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Zambia
Public Expenditure Review
Agriculture
PER Dissemination Workshop
Taj Pamodzi Hotel, Lusaka
December 02, 2010
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
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
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.
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
Agriculture in Zambia ctd.

Opportunities for effective
Government and donor support
• Strengthening market mechanisms and
value chains
Improved access
information,
to
market
and
price
• addressing critical policy issues in the
Better market
linkages and organization,
agricultural
sector
Contract enforcement,
Partnerships
between the
• investing
in infrastructure
private sectors in extension.
public
and
Agriculture in Zambia ctd.

Opportunities for effective
Government
donor
support
Poorly targetedand
fertilizer
subsidy,
Price policy for wheat and maize,
• strengthening
market
mechanisms
Periodic export bans
on key
food staples. and
value
chains
High cost
of doing business (complex
licensing regime)
• Addressing critical policy issues in the
agricultural sector
• investing in infrastructure
Agriculture in Zambia ctd.

Opportunities for effective
Government and donor support
• strengthening market mechanisms and value
chains
Infrastructure needs in transport, energy,
telecommunications, irrigation, etc.
Requires prioritization
and partnership
with
• addressing
critical policy
issues in the
the private sector
agricultural
sector
• Investing in infrastructure
Agriculture in Zambia ctd.

New developments
• Fertilizer voucher program Pilot
• Reintroduction of the Agriculture
Marketing Bill
Agriculture in Zambia ctd.

New developments
• Fertilizer voucher program Pilot
Expected
to
increase
private
involvement in fertilizer distribution
sector
Should result in a gradual reduction of public
fertilizer expenditure
• Reintroduction
of the Agriculture Marketing Bill
Implementation has been delayed, however
Agriculture in Zambia ctd.

New developments
• Fertilizer voucher program Pilot
Designed to enhance smallholder farmers’
access to markets and to include warehouse
receipting
• Reintroduction of the Agriculture
Marketing Bill
Agriculture in Zambia ctd.
Figure 1: Real GDP Contribution of the
Agriculture Sector
Real GDP contributions
250
200
billion 1994 ZMK

150
Agriculture
Fishing
Forestry
100
50
0
2001
2002
2003
2004
2005 2006
2007
2008 2009*
Source: PER Authors on the basis of CSO data
Agriculture in Zambia ctd.

Figure 2: Maize production trends
Maize Productivity (t/ha)
Maize production
3.0
2,000
1,800
2.5
1,400
2.0
t/ha
1,200
1,000
1.5
800
1.0
600
400
0.5
200
0
Source: PER Authors on the basis of crop forecast data
provided by MACO.
Note: Line = three-year moving average
20
09
20
07
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
0.0
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
Thousand MT
1,600
Agriculture in Zambia ctd.

Limitations
of
statistics
agricultural production
on
• 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
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
2008
Financial
Reports
from
Public Expenditure in Agriculture ctd.
Figure 3: MACO spending by “core” and “FSP
and FRA” in constant Kwacha
MACO spending, constant 2008 ZMK
900
800
Constant ZMK billion
700
600
500
FSP and FRA
400
Core MACO expenditure
300
200
100
0
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10

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)
Public Expenditure in Agriculture ctd.

Table 1: Global government spending, 2004-2008
million K
2004
2005
2006
2007
Tax and non-tax revenue /1
4,535,704
5,425,980
6,291,261
8,198,276
9,666,888
Total spending as per Financial Report
5,993,217
7,266,854
7,729,459
9,798,711
12,348,787
Debt service internal
745,524
608,894
578,422
469,998
497,536
Debt service external
597,989
470,184
227,019
239,180
222,135
Defense
538,147
625,791
690,140
899,134
1,013,235
Recapitalisation, Investments and
Government Institutions
under Loans and Investment
124,123
145,391
168,350
219,164
186,848
Core-MACO
236,749
91,500
332,400
133,281
446,838
122,792
636,376
227,078
735,985
194,165
FSP and FRA
145,248
199,118
324,046
409,298
541,820
100.0%
100.0%
100.0%
100.0%
100.0%
Debt service internal
12.4%
8.4%
7.5%
4.8%
4.0%
Debt service external
10.0%
6.5%
2.9%
2.4%
1.8%
Defense
9.0%
8.6%
8.9%
9.2%
8.2%
Recapitalisation, Investments and
Government Institutions
under Loans and Investment
2.1%
2.0%
2.2%
2.2%
1.5%
Agriculture (Head 89)
4.0%
4.6%
5.8%
6.5%
6.0%
1.5%
1.8%
1.6%
2.3%
1.6%
2.4%
6,189,281
2.7%
6,947,082
4.2%
7,904,334
4.2%
9,678,320
4.4%
11,295,249
Agriculture (Head 89)
2008
in %
Total spending as per Financial Report
Core-MACO
FSP and FRA
Memo: total internal budgeted expenditure
Source: Financial Reports 2004-2008
Note: Tax and non-tax revenue according to the narrative section of the Fin. Reports
Public Expenditure in Agriculture ctd.
Figure 4: Core MACO spending by broad groups of
departments, in constant Kwacha
Core MACO spending, constant 2008 ZMK
400
350
300
250
200
150
100
50
0
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Constant ZMK billion

Districts
Provinces
Training and research
Central sections of MACO
Public Expenditure in Agriculture ctd.
Figure 5: Spending by provincial and district agricultural
offices
Spending at the Provincial and District Levels
200
180
160
140
120
Districts
Billions of Constant ZMK

100
non-PE Province
Personnel
80
60
40
20
0
2005
2006
2007
2008
2009
2010
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.
Public Expenditure in Agriculture ctd.

Table 2: Spending and execution rates by provincial and
district agricultural offices
2005
Actual
Total spending Province and
District level
Provinces
Personnel
non-PE Province
Districts
Non-PE total
2006
Actual
2007
Actual
2008
Actual
constant million Kwacha
2009
2010
Budget
Budget
95,431
86,233
133,885
103,981
194,648
162,601
72,301
66,292
6,009
23,130
29,139
75,140
69,981
5,159
11,093
16,252
90,705
75,491
15,214
43,180
58,394
82,649
72,941
9,707
21,332
31,040
108,125
75,830
32,295
86,524
118,819
99,974
79,159
20,815
62,627
83,441
Non-PE as % of total province
and district spending
30.5%
18.8%
43.6%
29.9%
61.0%
51.3%
Non-PE total assuming 60%
execution for 2009 and 2010
29,139
16,252
58,394
31,040
71,291
50,065
8.5
88.9
5,109
4.2
100.0
16.9
113.4
12.3
124.7
No of provincial and district-level staff Nov 2008
District spending per staff
4.5
CPI, 2008=100
73.7
2.2
80.4
Source: Financial Reports and Budget figures. Staff level in 2008 from Cardno
Agrisystems Ltd 2009 (Participatory Review).
Public Expenditure in Agriculture ctd.
Figure 6: Direct technology spending relative to MACO core
spending
Direct technology spending relative to other MACO expenditure
25%
% of core MACO spending

20%
15%
Training Institutes
Research stations
ZARI
10%
5%
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010
Public Expenditure in Agriculture ctd.

Table 3: Budget execution rates for non-personnel
expenditure
2004
Non-personnel execution rates
Total MACO core
2005
2006
2007
2008
61%
82%
59%
66%
67%
53%
27%
64%
87%
74%
72%
86%
88%
64%
40%
39%
38%
77%
70%
61%
58%
67%
70%
77%
61%
53%
82%
69%
33,193
59,259
40,002
128,784
84,130
Provinces
Districts
Research incl. research stations
Training Institutes
Other Headquarter
Non-personal emoluments budget
Total MACO core
0
0
2,424
621
30,148
4,430
17,051
3,730
3,326
30,723
4,146
8,915
2,017
1,387
23,537
13,530
38,401
11,918
4,454
60,481
9,707
21,332
5,860
6,309
40,922
54,175
72,310
68,183
195,294
125,988
Provinces
Districts
Research incl. research stations
Training Institutes
Other Headquarter
0
0
4,606
2,285
47,284
5,086
23,172
5,215
3,879
34,958
6,491
22,103
5,207
3,647
30,735
19,238
62,843
20,704
6,684
85,824
12,648
35,030
11,078
7,674
59,558
Provinces
Districts
Research incl. research stations
Training Institutes
Other Headquarter
Non-personal emoluments actual
Total MACO core
Public Expenditure in Agriculture ctd.

Table 4: Comparison of internally and externally financed
appropriations and reported expenditure
K mn
2006
2007
2008
2009
Budgeted
Internal
External
Reported
Budgeted
Internal
External
Reported
Budgeted
Internal
External
Reported
Budgeted
Internal
External
210,959
10,651
200,308
10,506
360,594
5,058
355,537
34,050
277,311
16,223
261,088
35,561
158,346
3,350
154,996
Exchange
Rate
3,603
4,003
3,746
5,046
USD
Thousand
58,550
2,956
55,594
2,916
90,092
1,264
88,828
8,507
74,035
4,331
69,704
9,494
31,380
664
30,716
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.
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
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
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 longterm 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.
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.
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.
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
Gender and Public Expenditure in
Agriculture ctd.



Gender in Development Division (GIDD) of
the Cabinet Office
Mandate to coordinate, monitor, and evaluate the
implementation of the National Gender Policy in
Gender
Focal Points
in Line Ministries
order
to achieve
gender-reflective
goals in overall
development policy
In
2008, Sub-committees
GIDD had an approved budget for gender
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...
Gender and Public Expenditure in
Agriculture ctd.

Gender in Development Division (GIDD) of the
Cabinet Office

Gender Focal Points in Line Ministries

Specific duties of the Gender Focal Points (GFPs)
Gender
are
oftenSub-committees
unknown to agency staff
GFPs are rarely consulted on new initiatives
Interagency collaboration between GFPs, though
mandated by the GIDD, is extremely limited.
Gender and Public Expenditure in
Agriculture ctd.

Gender in Development Division (GIDD) of the
Function as a link between the GIDD and the
Cabinetministries
Office
various
as well as local and regional
authorities.

Reporting
and oversight
does not function
Gender Focal
Points in system
Line Ministries
well, collaboration with GIDD has been limited

Gender Sub-committees
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
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.”
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.
Thank you!
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