Good financial governance

Project description

Title: Strengthening good financial governance in Zambia
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Zambia
Lead executing agency: Ministry of Finance (MoF), Ministry of National Development Planning (MNDP)
Overall term: 2016 to 2018

Context

Despite more than a decade of continuous economic growth, Zambia is one of the world's least prosperous countries, with 60 per cent of its population living below the poverty line. The figure given for economic growth had to be reduced to 3 per cent in 2015. This is at odds with Zambia's long-term vision of becoming a middle-income country by 2030 (Vision 2030).

The quality of financial governance has also taken a turn for the worse in recent years. The budget deficit exceeded 8 per cent in 2015. Zambia's debt level is approaching 40 per cent of GDP. The macroeconomic framework has deteriorated dramatically due to the fall in the world copper price, Zambia's energy crisis and the huge depreciation of the national currency. There is a considerable discrepancy between public expenditure and the annual budget law.

Objective

The transparency, credibility and effectiveness of public finances are enhanced.

Approach

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), GIZ has been cooperating with the Zambian Ministry of Finance since 2005 on various issues connected with the administration of public finances.

The current programme aims to help

  1. improve tax administration,
  2. prepare the national budget more effectively (including improved integrated budget and development planning) and
  3. improve budget implementation.

The programme’s advisors have been assigned to the Ministry of Finance, the Zambia Revenue Authority and the Ministry of National Development Planning. The advisory services are designed to help improve public revenue and enhance the legality of budget implementation and budget audits. In addition, the programme also provides advice on budget processes and interfaces between the various stakeholders in the national budget cycle, such as cooperation with the Office of the Auditor General and internal audit bodies.

The programme works in three areas of activity. The first focuses on strengthening the tax administration to increase tax compliance by small and medium-sized taxpayers. The second area sets out to build capacity at the Ministry of Finance to carry out budget preparations in line with the future National Planning and Budgeting Policy and to take account of national development goals. The third area aims to develop the Ministry of Finance's capacity to implement the budget effectively in line with the annual budget law.