Context
Despite more than a decade of continuous economic growth, Zambia is one of the world's poorest countries, with 60% of its population still living below the poverty line. This is at odds with Zambia’s long-term vision of becoming a middle-income country by 2030 (commonly referred to as the Vision 2030). To achieve this goal, Zambia has adopted a number of poverty reducing measures in its national development plans, which are to be implemented under its annual and medium-term budgets. Following the change of administration in 2011, the Revised Sixth National Development Plan (R-SNDP) was drafted to better express the development priorities of the new government. It has a greater focus on sector-based approaches to poverty reduction.
Objective
Increased transparency, accountability and development orientation in the collection and use of public finances.
Approach
GIZ has been working together with the Zambian Ministry of Finance in the areas of planning, budgeting, monitoring and evaluation since 2005. Today, an additional focus area of the cooperation has been to strengthen the internal audit function and the capacity of the Zambian Revenue Authority (ZRA), especially in the small and medium-scale taxpayer segment.
GIZ facilitates the drafting and implementation of Zambia’s national development plans, in particular their macroeconomic aspects and the monitoring and evaluation (M&E) frameworks. GIZ also supports the Ministry’s capacity development efforts. Longstanding components of the cooperation include the strengthening of the budgeting process, improving the links between the budgeting and planning processes, enhancing analytical capacities and improving M&E procedures. These efforts are expected to promote evidence-based policy making in the country.
Technical advisors have been placed with the Budget Office, the Economic Management Department, the Planning Department and the M&E Department. Cooperation with the Ministry’s Internal Control and Audit Department started in 2011, with the aim of enhancing the transparent and accountable use of public funds, including the introduction of risk management to Zambia’s public services. Today’s work with the Budget Office also includes analyses of tax policies and aspects of climate financing, in an effort to increase fiscal space. GIZ also supports the publication of a document known as the Citizens’ Budget, which endeavours to improve budgetary transparency.
The project consists of three main components.
1. Strengthening revenue administration capacities in Zambia
2. Strengthening national planning and budget preparation processes
3. Promoting budget execution and control systems
Results achieved so far
The continuous support and professional advice, as well as the long term engagement with the Ministry of Finance have led to the strengthening of a relationship of trust between GIZ and representatives of the Ministry.
Transparency and accountability of public finances have improved due to the strengthened monitoring systems and analytical capacities in the Ministry. This is reflected in the publishing of annual progress reports analysing the achievement of national targets and the use of public funds. These results are successfully fed into in the medium-term and annual budgeting processes, and the results of the evaluation of the Fifth National Development Plan were used for the preparation of the Revised Sixth National Development Plan. In addition, monthly monitoring procedures have been introduced.
The development of relevant skills and organisational capacities in the Ministry has increased its effectiveness. Budgets are published on time, after consultations with line ministries. The new Public Financial Management (PFM) Reform Strategy is based on the government’s priorities and existing policies. National development plans are now drafted, implemented and monitored in a coordinated and consultative manner. Moreover, assessment of budget support performance is now more closely linked with the current plan. Results and performance are today measured using key performance indicators (national development plans, strategic plan of the Ministry).
Finally, national planning has been successfully aligned with budgeting. In the annual budget for 2015 a new format of an Output Based Budget was introduced, for the Ministry of Education as pilot ministry. This new format enhances the opportunities for aligning the planning and budgeting processes. Results orientation in the way public spending is planned is increased and budget execution becomes more transparent. The planning and budget processes are becoming anchored in law. In 2014 a National Planning and Budegting Policy was approved, which guides the Planning and Bugdet Bill being drafted. In order to improve evidence-based planning and decision making, a socioeconomic simulation model known as ‘ZAMMOD’ is now in regular use, which significantly increases the quality of the macroeconomic and fiscal frameworks.