African Development Bank Zambia

African Development Bank Zambia

Since it commenced operations in Zambia in 1971, the Bank has committed more than USD 1 billion to public sector infrastructure projects in agriculture, industry, water and sanitation, energy, social sector (education and health), transport and multi-sector (primarily general budget support). The predominant financing modalities are project loans/grants. Additional support valued at approximately USD 150 million have been allocated to the country’s private sector. Zambia also benefited from debt relief valued at USD 452 million under the HIPC and the Multilateral Debt Initiatives. 

At the end of December 2015, the portfolio consisted of 19 ongoing and approved operations (16 national and 3 multinational projects) with a total value of UA 633 million (USD 886 million) compared to UA 230 million (USD 322 million) in 2011. The portfolio is distributed across six sectors namely transport (47%), agriculture (14%), energy (14%), water supply and sanitation (8%), social (7%), finance (6%) and environment (4%). More than half of the resources come from the ADB lending window while about 33% of the project value is from ADF resources. 16% comes from NTF and other resources such as the Africa Working Together Fund and other trust funds.

The Bank also supports a non-lending program that has resulted in Economic and Sector Work (ESWs) on issues ranging from analysis of value addition, job creation and competitiveness in the mining, tourism, and cattle sectors. Recent non-lending activities include the Zambia Manufacturing Study and the Zambia Private Sector Profile. A study on Domestic Resource Mobilization was completed but is currently awaiting the preparation of a Policy Brief. The Development Effectiveness Review for Zambia was published in 2014 outlining key achievements during the past decade. Looking ahead a transport master plan (currently ongoing), cost of service study on electrification (re-tender), an analysis of the prospects for developing farm blocks and a study on trade (DRC-Zambia) are planned.

In January 2011, the government launched the Sixth National Development Plan (SNDP) which covered the period 2011–2015. The new government that took over at the end of 2011 introduced the revised Sixth National Development Plan 2013-2016 for the remainder of their term. The revised Plan sets out four overarching objectives for the development of the country: promote employment and job creation through targeted and strategic investments in selected sectors; promote rural development by supporting agriculture, rural enterprises and rural infrastructure; enhance human development by investing in social sectors; and accelerate infrastructure development to enhance the growth potential of the economy. The plan also sets out strategic growth sectors in agriculture, manufacturing, energy, construction, tourism and mining. Agriculture is the major employer in the country, while reliable and efficient infrastructure is vital to economic and social development that promotes inclusive growth.

Zambia’s 2011-2015 Country Strategy expired in December 2015. The main support pillars were: Pillar 1 – diversification through infrastructure development and Pillar 2 – economic and financial governance. A CSP Completion Report currently under internal review would be published in April 2016. The 2016-2020 CSP will be prepared during the course of the second and third quarter of 2016. Based on our analysis the new Strategy is expected to have a stronger focus on private sector development given its importance for creating jobs for hundreds of thousands of Zambians while improving their well-being and quality of life. Infrastructure rehabilitation and expansion is likely to continue as the other pillar as it is vital to economic and social development. Furthermore, large gaps in infrastructure development will remain. The Strategy’s overall objectives are to make growth more inclusive while building a robust and sustainable (greener) basis for long term growth. The Strategy is designed to assist Zambia sustain economic growth while diversifying the economy and strengthening country competitiveness.

The Bank’s 2011-2015 Country Strategy for Zambia spanned through two ADF cycles – ADF-12 and 13. Under ADF-12, the performance-based allocation (PBA) for the three years was slightly over UA 101 million (USD 141 million). Zambia was reclassified as a blend country in 2014 which gave it access to considerable ADB resources. The Government initially opted for a quick transition to ADB-only, but due to the economic headwinds has informed the Bank that the transition will take longer. The reclassification has reduced the ADF-13 allocation for Zambia to UA 21 million (USD 29 million).