The Unique Face of Poverty in ZAMBIA

1. The Unique Face of Poverty in ZAMBIA Valerie Kozel BBL Poverty Impact Analysis, Monitoring, and Evaluation October 17, 2006

2. Overview of Presentation • Context (matters a lot) • PVA – Approach and Key Findings • What were we trying to achieve? • Were we successful? • Policy Recommendations? • Lessons

3. Context • Zambia, once the “jewel in the crown” of Africa, is now among the poorest countries. • Zambia first country in Africa to achieve independence: resource rich, strong economic position. • Soon after, experienced decades of economic decline. Despite a slow recovery in late 1990s and positive rates of growth in recent years, economic conditions remain difficult and the future uncertain. • Zambia is still struggling to reverse deterioration in basic services in the 1990s. The capacity of public sector is weak and corruption widespread. • Moreover Zambia is entering its third decade of double-digit HIV/AIDS prevalence (16% of the adult population – 18% of women, 13% of men) • These conditions have extracted a toll on the Zambian people: a continuing fall in life expectancy, deteriorating stock of human capital, rising malnutrition and ill-health, and continuing high levels of poverty.

4. Economic Performance: Levels and Annual Growth Rates of GDP

5. Expectations of Zambians are high… formed by good years just after independence, high levels of education, modernization. But the basis for growth remains narrow and highly dependent on copper prices (good in recent years) and vagaries of the weather. The vast majority of rural poor continue to depend on subsistence agriculture, conditions little changed. • Zambia continues to be heavily aid dependent (WB borrower since early 1970s – instructive to look at history of lending, ESW). • Clarity on donor roles, donor coordination and harmonization essential. • Coordination on shared agendas e.g. poverty reduction is particularly challenging. • What is the Bank’s role in the country?

6. Objectives of PVA • Update understanding of poverty and vulnerability (last PA in 1994 – excellent report, limited impact) • Inform GRZ • Inform other stakeholders in Zambia • Inform the Bank, so we can assess our own CAS measures • In light of this, assess design and implementation of the PRSP (I-PRSP in 2000, PRSP in 2002) • Highlight issues to be addressed in next PRSP (Fifth National Development Plan – FNDP, 2006), provide analytic basis for informed debate in Zambia, push for greater accountability of GRZ to the Zambian people.

7. Approach PVA was designed and carried out in highly participatory fashion involving: • Early and continuing consultations with NGOs, academics and research organizations, international partners, Parliamentarians, labor organizations, including GRZ • Collaborative work with local academics and research institutes on key background papers • Early discussion of key findings, distribution of background papers, drafts available on SARPN website. However: GRZ was not strongly vested in the work. Lack of clarity on specific GRZ counterpart agency, over-emphasis of CSO, ZAMSIF links

8. The PVA used an innovative quant-qual approach to better understand the unique nature of poverty in Zambia and future challenges: • analysis of consumption-based poverty measures and non-income dimensions of poverty (e.g. schooling and school enrollments, malnutrition, access to basic services, employment composition, survival rates); • 2002/03 LCMS, cost of basic needs approach, building on earlier poverty lines • 92, 96, 2001 DHS, 1990/2000 Pop Census • augmented by in-depth qualitative field studies in urban and rural areas. • Plagued by problems with inconsistent data over time (typical in AFR), “progress by fiat”, political considerations

9. Given high levels of insecurity, PVA focused explicitly on links between risk, vulnerability and poverty: risk viewed as important cause of poverty • including economy-wide (recent droughts, commodity price shocks) as well as idiosyncratic shocks (disease, mortality and orphanhood) • and in particular on the links between HIV/AIDS and poverty Broader focus – poverty, risk, vulnerability – was widely appreciated: • Zambian’s perceived their world to be uncertain, carry many risks, and bemoaned capacity to deal with these. • “Poverty” (and headcounts) equated with reforms and neoliberal policies of 1990s. Vulnerability” seen as capturing quality of Zambian people’s lives.

10. Highlights: Findings • Poverty levels remain high in Zambia, despite recent signs of economic recovery. 95% of respondents in the LCMS survey said they were poor/very poor, few felt conditions had improved.

12. Official estimates based on (possibly) comparable surveys: poverty levels very high e.g. compared to other African countries (too high?), show no discernable trend over the 1990s

13. Non-income indicators also high. Viz. infant and child mortality is high, absolutely and in comparison to other SSA countries

14. Malnutrition shows similar patterns

16. Rural poverty is a particular concern Overall, data suggest virtually no improvement in rural living conditions in 1990s. • Differences are stark between rural and urban areas in Zambia • three-quarters of the poor live in rural areas and the majority rely on subsistence rain-fed agriculture; few have adequate access to transport, communications, and power (<5%), and health and education services are only gradually improving after a decade of neglect. • Share of rural labor force in agriculture increased over the 1990s – from 88% in 1990 to 94% in 2000. Despite some increase in cash cropping (cotton, tobacco), structural problems continue to plague the sector. • High uncertainty – in prices, weather, death and disease, also government policies. • In qualitative assessments, rural respondents cited high cost/low availability of ag inputs, low prices, limited markets, lack of credit, lack of job opportunities as reasons for their poverty. Many rural respondents wished for a return to the past – at time of relative stability and prosperity.

17. Urban areas show more dynamism… albeit with problems • As a result of reforms and stabalization measures in the 1990s, the urban workforce shifted out of mining and manufacturing and into trade and services, also agriculture (concern). • Accompanied by an expanding urban informal sector, viewed with unease by GRZ but with hope by many of the urban poor. • Some laid off mine workers still waiting for “the good times” to return, to be hired on again in the mines • Although the Zambian economy seems to have stablized, urban unemployment remains high – LCMS3 reports 14% unemployment on average, 18% for the poorest quintile. • Services are better in urban areas: however, sharp welfare gradient in access and many of the poor still lack access to clean water, adequate housing, good health and education services, reliable power. • Like their rural counterparts, many urban Zambians still wish for a return to past economic policies and past affluence.

21. The impact of the long period of adjustment, deteriorating basic services, and HIV/AIDS are visible in education and literacy patterns: Zambia remains one of the most educated countries in Africa, despite deterioration in the 1990s. But high levels of education have not ensured higher prosperity.

23. Concern about risk and uncertainty is widespread, and there is little confidence about the Government’s ability (or willingness) to address it. • Respondents cited multiple and large shocks in the 1990s, that had pushed them into poverty • Weather (droughts, flooding, environmental hazards) • Illness (malaria, other infectious diseases, HIV) • Deaths • Job loss, long periods of unemployment • Livestock theft, livestock deaths • Price shocks, including consumer prices • GRZ’s own policies: reforms in 1990s, spending cuts, policy reversals • Virtually no access to formal safety nets, instead depend on informal systems of support. Strong tradition of community and family support for most groups in Zambia. However cases cited of these systems breaking down viz. HIV/AIDS, orphans, poverty of elderly, hard economic times.

24. HIV/AIDS and Poverty • HIV/AIDS affects all aspects of society and people in all walks of life: Zambia is entering third decade of double-digit prevalence. • Poverty fosters exposure to HIV/AIDS and HIV/AIDS itself leads to higher poverty levels. • Loss of labor, human assets • Risky behavior • Health services overwhelmed, other services (education) also suffer • Stigma, breakdown of social capital • Women, children and the elderly are particularly hard hit: survival rates for women plummeted in the 1990s; the number of orphans nearly doubled (to 15% of all children by 2001/02), and over half Zambia’s orphans are being raised by elderly grandparents who themselves have lost many of their adult children to AIDS and other causes. • Unfortunate short-term focus in HIV/AIDS support, activities

25. According to the 2001-02 ZDHS, just under 16% of the adult population are HIV+. HIV/AIDS spread throughout Zambia, not just in high-risk populations.

26. Despite widespread awareness, risky behavior continues: and women are most affected…

28. Life Expectancy in High HIV/AIDS Prevalence Countries

29. Orphans as a Percent of All Children in Zambia

30. Zambia’s PRSP • Not prioritized, not well-implemented, not focused on the needs of the poor. • No effective monitoring of outputs or outcomes, weak reporting of general implementation. Despite repeated efforts on part of bilateral donors as well as Bank, no effective monitoring system was put in place. • A negotiated document: should this come as a surprise?

31. Policy Recommendations? • Left to discussions within Zambia: PVA framed the issues, options. Was this the right approach? • Key policy concerns: • Rural poverty: structural impediments in the ag sector, reluctance of private sector to engage (viz. vaccines, fertilizer), high levels of risk, costly inputs, poor transport. • Weak and ineffective govt, high levels of corruption. Seen as pandering to the better off and more powerful. • HIV/AIDS is a pervasive problem that will not be solved by better access to ARVs. Donor support has thus far been ineffective. What is next? What is the Bank’s comparative advantage. • Zambia’s first PRSP was poorly designed (if focus is poverty reduction), not prioritized, unevenly implemented. Will the next PRSP/5th NDP be any better? • Zambia has achieved stabilization and recovered from long period of deterioration. But some doubt that future growth path will be broad-based, inclusive of poor. E.g. decision to focus on “winners” in rural areas: is this the right decision?

32. Lessons • The Zambia PVA was not a large success, despite many “small successes”. Plagued by problems common across all AAA, also common to PAs. • Timing determined by exogenous factors, viz. FY deadlines, need for core diagnostics. Factors force Bank to power through issues rather than resolve them (ref. poverty lines, lack of appropriate counterpart). • No clear WB follow-up actions, esp. lending, linked to the report. • Uneven ownership of the CT, even more uneven ownership of GRZ (poverty not high on their list of priorities). Which Ministry is responsible for poverty? In contrast, strong support from international community, NGOs, other stakeholders in Zambia • Evolving role of WB in Zambia • Dissemination still pending (!) • How could it have been done better? (factors we control, factors we don’t)