Zambia Public Expenditure Review

1. Zambia Public Expenditure Review Agriculture PER Dissemination Workshop TajPamodzi Hotel, Lusaka December 02, 2010

2. Public Expenditure Review in Agriculture • Scope was to assist GoZ to critically review its operations and the use of public resources: • Identify opportunities to support fast and equitable growth in the Agricultural sector • Improve the effectiveness, quality, and equity in delivery of Agricultural services to the people of Zambia • Not an audit of expenditures

3. Agriculture in Zambia • Abundantly endowed with minerals, land, and water • About 70 percent of the Zambian labor force employed in agriculture. • Primary source of income for the poor (productivity and profitability closely associated with poverty incidence) • Contributes about 20% of GDP • Despite the recent bumper maize harvest, sector has underperformed over the past decade; average growth (1.3%/yr lagged behind population growth of 3%/yr

4. Agriculture in Zambia ctd. • Underutilization of potential cultivable area (+/- 16 million ha) • Rain-fed maize still dominates Zambia’s agriculture • Disproportionate priority towards maize and fertilizer subsidy schemes. • Irrigation is an integral part of the agenda to bring Zambia’s underutilized land into production.

5. Agriculture in Zambia ctd. • Opportunities for effective Government and donor support • Strengthening market mechanisms and value chains • Addressing critical policy issues in the agricultural sector • Investing in infrastructure

6. Agriculture in Zambia ctd. • Opportunities for effective Government and donor support • Strengthening market mechanisms and value chains • addressing critical policy issues in the agricultural sector • investing in infrastructure Improved access to market and price information, Better market linkages and organization, Contract enforcement, Partnerships between the public and private sectors in extension.

7. Agriculture in Zambia ctd. • Opportunities for effective Government and donor support • strengthening market mechanisms and value chains • Addressing critical policy issues in the agricultural sector • investing in infrastructure Poorly targeted fertilizer subsidy, Price policy for wheat and maize, Periodic export bans on key food staples. High cost of doing business (complex licensing regime)

8. Agriculture in Zambia ctd. • Opportunities for effective Government and donor support • strengthening market mechanisms and value chains • addressing critical policy issues in the agricultural sector • Investing in infrastructure Infrastructure needs in transport, energy, telecommunications, irrigation, etc. Requires prioritization and partnership with the private sector

9. Agriculture in Zambia ctd. • New developments • Fertilizer voucher program Pilot • Reintroduction of the Agriculture Marketing Bill

10. Agriculture in Zambia ctd. • New developments • Fertilizer voucher program Pilot • Reintroduction of the Agriculture Marketing Bill Expected to increase private sector involvement in fertilizer distribution Should result in a gradual reduction of public fertilizer expenditure Implementation has been delayed, however

11. Agriculture in Zambia ctd. • New developments • Fertilizer voucher program Pilot • Reintroduction of the Agriculture Marketing Bill Designed to enhance smallholder farmers’ access to markets and to include warehouse receipting

12. Agriculture in Zambia ctd. • Figure 1: Real GDP Contribution of the Agriculture Sector Source: PER Authors on the basis of CSO data

13. Agriculture in Zambia ctd. • Figure 2: Maize production trends Source: PER Authors on the basis of crop forecast data provided by MACO. Note: Line = three-year moving average

14. Agriculture in Zambia ctd. • Limitations of statistics on agricultural production • Post-harvest data have not been available since 2004 (lack of funding for data cleaning and processing) • CSO estimates based on pre-harvest surveys administered by MACO through its Early Warning System • Focus almost exclusively on staple crops • Livestock “production” is estimated on the basis of animal stocks rather than slaughters • Chicken production not taken into account

15. Public Expenditure in Agriculture • Origin of Fiscal Data • Analysis based on the “Estimates” (“Yellow Book”), and the “Financial Reports” (“Blue Book”) • Budgets and financial reports from 2004 onwards • Approved Estimates were available up to 2010 • Last available Financial Reports from 2008

16. Public Expenditure in Agriculture ctd. • Figure 3: MACO spending by “core” and “FSP and FRA” in constant Kwacha Source: PER Authors on the basis of Estimates and Financial Reports Note: Red Line = data source switches from actual expenditure (up to 2008) and budget (2009 and 2010)

17. Public Expenditure in Agriculture ctd. • Table 1: Global government spending, 2004-2008 Source: Financial Reports 2004-2008 Note: Tax and non-tax revenue according to the narrative section of the Fin. Reports

18. Public Expenditure in Agriculture ctd. • Figure 4: Core MACO spending by broad groups of departments, in constant Kwacha

19. Spending at the Provincial and District Levels 200 180 160 140 120 Districts 100 non-PE Province Billions of Constant ZMK Personnel 80 60 40 20 0 2005 2006 2007 2008 2009 2010 Public Expenditure in Agriculture ctd. • Figure 5: Spending by provincial and district agricultural offices Based on Financial Reports 2005-2008) and Approved Estimates (2009 and 2010). Note: Personnel costs in provincial budgets also include salaries for staff at district offices.

20. Public Expenditure in Agriculture ctd. • Table 2: Spending and execution rates by provincial and district agricultural offices Source: Financial Reports and Budget figures. Staff level in 2008 from Cardno Agrisystems Ltd 2009 (Participatory Review).

21. Public Expenditure in Agriculture ctd. • Figure 6: Direct technology spending relative to MACO core spending

22. Public Expenditure in Agriculture ctd. • Table 3: Budget execution rates for non-personnel expenditure

23. Public Expenditure in Agriculture ctd. • Table 4: Comparison of internally and externally financed appropriations and reported expenditure Note: The table reports on planned and actual spending under the Unit for Bilateral, Multilateral and Regional Cooperation in MACO. Only those programmes in which footnotes for external funds appear were selected.

24. Public Expenditure in Agriculture ctd. • Donor Contributions • Focus on extension and farming systems • International cooperation projects with ZARI • Donor funded projects poorly reflected in budgets ad financial reports

25. Public Expenditure in Agriculture ctd. • Conclusions • Overall agricultural spending appears sufficient, but majority of these resources goes to large-scale subsidy programs. Need to consider retargeting expenditures towards core agricultural services • CSO has adequate resources to collect data, but not to process them • Need to reduce annual and in-year variability of agency budgets, uncertainty leads to weak budget execution

26. Gender and Public Expenditure in Agriculture • The Importance of Gender in the Agricultural Sector • Females make up about 70 percent of the agricultural workforce • Gender mainstreaming is essential to the long-term growth of agricultural productivity and sector revenue, and inseparable from the alleviation of rural poverty. • Women, especially in rural areas, are still constrained by a lack of access to inputs, productive resources, and public services.

27. Gender and Public Expenditure in Agriculture ctd. • Laudable GoZ efforts to incorporate a strong gender element into development programming, not limited to agriculture (FNDP 2006-2010, National Gender Policy, signatory to several international declarations, conventions, etc.) But… • Economic empowerment of women and the mainstreaming of gender into agricultural policies and programs remain inadequate in scope and ineffective in execution.

28. Gender and Public Expenditure in Agriculture ctd. • Laudable GoZ efforts to incorporate a strong gender element into development programming, not limited to agriculture (FNDP 2006-2010, National Gender Policy, signatory to several international declarations, conventions, etc.) But… • Economic empowerment of women and the mainstreaming of gender into agricultural policies and programs remain inadequate in scope and ineffective in execution.

29. Gender and Public Expenditure in Agriculture ctd. • Gender in Development Division (GIDD) of the Cabinet Office • Gender Focal Points in Line Ministries • Gender Sub-committees

30. Gender and Public Expenditure in Agriculture ctd. • Gender in Development Division (GIDD) of the Cabinet Office • Gender Focal Points in Line Ministries • Gender Sub-committees Mandate to coordinate, monitor, and evaluate the implementation of the National Gender Policy in order to achieve gender-reflective goals in overall development policy In 2008, GIDD had an approved budget for gender training of Gender Focal Points and members of the Gender Sub-committees of almost ZMK122 million but only ZMK 300,000 was actually disbursed...

31. Gender and Public Expenditure in Agriculture ctd. • Gender in Development Division (GIDD) of the Cabinet Office • Gender Focal Points in Line Ministries • Gender Sub-committees Specific duties of the Gender Focal Points (GFPs) are often unknown to agency staff GFPs are rarely consulted on new initiatives Interagency collaboration between GFPs, though mandated by the GIDD, is extremely limited.

32. Gender and Public Expenditure in Agriculture ctd. • Gender in Development Division (GIDD) of the Cabinet Office • Gender Focal Points in Line Ministries • Gender Sub-committees Function as a link between the GIDD and the various ministries as well as local and regional authorities. Reporting and oversight system does not function well, collaboration with GIDD has been limited

33. Gender and Public Expenditure in Agriculture ctd. • Limited, irregular and occasionally irreconcilable data on the role of gender in agricultural productivity • Failure to collect, process and publish reliable, high-quality gender-disaggregated data on key sector indicators

34. Gender and Public Expenditure in Agriculture ctd. • Weak budget execution of gender specific programming and data collection “In 2008 MoFNP had an approved budget of over ZMK35 million for the collection of gender statistics, but actual expenditure was only ZMK1.8 million.”

35. Gender and Public Expenditure in Agriculture ctd. • Conclusions • Mainstreaming gender into the budgetary process is critical to achieving the government’s stated objectives for the agricultural sector • Need to consider reorganization of the MACO and MoFNP budget processes to reflect the appropriate prioritization of gender-specific programming, including data collection and analysis.

36. Thank you!