To counter the historically centralized nature of Zambian political power and institutions being confined to a narrow elite of Zambian society, Government has made decentralization by devolution a key piece of its governance strategy. Several policy and institutional initiatives were taken in the past. However, their ability to achieve development impact especially in the rural districts has been limited due to implementation failures, low institutional capacities, and weak incentives for key actors. Government is determined to address these binding constraints through a focused plan that will empower Local Authorities through resources and capacity building. Building upon the existing legal and institutional framework for decentralization such as the Constituency Development Fund (CDF), the Government has adopted a new, comprehensive DIP for 2022-2026. The new plan intends to strengthen the capacities of the local authorities and provide them with adequate financial resources through a strengthened intergovernmental fiscal system. It will also strengthen local accountability as well as citizen engagement.

Project Development Goal is to strengthen the financing, institutional performance and accountability of Town Councils (TCs) in Zambia.

Financing Type Two types of financing used for the project; (i) Program for Results (P4R)- Covers key result areas and disbursements are directly linked to achievement of tangible verifiable results. (ii) Investment Project Financing – will provide input-based capacity building support and project management activities Key Partners: Ministry of Local Government and Rural Development, Ministry of Finance, Decentralization Secretariat, Zambia Public Procurement Authority, Office of the Auditor General, Office of the Accountant General and Chalimbana Local Government Training Institute. Timeline: The project will run from 2022 – 2027 Focus Area: Decentralization to strengthen governance and service delivery across the country

Key Result Areas

Result Area 1: Capital Grants to Town Councils

The program will introduce a capital grant window to the inter-governmental fiscal framework, that will provide dedicated resources to Town Councils to meet their capital investments, incentivize institutional performance and enhance accountability of TCs.

Result Area 2: Strengthened Public Financial Management (PFM), Transparency and Accountability of Local Authorities (Las).  

The increased flow of resources to LAs necessitate good governance through democratic effective and coherent governance systems and institutions while respecting autonomy of the sub-structures.  This will require TCs to carry out their core PFM and procurement functions in an efficient, accountable and transparent manner.  This result area is about strengthening governance aspects of decentralization. 

Result Area 3: Strengthened Fiscal Framework for Devolution.

The DIP has identified many gaps in the fiscal landscape at the local level including high indebtedness, unsustainable management of debt, dwindling local own resource revenue etc.  Keeping in line with the priorities of the Government, the result area three will contribute towards the review and reform of the existing fiscal framework for decentralization such as the review of the intergovernmental resource allocation, and a review of the gaps in the existing policy and practice frameworks for local revenue collection and local debt management.

Result Area 4: Capacity Building of Town Councils.

The Government is reforming the human resource management system and has embarked on a comprehensive capacity development program for LAs to enhance, efficient and quality of service delivery.  There exist wide variances in the capacity of TCs across the country. Considering the program design of having TCs to qualify for accessing grants, the TCs are required to be supported with capacity building upfront. The capacity building support will be provided through the IPF