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Developing the Poverty Reduction Strategy Paper in Zambia Background:

Zambia is one of the heavily indebted poor countries. In December 2000 the World Bank and IMF agreed a debt reduction deal for Zambia. Given that Zambia is one of the poorest countries in the world with:
  • Life expectancy of 44 years

  • 4/5 of the population falling below the poverty line of $1 a day
the country clearly needed 100% debt cancellation. Their debt deal fell far short of this. In order to get debt reduction however, Zambia had to develop a poverty reduction strategy with the participation of civil society. The Zambian participation process is interesting for us in Ireland where there has been substantial experience with partnership agreements which involve the community sector as well as business, trade unions and the government.In Zambia, there were two separate but interacting processes:

Government lead process:

The government set up working groups to produce papers which would feed into the poverty reduction strategy. Working groups covered: macroeconomics, agriculture, tourism, industry, mining, health, education, governance. Each working group was chaired by government official, and was made up of officials, business, academics, trade unions, NGOs, World Bank, UN agencies and bilateral donors. Government advertised for and selected the civil society participants.A government technical committee produced a draft PRSP on the basis of papers produced by the working groups. Government also carried out a consultation process in the provinces.

Civil Society Process:

This was a separate process but it interacted with the government one. The aim was to make a direct contribution towards the final PRSP document. Civil society involvement which started in September 2000 was coordinated by Civil Society for Poverty Reduction (CSPR), a coalition of 100 groups including trade unions, chamber of commerce, and a range of NGOs. CSPR was serviced by a full time coordinator and assistant.CSPR formed consultative groups on : agriculture and food security; education, youth and child development; environment; gender; health/AIDS; industry, employment and sustainable livelihoods; mining. Each group produced a situation analysis. Some of the members of the CSPR working groups also took part in the government led working groups.CSPR also carried out consultations in the provinces. They selected 4 of the poorest provinces and focussed on the four or five poorest districts within these in order to give a voice to those living in poverty.CSPR produced a report including the papers from the various working groups and from the provincial consultations. This very substantial and informed document was submitted to the government.

Among civil society’s concerns were:
  • Civil society representation on the working groups was low.

  • Government’s consultation in the provinces was inadequate. Involvement seemed limited largely to government nominees and chiefs from villages rather than the poor.

  • PRSP could be another form of structural adjustment. Although the IMF and World Bank were not perceived as overtly trying to control the participation process, many civil society groups participants feared ‘the ‘Hidden Hand’ of the BWIs.

  • Not enough time to look at alternatives particularly in the macroeconomic group
There was however, a significant degree of consensus among civil society organisations - TUs, Church, business, women’s sector, NGOs, academia – that they should participate in the PRSP.

Bilateral Donors and the PRSP

Bilateral donors like Ireland Aid were members of the government led working groups. Many of these were supportive of civil society – providing funding and information. While major policy differences between civil society and the donors did not appear to have arisen during the process, there was some feeling from civil society that
  • there were too many donors in some of the government working groups

  • while donors had a right to be there and put their point of view as they are stakeholders, ultimately their role should be as observers

  • donors come sometimes with set models which they press on local people; models which may not be appropriate.
Role of IMF and World Bank

On the whole the IMF and World Bank were seen as encouraging the process. The World Bank was a member of most of the government led working groups. According to a World Bank representative they were trying to be neutral. They gave information but not technical advice in case they are seen to be influencing the outcome.The IMF was an observer in the government led macroeconomic working group but did not contribute to the discussion although the government urged him to do so. He was under strict orders from Washington not to take part. One perception of this was that the IMF couldn’t win. He was criticised if he did participate and he was criticised if he didn’t.

IMF and World Bank have final say

In spite of the way the IMF and World Bank operated, Civil Society groups were concerned at the IMF and World Bank’s powers to endorse/not endorse the final PRSP. Although the poverty strategy is meant to be a Zambian plan, it has to be passed by the IMF and World Bank before the agreed debt reduction will be released. When groups tried to clarify the criteria which the institutions use, they never got a satisfactory answer. This is not surprising because the issue of endorsement of poverty reduction strategies poses a dilemma for the IMF and World Bank. If they admit they have criteria for judging PRSPs, then this immediately undermines the principle that the country decides what are the best policies to reduce poverty. Because no one believes the IMF and World Bank have really disengaged, the two scenarios facing civil society are a) the IMF and World Bank refuse to endorse a Zambian home grown programme; b) the hidden hand of the BWIs’ guides the PRSP so they end up with a rehash of structural adjustment. The IMF and World Bank’s right to right to refuse to endorse a complete national development plan generates considerable mistrust among civil society groups.

Ireland Aid in Zambia

Zambia has been priority country for Ireland Aid since the late l970s. Ireland Aid’s programme is now moving from funding projects to supporting government plans for the education and health sectors. Aid from various donors including Ireland Aid is put into a central fund to finance an agreed set of activities in the particular sector. Ireland Aid’s focus is on monitoring the government’s implementation of the agreed programmes rather than on direct project implementation by themselves. This has made a considerable change in how Ireland Aid operates. For example, the Irish programme used to employ 300 people in Zambia’s Northern Province where the programme has been concentrated but as a result of the changes, they now only employ 30.

Ireland Aid and the PRSP

Ireland Aid is supportive of the PRSP approach and the final document will shape the next Ireland Aid country strategy. Ireland Aid was a member of two of the government working groups – on health and education. They haven’t been involved in supporting civil society groups in the PRSP process - civil society groups didn’t apply to Ireland Aid as there were other donors ready to provide them with funds.

Conclusion

Poverty reduction is the stated aim of Ireland Aid’s programmes. However, as a member of the IMF and World Bank, Ireland may be supporting policies which undermines this aim. It appears that Ireland Aid’s programmes are in the future to be linked closely with Poverty Reduction Strategies which are ultimately controlled by the IMF and World Bank. If this is the case, Ireland must be far more proactive in calling for changes in how these bodies operate than it has been up to now. Among the issues which need to be tackled are:
1. Democracy at global as well as local levelIreland Aid is keen to see good governance at national level in countries like Zambia to which they provide aid. Democracy at national level is obviously a priority. However, many of the key decisions affecting Zambians are taken by global bodies like the IMF and World Bank. If the real aim is to improve democracy i.e. enabling people to call to account those whose decisions impact substantially on their lives, then parallel efforts are needed to achieve democracy at global level. Currently decision making at the IMF is controlled by the rich and powerful nations. There are no moves to define principles of global democracy for these bodies. If global bodies are not founded on democratic principles, then governance programmes at national level will end up promoting efficient client states to implement decrees of global bodies rather than accountability to the people of the country. The Irish government needs to clarify its position on the democratisation of the IMF and World Bank

2. Uncritical acceptance of IMF/World Bank programmes Ireland Aid’s Country Strategy Paper for Zambia appears to accept IMF policy uncritically. Zambia’s current difficulties are seen as flowing from not sticking to the adjustment programme started in the early 90s rather than seeing that programme as part of the problem. However, an independent review of IMF programmes in low income countries (ESAF) found that poor programme design in Zambia’s case led to escalating inflation and avoidable social costs. Unless Ireland takes a more critical approach to IMF/World Bank programmes, it could confirm civil society’s worst fears by supporting the hidden hand of the IMF and World Bank in the PRSP process.

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