified were lakes Tanganyika, Bangweulu, MweruandKariba. Otherswere Luapulariver, Upper and Lower Zambezi, Kafue, Bangweulu, MweruandLukangaswamps. The total network of canals andwaterways is about 2,433km out of which 150 km was covered. The works involved vegetationcontrol andcanal clearing for a stretch of 50 kilometres ineach province. Air Transport The Governmentcontinued with the rehabilitation of airstrips and airports. Rehabilitation of Livingstone at a cost of K 9.5 billion, Lusaka international airports at K 51 billion and Chipata airport's runway at K 2 billion respectively was undertaken. The works involved provision of communication equipment to all airports, face-lifting of terminal buildings and upgradingofthe runways. The works at Livingstone airport involved face lifting ofthe terminal building andupgradingofthe runway. This ledto the upgradingof the airport to internationalstandard, which has seen an increase ininternational flights and passengers from 1,517 in 2001 to 2,172 in 2002 and 35,246 in 2001 to 63,956 in 2002, respectively. Railway Transport The major development of the sector was the concessioningof the Zambia Railways Limited(ZRL) to the Zambia consortium comprising Spoornet, New Limpopo Bridge investment project and Canarail internationalInc. Staff complementwas downsizedfrom 5,128 in 1998to 1,474 by endJune 2003. An additional K 135 billion (US $27 million) was earmarked for restructuring of ZRL. A total of K 70 million (US $14 million) was spent on retrenchment packages, K 30 billion (US $6 million) was spent on Enviromental Mitigation and Social Safety net, K5 billion (US$1 million) was spent on reviewing and strengtheningofthe Ministry of Communications andTransport's legal andregulatory framework. By end June, 2003 K 10 billion (US$2 million) was disbursedfor continuation of the restructuringprocess. ConcessioningZRL will lead to the revitalisation of the firm as it will undergo a complete overhaul and effectively contributeto economic growth andpoverty reduction. 28 The Government also approved the participation of the private sector in the running of the Tanzania - Zambia Railways Authority (TAZARA) and the study on the options for private sector participation is expectedto commence in2004. Road Sub-sector The government, with the support of cooperating partners, continued to implement the Road Sector Investment Programme (ROADSIP phase I). The project's positive impact has been registered with the pavedroadnetwork totaling 6,476 kmimproving tremendously. The percentage of the pavedroads ingood condition increasedfrom 46 per cent in2001 to 60 percentby the end of2002 with only 19per cent inpoor condition. However, very little progress has been made on m the remaining unpaved road network, the majority of which includes feeder roads and paved road network within the urban centers. Progress was slow on roads that were entirely funded by the governmentdue to poor release offunds. Innominal terms, the Governmentbudget allocations for the roads sub-sector for the period 2001to 2002 declined. In2001, a total of 251 billionwas allocatedout ofwhich K168 billionor 67 percentwas released. In 2002, the allocation fell to K151 billion out of which K 99 billion was released. This situation was largely due to budgetary constraints as a result of extra budgetary pressures. In 2003, the Government allocation to the road sector improved with K182 billion being allocated out of which K118 billion or 65 percent was released. (See table below 4.4) Source: Ministry of FinanceandNationalPlanning 29 Over the last two years, releases from the road fund were not commensurate to the collections. Most o f the financing i s from the fuel levy. This problem is however, expected to be rectified by the institutional reforms, currently being undertaken inthe sector especially with regardto the management o fthe fuel levy. For progress made on works and policy actions please see Table 4.5 below and Appendix 11respectively. Table 4.5: Utilizationof2002/2003 PRPFunding For Roads Programme/projects Activities Actual Funding Status WM) Roadmaintenance Gravellingandresealingof 6100 Gravellingandsealingundertakeninmostofthe district roadsand feeder roads districtsthough at aminimal rate becauseof underfunding Msoro-KateteRoad ConstructionofLupande 3000 Tender authoritygrantedfor awardof the bridge contract ChirunduChiawaroad Ottaseal surfacingand 1774 Works ongoing performancecontracts Mumbwa-Kaindu road Heavygrading, spot 5000 The project is dividedinto 12 LOTS while a regravelinganddrainageworks 20kilometrestretch is maintainedby force accountunder supervisionby the roadsBoard. All contractorshave mobilizedto site andthe works are ongoing. TOTAL PRP s K15,874 Source: Ministry o fCommunications andTransport 2003 30 4.2 SOCIAL SECTORSAND SAFETY NETS 4.2.1 Education In the education sector, the PRSP identified and targeted six programmes for implementation so as to contribute towards economic growth and poverty reduction. These programmes were Infrastructure development; curriculum development; provision o f education materials and provision of bursaries to orphans and other vulnerable children. In order to address the issues of equity, especially in the priority areas o f gender andHIV/AIDS, intensive awarenesscampaigns were conducted. These programmes were to be implemented under the auspices o f two ministries, these being the Ministry o f Education and the Ministry of Science, Technology andVocational Training. The combined authorized expenditure of the two ministries, inthe 2002 budget was an estimated K 928 billionrepresenting 15.1 percent of the total budget estimate. The 15.1 percent for 2002 proportion of the budget towards the sector showed an improvement as compared to 12 percent o f 2001. In 2003, the estimated budget for the sector is 931 billion, representing 16.4 percent of the overall revisednationalbudget of K5.7 trillion. (See appendix 9) In terms of the domestic discretionary budget, the Educationbudget share was 20.2 percent in 2001, and then declined to 18.2 percent in 2002 while showing an upwards movement to 19.7 percent in 2003. Although the 2003 education share is higher than that of the previous year, it is evident that the disbursement fell bellow government commitment of 20.5 percent. However, it is planned that the percentage allocation to education from the total discretionary budget will increase to 20.5 percent in the 2004 budget. Inregardto PovertyReductionProgrammes (PRPs), the budgetedamount for the sector in2002 was K43.9 billion with the largest component being donor funded. Government disbursed an estimated K6.85 billion while the cooperating partners disbursedan estimated K37.14 billion. In2003, the Budgetedamount for the PRPs is estimated at K51.7 billion, with government responsible for an estimated K5 billion. By October 2003, government had released an estimated K6.2 billion representing 123.3 percent of its budgetedfigure. (See table 4.6 below). Overall Sector BudgeExpenditure PRPsBudgemeleases Year Allocation Actual Donor GRZ Total Actual GRZ Percento f Expenditure Perce Allocation Release PRPto GRZ nt allocation 2001 656.4 367.9 56 2002 927.6 708.9 76 20.0 24.0 44.0 6.9 28.5 2003 931.0 46.7 5.1 51.8 6.3 123.3 *The 2003 overallkstimateis derivedfrom the RevisedYellow book PRSPImplementation Access to Education The sector performedfairly well inincreasing accessto all levels ofeducation over andabove the pre-PRSP Implementation period. Basic schools increased by 2.27 percent from 4,556 in 2002 to 4662 in 2003. A total of 165,037 more pupils were enrolled above the 2002 enrolment. In addition the number of basic school teachers increasedfrom 37,793 in2001 to 40,488 in2002, but thenfell back to 38, 891 in2003, after the Ministry o fEducationapplied a hiringfreeze inorder to remain within its wage billceiling. Out of the 31 basic school going age of 2,558,898 (gradesl-9), 77 percent were absorbed in the school system in 2003 comparedto 75 percent in2002 and 71percentin2001. The total basic school going age in2002 stoodat 2,498,962. The high schoolsub-sector (grades-12) recordedan increase inpupil enrolment from 205,393 in 2002 to 210,061 in2003. The Gross Enrolment Ratio (GER) in 2003 rose by 4 percent. The GER has been rising since 2001, indicating the growing capacity of the basic education system to enrol more pupils as the programmes of intervention intensify. The increasingpupil enrolment has been matched by the increase in the number of qualified teachers entering the system since 2000. However, the pupil teacher ratio has remainedat 46 in 2002, andthenroseto 52 in2003. Quality of Education Inorder to monitor the educationstandards, 7,320 inspectionsofbasiceducationschools were carriedout in 2003 as opposed to 5,695 in 2002. Inthe same vein, 725 inspectionsof secondary schools were carried out in2003. Inregardto the provision of schoolmaterials, the provision ofbooks went up as is exemplified in the 947, 998 English textbooks provided in2003 comparedto 865,701 in 2002. As a result there has been an improvement in reading and writing levels of children in schools in Grade 1. The reading levels improved from 34 percent in 1999 to 64 percent in 2003. In addition, between 2001 and 2003, the mean mathematicsscore increasedfrom 36 percent to 39 percent, while the meanEnglish score increased from 33 percentto 35 percent. For the secondary schools, the total number ofbooks increasedfrom 109,589 in2002 to 520,909 in2003. While the recent gains in learningachievement are encouraging, there is concernthat they are at risk, due to the current teacher employment crisis. In 2003, the Ministry of Education's wage bill ceiling made it impossible to employ the Teacher College graduating cohort of December 2002. A count in October 2003 revealedthat the Ministry had 9,000 teachingvacancies inthe seven mainly rural provinces (8,500 inbasic schools, and 500 inhigh schools). Another cohort ofnewly qualified perceptiveteachers graduatedfrom the Teacher Training Colleges inDecember2003. It is plannedthat some of these teachers will be absorbed in the system in2004. Equity and Efficiency The sector respondedvery favourably in providing education to orphans and physically impaired children. At basic school level 350,292 orphans and 25,626 impaired children were absorbed inthe system in 2003 compared to 235,515 orphans and 19,761 impaired children in 2002. At secondary school level, the numbers increased to 29,480 orphans and 2,657 physically impaired in 2003 compared with 20,437 and 1,820 in2002 respectively. The Pregnancy Re-admissionPolicy resulted in724 re-admissionsagainst 1,153 pregnancies registered in 2001. In 2002 the numbers of re admissions were 926, against 3,509-recorded pregnancies. HIV/AIDS Awareness Strategies for mitigating the impact of HIV/AIDS on Ministry of Education staff, Pupils and Teachers, to enable them plan ahead were developed. The capacity to manage HIV/AIDS interventionsinorder to foster the reduction of HIV/AIDS infections was also strengthened. Strategies such as sensitization workshops, awareness campaignsthrough T/shirts, awareness talks inschools, distribution of condoms and encouraging Voluntary Counseling andTesting (VCT) for its staff was undertaken. 32 MDGs With regard to the Millennium Development Goals (MDGs), two out of the eleven targets are from the education sector. These are; a) To ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course o f primary schooling and, b) Eliminate gender disparity in Primary and Secondary Education preferably by 2005 and to all levels no later than 2015. In relation to the good performance exhibited by the sector inthe first one and halfyears of the implementation o f the PRSP, the indication is that the first target will potentially be met, while there is a good probably that significant progress will be made towards achieving the secondobjective. 4.2.2 Health Sector Performance The PRSPobjective inthe Healthsector is to improve the healthstatus inZambia, especially for the poor. Inthis regard, the focus duringthe periodunder review remainedthat ofattainingthe objectives ofequity and efficiency inthe healthcared delivery system. Inline withthe PRSPobjective, Government has committed itselfto safeguardsocial sector allocation in the budget, includingthat ofhealth. Government has also takencognisanceofmeetingthe Millennium Development Goals of reducing Child Mortality and Improving Maternalhealth. Potential for the achievement o fthese goals exists, though muchneeds to be done inthe area of improving maternalhealth. Allocation to the healthsector from 2001 to 2003 has beenincreasing innominalterms. Total Domestic Discretionary Budget for the healthsector in2001 stood at 12.8 percent, dropped to 10.7 percent in2002 and increasedto 12 percent in2003 indicating Government's desire to increaseaccess to healthcare as close to the family as possible. However, the PRP budget as a share o fthe sector budgethas been fluctuating between 2001 and 2003. It was highest in2001 at 21.3 percent and lowest in2002 at 5.3 percent. PRP releasesas a percentageof the GRZ allocation have also beenincreasing indicating government's commitment inimplementingthe PRSPpriorities. In2002, about 27.3 percent from the PRP had been releasedand 59.2 percent was released by October 2003. (See Table 4.7). Source:Ministry o fFinanceandNationalPlanning *Releases are up to October 2003 while actualexpenditures are upto 15 December2003 andare notaudited. The funds releasedhavebeenusedto implementthe following major programmes: the basic healthcare package; integrated malaria control (Rollback Malaria); campaign against malaria; acquisition and distribution o f essentialdrugs; andconstruction and rehabilitationo f healthfacilities. 33 Provisionof BasicHealth Care Package In2002, a total of K 3.5 billionwas releasedfor the purchaseofdrugs inthe hospitals, which includedTB second line drugs and Anti-Trypanosoma1 drugs. Other drugs include anti-biotics, analgestics and antihelmuths. Though most health institutions received drugs, the health delivery system was however weakened by lack o f equipment and shortage of qualified staffespecially inrural areas. IntegratedMalaria ControlProgramme (RollbackMalaria) A total o f K 500 million was released for this programme in 2002. However, the actual expenditure was about K 124 million and was used to purchase 82,349 Insecticide Treated Nets (ITNs). ITNs were distributed to the following districts: Mambwe (13,222); Nyimba (18,532); Chilubi (12,500); Kaputa (23,200); and Kalulushi (14,895). This programme is working towards meeting the Abuja Declaration of providing Insecticide Treated Nets (ITNs) to 60 percent of the Zambian population by 2005. Furthermore, a major development inthe control o f Malaria has beena shift inMalaria treatment from chloroquine to more effective drugs. The country adopted a new policy to move to fansidar due to high levels o f resistance and thereafter to a more effective arteminism-based therapy (co-arterm). The delay in a shift to more effective drugs was due to lack o ffinancial resources. Following the successful implementation o f some programmes such outcomes on some essential health indicators have improved. For instance, the Infant and Under Five Mortality rates have declinedfrom 109 and 197 in 1996 to 95 and 168 in 2002, respectively. The malaria incidence has dropped from 406 in 2001 to 387 in 2002, although indications are that in 2003 it rose. Under five malaria fatality has also dropped from 26 and 22 in 2002. However, maternal mortality has gone up from 649 in 1996 to 729 in 2002 (see Table 4.8). Campaign Against Measles A total of K 1 billion was expended for the campaign against measles in 2003. Eight provinces were covered, except for Southern Province, which had already conducted its measles campaign in 2002. Coverage o f almost 100 percent for children aged 0-15 years was reached indicating that the programme was successfully implemented. Additionally, 16 freezers and vaccines were procuredto add to the existing stock in the country. Furthermore, a helicopter was hired in order to facilitate the distribution o f drugs to hardto reach areas. Additionally, Government continued with Polio Surveillance activities and managed to maintain surveillance certification level at District level. This can be evidence by the non acute Flaccid Paralysis (AFP) cases and a drop in Stool Adequacy rates during the review period. Apart from the intensified campaigns against measles, BCG, and DPT immunization coverage ranged between 87 per cent and 90 per cent. Acquisitionand Distribution of EssentialDrugs In2002, atotal ofK 13.2 billionwas usedfor the purchase ofdrugs.The drugs procuredinclude TB and STI drugs, anti-malaria. Each Rural Health Center received on a monthly basis about 1,025 drug kits, meetingan annual requiremento f 12,300 for rural healthcenters. In 2003, a total of K 12 billion was released for the purchase of essential health drugs, which included Antiretroviral (ARVs) drugs. The ARVs will only cater for 6,600 patients against the target of 10,000 patients for the selectedhealthfacilities. The first recipients of the ARVs were University Teaching 34 Hospital and Kitwe and Ndola Central Hospitals. Further, the Medical Stores Limited contract was re- tenderedinorder to ensuretransparency and accountabilityinthe storage and distribution of drugs. Construction and Rehabilitation of Health Facilities In 2002, about K 4.1 billion was spent on the rehabilitation of district and provincial hospitals and was distributed as follows: the GeneralHospitals in Solwezi, Chipata, Mansa, Kabwe, Livingstone and Kasama each received K 150 million while the University Teaching Hospital, Ndola Central Hospital, Arthur Davison hospital and Chainama Hospital each receivedK 250 million. Lewanika Generalhospital received K 150millionwhile District hospitalsinLusakaProvince, CopperbeltProvince, NorthernProvince, Eastern Province, Western Province, Luapula Province, Southern Province, Luapula Province, Southern Province, Central Province, andNorth-WesternProvincereceivedK 200 millioneach; At the UTH, the works conducted included the rehabilitation of blocks ByCyD, E, ultra sound room, laboratories, elevators, industrial cooker and the purchase of neconal ventilators. At Chainama Hospital, major works involved the rehabilitationofthe X-ray room and renovationofthe maternity ward. For the Livingstone General Hospital, X-ray machines were serviced and linen was procured while at Kabwe General Hospital, the mortuary refrigeration system was repaired and new cardaval units were purchased. Table 4.8: SelectedEssentialHealthIndicators Indicator Baseline Current(2002) Infant Mortalityrate(per 1000live births 109(1996) 95 UnderFive Mortality Rate(per 1000) 197(1996) 168 MatemalMortality(per 100,000) 649 (1996) 729 Malaria Incidence(per 1000) 406 (2001) 387 MalariaFatality Under Five (1000) 26 (1999) 22 Low BirthWeightNew Boms (percent) 10 (1999) 8 MeaslesIncidenceUnder Fives(per 1000) 5.7 (1999) 5.9 SupervisedDeliveries(percent) 32(1999) 47 TuberculosisCure Rate (percent) 50 (1999) 55 Life Expectancy at Birth 46.9(1990) 49.5(2000) Source:Ministryof Health 4.2.3 Nutrition Inthe period under review, Government embarkedon the strengtheningof the institutional capacity of the National FoodandNutritionCommission(NFNC), provision ofInformation Educationand Communication andthe preventionofmalnutrition andpromotion of appropriatediets inthe life cycle and finalisation ofthe National NutritionPolicy. Interms ofNutritional status there is increasingrecognition ofNFNC's important role intackling food and nutrition problems. However, the Commission and its partners have been confronted with a multitude of nutrition and nutrition related problems as manifested in the current malnutrition levels. Stunting in children under five years increasedfrom 40 per cent in 1992to 42 per cent in 1996 and47 per cent n200112 (DHS 2001).M id decade goals shows a higher figure of 53 per cent Wasting reducedfrom 5 per cent to 4 per cent in 1992and 1996, respectively but by 2001/2 it had risen to 5 per cent These levels are high compared to a normal situation and have contributed significantly to infant and child mortality, which stands at 110 per 1000live births. 35 The NFNC receives annual grants releasedby the Ministry of Health. As a statutory body, it also receives funding for specific programme or project activities from multilateral and bilateral cooperating partners. Government released a total of K 473.3 million to the commission in 2001 while K 699.9 million was released in 2002. Though government fundingto the Commission had been increasing in nominal terms, it had not been so in real terms. To this effect, implementation of interventions has been adversely affected leadingthe Commissionto heavily rely on donor fundingfor major programmes. PRSPImplementation NationalNutritionPolicy In September 2003, a stakeholders' workshop was undertaken on the National Nutrition Policy and the submissions were incorporated into the draft policy document. The draft document was submitted to Cabinet and is currently incirculationfor comments. InstitutionalCapacityBuilding Having realized that the National Nutrition Policy would take long to finalize and implement, the NFNC embarked on the Strategic Planning process which involved the revisiting o f its structure in order to rationalize its capacity towards effective implementation o f the PRSP interventions. These findings will be presented to the Board inJune 2004. MicronutrientControl ChildHealthWeek (CHW) andNationalImmunizationDays @IDS) In2002, a total of2,125,000 children were administered withVitamin A supplementation inthe first halfof the year, while 2,262,000 were reached in the last half of the year. This represented a coverage of 88 percent. In 2003, 2,200,000 children were immunized in the first half o f the year while 2,385,000 were immunized in the last half o f the year. This exercise was carried out mainly through the CHW and during NIDScoveringall childrenunderfive inallthe 72 districts inZambia. Fortificationof Sugar with VitaminA Duringthe periodunder review, NFNC`s activities inthis programme mainly involved monitoringvitamin A levels in sugar. Sugar samples were collected from households duringthe post Child Health Week mini surveys and taken for analysis at UNZA's Food Science and Technology Laboratory, while other samples were sent to Craft Technology through the Centre for Disease Control. Sugar samples were also collected duringDHS survey o f 2001. Results show that about 80 percent o f the samples have vitamin A. However, about 29 percent meet the standard (equal or greater than 15 parts per million). NFNC intendto further validate this by conductiona shelflife study o f vitamin A levels insugar. FortificationofMaizeMealwith VitaminA In 2002 the NFNC co-organized the dissemination meeting on the maize meal fortification trials, where major stakeholders attended. The trials commenced in 2000 with the collaborative effort of NFNC and National Industrial and Scientific Research (NISIR). Support from Micronutrient Initiative (MI) and UNICEF was also invaluableto this process. 36 By September 2002 Maize Meal fortification at hammer mills had started in all the six selected hammer mill sites inLusaka. These sites were inChipata, Chaisa, Bauleni, George, Chawama and Kanakatapa. The fortification trials at each of the above sites were done on different dates. The trials were successful inthat the communities that participated inthe trials hadacceptedfortification. Infant andYoung ChildFeeding In 2002 the NFNC coordinated the drafting of the National Regulation on Marketing of Breast Milk Substitutes. The final draft was submittedto CBoH for onward submission to Ministry of Health for further action. Inthe same year, the NFNC participated inthe development o f training guidelines on the Integrated Preventiono f Mother to Child Transmission o f HIV. Training o f health workers inPrevention o f Mother to Child Transmission o f HIV/AIDS (PMTCT) using the same guidelines followed this up. This programme was carried out with support from AED-LINKAGES, WHO and UNICEF. 4.2.4 Water and Sanitation The broad PRSP objective is to ensure that Zambia's water resources are effectively developed and managed to contribute to poverty reduction through increased access to safe water and sanitation for low income rural and urban Zambians. The PRSP also aims at developingwater resources infrastructure such as dams, boreholes and wells for improvement in water supply in rural areas and for agricultural use. Government has consequently committedto safe guarding the water and sanitation as seen inthe budget. In2002, a total of K20.8 billion to the sector and K 9.4 billion or 0.3 percent of the discretionary budget was released while in 2003, the budget increasedto K 23.2 billion and the releases were also increased to K16.3 billion or 0.5 percent o f the discretionary budget. In 2002, a total o f K 1.7 billion was spent on implementingthe PRP's and this rose to K4.20 billionin2003. ImplementationStatus Water ResourcesManagement The main intervention was the implementation o f the Water Resources Action Programme (WRAP). The programme was planned and organised in order to implement Zambia's National Water Policy. It aims at streamlining and strengthening the water resources management functions o f central government including the development o f new water resources policy and legislation. It aims at establishinga comprehensive framework for effective use, development and management o fthe Zambia's water resources ina sustainable manner. To this effect, a draft framework has been formulated. The WRAP has begun a programme on the Kafue River basin to improve water management through catchments basedmanagement o f water resources. Water ResourceDevelopment To develop water resources especially in drought prone areas, Government embarked on a water resource infrastructure development programme which involved dam construction and rehabilitation, borehole drilling, construction o f weirs and wells. The programmes were meant to improve the water supply inrural areas in all the nine provinces. To this effect, 8 dams were completely rehabilitated in 3 provinces, 153 boreholes were drilled in 6 provinces while work on 379 boreholes in 3 provinces is still on-going. The construction of wells inall the nine provinces is on going. Notwithstanding the impact this development has 37 had on the supply o f water inrural areas, not much progress was made inthe development o f water supply infrastructure due to insufficient funds. Water Supply and Sanitation Government continuedto support the planning, execution, management, operation and maintenance of rural water supply and sanitation. As for urban and peri-urbanwater supply, Government continued with the commercialisation o f Water Supply and Sanitation (WSS) services underthe on-going water sector reforms. To this end, commercial water utilities established inmost cities increased. This ledto increased access to water supply and sanitation services inthe low-income urban and peri-urban areas. Water Sector Reforms Government has been implementing a number o f reforms in the water sector. The reforms have recorded tangible achievements inthe water and sanitation sector that includes the following. 0 The successful decentralisatioddevolution of service delivery from Central Government to the local authorities; 0 The establishment o f several commercial water utilities allowing for competition amongst the providers. Ninecommercialutilities were established by 2002;and 0 Clearly outlined strategies for urban, peri-urban andrural water supply and sanitation. Notable improvements have beenrecorded interms o f service delivery and access to both water supply and sanitation in areas serviced by the commercial utilities. Notwithstanding this achievement, the situation in council operated areas continues to deteriorate and to be a source o f concern. A number o f districts go without water supply, for hours, due to lack o f funds to operate and maintain the equipment that frequently breakdown. The water and sanitation services inrural areas are mainly suppliedby central government and the situation still remains poor. The improvement o f the water and sanitation in rural areas has been constrained by lack o f funding. 4.2.5 Social Safety Nets The mainsocial safety nets programmes implementedwere: the Urban FoodFor Assets (UFFA); Micro- Credit Scheme under PUSHand the Public Welfare Assistance Scheme (PWAS); Disaster Relief; and the future searchprogramme. (See table 4.9) 38 Table 4.9: SocialSafety NetsProgrammes Programme ImplementingInstitution PublicWelfare Assistance Scheme --- Provisionofhealthcaresupport Ministry of Community Provisionofeducationsupport Developmentand Social Provisionofsocialsupport e.g.food Service PeriUrbanUrbanFoodfor -- Self Help Assets (UFFA) Ministry of Community Micro Credit Scheme Developmentand Social Service Food Security Pack ProgrammeAgainst Malnutrition/Ministryof Community Development and SocialServices FutureSearch Ministry of Labour and SocialSecurity Of!ice of the Vice President Disaster Relief Source:MOFNP In2002, a total of K 66.1 billion was allocated for social safety net programmes. This was distributedas follows: PWAS K12 billion; PUSH K 3 billion; Food Security Pack K 32 billion; Future Search K 1.1 billion; and Disaster ReliefK 18.5 billion. Out of the total allocation o f K 66.1 billion for social safety nets in2002, 60 percent or K 35.9 billionwas released. A total ofK400 millionwas releasedfor PUSH, K 300 million for PWAS, K 500 million for Future Search, K 18.5 billion for disaster relief and K3.9 billion for Food Security Pack. The money disbursed to PWAS went to support poor and vulnerable persons with health and education and other social requirements. Under health, 319 males and 305 females aged between 5 males and 327 females inthe age group 15 - 34 - 14 years and 626 years accessed medical services. In education, 560 males and 400 females were assisted and were mainly orphans and vulnerable children. As for social support,a range o f services are provided such as food, renting or building o f shelter for the destitute, provision of clothing and blankets and the repatriation o f stranded people. A total o f 33 males and 5 females were assistedunder social support. As for PUSHthe money disbursed was usedto support the followingprogrammes. 0 Improvements of 23.5 Kilometre of access unpaved road in Monze and Lusaka out o f the targeted 270 Kilometre road network innine districts, 0 Construction of two community skills training centers in Kafue (Soloboni),Chingola and Ndola (Mackenzie), 0 Empowerment o f 500 participants out o fthe targeted 4,500 invarious income generating skills, and 0 The establishment of 460 savings and solidarity groups for micro credit schemes Underthe food security pack programme the money was used for procurement and distribution of different crop seeds and fertilizer as well as agriculture lime. The total expenditure however, was K 16.2 billion as an amount of K 12.3 billion disbursed inthe season 2000/2001 was only utilized inthe 2001/2002 season. As a resulted of this expenditure a total o f 125, 000 beneficiaries were reached from the targeted number of 200 000 vulnerable but potentially viable farmers peryear. With regard to the future search programme, the money released was used to assist 3,346 displaced workers, and to conduct 36 counselling sessions for 1,964. Other activities undertaken were to conduct job search seminars, entrepreneurship development workshops and small business awareness seminar. 39 Inthe period underreview the disasterreliefprogramme was allocated an amount ofK18.5 billionof which K 2.lbillion was from the normal government budget line. Of this amount K 6.2 billion was used for purchasing and storage o f maize; K1.8billion for transportation; K 7.9 billion for purchase of mealie meal from suppliers; K 696 million for participatingNGOs and K 1.8 billion for operational costs. This project was implemented inseven (7) affected provinces and reacheda total of 2,433,412 beneficiaries. In2003 PWAS received K 4.5 billion for the provision of health support, targeting 200,000 clients. O f this amount, K224 million was spent on monitoringthe implemented programmes. Inthe 2002/2003 season, under the food security pack programme, 128000 beneficiaries were reachedat a cost of K 28.2 billion. The crops distributedunder this programme included maize, sorghum, millet, rice, groundnuts, beans, Soya beans, bananasuckers, sweet potatoes vines, and cassava cuttings The discretionary allocationto the sector has beendecreasing steadily. In2001 the discretionary budgetwas 3.2 percent, in2002 it was 2 percent and in2003 it was 1.1 percent 4.3 CROSS CUTTINGISSUES 4.3.1 Governance The PRSP has identifiedgood governance as a key aspect infostering growth andpoverty reduction. It has therefore set to achieve three key objectives as follows: 0 To have regular and wider consultations between government and the citizenry; 0 To ensure efficient, equitable and transparent management o f scarce public resources; and 0 To ensure guaranteedjustice for all. PRSP Implementation In line with these objectives, funding for governance programmes has improved. The overall budget allocation for governance in 2002 was K 148.2 billion while the PRP programmes allocation was K 16.8 billion, accounting for 8.46 percent of the total budget. On the other hand, the overall Governance budget for 2003 was K 155.4 billion and the PRP allocation was K 21.6 billion, accounting for 11.3 percent. In 2002, out of the total PRP allocation, 50.9 percent was disbursed, while by October 2003, 11.8 percent was disbursed. The major thrust of intervention were inthe areas o f constitutional andjudicial reforms, electoral reforms, law enforcement and humanrights improvement, enhancement o f public accountability andtransparency. Socio-Political Governance The government in2003 beganthe process ofreviewingthe constitution. This was promptedby the desire of the Zambian people to address a number o f contentious governance issues inthe current constitution. To this effect, a Constitutional Review Commission (CRC) to conduct countrywide sittings were the citizenry would make submissions. The CRC has since been receiving submissions from the public through meetings beingheld inthe provinces. Furthermore, the government engaged civil society inmajor national issues. One such event is the National (Indaba) Convention held in 2003 involving all stakeholders to discuss economic governance and social 40 issues of common concern. The recommendations of this Forum would be incorporated into the on-going governance reforms. Furthermore, to foster inclusive and participatory governance, the Government involved civil society organizations inmajor national social-political and economic forums. These included the Technical Committee for Electoral Reform process, Constitutional Review process, and Anti- corruption Coalitions. EconomicGovernance PublicExpenditureManagementReforms Government further undertook budgetary reforms in 2003. A budget review process was embarked upon, in which a new form of budgetingknown as the Medium Term Expenditure Framework (MTEF) was introduced. All key stakeholders were consulted as MTEF consultative meetings were held in all the nine provinces o f the country. Furthermore, through the introduction of Activity Based Budgeting (ABB), the MinistryofFinance andNational Planningwill facilitate enhancedtracking ofexpenditure by activity. Additionally, the Integrated Financial Management Information System (IFMIS) was introduced. This would facilitate the integration o f financial and physical performance measurements for monitoring and evaluation o f operational and mediumtermplans. Inorder to enhance efficient, equitable andtransparent management of scarce resources, the government, with support from Cooperating Partners, embarkeduponthe Public expenditureManagement and Financial Accountability Review(PEMFAR) as a way to improve public expenditure andfinancial management. Through this process, the Ministry of Finance and National Planning benefitedfrom a number of capacity building programs. In terms of staff training, approximately two hundred (200) accountants have been trained in the application o f Commitment Control Systems (CCS). This has resulted in a reduction in accumulation o f arrears in almost all ministries where this system was introduced. Moreover, government ministries and government spending agencies have benefited from computer equipment to enhance data processing. To promote accountability, the government built capacity in the office o f the Auditor General by training staff in long-term professional courses as well as short-term refresher course programmes. Moreover, the decentralization of operations o f the office o f the Auditor General has resulted in Government financial statements for 2000, and 2001 being audited on time. Additionally, the backlog o f audit reports has been cleared and there has beenan increase inthe number of special audit reports produced annually. DemocraticGovernance A need to reform the electoral process was identifiedand an Electoral Reform Technical Committee was established in 2003, with a wide composition o f members from the church, civil society, media and the government. The committee, whose mandate is to analyze and make recommendations regarding the legal framework o fthe electoral process inthe country, has since began its work. There were also reforms undertaken in order to revisit the way the Zambian Parliament conducts,business of the House. Most of the parliamentarybusiness is now being dealt with in committees. This has led to specialized matters being dealt with more efficiently. As a result, this increased the ability o f the Parliamentary Public Accounts Committee to review reports of the Auditor General effectively and efficiently and also deal with issues o f accountability, transparency and good governance in the government system. Moreover twelve pilot- constituency offices were established out o f the total one 41 hundredand fifty constituencies inthe country. This was done to enhance interface between MPs and their constituencies. Furthermore, the relaxation of the dress code for the visitors to the National Assembly has made the institution more accessible to the public. A Parliamentary website was also established in order to make people aware o fthe developments inthe Parliamentary system. Transparency and Accountability The Government has demonstrated political will to fight corruption through it's Zero Tolerance o f Corruption stance. To this effect, the operations of the Anti- Corruption Commission (ACC) have been decentralized to all the provinces, and an amount of K1.3 billion was disbursed to the Commission to facilitate finalization of this process. In view o f this, there has been increased awareness of the importance o f reporting corrupt practices in the community. The outcome has been an increase in the number o f complaints received by the ACC. The number rose to 836 complaints in 2002 against the 315 received in 2001, representing an increase of 162 percent. By June 2003, a total o f 439 complaints had been lodged, givingan indicationo fa further increaseby the endofthe year. A Task Force on Corruptionhas beenset upto investigate and prosecute cases of corruption andabuses of authority involving high officials in the previous Government as well as those currently serving in Government. So far the Task force has identifiedto investigate 405 firms. A total o f 213 fixed assets have beentraced and identifiedas suspectedproceeds from plunder, while 150 persons have been identifiedand are under investigation. A total of 20 suspects have also been arrested and charged for various criminal offences. Some of these are already appearing in court while 2 have been acquitted. A National Governance Baseline Survey was commissioned in 2002, to develop empirical information, which would be usedto plan implementationo f policies andprogrammes to improve good governance and thereby reduce corrupt practices. The survey has since been completed and it is hoped that the survey would benchmark indicators for future review o f elements o f governance and the extent of corrupt practices. Law Enforcementand Human Rights The Government embarked on reforms in the law enforcement agencies such as the Police and Prisons service so as to enhance the protection, promotion and enjoyment o f humanrights. To this effect, in2002, an amount of K2.0 billion was released to the Police, resulting inthe rehabilitation o f eight (8) police cells. Furthermore, eleven (11) out o f a target figure o f hundred (100) boreholes were sunk in Lusaka, Shangombo and Mongu districts. Additionally, twenty motor vehicles were repaired to improve community policing. The establishment of the Police Public Complaints Authority (PPCA), in order to check excessive use o f power by police officers, so as to protect human rights o f citizens was a notable development. Since its establishment in 2002, the PPCA has received 299 complaints and dealt with 4 cases involving abuse o f authority by police officers. The PPCA recommendedto the Police Service that the 4 officers concerned be dismissed. Under the Prisons and Reformatories, K2.7 billion was released and out o f the targeted 100 boreholes, twelve (12) were sunk and eleven o f these are operational. Six (6) 1x2 prison cells were constructed. Additionally, seventeen prisons were targeted for rehabilitation and materials were procured for these 42 works. The objective of undertaking these rehabilitation works was to improve prisons standards in order to enhance humanrights o f inmates. Under Capacity Building Programme for Good Governance an amount o f K375 million was released in 2002 to the Human RightsCommission. The Commissiontrained a total number of 3,679 law enforcement officers. These officers were from; Zambia Wildlife Authority, Anti Corruption Commission, Drug Enforcement Commission, Zambia Police and Prisons and Reformatories in Law Enforcement and Human Rights inLusaka, Western and Southernprovinces. JudicialReforms In the Judiciary, K1.2 billion was released for PRPs in 2002. This led to a total of 27 courts being rehabilitated inall provinces inthe country. Furthermore, a total o f thirty-three Magistrates were sponsored to study law at the University o f Zambia. Government has improved access to the justice delivery system through a number o f reforms and interventions. These included the establishment of Alternative Dispute Resolution Mechanisms which led to 2000 cases being dealt with. To improve the dispensation o f justice in the local courts, the Judiciary with the help o f co-operating partners, embarked upon a programme of buildingcapacity inthe Local Courts Justices. 4.3.2 HIVIAIDS Government's overall objective as outline inthe PRSP i s to reduce new infections and the social economic impact o f HIV/AIDS. Due to the cross-cutting nature o f the pandemic, Government has taken a multi- sectoral approach in the fight against the pandemic. In this regard, Government, working with other stakeholders, stepped up efforts and programmes aimed at preventing and controlling the spread of HIV/AIDS, promoting care for those who are infected and affected ,and reducing the personal ,social and economic impact o fthe epidemic. Inthe period 2002-2003, Zambia received a number of grants from the donor community to complement Government efforts in eradicating HIV/AIDS. These are Global Fundto FightHIV/AIDS, TB and Malaria, World Bank - Multi-sectoral AIDS Programme (MAP) grant, African Development Bank support, and various bilateral arrangements. The cost requiredto implement all the interventions for the period 2002-2005 has been estimated at K 2.8 trillion (US$560 million). Government under the Poverty Reduction Strategy Paper (PRSP) committed to spendK 475 billion (US $95 million). However, only K 13 billion (US $2.7million) was disbursed. By end June 2003, donor commitments amounted to K 1.3 trillion (US $270.89 million) out o f which K 27.8 billion (US $6.09 million) was disbursed. (See table 4.10 below) 43 Table: 4.10: GovernmentCommitmentsand CooperatingPartners'Pledgesto NationalHIVIAIDSISTIITB CouncilJanuary 2002- June 2003 SOURCE Pledges DISBURSED US$ million K' million US$ million K' million GRZ 95.0 460,750 2.7 13,095 Global Fund 192.0 931,200 0 19,400 World Bank 42.0 203,700 0 0 DffD 30.0 145,500 0 0 UNDP 5.0 24,250 1 4,850 ADB 1.2 5,820 0.5 243 WHO 0.00 0 0 0 NORAD 0.250 1,213 0.25 1,213 SIDA 0.220 1,067 0 1,067 IrelandAid 0.220 1,067 0.22 1,067 Total 365.89 1,770,250 8.79 40,935 Source: National HIV/AIDS/STI/TB Council 2003 Note: Exchangerate (IUS$=K4,850) PRSPImplementation During the period 2002-2003, the implementationof HIV/AIDS programmeswas quite favorable. Success has been noted in the areas of Public Awareness, provision of ARV's, and the provision and expansion of community home basedcare. Research at UTHhas been done to test patients for HIV, screen them for STIs, TB and then provide them with a comprehensivecare, which includes TB preventivetherapy. Training of Schoolteachers in life skills -based education has also been fulfilled with 996 teachers or 2.3 percent of the 43,448 teachers trained. Some encouragingresults are being observedas evidencedby an increase inthe Voluntary Counselingand Testing Centers from 56 in2002 to 110 by end June 2003. Anti-Retroviral Therapy (ART) was introduced inallpublic Institutionsthroughthe establishmentofProvincialART centres. Initially 10,000 patientswere put onthe ART programme. The Business Sector through the Zambia partnership has benefited through HIV/AIDS educational workshops, Distribution and promotion of male and female condoms at work place, provision of information on Voluntary Counseling and Testing and the introduction of Post - Test Clubs. As a result, approximately20,000 employees have been reached andpeer educators trained. Other groupstargetedwere the refugees, longdistance truckers, migrant workers, cross-bordertraders anduniformedsecurity personnel who are more susceptibledue to their mobility. Additionally, programmes targeting teachers and learners across the country were undertaken. This was done through the Ministry of Education by building capacity and capability to respondwith timely actions to prevent school age children and teachers from becoming infected. Sensitizationprogrammes were also undertakeninall the provincesthroughthe ZambiaNurses Association, with 206 nursing officers and carers trainedout ofthe targeted270 In collaboration with the Virology Laboratory and the VCT Services, 41 health workers were trained in Serology and Rapid Testingto cope with the increaseddemandfor VCT for Mother to Child Transmission (MTCT) insome ofthe healthcenters inrural Zambia, which do not have laboratoryTechnicians. A consultant was engaged to work on the sensitization of farmers at District level. Small- scale farmers were thereforetrainedusing dramaandtraditional leaders especially inrisk proneareas. 44 4.3.3 Gender In2001, the total allocation to Gender in Development Division (GIDD) was K 1.75 billion while actual expenditure was K 545 million which amounts to 31 percent. In 2002 the GIDD allocation was K 2.2 billion, while the actual expenditure was K 1.2 billion, which was 65 percent o f the total budget allocation. In 2003, however, the allocation by GRZ to GIDD was K 1.7 billion and the donor allocation was K 500 million. However, 10.7 percent was releasedfor PRPs to the sector. In addressing gender in development, the focus for the period under review was on improving the participation of women in decision-making, engendering the national budget, promotion of women's economic empowerment and development of the National Gender and DevelopmentInformation System. To increaseparticipationo fwomen indecision-making, Government appointed women to various decision- making positions at Cabinet Minister and Deputy Minister levels and other areas o f the public sector so as to achieve the thirty percent minimumrepresentation o f women in all decision-making positions stipulated by the 1997 SouthernAfrican Development Community (SADC) Gender Declaration. The representation of women at the ninth session of the parliament in 2003 was at 13.7 percent. Of all the selected positions in decision-making, only 18 percent are women as compared to 82 percent o f the position held by men. (See appendix 4). In an effort to engender the national budget, capacity buildingactivities for all line ministries duringthe month o f June 2003 were undertaken, and a draft framework has been developed to facilitate the collection, collation and analysis o f data. Government also recognized that due to customary practices, women still lacked access to land in comparison with their male counterparts. Inthis regard, the draft land policy proposingthirty percent o fthe land to be demarcated and allocated, for women and other vulnerable groups to reduce on discriminatory practices inthe Land Act - Chapter 184 o f the laws of Zambia was done. Consultations also started with various stakeholders on how international and regional agreements, such as Convention on the Elimination of All Forms o f Discrimination Against Women (CEDAW); the Protocol on African Charter on Human and People's Rights especially on rights of women (ACHPR), and the Southern African Development Community (SADC) Declaration on Gender and Development and its Addendum on the Prevention of Violence Against Women and Children could be translated into laws, policies, plans and programmes. Inorder to promote women's economic empowerment, Government disbursedgrants to Community Based Organisations (CBOs) amounting to K450 million in 2002 with a view to reducing poverty especially among women. More than ninety (90) CBOs benefited from these grants countrywide. Some o f the activities supported included poultry farming, crop farming, tailoring and designing, piggery, fish farming, orphanageetc. Duringthe period under review, the process of setting up a National Gender Resource Centre to host the National Gender and Development Information System started with the release o f K925 million (US$185,000.00) under Public Service Capacity Building Project (PSCAP) to facilitate the process. Four thousand National Gender Policy documents were disseminated to raise public awareness. In addition to these efforts, Government held six (6) radio and television programmes on the importance o f gender in development including poverty reduction. In gender capacity building programmes, ten training programmes with line ministriesand other public and private institutions were conducted. 45 CHAPTER5 REGIONAL IMPLEMENTATIONPROGRESS The Regional Perspective on PRSP implementation focused on infrastructure development and land resettlement programmes. This chapter analysesthe releases, expenditures and outputs per province. 5.1 Central Province The total budget allocationfor the province in2001 was K8.6 billion. This amount increasedto K8.7 billion in2002 while the 2003 budgetregistereda 66.lpercent increaseover the previous year to K14.5 billion. Out of K8.7 billion allocation, K2.8 billion was the allocation for PRPs in 2002 while K3.2 billion was the actual total expenditure. The additional expenditure was attributed to the balances brought forward from the previous year. Significant increases in the PRP budgetary allocation occurred in 2003, when the total provincial budget increased by 66.1 percent from K8.7 billion in 2002 to K14.5 billion in 2003. A total o f K7.9 billion or 54 percent of the total budget was allocated for the implementation of PRPs inthe province. This increasewas partly attributed to the large donor contribution accounting for 37.2 percent o f the total PRP budget. By October 2003, the government had released K3.1 billion representing 39.3 percent of the total PRP allocation to the province. Infrastructure Development For feeder road rehabilitation, approximately K 2 billion was used to rehabilitate 70 percent of Landless corner - Mumbwa road by June 2003, while K1 billion was spent for 40 percent maintenance works on selected roads insix districts. A total o f K150 million was used on the land resettlement programme to construct 27.3 kilometers, form and clear 9.6 kilometers o f the 75 kilometre Lukanda Scheme - Kapiri Mposhi access road. One out o f 15 boreholes was sunk. At Maimwene, 296 o f 396 plots were demarcated and allocated to settlers while 2 out of 10 boreholes were equipped with hand pumps. In addition, 11 kilometre and 2 kilometre of the 20Kilometre road was cleared and formed respectively. From the target o f 182 plots, 181 were demarcated andallocated to settlers. 5.2 Copperbelt Province The total budget allocation for 2001 was K9.9 billion. This amount increased by 14.3 percent to K11.3billion in 2002. In 2003, the provincial budget allocation increased by 56.1 percent to K17.7 billion over the previous year. Out of the K11.3 billion allocation for 2002, K2.8 billion was the allocation for PRPs o f which K1.6 billion was the total expenditure. Out o f a total K17.7 billion budget allocation for 2003, K 7 billion representing39 percent was earmarked for PRPs with donor commitment amounting to K2.9 billion. By October 2003, about K1.3 billion representing 18.6 percent of the total PRP budget and 32.1 percent o f the total GRZ budget for PRPs, had beenreleased. 46 InfrastructureDevelopment Duringthe period under review, the province received K2.45 billion of which K2 billion was for feeder roads, K150 million for the LandResettlement programme and K300 million for Beekeeping activities. By June 2003, the feeder roads programme received K1.7 billion. The Land resettlement programme received K150 million out o f which K149.94 million was spent for drilling 4 boreholes and installation of 6 culverts at Kambilombilo (Lufwanyama) and Lukanga North (Mpongwe). Sixty plots were demarcated at KafubuWest Damresettlement scheme where 6 kilometre and 9 kilometre of roadwas gradedand formed respectively. 5.3 Eastern Province The total budgetallocation for 2001 was K10 billion. This amount increasedby 8.7percent to K 1lbillion in 2002. In2003, the budgetallocation for the province increasedfurther by 59.6 percent to K17.7 billion. The PRP allocation to the province for 2002 was K4.9 billion. Out o f the total o f K17.7 billion budget allocation for 2003, 53percent was earmarked for PRPs with donor commitment accounting for K3.0 billion Kwacha. By October 2003, K2.2 billion representing 34 percent o f the total GRZbudget for PRPs, hadbeenreleased. InfrastructureDevelopment The feeder roads programme receivedK 2 billion, which was disbursedto 19 constituencies (K100 million each) for land clearing, culvert construction, road reshaping and spot gravelling invarious districts. Out of the targeted 274 kilometre about 86.lKilometre of road was reshaped and regravelled. Additionally, the constructionofthe targeted 2 culverts was undertaken. The Land Resettlement Programme received K150 million which was used for drilling of 4 boreholes, at Chipangali Madziatuba Resettlement Scheme, at a total cost of K74.1 million, construction o f 3 houses at K14.5 million, grading o f 8 Kilometers of road at a cost of K48.5 million and demarcation o f 25x10 Hectares farmland at a cost o fK617, 500. The balance o f K7.6 million was spent on monitoring the projects implemented.These projects were completed. 5.4 Luapula Province The total budget allocation for 2001 was K8.2 billion. This amount declined to K8.0 billion in 2002 representing a decline o f 2.9 percent over the previous year. The 2003 budget was K18.2 billion representingan increase o f 128.13 percent. The PRP allocation was K2.3 billion in2002, out o f which K1.9 billion was spent. In 2003 a total of K8.4 billion or 46 percent of the total budget was allocated for the implementation of PRPs inthe province. This increase was partly attributedto the large donor contribution accounting for 28.9 percent o f the total PRP budget and the balances, which were brought forward from the previous year. By October 2003, the government released K2.8 billion representing33.2 percent o f the total PRPallocation to the province and46.7 percent ofthe total GRZPRP budget. 47 InfrastructureDevelopment K 2 billion was disbursed for the provincial feeder roads programme in 2002. The funds were used for works on seven (7) feeder roads (Nchelenge) at a cost of K316 million; constructing mitre drains (K116 million), Milenge-Mashika Road, installation of Culverts (K100 million) and Kafubashi- Chishikishi Road (K197 million) inMilenge. In Samfya district, K104 million was spent for works on roads and K47 million for channel clearing. Works inMansa district were carried out at a cost of K262 million for roads and K15 million for Mitre drains. In Chiengi district, K 275 million was spent on road works. Kawambwa spent K770 million on roads andK85 millionon various other PRP activities. Duringthe periodunder review, resettlement schemes received K 150million, which was directed towards programmes in infrastructure development and improvements in water and sanitation in the various schemes. The beneficiaries were Mansa, Mwense, Mukanga and Kapako Resettlement Schemes. In the Mansa Resettlement Scheme, the targeted 179 plots were successfully demarcated and 5.8kilometre of access roadwas pegged and stumped and one bridgeconstructed. 5.5 Lusaka Province The total budget allocation for 2001 was K8.4 billion. This amount increased slightly to K9.0 billion in 2002 representing an increase o f 7.1 percent over the previous year. In2003 the budget allocation for the province was K11.9 billion, an increase of 32.6 percent over the previous budget. The PRP allocation to the province was K2.8 billion in2002 out o f which K851 million was spent. In2003 a total o f K5.0 billion or 42 percent of the total budget was allocated for the implementation o f PRPs. This increase was partly attributed to the large donor contribution accounting for 48.3 percent of the total PRP budget and the balances, which were brought forward from the previous year. By October 2003, the government had releasedK1.5 billion representing57.7 percent ofthe total government PRP allocation to the province. InfrastructureDevelopment Under the feeder roads programme, a total of 74 feeder roads with a length of 113.6 kilometers were rehabilitated. A total o f K1.73 billion was utilized by June 2003. From this amount, a length of 112.4 kilometers from a with a total o f 72 feeder roads was constructed. The feeder road programme was implemented usinglabour intensive techniques, and employing localpeople as a way of raisingthe levels o f income inthe beneficiary areas. From the released K150 million, for the resettlement programme, feeder roads and boreholes in Kasenga, Rufunsa and Yapite resettlement schemes were worked on at a cost o f K147 million. A total o f K107.7 million was released for Kasenge Resettlement scheme with K55.7 million earmarked for borehole siting, drilling and installation. A total of K6.3 million was released for Rufunsa Resettlement Scheme where K4.02 million was used for borehole rehabilitation and installation, while the remaining amount was used for reconnaissancesurveys. 5.6 Northern Province The total budget allocation for 2001 was K9.7 billion. This amount increased to K11.2 billion in 2002 representingan increase o f 15.3 percent over the previous year. In the 2003 budget, the allocation for the province was K15.9 billion representing, an increaseo f 41.8 percent over the previous budget. 48 The PRP allocation to the province for 2002 was K2.8 billion out o f which K580 million was spent. In 2003 a total of K6.98 billionor 44 percent ofthe total budgetwas allocated for the implementationof PRPs inthe province. This increasewas partly attributedto the largedonor contribution accounting for 42 percent o f the total PRP budget and the balances, which were brought forward from the previous year. By October 2003, the government releasedK2.1 billion, representing 30 percent o fthe total government PRP allocation to the province and 51.9percent o fthe total GRZbudget. Infrastructure Development The feeder roads programme received a total o f K 2 billionfor roads rehabilitation in2002. A total stretch o f 718.6 Kilometers o f road network, 6 bridges and 2 culverts were earmarked for construction and rehabilitation in the province during the review period. Approximately 622 Kilometers of roads were successfully rehabilitated with a balance of 97 Kilometers still to be worked on. Out of the six (6) earmarked bridges five (5) were constructed andthe 2 culverts were also constructed. The land resettlement programme was allocated K150 million, which was spent on demarcation of farm plots in Kanchibiya Resettlement scheme (Mpika) where a 1 x 2 classroom block was constructed at a cost of K 58.9 million. From a target o f 14 Kilometers stretch o f road, 12 Kilometers was rehabilitatedat a cost K10.9 million. However, there was poor workmanship on the road. Furthermore 87 out o f the targeted 300 plots in Mufubushiresettlement inMpika were demarcated at a cost o f K7.2 million. InKasama district, a 4 Kilometers stretch of road out o f the targeted 15 Kilometre in Lukulu scheme was done at the cost of K21.7 million. In addition, a new scheme o f about 2700 hectares has been opened inChief Katyetye's area Isoka district. An amount of K 2.9 million was spent on this project and so far the outer boundary has been done. 5.7 North Western Province The total budget allocation for 2001 was K8.1 billion. This amount increased to K8.2 billion in 2002, representing a slight increase of 1.3 percent over the previous year. The 2003 budget increased significantly over the previous year from K8.2 billion to K18.6 billion, an increase of 127.4 percent over the previous budget. The PRPallocationto the province in2002 was K2.8 billionout ofwhich K606 millionwas spent. In 2003, a total of K10.9 billion or 59 percent of the total budget was allocated for the implementation of PRPs in the province. This increase could be attributed to the donor contribution accounting for 26.8 percent o f the total PRP budget. By October 2003, the government released K3.5 billion representing 43.2 percent of the total government PRP allocation to the province and 31.6 percent o fthe total PRP. Infrastructure Development Under feeder roads, a 3-kilometer stretch and 5 culverts were worked on at a cost of K36.7 million. In Solwezi, K61.6 million was spent for rehabilitating 37 kilometer o f road and working on 1 bridge. One bridgewas worked on inZambezi at a cost o fK27.1 millionwhile the Mwinilungaroad costed K49 million and a culvert at K18.7 million. These works were completed. A total stretch o f 256 Kilometers from Mufumbwe to Zambezi was rehabilitated at a cost o f K906 million. However; works on the Kasempa- Zambezi roadare still going on. Inthe resettlement programme, atotal amount ofK150millionwas disbursedfor drillingof3 boreholes at a cost o f K69.9 million and rehabilitation of 3 wells at a cost o f K13.9 million in Solwezi. One (1) hammer mill was providedat a cost ofK31.2 million out ofthe targeted 7 hammer mills.A hammer mill shelter was 49 successfully rehabilitated in the same Resettlement Scheme at a cost of K4.8 million. In addition rehabilitation o f a 15 Kilometer gravel road inthe scheme at a cost of K30.1 million startedand is on going. 5.8 Southern Province The total budget allocation for 2001 was K9.6 billion. This amount increased to K11.3 billion in 2002 representingan increase of 17.3 percent over the previous year. The 2003 budget increased significantly over the previous year from K11.3 billion to K18.6 billion an increase o f 64.7 percent over the previous budget. The PRP allocation to the province in2002 was K3.8 billionout o fwhich K1.2 billionwas spent. In 2003, a total of K10.4 billionor 56 percent o fthe total budget was allocated for the implementationof PRPs inthe province. This increase could beattributed to the donor contributionaccountingfor 30 percent ofthe total PRP budget. By October 2003, the government had releasedK4.6 billion representing 62.9 percent of the total government PRP allocation to the province. InfrastructureDevelopment A total of K2.45 billion was released to Southern Province for PRPs inthe year 2002. An amount o f K 2 billion was released for road rehabilitation, K300 million for construction o f low cost houses and K150 million for resettlement. Under the feeder road programme, the PRP funds were used for bush clearing along the main roads, construction o f culverts and rehabilitation of feeder roads. A total o f 160.3 Kilometres was graded, 72 kilometers of bushcleared and 15 culverts installed. As regards the resettlement programme, K150 million was released to the Resettlement Department in the Province. The funds were usedfor land acquisition and demarcation. A total o f 5,000 hectares were targeted for Kalomo and Mazabuka o f which 434 hectares o f land was acquired. Demarcation o f 49 plots out of the targeted 100 new plots at Masasabi in Itezhi-tezhi and 283 new plots instead of 260 at Kasiya in Livingstone. Drilling o f 6 boreholes at Harmony, Kasiya, Siamambo and rehabilitation o f 1 borehole at Masasabi were done. 5.9 Western Province The total budget allocation for 2001 was K8.8 billion. This amount increased to K12.1 billion in 2002 representing an increase o f 38.1 percent over the previous year. The 2003 budget increased significantly over the previous year from K12.1 billion to K17.8 billion an increase o f 47.3 percent over the previous budget. The PRP allocation to the province in 2002 was K3.7 billion out o f which K2.1 billion was spent. In 2003, a total of K8.0 billion or 45 percent of the total budget was allocated for the implementation of PRPs in the province. This increase could be attributed to the donor contribution accounting for 36.5 percent of the total PRP budget. By October 2003, the government released K2.5 billion representing 49 percent ofthe total government PRP allocation to the province. InfrastructureDevelopment The province received K 2 billion for rehabilitation oftwo district roads and Luiwanyau embankment. Out o fthe total release, Lukuludistrict received K1.5 billion., Senanga 100 million and MonguK400 million. In Lukuludistrict, 145 Kilometre of Lukulu-Katunda roadwas graded out of the targeted 195 Kilometre.and works are still on going. In Senenga district, 19 Kilometre o f the Senenga-Kalongola road was completed. InMongudistrict 13 culverts were completed for the Luiwanyauembankment. 50 Inthe resettlement programme, K150 millionwas allocated for Kalumwangeresettlement scheme where 60 plots were demarcated at a cost of K28 million; sinkingo f one borehole at K32 million and construction of LC2 at K 80 million. All works were completed except for the LC2, which was at roof level. 51 CHAPTER 6 INSTITUTIONALFRAMEWORKFORPRSPIMPLEMENTAION, MONITORINGAND EVALUATION 6.1 Introduction The overall coordination of the planning, implementationas well as the monitoring and evaluationof the PRSP/TNDP rests within the Planningand Economic ManagementDepartment inthe Ministry of Finance and National Planning, with the full participation of the line ministries, provinces, other government institutions, civil society organizations, private sector and the cooperating partners. In order to ensure effective implementation of the PRSP/TNDP, an institutional framework dealing with the implementation and monitoring of the PRSP/TNDP has been developed. Though not in full operation, a Poverty Monitoring and Analysis Framework (PMA) has been designed to provide timely information to policy markerson the implementationofthe PRSP. The monitoring system for PRSP/TNDP include the Input-Output level, which covers the Management Information System (IMS) requirement of implementing a Poverty Reduction Strategy and the Outcome- Impact level that shows the contribution of the PRSP/TNDP programme to the overall status of poverty in the country. The Input-Output component captures data mostly through administrativerecordsof which the line ministries take full responsibility of managing IMS. The outcome and impact indicator data are captured through specialized surveys, which are done 'by the Central Statistical Office. Such surveys include; the Living Conditions Monitoring Survey (LCMS); Demographic and Health Survey (DHS); Education Survey; Sexual Behavior Survey; Crop Forecasting Survey (CFS); and Post Harvest Surveys (PHS); Labor Force Survey andthe Census. 6.2 InstitutionalStructure for Monitoringthe Implementationof the PRSP/TNDP As earlier indicatedthe monitoring and evaluation system of the PRSP is still weak. The proposedsystem involves weekly, monthly and quarterly review meetings for Sector Advisory Groups (SAGs,) Provincial Development Coordinating Committee (PDCC) and the District Development Coordinating Committees (DDCCs). These committees are supposedto meet on a quarterly basis and submit reports to MOFNP and subsequently to the cabinet at which reports are presentedand decisions made. However, this system has not been implemented fully. Nonetheless, there have been Sector Advisory Group meetings to discuss the 2004 budget submissions for the sectors in 2003 and not to tract the PRSP indicators. The government is however, putting inplacemeasuresto ensure that PDCC andthe SAGs beginto mange information systems that will be ableto track progress onthe implementationofthe PRP interventions. 6.3 Implementationand monitoringinstruments Planning and monitoring of the PRSP/TNDP is spearheaded through the Sector Advisory Groups (SAGs) and the PDCC and DDCC subcommittees, who are involved in both planning and monitoring of the implementation of the PRSP/TNDP. In this regard, the SAGs use the defined PRSP/TNDP indicators to define the targets particularly at the input-output levels that are used for monitoring. In addition, standardizedmonitoring questionnairesfor capturing information have beendesigned and distributedto all 52 implementingagencies. Furthermore, the profiling o f the quarterly releases o f the findings to PRPs has improved the implementation and monitoring o f the PRSP/TNDP, particularly in the last two quarters of 2003. It is worth noting that the current PRSP Annual Progress Report did not use the proposed system. Instead, sector ministries and other spending agencies were asked to provide retrospective data on the implementation o f the sector PRSP interventions. The data quality was rather poor, due to the non- existence or ineffective management o f information systems in most sector ministries. This resulted into a long process o f data searching, synthesizing and analysis. With the proposed system in place, the government envisages some level o f effective and efficient information management systems inmost of the sector ministries andprovinces. 6.4 Implementationof the framework Figure 6.1 illustrates the proposed information flow for both planning and monitoring and evaluation o f both the PRSP and TNDP. It is envisaged that implementation and monitoring o f the PRSP will begin at Ward level and information will then be forwarded to the district. At district level, there are consultative structures such as the DDCC to discuss development issues, assess and scrutinize the data on tracking program/ policy implementation. The district information is consolidated to form a provincial report, which is discussed by the PDCC and subsequently forwarded to MOFNP. Equally, the line ministries gather their planning and monitoring data from provinces, consolidate them and submit them to SAGs for discussion and adoption. The information is then submittedto the MOFNP. There is also a provision inthe framework for other consultative forums such the civil society, private sector and cooperating partners. These forums discuss PRSP implementation issues and make their submissions at the Annual Poverty Forum. The issues from the Poverty Forum are thensubmittedto Cabinet for information and decision-making. The partialimplementationof the framework started in2002 buthas since gained momentum inthe last half o f 2003. This is due to the implementation o f planning and monitoring strategies under the Planning and Economic Management Department, as well as consultative efforts being implemented under the MTEF. The last two quarters of 2003 saw increased activities o f SAGs and PDCC committees culminating intheir participation inthe preparation of the 2004-2006 MTEFand the 2004 budget. The major weakness is the lack ofa well-developed management informationsystem, weak institutional capacities and lack of clear linkages and specified roles by different stakeholders. The Planning and Economic Management Department, incollaborationwith all stakeholders, will addressthese weaknesses in the proposed systemonce fully implemented. 53 Fig6.1: PRSP/TNDP Planning, Implementation andMonitoringFramework ////// I \ I \ I I I \\\ I \ / II \ LINEMINISTRIES PROVINCIAL ADMIN. i SAG^ ; I 1 ; PDCC I civil Society/Privatei To coordinate development of To coordinate development of I 1 I ;Isector/Donor I Sector policies, MTEF, National Regional policies, MTEF, ----------I '__----,----1 and PRSPBudget PRSP National andPRSP Budget, I I Forumforum I III monitoring andRecommendto PRSP monitoring and I I .................... I II Cabinet Recommend to Cabinet 1--------1------, I I including PrivateSector and including Private Sector and I I Civil Society initiatives Civil Society Initiatives I DDCC IIII I I . _ - - _ _ _ _ _ _ _ _ _ _ _ _ 4 _IWard DevelopmentCommittees Develop and Recommend PRSP ___+ Implementing Project Ideas _Structures_ _ _ _ _ _ _ _ Advisory Consultative structures 54 CHAPTER 7 LESSONSAND RECOMMENDATIONS ON THE IMPLEMENTATIONOF THE PRSP 7.1 Main Observations The cost of implementingthe PRSPfor the period 2002-2004 is estimatedat K6.5 trillion (US $1.3 billion) out of which K4.3 trillion (US $870 million) or 67 percent is supposed to come from external sources and 33 percent or K2.12 trillion (US $430 million) from domestic financing. This means that the successful implementation of the PRSP is primarily premised on Zambia maintaining a good relationship with its cooperating partners for the external resources to be released. However, in 2003, Zambia failed to conclude a new PRGF with the IMF largely due to the budget overrun which, consequently led to the withholding of programme aid by co-operatingpartners. The withholding of programme aid has negatively affectedbudgetexecutionincluding spendingon PRPsbecausemost ofthe domestic resources have gone to external debt servicing and other constitutional expenditures. In addition, lack of a programme with the IMFhas ledto the delay inreachingthe HIPC Completion Point. This means that Zambia has not yet been able to access the bulk of the debt relief estimated at U S $3.8 billion. In2004, therefore, every effort must be made to get backon the PRGFprogrammeandconsequentlyreachthe HIPC Completion Point. Although the PRSP is supposed to be largely foreign financed, reporting on foreign financing of programmes from sector ministries was inadequate. As aresult it has beendifficult to provide an analysis of the donor financing. This calls for line ministriesto improve on their data capturinginformation systems so that in the next progress report an accurate picture of what is going on in the sectors will be portrayed. Additionally, linking outputs to inputs was another area where the information provided was not sufficient. This could be explainedby the fact that presentation, funding and reporting modulesof the budget were not by activity, therefore, the money released was not tied to specific activities. However, in 2004, with the presentationof the Yellow Book and reporting systems inthe ABB format it is expectedthat the reporting systemwill improve. It has been notedthat the total expenditures on PRPs during the period inthis report are much higher than indicated. The reason is that this report focused mainly on programmes classified as PRPs in the yellow book ignoring those that have direct poverty reducing effort but classified under other lines like capital expenditure or grants. It is important that the future progressreports should focus not only on programmes classified as PRPs but also include all poverty reducing programmes by Government and Cooperating partners. However separate annexes for all poverty reducing expenditures were prepared for 2000, 2001, 2002 and 2003. Further, a similar exercise to prepare an annex for all poverty reducing expenditures for 2004 is underway. The inputsfrom the line ministries into this progressreport inmost cases were poor, indicatingthat there is inadequate capacity in these ministries to conduct such analysis. Thus, there is need to build capacity in sector ministries. Unclear guidelines on the use of PRSP funds especially on expenditures for administration, coupled with lengthy procurement procedures resulted in low absorption capacity. Furthermore, late disbursement of funds for PRPs contributedto the non-implementationof a number of programmes. For instance, in 2003, the first PRP disbursementwas made inMay 2003. The late disbursementof funds is partly attributedto the 55 presentationofthe budget inJanuary whichis only approvedby March. There are proposalsthat the budget shouldbe presentedinOctober whichwill allow Parliamentto debate and approve the budgetby December. Thus, implementationwill begin in January. Furthermore, guidelines and procedures on the use of PRP funds as well as reportingneedto be clear and simple. Officersdealing with PRP funds needto be oriented on the guidelines andprocedures.The proposedstructure underthe SAGSwill address these problems. 7.2 Other Findings Although the picture is mixed, the overall performance in the areas in which resources were disbursed indicates positive gains in terms of input (policy formulation) and output (products produced, such as number of kilometres of graded roads or schools rehabilitated). The resources that were disbursed were utilized fairly well. However, it is currently difficulty to assess the impact of the various interventionsin regard to actual reduction of poverty. In addition, and although an attempt was made, a comprehensive comparisonof outcomes as opposedto the objectives, was foundto be problematicdue to the non-existence of a baseline. It is however planned, that a comprehensive comparisonwill be done inthe second progress report. Observable improvements ininputs and outputs, thoughthey may be, there are some clear areas of concern. The Progress reporthas identifiedseveral constraints, obstacles and other rigiditiestowards the creation of significant impact resultingfrom the implementationof the Poverty ReductionProgrammes (PRP's). Some of these are as follows: a) InadequateDisbursement The results of the report show that there was a problemwith the disbursement of resources budgeted for PRPs. Less than a third of the intended disbursements were effected in 2002 and the flow of these disbursements was sporadic. The result was that project implementation was delayed, causing costs to escalate and, for projects which had started, to remain incomplete. One o f the reasons, among several, for inadequate disbursements was due to the existence of other competing interests, which were able to exert greater pressure on the budget. Inaddition, it is importantto note that the implementationof the PRSP, in the Zambian case, precededthe development of the Medium Term ExpenditureFramework(MTEF). This development may have resultedinpoor releases due to the lack of specific targeting of the budget towards PRPsprogramsthat couldhavemade stronger demandsinorder to effectdisbursements. b) Absorption Capacity Findings indicate that, insome cases where disbursements we effected, there existedinadequatecapacity to utilize the money immediately. The money remained in the banks, unutilized for long periods of time, depriving other programs and projects that may have had the capacity to efficiently utilize it. The reasons for this lack of absorption are many and vary from program to program and from district to district. Common among them, however, is the lack of informationregardingtiming of disbursements, inadequate provision of capital equipment to facilitate implementation of infrastructure works and long and complicatedtender procedures. c) Process of IdentijjingPrograms/Nature of Consultation The report indicates that the nature of consultations, (all intended beneficiaries) in terms of identifying programsto be undertakeninthe year, were too broadandwas consideredinmany instancesas detrimental to the efficient and effective implementationof projects. In order to take into account political balancing and equitable distribution of resources, it was found that the resources were thinly spread, resulting in 56 incomplete projects. In addition and since the pattern of give and take was not consistent, it had become very difficulty to predict the flow of disbursed resources. The implication of this development was that effective planning o f largeprojects and extensiveprogramswere seriously impaired. d) Monitoring and Evaluation The first impression given by the findings of the report was that the capacity for poverty monitoring and evaluation was weak, since the Central Statistical Office (CSO) was unable to provide data that could be used inassessingthe revisedindicator system developedfor the PRSP. The revised indicator system useda systembasedon four values: Input, Output, Outcome andImpact, which needto be tracked both inthe short term and long term. The data was not available for both the immediate indicators as well as the long-term output and impact indicators.Inaddition, a baselinehadnot been sufficiently developeddue to the fact that only one year of implementation had elapsed. Interms of monitoring, which is supposed to be carried out by implementing institutions, it was found that the five (5%) percent of PRPs disbursementsto be usedfor the purpose was inadequate. The main reason for the inadequacy stemmed from the fact that no prior monitoring and evaluationcapacity had been established. Inorder to address the issue of data, Government has allocatedK5 billion underthe PRPsto enable CSO carryout a comprehensivesurvey in2004. 7.3 Other Remedies The findings of the report have already led to the initiation of efforts aimed at addressing some of the obstacles. These are efforts aimedat enhancingthe entire implementationprocess as well as creatinggreater capacity towards monitoring and evaluation. For example, twelve (12) Sector Advisory Groups (SAGs) have been established to assist line ministries and local administration identify the most viable programs and projects to be implemented.The SAGs will also assist inthe process of, consultations, implementation, Monitoring and Evaluation. The composition of the SAGs is very broad and includes civil society, the private sector, andthe cooperatingpartners.They will be meeting `in-house' at least once a month and with other SAGs, together with the Ministry of Finance and National Planning every quarter. These meetings will be heldinorder to report and assess the process of implementation. Inaddition to the above stated measures, a CabinetCommittee on developmenthas beenre-launchedso as to provide a forum at which Cabinet can quickly obtain monthly and quarterly reports on the implementation of PRSP. Cabinet has done this in order to create a mechanism by which budgetary and implementationproblems can be detected early, with the view of having them rectified before any serious structuralproblemsdevelop. Inaddition, it has beenagreedthat only Cabinet will authorize diversion of any money in the budget. This agreement will especially protect Poverty Reduction Programmes. Overall, the enhancedpolitical commitmenttowards budget discipline in2004 should assist to preventPRPs funds from being diverted. From the shortcomings observed in the PRSP Progress report, Government recognizes the need to constantly evaluate its performance and rededicate itself to ensuring the realization of the full potential of the nation's greatest asset: the Zambianpeople. Governmenthas also recognizedthe need for a sharp fiscal adjustment and the needto implement policies that will lead to macroeconomic stability and growth and ultimately lead to poverty reduction. The Governmenthopes to increase the share of spending on PRP, s to 2.5 percent of GDP by 2006. The budget for 2004 is anchoredon the premisethat the empowerment of the Zambian people must be the only reason for all development endeavors. This will secure sustainedand broad-baseddevelopments, which will great wealth, reduce poverty andraise living standards of all the citizens. 57 To meet these challenges, Government has proposed amendments to the Medium Term Expenditure Framework (MTEF) in which it seeks to revise the macroeconomic framework for 2004-2007 as indicated inTable (2.4). With the above premise inmind, inthe 2004 budget, the governmenthas focusedexpenditures on areas that will directly involve and benefitthe Zambian people and curb waste within the public sector. Government will endeavor to observe prudence inexpenditureto ensure that the limitedresources are directedat priority investments, which will reduce poverty and create wealth. The preparation of the PRSP inZambia precededthe development of the MTEF. The MTEF has now been developedand its first year of implementationis 2004. The 2004 budget has been formulated inthe context of the MTEF for 2004-2006, thus placing the annual budgeting cycle in a more strategic context. All spending agencies have used the ABB procedures to explicitly link their budget allocations to service delivery and outputs. The budgetingprocess has been made more transparent and in this regard, the 2004 budget provides much more information which will allow for transparency and accountability. The SAGS participated in the consultative meetings that fed into the 2004 Budget. In addition, the new `Funding Profile Schedule' takes into account of the consultative process and has designed a system, which will ensure disbursements are done in accordance to the annualized profile, rather than towards any other considerationthat budget office may have had. It is firmly plannedthat the implementation of the MTEF will have a positive effect on budgetary commitments and especiallytowards the allocation ofPRPs. The development of Zambia's first MTEF, the MTEF 2004-2006, went through a rigorous consultative process premised on the experience from the PRSP consultative process and the findings of the PRSP Progress report. With the benefit of experience from the PRSP consultative process, the process of developing the MTEF 2004-2006 was made faster than it would have been. Proper definitions of programmes and activities were achieved inthe MTEF through the lessons learnt inthe implementation of the PRSP. Nevertheless, there have been hurdles that have caused the delay in the publishing of the document. These hurdlesare at formulation andoperationalisationlevel. The formulation of the MTEF 2004-2006 used the Activity Based Budgeting (ABB) system to come up with estimates for MPSAs. Thus the Yellow Book for 2004 is in ABB format. With the new Chart of Accounts andthe new Commitment Control systems that were adoptedin2003, the ABB software that had been developed prior to 2003 had to be retooled. This was done, but improvements had to be made as the budgetingwent on during the year. Inorder to be able to do funding for the ABB based 2004 Budget items, the funding module was also developed. These processes which include training of staff has delayed the final implementationofthe MTEF. Before the MTEF 2004-2006 could be presentedto Parliament, the Parliamentarians debated far reaching issues relatedto consultationsand viability of the Budget Estimates that was presented inthe 2004 Budget. The parliamentariansmade changes which had an impact on the indicative allocations in the Green paper for 2004 to 2006. The MTEF 2004-2006 would therefore, only be finalised when the consultations were completed.As the 2004 Budget was approvedby Parliamentby the first week of April, 2004 the firmed up estimates for 2004 will only be completed at the end of April and will thereafter be a basis for updating the 2004-2006 MTEF. Inaddition to MTEF process, is the developmentofthe IntegratedFinancialManagementandInformation System (IFMIS) and the CommitmentControl System(CCS), bothhousedunder the Public Expenditure ManagementandFinancialAccounting Reform (PEMFAR). The institutionalization ofthese initiatives will contributetowards greater effectiveness inimplementing Poverty ReductionPrograms. 58 1 x 59 2 N 0 60 t (r c C 9 c c C c ..es C P I ..e I ....!3 U 62 63 m .-VI 4 b - + - - - - ~ - b b ~ - b - m w m b o - b w m 0 m w b b m ~ 64 vi 0 e, .-.- v1 .-M .-* '2E B w E .I .-* .-a -M 0 3BE .-M a .- in in 5e . . . . . 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