By Alice Pearce – Senior Researcher at PMRC

In a bid to address the high unemployment levels in Zambia the Government has been implementing a number of empowerment programmes, particularly those under the Ministry of Youth, Sport and Arts, Ministry of Community Development and Social Welfare, the Department of Gender, Citizens Economic Empowerment Commission and more recently, the Ministry of Local Government and Rural Development, among others, targeted at supporting the economic empowerment drive of the women and youth. These programmes are aimed at fostering job creation and economic growth through entrepreneurship as a vehicle. These programmes also provide citizens opportunities to participate in the growth of the economy by accessing capital to invest in viable business ventures.

Although the empowerment programme initiative is commendable as it supports innovation and entrepreneurship which are the critical pillars for economic growth and social and economic inclusion, notable challenges have been observed in the effective management and accountability of empowerment funds to derive real economic benefit to the beneficiaries as well as the government at large.

Therefore, financial literacy has emerged as an essential pre-requisite for effective and efficient management of the funds accessed by beneficiaries venturing into businesses under the current empowerment programmes. Not only will enhancing the financial literacy of beneficiaries increase the sense of ownership within beneficiaries of the funds, it will equally enable them to fully take control of the opportunities available to them and guarantee their businesses to be self-sufficient. However, findings from the 2020 FinScope survey indicate that a significant amount of the population experience low financial capabilities with financial inclusion recorded at 71.2% for men and 67.9% for women. This has been attributed to low levels of financial literacy which is largely skewed towards the urban population at 31.9% and 16.2% among rural households. Hence, limited financial literacy remains a major barrier for the successful implementation of economic empowerment programmes in order to transform the economic outcomes of ordinary citizens.

It is crucial to note that empowerment should not only be about access to seed capital, it should rather focus on providing a comprehensive programme that is sustainable by giving more power to beneficiaries through education, information, coaching and counseling, as well as amplify the possibilities to get or create a job or business, access micro-credits and ICT networks in order to inculcate business values in the beneficiaries, particularly for those who are not typically familiar with running a profitable business. Further, enhancing relevant trade skills has the potential to make beneficiaries competitive in their respective fields in order to maximise profit margins. Hence, Government is urged to consider integrating these aspects into the current empowerment programmes.

Furthermore, there is need to create guidelines that clearly identify eligible candidates through a robust mechanism that seeks to provide tailored mentorship and training programmes of candidates to actualise their business proposals. At the onset of the empowerment programme, eligible beneficiaries should be taught financial literacy courses before fully embarking on their investments as this will form the basic foundation for the success of the programme. Similarly, building the capacity of candidates in requisite financial, negotiation, marketing and product development skills is necessary to effectively achieve the goals of empowerment programmes.

Moreover, enhanced financial literacy skills will enable beneficiaries to effectively track their expenditure and balance their income with expenditure which is critical for assessing the profitability of the venture. By embedding basic business management practices and principles into the current empowerment programmes will enable candidates to understand the basics of business management and develop their competencies to generate and sustain their income while improving the sustainability of the empowerment programmes, particularly in the case of revolving funds were beneficiaries need to pay back loans. Equally, for funds accessed as grants, beneficiaries need to account for the funds in order to achieve the goal of the programme that has a multiplier effect which should trickle down to improved quality of life of the beneficiaries and direct economic benefits within the community as well as the local economy.

In addition, when beneficiaries of empowerment programmes are financially literate, it can be expected that there will be a general motivation to access formal financial services in order to expand their businesses as they will be able to have balanced and well documented business transactions. Therefore, there is need to facilitate linkages between financial lending institutions and beneficiaries of empowerment programmes in order to improve financial inclusion through technical assistance that relevant financial service providers are able to give to the beneficiaries. This will also nurture the skill of saving and growing the savings of the business which is critical for the evolution of the business from one of empowerment to that of self-sustainability.

The Policy Monitoring and Research Centre (PMRC) is a public policy think tank that was established in 2012 to promote public understanding through research and education. Our role is to encourage and facilitate debate on social and economic policy issues critical to national development. PMRC’s vision is “Unlocking Zambia’s Potential” through evidence-based policy research analysis and reform proposals. www.pmrc.com

PMRC is a grant-aided institution under Gazette Notice No. 123 of 2021 within the Ministry of Finance and National Planning.

The institutions’ core analytical areas include; economic Development, Good Governance, Natural Resources & the Environment, and Social Development & Livelihoods.

Within these work areas, PMRC seeks to:

  • Promote public understanding through research and education;
  • Encourage debate on social and economic policy issues critical to national development;
  • Disseminate research-based policy reform proposals; and
  • Support the Government in recommending policies and procedures critical for national development.

To deliver its mandate PMRC works with, and leverages pragmatic information, communication, and outreach networks of various institutions. These include Government, Civil Society Organizations (CSO), Academia, International Organizations and Cooperating Partners, National Assembly, Private Sector, and the Media. This approach of collaboration has enhanced PMRC’s relevance to national development through awareness of public policy.

In the last 10 years, PMRC’s internal and external operating environment has undergone major institutional transformation. There has been an increased demand for the institutions’ work and its outputs from numerous stakeholders. Due to the changes in the policy environment, there has been an increased need for a highly competent and productive workforce that is capable of responding to the ever-evolving space. Therefore, in keeping with its vision to unlock Zambia’s potential through producing high-quality, relevant and timely policy analysis, evidence-based research and reform proposals critical for national development, PMRC has to constantly adapt to the ever-changing operating environment and ensure that it continues to deliver quality services in line with its mandate.

 

Objectives of the Assignment

  • Job Evaluation and Human Resource Audit.

 

Scope and Specific Objective of the Consultancy

  • To analyze the existing institutional structure and its alignment to the mandate, stated aims, thematic areas, and matching financial capacity;
  • To recommend an appropriate institutional structure for PMRC and its consequent staffing levels based on the outcome of the skills gap analysis;
  • To conduct a job evaluation on all jobs and undertake a job grading exercise for all jobs in order to ensure that the job grading structure properly reflects the relative weight and size of the jobs as intended in the institutional structure;
  • Review and analyze the current job descriptions and develop job specifications for current and revised structures and propose key performance indicators;
  • Develop an institutional salary structure;
  • Implement a Performance Management System that is robust enough to ensure that staff deliver on agreed targets based on annual plans.
  • Conduct a job evaluation/analysis exercise on the duties, responsibilities, necessary skills, outcomes, and the required work environment;
  • Suggest the basis for developing an equitable pay structure across PMRC based on a logical method of measuring relative job scope and size and best practice;
  • Recommend an appropriate bonus system for the institution;
  • Presentation and submission of a final skills gap analysis report results and recommendations related to appropriate organizational structure; and
  • Recommend effective communication and change management throughout the process.

 

Requirement

The individual should demonstrate;

  • Minimum of Masters Degree in fields related to human resource management, change management, statistics and related fields;
  • Minimum experience of 5 years in providing similar services;
  • Proven track record in the area of compensation and benefits analysis, including for comparable international organizations for at least five years;
  • Experience in the field of human resource management and experience in undertaking salary surveys for at least five years;
  • Familiarity with labour market issues for at least five years and knowledge of the Employment Code Act of 2019;
  • Ability to render consulting services in the most professional, effective and efficient manner;
  • Fluent in English; and
  • Excellent writing and presentation skills.

 

Expected deliverables

  • Inception report
  • Skills gap analysis report.
  • Job evaluation report.
  • Proposed institutional structure.
  • Proceedings report.

 

Timeframe

This assignment will be executed over 20 working days.

 

Application procedure

Expressions of interest clearly marked “Expression of Interest for consultancy to provide services to conduct a Job Evaluation and Skills Gap Analysis of PMRC” must be submitted via email only to info@pmrczambia.net and copy human.resource@pmrczambia.net.

The closing date for the Expression of Interest is 22nd July 2022 at 17:00hrs Local Time. Late Expressions of interest will not be accepted.

Applications must be addressed to:

The Acting Executive Director

Policy Monitoring and Research Centre

Corner of John Mbita and Nationalist roads, Ridgeway

Private Bag, KL 10

Lusaka.

The Policy Monitoring and Research Centre (PMRC) is a public policy think tank that was established in 2012 to promote public understanding through research and education. Our role is to encourage and facilitate debate on social and economic policy issues critical to national development. PMRC’s vision is “Unlocking Zambia’s Potential” through evidence-based policy research analysis and reform proposals. www.pmrc.com

PMRC is a grant-aided institution under Gazette Notice No. 123 of 2021 within the Ministry of Finance and National Planning.

The institutions’ core analytical areas include; economic Development, Good Governance, Natural Resources & the Environment, and Social Development & Livelihoods.

Within these work areas, PMRC seeks to:

  • Promote public understanding through research and education;
  • Encourage debate on social and economic policy issues critical to national development;
  • Disseminate research-based policy reform proposals; and
  • Support the Government in recommending policies and procedures critical for national development.

To deliver its mandate PMRC works with, and leverages pragmatic information, communication, and outreach networks of various institutions. These include Government, Civil Society Organizations (CSO), Academia, International Organizations and Cooperating Partners, National Assembly, Private Sector, and the Media. This approach of collaboration has enhanced PMRC’s relevance to national development through awareness of public policy.

Organizations striving for best practices in corporate governance will have in place a Board Charter that all board members understand and formally commit to through selection, induction and annual review process. Whilst the development and documentation of a board charter is generally unique to each organization and reflects the specific nuances of the business, several core components should be included in every such document.

It is against this background that the Policy Monitoring and Research Centre (PMRC) proposes to contract a legal/ corporate governance expert to develop a Board Charter that will form the basis for the operations of the PMRC Board of Governors as enshrined in the institutional constitution.

 

Objectives of the Assignment

The main objective of the assignment is to develop a Board Charter to set out the key values of the Policy Monitoring and Research Centre (PMRC) Board of Governors. To provide a concise overview of the roles and responsibilities of the Board of Governors, power of the Board, various board committees and their roles, separation of roles between the board and management, and the policies and practices in respect of corporate governance matters.

 

Scope and Objectives of the Assignment

The consultant will develop a charter with the following;

  1. Terms of reference and person specification for board composition.
  2. Standard Operations Procedures/Manual (SOP) Meeting operations (No of meetings, quorum, notices, etc).
  3. Roles and responsibilities of the board and propose working committees.
  4. Code of conduct for board members.
  5. Board appraisal.
  6. Risk management.
  7. Reporting mechanisms.
  8. Legal implications and provisions.

 

Expected deliverables

  • Inception report.
  • Board Charter.

 

Timeframe

This assignment will be executed over 10-working days.

 

Consultant specifications

  • A Bachelor of Laws degree or any related field.
  • Postgraduate Diploma in Legal Practice.
  • A Legal Practicing Certificate is an added advantage.
  • At least 10 years of experience in legal practice.
  • At least seven (7) years of professional experience in the development of board charters.
  • Proven experience in the development of board documents as evidenced by at least two case studies.
  • Member of a corporate body.

 

Knowledge and skills

Working knowledge of Zambian laws is an added advantage.

 

Application procedure

Expressions of interest clearly marked “Expression of Interest for Consultancy to Provide Services for the Development of a Board Charter” must be submitted via email only to info@pmrczambia.net and copy human.resource@pmrczambia.net.

The closing date for the Expression of Interest is 22nd July 2022 at 17:00hrs Local Time. Late Expressions of interest will not be accepted.

Applications must be addressed to:

The Acting Executive Director

Policy Monitoring and Research Centre

Corner of John Mbita and Nationalist roads, Ridgeway

Private Bag, KL 10

Lusaka.

The Policy Monitoring and Research Centre (PMRC) is a public policy think tank that was established in 2012 to promote public understanding through research and education. Our role is to encourage and facilitate debate on social and economic policy issues critical to national development. PMRC’s vision is “Unlocking Zambia’s Potential” through evidence-based policy research analysis and reform proposals. www.pmrc.com

PMRC is a grant-aided institution under Gazette Notice No. 123 of 2021 within the Ministry of Finance and National Planning.

The institutions’ core analytical areas include; economic Development, Good Governance, Natural Resources & the Environment, and Social Development & Livelihoods.

Within these work areas, PMRC seeks to:

  • Promote public understanding through research and education;
  • Encourage debate on social and economic policy issues critical to national development;
  • Disseminate research-based policy reform proposals; and
  • Support the Government in recommending policies and procedures critical for national development.

To deliver its mandate PMRC works with, and leverages from pragmatic information, communication, and outreach networks of various institutions. These include Government, Civil Society Organizations (CSO), Academia, International Organizations and Cooperating Partners, National Assembly, Private Sector and the Media. This approach of collaboration has enhanced PMRC’s relevance to national development through awareness of public policy.

 

Objectives of the Assignment

The objective of the consultancy is to develop a three (3) year Strategic Plan to ensure that the institution fulfills its mandate.

 

Scope and Specific Objectives of the Consultancy

The scope of work for the Consultant will include but not be limited to:

  • Review the vision, mission, and values based on PMRC‘s mandate;
  • Undertake stakeholder mapping and analysis;
  • Undertake a Situation Analysis of PMRC’s operations to date;
  • Through a consultative process and application of appropriate tools of analysis, identify focus areas and develop strategic objectives and key result areas for the same;
  • Review the Institutional Capacity, Organizational set-up, financial and administrative systems against the PMRC mandate and the identified strategic objectives and key result areas and make recommendations, if any;
  • Propose a strategy for achieving the strategic objectives and key results;
  • Develop a Results and Resources Framework for the plan period;
  • Preparation of Strategic Planning document;
  • Prepare a roadmap for the development of the strategic plan;
  • Hold stakeholder meeting(s) to validate the draft Strategic Plan; and
  • Finalize the Strategic plan and submit it to PMRC.

 

Deliverables/Outputs

a) A three-year Strategic Plan (2023-2025) including a results and resources framework.

b) Report on the process including stakeholder consultations and workshops.

 

Assignment duration

This assignment is expected to be carried out for a period of 40 working days.

 

Preliminary Selection Criteria

The Consulting Firm should be able to provide the following:

i. Current company certificate of incorporation/ registration.

ii. Proof of statutory compliance including tax in the country of incorporation/registration.

iii. Litigation status.

iv. Financial statement for the last 3 years.

 

Qualification of the Firm

The Consulting firm should demonstrate the following:

  • At least seven (7) years of professional experience in Strategic Planning and Management and facilitation of Strategic Plan development.
  • At least five (5) years of working experience on assignments on Strategic Plan development for Grant-Aided Institutions or Public Institutions.
  • Prior experience in working with the Government and its partners and other stakeholders in the public sector, especially in the area of research, policy analysis, policy development, management, and program-related work.

 

Team Leader – Skills and Competencies:

  • Skills in facilitation of stakeholder engagements/workshops;
  • Evidence of having undertaken similar assignments;
  • Experience in research, policy development, management and corporate governance;
  • Demonstration of participatory approaches in conducting assessments and facilitating strategic planning processes; and
  • Current member of a relevant professional body.

 

Selection Method

The consultants will be selected using the Least Cost Based Selection method in accordance with the Public Procurement Act No. 8 of 2020 and the Public Procurement Regulations of 2022.

 

Application procedure

Expressions of interest clearly marked “Expression of Interest for Consultancy to Provide Services of Developing an Institutional Strategic Plan for PMRC” must be submitted via email only to info@pmrczambia.net and copy human.resource@pmrczambia.net.

The closing date for the Expression of Interest is 29th July, 2022 at 17:00hrs Local Time. Late Expressions of interest will not be accepted.

Applications must be addressed to:

The Acting Executive Director

Policy Monitoring and Research Centre

Corner of John Mbita and Nationalist roads, Ridgeway

Private Bag, KL 10

Lusaka.

By PMRC Researchers – Emmanuel Mumba and Mabvuto Lungu

INTRODUCTION 

Over the period 2019 to 2021, inflation in Zambia has been higher than the 6-8 percent target range. Inflation averaged 9.1 percent in 2019, 15.6 percent in 2020 and rose further to an average of 22.1 percent in 2021. Inflation is a broad measure involving goods and services and not only consumer food. It measures the overall impact of price changes for a diversified set of products and services. Calculating the overall inflation rate for a country requires an index with broader coverage of items called basket. Depending on the country and its consumption habits of the majority of the population, the basket will have different goods. Some goods might record a drop-in prices and others may increase and the overall value of inflation will depend on the weight of each of the goods with respect to the whole basket.

 In 2019 and 2020, the increase in inflation was mainly attributed to the depreciation of the Kwacha against the trading currencies, and upward adjustments in energy prices (fuel pump prices and electricity tariffs). Upward pressures on food prices following the adverse impact of the 2018/19 drought and trade disruptions, that followed the lockdown measures taken in response to the COVID-19 pandemic in early 2020, also contributed to rising inflation. The higher inflation outturn in 2021, was also associated with a sustained increase in food prices and the depreciation of the Kwacha until the second half of the year.  The inflation in Zambia is as a result of price changes on several goods and services. In a hypothetical example, using one of the most consumed items in the country (cooking oil) from the basket for illustration purposes for a period January to April. Suppose the initial price of cooking oil in January is K70 and over the next months, increases to K100, K125, and K135 in February, March and April respectively, the rates at which the price of cooking oil increased from January to April are K30, K25 and K10 respectively as shown below. 

K70 K100K125K135 or   when expressed in percentage change. The rate at which prices of cooking was increasing from one month to another at a decreasing rate is what is called inflation. Therefore, a reduction in the inflation rate does not mean a reduction in the prices of goods and services but the reduction in the rate at which prices are increasing.

EFFORTS TOWARDS REDUCTION IN INFLATION BY GOVERNMENT 

Government has been using a mixture of monetary and fiscal measures to control the rate of inflation towards its aspiration of an inflation rate of between 6-8 percent.  Some of the key measures that the Government has been using to control inflation are not limited to the following: 

The monetary policy being one of the major tools used by the central bank to control inflation has been instrumental during this period. The Monetary Policy Committee (MPC), at its November 22-23, 2021 Meeting, decided to raise the Monetary Policy Rate by 50 basis points to 9.0 percent. This was done in order to help steer inflation to single digits in 2022 and to within the 6-8 percent target range by mid-2023 as stated in the 2022 Budget Address. As anticipated, a sharp decline was experienced in the inflation rate and during the previous two MPC meetings (in February 2022 and May 2022) the MPC rate has been maintained at 9%.

In the 2022 national budget, the Government initiated a number of reforms to support the agriculture, livestock and fisheries sectors. These included among others, the removal of 5% customs duty on the importation of cattle breeding stock and suspension of 5% customs duty on grandparent and/or parent stock of day-old chicks. These actions and many others have drastically addressed the supply shocks and moderately improved the price movements in food items such as meat. Subsequently arresting food inflation from a whole year high of 31.6 % in August 2021 to 9.7% in June 2022.

The Kwacha has been stable for the past few months in trading against major currencies, which has contributed to a reduction in inflation. In the last three months, the Kwacha has sustainably been on a bullish trend appreciating averagely at 5.8% monthly against the US dollar. This performance has been anchored on enhanced fiscal consolidation measures, positive market sentiments emanating from the progress made on the IMF Extended Credit Facilities with its accompanied debt structuring programme and support from the Central Bank through its open market operations. Other factors that have buoyed up the Kwacha sprung from the encouraging dollar-quoted tax declarations from the mining sector. These factors have unwaveringly reduced the imports value basket for the imports-dependent local manufacturing sector, reducing production costs and thus, moderating consumer price levels. 

Government is urged to continue with its fiscal consolidation measures towards achieving a stable single-digit inflation rate which will positively impact the prices of goods and services in the long term. Lastly, in order for the gains of the single digital inflation to be realised and yield economic dividends through the reduction of the cost of living, there is need for continued stability of the exchange rate as well as stable fuel prices which are critical determinants for the cost of goods and services through its impact on the cost of production. 

By Chisengele Chibuta – PMRC Researcher

The African Continental Free Trade Area (AfCFTA) is a flagship project of the African Union’s Agenda 2063, which is a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. The AfCFTA aims to boost Intra-African trade by providing a comprehensive and mutually beneficial trade agreements among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy. The private sector will play a pivotal role in boosting intra-African trade through the AfCFTA. 

According to the Trade Law Centre, in Africa, the private sector accounts for 80% of total production, 66% of investment, 75% of credit and employs 90% of the working-age population. In addition, 90% of the firms within the African private sector are Small and Medium Enterprises (SMEs). This is also the case for Zambia where Micro, Small and Medium-sized Enterprises (MSMEs) employ the majority of the country’s workforce 

The private sector is the engine for innovation, investment, job creation, poverty alleviation and sustainable economic growth for any economy. However, the sector’s participation in cross-border trade is often hindered by tariff and non-tariff barriers (including complex customs and trade procedures), high transportation costs and a lack of access to information. These are some of the issues that the AfCFTA will seek to address. It will progressively remove tariffs on 90 % of goods (with 10% of sensitive items to be phased in later) as well as resolve the challenges of multiple and overlapping memberships, both of which will make it easier for businesses to trade across the continent. The AfCFTA is also expected to enhance competitiveness of local enterprises and promote industrial development. None of this will be possible, however, unless the legal instruments of the Agreement are fully implemented. These legal instruments represent an opportunity to establish strong governance structures as well as a stable and predictable business climate when trading or investing across borders. 

The AfCFTA will need to build on the work done by various Regional Economic Communities (RECs) as it relates to private sector participation. For example, the Southern African Development Community (SADC) Secretariat Directorates, with support from various committees, have established consultative mechanisms with the private sector on various topics, including infrastructure development, food security, customs and mining. Additionally, SADC has the Support to Industrialisation and the Productive Sectors (SIPS) programme, which is supported by the European Union and the German Federal Ministry for Economic Cooperation and Development to facilitate the expansion of regional value chains and promote dialogue between the private and public sectors. Such mechanisms and programmes must be infused into the AfCFTA negotiations and implementation of the Agreement. SADC represents just one of at least 8 RECs found across the continent, all of which have approached private sector participation differently. The progress that has been made in these RECs in terms of private sector participation is the key building block for greater private sector participation in the AfCFTA.  

To further achieve success in the implementation of the AfCFTA, it will be important for the Zambian Government to actively engage the private sector at all levels because it is a key stakeholder in the Agreement. To date, there has been limited direct involvement of the private sector in the negotiations of the AfCFTA, which demonstrates the importance of such engagements. To this end, it is commendable that Zambia’s Minister of Commerce and Trade, Mr Chipoka Mulenga recently stated that the private sector will be briefed on the provisions of the agreement and engaged as the negotiations proceed. This will further need to include the likely impacts of the Agreement on the sector as a result of the increase in competition that will come with open borders. 

The AfCFTA will not achieve any success without the involvement of the private sector. It is therefore critical that they receive the necessary support in order for them to have a major developmental impact in Zambia and Africa at large. 

Equitable access to and ownership of land is cardinal in fostering socio-economic development that results in empowerment for all citizens. However, key sections of society such as women, youth and persons with disabilities have continued to face barriers in the acquisition and ownership of land. This is partly attributed to social practices and beliefs as well as the lack of economic inclusion, which have excluded certain sections of society from owning land by virtue of their socio-economic status, physical ability and gender.

The United Nations Charter of 1945 which Zambia is a signatory to, recognises human rights and economic and social development as closely interrelated. The Charter acknowledges the implications of insecure land tenure on people’s livelihoods, dignity and survival. Hence, there is need for changes in societal norms to ensure that vulnerable groups have unrestricted access to land, secure land rights and are empowered to make their own decisions about land use.

Given the dual nature of Zambia’s land tenure, women, youth and persons with disabilities tend to hold land on customary tenure because it is cheaper and relatively easier to access than state land. However, the lack of security of land due to inadequate documentation to claim ownership has made it easier for people to be displaced. Recognising this challenge, Government has been rolling out a National Land Titling Programme in order to secure land ownership rights to land holders. However, there is an urgent need to amend the 1995 Lands Act in order to guarantee customary land rights.

As a fulfillment to Government’s commitment to uphold human rights, the 2021 National Lands Policy was instituted to address the various challenges related to access and control over land and its resources with special recognition to women, youth and persons with disabilities. This is especially important since securing land rights reduces their vulnerability through increased individual agency and socio-economic status.

Several policy measures have been put in place in order to allow for equitable land distribution. These include; facilitating the ownership of land by Zambian citizens in order to promote decent livelihoods and socio-economic development, regulating the land ownership of non-Zambians in order to facilitate reasonable access to land, achieving a gender sensitive and youth friendly land sector which is inclusive of persons living with disabilities and other socially marginalized groups, strengthening the land allocation mechanisms in order to improve security of tenure, among others.

Additionally, land distribution quotas have been effected in order to improve access and ownership of the resource. Government has revised land distribution quotas to 50% of available land for alienation being reserved for women and 20% for the youth and Persons with Disabilities. This pronouncement is also in line with promoting gender equality and socio-economic inclusion of women, the youth and persons with disabilities as envisaged in the National Gender Policy, National Youth Policy and National Disability Policy. It has also aided in uplifting livelihoods and enhancing greater participation of all citizens in national development.

Furthermore, Government’s revision of the contractual age for youths to own land from 21 to 18 years will make land more accessible to young people and enable them to contribute to the growth of the economy by venturing in agricultural and entrepreneurial activities. This affirmative step will empower women, youths and persons with disabilities through ownership of assets, which can be used as collateral to obtain financing from formal financial lending institutions such as banks. These policy measures need to be implemented effectively in order to enhance access and ownership of land to key groups and other marginalised persons in line with Government’s aspirations of promoting gender equality, inclusivity as well as equitable distribution of the country’s resources.

  By Alice Pearce- Senior Researcher

Public Financial Management

Government has identified public financial management as key to meeting its development agenda. In the 2022 budget focus, will be on strengthening national planning, internal controls and audit, resource mobilization, procurement as well as transparency in debt contraction and management, among other areas.

In the 2022 budget, Government has outlined its desire to expand the coverage of the Financial Management System to the district level and develop a standardized Local Authorities Financial Management Information System framework. PMRC commends this action because it will strengthen the financial governance of the Constituency Development Fund (CDF). This will serve to allay fears about abuse of the CDF.

Regarding public procurement, Government is committed to procuring goods and services at “the right price, of the right quality and delivered on time”. To this end, Government will endeavor to strictly adhere to the provisions of the Public Procurement Act No.8 of 2020 and ensure that all public investment projects are appraised. PMRC is of the view that gaps still remain in Zambia’s procurement legal frameworks, procedures and practices, which have previously resulted in abuses and significant losses in Government finances. Therefore, there is need for reforms to be undertaken in the procurement process in order to match Government’s commitment to undertake better procurement.

Debt Management

Zambia’s total debt as at September 2021 stood at US$26.96 billion, up 32% from December 2020 which is unsustainable. Government will spend K51.3 billion on servicing external debt and K27.3 billion on domestic debt, or K78.7 billion altogether. This represents 45.5% of the 2022 budget. Given the high debt servicing obligations, Government has had very limited resources to spend on programmes that contribute to economic growth and poverty reduction.

In November 2020, Zambia became the first nation in Africa to default on its debt during the COVID-19 pandemic. This happened when the country failed to make a US$42.5 million Eurobond repayment. The depreciation of the Kwacha against other currencies has contributed to higher debt service than planned.

Currently there are two important short-term measures of achieving debt sustainability which include a support programme from the International Monetary Fund (IMF) and the signing of the Debt Service Suspension Initiative (DSSI) with the Paris Club and G20 creditor countries and Intesa Sanpaolo. The IMF deal would allow Government to renegotiate its repayment terms with creditors under the Common Framework for debt treatment beyond the Debt Service Suspension Initiative, freeing up resources for development.

Going forward, Government will also endeavour not to contract further external non-concessional loans except for refinancing existing debt, while domestic borrowing will be restricted to scheduled auctions in preference to private placements. Concessional debt with a longer repayment period and lower interest will also be explored. With regards to strengthening the legal framework governing debt management and contraction, Government intends to repeal and replace the current Loans and Guarantees Act with a new Loans, Grants and Guarantees (Authorisation) Bill. PMRC commends Government on this move as the enactment and effective implementation of this Bill will enhance transparency in public debt management and loan contraction.

Fiscal Policy

Government’s fiscal policy agenda for the year 2022 is to progressively reduce fiscal deficits to sustainable levels while supporting growth that generates jobs and poverty reduction. To achieve this, the Government intends to employ a combination of revenue mobilization, administrative reforms and expenditure rationalization measures.

Revenue Mobilization

In the medium- term, the target is to increase domestic revenue to at least 21.0 percent of GDP. And to achieve this, Government will streamline the tax system and place a high priority on fair and equitable taxation as well as establish a stable and predictable tax policy environment.

Further, the Government will rationalise the mining tax system to attract investment which will in turn increase production and also address base erosion and profit shifting to boost domestic revenues.

Administrative Reforms

Government intends to take advantage of the Information and Communications Technology (ICT) for revenue collection and intends to connect an additional 100 public services to the Government Service Bus and Payment Gateway (BPG). This will bring the total number of services to 330 by the end of 2022. Further, the Zambia Revenue Authority systems will be interfaced with the Government Service Bus and other systems to improve on regulatory compliance and seal revenue leakages.

Expenditure Rationalization

To rationalize expenditure, Government plans to reduce areas of wastage of resources in the budget and channel them to other needy areas that will improve the livelihoods of the people. The migration of beneficiaries under the Farmer Input Support Programme to the cheaper comprehensive agriculture support programme is an example of such a measure.

To further reduce expenditure on goods and services, the Government will strictly enforce the provisions of Public Procurement Act No.8 of 2020. This is to ensure that the procurement of public goods, works and services are done at the right price in accordance with the quarterly market price index published by the Zambia Public Procurement Authority.

Strategies on Dismantling of Domestic Arrears

Government has accumulated significant domestic arrears over the past years. This has been attributed to revenue shortfalls, financing challenges and weaknesses in commitment control systems (Economic Recovery Programme 2020-2023).  The result of this is that domestic arrears have risen from about K641.2 million at the end of 2014 to K46.9 billion as at end- June 2021. The bulk of the arrears are to road contractors, suppliers of goods and services, Value Added Tax refunds and personnel related emoluments to public service workers.

Domestic arrears have led to a tightening of financial conditions, constrained the growth of private sector credit and contributed to a rise in non-performing loans which pose a threat to the stability of the financial system. The 2019 IMF Regional Economic Outlook for Sub-Saharan Africa suggests that as a result of payment delays, Government suppliers or State Owned Enterprises (SOEs) may withhold their tax payments until arrears are settled. If suppliers withhold tax payments, this lowers Government’s revenue which can result in inadequate public service provision and ultimately poor social outcomes. Additionally, SOEs may respond to the accumulation arrears by charging higher prices to compensate for delayed payments, thus delaying the supply of inputs for Government projects if they are financially constrained. This could further lead to the reduction in the size of their workforce, resulting in higher unemployment levels.

To curtail the accumulation of arrears and dismantle the stock, Government developed an arrears dismantling strategy. The key measures in the strategy include increased budgetary provisions, debt and/or cheque swaps, as well as debt refinancing and restructuring. Government plans to liquidate a substantial amount of domestic arrears over a period of five years.  However, there is a need to give a more comprehensive explanation of the principles and prioritization criteria that will be used to determine how arrears are liquidated. This may prove especially beneficial to suppliers who lack understanding about prioritization criteria on payments of suppliers. In terms of halting the accumulation of new arrears, it will be especially important to restrict the commencement of new capital projects and major equipment procurements. This action will have the dual benefit of ensuring that all on-going projects are completed and that domestic arrears are either accumulated at a slower pace or not at all.

Monetary Sector

Government through the Bank of Zambia intends to maintain a flexible exchange rate regime. To this effect, measures that support the stability of the exchange rate will be promoted. The measures include:

  • Stepping up the accumulation of international reserves to create a buffer to cushion the economy against external shocks, limiting it to at least 3 months of import cover.
  • Fast-tracking the diversification of exports through an export-led industrialization and promote a viable foreign direct investment.
  • Attain a real GDP growth rate of at least 3.5 percent.
  • Reduce inflation to single digits by end 2022 and within the target band of 6-8 percent by mid-2023. This will result in the lowering the cost of living for the Zambians by reducing the current high level of inflation.
  • Increase domestic revenue to not less than 21.0 percent of GDP.
  • Reduce the fiscal deficit to no more than 6.7 percent of GDP; and limit domestic borrowing to no more than 5.2 percent of GDP.
  • Further, implementation of monetary policy will continue to rely on the forward-looking framework anchored on the Monetary Policy Rate. This will take into account subdued economic activity and existing vulnerabilities in the financial system.

Decentralisation

The concept of decentralization in Zambia is not a new phenomenon, it dates back to the 1960’s with development and implementation of various pieces of legislation but the actual take-off for decentralization in Zambia was in 2013 when the country launched the 2013 Decentralization Policy. The main aim of the Decentralization Policy is to promote people’s participation in democratic governance at the local level. It is important to note that not all functions would be transferred to the lower levels and councils, but that Central Government shall retain some core functions over essential national matters.

Focusing on Decentralisation Policy Implementation progress, it was noted that: The transfer of functions from Central Government to councils commenced in January 2015 and, apart from devolving functions, the Cabinet Circular also mandated councils to create “Ward Development Committees (WDCs)” as the fourth tier of Government as required in the Revised National Decentralisation Policy (R-NDP) then.  In view of this, the National Planning and Budgetary Policy states that districts will be required to submit District Development Plans (DDP), which will be forwarded to the province and feed into the Provincial Development Plan (PDP). The province will then send the PDP to the Ministry of Finance and this was actualised in 2017, Central Government devolved functions to the local Authorities, recruited more human resource to build capacity and created more districts to ensure development is within the reach for people countrywide.

The final process of decentralization in Zambia over the last few years and what many proponents of decentralization have been advocating for the devolution of resources/fiscal decentralization to the local authorities. This form of decentralisation relates to power sharing for decisions relating to fiscal resources and revenue generating powers (Wunsch & Olowu, 1995). In many cases, fiscal decentralisation is the key to attaining the full benefits of overall decentralisation objectives. Despite the various prerequisites for success, (capacity of human resource and others) it has been argued to be a very effective form of decentralisation, as evidently seen in the case of Bolivia, where fiscal decentralisation led to Government being more responsive to the needs of the poor to promote more spending on social services, education and training, (Fauget .2003).   

Fiscal devolution is applied through financial mechanisms such as Constituency Development Funds (CDF). CDF refers to a policy tool and development initiative whereby public money is dedicated to benefit specific political subdivision (Center for International Development 2009). Central Government delegates and allocates funds through Local Government, which has influence over various stakeholders represented by area Members of Parliament (MP’s) and Ward Councillors.

Therefore, the 2022 budget has actualised the final process of decentralization by ensuring resources through CDF are increased from K1.6 million per constituency to K25.6 million to enable communities identify their development priorities, make budgets and undertake development programs according to their development needs. The budget has devolved functions to the local authorities that used to be performed by Central Government these include among other functions, construction of primary school classrooms, desks, clinics, local courts, small bridges and canals, community boreholes, dip tanks and small dams. Further the increased CDF will include empowerment programs for local communities that were previously done through respective ministries as well as bursaries and skills development programmes.

While the decentralization of resources to local authorities is commendable, there are a number of measures that need to be put in place for the country to attain development in all parts of the country other than those suggested in the budget and these include:

  • Strengthening accountability mechanisms to prevent corruption and misappropriation of funds as fiscal decentralisation is being implemented.
  • Further, steps to enhance service delivery by sub-national authorities need to focus more sharply on coherent policies targeted towards outcomes hence the need for introduction of key performance indicators for all constituencies arising from their individual development plans.
  • There is need for full participation of the private sector in the development committees to ensure that the choice of development projects meet value-for-money criterion.
  • Continuous capacity building for local authorities in financial management and M&E for local communities to track development and demand for accountability and transparency in the use of CDF.
  • Ensure adherence to financial management systems by the local authorities such as the Procurement Act 2020 and the Financial Management Act, 2018.

Public Private Partnership

Infrastructure development remains a very important component and bedrock for sustainable national development. Over the last 10 years, Government undertook various infrastructure projects which has contributed to the current debt stock.

With more demand for quality infrastructure critical for the survival and growth of the manufacturing sector, it is important that the country is land linked in its quest to become a sustainable transport hub within the implementation of the Continental Free Trade Agreement (CFTA) in order to increase the volume of manufactured goods and services for Zambia.  Several infrastructure projects ought to be undertaken at a huge cost and the ingredient to this requirement is the key to ensure that alternative financing is sourced, so as to provide some relief for the national treasury.

PMRC has therefore been advocating for Public Private Partnerships (PPPs) as a viable avenue through which Government can continue to engage with the private sector in delivering various infrastructural needs in all sectors. Going forward, the proposal by the budget to repeal and replace the Public Private Partnership Act no.14 of 2009 is commendable as this will enable Government address all challenges and bottlenecks that exist in the implementation of this Act.

Recommendations

  • Increased CDF should be supported by strengthened systems on procurement and planning for district committees. Review of the systems should be expedited before funds are released, to minimize the possibility of misappropriation.
  • Expedite public service reforms to address unwarranted political interference in oversight institutions so that they can efficiently and effectively perform their mandates.

Media Reforms

Government’s commitment to ensuring communication and free expression through the media is commended, as a means of providing checks and balances. The importance of universal access to information cannot, therefore, be over-emphasised; particularly so with the endeavour to ensure that development is taken to the people at constituency level. Information sharing and dissemination will be vital for the success of the development agenda.  The intention to install communications towers and promote ICT for business is thus commended.  To cure the ills that have plagued the media, Government will need to expedite consultations for an inclusive piece of legislation to provide for freedom of information, in furtherance of civil liberties on freedom of expression.

Climate change adaptation and mitigation is among the key areas of focus for the 2022 budget to improve environmental sustainability. This is in line with Government’s emphasis on ‘greening’ the economy, and entails that all environmental activities that are scheduled for 2022 should be executed in a manner that is climate-friendly.

The budget allocates just under K972 million to this sector, an increase of approximately 1.7% from the 2021 budget. The 2022 budget proposes reviewing the fee structure of environmental impact assessments in a manner that gives Government proper control of the process but also does not discourage investors from pursuing various development projects.

Government seeks to improve climate change financing in order to manage Zambia’s climate risks. This will be done through Green Bonds, Carbon Trading and Legislation for a Climate Change Fund.

Furthermore, the private sector needs to be encouraged to participate in climate change financing ventures. Some of the primary strategies that can be used to achieve this include; increasing the awareness on the negative impacts of climate change and the need for a response to it, utilising of public-private partnerships in national climate change efforts and, lastly, engage the private sector to develop products and services that will reduce the costs and impacts of climate change.

A well-functioning transport system has the potential to reduce the overall cost of doing business in the country and to increase efficiency in the movement of goods and people within Zambia. Furthermore, the Country’s central location places it in a key position to become a transportation hub.

The 2022 budget recognizes road, rail, air and maritime infrastructure as key drivers of economic activity as well as trade and investment within Zambia, across the region and beyond. As a way of improving the transport sector the following will be addressed in the 2022 budget:

  • Maintenance and rehabilitation  a total of 4,300km of rural feeder roads. Special emphasis will be placed on rehabilitating roads with economic significance such as the Lusaka-Ndola, Chinsali-Nakonde and Kazungula-Sesheke roads.
  • In terms of air transport, focus will be on the completion of Kasama and Mbala airports. The maintenance and rehabilitation of provincial airports are expected to facilitate transport for cargo and passengers and therefore contribute to the growth of Zambia’s tourism sector.
  • In view of its current fiscal constraints, Government will aggressively pursue Public Private Partnerships (PPPs) in order to maintain, rehabilitate and construct infrastructure related to the transport sector. The Public Private Partnership Act No. 14 of 2009 will be repealed and replaced by a new act.