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Poverty Reduction Budget Support (PRBS) in Zambia Joint Annual Review 2007:
Learning Assessment

Richard Gerster, Mwila Chikwekwe

Gerster Consulting

13 July 2007

SARPN acknowledges Gerster Consulting as a source of this document:
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Executive Summary

Mandated jointly by the Government of the Republic of Zambia (GRZ) and the Cooperating Partners (CPs) committed to Poverty Reduction Budget Support (PRBS), the learning assessment (LA), integrated into the Joint Annual Review (JAR) 2007 process, pursued the overall objective of developing practical recommendations on strengthening the effectiveness and efficiency of PRBS-supported programme implementation. The recommendations are based on PRBS experience in general and the 2007 JAR process in particular. The quality of dialogue, performance and accountability was to be specifically assessed. Methodologically, the LA made use of good practices developed elsewhere, observations of JAR sessions, interviews, and written feedback.

The JAR 2007 is embedded in Zambia’s cooperation landscape which is shaped by a highly advanced level of harmonisation and coordination, the PRBS being part of it. Nine CPs participate in the PRBS and have committed US$185 million for 2007. The Ministry of Finance and National Planning (MoFNP) provided professional leadership. Overall, the review was perceived as a positive experience by most of the participants. It drew on the benefits and virtues of PRBS as an aid modality by focusing on a limited number of core reform issues across sectors. However, no consensus was yet reached on past performance (2006) against the 33 indicators of the Performance Assessment Framework (PAF).

Approach: The JAR 2007, with one full day of working group discussions on key and crosscutting issues, and a half-day plenary event for the formal conclusion, is remarkably lean and offers a high level of alignment. The JASZ and the GRZ Aid Policy provide an agreed framework to improve the CPs’ portfolio coherence. However, a number of CPs view PRBS as an additional aid modality while continuing to provide ODA to GRZ off-budget and offtreasury, through programmes and projects . The PRBS scheme has been greatly expanding during the last two years. The machinery to direct and administer the PRBS flows and events has, however, not kept pace, and multiple functions of the current unit in the MoFNP bring the danger of sidelining attention to the PRBS even with highly dedicated staff. Therefore, the following recommendations are made:

  • The GRZ and CPs should invest in strengthening domestic processes that are ongoing or planned, and abstain from expanding the JARs and the PRBS parallel machinery in forthcoming years.
  • The PRBS CPs should pursue a coherent portfolio approach to their assistance to Zambia.
  • The current unit in MoFNP should be expanded to a PRBS secretariat in order to ensure the quality of coordination amongst all the stakeholders in this process.
Dialogue: The participation of line ministries at the JAR was mixed. A few NGO representatives were present in the thematic working groups on Tuesday but not during the plenary session on Thursday. There were no Members of Parliament present. Strong linkages to these stakeholders secure the expertise from different perspectives, which is so important in policy dialogue. There is broad agreement that the present GRZ budget management cycle is dysfunctional and needs revision. A revised proposal is on the table. A gap between FNDP priorities and budget execution was noticed during the JAR 2007 on several occasions . This needs to be addressed in order to prevent an erosion of trust between the GRZ and CPs when measuring performance. The relationship between the PRBS and the sectors varies a lot depending on the ministries responsible . Therefore:

  • Efforts are needed to make the PRBS dialogue process more inclusive: linkages to sectors, decentralised levels, parliament, and civil society should be strengthened.
  • The revision of the National Economic Management Cycle should be given top priority in order to arrive at an adequate budget cycle. Since the latter is part of the constitutional review, a separate fast track may be considered.
  • Due to the political dimension of a number of issues involved, the GRZ and CPs might take into consideration a high-level policy dialogue, and, as a permanent measure, activate the Joint Steering Committee (JSC) provided in the MoU.
Performance: There is a strong GRZ ownership of the performance-based system, as expressed in both the underlying principles as well as in the PAF. One of the key purposes of the JAR in June is to review the PAF-based GRZ performance. The perceptions and evaluation of performance in 2006 differed among the GRZ and the CPs. The JAR 2007 plenary meeting did not reach consensus but identified the way to take the performance assessment forward. The option of a transition from the IMF’s PRGF to the PSI provides a window of opportunity to rethink the role of the IMF in PRBS. Aspects to consider are:

  • The PAF indicators should be assessed on a more permanent and regular basis, and the assessment procedures should build upon the underlying sector processes. Ideally, a newly structured FNDP reporting, based on the indicators including those in PAF, could become part of and annexed to the MoFNP’s Economic Development Report. Timely information has the big advantage of opening a window for early corrective measures.
  • MoFNP and CPs should envisage a PRBS and PAF-related capacity building effort integrated in overall FNDP capacity development endeavours to ensure broad dissemination and good understanding of the PAF, its purpose and its implications, in particular with reference to funding. Options are tailor-made workshops designed for different target audiences, including sector ministries, civil society, parliament, and provincial and district government.
  • Advantages and disadvantages of the PSI vs a PRGF should be carefully assessed. Clarity is crucial about how CPs intend to use the IMF’s expertise and instruments for the signalling effect in view of their disbursements.
Accountability: Up to now, neither the Economic Report of the MoFNP nor the PAF have been transferred to parliament, despite declared intentions to do so. Parliament is not (yet) sufficiently involved in PRBS. Improving information access to PRBS documents beyond the MoFNP and the CPs would provide a basis for enhancing PRBS effectiveness as well as strengthening accountability to stakeholders and the general public via the media. Despite the spirit of mutual accountability, an assessment of CPs’ performance was missing from the JAR 2007. The PRBS MoU provides a good basis for evaluating the CPs efforts but there is no institutionalised machinery to measure past performance or to stimulate progress on agreed objectives. To address these issues:

  • Strengthening the role of Parliament in the budget cycle overall, including the PRBS, should become a priority.
  • A PRBS website should be created to host all essential PRBS-related documents so that all interested stakeholders could have access to this information.
  • A CPs’ PAF should be developed. It is suggested that the same monitoring approach as has been agreed upon for monitoring GRZ obligations should be used. The stipulated JASZ independent monitoring group (IMG) should not prevent this from bringing more symmetry into PRBS CPs – GRZ relations.
Sustainability: Zambia has articulated its long-term development objectives in the National Vision 2030. The Millennium Development Goals have a time frame up to 2015. The Fifth National Development Plan (FNDP) covers the period 2006 - 2010 as an interim step towards realising the vision. The volume and sustainability of Zambia’s development efforts and the CPs’ support is, taking any of these projections, a major issue. The GRZ has a mixed track record in raising internal revenues. In contrast to a deterioration in recent years, the FNDP projects a substantial increase of tax revenues as a percentage of GDP by 2010. The GRZ and the CPs rightly put taxation as one of the core issues on the agenda of the JAR 2007. Mobilisation of national resources is the best remedy against aid dependency. Taxation not only provides revenue but also strengthens domestic accountability – taxpayers become demanding citizens.

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