ZRA CSP 2020 (revised draft 31.3.2020).pdf

Zambia Revenue Authority

Corporate Strategic Plan (CSP) 2019-2021

(As amended in January 2020)

Theme:

Better Taxpayer Service, Optimized Revenues

Table of Contents Table of Contents

List of Tables

PREFACE

ABBREVIATIONS AND ACRONYMS

THE CORPORATE STRATEGIC PLAN

CHAPTER 1

1.1 Introduction

1.2 Institutional Review Framework

1.2.1 Mandate of The Zambia Revenue Authority

1.2.2 Governance of ZRA

1.2.3 Management and Structure

1.3 ZRA Past Performance

CHAPTER 2

2 SITUATIONAL ANALYSIS

2.1 SWOT Analysis

2.1.1 Stakeholder Engagement and Analysis

2.2 Strategic Issues

3 STRATEGIC DIRECTION: VISION, VALUES AND MISSION

3.1 Our Vision

3.2 Our Mission

3.3 Our Values

3.4 Strategic Pillars and Key Results Areas

3.5 Strategy Mapping

3.6 Key Result Areas (KRA) and Strategic Objectives

3.6.1 KRA 1: Enhanced Revenue Collection

3.6.2 KRA 2: Satisfied and Knowledgeable Taxpayers

3.6.3 KRA 3: Efficient, Reliable and Simplified Business Systems

3.6.4 KRA 4: Committed, Competent and High Performing Workforce

3.7 Summary Balance Scorecard

4 GOVERNANCE FRAMEWORK AND PERFORMANCE MONITORING

4.1 Governance

4.2 Performance Monitoring and Reporting

4.3 Corporate Goals and Performance Metrics

4.4 Resource Mobilization and Financial Management

4.5 Enterprise Risk Management

5 ANNEXES

5.1 Annex 1: Revenue Target 2019-2021

5.2 Annex 2: Projected Strategic Implementation Plan For The Plan Period

5.3 Annex 3: ZRA Organisation Structure for Senior Management

List of Figures

Figure 2. 1 Stakeholders Map Figure 3. 2 Strategic Map Figure 3. 3 Key Result Areas and Strategic Pillars Figure 3. 4 Summary Balance Scorecard

Figure 4. 1 High Level Organisation Structure Figure 4. 2 Performance Reporting Flowchart Figure 4. 3 Risk Mitigation Matrix

List of Tables Table 2. 1: SWOT Analysis Table 2. 2: Distilled Strategic Issues

Table 5. 1: Revenue Projections for the Period 2019-2021

PREFACE

The launch of the ZRA 2019 – 21 Corporate Strategic Plan establishes the next milestone for us towards realising our vision of being a world class model of excellence in revenue administration and trade facilitation. We have crafted the strategy with a great attention to the responsibility we have of contributing to our great nation reaching its Vision 2030 objectives and the Seventh National Development Plan (7NDP). The key aspect is how we have positioned ourselves to enhance domestic resource mobilization in order to achieve the target of increasing the contribution of domestic revenue to GDP from 18.6 percent in 2019 to

19.1 percent by 2021.

This Plan builds on gains from the previous Plans aiming at consolidating the revenue position through improved service delivery, operational efficiencies, strategic partnerships and optimising revenue collection. Our CSP theme for 2019-2021 is Better Taxpayer Service, Optimized Revenues. To achieve this, we have identified Strategic Initiatives aimed at enhancing customer experience as well as promoting a culture of tax compliance. We have proposed ways of enhancing the tax collection, both by identifying new sources of revenue and by being more assertive in ensuring that those who are liable to pay tax meet their tax obligations fully. This theme is a true reflection of input received from our stakeholders, both external and internal.

As a Board, we are committed to ensuring that this Plan is successfully executed. On behalf of the Board, I would like to appreciate all our stakeholders who include the Government of the Republic of Zambia, Management and staff, Cooperating Partners, Business community and the Consultants for their tireless efforts in developing this CSP.

I also reiterate the confidence and appreciation the Board has in the leadership and staff of ZRA in contributing to a better Zambia as we implement the strategies and priorities detailed within this Corporate Strategic Plan.

Chileshe Kapwepwe

BOARD CHAIRMAN

FOREWORD

This Corporate Strategic Plan (CSP) presents the Zambia Revenue Authority's strategic direction for the period 2019 through 2021.

The elaboration of this Plan is premised on the Government's Medium-Term Expenditure Framework (MTEF) spanning the same period. During the preceding CSP, ZRA performed well in a number of strategic initiatives that contributed to enhancement of domestic revenue mobilisation. The strategic initiatives include:

encouraging increased use of e-payments by taxpayers;

introducing an IT solution (Electronic Fiscal Devices) for managing collection of VAT; Insurance and Tourism Levy from traders; and building capacity for specialised audit skills to counter transfer pricing and base erosion;

among other initiatives.

For the next three years, this CSP acknowledges the importance of securing the support and willing participation of all Zambians in the effective tax administration. ZRA’s aim, in this regard, is to enhance revenue collection and grow compliance across the entire eligible tax base.

This Plan also revises the Corporate Vision, Mission statements and Core Values. The new Vision Statement seeks to capture ZRA’s critical role in Zambia’s development as outlined in the Vision 2030. Our Mission reflects our new approach of taxpayer engagement and compliance enhancement. In respect of our Core Values, these have been streamlined into five from the previous ten, with the primary objective being to ensure that stakeholders can more easily relate and hence internalize the values. To achieve this Corporate Plan, we are guided by four Strategic Pillars, namely:

• Increased Tax Compliance - Focus is on enhancing tax compliance and expansion of the tax base through building a tax paying culture;

• Customer focus and Collaborations - Shifting the customer service perception by improving service accessibility through service centres and technology platforms. Focus is also on cultivating productive, reliable, consistent, accurate & reciprocal Partnerships;

• Process Efficiency - Leveraging technology to enhance service delivery and promote compliance by simplifying all business processes, IT reliability and improve management

• Right Human Capital - Enhanced staff attitude and competences in order to improve institutional capacity, optimize talent management and improve staff integrity.

Based on the Strategic pillars identified above, the following are the Key Result Areas:

• Enhanced Revenue Collection;

• Satisfied and Knowledgeable Taxpayers;

• Efficient, Reliable and Simplified Business Systems; and

• Committed, Competent and High Performing Workforce.

As we embark on the next phase of our organisational transformation, I am confident that ZRA will yet again confirm its position as a world class model of excellence in public service delivery as the Authority firmly focuses on delivering its mandate.

Kingsley Chanda

COMMISIONER GENERAL

ABBREVIATIONS AND ACRONYMS

BCP Business Continuity Plan

BOZ Bank of Zambia

BSC Balanced Scorecard

CEO Chief Executive Officer

CG Commissioner General

CRM Customer Relationship Management

CSP Corporate Strategic Plan

DTA Double Taxation Agreement

E-payment Electronic Payment

GDP Gross Domestic Product

GRZ Government of the Republic of Zambia

ICT Information Communication Technology

KPI Key Performance Indicator

KRA Key Results Areas

PESTEL Political, Economic, Social, Technological, Environment and Legal

MTEF Medium Term Expenditure Framework

PAYE Pay As You Earn

PMDS Performance Management and Development System

PPP Public Private Partnerships

RTGS Real Time Gross Settlement

SMM Senior Management Members

SWOT Strengths, Weaknesses, Opportunities and Threats

TIEAS Tax Information Exchange Agreements

VAT Value Added Tax

WTO-TFA World Trade Organisation – Trade Facilitation Agreement

ZRA Zambia Revenue Authority (the Authority)

7NDP Seventh National Development Plan

EXECUTIVE SUMMARY

THE CORPORATE STRATEGIC PLAN

The Strategic Plan period is January 2019 to December 2021. However, the Plan will be implemented on a rolling basis. Therefore, emergent strategy, new and unforeseen environmental threats will be accommodated through annual and midterm reviews. The

Strategic Plan was developed through a consultative process that culminated into a facilitated workshop. In applying the process involvement approach, the methodology followed to develop the ZRA Corporate Strategic Plan is aligned to, in addition to other best practice methodologies, the Balanced Scorecard (BSC). The BSC has been used not as a performance measurement system but as an interactive management system for strategy execution and measurement.

Our Vision

A world class model of excellence in revenue administration and trade facilitation.

Our Mission

To optimize and sustain revenue collection and administration for a prosperous Zambia.

Our Values

Our core values are:

• Taxpayer focus;

• Integrity;

• Professionalism;

• Innovation; and

• Networking.

From the strategic issues, the following were synthesised as the Plan’s Strategic Pillars and Key Result Areas in the balance score card perspectives which will be the areas of impact and measurement for the plan period:

Figure 1.1 Strategic Pillars and KRA’s

The Plan is summarized in the figure above, demonstrating how the Pillars link with strategic elements. The Plan has been developed using the balanced scorecard (BSC).

To assist in tracking the progress during the implementation of the Strategic Plan, an implementation matrix has been developed. It details the specific objectives, Initiatives, activities, Service Delivery Target (SDTs) and Key Performance Indicator (KPIs).

CHAPTER 1

1.1 Introduction

This Corporate Strategic Plan has been developed to communicate the Zambia Revenue

Authority (ZRA) framework for revenue administration and services to taxpayers, Government, ZRA employees and other stakeholders. The Plan provides ZRA with a disciplined approach to execute its mandate over a three-year period from 2019 to 2021.

As part of the development process of this plan, wide consultations were done to get stakeholder buy-in and inputs on how ZRA can become more responsive to the diverse needs of its partners. A Technical Committee was appointed by the Commissioner

General with membership drawn from the various Divisions and Departments of the

ZRA in order to formulate this plan.

Key literature review was conducted to provide context and identify key issues affecting the global environment, Zambian economy, revenue administration and trade facilitation. The process included discussions with the Senior Management Members

(SMM) and the Governing Board who provided strategic insights and thinking into the future of ZRA. The CSP has been anchored on the Seventh National Development Plan

(7NDP), the 2019 – 2021 Medium Term Expenditure Framework (MTEF) and other relevant documents. The plan will serve as a roadmap to realise the Authority’s Mission and Vision over the next three years. The strategic performance will be reviewed on an annual basis. Using this Plan, ZRA will position itself to be a world class model of excellence in revenue administration and trade facilitation.

The following is the high-level view of ZRA’s strategy:

a) A review of institutional and policy environment;

b) Situation analysis including both micro and macro environmental factors likely to positively or negatively impact on the plan;

c) An analysis of the critical issues with a bearing on the plan;

d) The strategic direction: vision, values, mission and Key Result Areas; and

e) The governance framework and performance monitoring.

1.2 Institutional Review Framework

The Institutional review framework looks at the ZRA mandate, governance, management structure and past performance.

1.2.1 Mandate of The Zambia Revenue Authority

The Zambia Revenue Authority Governing Board draws its mandate from the ZRA Act, Chapter 321 of the Laws of Zambia. The following are the core functions of ZRA:

• To assess, charge, levy and collect all revenue due to the Government under such laws as the Minister may, by statutory instrument, specify;

• To ensure that all revenue collected is, as soon as reasonably practicable, credited to the Treasury;

• To perform such other functions as the Minister may determine.

1.2.2 Governance of ZRA

The Zambia Revenue Authority is headed by the Commissioner General (CG) who is the

Chief Executive Officer (C.E.O). The Commissioner General is appointed by the President and reports to the Governing Board. The Governing Board consists of the following:

a) Secretary to the Treasury;

b) Permanent Secretary to the Ministry responsible for legal affairs;

c) Governor of the Bank of Zambia;

d) A representative from the Law Association of Zambia;

e) A representative from the Zambia Association of Chambers of Commerce and

Industry;

f) A representative from the Zambia Institute of Certified Accountants;

g) A representative from the Bankers' Association of Zambia;

h) Two other members appointed by the Minister of Finance.

The Board provides strategic oversight to the senior management members, in the execution of ZRA’s mandate. ZRA has developed and implemented a Charter of Good

Practice for the Board members.

1.2.3 Management and Structure

The CG is supported by Commissioners and Directors who are in charge of operational aspects. Various governance structures and support functions work in harmony to ensure smooth implementation of the CSP. The organogram for driving this strategy is provided in chapter four.

1.3 ZRA Past Performance

At the time of reviewing the performance against previous CSP KPIs, the Authority was poised to meet most of the targets for the previous CSP. Generally, there was room for improvement to ensure that performance measurement was focused on outputs or outcomes rather than activities. All these lessons were considered in the formulation of the new Strategic Plan.

CHAPTER 2

2 SITUATIONAL ANALYSIS

The situational analysis considered the major Political, Economic, Social, Technological, Environmental and Legal (PESTEL) aspects. The PESTEL issues will continuously be monitored throughout the lifecycle of this CSP. The SWOT analysis assessed the strengths and weaknesses which are internal to ZRA, and opportunities and threats that are in the operating environment.

2.1 SWOT Analysis

The ZRA’s SWOT analysis produced the following results in the table below:

Table 2. 1: SWOT Analysis

Strengths

• Enabling legislation

• Good Corporate Governance

• Competent and qualified staff

• Electronic services (e-services)

• Established business processes

Weakness

• Ineffective Compliance Risk Management

• Limited Specialized Skills

• Weak Data Integrity

• Internal ICT Systems Instability

• High Debt stock

• Poor customer service

Opportunities

• Goodwill

• Unexploited taxpayer base

• Technology adoption by stakeholders

• Stakeholder Support and

Institutional Collaborations

• Trade Protocol and Exchange of information Agreements

Threats

• Unfavourable Taxation Agreements

• Low compliance culture

• Inadequate regulatory capacity for mining sector

• Economic shocks

• Cyber Crimes, terrorism and illicit financial flows

• Underdeveloped national ICT and other infrastructure

• High prevalence of cash economy

In te rn al

Ex te

2.1.1 Stakeholder Engagement and Analysis

A Stakeholder analysis was undertaken by an independent consultant and validated through a workshop including external stakeholders. The results of the validation workshop were considered in the formulation of the plan. The Stakeholder Map below outlines the key stakeholders and possible engagement strategies:

STAKEHOLDER MAP

Figure 2. 1 Stakeholders Map

2.2 Strategic Issues

On the basis of the Institutional and Situational analysis, issues that need attention during the period of this Plan have been distilled. The table below clusters and provides analysis of the planned issues, which have been grouped into four strategic themes and aligned to the Balanced Scorecard Pillars as captured in the strategy map in Chapter Two.

Table 2. 2: Distilled Strategic Issues

CLUSTERS OF

STRATEGIC ISSUES

STRATEGIC ISSUES

Enhanced Revenue mobilisation

1. Growing Debt Stock

2. Low tax compliance culture

3. Unexploited taxpayer base

4. Illicit financial flows

5. International tax and customs treaties that have not been reviewed and disadvantaging ZRA (unfavorable international tax and customs treaties)

6. Unfavorable economic conditions (tight liquidity, energy deficits, etc)

7. VAT Refunds backlog

Customer and

Stakeholder Focus

1. Poor public perception

2. Poor customer service

3. Inadequate tax knowledge by the public

4. Weak stakeholder engagement

Business systems and processes

1. Inefficient Business Processes

2. Inadequate ICT infrastructure

3. Internal ICT Systems Instability

4. Poor compliance risk management

5. Cyber Crimes, Terrorism

6. Weak Data integrity (tax register, transactions, demographics, Big

Data Analytics)

Human Capital Capacity 1. Inadequate staff in operating divisions

2. Inadequate staff capacity - limited specialized skills

3. Low employee productivity

4. Low appetite by employees to adopt new approaches

CHAPTER 3

3 STRATEGIC DIRECTION: VISION, VALUES AND MISSION

This section covers the main Plan and is informed by analysis of previous chapters. The strategic focus that ZRA will take is influenced by the 7NDP and the ZRA Act, stakeholders’ feedback and Board strategic insights. The following Vision and Mission statements are inspiring the direction of the Authority.

3.1 Our Vision

A world class model of excellence in revenue administration and trade facilitation.

3.2 Our Mission

To optimize and sustain revenue collection and administration for a prosperous Zambia.

3.3 Our Values

The following are our core values:

Taxpayer Focus

WE believe in delivering excellent services and value our taxpayers. We provide timely, responsive and proactive service. We take time to understand taxpayers’ needs and always strive to surpass their expectations.

Integrity

WE will do what we say we will do. We will up-hold professional and ethical business practices. The company's interactions with stakeholders will be done transparently for mutual benefits. We will ensure honesty, integrity and respect to all.

Professionalism

WE uphold high quality standards and etiquette in our dealings to enhance professional competence by providing the highest level of service.

Innovation

WE are creative, bold and believe in continuous learning and improvement. We believe these will sustain total quality consciousness in the organization.

Networking

WE collaborate inside and outside ZRA to maximise our shared knowledge and bring greater value to one another and most importantly, to our customers. We work together as one ZRA family, in partnership with other organizations, and always embrace diversity and inclusiveness.

3.4 Strategic Pillars and Key Results Areas

On the basis of the distilled issues from the strategic issues, four themes emerged that culminated into the pillars for this CSP which we believe collectively create value and contribute to the realization of our Vision, and these are:

• Increased Tax Compliance - Focus is on enhancing tax compliance and expansion of the tax base through building a tax paying culture;

• Customer focus and Collaborations - Shifting the customer service perception by improving service accessibility through service centres and technology platforms. Focus is also on cultivating productive, reliable, consistent, accurate & reciprocal Partnerships;

• Process Efficiency - Leveraging technology to enhance service delivery and promote compliance by simplifying all business processes, IT reliability and improve management

• Right Human Capital - Enhanced staff attitude and competences in order to improve institutional capacity, optimize talent management and improve staff integrity

Figure 3. 1: Strategic Pillars

3.5 Strategy Mapping

The ZRA Strategy Map demonstrates the value generation chain through the identified linkages between Strategic Objectives. It is a communication tool and a visual representation of strategy. The map indicates all areas of improvement that ZRA needs to pursue to attain the desired results. Related theme objectives are consolidated to derive

Strategic Objectives as shown in the Strategy map.

Figure 3. 2 Strategic Map

3.6 Key Result Areas (KRA) and Strategic Objectives

The strategy map has demonstrated how the strategic elements within the four perspectives of financial, customer, internal business process and learning and organizational capacity link with the KRAs. Our Scorecard shows the areas of improvement that we shall emphasize in order to address the concerns that were

Key Result Areas and Strategic Objectives

Enhance Compliance

Reduce Debt Stock

Optimise Revenue

Collection

Fi na nc ia l In te

Bu sin es s

Pr oc es se s Cu st om er O rg an iza tio na l

Ca pa ci ty

Improve Customer

Experience

Improve Public

Perception

Improve Data

Integrity

Improve ICT Solutions

Improve Business Processes

Improve Staff

Integrity

Increase Staff

Productivity

Improve staff Recruitment and Retention

• Develop and implement a comprehensive communication and tax education program

• Improve the ZRA brand

• Develop and implement CSR program

• Improve stakeholder management

• Improve the ZRA ambiance

• Training staff in customer service

• Simplify business processes

• Enhance and implement a Service Charter

• Map out business processes

• Automate business processes

• Roll out Business improvement processes

• Develop and implement new ICT Strategy

• Develop and implement a comprehensive compliance

• Develop and implement initiatives for improving data integrity risk management framework

• Develop and implement a Resourcing Strategy

• Review and improve employee value proposition

• Develop and implement a succession policy

• Automate performance management system

• Align Divisional and Departmental productivity standards to strategic initiatives

• Improve work environment

• Improve staff engagement

• Develop and implement talent management policy

• Implement e-learning for continuously learning

• Enhance integrity programmeValues: Taxpayer focus Integrity Professionalism Innovation Networking

• Develop and implement revenue optimisation measures

• Develop and implement a debt reduction strategy

• Increase audit coverage

• Increase filing compliance

• Increase in Payment Compliance

• Enhance enforcement

• Increase registration compliance

Enhanced Revenue Collection

Satisfied and Knowledgeable Taxpayers

Efficient, Reliable and Simplified Business Systems

Committed, Competent and High Performing Workforce

Vision A world class model of excellence in revenue administration & trade facilitation

Mission To optimize and sustain revenue collection & administration for a prosperous Zambia

BS

C

Pe rs pe ct iv e

St ra te gi c In iti at iv es

Improve Infrastructure

& Facilities identified through environmental scanning, stakeholder engagements and review of several survey reports. It also puts forward strategic initiatives that we shall implement in order to tap into our strength and opportunities that were identified through the same process. A total of four Key Results Areas will be pursued in this corporate planning period. These are major outcomes and impact for which the Authority will be held responsible and accountable. They are summarised in the figure below:

Figure 3. 3 Key Result Areas and Strategic Pillars

There are thirteen (13) Strategic Objectives which are medium to long term performance targets that the Authority intends to achieve in relation to four KRAs highlighted above.

3.6.1 KRA 1: Enhanced Revenue Collection

Our mandate as the tax administration Authority is to contribute to Zambia’s aspirations, ascribed in the 7NDP for self-sufficiency. The need to enhance revenue collection has been prominently emphasised by respective stakeholder groups. Therefore, in this CSP, we have re-defined the approach and emphasise on enhance revenue collection. To achieve the desired outcome, we will be guided by the following Strategic Objectives:

Distilled Strategic Themes

Core Values:

Mission:

To optimize and sustain revenue collection and administration for a prosperous Zambia Vision:

A model of excellence in revenue administration and trade facilitation in the world

Ta x

C om pl ia nc e

C us to m er F oc us an d C ol la bo ra tio ns

R ig ht P eo pl e

Pr oc es s

Ef fi ci en cy

Enhanced Revenue

Collection

Committed, Competent and High Performing

Workforce

Efficient, Reliable and Simplified

Business Systems

Satisfied and Knowledgeable

Taxpayers

ValuesTaxpayer focus Integrity Professionalism Innovation Networking

Key Result Areas (KRAs)

Strategic Pillars

• Strategic Objective 1.1 Optimise revenue collection

• Strategic Objective 1.2 Reduce debt stock

• Strategic Objective 1.3 Enhance compliance

• Strategic Objective 1.4: Effective business framework

See Annex 2 for strategies to achieve these Objectives.

3.6.2 KRA 2: Satisfied and Knowledgeable Taxpayers

Excellent service provision is at the core of our business, as appropriately reflected in our mission statement. We believe that in order to provide an effective service to our stakeholders, we must first understand their needs and expectations and channel our efforts towards addressing those needs. To satisfy and make the taxpayers knowledgeable, the following Strategic Objectives will be undertaken:

• Strategic Objective 2.1: Improve public perception

• Strategic Objective 2.2: Improve customer experience

3.6.3 KRA 3: Efficient, Reliable and Simplified Business Systems

We need to continually improve our business processes in order to make it easy for our taxpayers to meet their tax obligations. We shall operationalize the risk management framework, implement business process management programs such as KAIZEN. ICT solutions will be kept modern and continuously upgraded to respond to end user needs.

The following objectives will be undertaken to achieve this key results area:

• Strategic Objective 3.1: Improve business processes

• Strategic Objective 3.2: Improve ICT Solutions

• Strategic Objective 3.3: Improve data integrity

3.6.4 KRA 4: Committed, Competent and High Performing Workforce

This key result area focuses on improving the internal resources within ZRA to better deliver the organisation’s mission. This embodies the human capital that interacts with the processes and clients in order to deliver a high-quality service to our esteemed taxpayers. The staff will fully be empowered with the right skills relevant to their role, the infrastructure including offices and ICT. This key result area will be attained by:

• Strategic Objective 4.1: Improve staff recruitment and retention

• Strategic Objective 4.2: Increase staff productivity

• Strategic Objective 4.3: Improve staff integrity

• Strategic Objective 4.4 Improve infrastructure and facilities

3.7 Summary Balance Scorecard

The Strategic Plan is summarised in the balance score card below:

Figure 3. 4 Summary Balance Scorecard

Customer

Financial

Perspectives

Internal Business Process

Organizational Capacity

Strategic Themes

Key Result Areas

Mission

Vision

ZRA Corporate Balance Scorecard

Strategic Objectives

Tax Compliance |Customer Focus and Collaboration |Process Efficiency |Right People|

To optimize and sustain revenue collection and administration for a prosperous Zambia

A model of excellence in revenue administration and trade facilitation in the world

Improve Data IntegrityImprove ICT SolutionsImprove Business Processes

Improve staff integrity

Increase staff productivity

Improve staff recruitment and retention

Improve Infrastructure &

Facilities

Improve Customer Experience

Improve Public Perception

Enhance Compliance

Reduce Debt StockOptimise revenue collection

Satisfied and Knowledgeable Taxpayers

Enhanced Revenue Collection

Efficient, Reliable and Simplified Business

Systems

Committed, Competent and High Performing

Workforce

To assist in tracking the progress of the Strategic Plan implementation, an implementation matrix has been developed. It details the specific Strategic Objectives

(SOs), Strategies, Service Delivery Target (SDTs) and Key Performance Indicator (KPIs) as shown in Annex 2.

CHAPTER 4

4 GOVERNANCE FRAMEWORK AND PERFORMANCE MONITORING

4.1 Governance

The Board provides strategic oversight to the senior management members, in the execution of ZRA’s mandate. The following is the high-level organisation structure for

ZRA and the detailed format is attached in Annex 3:

The key responsibility in ensuring the implementation of the Strategic Plan rests with the

Commissioner General (CG). The CG will report to the Modernisation & Corporate

Strategy (MCS) Committee of the Board and the main Governing Board on the execution of this CSP.

4.2 Performance Monitoring and Reporting

To ensure smooth implementation of the Plan, the Modernisation & Corporate Strategy

(MCS) Division will be charged with the responsibility of ensuring that the Strategic Plan is cascaded to all Divisions and Departments within ZRA. The Corporate Strategy

Figure 4. 1 High Level Organisation Structure

Department of MCS Division will be tasked to ensure that ZRA’s key results areas and

Strategic Objectives are aligned to ZRA vision are monitored and evaluated at specific periods. It is envisaged that there will be a champion to spearhead each of the Key Result

Areas in the plan. An organisation structure that will support this strategy is Annexed to this plan. The reporting system is diagrammatically presented in figure 4.1. To further support performance monitoring, a ZRA M&E Plan and System will be enhanced, institutionalized and automated.

4.3 Corporate Goals and Performance Metrics

A series of metrics and three-year performance targets for each goal has been established to measure progress against a clear timeline. Performance plans for employees at all levels of the company will be tied to these metrics — beginning with the Senior

Management Members (SMM) and cascading throughout the organization as appropriate.

This process helps ensure that all employees are contributing not only to their team or

Directorate, but also to the corporate goals. The CSP identifies a set of key measures to be monitored during the plan period as appended in Annex 2.

Monthly Reports

Quarterly Reports

Annual Reports

Mid Term Reports

ZRA Board

Senior Management Members (SMM)

Ministry of Finance

Key Stakeholders

General Public

Key Results AreasM iss io n

Vision

Im pl em en ta tio n Pl an

Objectiv es

Strateg ies

Figure 4. 2 Performance Reporting Flowchart

4.4 Resource Mobilization and Financial Management

Financing of this Strategic Plan will be informed by the annual budget cycle in line with the fiscal year for the Republic of Zambia. ZRA will adopt a proactive approach to engage various stakeholders for resource support in operationalising the deliverable in this

Strategic Plan. For ZRA to achieve its goals and attain the projected performance levels, a sum of circa ZMW 2, 763 Billion will have to be invested in the organisation over the three-year period of the Strategic Plan. These funds will be mainly realised from

Government annual grant. In addition, assistance will be sought from cooperating partners and also through other financing options like Public Private Partnerships (PPP).

4.5 Enterprise Risk Management

Risk management is a continuous process as part of good governance practice. It involves identifying, ranking and coming up with risk response initiatives to maximise the probability of success of strategy implementation. The Authority has developed a

Risk Management Policy which further prescribes in detail the remedial measures to mitigate material identified. The risks are classified into three categories being: High, Medium, and Low. Mitigation actions are identified for the High and Medium Risks.

The drivers for risk identification will be the thirteen (13) Strategic Objectives in this

CSP. The risk approach and treatment strategy that will be undertaken during the Plan period is summaries in the following figure:

The responses to varying levels of risk exposure will be as guided below.

Threats/ Opportunities

Transfer Have third party take on responsibility for risk (insurance)

Mitigate Reduce probability or impact of risk

Accept Contingency plan for risk

Avoid Eliminate cause risk

(Low) Impact ( High)(Lo w)

Li ke lih oo d ( H igh

Figure 4. 3 Risk Mitigation Matrix

(i) Low Risk (Low Impact/Low Likelihood): The strategy for all low risks is to accept the risk subject to periodic passive monitoring measures. Under the low risk category, the option available is:

a. Accept the risk

This is where no action is taken to mitigate or reduce a risk and the

Authority has decided to live with it. This may be because the identified risk reduction or mitigation activity is deemed not cost-effective.

(ii) Medium Risk (Low Impact/High Likelihood or High impact/Low Likelihood): This is acceptable level of risk exposure subjected to regular active monitoring measures.

Under the medium risk category, the four treatment options in the High Risk category below also apply.

(iii) High Risk (High Impact/High Likelihood): This is unacceptable level of risk exposure which requires immediate corrective (treatment) action to be taken.

Under the high risk category, there are four treatment options available:

a. Mitigate the risk

This is a method of controlling risk through implementing actions that reduce the likelihood of the risk occurring or minimize its impact prior to its occurrence;

b. Transfer the risk

This can be achieved through the use of various forms of insurance, or contracting third parties who are prepared to take the risk on behalf of the

Authority;

c. Avoid the risk

This involves completely avoiding undertaking the activity that exposes the

Authority to the risk if it is possible to do without it or if there is an alternative activity that can be done in its place. This option is usually considered if the cost of implementing the mitigation is prohibitive; and

d. Accept the risk

This is where no action is taken to mitigate or reduce a risk and the

Authority has decided to live with it. This may be because the identified risk reduction or mitigation activity is deemed not cost-effective to institute.

5 ANNEXES

5.1 Annex 1: Revenue Target 2019-2021

Over the medium term, Government will continue to enhance domestic resource mobilization strategies so as to increase the contribution of domestic revenue to GDP from 18.6 percent in 2019 to 19.1 percent by 2021 as indicated in the Table 5.1 below:

Table 5. 1: Revenue Projections for the Period 2019-2021

5.2 Annex 2: Projected Strategic Implementation Plan For The Plan Period

KRA 1: Enhanced Revenue Collection

Strategic Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

1. Optimise revenue collection

• Develop and implement revenue optimization measures

• Develop and implement administrative framework to reform Value Added Tax

(VAT)

Parliament approved annual revenue target met 108% 100% 100% 100%

% of tax types that meet set targets 47.1% 50% 60% 75%

Tax Revenue to GDP ratio 17.5% 17.2% 18.1% 18.7% Cost of collection (Government funding to revenue ratio) maintained between 2% and 3% of revenue collected

1.8% 3.0% 3.0% 3.0%

2. Reduce debt stock

• Develop and implement a debt reduction strategy

• Enhance account reconciliations in collaboration with taxpayers to achieve an agreed position

% reduction in debt stock 10% 20% 20% 20%

Debt/Tax Revenue Ratio 96% 90% 80% 70%

% of debt stock within 90 days 6.42% 10% 15% 20%

3. Enhance compliance

Increase audit coverage Percentage of taxpayers audited 4% 10% 4% 4%

• Enhance and implement block management system

• Implement e-tax clearing certificates with other institutions

• Implement EFDs

Percentage of VAT returns filed 72% 78% 83% 86%

Percentage of final income tax returns filed 22% 41% 44% 46%

Percentage of PAYE returns filed 51% 66% 74% 79%

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

• Implement digital tax stamps

• Implement Telecommunication Traffic Monitoring System (revenue assurance module)

• Implement MVCMP

• Establish corporate intelligence unit

• Implement data matching project

• Appoint tax collection

Agents (specifically, local councils for enforcement activities)

• Integrate ZRA systems with third party institutions

• Implement Bulk Intelligence Data Analytics (BIDA) project

• Promote use of e-services

• Promote the use of

TaxOnphone

• Enhance enforcement

• Implement a real- time online system for acquittal of transits

• Implement electronic cargo tracking system

• Improve management of traffic segmentation and

Percentage of turnover tax returns filed 37% 50% 60% 70%

Percentage of domestic excise returns filed 68% 81% 89% 94%

Percentage of insurance levy returns filed New 74% 79% 82%

Percentage of mineral royalty tax returns filed New 65% 69% 70%

Percentage of VAT payments made on time 54% 60% 70% 80%

Percentage of income tax payments made on time 58% 60% 70% 80%

Percentage of PAYE payments made on time 64% 70% 75% 80%

Percentage of mineral royalty payments made on time

51% 60% 70% 80%

Percentage of domestic excise payments made on time

31% 50% 65% 80%

Percentage of turnover tax payments made on time 69% 75% 80% 85%

Percentage of compliant taxpayers following enforcement

New 50% 60% 75%

Percentage of Transits acquitted out of Total Transits

99.73% 100% 100% 100%

Value of debt from “Through Transits” not acquitted kept below 0.08%

0.08% 0.05% 0.05% 0.05%

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021 circulation under customs control

• Clean-up the tax Register of all Transits

4. Effective business framework

• Ensure filing and payment compliance by gaming and betting industry

% of identified gaming & betting businesses registered New 60% 70% 80%

% of compliant gaming & betting businesses New 50% 60% 70%

KRA 2: Satisfied and Knowledgeable Taxpayers

Objective Strategies Key Performance

Indicator Service Delivery Target

Baseline 2019 2018 2020

1. Improve public perception

• Develop and implement a comprehensive communication and tax education program

• Implement social media monitoring and engagement tools

• Improve monitoring and evaluation of the ZRA brand to achieve consistency

• Develop and implement Corporate Social Responsibility program

• Develop and implement a stakeholder engagement strategy

• Undertake taxpayer perception survey

% of taxpayers with a favourable perception of ZRA

61% 70% 75% 80%

2. Improve customer experience

• Improve the ZRA ambiance:

o Take up lead agency role as per Customs Border Control Act;

o Identify and dispose obsolete assets;

% of satisfied taxpayers New 70% 75% 80%

% of taxpayers using e-services 65% 85% 90% 100%

Objective Strategies Key Performance

Indicator Service Delivery Target

Baseline 2019 2018 2020 o Implement frontline uniform.

• Implement a formal organizational structure for customer service function

• Implement Customer Relations Management System (2021)

• Expand service delivery channels:

o Implement TaxOnphone o Implement TaxOnline 2 interface, o Implement payment module and customs module o Implement Mobile e-payments o Implement Point of Sale

(POS)

o Implement Mobile APP o Implement Bulk SMS alert o Implement additional

Service Centres (evaluate performance of existing service Centres in 2020) o Implement Mobile Offices o Outsource cash offices

% of e-payments by volume 60% 80% 85% 90%

% of e-payments by value 62% 75% 80% 85%

% of Returns filed online 92% 92.5% 93% 93.5%

Objective Strategies Key Performance

Indicator Service Delivery Target

Baseline 2019 2018 2020

• Review and implement call

Centre reforms

• Enhance and implement a

Service Charter

KRA 3: Efficient, Reliable and Simplified Business Systems

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

1. Improve business processes

• Develop and execute business processes improvement plans (Kaizen, Change Management, project management)

• Implement WTO-TFA Plan

- Implement Zambia Electronic Single Window

(ZESW)

• Develop and implement innovation Framework

• Establish innovation Centre

Percentage of identified Processes meeting set performance standards

New 50% 60% 75%

% of WTO TFA articles implemented 43.08% 50% 55% 60%

Total Number of institutions connected to ZESW 8 13 18 23

Total Number of ZESW Pillars implemented 3 4 4 4

• Implement a comprehensive operational risk management framework

Percentage of identified risks treated New 80% 90% 100%

2. Improve ICT solutions

• Develop and implement new ICT Strategy:

• Develop and implement Taxonline2

• Deploy new servers for applications and database for the core business systems

% uptime for core networks 98% 98.5% 99% 99.5%

% uptime for core servers 98% 98.5% 99% 99.5% % weighted average uptime for links 97% 98.0% 98.5

% 99.0%

% uptime for core Database Systems 98% 98.5% 99% 99.5%

% uptime for core applications 98% 98.5% 99% 99.5%

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

• Implement new data centers at Head Office and Mpendwa House

• Optimize Connectivity bandwidth

• Implement Connectivity links

• Implement flexible middleware applications

• Upgrade ASYCUDAworld

• Implement systems stabilization program

• Implement ICT Service

Level Agreements

• Upgrade Middleware to a more Stable Environment

• Optimize the use and reduce cost of software licenses.

• Conduct End User System based Surveys

• Upgrade SAP

% of the total ICT Recurrent Budget against the total ZRA Operational budget

16% 15% 14% 13%

% of software upgraded to the latest proven version New 90% 95% 99%

% of ICT servers that are within warranty period 70% 75% 80% 85%

% of Satisfied End-Users of ZRA Business Systems New 60% 70% 80%

% of identified COBIT processes improved New 70% 80% 90%

3. Improve data integrity

• Develop and implement initiatives for improving data integrity

• Develop a mechanism for documenting, reporting and tracking cases of unclean data

% of identified cases for cleaning that have been cleaned

New 80% 90% 90%

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

• Implement reconciliation of taxpayers’ accounts

KRA 4: Committed, Competent and High Performing Workforce

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

1. Improve staff recruitment and retention

• Develop and implement a Resourcing Strategy

• Review and improve employee value proposition

• Develop and implement a succession policy

• Implement e-Recruitment system

• Develop and implement strategies to address Gender imbalance in the recruitment process

• Develop and implement a leadership mentorship program

Staff establishment to be at least 95% 96.7% 95% 95% 95%

Attrition Rate 5.3% 5% 5% 5%

2. Increase staff productivity

• Automate Performance Management and Development Contract (PMDC) system

• Align Divisional and Departmental productivity standards to strategic objectives

• Improve work environment

• Improve staff engagement

• Realign the HR structure

% of employees who met or exceeded their performance standards

New 95% 95% 95%

% of employee satisfaction 81.3% 85% 85% 85%

No. of innovations adopted New 2 2 3

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

• Develop and implement talent management policy

• Implement e-learning for continuously learning

• Review content and mode of delivery of technical and soft skills training

No. of in-house e-learning courses New 5 10 15

3. Improve staff integrity

• Undertake Corruption Vulnerability Assessments (CVA) for Divisions/Departments

• Develop and implement annual Corruption Prevention Plans

• Implement Whistle blower Policy

• Facilitate enactment of legislation to support Reward Policy

• Implement Reward Policy

• Revise and automate

Asset Declaration Form

Reduced Bribe payers index survey 5.6 3.5

% of employees dismissed for unethical conduct to total number of staff

0.7% 0.5% 0.5% 0.5%

4. Improve infrastructure and facilities

• Develop and implement a maintenance plan for existing infrastructure

• Develop new infrastructure for office and staff accommodation

• Acquire new motor vehicles and other equipment

% of physical infrastructure plan implemented

New 100% 100% 100

Percentage of planned new motor vehicle procured New 100% 100% 100

Objective

Strategies Key Performance Indicator Service Delivery Target Baseline 2019 2020 2021

• Implement fleet management system

5.3 Annex 3: ZRA Organisation Structure for Senior Management

Commissioner Customs Services

Director Legal

Deputy Commissioner

HQ

Director Information &

Communication Technology

Director Large &

Specialised Taxpayers

Director Informal Sector

& Medium Taxpayers

Director Design, Monitoring & International

Relations

Deputy

Operations

Direct Taxes

Director Innovation &

Project Management

Director Excise

Director VAT Operations

North

Commissioner Finance

Director Treasury

Management Director Finance

Director Internal Audit

Commissioner Indirect Taxes

Director Human

Resource

Director Investigations

Director VAT Operations

South

Director Research & Corporate Strategy

Director Administration

Board Secretary

Governing Board

Confidential Secretary

Commissioner General

Director Design, Monitoring & International

Relations