The Government of the Republic of Zambia (GRZ) developed the PFM Reform strategy to continue with the reforms in the area of public finance management (PFM) after the Public Expenditure Management Financial Accountability (PEMFA) Program came to an end in 2011. The PFM Reforms are largely focused on the creation of more fiscal space, by way of improvements in public expenditure and financial management. The GRZ recognizes public financial management as an essential ingredient for efficient service delivery, strategic resource allocation, sound management of resources and fiscal discipline.
To underpin Government’s commitment to these reforms and provide a long-term planning horizon, the GRZ PFM Reform agenda is informed by a medium to long-term policy framework for national planning, which includes the Vision 2030 and the five-year national development plans (NDPs), presently the R-NDP (2013-2016). The Ministry of Finance Strategic Plan (2012 – 2016) also places PFM as a key component of the Ministry’s reform agenda.
The PFM reform strategy for Zambia has applied a holistic, systemic view of the PFM system in order to consolidate macroeconomic stability, one of the key objectives in the Revised Sixth National Development Plan (R-SNDP). The ultimate goal of the PFM Reform Strategy is therefore to ensure efficient, effective and accountable use of public resources as a basis for economic development and poverty eradication through improved service delivery.
PFM reforms in Zambia are anchored in the Ministry of Finance, but spread through line ministries, accountability agencies (like the office of the Auditor General), and National Assembly and has strong backing of the Cabinet. Development partners are actively engaged in support the Government’s PFM reform agenda since 2000.
“I am aware that there are complaints from stakeholders regarding the weak regulatory and legal framework on financial management. My Government has embarked on implementation of Public Financial Management Reforms in Planning & budgeting, Revenue administration, Accounting & reporting, Internal Audit & control and Public Procurement to ensure and enshrine in law the prudent use of public resources.” Hon’ble Edgar Lungu, President, Republic of Zambia, at the launch of the cabinet-level workshop hosted by the Minister of Finance on "Promoting Ethical Conduct, Integrity and Accountability in the Public Sector for Enhanced Public Service Delivery", following the PEFA report launch
“The PEFA report once finalized will be a public document that will be available to members of the public as Government has nothing to hide and values the feedback from all stakeholders. I therefore look forward to the report on the assessment.” Hon’ble Felix Mutati, Finance Minister, Republic of Zambia at the public event to initiate the a ssessment mission
The GRZ has conducted PEFA assessments in 2005, 2008, and 2017 for the purpose of monitoring the progress of its PFM reforms. 2017 PEFA assessment was carried out jointly by the assessment team comprising of officials of the GRZ and the World Bank. The objective of the assessment was to identify areas of strengths and weaknesses in the Government’s PFM system. The assessment process was formally launched by the Minister of Finance, Honorable Felix C. Mutati, Member of Parliament (MP), who stated that the capacity of Government to manage public resources was central to the ability to deliver public services to the people of Zambia and therefore there was no choice, but to succeed in implementing the PFM reforms.
PEFA assessment team with the Finance Minister, Secretary to Treasury, British High Commissioner, Director, KfW Zambia, Country Manager World Bank
The assessment was undertaken under the Public Financial Management Reform Program Phase I of Government of Zambia, financed by multi donor trust fund of United Kingdom, represented by the Department for International Development [DFID], the Government of Germany (Kreditanstalt für Wiederaufbau [KfW]) and the Government of Finland, and administered by the World Bank. The PEFA Assessment was managed through the high level Joint Government Donor Committee, chaired by Mr Fredson Yamba, Secretary to the Treasury and co-chaired by Mr Frank Hofmann, Head of Cooperation, German Embassy.
The assessment process was guided under the leadership of Mr Mukuli Chikuba, Permanent Secretary, Economic Management and Finance Division (EMF), Ministry of Finance (MoF). The assessment was jointly led by Mr Mumba Chanda, Head of PFM Coordination Unit and Deputy Accountant General - LG, Ministry of Finance and Mr Srinivas Gurazada, Sr Financial Management Specialist and Task Team Leader, World Bank. The PEFA assessment team comprised staff from the Budget Office, the Accountant General’s Office, Investment and Debt Management, Internal Audit, Office of the Auditor General (OAG), ZRA, ZPPA and staff and consultants from the World Bank. The assessment was a collaborative exercise with several information providers, peer reviewers, MDTF Donors, other development partners including PEFA Secretariat, IMF, European Union, GIZ & USAID, civil society agencies.
Government viewed the Public Expenditure and Financial Accountability (PEFA) Framework, a global gold standard for assessing a country’s PFM systems, as a powerful guiding tool to help Zambia raise financial resources and spend them efficiently for service delivery. Zambia is an example of a country that has been successfully leveraging the results of its PEFA Assessments which involve evidence-based measurements of country’s PFM systems to provide a score card of performance against various indicators to embark on an ambitious and promising reform path. Here are some ways the Zambian Government has used PEFA assessments so far:
- Early adoption advantage: Zambia is one of the early adopters of PEFA framework, the first assessment done as early as 2005, when the framework became available. Since they were early adopters, they are now better aware of the progress they’ve made since 2005 and what work needs to be done.
- Conducting regular assessments: Assessments were conducted regularly – in 2005, 2018, 2012, and 2017. From these assessments, they know what works and what did not.
- Getting priorities right: Successive PEFA assessments with detailed narratives helped Zambia better set and understand their priorities going beyond performance scores. The panoramic perspectives provided in the PEFA Reports were used to help develop Zambia’s National Development Plans.
- Monitoring and Evaluation: PFM reform projects, supported by the World Bank and other partners, used PEFA scores to monitor progress – an objective way to assess.
- Timely actions: The assessment report in 2012 flagged risks to reform sustainability. When the government saw that some of the gains made earlier were lost, they were able to respond immediately.
- Drill down where needed: More specific assessments and tools are used to complement the PEFA results for specific reform areas. The TADAT – Tax Administration Diagnostic Assessment Tool – is used for revenue administration reforms; PIMA - Public Investment Management Assessment – is used to improve capital investment decision making; SAI PMF – Supreme Auditing Institutions Performance Management Framework – for Auditor General; ROSC AA - Report on observance of standards and codes Accounting and Auditing – which helps strengthen the accounting profession.
- PEFA results are credible among stakeholders: Government teams and all stakeholders now better understand the PFM reform process. In the case of the 2017 Report, the credibility of the results for stakeholders were enhanced due to:
- The joint nature of assessment exercise done jointly with the Government and Donors (represented by the World Bank).
- An award for the PEFA Check quality assurance credentials for the 2017 report for satisfactorily following the PEFA quality processes.
While there is still a long way to go before Zambia can proudly have in place best global PFM systems, the country is on the right track with strong fundamentals for a transparent PFM system in place because of how Zambia has leveraged PEFA assessments over the years. An open and orderly PFM system contributes to fiscal disciple, effective allocation of resources and efficient service delivery. It puts money to better use for citizens and brings a smile on the face of every Zambian.
The 2017 Zambia PEFA Report can be downloaded here.
The results of PEFA assessment contributed to the successful implementation of PFM Reform Project and several other Government led, Donor financed reform initiatives. A few practical illustrations are below:
- The 2016 PEFA framework brought the significance of Public Investment Management (PI 11). Zambia leveraged on the results of PEFA and PIMA to put in place (2018) operational public investment processes, which will guide future public investments. These are expected to strengthen the quality of public investment decision-making and optimize benefits.
- PEFA results (PI 1, 2, 21, 22 and 28) brought into focus the need to for on budget credibility and execution. In particular focus were also the concerns relating to accumulation of arrears. Amongst several steps taken by Government, the enhanced use of Integrated Financial Management Information Systems (IFMIS) systems and implementation of Treasury Single Account (TSA) in 2017 and 2018 are seen as major improvements in PFM systems.
- PEFA results (PI 25 and 26) informed the new Public Financial Management Act 2018, which amongst others, established stronger processes and penalties for PFM related irregularities. Country also put in place functional Audit Committees based on a robust Audit Committee Manual.
- Zambia is in the process of migration to Output based budgeting (similar to performance-based budgeting in other geographies) from traditional activity-based budgeting, a reform accelerated also be results of PEFA assessment.
- The PEFA assessment informed the agenda of the Government for next generation PFM reforms through the PFM Reform Strategy (2019-2023), prepared and currently under finalization (November 2018).
PEFA Assessment Report launch by Finance Minister
One the most significant positive lessons (an experiment that went successful) learnt in Zambia PEFA assessment is the investment of time and efforts from the World Bank team to ensure strong ownership and leadership from the Government team. In case of Zambia, the team leader from Government and the team were highly committed, fiercely objective in their assessment, and led from the front. The Bank team provided technical inputs / clarifications / constructive criticism while the Government team took the primary responsibility for the assessment. Government team and senior leadership including those at political level were highly confident and committed to an objective assessment and had no hesitation to publicly acknowledge the limitations in PFM systems. Low PEFA scores were constructively considered as stepping stones for improvements in PFM systems. Such high levels of ownership ensured that PEFA report received highest level of attention (including at the level of President of Republic of Zambia) and remained one of the most important reference point for all PFM decisions for several months after the report for published (and is expected to remain so till the next formal PEFA report). The approach followed (joint assessment with strong ownership of Government) and the preparatory steps leading to such an arrangement are worth replicating in other countries (the approach has been replicated by the Bank team in the PEFA assessments of Zimbabwe and Malawi, primarily drawing inspiration from Zambia).
Another positive experience has been the use of technology. The assessment team used several audio-visual methods including short videos, all through the process, which ensured that the key messages reach the intended audience and the finding receive attention.
Watch this video to learn more about the impact that PEFA Assessments have had on Zambia:
Measuring Zambia's Public Management Performance through PEFA Assessment (Video)
The success story of Zambia in using the PEFA assessment was also featured in the WBG blog “Governance for Development” at http://blogs.worldbank.org/governance/how-zambia-used-pefa-assessment-reports-public-financial-management-reforms