On Wednesday 18th January 2017, the PMRC research team appeared before the Parliamentary Committee on Estimates to discuss “Fiscal Decentralisation” in Zambia and potential budgetary changes to promote service delivery. The submission and discussions focused on understanding the concept of Fiscal decentralisation, assessing the status of sub-national authorities and also analyzing possible institutional and budgetary changes in light of decentralisation. 

The following are major highlights from the PMRC submission;  

The main aim of the Decentralization Policy 2013 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 (PDP), which will be forwarded to the province and feed into the Provincial Development Plan. The province will then send the PDP to the Ministry of Finance . 

Capacity Issues: The Reality of Fiscal Decentralisation (The need to Strengthen Capacity) 

  • For sub national and local authorities to supervise their many new functions previously undertaken by Central Government, they will require massive capacity building and recruitment of top-level high quality administrators. The challenge therefore for the Central  Government is to ensure that adequate resources are made available  to all implementing institutions.  
  • District and sub-district level community structures would also need strengthening to fully appreciate decentralization and the levels of civic responsibilities that the local communities now need to play. 
  • The general citizenry further needs capacity building for them to effectively participate in the affairs and running of their local district and sub-district level authorities. 

The Creation Of New Districts

The discussion around the creation of new districts bordered on; Government expediting the infrastructure, institutional and financial resources to ensure that the new districts are equipped with all requirements necessary to implement tasks. 

LESSONS FROM BEST PRACTICE – the case of South Africa 

Fiscal decentralisation in South Africa involves shifting some responsibilities for both revenue and expenditure to sub-national levels of government. Based on the “Division of Revenue Act”, which annually allocates national revenues to each of the three spheres of government, the South African Intergovernmental Fiscal System (IGFR) provides a framework of fiscal arrangements aimed at ensuring that government responsibilities are met, while the right level and mix of public services are delivered to enhance the socioeconomic rights of citizens.  

PMRC proposed to the committee that the Zambian Government should seriously consider learning from the South African framework in implementing fiscal decentralization. 

SUMMARY OF LESSONS LEARNT 

In learning from best practice, the following are some of the key points noted to aid effective decentralisation implementation: 

  • Conducive policy environment: there should be conducive policy environment which sub divides mandates and sub national authorities, clearly establishing tasks and roles. 
  • Phased approach: Decentralisation is a long-term process that needs to be planned for and undertaken in stages. (for example: Uganda and Kenya had a series of pilot projects in reference to decentralization.)
  • Proactive and practicality of implementation: Ensuring that decentralisation is implemented in practice. There should be political will and commitment. 
  • Matching plans to resources: Resource allocation and mobilization has been highlighted as a key requirement for the effective implementation of plans.
  • Capacity building: for efficient and effective resource management and decision making.

CONCLUSION 

Experience has clearly shown that effective decentralization requires complementary adaptations in institutional arrangements for intergovernmental coordination, planning, budgeting, financial reporting, and implementation.  Of utmost importance is transparency and accountability to local constituencies supported by strengthened higher level monitoring and reporting of local fiscal performance. PMRC affirms that with effective implementation, well-defined responsibilities, definite functions, and distinct lines of authority and communication, Government may attain the set objectives of increased community participation and improved service delivery through decentralisation.

PMRC RECOMMENDATIONS 

Policymakers should take the following observations into account:

  • Financial decentralisation should not be used as a means for national governments to shift the burden of financing services to sub-national governments and private providers. (The mandate should be clearly outlined) 
  • Fiscal decentralisation requires citizen participation since resource allocations should reflect local preferences. The challenge is to overcome the technical complexity of the process and find appropriate ways to institutionalize participation. (The case of checks and balances)
  • Further, steps to enhance service delivery by sub-national authorities need to focus more sharply on coherent policies targeted towards outcomes. (The case of the 7 National Development Plan)
  • Strengthen accountability mechanisms to prevent corruption and misappropriation of funds as fiscal decentralisation is being implemented.

Financial literacy can be understood as the education and understanding of various financial areas with focuses on the ability to manage personal finance matters in an efficient manner.  Financial literacy includes the knowledge of making appropriate decisions about personal finance such as investing and saving. Key financial stakeholders in Zambia hold awareness weeks on an annual basis. The aim of the Financial Awareness Week Campaign is to educate and sensitize the general public about various topics on financial matters. The campaign is adapted to meet the objective of our National Strategy on Financial Education (NSFE).

Financial inclusion is driven by financial literacy, as financial literacy increases so does the demand for financial services, therefore improving financial inclusion. Financial inclusion can be defined as making financial services accessible at affordable costs to all individuals and businesses, irrespective of net worth and size respectively. According to the Central Bank, Zambia’s formal and informal rate of financial inclusion of its citizenry stands at 60% with 38 % being formal, while informal stands at 22%. This is a considerable improvement from the 40% (both formal and informal recorded) in 2009.

This year the Financial Literacy Week will run from 27 March to 2 April, 2017 under the theme: “Know and plan your finances to lead a better life”. The aim of this year’s Financial Literacy Week is to create public awareness of the Key Life Events so as to empower citizens with the knowledge, understanding, skills and confidence to meet the financial obligations associated with the events.

PMRC focuses on the second element which encourages citizens to plan for Key Life Events. Planning for Key Life Events involves encouraging citizens to save and make investments to smoothen future consumption. Various studies provide evidence which suggests that intervention such as financial education improves personal and household savings.

PMRC is further encouraged by plans to extend financial education to rural areas and schools as is contained in the Central Bank’s Strategic Plan.  PMRC believe these are key strategic focal points that must be included in efforts to increase financial literacy. The schools should ensure that a saving culture is inculcated in the youth who are the majority, while the rural areas account for the majority of those financially excluded.

Finally PMRC firmly believes that financial literacy is key to developing the informal sector. Zambia’s informal sector is estimated at approximately 50% of GDP, this is uncharacteristically large and undermines domestic revenue collection which is below the regional average at 18%. Improving financial literacy could prove to be a useful tool in reducing the size of the informal sector and ultimately boost economic growth. 

Climate change is widely recognized as one of the major challenges facing humanity and to address such a global issue, the United Nations Framework Convention on Climate Change was therefore adopted in 1992 to stabilize Green House Gases (GHG) concentration in the atmosphere. By definition, climate change is “a long-term change in the earth’s climate, especially a change due to an increase in the average atmospheric temperature.” It is widely recognized that climate change constitutes a significant and serious threat to sustainable development of any country. Evidence shows that Zambia has over the past years experienced a number of climate related hazards including droughts and dry spells, seasonal and flash floods, and extreme temperatures. Therefore, actions to minimize the potential future impacts of climate change are critical. The Climate Change Secretariat in Zambia recently indicated that over US$ 50 billion is required for both mitigation and adaptation to climate change effects. This is because the impact of climate change is long term and therefore long-term interventions are required.

International Agreements on Climate Change

The Paris COP 21

The 2015 United Nations Climate Change Conference was held in Paris, France, from 30 November to 12 December 2015. It was the 21st yearly session of the Conference of the Parties (COP 21) since the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and the 11th session of the Conference of the Parties to the 1997 Kyoto Protocol. COP 21 negotiated the Paris Agreement, “a global agreement on the reduction of climate change”, which represented a consensus of the representatives of the 196 parties attending it. Zambia pledged to fight the effects of climate change by signing the Paris Agreement when President Lungu appended Zambia’s Signature to the historic Paris Agreement in September 2016 at the 71st Session of the United Nations General Assembly in New York, USA.

MarrakeCh COP 22

In November 2016, negotiators from more than 150 countries (including Zambia) convened in Marrakech; Morocco, for the 22nd Conference of Parties, (COP22) to discuss and showcase progress and begin the important process of turning the UN’s Paris Agreement into a detailed blueprint for action. The Marrakech Action Proclamation, issued by Heads of State and government gathered at the COP 22. It was widely seen as a reaffirmation of global commitment to the Paris Agreement. Further, a new fund to encourage transparency efforts was established and given a $50m injection of cash from countries including Australia, Canada and Germany. To this effect, Zambia needs to continuously seek out opportunities for international funding available for climate change adaptation and mitigation programmes.

The National Climate Change Policy (NPCC)

The Government of the Republic of Zambia recently launched the National Policy on Climate Change and PMRC welcomes this development, as it has been long overdue. PMRC notes that the formulation of the National Policy on Climate Change is based on mitigating the threats posed by climate change to the development process including attainment of the Vision 2030. Most importantly we note also that the policy provides guidance on how the Zambian economy can grow in a sustainable manner and compliment the implementation of the Seventh National Development Plan. We further believe that this Policy on Climate Change will promote coordination of all adaptation and mitigation measures towards combating climate change.

Insight into the National Policy on Climate Change

The Vision of the National Policy on Climate Change is “A prosperous and climate resilient economy by 2030”. We note also that the rationale for formulating the NPCC is to establish a coordinated national response to climate change; as previously, climate change issues have been addressed in a fragmented manner using various sectoral policies, strategies and plans and these have had limited overall effect.

The overall objective of the Policy is to provide a framework for coordinating climate change programmes in order to ensure climate resilient and low carbon development pathways for sustainable development towards the attainment of Zambia’s Vision 2030.

Specific objectives

  • To promote and strengthen the implementation of adaptation and disaster risk reduction measures to reduce vulnerability to climate variability and change;
  • To promote and implement sustainable land-use management practices in order to contribute to reducing Green House Gases (GHG) emissions from land use and land use change and forestry;
  • To promote mainstreaming of climate change into policies, plans and strategies at all levels in order to account for Climate Change risks and opportunities in decision making and implementation;
  • To strengthen the institutional and human resource capacity in order to effectively and efficiently address all aspects of climate change at international, national, provincial, district and local levels;
  • To promote communication and dissemination of climate change information to enhance awareness and understanding of its impacts;
  • To promote investments in climate resilient and low carbon development pathways in order to generate co-benefits and provide incentives for addressing climate change more effectively;
  • To foster research and development in order to improve understanding and decision making in responding to climate change;
  • To engender Climate Change programmes and activities in order to enhance gender equality and equity in the implementation of climate change programmes

Climate Change Department

As PMRC, we further applaud the establishment of the Climate Change Department. This department was established under the Ministry of Environment and Natural Resources in order to facilitate effective implementation of NPCC. Further, for purposes of coordination, overall oversight and mainstreaming of climate change in national development planning processes, this Department will closely collaborate with the Ministry responsible for National Development Planning.

Prospects

Moving forward, we note that having of this National Policy on Climate Change is an important development, which presents the country with a well-structured national strategy to respond more effectively to the adverse effects of climate change. We note that the structure and implementation arrangements will ensure effective delivery of efforts to mitigate climate change. The policy will also promote stronger collaboration between various ministries and institutions that have a critical role to play in climate change mitigation and adaptation. The mainstreaming further ensures coherence between the recently developed Seventh National Development Plan and all climate change programmes. We believe that this multi-sectoral collaborative approach is critical for success in implementing programmes because it requires coordination through a defined institutional framework. Further we note that the policy will support and facilitate a coordinated response to climate change by re-aligning its climate sensitive sectors of the economy and society. The policy provides stakeholders with a clearer framework on how to tackle climate change in Zambia. With a policy in place, duplication of efforts and time wasting would not arise because of the integrated approach.

Having launched the National Policy on Climate Change, the next steps for Government as custodians is to ensure that all players and stakeholders critical to the implementation are consistent in their delivery. Further, to ensure success, a monitoring and evaluation mechanism must be put in place with clearly defined key performance indicators that can serve as a guide to asses the state of implementation and success. What is next after having this policy is to ensure that cooperating partners and other stakeholders are consistent in implementing the policy. There is need to ensure that adequate provision of resources for climate change initiatives are available.

Conclusion

PMRC pledges to support all government efforts in evaluating and responding to Zambia’s needs to fight climate change based on evidence. PMRC remains supportive of highly feasible plans to reduce global emissions and build climate resilience for the immediate and future benefit of our generations. Government must further enhance efforts towards communication and dissemination of climate change information so as to increase awareness and understanding of interventions, programmes, opportunities and impacts. The fight against climate change concerns all citizens of the country and to this effect; there should be information available on the roles that citizens need to play in order to look after the environment. Furthermore, PMRC welcomes the launch of the National Policy on Climate Change as it is envisaged to provide a framework that will allow the implementation of existing, and future initiatives and opportunities in a more coordinated manner, while providing a long-term vision to achieve sustainable development.