zambia country office annual report 2012

ZAMBIA COUNTRY OFFICE

AFRICAN DEVELOPMENT BANK GROUP

2012 ANNUAL REPORT

2012 ANNUAL REPORT – ZAMBIA COUNTRY OFFICE

Abbreviations and Acronyms 3Foreword by Regional Director, South B (ORSB) 5Message from Resident Representative 6

1. Macroeconomic Environment 72. Bank Group Support to Zambia and 2013 Lending Program 93. Portfolio Performance and Management 12

3.1 Portfolio Structure 123.2 Portfolio Monitoring and Evaluation 123.3 Portfolio Issues and Action Plan 13

4. Project Results and Achievements 154.1 Multinational Botswana-Zambia Kazungula Bridge 164.2 Nacala Road Corridor Project Phase II 174.3 Eight Centers Water Supply and Sanitation 184.4 Rural Water Supply and Sanitation Program 194.5 Small Scale Irrigation Project 204.6 Multinational Lake Tanganyika Project 214.7 Itezhi-Tezhi Power Plant and Transmission Project 224.8 Enhancing the Zambian SMEs Competitiveness and Access to Finance 23

5. Aid Coordination and Policy Dialogue 246. Analytical and Knowledge Work 26

6.1 Extractive Industry Transparency Initiative (EITI) 266.2 Joint Development Information Center 27

7. Finance and Administration 287.1 Budget Execution 287.2 Workshops and Meetings 287.3 Human Resources Management 287.4 Capital Expenditure and Contractual Obligations 29

8. Information Technology 318.1 IP Telephony 318.2 High Definition Video Conferencing 318.3 Network Security and Resilience 31

AnnexesAnnex 1: Comparative Socio-Economic Indicators 32Annex 2: ZMFO Budget 2012 Utilization by Cost Category 33Annex 3: Workshops and Dialogues Meetings 34Annex 4: Staff List of Zambia Country Office 35Annex 5: Bank Group’s Country Portfolio (December 2012) 36Annex 6: Division of Labour 2012-2015 (JASZ II SIGNATORIES) 37Annex 7: Revised Country Portfolio Improvement Plan 38

Table of Contents

1

List of FiguresFigure 1: Sources of Funding 12Figure 2: Portfolio Distribution (31 December 2012) 12Figure 3 Portfolio Key Performance Indicators 12Figure 4: Proposed Design 15Figure 5: Current pontoon that keep breaking down and has been a cause of several accidents 16Figure 6: Trucks parked on both sides of the road on the route to the Pontoon

awaiting crossing 16Figure 7: Current Nacala Road 17Figure 8: Nacalar Corridor 17Figure 9: Before Project - Use of Shallow Well 18Figure 10: After Project - Water Kiosk 18Figure 11: Mushimbili Dam– Securing Water supply for Kapiri town 18Figure 12: Borehole drilling and development in progress 19Figure 13: Kasalawe Village water point, Mpulungu district 19Figure 14: One of the reservoirs at NegaNega Irrigation Scheme 20Figure 15: Pumping pontoon at Nzenga Irrigation Scheme 20Figure 16: Lined canal at Nzenga 20Figure 17: Consultative meetings with farmers at NegaNega 20Figure 18: Construction of 2.5km Jetty – Market Road being upgraded in Nsumbu 21Figure 19: Kabolwe Health Post under Construction 21Figure 20: Dam Outlet 22Figure 21: Itezhi-Tezhi Dam 22Figure 22: Mining Activities in Zambia 26

2012 ANNUAL REPORT – ZAMBIA COUNTRY OFFICE2

2012 ANNUAL REPORT – ZAMBIA COUNTRY OFFICE 3

Abbreviations and Acronyms

ADF African Development FundADB African Development BankADC Area Development CommitteeALSF African Legal Support FacilityCP Cooperating PartnersCPG Cooperating Partners GroupCPIA Country Policy and Institutional AssessmentCPIP Country Portfolio Improvement PlanCPPR Country Portfolio Performance ReviewCSP Country Strategy PaperDBSA Development Bank of South AfricaDP Development PartnersDO Development OutcomesECON Office of Chief EconomistEU European UnionFAPA Fund for Africa Private Sector AssistanceFDI Foreign Direct InvestmentFNDP Fifth National Development PlanGEF Global Environment FundGDP Gross Domestic ProductGRZ Government of Republic of ZambiaHDI Human Development IndexHEST Higher Education Science and TechnologyHIPC Highly Indebted Poor CountriesIP Implementation ProgressILO International Labour OrganizationJDIC Joint Development Information CenterLTS Long Term StrategyMTS Medium Term StrategyMDRI Multi-Donor Debt Reduction InitiativeM&E Monitoring and EvaluationMOU Memorandum of UnderstandingMTEF Medium Term Expenditure FrameworkMTR Mid-Term ReviewNSC North-South CorridorNSIJ National Strategy for Industrialization and Job CreationNTF Nigeria Trust FundPAF Performance Assessment FrameworkPBA Performance Based AllocationPD Paris DeclarationPEMFA Public Expenditure Management and Financial Accountability Program

PPCR Pilot Project for Climate Change ResiliencePRBS Poverty Reduction Budget SupportRMC Regional Member CountriesRSDG Road Sector Donor GroupSI 33 Statutory Instrument No. 33SI 78 Statutory Instrument No. 78SME Small and Medium EnterprisesSNDP Sixth National Development PlanTOR Terms of ReferenceUSD United States DollarsVCDC Village Community Development CommitteeV-WASHE Village-Water, Sanitation, Hygiene and Education Committee



Foreword by Regional Director,South B (ORSB)The 2012 annual report provides a summary of theachievements made, the challenges faced and the Bank’sresponse to the development issues facing Zambiatoday. The Bank continues to be a strong partner inZambia’s development, serving as the “African Voice”amongst a number of Cooperating Partners andevidenced by the number of operations with co-financingthat the Bank led.

The year 2012 witnessed strong economic performance with real GDP growth above 7%and a stable macroeconomic environment. Zambia’s ability to raise capital from the markets– USD 750 million in a Eurobond issuance - further attests to improvements in themacroeconomic fundamentals. The economic outlook remains favorable in the mediumterm, underpinned by good performance in many sectors and by single digit inflation.

However, tackling high poverty levels (above 60% nationally), especially in the rural areas,and addressing high youth unemployment remains one of the Government’s foremost policychallenges and Bank’s priority. As a proportion of the total labour force, 63% of the urbanyoung in the 15-19 age-groups remain out of work while unemployment is 48% for the 20-24 age-categories. Part of the Bank’s assistance in 2012 focused on high level policydialogue and the conduct of studies on youth unemployment and entrepreneurshipdevelopment as part of Bank’s transformation and inclusive growth agenda. These agendasare outlined as central focal operational areas of the new Long Term Strategy for 2013–2022.

Marked improvements were seen in Zambia’s portfolio performance. The posting of additionalstaff to the field paid off, with improved dialogue with Government and other CooperatingPartners. In addition, ORSB Department supported the Field Office by leading a numberof dialogue missions, notably the CSP MTR stakeholders’ review workshop, Kwacha re-domination with Central Bank, several meetings with the private sector and Civil SocietyOrganizations, and a staff confidence building workshop with Ethics Department. The effortsof the Team from ORSB inspired confidence and strengthened the dialogue process.

We envisage 2013 to be a year of continued improvements for Zambia on its socio-economicdevelopment. We expect the Zambian Government to build on the achievements of 2012,while addressing issues of inclusive and green growth. Meeting the emerging needs andthe high expectations, the Bank, in the coming year will focus on a stronger partnership,enhanced policy dialogue, effective portfolio management, building a robust project pipeline,increased knowledge work and provide the needed motivation for staff located in the FieldOffice as the decentralization process deepens.

Dr. Chiji Ojukwu,Director, Regional Department South B

(ORSB)

Message from ResidentRepresentativeThe year 2012 saw further evidence of Zambia’s strongeconomic performance with real GDP growth of over 7%. Inspite of this economic performance, Zambia is yet to achievesignificant gains in social and human development. The povertyheadcount remains high, with about 60 per cent of thepopulation still living below the poverty line. This means, Zambia,

Dr. Freddie Kwesiga,Resident Representative, ZMFO

like many African countries, must now focus on jobs creation, social inclusion and provision ofsafety nets. Rapid economic growth should also bring benefits to people in a sustainable manner.

As part of Bank’s agenda of inclusive and green growth, the Country Office focused its effort onjob creation, skills development and the development of climate resilient programs. The Bank,in 2012, organized a high level policy dialogue that discussed unemployment and growing povertyrates, especially in the rural areas. One key outcome was a Bank-financed study on youthunemployment, skills development and entrepreneurship with support from Office of ChiefEconomist (ECON) complex. This study will be completed in 2013 and its recommendations willdefine a clear path for youth development and give a true meaning to the Government’s jobcreation efforts. The Bank is also supporting Zambia, through the Global Environment Fund, todevelop climate resilience and adaptation programs in its quest for a greener economy.

The Bank’s Country Office also hosted President Kaberuka when attended high level meetingsincluding the Board Meeting of PTA Bank. The President’s visit was also used to motivate andto inspire confidence in staff to be agents of change.

The Bank undertook a joint mid-term review of Zambia’s Country Strategy Paper (CSP) andCountry Portfolio Performance Review (CPPR). The review highlighted the need for the transformationand diversification of Zambia’s copper-dependent economy, with agriculture, entrepreneurshipdevelopment and private sector development as some of the key entry points. It also revealedimprovements in portfolio management as a further evidence of the results if Bank’s decentralization.

The Bank has been very active in the donor coordination and currently chairs the AgricultureSector Working Group and actively participates in activities of Cooperating Partners, serving asthe “African Voice”. The Bank, in 2012, Chaired the Donor Cooperating Partners Group Troika,Water and Sanitation Sector Group and Agriculture Sector Group. In building meaningfulpartnerships, the Bank has been leveraging on co-financing of Bank’s operations in Zambia, whichis 220% of ADF-12 resources.

The year 2013 will see further improvements in portfolio management, building of a robust pipelinefor the remaining period of the CSP, aid coordination and improved responsiveness to Bank’sclients in Zambia and the Southern Region. Five major operations are expected to be programmedfor Board consideration. These are Poverty Reduction Budget Support V (UA 15 million), LivestockInfrastructure Support Program (UA 12 million), HEST-Skills Development Project (UA 10.95 million),Strengthening Climate Resilience in the Kafue Basin (UA 36 million) and Maamba Coal-fired PowerPlant Project.



Macroeconomic Environment11.1 Zambia’s economic performance in2012 has been very strong. This was mainlydue to a combination of improvedmacroeconomic management, high exportcommodity prices (especially copper),economic liberalization and a more effectivepolicy implementation. Real GDP growthwas 7.3% in 2012, an increase from 6.8%in 2011. Growth has also been drivensubstantially by the mining sector withcontributions from agriculture, services(tourism and financial services) andconstruction.

1.2 The Government successfully issued a US$ 750 million 10 year tenured Eurobondat a yield rate of 5.625% in September 2012, showing a growing investor confidence in theZambian economy. This bond was oversubscribed twenty four times (generating US $11.9billion worth of subscriptions). The proceeds of the bond have been earmarked for upgradinginfrastructure in health, agriculture, energy (power generation and distribution, fuel refineries),transport (roads and rails) sectors, and supporting private sector development throughestablishment of medium to long-term financing to small and medium enterprises (SMEs)through the banking sector.

1.3 The Government’s Medium TermExpenditure Framework (MTEF) prioritizesincreasing spending on infrastructure,agriculture, tourism, transport and energysectors. This is aimed at setting the economyon course to an inclusive growth path bycreating jobs and improving basic servicedelivery. It targets to increase capital spendingfrom 6.1% in 2012 to7.3% of GDP in 2013following an average of 3.6% in 2008-2011periods. The fiscal deficit (including grants)is projected to rise to 4.6% of GDP in 2012,up from an average of 2.3% in 2008-10. Thestrong growth of real GDP is expected tocontinue in the medium term, (at 7.8% in2013, 8% in 2014 and 7.7% in 2015),

Table 1: GDP Growth by Sectors

2010 2011 2012*GDP 7.6 6.8 7.3

Non Mining GDP 6.8 8.2 8.0

Primary sector 10.2 2.2 4.1

Agriculture, Forestry and Fishing 6.6 8.0 7.1

Mining and Quarrying 15.2 -5.2 -0.3

Secondary sector 6.5 8.5 12.3

Manufacturing 4.2 8.0 11.2

Electricity, Gas and Water 7.4 8.2 2.3

Construction 8.1 8.9 15.3

Tertiary sector 6.6 7.8 8.2

Wholesale and Retail Trade 4.2 7.5 7.9

Restaurants, Bars and Hotels 10.2 7.9 2.1

Transport, Storage and Communications 14.9 13.7 11.3

Financial Institutions and Insurance 6.0 4.9 12.0

Real Estate and Business services 3.0 2.9 2.9

Community, Social and Personal Services 5.3 8.4 8.4

Source, Central Statistical Office, Lusaka; *estimated

underpinned by increased output and investments in mining and rising construction activityas the government implements its plans to develop energy and transport infrastructure,including the Link Zambia 8000KM Road Project.

1.4 Public sector external debt remains low, following extensive debt relief in 2005-2006.Debt relief under the Highly Indebted Poor Countries (HIPC) program and Multi-donor DebtReduction Initiative (MDRI) significantly reduced Zambia’s public sector external debt stockto 9% of GDP in 2006 (US$0.5 billion), down from 86% (US$7.2 billion) in 2005. Thegovernment’s debt policy of borrowing only on concessional terms from multilateral creditors(including the Bank) has resulted in a moderate rise in public sector external debt, at anaverage of 10.8% of GDP in 2008-2012, and expected to rise to 14% of GDP in 2013.

1.5 Since 2006, inflation has been contained in a single digit due largely to lower foodprices and a tight monetary policy. Despite the price hikes in 2008 (at 16.6%) as a resultof rising global fuel and food prices, inflation has fallen to single digit since end-2009 (at9.9%), and has fallen further to 5.4% in October 2012. To boost transparency of its effortsto anchor inflationary expectations, the Bank of Zambia replaced its monetary-targetingpolicy framework in April 2012 with a benchmark monetary policy interest rate. Initially setat 9%, the policy rate was adjusted upwards to 9.25% in November 2012.

1.6 The 2013 Budget highlights new government priorities and intentions to put theeconomy on a path to sustainable and inclusive growth, through job creation and enhancedbasic service delivery. The macroeconomic objectives are to: (i) achieve real GDP growthof above 7%; (ii) attain inflation of no more than 6%; (iii) achieve domestic revenue of at least20% of GDP; (iv) limit the overall fiscal deficit to 4.3% of GDP, of which 1.5% (of GDP) willbe domestic borrowing and 1.2% (of GDP) will be grants from development partners; (v)maintain at least four months of import cover covered by gross international reserves (morethan US$ 2 billion); and (vi) create 200,000 decent jobs. With the new budget, the governmentpresented in tandem, a new strategy for growth and job creation: the National Strategy forIndustrialization and Job Creation (NSIJ) that prioritizes agriculture, tourism, manufacturing,and infrastructure development.

1.7 In spite of the improvements witnessed in economic performance, Zambia is yet toachieve significant gains in social and human development. The poverty headcount remainshigh, with about 60% of the population still living below the poverty line in 2010. The Ginicoefficient has risen from 0.60 in 2006 to 0.65 in 2010. Unemployment is still high especiallyamong the youth, with the rates increasing further from 22% in 2008 to 28% in 2010 amongthe 22-24 years age groups. In essence, economic growth, mainly driven by the miningsector, has not been inclusive to benefit populations in the rural areas and other sectors.



Bank Group Support to Zambiaand 2013 Lending Program2

2.1 The Bank’s development assistance to Zambia is within the framework of its 2011 -2015 Country Strategy Paper (CSP), approved by the Board of Directors in December 2010.In 2012, the Bank undertook Mid-Term Review (MTR) of this strategy. This allowed thealignment of the priority areas of the Bank’s strategy with the priorities of the new ZambianGovernment and to incorporate issues of inclusive and green growth to ensure that theBank’s collaboration with the GRZ follows the new Long Term Strategy (LTS) of the Bank.This also enabled the Bank to harmonize the CSP with key Government policy anddevelopment frameworks such National Vision 2030, the Sixth National Development Plan(SNDP) 2011-2015 and Medium Term Expenditure Frameworks (MTEF).

2.2 The CSP (2011-2015) spans through two ADF cycles – ADF-12 and 13. Under ADF-12, the Performance-Based Allocation (PBA) for the two initial years (2011 and 2012) wasUA 70.07 million. Zambia’s ADF-12 allocation for 2013 is UA 37.95 million, bringing totalallocation of ADF 12th replenishment cycle for Zambia to UA 108.02 million. This representsa net decrease of UA 10.88 million compared to the UA 118.9 million of ADF-11. This trendreflects the country’s continuous positive GDP growth, which partly has a decreasing effecton the PBA formula, and offsets the positive contributions to the formula of the improvedportfolio performance and Country Policy and Institutional Assessment (CPIA). The Bank’sCountry Office used this meager ADF allocation to leverage other resources. During the firstCSP implementation period, the total committed resources amounted to UA 128 million,of which UA 62 million were from ADF-12, and UA 66.4 million from other internal sources,achieving a leverage rate of 107%.

2.3 In 2012, the Bank approved the Itezhi-Tezhi Hydropower Transmission Project (ADF– UA 30.0 million; NTF UA 6.4 million), Itezhi-Tezhi Power Project (ADB – UA 23.17 million)and Itezhi-Tezhi Power Stand-By Project (ADB – UA 1.98 million) and Small Dams Project(AWF - EUR 950,000). In addition, the Bank provided UA 2.5 million through the KazungulaBridge Project towards the cost of the National Transport Master Plan. The Bank supportedGRZ in the preparation of terms of reference (TOR) for the study.

2.4 In the year 2013, five (5) operations are programmed for Board consideration. Theseare Poverty Reduction Budget Support V (UA 15 million), Livestock Infrastructure SupportProgram (UA 12 million), HEST-Skills Development Project (UA 10.95 million), StrengtheningClimate Resilience in the Kafue Basin (UA 36 million) and Maamba Coal-fired Power PlantProject. The Bank’s Country Office has already initiated discussions with the Saudi Fundto co-finance the HEST-Skills Development Project. In addition, the Bank will be supportingthe preparation of Mpulungu Port Rehabilitation Project and the National Transport MasterPlan Study.

2.5 The Bank’s poverty support program will, in part, support efforts on capacity buildingand reforms to enhance private sector development. In this regard, the Bank will focus on

reduction of business transaction costs, financial sector reforms with a view to improvingaccess to finance by SMEs, business regulatory framework, as well as long term credit forsmall, medium and large businesses.

2.6 Bank’s support to the development of livestock infrastructure is aimed at addressingissues of poor infrastructure for disease control, low productivity and weak market linkagesin the sector and to induce inclusive growth. This program is expected to enhancetransformation of agricultural production, diversification through development of marketvalue-chains and improved agricultural infrastructure especially for livestock production andprovide linkages to local and international markets.

2.7 The issue of skills development in Zambia, especially for the youths, is a majorchallenge that requires urgent intervention. Zambia’s National Long Term Vision 2030 andSixth National Development Plan SNDP (2011-2015) have indicated human developmentespecially skills development for the youths as one of its focus areas. Zambia is seen asan attractive destination for Foreign Direct Investment (FDI) due to its economic policies andpolitical stability but it is unable to convert this advantage to gains in economic growth withits current skills gap constraint. The proposed Bank’s intervention in HEST-Skills DevelopmentProject is expected to address some of the challenges regarding expansion of access tohigher education and address the huge challenge of youth unemployment (15-19yrs) whichstands at 60% especially among the urban population.

2.8 With funding from the Pilot Program for Climate Resilience, the Bank will be providingsupport to GRZ to build resilience and develop adaptation programs aimed at mitigatingthe impact of climate changes. The Project objective is to strengthen the adaptive capacityof poor rural farming communities and agricultural production systems to better respondto current climate variability and long-term consequences of climate change in the Kafuebasin. The principal target group for the project is rural poor who depend, to a high degree,on rain fed agriculture and natural resources for subsistence and livelihood in the Kafuebasin. This is also to support Bank’s agenda on green growth and support on the developmentof green economies in Africa.

2.9 The Maamba Coal-fired Power Plant Project is expected to add 300MW of electricityusing low grade coal from a mine that is currently left to self-combust and adversely affectingthe surrounding environment. The energy produced by the plant is to be sold to Zambia’snational utility company, ZESCO, through a 20-year Power Purchase Agreement. This projectis estimated to cost a total of USD 736 million and is envisioned to be financed by acombination of equity (30%) provided by the sponsor, and debt (70%) raised from DevelopmentFinancial Institutions (DFIs) (i. e. AfDB, DBSA, IDC), commercial banks (Absa Capital, StandardChartered Bank, Standard Bank), and ECA-backed banks (China Development Bank, Bankof China). Upon completion, this project will contribute the Government’s rural electricitycoverage which currently stands at 3%. The Government’s target is at least 50% coverage.

2.10 The Bank has financed the preliminary designs and development proposals for therehabilitation and modernization of Mpulungu Port. The African Legal Facility under the



Bank is assisting Zambia and Burundi governments to develop an MOU to foster the jointinvestment for the project. The benefits from the development of the 700 Km long LakeTanganyika corridor are varied including trade facilitation with regional countries throughshipping of goods through Mpulungu and Bujumbura ports

Portfolio Performance andManagement3

3.1 Portfolio Structure

3.1.1 The Bank’s on-going portfolio in Zambia comprised of 14 operations (11 national and3 multinational projects) with a total value of UA 270.9 million. As at end of December 2012,the average age of the portfolio was 2.8 years, while the average disbursement ratio was17.6%, including operations approved and yet to be effective for disbursement. However,the average disbursement ratio for operations that have been declared effective fordisbursement was 22.7%. Portfolio distribution and sources of funds are presented in Figures1 and 2. Detailed portfolio status is presented in Annex 5.

Figure 2: Portfolio Distribution (31 December 2012) Figure 1: Sources of Funding

3.2.1 The Bank’s 2012 CountryPortfolio Performance Review (CPPR)was done in November 2012, jointlywith the Mid-Term Review (MTR) ofthe Country Strategy Paper (CSP).The CPPR assessed the overallperformance of the portfolio andfound it to be Satisfactory, withimplementation progress (IP) anddevelopment outcomes (DO) of 2.42and 2.56 respectively, on a scale of0 to 3. Ageing operations, as apercentage of the entire portfolio,reduced from 38% since the lastCPPR in 2010 to 1.7% in 2012. The

Figure 3: Portfolio Key Performance Indicators

Dec-10 Dec-11 Dec-12

Number of Ongoing Projects 14 14 12

Oldest Project in the Portfolio (years) 9.5 7.8 8

Average Age (years) 5.59 3.29 2.8

Disbursement Ratio (%) 12 25.75 12

Average Project Size (UA m) 9.8 13.6 22.0

Project's Overall Evaluation (Scale 0 -3) 2.47 2.36 2.35

Implementation Progress (IP) 2.24 2.21 2.19

Development Objective (DO) 2.71 2.60 2.52

Commitments-At-Risk (%) 12.97 3.32 1.24

Projects-At-Risk (%) 14.29 16.67 8.33

Problem Projects (%) 1 1 0

Potentially Problem Projects (%) 1 1 1

Ageing Operations (%) 38 35 16.67

Approval to 1st disbursement compliance (months) 16 14 12

Parallel PIUs (#) 0 0 0

Number of Co-financed projects 3 3 6

Timely submission of financial audit reports(%) Submission of Audit Reports

29% 43% 44%

3.2 Portfolio Monitoring and Evaluation



number of projects at risk has reduced from 14.29% in 2010 to 16.67% in 2011 and to8.33% in 2012.

3.2.2 All sectors saw improvements in physical implementation since the last CPPR of2010, apart from operations in water and sanitation, and some multinational operationswhich still face implementation challenges. In the water and sanitation sector for example,delays in borehole drilling was due to prestart up activities of community mobilization whichtook two years to carry out.

3.2.3 Delays on the Multinational Lake Tanganyika Integrated Regional Management Programwere largely due to the multinational nature with the headquarters in Bujumbura encompassingthe Democratic Republic of Congo, Burundi and Tanzania. Respective Governments hadinitially delayed in making their budgetary contributions as expected, resulting in delays inrecruitment of project management staff and project effectiveness.

3.2.4 There were loan signature delays for Itezhi-Tezhi Hydro Power Generation andTransmission Line Project but these have been partially resolved. Only the transmission linecomponent was signed 2012. The generation component (private sector) has not yet beensigned due to a policy change (SI33/78) requiring all domestic transactions to be denominatedin Zambian Kwacha. The financiers, including the Bank, ABSA, Propaco and ADF hesitantto sign the power purchase agreement is denominated in Kwacha due to uncertainty overthe value will be in 15 years’ time. The Country Office is working with Government to seeka waiver as a way forward.

3.3 Portfolio Issues and Action Plan

1.2.1 A stakeholders’ consultative workshop was organized to discuss the Bank’s portfolioperformance. Workshop participants included officials from key Government Ministries,project implementation units, private sector and cooperating partners. There was a generalagreement that a number of challenges still affect the smooth implementation of plannedactivities. The main issues relate to: (i) Weak capacity of project implementation units in thearea of procurement, contract management and adherence to implementation schedule;(ii) weak project monitoring and evaluation; (iii) delayed submission of audit reports and non-compliance with fiduciary requirements; and (iv) poor coordination of Bank’s interventions.

1.2.2 To enhance the portfolio performance, actions to be taken, recommendations madeand agreements reached with Government during the CPPR exercise include the following:

a) Weak Project Implementation Capacity: The Bank to organize a project implementationtraining workshop in the area of procurement, contract management, and disbursementmanagement for project executing agencies, along with the Ministry of Finance M&Edepartment.

b) Weak Project Monitoring and Evaluation: Tracking the submission of quarterly progressreports (including the use of new formats to capture results), process and providefeedback to Government on a timely basis. Implementation Progress Reporting (IPR)

for operations that will qualify (operations approve in 2011 and beyond) as per Bank’srevised logical framework.

c) Weak Portfolio Coordination: The Bank and Government to establish platform formonitoring, evaluation and obtaining feedback from project executing agencies andline ministries. The multilateral and donor coordination desk at the Ministry of Finance,in collaboration with the M&E Department, be responsible for coordinating quarterlyportfolio review meetings to review progress and follow up on agreed actions.

d) Submission of Audit Reports: The Auditor General’s office is to prepare an auditprogram to determine which project audits would be outsourced, taking into accountthe expected final submission deadline of audit reports to the Bank. In addition, ZMFOwill provide support to project accountants in ensuring the preparation of high qualityfinancial reports consistent with requirements of Bank’s audit terms of reference.

1.2.3 A Country Portfolio Improvement Plan (CPIP) has been developed with deliverables,indicators, responsibilities and milestones for achieving activities programmed in the plan(Annex 7). In 2013, capacity building for staff of project implementation units will be a keyactivity that is expected to improve overall physical implementation of operations in theBank’s portfolio in Zambia.



Project Results andAchievements4

Figure 4: Proposed Design

4.1 Multinational Botswana-Zambia Kazungula Bridge

4.1.1 The Kazungula Bridge has been on the drawing board since the times of the firstZambian President Dr. Kenneth Kaunda and Late President Sir Seretse Khama of Botswanain the 1970s. This Project finally came to reality 40 years after it was first conceptualizedbetween the presidents of Zambia and Botswana. The Bank financed the feasibility studiesand detailed designs for the bridge.

4.1.2 The Kazungula Bridge Project (KBP) is a multi-national project on the North-SouthCorridor (NSC) within the SADC region and part of a corridor-long infrastructure improvementprogram. The project scope includes a bridge linking Botswana and Zambia over the ZambeziRiver and juxtaposed one-stop border facilities at Kazungula to replace the existing ferry.

Figure 5: Current pontoon that keep breakingdown and has been a cause of several accidents

Figure 6: Trucks parked on both sides of the roadon the route to the Pontoon awaiting crossing

4.1.3 The sponsors agreement between thetwo governments was signed on 31 March2012, outlining the principles based on whichthe project would be implemented. Theconditions precedent to the first disbursementhas been fulfilled by the Zambian Government.

4.1.4 The feasibility studies for the projecthave been done together with the detaileddesigns for both the bridge and the one-stopboarder facilities. The study for this operationwas a joint offer of EGIs, SADC, Botwasna,Zambia, IIPO and the Bank. The procurementprocess is underway with the pre-constructionactivities, which include design review isexpected to be completed in 2013. Adedicated project management teamcomprising technical experts from the twocountries has been mobilized at the projectoffice in Kasane, Botswana to oversee theday-to-day management of the project. Thecivil works will be tendered as soon as thedesign review is completed in the first quarterof 2013.



4.2.2 The overall project in three countriescovers about 1,033 km of road works alongthe Nacala Road Corridor and includes twoone-stop border posts on the borders betweenZ a m b i a / M a l a w i a n d b e t w e e nMalawi/Mozambique. Activ i t ies beingundertaken include detailed design and tenderdocuments for the two road sections inMozambique and Malawi, and the design andpreparation of legal and regulatory frameworkfor management of the one stop border posts.

4.2.3 The project technical launch for the ADF financed Phase II (Zambia) was conductedfrom 1 to 3 March 2011. The project became effective on 10 June 2011 after fulfilling theconditions for entry into force. The conditions for first disbursement were met on 24 October2011.

One of the Components of the Nacala Road Corridor Project Phase II - The InstitutionalCapacity Building Consultancy to the Road Development Agency commenced on 31stJanuary 2012. First disbursement was made on 6th June 2012 as mobilization paymentto the consultant and the current disbursement rate is at 0.28 %.

4.2.4 The civil works bidding documents were issued to contractors on 7 September 2012and bids were opened on 30th November 2012. The Road Development Agency (RDA) hasbeen given the ‘no objection’ to negotiate with the lowest evaluated bidder for a contractamounting to USD69.2 million. Work on the ground is expected by June 2013. The Requestsfor Proposals for civil works supervision consultancy were issued on 28th September 2012to the shortlisted firms. The civil works are the expected to start in the second quarter of2013.

4.2.1 As part of the North-South Corridorinterconnectivity, the Bank through its regionalintegration window provided financing for theGreat East Road (114 km) from Nyimba toSinda of the 360 Km in Zambia from Luangwato Mwami which is part of the Nacala Corridorcovering 1,033 km of roads in Zambia, Malawiand Mozambique. The Bank has providedUA 69.369 million (78 million Euros) for theNyimba to Sinda (Nacala Road Corridor PhaseII) while other partners are financing the othersections (the French Development Agency(Euro 53.13 Million), the EU Africa InfrastructureTrust Fund through the European investmentBank (EIB) (Euro 80 Million).

Figure 7: Current Nacala Road

4.2 Nacala Road Corridor Project Phase II

Figure 8: Nacala Corridor

4.3 Eight Centers Water Supply and Sanitation

4.3.1 The Bank provided support amounting UA 24 million to improve water and sanitationinfrastructure in eight (8) towns in Central provinces of Kabwe, Kapiri-Mposhi, Mkushi,Serenje, Chibombo, Chisamba, Mumbwa and Nampundwe.

4.3.2 The project has established a utilitycompany, the Lukanga water and SewerageCompany, which commenced operations in2006, responsible for provision of water andsanitation services.

4.3.3 The project improved water supply andsanitation in terms of quantity and quality. Itenabled 213,613 out of 268, 255 people (51%women) in the project area to have access tosafe, clean water supply and improvedsanitation services. This has resulted inimproved reliability and continuity of servicewith an average of 22 hours of supply.

4.3.4 According to Ministry of Health’s 2012report, incidence of diseases has reduced by48% from 19.35 per 1,000 cases in the year2000 to 10 per 1,000 cases in 2011.

4.3.5 The Project Completion Report wasfinalized in October 2012. The reporthighlighted the projects added value to theCentral Province. The improvement of WSSservices has had positive financial benefits tothe utility as evidenced in their willingness topay for services has improved compared tobefore. The installation of water kiosks in theperi-urban areas has made water availabilitywithin reachable distances. Communitymobilization and public health education hashad positive impact on hygiene and generalwellbeing of communities in the project area

4.3.6 The Bank will in future continue tosupport the water utility to improve the qualityand delivery of water supply and sanitationservices.

Figure 9: Before Project - Use of Shallow Well

Figure 10: After Project - Water Kiosk

Figure 11: Mushimbili Dam– Securing Water supplyfor Kapiri town


4.4 Rural Water Supply and Sanitation Program

4.4.1 The main objective of the National Rural Water Supply and Sanitation Program is toincrease access to safe, reliable and convenient quantities of water supply from present37% to 55% of the rural population; and to increase access to sanitation from 13% to 33%of the rural population.


4.4.2 The program targeted drilling andequipping of 1,499 boreholes, rehabilitationof 651 boreholes, construction of 871Ventilated Improved Latrines, construction of274 hand-dug wells and construction of 13small water piped systems in the Northernand Luapula provinces. The project isexpected to reduce water borne and hygienerelated diseases amongst children and thevulnerable.

4.4.3 To date, the project has completed andcommissioned 867 new water points servicing216,750 persons. Works on rehabilitation ofboreholes, construction of hand dug wellsand latrines are ongoing.

4.4.4 Activities related to sanitation andhygiene have been implemented taking intoaccount gender and environmentalmainstreaming through the newly formed AreaDevelopment Committees (ADCs) and Village-Water, Sanitation, Hygiene and EducationCommittees (V-WASHEs). Area Pumpmenders have been trained and engaged inmaintenance of the new water points.

4.4.5 The project has facil itated theestablishment of spare part shops in 15districts and supported sustainable operationand maintenance of the water facilities incommunities. The capacity of central andlocal government institutions have also beenenhanced, artisans have been trained andassisted to establish repair outlets for watersupply and sanitation systems.

Figure 12: Borehole drilling and development inprogress

Figure 13: Kasalawe Village water point, Mpulungudistrict

4.5 Small Scale Irrigation Project

4.5.1 The objective of this project is toincrease food security through thedevelopment of 800-ha of irrigation schemesfor 1,600 families in drought prone areas. Thisis expected to increase volume of high valueirrigated products to feed the growing urbanpopulation and for export. The projectaddresses development constraints causedby unreliable rainfall patterns due to climatevariability, poor water extraction, storage andutilization infrastructure, and is therefore inline with Bank’s Medium Term Strategy (2008-2012). The project received a grant of Euro9.5 million from Finland Trust Fund.

4.5.2 The project interventions have directlybenefited 1,600 smallholder farmers, eachwith a minimum of 1-4 ha under irrigation.The project also built capacity at variousinstitutional levels, while documenting anddisseminating best practices and lessonslearnt during project implementation.

4.5.3 The 595-ha Nega Nega and 100-haNzenga schemes are fully completed andexpected to be launched soon. Planting ofboth schemes is expected later this year oncea management company that has beenregistered or incorporated is fully establishedto run the schemes with farmers asshareholders. Farmers have been linked tocommercial companies for provision of agro-services.

4.5.4 Offices for the scheme are beingestablished. Farmers in the scheme haveaccess to the electric power line. Fullproduction is expected in 2013 anddependence on rain fed agriculture will bereduced in this area. Procurement of worksfor the construction of the 90-ha Sinazongwescheme commenced and contract award isexpected to take place in first quarter 2013.This scheme will directly benefit 200households.

Figure 17: Consultative meetings with farmers atNegaNega

Figure 14: One of the reservoirs at NegaNegaIrrigation Scheme

Figure 16: Lined canal at Nzenga

Figure 15: Pumping pontoon at Nzenga IrrigationScheme



4.6 Multinational Lake Tanganyika Project

4.6.1 The Project has raised awareness among communities, fishers and farmers aboutthe importance of sustainable management of natural resources around the lake Basin.Community governance structures such as the Village Community Development Committees(VCDCs) as channels of communication for bottom-up approach to resource managementhas been established in Mpulungu and Kaputa Districts. The communities have been trainedin the establishment of tree nurseries and seedling nurseries for the reforestation of degradedlands and maintenance of plantation plots.

Figure 19: Kabolwe Health Post under Construction

Figure 18: Construction of 2.5km Jetty – MarketRoad being upgraded in Nsumbu

4.6.2 The Project has facil itated thedevelopment of harmonized systems formonitoring and management of fisheries andforest resources around the Lake Basin acrossall the four countries and Zambia hasincorporate these into its laws and regulations.It has also demonstrated the importance ofmulti-disciplinari ly and inter-sectorialcoordination as different line Ministries hasbeen involved in planning and implementation.

4.6.3 The Project has started improving theinfrastructural base for improved social, healthand economic conditions through the LocalDevelopment Fund. Construction of a 2.5kmaccess road from the landing jetty to themarket in Nsumbu, an office block for NCUin Mpulungu, construction of staff houses atschools and health centers have alsocommenced.

4.6.4 The project suffered from managementproblems arising from low staff skills inprocurement and disbursement, and failureto produce an audit report for 2011 led tosuspension of disbursement in 2012. Theaudit report is expected in March 2013.

4.7 Itezhi-Tezhi Power Plant and Transmission Project

4.7.1 The Bank is providing financing (ADF – UA 29.9 million and NTF – UA 6.4 million)towards the cost of this project. The Itezhi-Tezhi power plant and transmission project consistof the construction, operation and maintenance of a 120 MW base loan hydro power plantat the Itezhi-Tezhi (ITT) dam on the Kafue River in Zambia. The 330 KV transmission line will

evacuate the power to the proposed Mumbwaand Lusaka West substations.

4.7.2 The Project was approved by the Boardon 13 June 2012 and the loan signing tookplace on 19 December 2012. The project isyet to be effective for disbursements.

4.7.3 On 12 July, the Director of ORSB, MrOjukwu undertook a field visit to the Itezhi-Tezhi hydro power plant project. During thevisit, Mr. Ojukwu met the project managementteam from ZESCO, who presented anoverview of the existing Itezhi-Tezhi (ITT) Damand the Itezhi-Tezhi power project. The projectmanagement team outlined the variousinfrastructure works that have commencedand provided details on the expected benefitsof the hydro power project. The powergenerated from the plant is expected toaddress power shortages in Zambia and theSouthern Africa region.

4.7.4 After touring the infrastructure, Mr.Ojukwu commended the company on thegood work and encouraged the contractorsto prioritize the most critical works to ensurethat quick gains are made in improving powersupply within the country and the region.

Figure 20: Dam Outlet

Figure 21: Itezhi-Tezhi Dam


4.8 Enhancing the Zambian SMEs Competitiveness and Access to Finance

4.8.1 The Zambia SMEs program, which aims at facilitating SMEs access to finance,consists of a financial and technical assistance component. The financial component providedlines of credit Zanaco (US$10million), Investrust (US$3.5 million) and a partial credit guaranteefacility of US$ 10 million (of which $8 million granted by AfDB and $2million granted byUSAID) to Zanaco. The FAPA technical assistance component of US$ 980,824 includedcapacity building support to financial institutions, business development services providersand SME Associations implemented by ATMS/AMSCO.

4.8.2 The program worked with ILO on capacity building for staff of Investrust and Zanaco.The Female and Male Operated Small (FAMOS) check was developed as one of the toolsto facilitate financial institutions to have a fresh look and have a systematic assessment of


the extent to which they target and servewomen entrepreneurs, their needs and theirpotentialities. The self-checker has beeninstal led on the website of ZambiaDevelopment Agency website where all SMEscan do their own assessment before goingto the Bank to ask for financial assistance.Some adjustments still need to be done beforeit is fully operational.

4.8.3 The SME credit scoring tool (LoanCom)has been made operational and looks at SMEprofile, financial and non-financial parameters. In addition 30 business development serviceproviders have been trained on managementand financial skills. Out of 60 SMEs targetedfor training for the period, 74 have receivedtraining (123% achieved).

4.8.4 The program has also trained 12Business Associations, providing the muchneeded forum between Bankers and SMEs(potential Clients) to understand requirements,processes and procedures and establish adialogue platform.

Aid Coordination andPolicy Dialogue5

5.1.1 Consistent with the principles enshrined in the Paris Declaration (PD) and AccraAgenda for Action (AAA), the Bank has played a very active role in the various coordinatingefforts in Zambia.

5.1.2 The Cooperating Partners Group (CPG includes the World Bank, the EU, DFID,Germany, Ireland, Sweden, Finland, Netherlands and Norway - as well as close to 20 otherdiverse macro and thematic sector advisory groups (SAGs). The Bank convened and chairedsix Cooperating Partners Group (CPG) meetings that discussed key issues including post- Busan updates, SNDP developments, conference of Parties 17 outcomes, JASZ II/mutualaccountability framework, joint graduated response to corruption, assessment of the annualprogress report for the FNDP, key living conditions monitoring survey 2010, Zambia’spreparations for Rio +20 and the trajectory of aid graduation and scaling up nutrition andthe 1000 days program. The division of labour 2012-2015 (JASZ II signatories) is presentedin Annex 6.

5.1.3 The Bank also convened four key meetings with the Secretary to the Treasury (ST)as a platform of discussion on matters that affected both the GRZ and CPs. The topicsdiscussed bordered on a follow up on the Auditor General’s report on the road sector andthe status of the Road Development Agency Board; Joint communiqué leading to the MutualAccountability Framework on Aid and Development Effectiveness; re-instatement of theAbuse of Office Clause, Climate Change mechanisms; and Review of Salaries and Conditionsof Services instrument.

5.1.4 Key achievements of the Bank as Chair of the CPG was to successfully hold twohigh level discussions on Government priorities and the CPG-GRZ engagement framework.In addition, the Bank also made significant inputs towards the organization of a High LevelPolicy Dialogue (HLPD) in November 2012, between the CPs and GRZ focusing on thediversification and transformation of the Zambian economy.

5.1.5 As a Chair of the CP Agriculture Sector, the Bank prepared a discussion paper onAgriculture Diversification for Job Creation and this was discussed at a High Level PolicyDialogue Conference organized with the Government and the UNDP. The Chair alsoorganized and led a joint tour of the CPs to Nansanga Farm Block in Serenje District, 400kmfrom Lusaka. This helped the CPs to understand the concept and progress made byGovernment in implementing the farm blocks.

5.1.6 The Bank also chaired the CP Water and Sanitation Sector. The Bank coordinatedthe preparation of the Mid Term Review Report on the National Rural Water Supply andSanitation program, led two policy dialogue discussions with the Ministers of Local Government& Housing and of Mines, Energy and Water Development on key water sector issues and



priorities. As part of the water sector group, the Bank continues to provide input in thedevelopment of the new water and sanitation policy.

5.1.7 The Bank was active in the Transport Sector Group. The Bank’s interventions in thesector with the Nacala Road Corridor Phase II and the Kazungula Bridge Project has nowpositioned the Bank in the lead. Donor coordination among Development Partners (DPs)occurs through the Road Sector Donor Group (RSDG). The group, which meets monthlyand bi-annually in a Joint Donor Forum, has been led by the by the EU in 2012. RSDG aimsat harmonizing the approach taken by DPs with regards to institutional, policy and projectspecific financing and implementation matters. The group serves as a platform for interactionswith the Government to ensure that results and outcomes are achieved as per agreedindicators.

5.1.8 The cooperating partners and the government of Zambia have agreed to support theAfrican development Bank to Chair of the Transport Sector Donor group as from 2013. TheBank in cooperation with other partners in the sector has supported the executing agenciesin capacity building in procurement and financial management through projects and technicalassistance and has participated in the strenthening of the institutions by supporting measuresto address the concerns raised in the Road sector Audit Report by the country’s AuditorGeneral.

5.1.9 As part of efforts to enhance collaboration and leverage additional resources, theBank continues to work closely with other development partners on the projects in theportfolio. These Partners include a multitude of Donors in the PRBS IV, Finland (for the SmallScale Irrigation Project), the Governments of Zambia and Botswana and JICA (for theKazungula Bridge Project), the EU (for the Nacala Corridor Road Project), and Collaborationwith, EIB, DBSA and AFD (for the Itezhi Tezhi Hydro Power Generation and TransmissionLine Project).

Analytical and KnowledgeWork6

6.1.1 The Bank is currently supporting thisinitiative. The aim is to promote transparencyin the use and distribution of revenuesgenerated by the development of eachcountry’s extractive industry. The presentscope of the EITI in Zambia is focused on themining sector, with plans to include otherextractive industries in the future. The mainobjective is to disclose what extractiveindustries pay to Government and whatGovernment receives in order to boosttransparency and accountability in theextractive industry.

6.1.2 The EITI is being implemented by theZambia EITI Council, (ZEC) which is chairedby a senior official appointed by Governmentand has an equal representation of councilmembers from the mining companies, civilsociety and Government. Upon successfulcompletion of this initiative, this initiative wouldimprove revenue transparency in the miningindustry and increased domestic resourcemobilization from the mining industry. Theultimate beneficiary of EITI implementation inZambia will be the citizen who will derivemaximum benefit from their natural resourcesthrough transparent and accountableexploitation of these resources.

6.1.3 In 2012, Zambia’s EITI was declaredcompliant by the EITI Board in September2012. However, one major challenge whichZambia and other countries face is in thereporting due to the laborious process of datacollection from the extractive companies andGovernment agencies. This challenge needs

to be addressed a web-based or online e-services platform that would be robust, secureand easy to use accurate reporting bycompanies.

Figure 22: Mining Activities in Zambia(Credit: EITI Zambia)

6.1 Extractive Industry Transparency Initiative (EITI)



6.2.1 The Joint Development InformationCentre (JDIC) was established on 12 June2008 as a joint initiative between the AfricanDevelopment Bank and the World Bankcountry offices. The Centre provides a onestop shop for information to the Zambiangeneral public, policy makers and civil societyorganizations on various development issues.The Centre conducts and provides space fordialogue on a variety of development issues,in order to widen the scope of understandingof current issues. The purpose is to give anopportunity to different groups of people, civilsociety, private sector, youths and others, toshare and exchange views on subjects ofmutual interest, which are compatible to thedevelopment of the country.

6.2.2 The center provides key services tothe public including publications and onlinedatabases on a wide range of sectors thatthe two Banks deal with. Knowledge providedby JDIC is anchored on the Banks strategicoperational priorities and the developmentchallenges ensuring that knowledge activitiesserve the priorities of the Bank and the RMCs.

6.2.3 The JDIC provides an invaluableknowledge base for all to use. Knowledge ispower, which can bring about developmentand progress for individuals and for the nationas a whole and the center is contributingtowards this aspect, by providing knowledgethat is responsive, policy-oriented and relevant.

6.2.4 The Joint Development informationCentre in 2012 had more than 3,000 visitorsfrom different backgrounds and institutionsseeking information. The Bank distributedmaterials to different stakeholders includingcooperating partners, government and private. Other events such as the high level policydialogue meetings that attracted people from

different countries and regions provided anopportunity to share materials increase Bank’svisibility. ZMFO also shared materials fromthe Bank at the book launch sponsored bythe Bank for a Zambia in November 2012.

6.2 Joint Development Information Center

Finance and Administration77.1 Budget Execution

7.1.1 The Zambia Country Office received a total administrative budget allocation of UA1.05 million for the year 2012, an increase of 12% over previous year’s allocation of UA 0.95million. Of this budget allocation, approximately 65% was assigned to staff costs, 13% wasassigned to workload expenses and the balance of 22% covered the category of generalexpenses. Annex 2 provides the total budget utilization by cost category.

7.1.2 By the year end 31 December 2012, a budget execution rate of 96% was attained.In addition, a total balance of USD 357,000.00 was transferred to the Country Office tofacilitate the hosting of various workshops and dialogues that drew participants and facilitatorsfrom COMESA, SADC, UNECA, African Union Commission, other regional member countriesand non-regional member countries.

7.2 Workshops and Meetings

7.2.1 In line with the Bank’s Knowledge Management Strategy, the Zambia Country Officein collaboration with various Sector Departments contributed to the capacity building, policyanalysis, dialogue exchange and dissemination of development responses and resultsthrough the hosting of workshops and policy dialogues.

7.2.2 The Long Term Strategy Consultation meeting was successfully hosted with theMinistry of Finance and National Planning, whilst the High Level Policy Dialogue on YouthEmployment engaged stakeholders from Zambia, Angola, Madagascar, Malawi, Mozambiqueand Mauritius. The Statistics Department of the Bank’s organized two workshops aimedat building capacity in regional member countries including COMESA and SADC. The QualityAssurance and Results Department held a Regional consultation on Integrated SafeguardsSystems. A summary of the consultations held is outlined in Annex 3.

7.3 Human Resources Management

7.3.1 During the course of the year concerted effort was made to identify appropriatelyskilled technical expertise to augment the staff complement of the Zambia Country Office.Consultants were engaged for specific assignments including aid coordination andharmonization, and economic and sector work. List of staff for 2012 is presented in Annex4.

7.3.2 As part of the Bank’s decentralization strategy staff participated in a regionalprogramming retreat with the South Africa Regional Centre in Maputo, Mozambique underthe theme “Fostering best practices for efficient collaboration between the ORSB Regional



Department and the Southern Africa Resource Centre (SARC)”. The result of the meetingwas a documented action plan for implementation of strategies with respective roles beingclearly defined for effective results.

7.3.3 The Ethics Officer and the Ombudsperson engaged with the Country Office for teambuilding sessions during the course of the year. The first team building effort focused ongarnering confidence within teams for conflict resolution and forestalling retroactiveengagements. For the second team building session staff participated in role plays for casestudies and team dynamics.

7.3.4 The staff members continue to benefit from the Compensation Reform being undertakenby the Bank Group and taking into consideration the uniqueness and diversity of issuesaffecting benefits and compensation in the local economic environment. The HumanResources Department approved the revision of Education Benefits for dependents of staffmembers to ensure that the benefit was actually reflective of local educational cost structureand could be applied universally. The Medical Benefits Plan has also taken into considerationthe fee structure in COMESA, SADC and other African countries to widen the base oftreatment options for all staff members. The Bank continues to review on an annual basisall benefits and compensation to staff in comparison with other key employers in the country.

7.4 Capital Expenditure and Contractual Obligations

7.4.1 As a direct response to the expansion of the functions of the Country Office, tenderswere floated for the acquisition of office furniture, office equipment, office renovation andrehabilitation works and the air-conditioning system. It is worthwhile noting that the majorityof the successful bids will eventually be awarded to do business with institutions based inZambia thus increasing the interaction of the Country Office with the business communityin public procurement.

7.4.2 Following assurances during the Annual Meeting held in 2012 in Arusha, Tanzania,the Government of the Republic of Zambia allocated land to the Bank Group for thedevelopment of an office complex. The title deeds were handed over to the Bank GroupPresident Dr. Donald Kaberuka during his visit to Zambia in December 2012. The CountryOffice is working with CGSP to provide adequate protection of this asset.

7.4.3 The Government, in 2012, issued Statutory Instrument No 33 (The Bank of ZambiaCurrency Regulations) Act which reinforces the local Zambian Kwacha Currency as legaltender for all domestic transactions. This affected all existing contracts which were previouslydenominated in foreign currency. To effectively comply with this enactment, additional budgetresources of about 7,000UA were required for affected contracts. In addition StatutoryInstrument No 46 of 2012 (The Minimum Wages and Conditions of Employment Act)compelled the Country Office to ensure that all contractors and service providers seekingto continue transacting business with the Bank had to provide substantial proof thatemployees engaged with respect to relevant contractual obligations were in full compliance

of this statutory instrument. The cost of implementation of this Act by service providers wastransferred to the Bank for existing contracts with respect to management and maintenanceof the office building.

7.4.4 The Government of Zambia, on 23rd January 2012, approved the Central Bankdirectives for rebasing of the local Zambian Kwacha currency effective 1st January 2013.Accordingly, the Country Office revised all its finance and accounting online and physicaltransactional processing to conform to the rebased local Zambian Kwacha currency.



Information Technology88.1 IP Telephony

8.1.1 In 2012, a new IP telephone system running on a Switchvox SMB AA305 server wasinstalled. While a Switchvox is a robust system, it is simple to manage. This system has avoice mail facility, Interactive Voice Response (IVR) functionality and the ability to route callsbased on least call routing configuration thereby reducing phone bills. The new telephonesystem also includes two Sound point IP 7000 conference phones which have greatlyimproved the user experience during conference calls, because calls are in high definitionsound.

8.2 High Definition Video Conferencing

8.2.1 The new Video Conferencing (VC) equipment installed at ZMFO comprises the HDX8000 HD codec, two High definition 42” LED screens and an eagle eye camera. The newVC equipment boasts the innovative eagle eye camera technology which uses two camerasand an array of five microphones. During a session the system uses the two cameras andmicrophones to track the speaker and zooms onto him/her.

8.2.2 The new VC system uses a different technology for compression and hence saveson bandwidth while increasing picture and voice quality. Two 42” screens are connectedto the codec, this allows for content mixing. During a VC that requires power point presentation;one screen would be used for viewing the far site and the other screen for the power point.The facility also has the Converged Media Access (CMA) is a desktop application used forvideo conferencing. CMA is meant to be used as an alternative to the conventional VCespecially when there is only one participant. It is also cheaper in terms of bandwidth usage.

8.3 Network Security and Resilience

8.3.1 In order to further improve IT service delivery CIMM embarked on a project that wouldsee the introduction of last mile optic fiber connectivity to the FOs. Security on the Linkswas also improved. With the current architecture the FOs now have connectivity to ALL ITservices with or without the traditional VSAT link.

Annex 1: Comparative Socio-EconomicIndicators



Annex 2: ZMFO Budget 2012 Utilizationby Cost Category

• Workload expenses are related to missions and consultancies undertaken by theField Office

• General expenses relate to staff training 8%, costs related to the occupancy andmaintenance of the office building 66%; costs related to maintenance and repairs13% and communication costs 13%.

• Staff Costs include benefits to all Country Office staff

Summary of Consultancy contracts awarded during 2012

2012 Expense category Total Budget (UA) Total Expenditure (UA) Budget Utilisation (%)

Workload Expenses 133,000.00 117,000.00 88%

General Expenses 232,000.00 213,000.00 92%

Staff Costs 693,000.00 686,000.00 99%

Total 1,058,000.00 1,016,000.00 96%

Contract Title

PCR - Central Province Eight Centers Water

Supply and Sanitation Project

Donor Coordination Consultancy (January to

June 2012)

Donor Coordination Consultancy (July to

December 2012)

Zambia Association of Manufacturers Audit

Consultancy

Youth Employment - Zambia Skills Study -

Labour Analysis Report

Youth Employment - Zambia Skills Study -

Macro Economics Report

Country Strategy Paper and CPPR - Mid

Term Review - Macro Economist

Approximate Value

UA 8,300.00

UA 21,000.00

UA 19,000.00

UA 12,200.00

UA 16,500.00

UA 16,500.00

UA 11,500.00

Status

Completed

Completed

Completed

Ongoing with

revised TOR

Ongoing

Ongoing

Completed

Annex 3: Workshops and DialoguesMeetings

Workshop

Long term strategy consultationmeeting4 April 2012

Regional Consultation forSouthern Africa on Bank’sIntegrated Safeguards System18 – 20 April 2012

Zambia SME Support Program– Stakeholders Workshop5 July 2012

High Level Policy Dialogueseminar on youth employmentin Africa9 July 2012

Workshop on compilation ofGDP by expenditure usingcommodity flow approach23 July to 3 August 2012

Workshop on preparing data forMDB indicators30 July to 3 August 2012

Main objective

To convene varied stakeholdersand invite reflection on how theBank can consolidateachievements and be moreeffective and participatory infuture

To revise and update policiesand procedures forenvironmental and socialsafeguards in consultation witha wide range of stakeholders

To enhance Zambia’s SMEscompetitiveness and access toFinance by engaging withvarious stakeholders

To invite stakeholders toexchange views on Thechallenge of youthunemployment, issues,opportunities and experiences

Workshop held in conjunctionwith ESTA Department,COMESA, SADC membercountries and Government ofZambia ZAMSTATS

Workshop held in collaborationwith UNECA and Africa UnionCommission

Key issues raised

Private sector involvementYouth employment and skillsdevelopmentCapacity building for domesticresource mobilizationGood governanceSustainable economic growthwith climate changemanagement and effectiveresponse to global crises

The purpose of the consultationprocess is to enable keystakeholders to actively engagewith the Bank in the design ofBank’s Integrated SafeguardsSystem

To obtain feedback from variousstakeholders on outcomes,impact, lessons learnt and futureprospects of SME financingdevelopment

Youth population providesopportunities for demographicdividendsCountry experiences reflectingon initiativesYouth employment prioritizationon development agenda

To review methodologicalaspects of commodity flowapproach

To build capacity of countries toprepare metadata on thedevelopment indicators toimprove data quality and resolvediscrepancies of data betweennational and internationalstatistics

Outcomes

Bank’s future role in Zambiaand the region as a knowledgebroker and driver of change

Improve quality and relevanceof ISS and promote commonunderstanding and correctformulation of safeguards policystatement

Various feedback to be usedfor design and implementationof future interventions andprograms

Bank to continue sharingexperiences on initiatives andleverage joint initiatives onimproving youth employmentpolicies, inclusive growth,investment in HEST and publicprivate initiatives that promoteyouth employment

In accordance with StatisticalCapacity Building Program III2012 – 2013 of the Bank for theimprovement, collection andanalysis of economic, nationalaccounts and labour statistics

The Bank’s data portal will besignificantly enhanced by theinclusion of metadata andprovision of accurate and timelystatistics towards MDGs



Annex 4: Staff List of Zambia CountryOfficeNo. Name Job Title Ext No

1 Freddie Kwesiga Resident Representative 6400

2 Maureen Wanga Secretary to Resident Representative 6401

3 Miriam Msuku Secretary/Receptionist 6402

4 Philip Boahen Principal Country Program Officer 6403

5 Patience Ugonma Ekoh Senior Education Analyst 6404

6 Lewis M Bangwe Agriculture Specialist 6405

7 Mothobi Matila Principal Macroeconomist 6406

8 To assume duty in 2013 Principal Country Economist 6407

9 Natan Jere Procurement Officer 6410

10 Namakau Katundu Admin/Finance Assistant 6411

11 Paul Machona IT Telecom Officer 6412

12 Kennedy Wishimanga Library Assistant 6416

13 Herbert M Chinokoro Water and Sanitation Expert 6417

14 Chilala Chikuba-Watae Disbursement Assistant 6418

15 To assume duty in 2013 Transport Engineer 6420

16 Peter Zulu ZMFO Driver 6421

17 Evans Mubanga Resident Representative Driver 6422

18 Vacant Finance and Administrative Officer

19 Vacant Private Sector Officer

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Notes

zambia country office annual report 2012

Documents