Corruption in practice - Case of Zambia

Francesca Di Mauro Governance Seminar - June 2011, Brussels

Outline

Context in Zambia 2009: a difficult year Response and dynamics Lessons learned

Context in Zambia

CPG: all 17 donors active in ZM – highly harmonized context: JASZ, DOL, sector MoUs

PRBS Group: GRZ + 7 CPs (Germany, Finland, Norway, UK Aid, AfDB, EU and World Bank)

PRBS MoU signed in April 2005 – with 4 Underlying Principles: Macro, PFM, poverty reduction, good governance (rule of law, democratic principles, anti-corruption)

3-years rolling PAF used by all, with 25 indicators covering several areas, but NOT governance/political conditionality in particular (except AC); mix of output, outcomes, process

2009: a difficult year

Ministry of Health scandal: funds misappropriated, including donor basket funds; SW and NL suspend funds;

Ministry of Works and Supply documents show huge over-commitments in the sector in 2008 (election year);

Agriculture audits show that main policies are not effective (fertilisers input, maize purchase)

Meeting with President and all ambassadors in May: Gov asked to clearly identify concerns

Response and dynamics

Health: Governance Action Plan – internal audit strengthened, financial audit, repayment to donors

Roads: Sector Management Plan - launching of a series of audits

PRBS CPs launch formal dialogue on UPs in June, using a Roadmap – GBS put in question

Generally (with few exceptions) all interested in Gov response, set of remedial measures

Response and dynamics - PRBS

PRBS Roadmap coverage: PFM reforms: procurement, IFMIS, treasury management, budget

cycle; Public sector reform: decentralisation, pay policy; Good governance: anti-corruption policy; funding of oversight

institutions OAG and ACC, freedom of information Sectoral issues: Health, Roads, Agriculture

Intense dialogue, will last 6 months, regular meetings with Gov; tensions at EDF Committee on EU GBS (V-FLEX)

PRBS structured dialogue around clear issues (changing goalposts)Outcome: final meeting of 25 November concluded positively,

disbursements and future commitments would depend on progress on outstanding issues – some donors ‘breaking the ranks’

Response and dynamics – Roads

EU in the lead: let the national process operate Auditor-General audits: financial, procurement,

technical Public Accounts Committee: debate over audits –

set of recommendations (incl. removal of top management)

Dialogue still on-going…SBS still ‘suspended’…process very long

Lessons learned

Support rather than undermine national process: AG, PAC, ACC

more-long lasting effects (difference between Roads and Health)

But trade-off is slow process/no disbursement Under PRBS, several areas actually moved: ‘reform

by threat’? Importance of clearly identifying concerns -

transparency Keep unified donor position (at least within EU) –

not always easy, especially with new mood on GBS

Annexes

Current Underlying Principles in PRBS MoU: GRZ’s commitments to fight poverty, including through a

pattern of public expenditure consistent with poverty reduction priorities as identified in the National Development Plan

GRZ’s commitment to peace, democratic principles, the rule of law, good governance and integrity in public life, including the fight against corruption;

GRZ’s commitment to public financial management reforms; GRZ’s commitment to pursuing sound macro-economic

policies, as evidenced by a positive IMF assessment of overall macro-economic performance.