In 2007, Zambia continued to perform well against its broad economic objectives. The Zambian Government presented its first budget after the 2006 elections and the launch of the Fifth National Development Plan (FNDP). A stronger reorientation of budget allocations towards FNDP priorities had been expected, but the link to the FNDP is more pronounced in the 2008 budget, with increased allocations to social sectors. A major achievement in 2007 was the improved cash management and releases to service delivery levels by the Ministry of Finance and National Planning (MoFNP). The announcement in the 2007 budget of several proposed changes to bring Zambia’s fiscal regime for the mining sector in line with international benchmarks was an important development, and was followed-up by a proposed new fiscal regime for the mining sector in the 2008 budget speech.
Although Zambia’s economy continued to grow, expansion of access to social services was limited, and HIV and AIDS remains a developmental challenge. From information recently released , poverty levels have decreased in overall terms since 2004, primarily in urban areas, while poverty in rural areas has remained stagnant or increased. A key concern for service delivery and poverty reduction is the Government’s capacity to implement the FNDP. The capacity issue is coming more into focus with increased revenues from the mines and more Cooperating Partner (CP) resources channelled through government systems as budget support and other forms of programme based approaches are increasingly being used. The first FNDP monitoring report will be presented soon.
Another major challenge during the period under review came from the Energy Sector as electricity demand outnumbered generation, mainly due to increased mining activities. It is expected that future overall economic growth could be held back with up to 2 % due to the energy deficit.
Agricultural production during the season 2006/2007 was good by historical patterns, and a surplus of maize was produced. Unfortunately, this was accompanied by a decrease in the production of other food and cash crops as farmers turn to maize, a safe and profitable crop, due to the high levels of subsidies provided by the government.
The constitutional review process made progress in 2007. The National Constitutional Conference (NCC) began its sittings to consider the recommendations of the Mung’omba Constitutional Review Commission (CRC) report and the draft constitution. The NCC has had mixed reactions from the opposition and civil society. Another political event was the presentation of an NGO Bill by Government with a view to provide coordination and registration of NGOs. The Bill was later withdrawn due to lack of stakeholder consultations. Government has indicated that it will be re-submitted to Parliament after consultations have been completed. Some positive steps have however been taken in the area of freedom of information. The Freedom of Information Bill has again been brought up for discussion and is expected to be presented for Parliament during 2008.Several major milestones have been achieved with regard to the harmonisation agenda in Zambia, including the finalisation of the Government’s Fifth National Development Plan, Aid Policy and the Cooperating Partners’ Joint Assistance Strategy for Zambia, JASZ. A major task for the Embassy on an overall level has been to prepare a new Cooperation Strategy. During the period under review, the Embassy continued to build up its support to Poverty Reduction Budget Support (PRBS), Civil Society, Health, Agriculture and Energy while preparing phasing-out plans for the three sectors to be phased out in the years to come . The risk assessment made in view of 2007 did in general reflect the major risks and their respective likeliness. The political risks did not materialize to a great extent. The operational risks, the limited capacity of partner organisations and government, did hamper progress in most areas. The fight against corruption has had some success during the year, and the public transparency and accountability has increased. However, the culture of corruption in public life will take a long time to change. HIV/AIDS continued to pose a risk for programme implementation
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