Zambia - Country assistance strategy public information notice (CPIN)

Report No. PIN25 Zambia CAS: Public Information Notice World Bank Board Discusses Zambia Country Assistance Strategy On November 17, 1999, the World Bank Group published its Country Assistance Strategy (CAS) for the period 2000 to 2002 for the Republic of Zambia. Country Context Although Zambia has a rich copper endowment, which seemed at independence to guarantee the country a bright future, state-dominated economic policies and falling copper revenues after independence resulted in declining standards of living. Zambians today still have better access to health services, safe water, and education than many of their neighbors. However, since the early 1980s the quality of these services has deteriorated and poverty has risen. By the early 1990s, Zambia was among the poorest and most heavily indebted countries in Africa. Following elections in 1991, the new Government embarked upon a far-reaching economic reform program, including liberalization and the creation of a market economy. Even so, sustained growth has remained elusive. Delays in privatizing the copper mines and diminished external aid flows have limited the Government's ability to reduce poverty. At the same time, HIV/AIDS, with an incidence rate of 19 percent, has become a serious and overarching social and economic problem, as growing numbers of infected adults die from the killer disease in their most productive years. It is expected that some 11 percent of Zambia's children will become AIDS orphans by the year 2000. In the past few years, in an effort to reduce poverty and reverse declines in service delivery, the Government has established sector investment programs in health, education, agriculture and roads. It has also intensified efforts to improve governance, to reform the public sector, to control the spread of AIDS, and to manage the environment. Much has been done, but much also remains to be done, to effect the profound economic changes which Zambia requires to achieve sustainable growth and a permanent reduction in poverty. Bank Strategy The long-term objective of the Bank's work in Zambia is to increase incomes and living standards for the vast majority of Zambians who are poor. The central objective of the CAS is to sustain positive growth rates over the CAS period and to promote reforms that will bring tangible benefits to the population. Although projected growth of about 3 percent per annum will not be enough to reduce poverty significantly by 2002, the reforms, when implemented, are expected to build the foundation for more rapid growth and poverty reduction in the future. A central message of this CAS is that Zambia will need to rely less on copper, and more on new products and services related to sectors such as tourism and agriculture, in order to grow and meet its development objectives. Priorities for Bank Assistance Based on extensive consultations as well as the Government's articulated priorities, the CAS identifies three strategic priorities for the Bank's work in Zambia. They are: Removing the constraints to sustainable diversified growth; Improving governance; and Increasing access to basic services and direct poverty interventions. During the CAS period, IDA's substantial ongoing involvement in social sector investment  programs, and in the analysis of public spending priorities, will continue. The Bank will introduce two new growth-enhancing operations (a Copperbelt Services Project and a Local Development Fund) that aim directly to improve the lives of the poor. It will also assist the Government in aid coordination and in HIV/AIDS prevention and control. Work on determining Zambia's eligibility for debt relief under the HIPC Initiative will be intensified once the Government-owned copper company is privatized, and debt service savings will be used to increase funding for poverty reduction activities. In the area of governance, the Bank will continue to support the Government in its efforts to implement public sector reform and improve economic transparency and accountability. Lending over the CAS period is expected to total about $375 million, including adjustment and investment lending. Partnerships The CAS preparation involved widespread consultations with Government, donors, NGOs, academics, farmers, entrepreneurs, trade unions, religious groups, and the media. Early in the CAS consultations, it became clear that the CAS process could help the Government to initiate a wider Government-led process to forge a shared long-term vision and development framework for Zambia. Although Zambia is not a Comprehensive Development Framework (CDF) pilot country, its experience with sector investment programs, coupled with concerns about aid coordination and the lack of a long-term vision, has prompted the Government to begin preliminary work on a CDF for Zambia with its development partners. The building blocks of the current working version of the CDF, which is described in the CAS document, are reflected in the three strategic areas for Bank assistance in Zambia. Further work on the CDF will be conducted by the Government together with its external and internal partners and supported during the CAS period. All parts of the World Bank Group, including IDA, IFC and MIGA, will collaborate in the implementation of this CAS. The Bank Group also works closely with the IMF on economic reform in Zambia. -2-