Attachment J.11_ USAIDZambia 2019-2024_CDCS - Amendment I.pdf

APPROVED FOR PUBLIC RELEASE

A y o u n g g ir l w h o s e f a m ily i s p a rt o f a U

S A

ID

-s u p p o rt e d m ic ro

-f in a n c e p ro g ra m

COUNTRY DEVELOPMENT

COOPERATION STRATEGY

(CDCS)

JULY 16, 2019 – JULY 15, 2024

Amended: December 2019

CDCS AMENDMENT PREFACE

In December 2019, USAID/Zambia updated the CDCS to revise intermediate results (IRs) and sub-intermediate results (sub-IRs) under Development Objective (DO) 2: Rural poverty reduced through enterprise-driven inclusive economic growth. The overarching DO was not changed. The revisions to the IRs and sub-IRs (under DO2) were made to strengthen the logical framework for DO2, clarify the logical connections within the theory of change and to allow greater flexibility in technical approaches to achieve the DO. The revisions to the IRs and sub-IRs provide USAID/Zambia with a clearer path to achieving DO2.

Specifically, the revisions to focus on an improved business enabling environment will set the stage not only for greater private sector led inclusive growth, but also provide benefits to the private sector and civil society actors, ideally spilling across all USAID/Zambia technical sectors.

The shift towards strengthening rural enterprises will now be more targeted at measurable outcomes, such as income, investment and employment, and be more broadly defined to stimulate growth within, and outside of, the agricultural sector. Lastly, the revisions to the natural resources sub-IRs allow for USAID to more effectively engage with civil society and the private sector in addition to the Zambian government to improve management, address poverty as a principal driver of resource degradation, as well as explicitly state conservation as a core result in and of itself.

Whereas this update changes the results framework, it does not change the underlying narrative of the CDCS itself, which adequately describes the strategic technical approach and rationale under DO2. The revised Results Framework can be found on Page 3.

TABLE OF CONTENTS

ACRONYMS................................................................................................................... i

I. EXECUTIVE SUMMARY

II. COUNTRY CONTEXT

III. STRATEGIC APPROACH

IV. RESULTS FRAMEWORK

V. MONITORING, EVALUATION AND LEARNING

i

ACRONYMS

CDC Centers for Disease Control and Prevention

CDCS Country Development Cooperation Strategy

CLA Collaborating, Learning, and Adapting

CP Conditions Precedent

CSO Civil society organizations

DA Development Assistance

DO Development Objective

DOS Department of State

DRMU Domestic resource mobilization and utilization

ECZ Electoral Commission of Zambia

EGRA Early Grade Reading Assessment

FAO Food and Agriculture Organization

FY Fiscal Year

GBV Gender Based Violence

GHP Global Health Program

GRZ Government of the Republic of Zambia

G2G Government to Government

HIV Human Immunodeficiency Virus

ICS Integrated Country Strategy

IPP Independent power producer

IR Intermediate Result

J2SR Journey to Self-Reliance

M&E Monitoring and Evaluation

MoGE Ministry of General Education

MOH Ministry of Health

MRR Mission Resource Request ii

MWDSEP Ministry of Water Development, Sanitation, and Environmental

Protection

NRM Natural Resources Management

NSS National Security Strategy

PEPFAR Presidential Emergency Plan for AIDS Relief

PFM Public Financial Management

PHO Provincial Health Offices

PMI Program against Malaria Initiative

PMP Performance Management Plans

SIDA Swedish International Development Agency

SUN Scaling Up Nutrition

TA Technical Assistance

TaRL Teaching at the Right Level

UN United Nations

UNFPA United Nations Population Fund

UNICEF United Nations Child Fund

USAID United States Agency for International Development

USG United States Government

WASH Water Sanitation and Hygiene

WB World Bank

ZDHS Zambia Demographic and Health Survey

7NDP 7th National Development Plan

USAID/ZAMBIA CDCS 2019 – 2024 1

USAID/Zambia Country Development Cooperation Strategy, 2019 - 2024

I. EXECUTIVE SUMMARY

Motivated by USAID’s Transformation, and building on previous successes and lessons learned, USAID/Zambia has developed a new 2019 – 2024 Country Development

Cooperation Strategy (CDCS), to take effect in July, 2019, that aims to advance Zambia’s journey to self-reliance (J2SR) and make progress toward the ultimate objective of ending

Zambia’s need for development assistance. The CDCS goal statement is: USAID will partner with the Zambian government, civil society and private sector to advance the country’s self-reliance through more effective development choices and governance, enterprise-driven economic growth, and increased resilience among its vulnerable citizens.

This strategy seeks to unleash private sector investment and build local capacity to advance an alternative development path which generates solutions that are sustainable and do not mortgage the country’s future development potential and sovereignty. The strategy does not anticipate that Zambia will no longer need foreign assistance by the end of the CDCS implementation period. However, it establishes a vision for how to achieve self-reliance at household and national levels, and starts down this path through transformative and sustainable gains in: (1) effective, citizen-responsive governance; (2) rural poverty reduction and sustainable natural resource management; (3) utilization of quality health, water and sanitation, and social protection services; and (4) primary education quality.

Zambia’s Country Roadmap indicates a country that is relatively low in Capacity, but relatively high in Commitment. It specifically highlights three priority concerns that are the focus areas of this CDCS -- Open and Accountable Governance; Citizen Capacity; and Capacity of the Economy. The CDCS will also focus on changing aspects of Economic Policy which currently contribute to weak citizen and economy capacity.

Commitment: While Zambia scores relatively high in commitment compared to the other low- and middle-income countries, its commitment does remain an area of significant concern. Widespread and growing corruption at a very senior level of government, for example, has robbed Zambia of critical resources, stifled private investment, and led the country to incur an increasingly high debt burden that impairs its future ability to achieve self-reliance. The Government of the Republic of Zambia (GRZ) has demonstrated a willingness to improve accountability through improved transparency, anti-corruption measures and decentralization. To effectively achieve the CDCS goal, however, the GRZ must demonstrate greater political will to enact and effectively implement critical policy and institutional reforms, and to prosecute corruption at all levels of government. For this reason, the CDCS highlights the need for more accountable and citizen-responsive governance as its first Development Objective (DO) and as a cross-cutting issue across all of the DOs.

Capacity: The CDCS recognizes that gains which USAID assistance has helped achieve to date in the areas of rural poverty reduction, health, education and natural resource management can only be maintained and advanced through improved capacities of systems, institutions, enterprises and individuals. Such capacity building therefore features as

USAID/ZAMBIA CDCS 2019 – 2024 2

Intermediate Results (IRs) in each of the DOs. To reduce rural poverty, for example, the

CDCS will address key factors that hamper the productive capacity of rural enterprises, including: policies that distort and constrain markets; ineffective land markets and tenure security systems; limited availability of credit; lack of access to electricity; and underutilization of digital information technology. The CDCS will also increase the capacity of Zambia’s health care system by strengthening public sector institutions, enhancing private sector engagement, and encouraging healthier behaviors among households and individuals.

In education, capacity will be enhanced through improved literacy instruction and school performance management, and greater community and private sector engagement in primary education. Moreover, in each of these sectors, the capacity of women to empower themselves economically and socially will continue to be prioritized.

Strategic Approach: While this CDCS will focus on the same sectors as the 2011 –

2019 CDCS (democracy and governance, rural economic development, health, and education), there will be significant differences in strategic approach. Differences include:

(1) greater emphasis on private sector engagement in all sectors; (2) a shift from direct micro-project assistance -- with its limited benefits -- to addressing the underlying policy, regulatory and institutional constraints in order to have a more large-scale and sustainable impact on poverty reduction and self-reliance; (3) more emphasis on locally led implementation, particularly in the health sector; (4) highlighting effective, accountable and citizen-responsive governance as the top priority and incorporated into each DO; and (5) clear articulation of USAID/Zambia’s strategy as an alternative development path which facilitates sustainable solutions and promotes, rather than limits, Zambia’s future development capacity and self-reliance.

In the health sector, the battle against HIV/AIDS will remain the highest priority of this

CDCS. However, with Zambia expected to reach the important milestone of “epidemic control” in 2020, there will be a strategic shift in emphasis from a laser focus on getting as many infected people as possible on treatment to strengthening the technical and financial capacity of the country’s health system to maintain and advance these gains on its own (thus furthering its own self-reliance in health), and to reduce (and eventually, end) the need for continued U. S. Government (USG) assistance over time.

Poverty reduction efforts will continue to focus on rural areas, where poverty is most prevalent and severe. This CDCS, however, will shift focus away from conventional project assistance to smallholder farmers, which has failed to have lasting, transformative impacts on reducing poverty or the continued need for external assistance. Instead, aligned with the

Prosper Africa initiative, it will focus on unleashing private sector investment by supporting the government to tear down policy and institutional barriers to productive investment and trade, and building the capacity and enabling environment to grow rural enterprises, particularly female-led enterprises, in order to create the employment opportunities needed to advance household-level self-reliance.

This CDCS directly supports many elements of the United States Government’s 2018

National Security Strategy (NSS), including:

• The focus on governance and fiscal transparency issues in DO1, and as a cross-cutting objective throughout the strategy, aligns with the NSS Africa Priority Action to

“encourage reform, working with promising nations to promote effective governance, improve rule of law, and develop institutions accountable and responsive to citizens.”

USAID/ZAMBIA CDCS 2019 – 2024 3

• The CDCS’s new approach to poverty reduction supports the NSS Africa Priority

Action to “work with reform-oriented governments to help establish conditions that can transform them into trading partners and improve their business environment (and) seek to move beyond assistance to partnerships that promote prosperity.”

• The NSS emphasizes the importance of gender equity to achieving peace and prosperity.

The CDCS addresses this through increasing female civic engagement, political participation, land rights, credit access, access to voluntary family planning services, and personal security.

Graph 1: The 2019 - 2024 CDCS Results Framework

II. COUNTRY CONTEXT

GOAL: USAID will partner with the Zambian government, civil society and the private sector to advance the country’s self-reliance through more effective development choices and governance, enterprise-driven economic growth, and increased resilience among its vulnerable citizens

DO 1: Citizen and

National Self-Reliance

Advanced by More

Effective, Accountable

Governance

DO 4: Quality of

Primary Education

Strengthened to

Improve Learning

Outcomes

DO 3: Capacity of Zambia’s

Government, Citizens and

Private Sector Increased to

Improve Health Outcomes and

Meet Critical Needs of

Vulnerable Populations

DO 2: Rural Poverty

Reduced through

Enterprise-Driven Inclusive

Economic Growth

IR 1.1: Citizen

Engagement in National

Development Choices

Strengthened

IR 1.2: Public Resources

More Effectively Used

IR 1.3: Credibility and

Fairness of Political

Processes Increased

IR 2.1: Rural Business

Enabling Environment

Improved

IR 2.2: Rural

Enterprises Strengthened

IR 2.3: Natural

Resources More

Sustainably Managed

IR 3.1: Utilization of quality health, water, and sanitation services and prevention practices increased

IR 3.2: Health, water, and sanitation systems' effectiveness, capacity and sustainability strengthened

IR 3.3: Capacity to Protect

Vulnerable Populations

Enhanced

IR 4.1: Quality of Literacy

Instruction Improved

IR 4.2: Education System

Capacity and Performance

Increased

IR 4.3: Community and

Private Sector Engagement in

Early-Grade Education

Increased

Cross-Cutting Elements:

Governance, Gender, Youth

USAID/ZAMBIA CDCS 2019 – 2024 4

Zambia’s development holds much promise, but faces much peril. Urban economic growth has boomed, but rural areas have stagnated in poverty. Most rural households are engaged in subsistence-level farming on very small plots that are not economically viable, often turning to unsustainable livelihoods that degrade natural resources, such as forests and wildlife, to supplement their incomes. Despite over a decade of high economic growth, most of Zambia’s population remains below the poverty line due to high income inequality

(Zambia’s Gini coefficient is among the world’s highest), and the economy remains far too dependent on copper for tax revenue and foreign currency reserves. Rural enterprise development is constrained by a lack of capacity and access to credit, and a poor enabling environment. A high national debt burden jeopardizes future growth and the GRZ’s ability to make critical human capital investments.

While significant progress has been made in Zambia’s political and social development in recent decades, serious concerns remain. Zambia has been a regional bastion of peace, but democratic backsliding and corruption threaten political stability and effective public service delivery. Substantial U.S. Government support has brought Zambia close to achieving HIV epidemic control, but sustaining this progress is undermined by an under-resourced, poorly managed health system. Child mortality rates have also fallen, but high malnutrition and the poor quality of primary education impede child development and future workforce productivity. And although many high-level political leaders (including the vice-president and several Cabinet ministers) are women, deeply-rooted gender inequities in social, political and economic rights and opportunities continue to hamper women’s empowerment and welfare, and gender-based violence (GBV) remains pervasive.

The Zambian government has committed to addressing these issues through its 2018 – 2022

7th National Development Plan (7NDP). Its objectives are to: (1) diversify and make economic growth inclusive; (2) reduce poverty and vulnerability; (3) reduce development inequalities; (4) enhance human development; and (5) create a governance environment conducive to a diversified and inclusive economy. USAID partners closely with the GRZ to achieve 7NDP objectives, and CDCS objectives closely align with them.

Zambia’s economic and financial future, however, and its ability to carry out its 7NDP, is threatened by rising levels of external debt, much of it resulting from substantial Chinese investment and financing over the past decade. Zambia’s growing and unsustainable debt burden not only jeopardizes its J2SR, but also has implications for USAID programming.

Official external debt rose to over $10 billion in 2018. Of this, $3 billion is currently owed to China, but another $6 - 8 billion is estimated to be in the pipeline (contracted but not disbursed) through various opaque lending agreements. The IMF estimates overall public debt (external and internal) to be 71 percent of Zambia’s annual GDP, up from 10 percent in 2011.

The government spends 87 percent of its budget on debt servicing and wages, leaving little left for other priorities. Fiscal deficits also continue to rise and are currently about 10 percent of GDP. This budget burden undercuts progress toward Zambia’s financial self-reliance as the government is less able to make critical investments in health, education and rural development, which also jeopardizes the sustainability of USAID investments. To address this crisis, the GRZ must stimulate private sector investment, more efficiently manage its public financial resources, and avoid taking on more debt. USAID can play an important role by providing technical assistance to advance policy/institutional reforms and more transparent procurement and financial practices, and by promoting effective, USAID/ZAMBIA CDCS 2019 – 2024 5 accountable governance through greater citizen engagement and democratic processes that hold political leaders accountable for the national development choices they make.

Country Roadmap: Zambia’s Roadmap specifically highlights three priority concerns that are the focus areas of this CDCS -- Open and Accountable Governance; Citizen Capacity; and

Capacity of the Economy. An additional area of concern for the CDCS, however, is Economic

Policy. While the Roadmap indicates that Zambia scores relatively well in the sub-dimensions of Business Environment, Trade Freedom, and Biodiversity and Habitat Protection, the country has serious deficiencies in each of these which contribute to its low sub-dimension scores for Poverty Rate, GDP per Capita, and Export Diversification.

Open and Accountable Governance. The most important prerequisite for advancing self-reliance is more accountable and citizen-responsive governance. Widespread corruption, state capture and vested interests, for example, have led to theft and misuse of domestic resources, including engaging in opaque, unsustainable external financing arrangements that rob Zambia of its future development potential. The Roadmap highlights low Liberal

Democracy and Open Government scores, which must be addressed through greater citizen engagement and transparency in public policy-making and democratic processes that hold leaders accountable.

Citizen Capacity. The Roadmap highlights Zambia’s low rankings in the sub-dimensions of poverty, education and health. Extreme poverty -- which is concentrated mostly in rural areas and disproportionately affects women -- must be tackled by stimulating private investment to create more productive and inclusive livelihood opportunities. Zambian health system capacity must be strengthened to combat infectious diseases, reduce maternal/child mortality, promote child development, and sustain and advance gains in health outcomes that have been achieved to date. Early-grade literacy instruction must be improved through higher quality teaching methods and increased private sector engagement, as a foundation for better future learning outcomes and increased citizen capacity to participate in national development.

Capacity of the Economy. Zambia’s Roadmap highlights its lack of economic diversification, as well as the very limited use of information and communications technology in many rural areas. Copper accounts for 70 percent of exports, and most of the rural workforce is engaged in low-productivity subsistence-oriented farming. Rural areas have enormous unrealized economic potential -- particularly in agriculture and tourism -- that needs to be unleashed by removing the underlying policy and institutional barriers to private investment and trade; building capacity and the infrastructural enabling environment (e.g., power, internet access) for private enterprise growth; and creating incentives and capacity to sustainably manage natural resources for long-term self-reliance.

Economic Policy. While the Roadmap gives Zambia high relative scores on Business

Environment, Trade Freedom, and Biodiversity and Habitat Protection, these remain serious areas of concern impeding the country’s self-reliance when looked at through different lenses.

For example, the Heritage Foundation’s Index of Economic Freedom ranks Zambia as “Mostly

Unfree”, noting its “inefficient legal and regulatory frameworks, weak protection of property rights, and corruption, all of which continue to undercut prospects for long-term development.”

Agricultural productivity and export diversification are undermined by adverse policies that include export bans, erratic changes to taxation regimes, inefficient subsidies, and restrictions on land tenure and real property transfers.

USAID/ZAMBIA CDCS 2019 – 2024 6

Zambia also has one of the highest deforestation rates in the world, and poaching of elephants and other wild animals has increased in recent years, jeopardizing the country’s tourism sector, which accounts for 7 percent of its GDP.

Transition Planning: Given the scale of its development challenges relative to its resources available (for both Zambia and its cooperating partners, such as the U.S.

Government), Zambia is not expected to become fully self-reliant in planning, financing and implementing its development solutions within the timeframe of this CDCS. However, the strategy aims to make considerable progress toward achieving self-reliance at household and national levels through transformative and sustainable gains in: (1) effective, citizen-responsive governance; (2) rural poverty reduction and sustainable natural resource management; (3) utilization of quality health, water and sanitation, and social protection services; and (4) early-grade literacy.

One area where significant steps toward transition are expected to take place during this

CDCS is the HIV/AIDS program, funded by the President’s Emergency Plan for AIDS Relief

(PEPFAR), which currently accounts for nearly 80 percent of USAID/Zambia’s budget.

PEPFAR has achieved extraordinary success in combating HIV/AIDS, to the point where

Zambia is expected to reach epidemic control in 2020. As this major milestone is achieved, the CDCS will shift more toward strengthening the technical and financial capacity of the country’s health system, including increasing private sector engagement and local partner implementation, in order to become more self-reliant in maintaining and advancing these gains.

III. STRATEGIC APPROACH

While addressing the same key sectors as the current strategy, this CDCS will have significant differences in strategic approach. Differences include: (1) greater emphasis on private sector engagement in all sectors; (2) a shift from direct micro-project assistance --with its limited benefits -- to addressing the underlying policy, regulatory and institutional constraints in order to have a more large-scale and sustainable impact on poverty reduction and self-reliance; (3) more emphasis on locally-led implementation, particularly in the health sector; (4) highlighting effective, accountable and citizen-responsive governance as the top priority, incorporated into each DO; and (5) clear articulation of USAID/Zambia’s strategy as promoting a development path that facilitates sustainable solutions and encourages

Zambia’s future development capacity and self-reliance, as opposed to one leading to unsustainable debt, resource depletion, and potential loss of national sovereignty.

Relationship with Government. The United States and Zambian governments have an excellent relationship and a long partnership in development programming. This partnership has been strengthened at the implementation level with the co-location of USAID staff in four

Ministry of Health provincial offices and embedded advisors in the Ministries of Finance, Energy and Health. The GRZ has consistently been an active and cooperative partner in

USAID programming, committing staffing and providing a conducive working environment.

To date, USAID has not required GRZ co-funding support for activities, or imposed policy reform conditionalities on assistance. This is an area we plan to build on during this CDCS period, in order to strengthen the GRZ’s commitment to achieving development results.

USAID/ZAMBIA CDCS 2019 – 2024 7

Financing Self-Reliance. The GRZ’s shrinking budget resources, compounded by its growing debt service burden, undercut the government’s ability to make the investments in health, education and rural development that are critical for advancing its self-reliance. While this partly reflects the limited tax base of this small and largely underdeveloped economy, it is also largely the result of inefficient public financial management (PFM) and inadequate domestic resource mobilization and utilization (DRMU). Importantly, it is not simply an issue of raising more revenues, but also an issue of more effectively using the limited fiscal resources currently available to the GRZ.

DRMU issues are addressed in each of the CDCS DOs as a means to increase the availability of public resources available to the GRZ for delivering critical public services and becoming self-reliant. Under DO1, for example, IR 1.2 aims to strengthen PFM systems and the transparency and integrity of GRZ procurement processes. Under DO3, health systems strengthening will include supporting the GRZ in developing and implementing a Health

Care Finance Strategy to increase public revenue availability for meeting critical national health care needs.

Private Sector Engagement. Even with improved DRMU, Zambia's resource requirements for achieving self-reliance are far too great to be met by relying exclusively on government and donor funding – the private sector has a major role to play. Therefore, increasing private sector engagement is addressed in each of the CDCS DOs. Under DO2, for example, IR

2.1 will shift the focus away from conventional, unproductive technical assistance and subsidies to smallholder staple-crop production and toward tearing down the policy and institutional barriers presently hampering the potential for broad-based and sustained poverty reduction through greater and more diversified private sector investment. Under

DO4, private sector investment and partnerships will be facilitated to augment Zambia’s extremely under-resourced primary education system.

These changes in strategic approach, particularly related to rural poverty, are supported by

USAID’s Private Sector Engagement Policy which highlights that “we must change the way we do business” in order to “make catalytic use of USAID resources”, “seek market-based solutions for greater sustainability” and “mobilize private capital for scale.” It further argues that “USAID must move toward playing a more catalytic role in achieving results, rather than fully funding and managing projects.” The latter recommendation highlights how most conventional USAID rural poverty reduction and food security activities do not play a role in achieving the catalytic results needed to advance self-reliance.

USAID/Zambia has -- as part of its CDCS development process -- conducted, in collaboration with USAID's Global Development Lab, an exhaustive Private Sector

Landscape Assessment (PSLA) that detailed areas and specific activities where USAID could partner with private-sector actors to leverage and sustain greater development impact from its interventions. PSLA findings will help accelerate and deepen private-sector engagement across all four DOs.

Civil Society/Citizen Engagement. As the CDCS makes clear, improved governance through increased engagement by citizens, particularly those previously underrepresented in decision-making, such as women and youth, is at the heart of USAID/Zambia’s strategic approach. Increasing citizen demand and advocacy for transparent and accountable service delivery can effectively strengthen government commitment for making effective

USAID/ZAMBIA CDCS 2019 – 2024 8

development choices that promote Zambia’s J2SR. This is further discussed in the DO1 section below.

Interagency and Other Partners: At post, USAID partners with the Department of State

(DOS) PEPFAR Coordination Office, the Centers for Disease Control and Prevention, the

Department of Defense, and Peace Corps in implementing the PEPFAR program to combat the HIV epidemic. PEPFAR accounts for about 80 percent of USAID/Zambia’s current $300 million/year budget, with an overall U.S. Government interagency PEPFAR annual budget of over $400 million. Coordinated by DOS, USAID and CDC implement the lion’s share of the PEPFAR budget, working closely together to harmonize strategic approaches and ensure no gaps or duplication in coverage. DOS’s Office of the Global AIDS Coordinator has mandated that USAID, CDC and DOD increase the share of their non-commodity budgets managed by local government or non-governmental organizations (NGO) from 25 percent to 70 percent within the next two years. This mandate is consistent with USAID’s J2SR objectives of increasing local ownership and leadership, and aligns with the strategic approach of this CDCS.

USAID works closely with the Ambassador and Post’s Political/Economic Section on issues such as democracy and governance, economic policy, energy sector reform and wildlife conservation, ensuring that USAID programming is in lock-step with overall U.S.

Government objectives and priorities in Zambia. USAID also engages with the Public Affairs

Section on a number of activities, especially those related to youth development and women’s empowerment. In addition, this CDCS is fully aligned with Post’s Integrated

Country Strategy.

Outside of the U.S. Government, USAID/Zambia actively partners with the GRZ, the

Zambian private sector, and other Cooperating Partners (bilateral and multilateral donors) in Zambia, as a means to increase and better sustain the development impact of its assistance. These partnerships increase efficiencies through economies of scale, delegated cooperation, joint programming, and effective use of other actors' predominant capabilities and subject-matter expertise in ways that are complementary to USAID's objectives and goals in Zambia. Also, by effectively partnering with Zambian local actors, local institutional capacity is built and enhanced - a fundamental element of self-reliance.

IV. RESULTS FRAMEWORK

Goal Statement and Narrative: USAID will partner with the Zambian government, civil society and the private sector to advance the country’s self-reliance through more effective development choices and governance, enterprise-driven economic growth, and increased resilience among its vulnerable citizens.

This CDCS will address this goal by: (1) supporting more accountable, citizen-responsive governance; (2) unleashing private sector investment needed to overcome widespread rural poverty and sustainably manage natural resources; (3) strengthening the country’s capacity to combat disease and meet the health and protection needs of vulnerable populations; and

(4) increasing access to high-quality early-grade literacy instruction. Strategic USAID investments in these sectors will strengthen Zambia’s capacity to plan, finance and

USAID/ZAMBIA CDCS 2019 – 2024 9

implement development solutions that are sustainable, advance its self-reliance, and do not mortgage its future development potential and sovereignty.

Gender Focus. The CDCS will also prioritize, as a cross-cutting theme, important gender inequities that constitute significant obstacles on Zambia's J2SR. Consistent with the

Agency’s Gender Equality and Female Empowerment Policy, it will serve as a means for engaging key stakeholders, including the GRZ, to address these broad-based gender inequities and inequalities.

Specific means of achieving the Gender Policy’s outcomes are addressed in each of the four

DO narratives. Issues affecting the welfare and empowerment of women and girls that will be addressed include: gender-based disparities in access to and ownership of economic resources (employment, capital, and productive assets such as land); social norms, particularly in rural areas, that devalue education for girls and result in disproportionate drop-out rates; cultural practices that tolerate or accept gender-based violence (GBV) and allow for child marriage; heightened vulnerability to HIV infection due to poverty and lack of economic opportunity and education; and under-representation of women in formal and informal decision-making bodies at all levels of society (household and community) and government (district up to national level).

Youth Focus. Youth development will also be prioritized as a cross-cutting theme. Given

Zambia’s demographic profile, with half the population under 30 years old, youth represent either a potential catalyst for accelerated economic and social development, or -- if they continue to be politically marginalized and overrepresented among the poor and unemployed -- a major source of social and political instability that could derail Zambia’s journey to self-reliance.

DO 1: Citizen and National Self-Reliance Advanced by More Effective, Accountable Governance:

Development Hypothesis: If citizens are increasingly engaged to make productive demands of their government, and if government is both willing and able to respond to those demands with transparent processes and improved use of public resources, and if credible democratic processes hold political leaders accountable, then Zambia will strengthen its capacity to make effective development choices and promote citizen-responsive governance, thereby advancing national self-reliance.

Evidence from around the world shows a high correlation between the quality of a nation’s governance and the degree of its economic development and self-reliance. Widespread corruption has robbed Zambia of critical resources, stifled private investment, and led the country to incur an increasingly high debt burden. USAID will work with government, civil society organizations and the private sector to support the country’s capacity to make informed development choices that more effectively generate and utilize domestic resources to finance its development needs, thus reducing reliance on external funding.

Improving the quality of governance is the core need for Zambia’s economic and social development, and critical for maintaining and advancing progress that has been made across sectors during Zambia’s previous CDCS. Zambia needs continued support to strengthen democratic norms and processes while ensuring greater transparency in the use of public

USAID/ZAMBIA CDCS 2019 – 2024 10

resources. With Zambia’s J2SR increasingly jeopardized by rising external debt and government budget deficits, this CDCS will place increased emphasis on promoting more effective public financing choices to counter unsustainable debt dependency.

Zambia has benefited from almost 30 years of largely peaceful multi-party politics and power transitions, and is often held up as an exemplar in sub-Saharan Africa. However, this democratic foundation is under threat. Political and civil liberties in Zambia are declining, according to Freedom House’s 2019 Freedom in the World report, and the restrictions on media and freedom of assembly in the run-up to the August 2016 general elections, and subsequent repressive steps by the elected government, spotlight the fragility of the country’s democratic structures.

Lack of government transparency and citizen engagement are critical constraints to effective governance. The GRZ acknowledged this in initiating development of the Access to

Information Bill in 2011; however eight years later it has yet to be approved by the National

Assembly, underscoring the government’s hesitation on transparency and the corruption it may reveal. Political parties have long been tools for patronage to elite members, offering only superficial engagement with average citizens. Broad swaths of society are left out of the policymaking conversation, and most Zambians, especially rural women, do not know, let alone fully exercise their legal rights and entitlements. Civil society organizations (CSOs) have the potential to reverse these democratic shortcomings; however, they generally lack strong advocacy roles and depend on donors for survival.

Amid these challenges, Zambia has made some significant strides toward more accountable, democratic governance. The GRZ has demonstrated commitment to reform, for example, through the Public Financial Management Act of 2018, which provides a regulatory framework and enforcement measures for managing public funds.

To reinforce GRZ efforts, DO1 will support enhanced democratic commitment and capacity through more inclusive, transparent and accountable citizen-centered governance. This will be achieved through the three IRs which, taken together, provide a comprehensive approach by addressing: (1) the “demand side”, through more inclusive citizen engagement in public-policy making; (2) the “supply side”, through more accountability in the provision of public resources; and (3) accountability for ensuring supply responds to demand through democratic political processes that hold leaders accountable for their performance.

Gender Focus. Serious gender inequities are rooted in cultural norms that assign women and girls subordinate roles in their families and communities, which extend to the political sphere. Recognizing that women have played a less significant role in decision making with regard to democratic processes (e.g. only 18 percent of Parliamentarians are women), the

DO will particularly focus on ensuring that women have a more active and meaningful role in governance. Note that women and youth are explicitly identified as part of groups to be engaged in Sub IR 1.1.2 and gender inclusion is also addressed in Sub-IRs 1.1.2 and 1.3.3.

Country Roadmap. Zambia’s Roadmap scores low on both sub-dimensions of Open and

Accountable Governance -- Liberal Democracy and Open Government.

Strengthening Liberal Democracy is critical for J2SR as it promotes political inclusiveness and fairness, through the dispersion of political power, effective rule of law, and the protection of individual rights This, in turn, provides strong incentives for broad-based political and

USAID/ZAMBIA CDCS 2019 – 2024 11

economic engagement that are essential for self-reliance. Open Government is likewise critical as citizens who are well-informed about the workings of government are better empowered to hold their government accountable for using resources responsibly and effectively in a way that fosters greater self-reliance.

DO1 will build on the Zambian government's commitment through supporting implementation of improved laws and policies, to increase their effective implementation, such as the Public Finance Management Act of 2018. USAID plans to continue working with the Ministries of Health and Education to achieve better service delivery and supporting citizen engagement in development choices and oversight. USAID will also seek to increase

Zambia’s Roadmap score on the Economic Gender Gap index by continuing to support women’s socio-economic empowerment.

Alignment with Zambian Government Priorities. This DO aligns closely with Pillar 5 of Zambia’s

7NDP, which is: “Creating a conducive governance environment for a diversified economy.” The

GRZ has demonstrated a willingness to improve accountability through greater transparency, anti-corruption measures and decentralization, for example, through passage in 2018 of the Public Financial Management Act.

In line with the government’s decentralization objectives, USAID activities will increasingly engage with district-level government institutions, which are expected to play a greater role in service delivery. USAID will continue to coordinate DRG sector support with the Extractive Industries Transparency Initiative and the Office of the Auditor General to support public financial management accountability. USAID will also partner with relevant

GRZ actors, such as the Human Rights Commission and the Electoral Commission of

Zambia (ECZ) to support credible and fair elections, in coordination with other donors.

Great Power Competition. In Zambia, major competitors – particularly China - focus on infrastructure construction projects, such as roads and airports, with less attention to the long-term, more complex challenges of health and education service delivery, for which the

US government is Zambia’s leading partner. The arena of service delivery serves as an important interface for strengthening democratic governance to prioritize public transparency and citizen-driven accountability.

DO1 promotes a fair and transparent enabling environment that shows both the government and Zambians themselves the benefits of the equitable and effective use of U.S.

Government foreign assistance resources for improved service delivery, especially at local levels. Support for multilateral efforts such as the Extractive Industries Transparency

Initiative improves public visibility into mining and its fiscal contribution to Zambia's development.

DO1 activities will advance civic engagement through citizen-led structures, focusing especially on strengthening the role of women and youth through leadership development and networking, which builds social capital for Zambian self-reliance - versus dependence on an outside power. In addition, they will protect human rights and provide assistance to human rights defenders and organizations; thereby strengthening the foundation for freedom and advocacy to express the will of the Zambian people.

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Assumptions.

• The government continues to allow USAID access to its institutions, including oversight bodies, for institutional-strengthening activities critical to its J2SR.

• The decentralization policy framework makes significant progress in implementation.

• The Zambian people and government remain committed to the peaceful management of ethnic, regional and political diversity.

• The government and related institutions will continue their commitment to ensuring credible elections that reflect the will of the people and protect human rights.

Risk Factors.

• Continued government treatment of public criticism by civil society and opposition political parties as threatening and illegitimate may reinforce its efforts to manipulate institutions to suppress it, thus reducing the democratic space needed to achieve self-reliance.

• Financial instability, resulting from economic stagnation and the growing national debt burden, and the increasing cost of living could undermine citizen engagement and government response for reliable service delivery.

Evidence base. The strategic approach for this DO and its IRs is based on the following analyses: (1) Private Sector Landscape Analysis; (2) Political Economy Analysis; (3) Youth

Assessment; (4) Fragility Assessment; (5) Gender Desk Review; (6) CDCS 2011-2017

Performance Evaluation; and (7) World Bank Systematic Country Diagnostic, 2018.

IR 1.1: Citizen Engagement in National Development Choices Strengthened.

How IR Contributes to the DO. Increased citizen capacity to participate meaningfully in decision-making, including fostering women and youth leaders, and strengthening advocacy and oversight by citizen-responsive structures and civil society, creates sustained demand for equitable, inclusive national development that builds self-reliance. Through this IR, USAID will enhance the ability of citizens and civil society to hold the state accountable, as measured by increases in sustained engagement between citizens/civil society and government service delivery entities, resulting from effective use of proven social accountability actions. A key entry point for ensuring citizen engagement is support to the decentralization path to which the government has committed.

Advancing self-reliance in Zambia is closely tied to increasing the active participation of the country’s largest population - women and youth. Activities under this IR will foster citizen capacity to advocate productively for their interests, including building the leadership capacity of women and youth as new, visible democracy champions. Others will support civil society coalitions and networks’ ability to hold government accountable by strengthening their organizational capacity (e.g., the abilities to attract and manage funding, recruit qualified staff, and analyze and advocate for policy), thus amplifying their impact on effective governance. USAID will also leverage the fast-growing digital technology sector, which can help to empower rural populations through better access to information and financial services.

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Link to Zambian Government Policies. Promoting citizen participation complements existing national and local policies that call for citizen input in development planning and monitoring.

A new law, the Local Government Act of 2019, reinforces this by formally mandating citizen-led development coordination structures that have already been rolling out nationwide. The government has established new district and sub-district citizen-led structures as a means of moving decision-making closer to the local level. If implemented successfully, decentralization may also lead to opportunities for increasing the participation of women and youth through development coordination committees that provide platforms for citizens to engage with government officials and be involved in development decisions.

Local Actors. This IR will include participation by the partner government at national and local levels, traditional leaders, civil society organizations and citizen-led oversight structures. The Local Government Association of Zambia will be an important liaison with local authorities. The private sector, research institutions and universities also will support increased citizen engagement.

Evidence Base. The Fragility Assessment and Political Economy Analysis highlight the need to increase citizen participation – especially women and youth - to mitigate democratic backsliding; also supported by Gender and Youth assessments.

IR 1.2: Public Resources More Effectively Used.

How IR Contributes to the DO. Strengthening GRZ institutions’ ability to finance their self-reliance by utilizing resources more accountably and effectively allows for better service delivery, particularly in the health and education sectors, that are essential for advancing citizen and national self-reliance. This IR will promote more effective governance by increasing government transparency, accountability, and adherence to established policies and procedures in budgeting, procurement, audits, internal controls and general financial management.

USAID will support Zambian efforts to strengthen its financial self-reliance through improved public financial management in the health and education sectors, as well as strengthen key national accountability institutions. In addition to national-level government capacity support, USAID will promote improved government response at the sub-national level, consistent with Zambia’s decentralization policy. As such, USAID will make a significant, cross-sector investment in improving the accountability of governance at the local level, where governance most directly impacts citizens via the delivery of essential services.

Link to Zambian Government Policies. The GRZ has demonstrated commitment to PFM strengthening through the Public Financial Management Act of 2018, which provides a regulatory framework as well as enforcement measures for managing public funds that did not previously exist. USAID support through this CDCS will help the GRZ to effectively implement this new Act.

Local Actors. USAID will engage the private sector, oversight institutions in the host government, and other PFM actors in the country, including watch-dog entities, which are important local advocates recognized by the GRZ.

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Evidence Base. The Fragility Assessment and Political Economy Analysis highlight the pernicious effects of corruption and politicization of resource allocation on governance; also supported by World Bank Systematic Country Diagnostic.

IR 1.3: Credibility and Fairness of Political Processes Increased.

How IR Contributes to the DO. Expanding space for free speech and association so that citizens, especially women and youth, may fairly select leaders empowers them to ensure that those who wield political power make effective development choices that advance national self-reliance. The political system in Zambia, including electoral processes, legislative and policy formulation, and citizen participation, has real potential to hold those who wield political power to account and make systems of governance more responsive to citizen needs. Elections are a well-established mechanism for ensuring citizen engagement;

yet, as seen in the August 2016 general elections, weaknesses create openings for divisive political opportunism.

In the immediate term, IR 1.3 will aim to prevent further political backsliding and polarization of the political landscape, and actively work to protect inclusive political space for speech and association. In the long term, this IR will help to generate and sustain the political will of the government and the motivation of citizens to advance meaningful reform and development progress. It will also promote the independence and capacity of the

Electoral Commission of Zambia (ECZ), and the emergence of new political champions, with a focus on women and youth.

Link to Zambian Government Policies. Constitutional reforms, legislative amendments and general elections are scheduled during the CDCS period of performance.