The World Bank
Presented at:Vienna,July 2, 2009
Presented by:Brian Levy
AdvisorPREM Governance
Zambia:Governance, Political Economy
and Development Strategy
The World Bank
Page2Brian Levy
PREM Public Sector Governance
RELEVANCE FOR ZAMBIA: I
“By and large, agreeing on policies and programs was the easy part of the Bank’s relations with the government. The really difficult part was and continues to be implementation.”.
- Completion Report for 1999-2003 CAS
=> why?
The World Bank
Page3Brian Levy
PREM Public Sector Governance
SECTORAL REFORM IN ZAMBIA: PROPOSALS AND RESULTS
Proposed Reform Result so far Electricity sector restructuring
Unbundle generation, transmission and distribution; private concessions
Reforms rejected in 2003, after initial seeming agreement
Price rebalancing – electricity and water
Increase currently heavily-subsidized consumer prices towards cost recovery levels
No sustained real price increases since 2001
Introduce foreign participation into water and electricity sectors
- water: beginning in 1998, copperbelt facility operated by French management contractor, - electricity: invite foreign concessionaires to develop new generation facility
- water: management contract expired in 2006, and not renewed; - electricity: since 2003, parastatal provider taken responsibility for seeking investment resources (i.e. China); recent efforts to re-probe international markets
Strengthen regulatory framework for telecommunications
- cost effective interconnections; - liberalized international gateway
- regulator lacks authority; - liberalization of gateway rejected
Land policy and administration
Enhance legitimacy of rural and urban land market transactions by clarifying, simplifying and making transparent ‘rules of the game’
- 1995 Land Act resulted in very few concrete changes; - 2004 land allocation ranked bottom among public services - top Land Ministry officials charged with corruption in 2007; - limited follow-up consultations on 2006 draft Land Policy
Decentralization Devolve decision-making authority, functions and resources from central to local levels, and build local capacity, accountability and transparency
- Central government grants to local levels declined since 1987; - No follow-through with implementation of 2002 National decentralization Policy
The World Bank
Page4Brian Levy
PREM Public Sector Governance
ZAMBIA: GOVERNANCE DRIVERS OF DEVELOPMENT DECISION-MAKING
Authority is centralized in the presidency, which enjoys wide discretion.
Checks and balances institutions create enough space for citizen voice to ensure that impunity is not unbounded
An extreme tilt to the status quo is a consequence of Zambia’s ‘bounded impunity’
Elite economic nationalism is a resurgent part of Zambia’s developmenet discourse
The World Bank
Page5Brian Levy
PREM Public Sector Governance
ZAMBIA: HOW GOVERNANCE CONSTRAINTS INHIBIT SECTORAL REFORM
Electricity Telecomm-
unications Water Utilities
Land Admin-istration
Decentraliz-ation
Discretionary political management
***
**
*
***
***
Tilt towards Status Quo:
***
0
**
**
Private Influence Capture
*
*
0
*
0
Economic Nationalism
* ** * 0 0
*** = most politically salient
The World Bank
Page6Brian Levy
PREM Public Sector Governance
FEASIBLE WAYS FORWARD 1: GENERAL PRINCIPLES Seek out incremental POLICY reforms that are feasible
given a country’s political economy realiltiesStakeholder interests are key, and….Stakeholders want better results for concrete goals that matter to
them
Draw on knowledge of economically ‘optimal’ policies…as a ‘north star’ to help navigate change…….with the best route not necessarily the most direct one…
Consider options for strengthening INSTITUTIONS….institutions mediate between private interests and public
goals…….better policy and implementation with stronger capacity and
accountability….feasibility is also key for institutional reform
The World Bank
Page7Brian Levy
PREM Public Sector Governance
FEASIBLE WAYS FORWARD 2: ZAMBIAGOVERNANCE-ALIGNED SECTORAL REFORMS
Focus engagement narrowly – targeting very specific interventions where development goals are aligned with incentives of Zambian elitesElectricity generation: incentives of mining companiesTelecommunications: cost-based interconnection
Build local coalitions for change – organized around very specific interventionsUrban water and electricity distribution
oEngage consumer groups and business associations
The World Bank
Page8Brian Levy
PREM Public Sector Governance
RELEVANCE FOR ZAMBIA II: A DIFFERENT APPROACH TO WBG ENGAGEMENT
FROM…. …… ”should” ………… (prescription)
TO ……. ….. ”why?” ………….(seek to understand)
TO… “feasible next steps” .. (for poverty reduction),
..an approach, NOT a prescription…(more humility)
…but not a recipe for inaction!!!