Transcript Resources, Decentralisation, Pov Reduction

Resource Allocation and Flows,
Decentralisation, and Poverty Reduction:
The Case of Rural Water Supply and
Sanitation in Zambia
Research Team:
Eric Gutierrez
Webby Wake
Savior Mwumbwa
WaterAid, Regional Advocacy and
Research Adviser for Southern Africa
University Zambia, Acting Chair,
Department of Economics
WaterAid, Research Officer
Outline of Presentation
Brief on the Annual Budget Process
 Findings of the study
 Estimating finances needed to meet MDGs

Notes on the Budget
Poverty Reduction
Strategy Paper 2002-2004
(Multi-stakeholder
consultations)
Transitional National
Development Programme
2002-2005 (Multi-stakeholder
consultations)
Medium-Term Expenditure
Framework 2003-2005,
(Ministry/ Sectoral Advisory
Groups)
Public Investment
Programme 2002-2005
(Ministry of Finance)
Annual Budgets
(Parliament)
Tools for shaping and structuring the
Annual Budget
The Resource Envelope
Source
2002
Projection (as
percentage of GDP)
Tax revenue
18.4% of GDP
2,940
($588 m)
External support
5.6% of GDP
891
($178 m)
Deficit Financing
7.3% of GDP
1,168
($234 m)
Total for 2002
2003
4,999 ($1000 m)
Tax revenue
18.5% of GDP
3,403
($681 m)
External support
5.3% of GDP
986
($197 m)
Deficit Financing
4.3% of GDP
787
($157 m)
Total for 2003
2004
Amount in kwachas
(1 = 1 billion)
5,176 ($1035 m)
Tax revenue
18.6% of GDP
3,782
($756 m)
External support
5.1% of GDP
1,043
($209 m)
Deficit Financing
4.1% of GDP
832
($166 m)
Total for 2004
Source: PRSP, May 2002
5,657 ($1131 m)
Finance Ministry
calls for budget
submissions
April
Budgets made by
all spending
bodies
May
Head offices
consolidate budget
submissions and
sends them to
Finance Ministry
June-July
THE BUDGET PROCESS OF
ZAMBIA (IN THEORY)
Parliament
approves the
budget for the
following year;
Appropriation Act
Parliament
deliberates on the
budget; conducts
budget hearings
“Estimates”
produced and sent
to Parliament for
approval
December
Sept - November
August
Finance Ministry
calls for budget
submissions
Budgets made by
all spending
bodies
April
Aug-Sept
Head offices
consolidate budget
submissions and
sends them to
Finance Ministry
December
Parliament
approves
Appropriation Act
THE BUDGET PROCESS
OF ZAMBIA (IN
PRACTICE)
March
Parliament deliberates the
budget as ‘committee of
the whole’
Jan - March
“Estimates”
produced and sent
to Parliament for
approval
January
With no legislative
authorisation for a
budget when the
financial year starts,
President issues a
warrant authorising
release of funds from
Treasury.
Findings
2001
Heading
Ministry
Line item in the Budget
Authorised provision
02/03
OVP-DOR
Water Supply and Sanitation
13/01
MEWD
Grants to the Water Board
550,000,000
602,970,213
13/01
MEWD
Grants to NWASCO
550,000,000
324,037,330
13/03
MEWD
Poverty Reduction Programme - Rural Water
(Boreholes, Wells)
17,873,404,000
5,345,856,860
13/03
MEWD
Strengthening of Hydrological Stations
450,000,000
551,473,891
13/03
MEWD
Rural Water Development - Eastern Province
200,000,000
118,313,774
13/03
MEWD
Drought/Flood Mitigation
500,000,000
49,079,881
13/03
MEWD
Zambezi River System
110,000,000
97,936,129
13/03
MEWD
Hydrological Assessment and Strengthening of
Network
300,000,000
503,292,132
13/03
MEWD
Rehabilitation/Construction of Earth Dams
593,460,000
765,414,946
13/03
MEWD
Kafue Basin Action Plan
200,000,000
199,510,847
13/03
MEWD
Rural Water Supply Program - Eastern Province
6,600,000,000
839,946,612
13/03
MEWD
Chongwe Multipurpose Dam
185,690,000
167,987,110
13/03
MEWD
Ground Water Monitoring and Exploration
339,790,000
759,293,828
13/03
MEWD
Hydrogeological Mapping
184,800,000
26,252,234
13/03
MEWD
Water Resources Information Center
33,970,000
45,970,000
13/03
MEWD
Water Resources Action Programme
235,400,000
220,422,830
13/03
MEWD
Rural Water Supply and Development Support
116,000,000
350,520,316
13/03
MEWD
Rural Water Development for Drought Prone Areas
5,175,000,000
228,662,340
20/01
MLGH
Livingstone WSS Services
20,300,000,000
6,945,525,023
20/01
MLGH
Six Townships Water Supply - NW Province
20/01
MLGH
Lusaka Water Supply Scheme (Rehabilitation of
Distribution System)
50,000,000
Actual expenditure
-
790,000,000
-
10,500,000,000
-
1. Allocations in the Budget are
Greater than the Resource Envelope
Year
What the resource
envelope provides, if
divided equally over
three year
Capital expenditures
budgeted for water
and sanitation
Actual
expenditure
2002
70.6 billion K ($14.13m)
135.7 billion ($27.1m)
No figures yet
2003
70.6 billion ($14.13m)
152.1 billion ($30.4m)
No figures yet
2004
70.6 billion ($14.13m)
No figures yet
No figures yet
Source: PRSP, May 2002 and Estimates of Expenditures, 2002 and 2003.
2. Great variance between
provision and actual expenditure
Year
Authorised
Provision for water
and sanitation
Actual Expenditure
for water and
sanitation
Expenditure/
Provision
1999
35,974,179,010
3,473,308,922
9.65%
2000
52,213,690,709
8,176,348,001
15.65%
2001
197,587,575,884
48,787,082,154
24.70%
2002
135,696,095,997
No figures available
-
2003
152,107,960,726
No figures available
-
Source: Consolidated from 1999, 2000 and 2001 Financial Reports and 2002,
2003 Estimates of Expenditures. See Annex 1 for breakdown.
Table 7 – Comparison of Authorised Provision and Actual Spending
on WSS Capital Expenditures,
Ministry of Energy and Water Development, 1999-2001
Year
Authorised
Provision for water
and sanitation
Actual Expenditure
for water and
sanitation
Expenditure/
Provision
1999
28,220,854,000
553,648,165
1.96%
2000
13,591,979,000
614,906,368
4.52%
2001
34,197,514,000
11,196,941,273
32.74%
Source: Consolidated from 1999, 2000 and 2001 Financial Reports and 2002, 2003 Estimates of Expenditures.
3. Local authorities have little say in the
allocation and decision-making on
resources
• Local officials get to know about allocations only if central
offices inform them
• Local government personnel and machinery lie idle for
most of the year because no funds are released (even
when they are approved)
• District governments do not have the power to budget for
capital expenditures, only salaries and other recurring
expenditures.
4. The budget process appears to be
unsystematic and unclear
• Are the tools for the annual budget (PRSP, TNDP, PIP)
actually being used as tools?
• Lack of clarity between the functions of the MEWD and the
MLGH.
• MFNP identified as spending body for WSS capital
expenditures; not clear from budget whether this ended up in
MEWD
• Some bodies bid for more money than they can spend,
because it will be cut anyway.
• At the end of the year, unspent sums are transferred to other
accounts
• Parliament does not engage critically in the budget process.
5. WSS financial resources could easily
be redirected away from unserved into
better-served areas.
• Urban centres getting the lion’s share of allocations for
projects that were not identified as priorities for
expenditure under the PRSP.
• Not clear if poor peri-urban areas are prioritised under
these allocations.
6. Donors provide 70-80% of allocations
to WSS sector, and are driving much of
the process.
• On-budget donor support up to 70% of total spending;
including off-budget, it could reach 80%
• With this leverage, why have donors not pushed for
decentralisation reforms in WSS?
• Certain donor-supported sectoral reforms are evident,
e.g. privatisation of urban water utilities.
Table 10: Identified On-budget Donor-Supported Items in the
2001 Zambia National Government
Budget Allocations for Water and Sanitation
Description of Item
Donor and amount provided
Actual
Expenditure
20,300,000,000
19,800,000,000 KfW loan
6,945,525,023
Six Townships WSS NW Prov.
790,000,000
600,000,000 KfW loan
-
Lusaka Water Supply Scheme
10,500,000,000
9,810,000,000 ADB/AFD loan
-
1,675,000,000
1,225,000,000 ADB/AFD loan
850,000,000
670,000,000 KfW loan
Urban Restructuring &
Expansion of Water Supply
2,835,000,000
1,800,000,000 IDA grant
1,397,362,981
Improvement of Water Supply
of NW side of Lusaka City
7,750,000,000
6,500,000,000 EU grant
1,000,012,830
31,869,398,000
15,304,732,000 ADB loan
2,583,641,500
139,974,804,000
99,193,532,000
14,881,980,416
Livingstone WSS Services
Kitwe Water Supply Scheme
Solwezi WSS System
Lusaka Water Supply
Rehabilitation Project
TOTALS
Authorised
provision
402,854,193
-
Source: pages 147 to 155 Estimates of Revenue and Expenditure, 2002. Source for column on actual expenditure are pages 168-175 of Financial Report, 2001.
7. The approach to WSS provision is
largely an engineering solution.
8. Sanitation is not on the agenda
Estimating Finances Needed
to Meet MDGs
Starting Baseline – 1993-97 Water Point
Inventory of Zambia
Province
District
Southern
Choma
Southern
Rural Popn
No of WP
WP in use
WP NIU
WPD all
WPD IU
142,596
298
223
75
2.09
1.56
Gwembe
41,326
72
50
22
1.74
1.21
Southern
Kalomo
197,875
299
189
110
1.51
0.96
Southern
Mazabuka
136,918
389
233
156
2.84
1.70
Southern
Monze
115,868
454
327
127
3.92
2.82
Southern
Namwala
90,420
390
263
127
4.31
2.91
Southern
Siavonga
30,395
88
28
60
2.90
0.92
Southern
Sinazongwe
63,794
130
66
64
2.04
1.03
Western
Kalabo
87,817
114
101
13
1.30
1.15
Western
Kaoma
135,059
178
125
53
1.32
0.93
Western
Lukulu
53,355
118
103
15
2.21
1.93
Western
Mongu
108,796
402
296
106
3.69
2.72
Western
Senanga
136,912
552
432
120
4.03
3.16
Western
Sesheke
61,574
124
98
26
2.01
1.59
Calculate what is needed to bring WPD in
each district to 4 water points per thousand
Table 5: Projections on the needed growth in number of
rural water points in Kaoma District, Western Province, Zambia
Year
Rural Population
Estimates
(constant growth
of 3.3%)
2003
162,779
2004
168,151
2005
New Water
Points
Added
Number of Water Points
at the End of the year
Water Point
Density at
end of the
year
192
1.18
64
256
1.52
173,700
64
320
1.84
2006
179,432
64
384
2.14
2007
185,353
64
448
2.42
2008
191,470
64
512
2.67
2009
197,788
64
576
2.91
2010
204,315
64
640
3.13
2011
211,057
64
704
3.34
2012
218,022
64
768
3.52
2013
225,217
64
832
3.69
2014
232,649
64
896
3.85
2015
240,327
64
961
4.00
Make national projections
• Total number of water points needed each year – 1813
• Very rough calculation of cost – K 45 billion ($9 million) each year;
reductions can be made if inventory is updated, and lower-cost technology
options chosen.
• This figure looks high but is not unaffordable. This is also high-value
investment because of the impact of water provision on economic productivity,
health and primary education.
• Note: Equity in distribution is not shown here
• Cost of updating inventory -- $1000 per district, at most 1 month work in each
district, involving 8-10 local district and D-WASHE personnel; includes local
district-level planning workshop
Some Recommendations
• Undertake local level planning that is consolidated at district level
• Decentralise financial allocation and decision-making through conditional
grants from national to district governments (e.g. Uganda experience)
• Strengthen budgeting mechanisms; non-state actors can lobby for the
institutionalisation of budget reforms.