Project Information Document (Pid)

1. Zambia has successfully raised its average annual gross domestic product (GDP) growth rate; however, poverty and inequality have remained stubbornly high. Zambia has averaged an annual GDP growth rate of 7.4 percent since 2000, with average per capita incomes increasing after decades of economic volatility since the country’s independence in 1964. Although economic growth has resulted in overall development outcomes in some core sectors such as health and education, Zambia faces both high levels of poverty and inequality when compared to other countries in the region. Rapid population growth has meant that the number of Zambians living in poverty increased between 2010 and 2015. In this context, the structure of growth benefited the people in urban areas (both poor and non-poor) more than the poor in the rural areas1.

2. Zambia’s growth has been spatially unbalanced. Historically growth has been highest along the railway line from Livingstone through Lusaka to the Copperbelt, whereas other places and people have remained, to a very great extent, excluded from recent economic progress. Urbanization has been a driver of change over the past 15 years. However, urban growth has been significantly more focused on the capital city than secondary and rural towns. For example, although the annual population growth of Lusaka is over twice the average for Sub-Saharan Africa, secondary towns are growing slower than the rest of Africa (0.7 percent in Zambia as compared with 1.8 per cent elsewhere). These disparities may exacerbate uneven territorial development, as secondary and rural towns play a crucial role in strengthening the links within local, provincial, national and international supply chains.

3. Weak institutions and limited accountability have hindered service delivery and growth. Between 2012 and 2017, Zambia’s rank in Governance Effectiveness fell from 39 to 29 in the World Bank’s Worldwide Governance Indicators. Weak policy coordination and implementation of reforms, and limited transparency and accountability create space for vested interests to have a disproportionate influence in policy making and public resource allocation, thereby hindering pro-poor growth. It has been observed that while forms of institutions (laws, policies, systems and structures) have shifted to mirror global “best practices”, their functionality (de facto performance) has remained relatively the same. Weak capacity to manage public expenditures and implement programs has undermined service delivery....

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