Country Partnership Framework Document of The World Bank Group FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR REPUBLIC OF ZAMBIA FOR THE PERIOD FY25–FY29 September 5, 2024 Zambia Country Management Unit Eastern and Southern Africa Region The International Finance Corporation Africa Region The Multilateral Investment Guarantee Agency This document is being made publicly available prior to Board consideration. It may be updated following Board considerations, and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. The date of the last Country Partnership Framework was February 14, 2019. FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (August 30, 2024) Currency Unit – Zambian Kwacha (K) K 26.1 = 1 US Dollar ABBREVIATIONS AND ACRONYMS 7NDP Seventh National Development Plan MIGA Multilateral Investment Guarantee Agency 8NDP Eighth National Development Plan MOU Memorandum of Understanding AfCFTA African Continental Free Trade Area MPA Ministries, provinces, and agencies BDS Business Development Services MSME Micro, Small and Medium Size Enterprises CEM Country Economic Memorandum MW Megawatt CLR Completion and Learning Review OCC Official Creditors Committee COVID-19 Coronavirus Disease 2019 PEA Poverty and Equity Assessment CPF Country Partnership Framework PFM Public Financial Management CPSD Country Private Sector Development PforR Program-for-Results CRW Crisis Response Window PHC Primary Healthcare DPF Development Policy Finance PIM Public Investment Management DRM Disaster Relief Management PISA Program for International Student DSA Debt Sustainability Analysis PIU Project Implementation Unit EITI Extractive Industries Transparency Initiative PLR Performance and Learning Review ESF Environmental and Social Framework PPG Public and Publicly Guaranteed FDI Foreign Direct Investment PPP Public-Private Partnership FISP Farmers Input Supply Program PSW Private Sector Window FY Fiscal Year SADC Southern African Development Community GDP Gross Domestic Product SCD Systematic Country Diagnostic GRID Green, Resilient, and Inclusive Development SCT Social Cash Transfer Diagnostics SDG Sustainable Development Goal GRM Grievance Redress Mechanism SME Small and Medium Enterprises GRZ Government of the Republic of Zambia SOE State Owned Enterprise HIPC Heavily Indebted Poor Countries SPJ Social Protection and Jobs HLO High Level Outcome SSA Sub-Saharan African IC Investment Climate TB Tuberculosis IDA International Development Association TVET Technical and Vocational Education and IEG Independent Evaluation Group Training IFC International Finance Corporation USAID The United States Agency for International IMF International Monetary Fund Development IPF Investment Project WASH Water, Sanitation and Health IPP Independent Power Producers WBG World Bank Group ISR Implementation Status and Results Report WTO World Trade Organization LG Local Governments ZESCO Zambia Electricity Supply Corporation Limited LMI Lower Middle Income ZPPA Zambia Public Procurement Authority MFD Maximizing Finance For Development IDA IFC MIGA Vice President: Victoria Kwakwa Sergio Pimenta Ethiopis Tafara Director: Nathan Belete Mary Porter Peschka Sebnem Erol Madan Task Team Leader: Achim Fock, William Madalo Minofu Jessica Charles Wade Battaile, Immaculata Senait Mekete Ayele Ishemwabula FY25–FY29 COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF ZAMBIA TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................................ 1 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA ....................................................................... 2 2.1 Social and Political Context ......................................................................................................... 2 2.2 Recent Economic Developments ................................................................................................. 4 2.3 Poverty and Shared Prosperity .................................................................................................... 6 2.4 Main Development Challenges.................................................................................................... 7 III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK ...................................................................... 8 3.1 Government Program .................................................................................................................. 8 3.2 Proposed WBG Country Partnership Framework........................................................................ 9 3.3 Implementing the CPF ............................................................................................................... 17 IV. MANAGING RISKS TO THE CPF PROGRAM .................................................................................. 19 Annex I: Results Framework for Zambia CPF FY25–FY29............................................................................ 21 Annex II: Country Partnership Framework FY19–FY24 Completion and Learning Review ......................... 35 Annex III: Streamlined Systematic Country Diagnostic Update .................................................................. 75 Annex IV: Selected Indicators of Bank Portfolio Performance and Management...................................... 93 Annex V: Operations Portfolio (IDA and Grants) ........................................................................................ 94 Annex VI: IFC Committed and Outstanding Portfolio by Industry Group (as of June 30, 2024) ................. 96 Annex VII: MIGA’s Guarantee Portfolio (as of June 30, 2024) .................................................................... 97 0 FY25–FY29 COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF ZAMBIA I. INTRODUCTION 1. The proposed Country Partnership Framework (CPF) lays out the priorities for the World Bank Group’s (WBG’s) engagement to support Zambia during a critical time of recovery from shocks and refocus on inclusive and more resilient growth and job creation. The FY25–FY29 CPF maintains the strategic directions of the previous FY19–FY24 CPF, with a sharpened focus on specific areas of private sector-led growth, human capital development, and climate resilience in response to evolving development challenges. This CPF was informed by extensive stakeholder consultations at the concept and decision stages; with the Government of the Republic of Zambia (GRZ) at national and local levels, the private sector, civil society, and development partners. It also draws from core analytics including the Systematic Country Diagnostic (SCD), Country Economic Memorandum (CEM), Public Finance Review (PFR), and Poverty and Equity Assessment (PEA), and emerging lessons from the draft Country Private Sector Development (CPSD) report and a Climate Finance Assessment, which also serves input to the upcoming Climate Change and Development Report (CCDR). 2. The proposed CPF brings onboard key aspects of the WBG Evolution. The CPF aims to deliver solutions and impact at scale, consistent with the WBG Evolution and updated mission to end extreme poverty and boost shared prosperity on a livable planet by: (a) operationalizing the “One World Bank Group” approach, particularly with a renewed focus on enabling and mobilizing private capital in areas like renewable energy and agribusiness through the full range of World Bank, International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) instruments; (b) a sharper focus on outcomes using the WBG Corporate Scorecard; (c) better connecting country-level support with regional integration and priorities and global challenges; (d) managing current and future projects effectively and with a focus on results, and scaling up successful and impactful projects; and (e) more strongly leveraging partnerships with other development partners. 3. This CPF presents a new strategy articulated along three interrelated High-Level Outcomes (HLOs) to support Zambia’s recovery over the next five years: (1) more and better jobs, (2) improving human capital, and (3) enhancing climate resilience. Drawing from lessons learned from the FY19–FY24 CPF implementation as well as regional priorities of access to electricity, improved education, access to digital and access to water and sanitation, this strategy is most importantly grounded in the GRZ’s priority to foster conditions for inclusive, sustainable, and resilient private sector-driven growth. The HLOs are interrelated. For example, human capital development is paramount to a healthier and more skilled labor force and realizing the goal of more and better jobs. Similarly, enhanced climate resilience bolsters the Zambian’s economy ability to withstand shocks and attract private investment. . The CPF aligns closely with the country’s 8th National Development Plan (8NDP, 2022–2026) issued by Government in 2021, as well as the Vision 2030 issued in 2006. It also retains flexibility to adjust to changing circumstances and intensifies the focus on implementation to deliver results. 4. The CPF builds on a well-performing WBG portfolio in Zambia. The World Bank portfolio includes 25 active projects with a total commitment of over US$3.2 billion, including 17 national IDA projects (US$2.4 billion) as well as 6 IDA regional and 2 small trust-funded projects. IFC’s financing portfolio stands at US$155.4 million over 12 projects. MIGA has a commitment of US$170.7 million over five projects. While implementation was slow in the past, partly due to challenges including COVID-19 and the transition to a new administration, the portfolio has been performing well over the past two years, and disbursement rates have been high and reaching 34.94 percent in FY24 (for national IDA IPF). The recent and ongoing 1 Advisory Services and Analytics (ASA) program is also strong, including several just-completed core analytics and IFC’s Advisory Services portfolio of US$5.1 million across seven projects mainly in agriculture sector, climate insurance and support to the public private dialogue forum.1 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA 2.1 Social and Political Context 5. Zambia’s growth has been volaƟle, achieving middle-income status in 2011 and then slumping by 2019 to the lowest growth in two decades, resulƟng in the country’s reclassificaƟon as low-income in 2022 (see Figure 1). Economic growth has fluctuated due to vulnerabiliƟes in the agriculture and mining sectors. This volaƟlity, combined with very limited poverty reduction—even when the economy has done well— challenge Zambia’s prospects for long-term inclusive growth. Zambia's growth waned after experiencing a remarkable growth acceleration during the 2000s, on the back of Heavily Indebted Poor Countries (HIPC) debt relief and increased producƟon in agriculture and mining along with rising global copper prices. Between 1996 and 2015, a period which saw much of the growth, the number of poor increased by more than 2.6 million, with the rural population accounting for more than 90 percent of all new poor. Growth averaged 3.1 percent per year between 2015 and 2019, mainly aƩributed to falling copper prices and declines in agricultural output due to rainfall variability. Debt vulnerabiliƟes also grew significantly over this period, with external public and publicly guaranteed debt jumping from 14.5 percent of GDP in 2014 to 66.8 percent in 2019. Growth in 2019 slumped to its lowest point in two decades (1.4 percent), with drought condiƟons impacƟng agriculture, electricity, and copper producƟon. The COVID- 19 pandemic caused further worsening of Zambia’s macroeconomic imbalances, and the country was reclassified as low-income in July 2022. By 2022, 60 percent of the population (around 11.7 million people) lived below the poverty line. Most Zambians are employed in subsistence agriculture and the informal services sector, where wages are low. 6. Zambia is one of the most politically stable countries in Africa, and the bold reform vision of the current administration provides an opportunity for better development results. Zambia has been a relatively stable democracy, having consistently and peacefully transferred power between four political parties (UNIP, MMD, PF and UPND) and has, since 1991, held nine presidential elections. The “New Dawn” administration was voted into power by a large margin in August 2021 on a mandate to accelerate the achievement of Zambia’s Vision 2030. The government emphasizes the crucial role of the private sector and has prioritized good governance, macroeconomic stability, strengthened public financial management, improved service delivery, and productivity. A hallmark of the new approach is the aim for a small, diverse, and efficient government characterized by proper planning as well as transparency and accountability in the management of public resources. The new government has taken bold steps to stabilize the economy, refocus on private sector-led growth, restore public confidence, and strengthen institutions. Key measures have targeted the debt problem through improved fiscal management, scaling up social safety nets, and taking service delivery and resources closer to the people by increasing financing to constituencies through stronger local governance and accountability. Figure 1: Zambia’s remarkable Gross Domestic Product (GDP) growth rates during the 2000s have not been sustained Real GDP growth, Zambia, and selected country groups, 2001–2021 1 All portfolio data is as of June 30, 2024. 2 Source: World Development Indicators, World Bank. Note: LIC=low-income countries; LMIC=lower-middle-income countries; SSA=Sub-Saharan African countries excluding high-income countries 7. Zambia’s young and growing population presents significant opportunities and challenges for job creation and more inclusive growth. Zambia’s population of over 20 million people (19.6 million in 2022 according to the 2022 Census of Population and Housing) is young and growing rapidly, with 46 percent under 15 years and about 20 percent between 15 and 24 years. Translating this demographic potential into a demographic dividend will necessitate substantial investments in human capital to create a healthy and skilled labor force that can enable inclusive growth. Unemployment and underemployment are higher for women than men and are particularly high for youth, so it is imperative to bring young Zambians into the labor force, as the population is anticipated to double in the next 25 years. Opportunities clearly exist. For instance, more young Zambians go to primary and secondary school today than ever before. In addition, financial exclusion is higher for the 16–25 years age group (FinScope Survey, 2020), so the uptake and usage of financial products and services by youth can help ensure their transition to adulthood, financial independence, capability, and growth. At the same time, the human capital challenge is escalating as the population increases. To illustrate, the yearly cohort of Zambians between 15 and 24 years is about 400,000, while there are only about 46,000 university graduates and about 12,000 Technical and Vocational Education and Training (TVET) graduates each year. About 100,000 more teachers are needed in primary and secondary schools by 2030 merely to maintain student–teacher ratios; 500,000 more children under five years will need health services by 2033; 2.2 million more girls and women will require reproductive, maternal, neonatal, child and adolescent health and nutrition services; and 1.12 million more people over 50 years will need non-communicable disease and geriatric services. Improving gender equity and reducing Gender Based Violence (GBV) will also be crucial to unlocking the potential of Zambia’s youthful population. High adolescent fertility impedes girls’ likelihood of staying in school, maternal and neonatal health and nutrition outcomes, labor market access, and economic empowerment. 8. Weak insƟtuƟons and limited accountability have hindered service delivery and more inclusive growth. Weak policy coordinaƟon and implementaƟon of reforms, as well as limited transparency and accountability, have created space for vested interests to exercise a disproporƟonate influence in policy making and public resource allocaƟon, thereby hindering pro-poor growth. On the posiƟve side, the format of insƟtuƟons in Zambia (laws, policies, systems, and structures) have shiŌed to mirror global “best pracƟces”. However, their funcƟonality (de facto performance) has remained relaƟvely the same. Weak insƟtuƟons and capacity to manage public expenditures, coupled with inadequate funding for key insƟtuƟons, have undermined service delivery. 3 2.2 Recent Economic Developments 9. Progress on debt treatment and improved fiscal management are expected to restore debt sustainability, support macroeconomic stability, reinforce Government’s ambitious reform program and accelerate inclusive growth. A decade of pro-cyclical macroeconomic policies and falling copper prices caused external debt to jump from 6.7 percent of GDP in 2011 to 66.4 percent in 2019. The COVID- 19 pandemic exacerbated these vulnerabilities, leading to a default on Eurobond payments in 2020. In early 2021, Zambia requested debt treatment under the G20 Common Framework and has made significant progress since then, as summarized in Box 1. This was accompanied by an ambitious reform program, supported by World Bank development policy financing and an IMF Extended Credit Facility (ECF). Government actions include bold energy subsidy reform and improving the primary balance by 6.6 percentage points in 2022, bringing it to a surplus in 2023. Inflation has been cut roughly in half from a peak of 25 percent in 2021. The government has also introduced measures to boost private investment and has rebalanced the composition of government spending. Box 1: Zambia’s External Debt Restructuring under the G20 Common Framework Official external creditors and Government agreed, in October 2023, on an MOU outlining treatment covering around US$6.3 billion of official debt. The agreement provides debt relief through a maturity extension and lower interest rates, including a grace period on principal repayments and negligible interest rates during 2024–25. The MOU has been subsequently signed by all Official Creditors Committee (OCC) members. The debt treatment is based on a quantified two-stage approach that adjusts the volume of debt relief according to Zambia’s debt-carrying capacity (DCC). At the end of the IMF program, a one-time validation test will determine Zambia’s DCC and inform the stock treatment of debt in the second phase. The DCC is evaluated using a composite indicator that captures the World Bank’s Country Policy and Institutional Assessment (CPIA) score, the country’s real GDP growth, remittances, international reserves, and the world’s economic growth. If Zambia’s economic conditions improve and the DCC is upgraded from “weak” to “medium”, principal reimbursements would be accelerated, and interest payments increased; otherwise, they would continue under the base case scenario. Eurobond restructuring has also been successful while discussions with the residual private creditors are ongoing. Following an agreement in principle for restructuring Zambia’s Eurobonds, consistent with program parameters and comparability of treatment requirements as set by the OCC, Zambia exchanged its three Eurobonds for two new amortizing bonds on June 11, 2024. Ongoing discussions with all remaining external private creditors are expected to deliver a treatment consistent with the Debt Sustainability Analysis (DSA) parameters and on comparable terms with the OCC. Zambia will be the first substantive, successful case under the G20 Common Framework. Zambia is the second debt restructuring candidate (after Chad) under the Common Framework and the first to achieve significant debt reduction amongst a more heterogeneous set of creditors. While Zambia defaulted on its debt since 2020, and the debt restructuring has been a long process, it has paved the way for ongoing and future cases under the Common Framework. 4 10. However, structural challenges continue to constrain Zambia’s economic transformation and more inclusive growth.2 GDP growth continues to be strongly influenced by a volatile mining sector, with minimal economic participation by domestic firms and workers or linkages with other sectors. Over the last 20 years, labor productivity fell by more than 40 percent in agriculture and grew less than 2 percent in services, largely comprising trading activities such as wholesale and retail trade. Yet, these sectors account for about 90 percent of new jobs. Economic activities continue to be highly concentrated along the railway line, and the disparity in access to basic services between rural and urban areas remains wide. At the same time, urbanization has stalled and cities are growing informally, exacerbating vulnerabilities and constraining quality job creation. Governance indicators notably deteriorated between 2015–2020. While they have improved since 2020, they remain below 2015 levels, and weak institutions hinder policy effectiveness and service delivery. Partly resulting from weak governance, fiscal policies of the 2010s— driven by an ambitious public infrastructure agenda—could not sustain growth and contributed to the debt default, severely affecting income per capita. 11. Economic recovery remains vulnerable, given compounding crises that started with COVID-19, followed by flooding, a major cholera outbreak, and a severe drought during the last rainy season. Projected economic growth for 2024 dampened to 2.3 percent (see Table 1). The drought has severely impacted agricultural and livestock production, food security, health and nutrition outcomes among the poor and vulnerable, water availability, and electricity supply. Government has declared the drought a national disaster and called for an emergency response. The mining sector, on the other hand, is expected to recover in 2024 and stimulate growth in exports and supportive services activities. Tight monetary policy to contain inflation and elevated net domestic financing to the government are expected to keep private sector borrowing costs high. Overall, substantial uncertainty surrounds the outlook. Key risks include copper production and price volatilities, the timing of the final stages of a debt restructuring deal, and the effects of climate change on food security and hydropower generation. Table 1: Key Macroeconomic Indicators and Preliminary Projections throughout the CPF Period (annual changes in percent, unless indicated otherwise) 2020 2021 2022 2023e 2024p 2025p 2026p 2027p 2028p 2029p National accounts Real GDP growth rate -2.8 6.2 5.2 5.4 2.3 6.6 5.9 5.6 5.1 4.9 Agriculture 17.2 6.9 -11.0 -15.9 -19.4 27.4 13.3 4.6 4.0 4.0 Mining 8.0 -4.7 -3.7 -5.9 4.1 13.1 10.0 11.9 8.9 5.0 Other -5.6 7.7 7.8 8.2 3.4 5.1 5.0 5.0 4.7 4.9 Money and prices Credit to private sector 8.5 -7.8 34.2 41.3 23.6 29.0 15.6 13.1 12.7 10.2 Inflation rate (period avg) 15.7 22.0 11.0 10.9 14.6 12.1 7.0 7.0 7.0 7.0 External (percent of GDP) Current account balance 11.8 11.9 3.8 -1.9 -0.2 6.9 5.7 6.3 6.2 6.2 Exports of goods 44.1 50.7 39.5 37.4 45.7 46.0 43.1 42.0 41.8 41.6 Imports of goods -26.4 -28.9 -27.9 -32.5 -36.0 -30.1 -28.7 -28.0 -28.0 -28.0 Prim./second. income, net -4.3 -7.7 -5.5 -5.0 -8.3 -7.5 -7.4 -6.5 -6.4 -6.2 FDI inflows, net 1.0 3.1 0.6 -0.1 3.8 3.8 4.5 4.3 4.3 4.3 Portfolio inflows, net 1.1 4.5 -1.1 0.6 0.0 0.0 0.5 0.4 0.4 0.4 2 Zambia Country Economic Memorandum: Unlocking productivity and economic transformation for better jobs (December 2023). 5 2020 2021 2022 2023e 2024p 2025p 2026p 2027p 2028p 2029p Nominal exchange rate (avg) 18.3 20.0 17.0 20.2 Gross reserves (mn imports) 1.9 3.3 3.4 3.6 4.3 5.0 5.2 5.6 6.0 6.0 Fiscal (percent of GDP) Fiscal balance (cash basis) -13.8 -8.1 -7.8 -6.5 -6.1 -2.8 -3.4 -2.6 -2.2 -1.8 Fiscal balance (commitment) -17.3 -13.9 -5.4 -5.6 -2.5 -1.6 -2.3 -1.7 -1.8 -1.6 PPG debt* 150.3 112.1 110.9 133.4 107.5 88.5 79.2 74.3 69.8 66.0 Domestic 95.8 57.8 58.8 86.4 68.5 56.9 50.0 46.9 43.5 41.8 External 54.5 54.4 52.1 46.9 38.9 31.6 29.2 27.4 26.3 24.2 Source: World Bank Note: e = estimate, mn = months of, p =projection, (*) refers to the debt spike in 2023 due to significant exchange rate depreciation. 2.3 Poverty and Shared Prosperity 12. Zambia is simultaneously among the poorest and most unequal countries in the world. In 2022, the country had the 6th highest poverty incidence and the 6th highest Gini coefficient. The poverty level is misaligned with the country’s GDP per capita (i.e., countries with higher poverty have less than half of Zambia’s GDP per capita level), and the level of inequality stands out even among the subset of highly unequal resource-rich countries. Vulnerability to poverty is widespread and largely structural, reflecting massive underinvestment in services and infrastructure and limited labor market opportunities. Based on the World Bank’s Multidimensional Poverty Measure, in 2015 Zambia held the 5th highest deprivation rate in access to electricity, 6th in access to drinking water, and 21st in access to sanitation. Zambia’s Human Capital Index is also low with only 0.4 (2020). At 43 percent in 2019, the share of youth Not in Education, Employment, or Training (NEET) is about two times the global and regional averages and is about 40 percent higher among women than men. Meanwhile, female labor force participation remains low (27 percent compared to 44 percent among men). With 46 percent of the population aged 14 or younger, addressing human capital deficits becomes urgent. 13. Past poverty reduction has almost exclusively been concentrated in urban areas, and the recent reversal is not the result of a transitory shock but rather the reflection of underlying structural factors. The poverty-reducing impact of economic growth is among the lowest in a region that already lags significantly behind the rest of the world. On average, a 1 percent increase in GDP per capita is associated with a 2.5 percent decline in poverty among countries outside Sub-Saharan African (SSA), a 1 percent decline among countries in SSA, and a 0.5 percent decline in Zambia during the last high- growth period (2010–2015). This is the result of weak urban-to-rural links but also of limited urban poverty reduction. Outside urban Lusaka, growth has exclusively benefited the highly skilled workers, weakening the impact on poverty and increasing within-urban inequality. At the same time, this progress came to a halt. Following a decade of sustained urban poverty reduction, the incidence of urban poverty increased by 8.5 percentage points between 2015 and 2022 (reaching 31.9 percent in 2022). Labor market indicators suggest that Lusaka did experience a large one-off shock in 2020, but that poverty in the rest of the urban areas was likely increasing before 2020 and has not improved during the recent macroeconomic recovery. Overall, the increase in poverty is estimated to have been twice as large in 2020 relative to 2022. Current levels will not go down unless growth accelerates and becomes more inclusive. 14. Rural poverty remains widespread and stagnant—reflecting structural underinvestment, limited 6 access to economic opportunities, and vulnerability to weather shocks. Rural areas account for about 80 percent of the poor population, and the incidence of rural poverty has remained above 75 percent since 2010. Rural–urban gaps in access to services are stark, limiting human capital accumulation and hampering labor productivity. Only 6 percent of rural households had access to electricity in 2022, compared to 74 percent of urban households. Similarly, only 57 percent of rural households had access to improved water (38 percent for improved sanitation) in 2018, relative to 91 percent of urban households (79 percent for improved sanitation). While overall financial inclusion has increased significantly to 83.8 percent in urban area, it is only 51.2 percent in rural area (2020). Agricultural productivity, which is central to the livelihoods of the poor, has been in a steady decline for years, amidst ineffective policies and exposure to weather shocks. Only 17 percent of the rural population lives within 2 kilometers of a road in good condition (Rural Access Index). However, not all rural areas faired equally poorly, nor did all agricultural activities keep households in poverty, signaling that adequate investments and policies should be able to change course from the past. Rural areas in the highly- urbanized provinces of Lusaka and Copperbelt experienced a modest but steady decline in poverty over time—arguably due to larger and more pro-poor asset accumulation combined with better connectivity and access to markets. Nearly 40 percent of the rural non-poor receive most of their income from agriculture, supported by higher endowments and better agricultural practices. Wage employment in agriculture and transitioning from small-scale farming to medium-scale farming offer promising ways out of poverty—though these should be complemented with viable alternatives outside of agriculture. 15. Rural poverty is closely linked to the often poor and unsustainable use of abundant natural resources and biodiversity, particularly water, land, forests, and minerals. Over 75 percent of rural households in Zambia depend on agriculture for their livelihood, with 99 percent engaged in crop production as their major agricultural activity. To spur a sustainable and green development path, the country is well-poised to protect its abundant natural resources by applying natural capital accounting and investing in biodiversity conservation and resilience-building against the increasingly frequent and severe extreme weather events—and their impacts on forests, land, and freshwater resources. Recurrent exposure to droughts is likely one of the factors behind the structurally high poverty rates in rural areas. A recent assessment of the correlation between ward-level poverty rates and exposure to droughts over a 25-year period3 found that each additional drought is associated with a half-percentage point increase in the incidence of poverty, after controlling for various structural barriers and mitigating factors. Investments in adaptations to climate impacts protect livelihoods, assets, and human well-being, ultimately contributing to poverty eradication efforts in Zambia. Similarly, mining—especially for energy transition minerals (ETMs)—can increase the welfare of many Zambians, but only if the environment and public health is protected, if local communities benefit from job creation along the entire ETM value chain, and if revenues finance the provision of better services for all Zambians. 2.4 Main Development Challenges 16. Zambia holds tremendous potential to pivot from years of entrenched poverty and high inequality towards unlocking more sustainable and inclusive economic development from all sectors of the economy, especially through higher value addition in agriculture, new opportunities in mining, and further diversification. There is abundant natural wealth—including water, land, forests, and minerals— to support sustainable and inclusive development. Agriculture holds massive potential for diversification, value addition, and export. Mining could support Zambia’s economic transformation if the opportunity 3 : Farfan, G., Chingozha, T., & Gayoso, L. (2023). Examining the long-term relationship between drought frequency and poverty in Zambia. Mimeo. 7 provided by the global energy transition is leveraged through investments in infrastructure and human capital, reforms to sector governance, stronger management of environmental and social risk, and improved business regulations that facilitate investment and job creation along the full ETM value chain. Transport and energy infrastructure development—with strengthened private sector involvement— can create positive spillovers for other sectors. There are abundant clean energy sources to support green growth. There is also large, untapped potential in the tourism sector. The country is strategically placed to benefit from regional integration and global markets. To harness this growth and benefit from the demographic dividend of a young population, Zambia needs to significantly improve public policy efficiency, accelerate structural transformation, invest in infrastructure and human capital, manage high fertility among adolescent girls, build resilience to climate change, and ultimately unleash private sector- led growth. 17. Strong fiscal reform credentials are a new starting point under this CPF period compared to the last. However, a second generation of structural reforms is needed to address key impediments to a higher and more inclusive development trajectory: growth remains volatile and under its potential; low levels of human capital especially in rural areas constrain opportunities for better livelihoods; and weak governance has been a drag on development. Weak human capital is an underlying factor constraining economic transformation, compounded by gender disparities and frequent shocks. For example, Zambia has one of the highest levels of learning poverty in the world and higher levels of stunting than the SSA average. Economic activities and services continue to be highly concentrated along the line of rail, and the disparity in access to basic services between rural and urban areas remains staggering. At the same time, cities are growing informally, exacerbating vulnerabilities and constraining quality job creation. The share of formal employment has been on a steady decline since 2017. Governance has notably deteriorated, particularly over the period 2015–2020, led by “voice and accountability”, “rule of law”, and “control of corruption”. Since 2020, governance indicators have improved, but they remain below 2015 levels. Weak institutions hinder policy effectiveness, including policy formulation, resource allocation, coordination and implementation of reforms, and service delivery. 18. Zambia needs to increase private sector productivity and accelerate economic transformation to achieve sustained and inclusive growth. Economies transform when the private sector has the confidence and access to finance to invest and grow, and more people have the skills and opportunities to join the labor force, become more productive at their jobs, or relocate to access more productive jobs. As a result, average labor productivity rises with labor incomes. A key development challenge in Zambia has been a trend of declining productivity, and only the capital-intensive mining sector has seen significant labor productivity increases. Agriculture has enormous potential to drive poverty reduction, but expensive and distortive support programs, coupled with increasing climate hazards, constrain productivity growth and dampen diversification opportunities outside maize. Critical economy-wide reforms and sectoral policy actions, including in agriculture and mining, are needed to boost productivity and enable the private sector to drive job creation and economic transformation. This will require improvements to the business environment, connectivity to markets, affordable and reliable energy, a healthy labor force possessing modern skills, and stronger resilience to policy-induced and external shocks. III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK 3.1 Government Program 19. The CPF is grounded in Zambia’s 8NDP and will support the country’s long-term Vision 2030 to be a prosperous middle-income country, founded on private sector-led and inclusive growth. The 8NDP 8 programs contribute to the following strategic objectives: (i) economic transformation and job creation, focused on a diversified economy and competitive private sector with more inclusive labor participation (linked to HLO 1); (ii) human and social development, centered around improved education, health and water/sanitation contributing to reduced poverty, vulnerability, and inequality (linked to HLO 2); (iii) environmental sustainability around enhanced mitigation and adaptation to climate change as well as sustainable environment and natural resource management (linked to HLO 3); and (iv) a good governance environment, focused on an improved policy environment and enhanced rule of law (linked to the CPF cross-cutting theme). 3.2 Proposed WBG Country Partnership Framework 20. Given the key development challenges, the WBG’s comparative advantage, and lessons learned from the previous CPF’s implementation, the new CPF will reinforce the importance of the private sector, good governance, and resilience and will focus on results. First, moving the needle on diversifying the economy and broad job creation will require fully leveraging the wide array of instruments available for mobilizing private capital across the WBG. Target areas will be guided by the forthcoming CPSD. IFC will leverage the IDA Private Sector Window (PSW) and blended finance more generally, local currency lending, as well as capacity building through investments and advisory programs. MIGA guarantees can effectively mitigate investors’ concerns about non-commercial risks and encourage long-term engagement and private investment under public-private partnership (PPP) structures. Second, governance and institutional capabilities are intrinsically linked to achieving results at scale across all aspects of the GRZ program. The new CPF takes a more comprehensive approach to governance by looking for binding constraints across all objectives of the program. Third, more emphasis is needed to help manage Zambia’s vulnerabilities to global challenges, which have been shown over the last CPF period to have large negative impacts and reversals of hard-fought gains. The new CPF elevates the WBG’s support on resilience to climate change, environmental degradation, and to macroeconomic, fiscal, and other risks. Fourth, a strong focus on results and measuring progress along the way to guide decision-making and accountability requires knowledge generation and utilizing appropriate and measurable indicators. This includes aligning with GRZ goals as well as corporate objectives to strengthen the WBG’s attribution and monitoring progress towards the CPF objectives. 21. The WBG program will selectively focus on areas with strong government demand for integrated and mulƟsectoral soluƟons. The CPF follows corporate guidance on three fundamental filters to achieve selecƟvity. The CPF objecƟve and program has to: (i) be grounded in Government’s development plan and prioriƟes, (ii) be informed by the SCD key prioriƟes, and (iii) leverage the WBG’s comparaƟve advantage with close coordinaƟon and partnership with other development partners. Support will double down on Government’s bold reform program for private sector job creation, particularly for value addition in CPSD focus areas of agribusiness, renewable energy, mining, and tourism. It will prioritize women and youth (under 25 years), which make up about 83 percent of Zambians and an even larger share of the vulnerable population. Selectivity will come through streamlining within sectors, for example prioritizing skills development in the education sector. Lastly, in addition to the abovementioned specific selectivity criteria, it is expected that the mid-term Performance and Learning Review (PLR) will present further opportunities to recalibrate the WBG program toward more selectivity, as the WBG progresses along its Evolution. The WBG will seek further selectivity as other development partners take leading roles in specific sectors. 22. The FY25–FY29 CPF contributes to more balanced, inclusive, and private sector-led and resilient growth through three HLOs: (i) Creating More and Better Jobs; (ii) Improving Human Capital; and (iii) Enhancing Climate Resilience. Given the WBG’s comparative advantage and the need to be selective in 9 order to achieve impact at scale, the program focuses only on a few objectives contributing to each HLO. Each objective will be achieved through a few focused interventions, and some sectors, such as urban development or land administration, are not included in the CPF program even though they are critically important for Zambia’s development. At the same time, these HLOs and the CPF objectives are not silos, but instead are intrinsically interlinked. Achieving a higher and more poverty-reducing growth trajectory will require a better equipped and more productive labor force. As made clear by the COVID-19 pandemic, shocks can wipe out hard-fought gains in attracting private sector investment and human capital development. Boosting resilience is critical to staying on course for both HLO 1 and HLO 2. At the same time, cross-cutting priority objectives on the improved effectiveness of the government and a good governance environment, as well as on gender equality, will underpin progress on all three HLOs. Accordingly, while specific operations contribute to each HLO, the three HLOs reinforce each other and build on the cross-cutting priorities. Annex 1 contains a Results Framework which will be used to monitor progress toward six key objectives during the CPF period. More efficient, transparent, and accountable institutions, as well as promoting gender equality and inclusiveness, will be embedded in each of the HLOs. 23. WBG engagement under the CPF emphasizes scaling up efforts through programmatic approaches and looking for opportunities to leverage regional and global initiatives. Important areas in this regard include the focus on supporting private sector solutions and financing, the doubling down on energy access, strongly supporting regional integration, and supporting the mining sector, which is important not just for Zambia but also for energy transition globally. The approach to achieving this is often through strengthened World Bank, IFC, and MIGA collaboration and through alignment with the Global Challenge Program on Energy Transition (GCP-E) and related multiphase programmatic approaches (MPAs). For instance, doubling down on energy access will be achieved through the implementation of the ambitious MPA for National Energy Advancement and Transformation Program (NEAT); the Regional Energy Transmission, Trade, and the Decarbonization Project (RETRADE) with its Zambia–Tanzania interconnector component, which is critical not just for Zambia but for Africa as it connects the Eastern African and the Southern African power pools; and possibly the regional Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) MPA, combined with scaled-up engagement of IFC and MIGA in the energy generation and, possibly, transmission sector. The expansion of the critical mining sector will be informed by a Zambia ETM Country Roadmap currently under preparation, which outlines priority actions for Zambia to leverage the global energy transition for economic transformation, and— with support from expected WBG private and public investments—to develop the ETM value chain, including support to energy and transport infrastructure. The CPF will also make use of regional MPAs and contribute to Global Challenge Programs on food and nutrition security, water security and climate adaptation, health emergencies, accelerating digitalization, and possibly others. 24. The CPF has been designed in close partnership with the government, incorporates important takeaways from extensive stakeholder consultations, and emphasizes its implementation through strengthened partnerships. The preparation of this CPF adopted an inclusive approach to seek insights from a wide range of stakeholders, including national and local governments, the private sector, civil society organizations, academia and research institutions, and development partners. Consultations were held in Lusaka upstream of the concept stage, across the country in May 2024, and through a public online survey to ensure geographic representation and capture varying socioeconomic characteristics. The consultations reaffirmed emerging needs, priorities, and the HLOs and cross-cutting themes; highlighted the need to strengthen the accountability and sustainability of WBG engagements; and emphasized the importance of adequate WBG and government consideration of grassroots voices and follow-through on reform commitments. It also motivated the renewed emphasis on leveraging the WBG’s strengths through partnerships, in particular with other development partners. 10 Figure 2: Overview of Zambia FY25–FY29 CPF HLO 1: More and Better Jobs 25. Objective 1: Improve the Business Environment for Private Investment. Private sector growth is paramount to more sustainable, inclusive, and equitable development in Zambia. The public sector plays a critical role in promoting a conducive environment for private investment and helping ensure an efficient allocation of factors of production, including access to affordable finance. The current administration has undertaken efforts to improve the business environment, including the establishment of a new Ministry of Small and Medium Enterprises (SME) Development and recent legislative changes. However, implementation has been slow and domestic and foreign investors are looking for more tangible cuts to the cost of regulatory compliance to make investments at scale that will create jobs. The CPF will support government efforts to upgrade the public-private interface, improve transparency, and level the playing field to attract new investment. This includes regulatory streamlining, leveraging technology to reduce costs of regulatory compliance, decreasing the access to finance constraints often cited by firms, and improving policy predictability. Streamlined business operations should include reduced business registration costs and simplified business licensing procedures. Technological solutions like an e-registry of business licenses to local authorities, risk-based regulatory approaches, and support for mineral title management will improve efficiency and transparency. Financial sector reforms to lower borrowing costs and to offer a variety of financial services and products catering to SMEs will require restructuring state- owned financial institutions, scaling up credit guarantee schemes for bank loans to SMEs, improving collateral registry, credit reporting and payment systems, leveraging digital technologies, and improving financial literacy, including of SMEs. Special consideration should be given to agriculture and agri-business and other priority sectors including energy, manufacturing, tourism, energy transition minerals, and the financial sector (e.g., improving access to finance through strategic partnerships with financial institutions to roll out SME banking, with a focus on women banking), all with a focus to include the underserved populations such as rural residents, women, and youth-led SMEs. Investment policies will be strengthened 11 to attract much-needed FDI, including investment promotion, incentives, and investor protection and retention. Lastly, cross-cutting support will focus, in the near and medium terms, on restoring macroeconomic and financial stability, government policy predictability, and public debt sustainability as a foundation to improve the investment climate. These efforts will be complemented by investments in the statistical system to increase the effectiveness and accountability of public policies. 26. Objective 2: Improve Connectivity and Increase Energy Access. The CPF will support interventions to improve infrastructure drivers of competitiveness. WBG support will be selective and focus on energy, transport, and digital connectivity to foster domestic and regional integration that can boost more balanced economic growth. This includes support for the reorientation of agriculture policies, for reforms and investments that enable the mining sector to both meet export demand and contribute to Zambia’s economic transformation, and for measures that promote private investment more broadly and strengthen competitiveness.  Energy. Zambia’s electrification rate is 42 percent, below the SSA average of 47 percent. The program will address unequal access to reliable electricity and overcome shortages–a corporate, regional and country priority. The CPF will support transformation across the electricity sector value chain, and increase the financial sustainability, operational reliability, and resilience of the electricity sector. The program aims to crowd in private sector investment in Zambia’s energy sector by providing the long-term, predictable policy support and financing needed to successfully implement a complex reform process and return ZESCO to financial viability. The CPF will support Zambia’s ambition to be a hub for power trade and foster regional connectivity and integration. Open and transparent tendering will be essential to regain credibility and win the private sector’s confidence. The focus on energy will benefit households as well as businesses. Mines will remain a major power consumer as the country works to achieve its goal of tripling annual copper production. CPF support for energy can additionally enable downstream ETM processing and manufacturing, while boosting the competitiveness of key non-mining sectors such as agribusiness, manufacturing, and tourism. Further energy sector reforms, such as the recently enacted open access policy, could unlock additional substantial private investments in renewable energy and help bring in new solar and wind projects to reduce the overreliance on hydropower. IFC and MIGA aim to work jointly with the World Bank to actualize pipeline projects in this space.  Transport. The WBG will help address weak national and regional transport connectivity, which results in 75 percent of the GDP concentrated along the central corridor and only 17 percent of the rural population living within 2 kilometers of a road in good condition. Key modalities to be supported include road rehabilitation and construction to link productive rural and upcountry regions with markets. Improving urban–rural connectivity will be vital for the growth of secondary cities, which in turn are essential for fostering balanced urbanization, job creation, and productivity. At the same time, supporting strategic connectivity though international transport and economic corridors (including support for railway transport) will help increase Zambia’s integration into regional and global value chains and capitalize on opportunities from the African Continental Free Trade Area (AfCFTA). Private sector investment, including through PPPs, will be critical in addressing this, given the government’s limited fiscal space.  Digital. Technology and leveraging digital ecosystems can play an important role in Zambia’s vision for economic transformation through private-sector investment, growth, and job creation, and can also have a transformative effect on government. Improved access to digital technologies and effective use of data and digital platforms and infrastructure can thus be powerful tools in the quest to increase private sector productivity, enhance public sector efficiency and effectiveness, and improve the accountability of both the public and private sectors. The CPF will focus on this regional and country priority and support government and private sector solutions 12 for Zambia’s digital transformation by: (i) promoting greater use of digital technologies in the economy; (ii) reducing government transaction costs and reducing the cost of doing business through digitally optimized government systems; (iii) improving the adoption of innovative digital solutions by enabling entrepreneurship; (iv) leveraging data and digital ecosystems to improve climate resilient sector-specific outcomes in secondary towns and rural areas; and (v) developing partnerships with digital players, mobile network operators, and other stakeholders to deepen access to finance by leveraging digital technology. HLO 2: Improving Human Capital 27. Zambia’s progress on human capital development and addressing the gender and spatial inequalities is a necessary condition for more inclusive and sustained growth, requiring both public and private sector solutions. There are major deficiencies in service delivery that contribute to continued poor human capital outcomes, persistent poverty, and high inequality. Gaps are particularly acute in rural areas. While there have been improvements in access to education, health, and social protection systems, important challenges remain in improving both access to and the quality of the services that support the formation and protection of human capital. Importantly, making progress under this HLO must also recognize that it will require both public and private sector solutions to make a difference at scale. 28. Objective 3: Improve Education, Skills, and Health Outcomes for the Future Labor Force. The CPF will help tackle two main dimensions of addressing human capital constraints: On education and skills, which is also a regional priority, the CPF will support solutions to Zambia’s comparatively poor education attainment and outcomes, including high out-of-school rates, high drop-out rates and very low Program for International Student Assessment (PISA) results. The program will help increase needed financing and equitable use of available resources for more equitable access to secondary education and market- relevant skills, including financial literacy, and with a specific focus on improving gender equity. On health, notwithstanding the increasingly diverse healthcare needs of a rapidly growing population with longer life expectancy, the primary healthcare (PHC)4 system remains foundational. It is the first point of contact for individuals—the only one among the most remote populations—and it covers a wide range of services across the life stages and refers patients to higher-level or specialized care. Thus, to strengthen health outcomes, one focus will be on improving the PHC system, which is expected to be instrumental for delivering youth-friendly health services and addressing gender gaps in human endowments, the high prevalence of malnutrition, the rising/shifting burden of infectious diseases as the climate changes, and the increasing burden of non-communicable diseases. Moreover, The CPF will help address weaknesses in the prevention, detection, and capacity to maintain health services during emergencies, as this is critical to protecting the population’s health against significant vulnerabilities in Zambia and region. Given the importance of Water, Sanitation, and Hygiene (WASH) as well as nutrition interventions for health outcomes, and the severe access gaps in these areas, the program will support WASH services and explore supporting Government’s commitment to address stunting made at the 2023 Africa Heads of States Human Capital Summit. 29. Objective 4: Improve Targeting and Effectiveness of Social Protection. Zambia’s high vulnerability to external shocks (e.g., climate events and low/volatile commodity prices) over the last CPF period underscores the need to protect the vulnerable. The CPF will support sustained coverage and adequacy of the social cash transfer (SCT) program as a foundational social assistance program. It will also aim to 4 The government defines PHC as the health services provided at first-level hospitals, urban and rural health centers, and health posts. 13 strengthen sustainable graduation pathways through a “cash plus” approach and a shock-responsive social protection system. These approaches will enhance human capital through improved consumption and productive investments. It will also be critical to support adaptive capacity and investment in an effective shock response social protection system, such as a Social Registry, to enable timely and cost- efficient emergency assistance, and support coordination and linkages to other relevant social programs as well as possible access to financial services. This is increasingly pressing in order to expand resilience to climate change. HLO 3: Enhancing Climate Resilience 30. Objective 5: Improve Natural Resources Management and Climate-Smart Agriculture. Development of the agri-food sector in Zambia has tremendous potential to promote economic diversification, sustainability and job creation, and is an integral part of Government’s strategy for inclusive growth, food security, and poverty alleviation. This objective is also aligned with the Food and Nutrition Security Global Challenge Program and IFC’s Africa Agriculture Accelerator Program (AAAP). The CPF will support key building blocks for a resilient agri-food sector, namely enhanced policies and institutions, improved financial and support services, strengthen climate finance programs supporting financial institutions to develop and roll out programs for financing climate-smart agriculture, energy efficiency and renewable energy projects by both corporate and SME clients of financial institutions, and improved rural infrastructure and assets. The program will support the redirecting of agricultural public expenditures towards more growth-enhancing and climate resilience-improving areas. These include improvement of water management and expansion of irrigation, improved knowledge, information and extension services and services for improving climate change adaptation and resilience. The support will particularly benefit smallholders, who largely have rainfed production and rudimentary irrigation methods. Given that 55 percent of working-age women earn their livelihoods from agriculture yet earn less than male farmers, particular attention will be given to supporting female farmers’ productivity. WBG support will also foster water resources management and the expansion of irrigation with a focus on PPPs to invest in resource- efficient systems and establish well-defined user rights and fees among farming communities. For this agricultural growth path to be effective and sustainable, an equal emphasis will be put on the management of land, water, and forests. Improved planning and management of these natural resources within the landscape and watershed, based on strengthening information and knowledge, will ensure positive, sustainable, and more resilient outcomes for agricultural and other rural livelihoods as well as the environment. The CPF will support building better sector governance, regulations, and transparency, and expanded financing opportunities, to help halt unsustainable exploitation practices, attract investment, and prevent conflict among various users of natural resources. Lastly, it is important for CPF support to remain flexible so it can be further identified and refined to operationalize findings and recommendations from the upcoming CCDR exercise. 31. Objective 6: Enhance Climate Risk Management Systems and Financing. Climate change is intensifying natural disasters in Zambia. The ongoing drought and earlier floods in 2020 and 2023 underscore direct negative impacts to business and consumption, and the vulnerability of Zambia’s natural, human, and physical assets. There is a need to strengthen climate adaptation and improve disaster risk management (DRM) and financing for improving future resilience. The CPF will include support for: (i) improving DRM systems at the national and local levels by clarifying the regulatory framework, (ii) institutional coordination, (iii) introducing climate-resilient infrastructure designs and nature-based solutions, (iv) stimulating more private sector lending utilizing new approaches being piloted under AAAP to leverage technology (AgTechs) and agri- or climate risk insurance (coupled with IFC risk sharing facilities where relevant) to de-risk lending to this segment, (v) working with the private sector 14 insurance companies to develop agri- or climate risk insurance products, (vi) enhancing disaster response and preparedness including early warning systems, and (vii) helping lay the foundation for a disaster risk financing mechanism. The CPF will also support the improvement of DRM systems at national and local level, climate-sensitive financing instruments to manage natural resources, and climate-smart investments. For example, the increase of carbon in soils and plants is another positive effect of more productive agriculture within a better-managed landscape described under Objective 6, which the program aims to monetize for the benefits of Zambia and the local communities. Similarly, strategic use of concessional funding and technical advisory for PPPs, guarantees, and other blended finance tools, as well as emissions reductions crediting and carbon markets, can help mobilize the private sector while green finance frameworks and policy interventions further incentivize increased investment over time. Focus areas include high-potential sectors such as renewable energy, mining, and agriculture and forests, including dedicated support for SME and smallholder farmer financing. Cross-Cutting Priority 1: More Efficient, Transparent, and Accountable Institutions 32. Notable strides have been made in Zambia’s public sector, but important constraints persist that will continue to undercut poverty reduction and green growth efforts unless addressed. This CPF aligns closely with Government’s strong commitment to a good governance environment, as laid out in the 8NDP, by making this a cross-cutting priority across HLOs. Strengthened institutions will include an enhanced policy and regulatory environment, more efficient and effective implementation of government policies and programs, as well as strengthened coordination with private sector and other non- government stakeholders. Key aspects of WBG support to achieving the HLOs are mentioned in each section above, and in summary include: (i) overall capacity building for information gathering and policy making, including through the digitalization of government services, procurement reforms, and the on- going regional statistics project; (ii) public financial management (PFM) strengthening on both the revenue and expenditure sides to help ensure successful implementation of Government’s fiscal consolidation strategy committed to under debt restructuring discussions with creditors; (iii) supporting Government’s devolution initiative and rebalancing the uneven spatial development in Zambia by building local administrations’ capacity and facilitating accountability for local service delivery; and (iv) boosting capacity to coordinate complex policy formulation and implementation for high-priority issues including trade and climate change. As restrictive trade policies have substantially hampered export growth, particularly in the agricultural sector, this will also be an area of focus for WBG coordination, with strong participation by the private sector. Dealing with recent and current DRM and climate crises has both exposed institutional fragmentation and weaknesses but also helped better identify opportunities to improve. Leveraging these opportunities requires improved institutional coordination and management capacity, including to better access and leverage DRM and climate financing opportunities. A vital component of strengthened institutions is improving technical capabilities through digitalization and the foundational national digital identity document. 33. The CPF will support macroeconomic stability through improved revenue mobilization and fiscal governance. The root causes of recent macroeconomic instability can be traced back to pro-cyclical fiscal and borrowing policies, with weak spending controls—notably public investments—exacerbating fiscal imbalances and leading to an external debt default. Enhancing fiscal policy and budget management is crucial for economic stability and growth. The CPF will support key determinants of improved fiscal management and sustainability as an anchor of macro stability. First, in the context of limited development finance, it will help support policies that expand and diversify the tax base and strengthen tax administration. Second, it will also be important to manage resources effectively through economic cycles by prioritizing spending in key areas while ensuring fiscal sustainability through prudent public 15 investment management (including by state-owned enterprises [SOEs]), strengthened procurement practices and tightened PFM. Third, continued technical assistance will support robust debt management and focus on concessional financing to help avoid accumulating liabilities. Finally, the CPF will emphasize technology adoption to generate and use better macro-fiscal data for evidence-based decision making. This will increase transparency and combat corruption and the misappropriation of public funds. Cross-Cutting Priority 2: Promoting Gender Equality and Inclusiveness 34. Zambia has made positive strides in addressing gender inequality and promoting inclusion through the enactment of relevant policies and legal frameworks. Policy reforms and affirmative actions have resulted in: (i) increased opportunities for land ownership among women; (ii) improvements in access to credit facilities propelled by inclusive financial strategies; (iii) resource allocation to health for women and children; (iv) girls’ retention in secondary school; (v) support to skills development for youth and women; (vi) the appointment of women to key decision-making positions; and (vii) the protection of women’s and girls’ rights. However, gender gaps and opportunities for inclusion of persons classified as vulnerable persist. In addition to continuing high rates of adolescent fertility (mentioned in paragraph 7 above), other important constraints that contribute to gender gaps in a variety of outcomes throughout women’s lives include women’s weaker access to assets and business credit, uneven domestic responsibilities, and weak participation in decision-making, which all contribute to women’s concentration in low-productivity agriculture and informal work, including micro household enterprises. Across all domains, gender gaps tend to be wider in rural than urban settings and among the poorest. These gaps were identified in a recent Country Gender Assessment (2023). 35. The CPF’s approach to gender responds to the wider gender gaps observed among the poorest rural populations and is consistent with the overall selectivity filters that reflect government demand for integrated and multisectoral solutions. The CPF’s approach also fully aligns with the WBG Gender Strategy 2024–2030: Accelerate Gender Equality to End Poverty on a Livable Planet, in particular expanding and enabling economic opportunities and ending GBV and elevating human capital. The CPF is expected to make an important contribution to overall progress towards gender equality and inclusion across all three HLOs. Specifically, this CPF will: (i) support the reduction of women’s vulnerability, promote education for girls, and advance skills development for women, youth, and persons with disabilities under HLOs 2 and 3;5 (ii) promote increased productivity among women, youth, refugees, and host communities through integrated business development support, access to credit and land tenure, and the adoption of climate-smart agricultural techniques corresponding with HLOs 1, 2 and 3;6 (iii) advance digital acceleration for service delivery, ease of doing business, and facilitating entrepreneurship for women, youth, and refugees through Zambia agribusiness, refugee and host communities, and digital acceleration in line with HLO 1; (iv) enhance capacity for statistical data to strengthen planning for gender mainstreaming, and disability and youth inclusion under HLO 27; (v) improve access to clean energy and WASH infrastructure that will respond to specific gender and disability needs and accessibility 5 Through the provision of social cash transfers, grants for women’s empowerment, sustaining girls’ retention in school through the implementation of GEWEL, the Zambia Enhanced Education Project, and the Zambia Growth Opportunities and Skills Development Program. 6 Zambia Agribusiness and Trade II, Zambia Refugee and Host Communities and Transforming Landscapes for Resilience and Development Projects. 7 SADC Regional Statistics Project, ASA on Disability Assessment. 16 corresponding with HLOs 1 and 2;8 (vi) empower communities in implementing locally-led initiatives to manage natural resources, account for carbon emission reductions,9 and strengthen women’s involvement in local governance under HLO 3;10 and (vii) support interventions to reduce girls’ and women’s exposure to risks and incidences of GBV, in response to HLO 2, throughout the portfolio, and in particular through the multisectoral approach of the second Girls Education and Women’s Empowerment and Livelihoods for Human Capital Project (GEWEL 2), which builds on the success of GEWEL I. 3.3 Implementing the CPF 36. The CPF will be operationalized throughout all financing and analytical work with a renewed focus on efficiency and results. This includes further intensifying engagement with the Ministry of Finance and National Planning through a coordinated “Value Plus Team” that supports enhancing monitoring and accountability, strengthening implementation arrangements, providing targeted hands-on enhanced implementation support, and delivering client learning. The implementation of the program will also follow strong operational management principles, including for fiduciary and environmental and social aspects, and will ensure that each financing and analytical activity will be assessed regarding their: (i) ability to promote private-sector solutions such as mobilizing finance from and for the private sector, often through joint IDA-IFC-MIGA engagement; (ii) targeting of women and youth; and (iii) contribution towards more resilience. These elements are a core and integral part of Zambia’s development and are therefore embedded throughout the three dimensions and development challenges. The CPF will also contribute to the WBG’s Global Challenge Programs to the extent possible, for example in previously noted areas of energy transition, climate adaptation, and food and nutrition security. Finally, coordination and partnerships with other cooperating partners will be intensified, including by strengthening the WBG’s leadership and participation in the Cooperating Partners Group. 37. The CPF will cover multiple cycles of International Development Association (IDA) financing: the final year of IDA20 (FY25), IDA21 (FY26–28), and the first year of IDA22 (FY29). Zambia has exhausted its IDA20 national allocation and is currently overprogrammed for the last year of IDA20 (FY25). Pipeline projects that cannot be financed will have to be delayed to early FY26. Most urgently, the country is facing a drought crisis and Government has declared a national emergency and appealed to cooperating partners for support. The World Bank has approved emergency support under the Crisis Response Window (CRW). Zambia also expects to access additional resources through the IDA20 Regional Integration (RI) Window, the Window for Host Communities and Refugees, and the PSW. Zambia is currently an IDA grant-only country and is not eligible to access other IDA windows such as the Scale Up Window. This is likely to change over the course of the CPF period with promising progress on debt restructuring and other developments. The WBG will continue to leverage trust fund resources from Cooperating Partners. Working as one World Bank Group in Zambia, World Bank, IFC, and MIGA aim for stronger leveraging of private sector financing, including through guarantees to attract more investments both from outside and within Zambia in support of the CPF’s development objectives and results. The WBG will also continue to use advisory and analytical work and leverage its convening power as appropriate to achieve the CPF Objectives. 8 Zambia Water Supply and Sanitation for Growth Centers, Accelerating Sustainable and Clean Energy Access Transformation and Regional Energy Transmission, Trade Decarbonization Projects. 9 Eastern Province Jurisdiction Sustainable Landscape and Green Resilient Transformational and Tourism Projects. 10 Zambia Devolution Support Program, and Voice and Accountability Community Empowerment for Improved Local Service Delivery Project. 17 38. IFC expects to grow its engagements during the CPF period in priority sectors, including energy, to support a growing mining sector, agribusiness, tourism, and others, in line with the forthcoming CPSD. IFC’s financing portfolio stands at US$155.4 million over 12 projects across various sectors including energy, telecommunications, agriculture, manufacturing, tourism, and financial sectors. IFC financed two solar projects with a combined capacity of 84 megawatts (MWs) peak in Zambia, the first country to implement the WBG scaling solar program , that helped the country to diversify source of energy while its hydropower plants are suffering from the ongoing drought; IHS, that provides telecom towers critical for delivering affordable connectivity through shared infrastructure especially during the crisis and economic recovery post COVID; Airtel, a telecom company expected to increase access to quality and affordable mobile connectivity; Zambeef, an integrated agribusiness contributing to food safety through both cropping (wheat and maize ) and livestock including production of feed; and Bayport Zambia, a micro finance institution, among others. To meet increasing demand for local currency financing, IFC issued a US$20 million equivalent local currency bond to finance a project in Zambia. IFC will further explore how to: (i) leverage the IDA PSW and blended finance more generally, local currency lending as well as other risk- mitigating instruments (e.g., partial risk guarantees) to mitigate currency volatility and the high cost of lending; (ii) put greater focus on capacity building through investments and advisory programs; (iii) utilize MIGA guarantees for mitigating investors’ concerns about non-commercial risks, thus mobilizing more private capital into transactions; (iv) encourage private sector engagement through the public-private dialogue forum; (v) advance institutional reforms; and (vi) strengthen a PPP framework to reduce regulatory risk and the cost of capital, particularly in the energy and transport sectors. IFC will leverage its advisory and upstream engagements, such as on farm blocks and electric vehicle battery value chains, to catalyze private sector investment and participation in the respective sectors. IFC will also focus on enhancing access to finance and financial services to SMEs through capacitating financial institutions to lend to SMEs, especially in the agriculture sector. 39. During the CPF period, MIGA expects its portfolio to grow based on existing pipelines in the country and increasing investor interest. MIGA’s portfolio in the country stands at US$137 million, with five projects covering foreign private investment in Zambia in the financial, mobile money, manufacturing, and energy sectors. Approximately half of the exposure stems from two capital optimization projects which are enabling two South African banks to increase lending in the country. In addition, in FY22, MIGA supported The Rise Fund’s investment in Airtel Mobile Money Zambia. Together, these three projects are improving financial inclusion and domestic private sector lending, which proved crucial during the COVID-19 crisis and Zambia's macroeconomic challenges. MIGA supported Zambia’s electricity infrastructure, including through Tata’s equity investment in the 120 MW Itezhi-Tezhi hydropower station. MIGA was able to continue supporting investors in Zambia despite the sovereign default, by utilizing IDA Private Sector Window to support the Airtel Zambia investment, and by closely collaborating with clients, World Bank, and Government. During the CPF period, MIGA will support an expansion of one of the existing capital optimization guarantees, and is working upstream with Government, the World Bank, and clients to facilitate mini grid investments in the country. Other opportunities may exist in the digital, financial, agribusiness, and hospitality sectors, as MIGA is active in these sectors in the region. 40. The WBG will cooperate closely with Government to improve portfolio implementation, enhance the use of country systems and strengthen its capacity for evidence-based policymaking. The focus will be on prioritizing timely project implementation readiness, enhancing project implementation oversight and capacity building, strengthening fiduciary management and safeguards compliance, and enhancing strategic and technical monitoring of the portfolio. The WBG will help strengthen financial reporting and enhance accountability through capacity building in external audit and parliamentary oversight. Technical and financial assistance to the Zambia Statistics Agency (ZAMSTATS) will continue through the Southern 18 African Development Community (SADC) Regional Statistics Project and Poverty ASAs on poverty measurement and analysis and the collection of key surveys and censuses which will support the monitoring and evaluation of the CPF by measuring progress against objectives. 41. Zambia has a comprehensive public procurement legal and regulatory framework. This consists of the Procurement Act of 2020 and is supplemented by Public Procurement Regulations, 2022 (PPR). It covers most aspects of a well-functioning public procurement system. Through the Act, it has established the Zambia Public Procurement Authority (ZPPA) as an independent regulatory body with monitoring and oversight functions. The use of the e-GP system is also mandated for processing public procurement. Procurement under the World Bank portfolio experienced efficiency challenges during the previous CPF period due to the lengthy lead time to complete procurement transactions. However, no major inappropriate practice was observed, including in the post procurement review (PPR) exercise conducted by the World Bank. Government is focused on improving the operational effectiveness and efficiency of the current e-GP system through simplifying processes and procedures to find cost and time savings, improving contract management, and better monitoring performance and citizen engagement. During the CPF period, the World Bank will support these efforts through continued capacity building and leveraging digital technologies (e.g., e-government, e-government procurement at centralized level) and innovations that are well adapted to local needs and capacities. The latter will be pursued under the proposed Digital Project. IV. MANAGING RISKS TO THE CPF PROGRAM 42. The overall risk to the CPF program is assessed as moderate. Two of the eight categories in the WBG’s Systematic Operations Risk-Rating Tool warrant a substantial risk rating (Table 2). Other risks, while substantial for the country’s development path, are assessed as moderate for the achievement of the CPF program. Macroeconomic risks are notable, including from lengthy debt treatment negotiations. However, risk to the CPF program is assessed as moderate given satisfactory implementation of the program in the last CPF period under major macroeconomic shocks, as well as the impressive fiscal consolidation recently achieved, and the government’s strong reform credentials which bode well for the medium-term outlook. All risks will be monitored throughout the CPF period, and mitigation measures will be applied as needed. 43. Risks related to institutional capacity are rated substantial. There is considerable risk in the management of WBG-financed programs and projects due to capacity constraints in some line ministries and at the local government level. An inadequate incentive structure is also an impediment to service delivery at all levels. To mitigate these risks, the WBG will provide cross-cutting support to the program implementation as well as to the government’s decentralization agenda, including capacity improvements across levels of government in the context of WBG-financed operations. Institutional capacity will also be a key component in creating strong counterparts and ensuring appropriate risk allocation in structuring PPP projects that enable the mobilization of private capital for planned infrastructure projects in both the energy and transport sectors. 44. Environmental and social risks are rated substantial. While the overall client capacity to manage environmental and social safeguard risks has increased, risks remain substantial mainly because of the growth in lending, the scale of the projects, and the complexity of engagements, including the possibility of more project-induced environmental and social risks and impacts. The WBG has increased its efforts to provide capacity building in safeguards and the new Environmental and Social Framework (ESF) Standards for project teams and will continue to work with the relevant ministries to: (i) promote reforms that 19 strengthen environmental and social management systems and the norms and procedures underlying them, at the policy level; and (ii) find flexible and practical ways to apply the ESF Standards while also adhering to international good practices, at the project level. Additional support is needed to undertake agile reviews, strengthen ownership on the client side, and enhance the legal framework and tools for environmental and social risks. Table 2: Risks to the CPF Program Rating Risk Category (L, M, S, H) 1. Political and Governance M 2. Macroeconomic M 3. Sector Strategies and Policies M 4. Technical Design of Project or Program M 5. Institutional Capacity for Implementation and Sustainability S 6. Fiduciary M 7. Environmental and Social S 8. Stakeholders M OVERALL M 20 Annex I: Results Framework for Zambia CPF FY25–FY29 Indicator Coding CS Aligned with Corporate Scorecard IS More Efficient, Transparent and Accountable Institutions (Cross-cutting Theme 1) GI Promoting Gender Equality and Inclusiveness (Cross-cutting Theme 2) High-Level Outcome 1 (HLO 1): More and Better Jobs This HLO integrates several of the last CPF/PLR’s focus areas to better align with Government’s priority reflected in the 8NDP to reignite private sector-led growth, achieve greater economic diversification, and boost employment. This integration facilitates more fully leveraging the One World Bank Group—the World Bank, IFC and MIGA—to achieve more and better jobs at scale. CPF engagement will prioritize improving the business environment for private investment and improving supportive infrastructure in rural and urban areas to boost value addition key sectors including agriculture and agribusiness, along the mining value chain, tourism, and others. Given the criticality of the macroeconomic situation for economic development, this HLO also places additional focus on managing more prominent macro/fiscal risks since the last CPF period and supporting the statistical system for enhanced production and use of data for policymaking. Complementary measures to support a healthier and better skilled labor force are included in HLO 2 (Improving Human Capital). HLO 1 Indicator 1 below on the number of new or better jobs is taken from the WBG Corporate Scorecard. Measurement remains a work in progress, and Zambia- specific data will benefit from continuing institution-wide methodological work and be determined at PLR stage. High-Level Outcome Indicators Data Source Current Value 1. Number of new or better jobs – CS TBD at PLR stage TBD at PLR stage 2. Moderate risk of external debt distress – WB/IMF Debt Sustainability Analysis In debt distress CS, IS 3. Tax revenue-to-GDP, percent – CS, IS Ministry of Finance and National Planning 15.8 percent (2022) Description Zambia’s policymakers are refocused on addressing the longstanding need for more inclusive, sustainable, and private sector-driven growth, having navigated unprecedented shocks over the past four to five years and emerging from debt restructuring with creditors. A more comprehensive and integrated WBG approach will be critical to tackle the inter-connected public and private sector challenges in this HLO and move the needle on competitiveness and private sector job growth. WBG support under HLO 1 includes key interventions in two priority areas to support private sector investment and job growth as identified in the 8NDP, specifically pro-business policy reforms to reduce red tape and increase access to financial inclusion, as stated in the Zambia National Financial Inclusion Strategy (NFIS) II 2024–2028, and boosting competitiveness and export orientation by addressing connectivity and energy constraints. This two-pronged approach will require closely 21 coordinated efforts by all parts of the WBG and will be underpinned by engagement to improve fiscal governance as part of the cross-cutting CPF theme of building institutions and strong governance. Core analytics including the SCD, CEM, and the forthcoming CPSD show structural impediments continue to constrain businesses and limit progress in improving private sector competitiveness. Access to affordable and reliable core infrastructure, such as energy and transportation, is low. Power disruptions due to climate change challenge business operations. The regulatory environment is also particularly burdensome on SMEs with limited resources to tackle the many hurdles of compliance. In addition to these structural issues, the macroeconomic and fiscal risks identified under the previous CPF have materialized due to multiple shocks, contributing to limited structural transformation, continued non-inclusive growth, and persistently high levels of poverty and inequality. Thus, a strong focus is needed on macroeconomic including public debt sustainability and government policy predictability, as a foundation to improve the investment climate. These efforts will be complemented by investments in the statistical system to increase the effectiveness and accountability of public policy. Related SDGs:  SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all;  SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all;  SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. Objective 1: Improve the Business Environment for Private Investment Intervention Logic Government is pursuing a bold reform agenda, laid out in the 8NDP, to re-ignite private sector-led growth to drive industrialization and diversification of the Zambian economy. The WBG is supporting key dimensions of this agenda to bolster inclusive growth—including in the agriculture sector where most Zambians work—including reducing the costs of regulatory compliance, increasing access to finance and financial inclusion, leveraging private capital, and building the capacity of firms to increase both foreign and domestic private investment. The WBG will continue its substantial engagement through policy dialogue, on-going project support, and technical support, including strong leadership on private sector engagement by IFC and MIGA. Efforts will center on inclusion and impact at scale by targeting growth for the bottom 40 percent of earners, most of whom are employed in Zambia’s agriculture or agribusiness sectors in micro, small, and medium segments. This will help prioritize opportunities for youth and women as Zambia transitions to an inclusive and greener economy. The IFC will continue to spearhead efforts to support structured dialogue between Government and the private sector. WBG interventions will also help restore macroeconomic stability, which is essential for private sector-led growth, by supporting improved fiscal governance and prudent public sector investments as emphasized in the 8NDP. The proposed interventions are guided by Zambia’s 8NDP, the 2024 SCD Update, the CEM, and the forthcoming CPSD. Stronger coordination of World Bank, IFC, and MIGA efforts to promote private sector development at scale, backed by a stable and inclusive financial sector, will focus simultaneously on supportive public policies and affordable backbone services. The World Bank will continue a strong focus on the agriculture sector through the Zambia Agribusiness and Trade Project (ZATP) II and Zambia Growth Opportunities (ZAMGRO) operations, as well as WBG- coordinated support for the development of farm blocks. The Green, Resilient, and Transformational Tourism Development Project (GREAT TDP) 22 will bolster competitiveness in the tourism sector. The Roadmap for the Energy Transition Mineral (ETM) will support the mining value chain. The CPF will also put a strong emphasis on strengthening underlying institutions and data strengthening across the WBG. Support under the CPF will continue helping to strengthen fiscal management at various levels of government, including through the Devolution Support Program for Results and a new Development Policy Finance (DPF) series; enhance domestic resource mobilization; and develop fiscal stabilization mechanisms to restore and preserve macro stability. Continued support to the financial sector, including a potential new development finance institution, will mobilize private capital for financial inclusion and climate adaption. This includes IFC continuing its engagement with financial institutions to increase credit to women-owned MSMEs and broaden participation in sectoral working groups in its on-going Public Private Dialogue Forum (PPDF). The SADC Regional Statistics Project will invest in the statistical system to produce more and better economic information to support evidence-based policy making. CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 1.1: Private Capital mobilized SPI 1.1: Total number of ZATP II Ongoing Operations: (Amount) (USD) beneficiaries with increased access to  Zambia Agribusiness and Trade Project II Baseline: 0 (2023) markets and finance – (P179507) Target: 17,000,000 (2028) Baseline: 0 (2023)  Zambia Growth Opportunities Program-for- Source: P179507 Target: 95,000 (2027) Result (P178372) Source: P179507  Zambia Farm Block Project (608166) Indicator 1.2 Local Authorities with  Zambia–Macroeconomic Stability, Growth increased own-source revenue – IS SPI 1.2: Total number of new Full Time and Competitiveness DPF series (P181011) Baseline: 40 (2024) Employment jobs created by the ZATP II  Green, Resilient, and Transformational Target: 80 percent (2027) project – Tourism Development Project (GREAT TDP, Source: P178492 Baseline: 0 (2023) P180337) Target: 9,000 (2027)  Zambia Devolution Support Program for Indicator 1.3: Business Ready (B-READY) Source: P179507 Results (P178492) summary indicator on business  SADC Regional Statistics Project (P175731) environment11 - GI SPI 1.3: Average number of days for tour Baseline: TBA operators to complete an operating Proposed Operations: Target: TBA license renewal (Days) – IS  New DPF series Source: TBA Baseline: 120 (2023) Analytical Work: Target: 30 (2027)  CPSD Source: P180337 11 Business Ready (B-READY) is the World Bank’s forthcoming benchmarking of the business environment and investment climate in most economies worldwide. The CPF baseline and target data for Zambia will be determined at PLR stage. 23  Public Private Dialogue Forum (IFC supported)  Zambia Financial Sector Development Programmatic ASA FY23–26 (P179395)  Zambia Poverty Programmatic ASA FY23–25 (P179207)  Zambia Governance for Transformation PASA (P502030)  Implementation of Public Finance Review (P174901) recommendations (DRM, PIM, SOEs)  Leveraging Green Minerals for Economic Transformation PASA (P181151) Objective 2: Improve Connectivity and Increase Energy Access Intervention Logic Despite large public investment efforts, infrastructure gaps continue to pose significant burdens to the competitiveness of the private sector. Access to electricity remains a significant challenge, particularly in rural areas, where only 6 percent of households have access to electricity. Businesses with electricity access face high volatility with power outages lasting up to 16 hours in some cases, given the reliance on hydroelectric power—a source highly vulnerable to the impacts of climate change. Lack of transport connectivity results in 75 percent of the GDP concentrated along the central corridor and 17 percent of the rural population living within 2 kilometers of a road in good condition. In addition, addressing digital access gaps is seen as a necessary condition to achieve Zambia’s vision for economic transformation and also have a transformative effect on the government. The 8NDP aims to enhance national development by improving access to domestic and international markets, enhancing rural road connectivity, boosting the country's digital capacity, and diversifying energy sources to ensure better access and sustainability. Bank engagement will focus on energy, transport, and markets, and digital connectivity will foster domestic and regional integration that can boost more balanced economic growth in Zambia. Past public investment efforts have not yielded improved connectivity infrastructure such as transport and digitization, which hampers market access. Zambia’s agriculture sector continues to be constrained by this lack of connectivity to both domestic and export markets. To increase incomes and create jobs in agribusiness, access to markets must be improved, along with enhanced financial inclusion and additional support to bolster climate resilience. The recent droughts are another reminder of the pressing need for investments in climate adaptation and to diversify Zambia's energy sources to reduce reliance on hydropower and expand generation capacity, ensuring a reliable energy supply for businesses to conduct their economic activities effectively. Additionally, it is crucial to promote energy access, particularly in rural communities, to enhance their quality of life and economic prospects. Key risks include high investment costs in the power sector, which necessitate a substantial role for 24 the private sector, and the difficulty of attracting private capital and partnerships. Addressing these issues requires strategic investments in connectivity infrastructure for energy, markets, and digitalization. By doing so, the country can effectively overcome these challenges and fully capitalize on the potential of a flourishing private sector that is well-connected to markets and reliable energy sources. CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 2.1: Percentage of rural SPI 2.1: Roads rehabilitated – non-rural Ongoing Operations: households with access to electricity (CRI, Kilometers) –  National Energy Advancement and disaggregated by gender –GI Baseline: 0 (2023) Transformation Program (NEAT) MPA Baseline: 0 (2024) Target: 124 (2027) Phase 1 (P179380) Target: 20 percent female-headed (2029) Source: P180801  Zambia Improved Rural Connectivity Source: Gender Strategy and Action Plan, Project (P159330) Ministry of Energy – 2019 SPI 2.2 Private sector capital investments  Transport Regional Corridors for Economic mobilized for electricity infrastructure Resilience (TRACER) – P180801 Indicator 2.2: Increased renewable energy Baseline: 0 (2024)  IHS Zambia COVID-19 (Digital– 44235) capacity and climate resilience Target: US$140 million (2027)  Airtel Zambia (Digital– 600215) Baseline: 0 (2023) Source: TBA  Scaling Solar Zambia (Solar) Target: 1,200 MW (2029)  Scaling Solar Zambia 2 (Solar) Source: IRP, P179380 SPI 2.3: People provided with access to Proposed Operations: new or improved electricity services by  Digital Zambia Acceleration Project Indicator 2.3: Border clearance time at household connections (on-grid and off- (P505094) Nakonde (Zambia border) (for trucks and grid) – CS small traders) – (Hours) Baseline: 0 percent (2024)  Rural Roads Project (expecting request Baseline: 39 (2023) Target: 15 percent (2027) from Government) Target: 24 (2029) Source: IRP  NEAT Additional MPA Phases Source: P180801  Zambia/Tanzania interconnector component of the Regional Energy Indicator 2.4: Number of people using Transmission, Trade and Decarbonization broadband internet disaggregated by gender Project (RETRADE) – (P175190) – CS, GI  Accelerating Sustainable and Clean Energy Baseline: TBA (2024) Access Transformation (ASCENT) Project Target: 1,000, 000 (50 percent female) Analytical Work: (2029)  Renewable Energy Development Support Source: P505094 to Zambia 25  Zambia Energy Sector Programmatic PASA (P170796) High-Level Outcome 2 (HLO 2): Improving Human Capital This HLO continues and strengthens the last CPF/PLR focus area 2, which aimed to support increased access to health, education, and social protection. This HLO is largely a continuation of the last CPF/PLR; it will contribute to HLO 1 by supporting the development of a well-equipped workforce with practical and entrepreneurial skills. World Bank support under this HLO is focused on human capital outcomes. Specifically, it aims to enhance education, skills, and health outcomes for the existing and future labor force. Additionally, the HLO will improve the targeting and effectiveness of social protection measures, which is particularly critical at this time due to the increased number of people living in poverty in the country. HLO 2 Indicators are taken from the WBG Corporate Scorecard. Measurement of HLO 2 Indicator 2 remains a work in progress, and Zambia- specific data will benefit from continuing institution-wide methodological work. High-Level Outcome Indicators Data Source Current Value 1. Number of students supported with Education Statistics Bulletin 2020, Ministry 44.6 percent (45 percent M; better education, disaggregated by gender of Education, Republic of Zambia 44.2 percent F) – CS, GI 2. Number of people receiving quality District Health Information Software 2 health, nutrition, and population services (DHIS2) (used in the Ministry of Health for (of which number/percentage are youth, of TBA data collection and monitoring the major which number/ percentage are women) – health indicators) CS, IS 3. Number of beneficiaries of social safety Ministry of Community Development and net programs – CS Social Services, SSRSP - P179095, SSRSP 6,817,725 AF2 – P181711 (December 2023) Description Enhancing human capital is imperative to redressing spatial disparities in growth and alleviating Zambia’s persistent income inequality. Significantly deficient education and healthcare services compared to the requirements for a robust and skilled workforce are particularly evident in rural areas of the country. Implementing improved safety nets and facilitating smoother pathways for inclusion in the formal economy are essential steps towards fostering inclusive growth. World Bank support under HLO2 includes key areas to boost human capital, focusing on education, practical and essential skills, and health outcomes for both the existing and future labor force. Additionally, it will prioritize enhancing the targeting and effectiveness of social protection measures in Zambia. Related SDGs:  SDG 1: End poverty in all its forms everywhere;  SDG 3: Ensure healthy lives and promote well-being for all at all ages; 26  SDG 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. Objective 3: Improve Education, Skills, and Health Outcomes for the Future Labor Force Intervention Logic Human capital is a key factor in diversifying economic growth and capturing the full potential of Zambia’s people. Zambia’s Human Capital Index (HCI) has remained static, at 0.40, since 2017, placing it at the low end of the world’s countries. This HCI score suggests that a child born in 2020 could expect to reach only 40 percent of the earning potential she would have if she enjoyed complete education and full health. There is an overall need to improve the quality of social services in order to make a sustainable impact on human capital formation. Government’s 8NDP aims to cultivate a well-educated, highly skilled, and healthy labor force to propel Zambia towards becoming a thriving and industrialized nation, as outlined in the country’s Vision 2030. The WBG program will focus on secondary education, practical and entrepreneurial skills development, primary health care at each life stage, and expanding social protection systems. There is an overall need to improve the quality of social services in order to make a sustainable impact on human capital formation. The WBG program, including IFC and MIGA’s engagement with the private sector through financial institutions and PPP structures, will focus on secondary education, primary health care at each life stage, and practical skills development especially for the women and youth. Given the increasing population and Government’s policy to promote free education, there is a significant need to support both access to and quality of education. Additionally, it is essential to enhance skills development to ensure that graduates from various institutions possess the practical skills required by industry, as well as entrepreneurial skills for those who wish to establish their own businesses. The rapidly growing population with longer life expectancy is exerting significant pressure on the provision of social services essential for human capital development. Zambia faces the double burden of both communicable and noncommunicable diseases, and experienced substantial disruptions in health service delivery during the COVID-19 pandemic. Decentralization in the health sector is an opportunity to strengthen the primary healthcare system. The country is highly vulnerable to health emergencies, given its geographical location and climate risks, and is contending with the worst cholera outbreak in its history and a drought which has been declared a national emergency by the government. Supporting the government in enhancing human capital is a crucial intervention to mitigate these risks. CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 3.1: Number of people with access SPI 3.1: Percentage of infants who Ongoing Operations: to basic drinking water, sanitation, and received Micronutrient Powder (MNP) in  Zambia Education Enhancement Project hygiene (WASH), of which (percent) is safely project-supported facilities (Percentage) – (P158570) managed – CS GI  Enhancing Early Learning Project (P174012) Baseline: 0 (2024) Baseline: 0 (2024)  Africa Centre for Diseases Prevention and Target: 102,500 (2029) of which 30 percent Target: 40 (2027) Control (CDC) Regional Investment Project is safely managed Source: P181391 (P167916) – RI 27 Source: P179237  Zambia Health Emergency Preparedness, SPI 3.2: United Nations Statistics Division Response, and Resilience Project (P505188) Indicator 3.2: Number of people benefitting (UNSD) minimum list of gender indicators  Girls' Education and Women's Empowerment from strengthened capacity to prevent, properly calculated using data collected and Livelihoods for Human Capital Project detect, and respond to health emergencies – within the last five years – GI (P181391) CS, IS Baseline: 16 (2023)  SADC Regional Statistics Project (P175731) Baseline: 0 (2024) Target: 27 (2027) Proposed Operations: Target: 10,000 (2029) Source: P175731  Digital Zambia Acceleration Project Source: P167916/ P505188 (P505094) SPI 3.3: Percentage of districts for which  Water and Sanitation Services in Growth Indicator 3.3: Percentage of Keeping Girls in national clinical case management Centers Program for Results (P179237) School Program (KGS) girls retained in guidelines for priority health events are  Zambia Health Transformation Project school (percentage) – GI, IS developed by the project and Baseline: 77 (2024) implemented – IS Analytical Work: Target: 87 (2028) Baseline: 0 (year)  Improving the Effectiveness of Social Source: P181391 Target: 40 (2026) Protection Systems in Zambia (P168188) Source: P505188  Universal Health Coverage and Quality in Indicator 3.4: Number of students who Zambia (P180855) successfully completed project-supported  Report on Promoting Skills Development for training programs, disaggregated by gender. Youths in Zambia (P179809) Baseline: 0 (2025) Target: TBD (TBD) Source: Zambia Skills Development Project (proposed operation)12 12 Zambia Skills Development Project - proposed operation following the Report on Promoting Skills Development for Youths in Zambia findings and high demand affirmed by consultations, values to be updated at PLR. 28 Objective 4: Improve Targeting and Effectiveness of Social Protection Intervention Logic As a key instrument to alleviate poverty, Government aims to enhance and improve the coordination of social protection programs as stated in the 8NDP. The World Bank has been increasing its engagement, including investment in Zambia's social protection sector, in collaboration with other Cooperating Partners. More effort is required not only to protect the human capital gains achieved so far against emerging risks but also to enable a significant push to unleash the growth and development potential of girls and women. These efforts are crucial to safeguard the human capital gains made to date, particularly in the context of deteriorating poverty and vulnerability. Given the fiscal challenges, enhancing the targeting and effectiveness of social interventions and working on graduation from social protection programs is especially imperative. WBG’s continuing engagement will steer the sector toward more social and productive inclusion activities aimed at strengthening the empowerment and human capital of girls and women. This will support their sustainable, climate-smart pathways out of poverty for longer-term development outcomes. This objective also aligns with the global challenge of Food and Nutrition Security and is a key aspect of Government’s commitment to human capital with its focus on nutrition, particularly for children and mothers. Zambia is positioned among the nations grappling with severe poverty and inequality on a global scale. The poverty rate surged to 60 percent of the population in 2022, marking an increase of 5.6 percent since 2015. Rural poverty has failed to decline in over 15 years, and the recent rise in urban poverty is the reflection of underlying structural factors rather than the result of a transitory shock. At the same time, poverty is becoming more entrenched over time. Extreme poverty accounts for a larger share of total poverty, and the rising monetary poverty is accompanied by an increasing incidence of overlapping non-monetary deprivations. As a result, vulnerability to poverty is largely structural, while cushioning exposure to negative shocks is critical to prevent further impoverishment among the structurally poor. However, the current fiscal challenges may impede Government's ability to provide sufficient social protection measures. Therefore, enhancing the targeting and effectiveness of social interventions is imperative to ensure judicious utilization of the limited public funds. Additionally, support from the World Bank will be instrumental in bolstering government efforts and mitigating these risks effectively. CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 4.1: Number of refugees and SPI 4.1: Percentage of eligible project Ongoing Operations: former refugees accessing and utilizing beneficiaries that are linked to the Food  Scaling Up Shock Responsive Social services and livelihoods – CS, IS Security Pack Program – Protection Project (P179095) and AF 1 Baseline: 0 (2024) Baseline: 0 (2024) (P181651) and AF 2 (P181711) Target: 92,431 (2028) Target: 45 (2027)  Girls’ Education and Women’s Empowerment Source: P503941 Source: P181391 and Livelihoods for Human Capital Project (P181391) Indicator 4.2: Percentage of children living SPI 4.2: Percentage of SCT beneficiaries in households receiving the SCTnutrition receiving payment on time – Baseline: 52 (2024) 29 top-up that achieve a minimum dietary Target: 75 (2027) Proposed Operations: diversity – GI Source: P181391  Zambia Refugee and Host Communities Baseline: 11.20 (2024) Project – ZRCP (P503941) Target: 18.50 (2028) SPI 4.3: Percentage of eligible Analytical Work: Source: P181391 Strengthening Women Livelihood Program  Improving the Effectiveness of Social (SWL) beneficiaries with an ongoing Protection Systems in Zambia (P168188) Indicator 4.3: Percentage change in number income-generating activity one year after of beneficiary households eating more than SWL has ended – GI one meal per day (percentage) Baseline: 0 (2024) Baseline: 0 (2024) Target: 70 (2027) Target: 15 (2028) Source: P181391 Source: P179095; P181711 High-Level Outcome 3 (HLO 3): Enhancing Climate Resilience This HLO continues and expands the last CPF/PLR focus area 1, which aimed to promote sustainable and efficient use of natural resources, and aims to develop climate-sensitive financing instruments to manage natural resources and support climate-smart investments. Thus, this HLO continues the efforts to elevate climate resilience and climate-smart agriculture issues as well as to attract adequate financing. This HLO contributes to HLO 1, specifically Objective 2 which focuses on improving energy generation and diversifying the energy mix for the country. High-Level Outcome Indicators Data Source Current Value 1. Number of hectares of terrestrial and Ministry of Green Economy and aquatic areas under enhanced conservation 50,029.81 (May 2024) Environment (MGEE) /management. – CS 2. Net greenhouse gas (GHG) emissions Ministry of Green Economy and (Metric tons) per year – CS Environment (MGEE) 22,472,515.00 (2022) Transforming Landscapes for Resilience (Next reporting will be in 2025) and Development (TRALARD) P164764 3. Number of beneficiaries with enhanced Composition baseline/target from resilience to climate risk – CS P164764; P501987; and proposed 157,570 (2024) TRALARD II Description Zambia has very rich natural resources including land, water, forests, and minerals and key sectors highlighted in the 8NDP including agriculture, mining, tourism, and energy depend on them. With 40 percent of Zambia's wealth derived from natural resources, this constitutes a pivotal asset 30 that demands strategic management for optimal sustainable development outcomes. This requires adapting to climate change and addressing the threats of disasters. Most critically, the agriculture sector, serving as the primary livelihood for over 50 percent of Zambia's population— including most of the impoverished—currently does not optimize the sustainable utilization of the country's abundant natural resources and needs to better manage climate and other disasters. Zambia’s recent drought conditions have highlighted the vulnerability of the country to climate change with several economic sectors affected, especially energy, agriculture, and small businesses. This necessitates adequate financing to enhance climate resilience for the country. Under HLO 3, WBG support includes key areas to improve climate-smart agriculture and sustainable management of natural resources, as well as enhancing disaster and climate risk management systems and financing. Related SDGs:  SDG 13: Take urgent action to combat climate change and its impacts;  SDG 15: Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, halt and reverse land degradation, and halt biodiversity loss. Objective 5: Improve Natural Resources Management and Climate-Smart Agriculture Intervention Logic The government has prioritized sustainable landscape management as a key objective of the 8NDP and the 2024 Green Growth Strategy. This commitment underscores the importance of effective natural resource management, reducing deforestation, and maximizing the benefits derived from the forestry, agriculture, and wildlife sectors. These efforts are designed to preserve biodiversity, encourage sustainable land use, and enhance the well-being of local communities. In line with this, the Second National Biodiversity Strategy and Action Plan 2015–2025 (NBSAP II) also emphasizes conservation, sustainable resource management, and biodiversity protection. The CPF will continue to support these initiatives by supporting sustainable natural resource productivity across various sectors and incorporating climate change adaptation and mitigation measures to fortify these interventions against climate-related impacts. Despite the critical role of natural resources in Zambia's economy, the country lacks comprehensive data on the economic impact of natural capital degradation. Recognizing and managing the value of natural capital is crucial for Zambia's economic health. To this end, the CPF program will advance its support through analytical work in Natural Capital Accounting, aiding Zambia in valuing and managing its essential natural capital. This will also be supported by new data collected under the SADC project, including the first agricultural census since 1992 and the compilation of Environment and Climate Change Statistics using the Framework for the Development of Environment Statistics and the Global Set of Environment Statistics. Enhanced Natural Capital Accounting will be instrumental in shaping national development strategies and fulfilling Government's commitments to biodiversity and climate change. As Zambia’s most critical sector depending on its natural resources, agriculture remains highly vulnerable to the impact of climate change, with around 90 percent of cultivation being rain-fed, resulting in agriculture production in an estimated 84 out of 116 districts being affected by the current drought. An average of 86 percent of public expenditures in agriculture between 2021 and 2024 were allocated to two large government programs: the Farmers Input Support Program (FISP) and the Food Reserve Agency (FRA). Government’s 8NDP focuses on implementing adaptation measures to build the resilience of communities and the economy against climate change impacts. This includes engaging 31 communities in water harvesting, integrated water resources management, scaled-up irrigation development, and climate-smart agriculture. Additionally, Government aims to support communities’ involvement in environmentally friendly alternative livelihoods and natural resource- based value chains to strengthen resilience and sustain livelihoods. The CPF program will continue to support reforms in the sector for the repurposing of agricultural public expenditures away from FISP and towards more growth-enhancing sectors, including irrigation, extension services, and climate change adaptation. Irrigation is critical to building the resilience of the rain-fed farming systems, improving agricultural productivity, diversification and commercialization, all while creating jobs. However, out of the potential 2.75 million hectares (ha) of irrigable land, only about 155,000 ha (about 6 percent of the total land area or about one-third of the irrigable area) is currently irrigated (GRZ 2013). Traditional practices, including the chitemene system of farming and charcoal burning for energy purposes, are major impediments to the achievement of this objective, underscoring how critical supporting smart agriculture and the management of natural resources will be in mitigating this risk. CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 5.1: Number of farmers who SPI 5.1Volume of maize exports (grain Ongoing Operations: received extension services and completed equivalent) (Metric tons) – IS  Zambia Growth Opportunities Program-for- the training on Climate-Smart Agriculture Baseline: 568,970 (2024) Result (P178372) technologies under ZAMGRO program Target: 1,400,000 (2026)  Transforming Landscapes for Resilience and disaggregated by gender – IS, GI Source: P178372 Development (TRALARD P164764) Baseline: 100,000 (2022)  Green, Resilient, and Transformational Target: 600,000 (30 percent female) (2026) SPI 5.2: Farmers adopting improved Tourism Development Project (GREAT TDP, Source: P178372 agricultural technology (Number) P180337) Baseline: 54 158 (2024)  Eastern Province – Jurisdictional Sustainable Indicator 5.2: Number of people in private Target: 116,914 (2025) Landscape Program – Emission Reduction sector schemes adopting improved Source: P164764 Project (P155827) agricultural practices under the EP-JSLP –  SADC Regional Statistics Project (P175731) Baseline: 0 (2024) SPI 5.3: Farmers benefitting from new  Zambeef (P46603) Target: 500,000 (2029) irrigation services disaggregated by gender  Zambeef Biochar (P608420) Source: P155827 - GI  Zambeef Food Security (P607950) Baseline: 0 (2024)  ETG Zambia (607181) Indicator 5.3: Land area under sustainable Target: 5,000 (40 percent female) (2026)  Zambia Farm Blocks Program (608166) community-based forest management or Source: P178372  Zambia Inclusive Climate Insurance Program sustainable production plantations (607090) (Hectares) – Baseline: 122,869 (2024) Target: 525,000 (2029) 32 Source: P164764, P161490 (ICR), P501987 Proposed Operations:  Sustainable Management of Ecosystems in Miombo Ecoregions of Zambia (P501987, GEF TF)  Zambia Refugee and Host Communities Project – ZRCP (P503941)  Transforming Landscapes for Resilience and Development Phase II (TRALARD II) Analytical Work:  Low-carbon and Sustainable Landscape Development in Zambia  Mainstreaming Nature into Policy and Decision-making Processes in Zambia Objective 6: Enhance Climate Risk Management Systems and Financing Intervention Logic Climate change poses significant challenges to Zambia, a country with an economy heavily reliant on the agriculture sector, which is vulnerable to droughts, floods, and shifting weather patterns. The impacts of global warming threaten food security, water resources, and energy production, while exacerbating poverty and inequality. Government’s 8NDP aims to strengthen disaster risk reduction efforts. This includes enhancing early warning systems for timely action, improving disaster preparedness to facilitate effective response and recovery, and ensuring that reconstruction efforts focus on building back better. Additionally, Government plans to conduct disaster risk assessments, establish emergency operation centers, implement community-based disaster risk management programs, and undertake post-disaster recovery activities to enhance resilience. The World Bank has been involved in several projects and reports related to climate resilience in Zambia, focusing on both national and community-level interventions. It also has a portfolio and track record in helping Zambia apply various climate financing tools and instruments, including piloting of results-based climate finance and green finance frameworks. The CPF will support: (i) strengthening disaster risk management systems, including policy updates, enhancing risk sensitive urban planning, disaster response and preparedness, and financing mechanisms; (ii) scaling up climate-resilient low-carbon infrastructure and early warning systems; and (iii) enhancing climate finance flows from various sources and instruments, including concessional funding, blended finance tools and carbon crediting, and strengthening related governance and institutional capacities. 33 CPF Objective Indicators Supplementary Progress Indicators (SPIs) World Bank Program Indicator 6.1: People with enhanced SPI 6.1: Percentage of districts with sub- Ongoing Operations: resilience to climate risks (number) national-level climate emergency  Eastern Province – Jurisdictional Sustainable disaggregated by gender – CS, GI preparedness and management plans Landscape Program – Emission Reduction Baseline: TBD (2024) Baseline: 0 (2023) Project (P155827) Target: 1,000,000 (50 percent female) Target: 25 (2026)  Green Resilient and Transformational (2031) Source: P505188 Tourism Development Project (GREAT TDP, Source: P505094, P181711 P180337) SPI 6.2: Land area under sustainable  Second Additional Financing for Scaling Up Indicator 6.2: Roads that are upgraded in landscape management practices Shock Responsive Social Protection compliance with climate/disaster-resilient (Hectare) (P181711) design standards (kilometers) Baseline: 0 (2023)  Zambia Health Emergency Preparedness, Baseline: 0 (2024) Target: 200,000 (2027) Response and Resilience Project (P505188) Target: 700 (2029) Source: P155827 Proposed Operations: Source: P180337  Zambia Refugee and Host Communities Indicator 6.3: Volume of CO2e Emission Project – ZRCP (P503941) Indicator 6.3: Number of new DRM and Reductions in Eastern Province (metric  Digital Zambia Acceleration Project Climate Finance operations supported ton) (P505094) through the WBG program Baseline: 0 (2023)  DPF CAT DDO (P507116) Baseline: 0 (FY24) Target: 1,500,000 (2027)  TRALARD II Target: 5 (FY29) Source: P155827 Source: WBG Portfolio  ASCENT Analytical Work:  Financial Sector PASA (P179395)  CCDR (P506115) 34 Annex II: FY19–FY24 Country Partnership Framework Completion and Learning Review I. INTRODUCTION 1. This Completion and Learning Review (CLR) assesses the program of WBG in Zambia from FY2019 to FY2024. The FY19–FY24 CPF for Zambia was discussed by the WBG Board of Executive Directors on September 20, 2018 (Report No. 128467-ZA).13 2. The original FY19–FY23 CPF was built around three focus areas: (1) More even territorial development: opportunities and jobs for the rural poor; (2) Public services and social protection for job participation; and (3) Institutions for resilience. The CPF was guided by the 2018 SCD (Report No. 124032-ZM) and supported the inclusive growth objectives of Zambia’s Government Vision 2030 and implementation of the Seventh National Development Plan (7NDP)14 and strongly aligned with the SDGs. The WBG, with the CPF starting in FY19, aimed to assist the government in reversing Zambia’s backslide by increasing FDI and private sector participation in the agriculture, energy, and transportation sectors; creating jobs; and reducing poverty. The CPF addressed lagging poverty reduction despite recorded strong GDP growth during the preceding decade and aligned Zambia with its international commitments to a low-carbon and climate-resilient economy. 3. A PLR was endorsed by the Board of Executive Directors on May 7, 2023 (Report No. 181836-ZM). The PLR’s assessment of the CPF program’s performance suggested adjustments to the World Bank’s engagement strategy to enhance the relevance and effectiveness of the CPF program. Notably, the results framework was adjusted to align with the Government's emergency response to COVID-1915, the adoption of the Eighth National Development Plan (8NDP) for enhancing economic management and livelihood opportunities in rural areas. The PLR extended the CPF through FY24 due to COVID-19, the ongoing debt crisis in the country, the government transition after the 2022 elections. The CPF extension was intended to strengthen ownership with the new government, generate more results, and complete analytics for the preparation of the next CPF. 4. The overall performance of the complete FY19–FY24 CPF program is rated as “Moderately Satisfactory.” The World Bank delivered a strong portfolio of new commitments for US$2,973.76 million, including 15 investment projects (IPFs), two DPF operations, three Program-for-Results (PforR), additional financing for six projects, and one guarantee, and also delivered 28 ASA products.16 The IFC provided long- term finance for US$247.1 million, including mobilization of US$48.8 million for the financial sector, agribusiness, manufacturing, and renewable energy sectors. The MIGA portfolio, which peaked at US$169 million, extended guarantees to the agribusiness, energy, banking, and manufacturing sectors.17 All five CPF objectives were Mostly Achieved (see details in Table 1 and Annex 1). 5. The WBG performance rating is “Good.” The effective alignment of the CPF with government objectives and the WBG’s strong commitment and concessional resources facilitated strong program deliveries and 13 The CLR assesses and rates the overall effectiveness of WBG’s program in achieving its stated objectives and evaluates WBG’s performance. The CLR assessment draws on discussions with WBG country team members involved in the delivery of lending and analytical tasks, a range of WBG documents and reports, and discussions with the GRZ. 14 Such as diversification and job creation, poverty and vulnerability reduction, developmental inequalities reduction, human development enhancement, and creation of a governance environment for a diversified economy. 15 The World Bank COVID-19 Crisis Response Approach Paper recommended deferring new CPFs until the return of steadier conditions. See World Bank, “Saving Lives, Scaling-up Impact and Getting Back on Track,” COVID-19 Crisis Response Approach Paper, June 2020. 16 Of these, nine ASAs are still active in FY24. 17 The agribusiness guarantees rolled off in FY23. 35 COVID-19 response. Also, by drawing on lessons from the 2013–2017 CPF and proactive risk management to ensure portfolio quality improvements throughout this CPF period, significant growth was achieved in the active portfolio—from US$899 million at the beginning of the CPF to US$3,228 million by June 2024 (Annex 4). Although external factors, including COVID-19, posed obstacles to program implementation, the WBG’s proactive engagement with the government and international financial institutions, including the IMF, underpinned its support for the government to overcome ongoing debt and fiscal crises. Nine IPFs and one budget support operation closed during the CPF period. II. STRATEGIC CONTEXT AND FOCUS 6. The CPF’s preparation occurred at the end of a decade marked by strong growth for Zambia in early 2000s, which, however, had wound down by 2019. During the 2011–2019 period, the real GDP growth rate slowed from 7.7 percent in the previous decade to 4.1 percent. Zambia started slipping back from low-middle income country status to IDA-blend in 2016 and to IDA–only borrower in 2023. The national poverty headcount declined only slightly from 57 percent (2010) to 54.4 percent (2015) and was driven exclusively by decreasing urban poverty, while the rural poverty headcount remained at about 76.5 percent.18 Growth had severely weakened over the four years preceding the CPF’s launch in 2019, averaging 3.4 percent and reflecting the impact of lower commodity prices, erratic rains, and weak fiscal performance. Fiscal expansion also continued despite rising debt vulnerabilities, further weakening the debt indicators, and delays in passing key legislation to strengthen debt management further exacerbated the macro-fiscal challenges. 7. The government’s 7NDP for 2017–21 aimed to correct this trajectory and get the country back on track for attaining the national Vision 2030 by accelerating growth and transforming Zambia into a middle-income country by 2030.19 The 7NDP identified five strategic areas aligned with the SDGs to pursue this vision: (1) diversification and creation of jobs, (2) reduction in poverty and vulnerability, (3) reduction in developmental inequalities, (4) enhancements in human development, and (5) creation of a conducive governance environment for a diversified economy. Additionally, the 7NDP emphasized the importance of a stable macroeconomic environment, and its implementation was linked with the annual budget formulation processes. The plan also made low-carbon commitments in alignment with Zambia's Nationally Determined Contribution. 8. The 2018 SCD had identified three major development challenges to Zambia’s efforts to achieve the WBG’s twin goals—extractives-based growth, unequal territorial development, and weak governance.20 Four CPF filters21 helped identify priorities to align the CPF with the government program of the 7NDP.22 Within these, the CPF further focused on seven priorities to develop into CPF objectives with a results framework and operational program. First, the regional disparities in opportunities and employment were creating significant poverty gaps between urban and rural areas. Second, this imbalance was exacerbated 18 World Bank estimated based on 2010 and 2015 Living Conditions Monitoring Surveys. Poverty incidence is based on the national poverty line. Trend accounts for methodological changes implemented between the two surveys. 19 The four pillars of the national Vision 2030 were inclusive and diversified economy, environmental and social sustainability, competitiveness, and sustainability, and strengthening mechanisms and capacities, as indicated in the 2019 CPF, p. 12. 20 See Republic of Zambia, “Systematic Country Diagnostic,” 2018, 5–15. 21 These four filters were: Government program and medium-term strategy, SCD priorities, WBG comparative advantage, and Tightening selectivity in the use of IDA18 funds. See the 2019 CPF, 12–13. 22 Areas of strong overlap between the CPF and the government program included support for (1) diversified and export- oriented agricultural sector; (2) enhanced availability of energy, transport, and ICT; (3) enhanced welfare and livelihood of the poor and vulnerable; (4) reduced inequalities (rural/urban, regional); (5) human development (health, education); and (6) an improved policy environment. See the 2019 CPF, 13. 36 by agricultural policies that were focused on maize rather than improving agricultural productivity. Third, rural communities also faced heightened vulnerabilities to climate and environmental shocks, impacting agriculture, health, and livelihoods. Fourth, the lack of quality resilient infrastructure services in rural and small-town areas was impeding economic development and agricultural productivity. Fifth, poor health outcomes were also common in the rural regions, which were marked by high rates of stunting and teenage pregnancies as well as limited access to health services. Sixth, limited access to secondary education, especially for rural girls, was contributing to poor educational outcomes and future employment opportunities. And seventh, fiscal and financial vulnerabilities, including high deficits and debt distress, were posing serious challenges to macro-fiscal stability and private sector growth. Addressing these issues would require strengthening institutions and enhancing regional integration. 9. Further, the changing external conditions posed major challenges to the FY19–24 CPF implementation, with Zambia facing COVID-19 pandemic, a debt crisis, falling copper prices, and increased vulnerability to climate impacts. Despite efforts to improve economic growth, human capital, and environmental sustainability, structural issues remained and were exacerbated by unsustainable macroeconomic policies and imprudent external borrowing, which sharply increased external debt. The pandemic disrupted economic activity, causing 60 percent of the country’s population to fall below the national poverty line, including 79 percent of rural residents, in 2022. Zambia's external position is heavily dependent on copper, so it deteriorated further due to declining copper prices and exports. 10. In August 2021, the election of President Hakainde Hichilema ended a period of political uncertainty and facilitated improved dialogue with the WBG. The new government's 2021–2026 Manifesto priorities included good governance and macroeconomic stability, strengthened public financial management, improved service delivery, and increased productivity. The 8NDP for 2022–26, prioritized economic diversification through improved agricultural debt management and reporting. The WBG revised priorities at the PLR stage (2023), emphasizing promoting resilience, improving job creation, and addressing rural communities' specific needs, with a streamlined focus on five key objectives (Table 1), including a newly revised objective for strengthened economic management for growth and regional integration. III. PROGRESS TOWARD CPF DEVELOPMENT OUTCOMES 11. The review assesses the overall development outcome of the CPF as “Moderately Satisfactory.” All five objectives were “Mostly Achieved.” (Table 2 and CLR Annexes 1 and 2). Seventeen results indicators were “Achieved,” one “Mostly Achieved,” one “Partially Achieved,” and two “Not Achieved.” Table 2. Ratings of Zambia FY19–FY24 CPF Objectives by Focus Area Focus Area 1: Increase resilience of rural households to climate change and other shocks  Moderately Satisfactory Objective 1: Increased access to services for farmers Mostly Achieved Objective 2: Increased access to and quality of resilient infrastructure services in selected Mostly Achieved rural areas and small towns Focus Area 2: Better job prospects for underemployed groups  Moderately Satisfactory Objective 3: Increased access to health, education, and social protection Mostly Achieved Objective 4: Strengthened economic management for sustainable growth and regional Mostly Achieved integration Objective 5: Improved livelihood opportunities, especially in rural communities Mostly Achieved 37 12. There were four exceptional country-level successes during the FY19–FY24 CPF period. These demonstrate WBG’s strong support for Government’s structural reform and investments in strategic sectors—agriculture, infrastructure, and human capital—across the two focus areas. First, the WBG provided crucial support for Zambia's COVID-19 response,23 enhancing the country's health systems and pandemic preparedness. This assistance focused on strengthening surveillance, contact tracing, laboratory capacities, and improving designated hospitals' functionality, ultimately bolstering public awareness and response efforts, and provided assistance to 36,000 frontline healthcare workers. Second, through the GEWEL Project,24 the SCT program has grown and reached 1.3 million households, benefiting approximately 34 percent of the population and 57 percent of the poor, potentially contributing to a notable reduction in poverty by six percentage points of the targeted beneficiaries.25 Third, the Zambia Scaling Solar program26 successfully established a competitive market for grid-connected solar projects in Zambia, reducing the country's reliance on hydropower and increasing energy mix diversity. By streamlining PV project development processes, the program facilitated private investments in solar PV generation, demonstrating its effectiveness through increased participation of independent power producers. Fourth, the World Bank's budget support (see paragraphs 26 and 40) facilitated Zambia’s debt crisis recovery, enabling a return to sustainable growth by generating significant impacts on growth, farmer productivity, market access, private sector development; expanding access to essential services such as energy and finance; and protecting vulnerable groups during fiscal consolidation from the pandemic shocks and the polycrisis. 13. Other notable results also include boosting the sales and incomes of 109,740 rural direct beneficiaries, along with 202 producer organizations and 259 SMEs;27 converting 72,840 hectares of forest area to sustainable management; adopting climate-smart practices on 162,334 hectares of agricultural land; and improving crop yields for selected crops, benefiting 162,063 individuals in targeted communities, 47 percent of whom were women.28 14. Capacity and implementation challenges prevented the CPF from achieving more results and surpassing targets during the 2019–2024 period. To foster ownership and ensure project implementation success, it is essential to consider a country's institutional capacity for planning and implementation, engage stakeholders at various levels, and increase stakeholder involvement in the preparation of the next CPF. Early detection and resolution of delays during the last CPF period proved to be crucial for maintaining steady implementation progress and preventing cost overruns. A. Focus Area 1. Increase Resilience of Rural Households to Climate Change and Other Shocks – Moderately Satisfactory 4.1 Objective 1. Increased Access to Services for Farmers – Mostly Achieved 15. One indicator met its target fully and one partially. Aligned with the government's rural poverty initiatives under the 7NDP and the 8NDP, this objective supported the shift toward non-maize-centric policies by increasing farmers' access to key services, investing in irrigation, and providing them with access to 23 Through the Emergency Health Service Delivery Project (P176214) and the COVID-19 Emergency Response and Health Systems Preparedness Project (P174185). 24 Girls Education and Women’s Empowerment and Livelihood Project (GEWEL: P151451). 25 See GEWEL 2024 Restructuring paper. 26 Zambia Scaling Solar Energy Project (P157943); Second Scaling Solar Guarantee (P163958). 27 See Zambia Agribusiness and Trade Project (P179507). 28 See Zambia Integrated Forest Landscape Project (P161490). 38 innovative technologies.29 These are considered key steps in transitioning the agricultural sector toward diverse crops, creating off-farm jobs along the agricultural value chains, and establishing links to regional export markets. The first indicator (1.1), measuring the increase in the area provided with new/improved irrigation or drainage services, exceeded its 6,000-hectare target by reaching 9,150 hectares. The second indicator (1.2), tracking the share of FISP budget under e-vouchers, was Partially Achieved with 17 percent against a target of 50 percent. 30 16. Enhancing farmers’ productivity by increasing access to irrigation and agricultural markets remains a highly relevant objective for WBG engagement; however, the attainment of this objective has become elusive because of political complexity and the required resource intensity. The indicators chosen for farmers to receive services are output and intermediary indicators and do not directly track the increase in services. The Transforming Landscapes for Resilience and Development (TRALARD; (P164764) project offers a better indicator choice—that is, the number of farmers reached with agricultural assets or services.31 By 2023, TRALARD had reached 153,429 farmers. Factors that could enhance the future outcomes under this objective include devolving necessary infrastructure services to the district level and establishing grassroots extension systems, addressing private sector vulnerabilities, and fostering private investors’ participation in the drip irrigation system. Key lessons for increasing effectiveness point to the need for more devolution of power and infrastructure services to the local level, strengthening the private sector, commercialization, and access to markets. To this end, IFC supported a large agricultural inputs and commodities trading company in improving the efficiency of its upstream and downstream supply chain in Zambia as a means to access key target crops such as maize and soybeans and input sales. This increase in efficiency was achieved by crop aggregation for approximately 21,000 smallholder farmers in Zambia. In addition, IFC has invested in Zambeef, a vertically integrated agri-company engaged in livestock and crops (including for feed) production, to expand its farming and improve productivity through irrigation and sustainable farming practices. The IFC Climate Insurance project in Zambia has been supporting the insurance sector clients so to strengthen the resilience of smallholder farmers in Zambia by improving their access to suitable and sustainable/climate insurance solutions. MIGA’s support to Silverlands Zambia Limited supported food security and farmer livelihoods.32 4.2 Objective 2. Increased Access to and Quality of Resilient Infrastructure Services in Selected Rural Areas and Small Towns – Mostly Achieved 17. The FY19–FY24 CPF program made solid progress toward Objective 2. Four indicators reached their targets, while one indicator (2.1) was Not Achieved.33 Under this objective, the WBG sought to address the infrastructure gaps contributing to the uneven territorial development (rural and small towns) and address energy, transport, and water and sanitation shortages. The indicator measuring the number of people provided with new or improved electricity service (2.2) achieved 120 percent of its target; WBG interventions reached 16,878 female beneficiaries against a target of 6,800. More than 111,000 hectares of land were protected and restored from deforestation (2.3) and degradation against a target of 90,000 hectares. Also under this objective, 335,000 people in low-income areas in Lusaka have gained access to improved sanitation services (2.4), of which 71,672 have improved sanitation facilities, and 263,214 have 29 See the 2023 PLR, 19. 30 Ongoing preparation for the next planting season will result in expansion of e-voucher reform to 64 percent of the districts. 31 See TRALARD (P164764) “Implementation Status and Results Report #9” for the definition. 32 MIGA guarantees enabled the production of more than 12,000 tons of wheat, 5,000 tons of soya beans, and 300 tons of seed maize. 33 The Improved Rural Connectivity Project (P159330) experienced some implementation delays and the index for 'share of Zambia’s rural population with access to an all-season road' will be measured at the end of the project. See also Annex 2. 39 improved fecal sludge management services (against a combined target of 213,000). The share of the female beneficiaries was 150 percent (167,443 against the target of 107,500). The power transmission capacity (2.5) between Kafue Town and Livingstone substations increased from 230 kilovolt-amps to 700 kilovolt-amps and met the target. Also, more than 160,000 people have experienced increased monetary and nonmonetary benefits (2.6), of which 47 percent were women (against a target of 30 percent). 18. WBG's engagement in the energy sector under this objective yielded strong results through a well- rounded approach of extending lending and advisory services; however, although successful, the scale of the engagement could have been bigger. Main inputs were provided by the IFC supported Scaling Solar Program (P157943; P163958) and Zambia Electricity Service Access Project (P162760), which significantly surpassed its targets for expanding coverage to more households. The project successfully improved electricity access for 291,299 people, exceeding the target by 34 percent, benefiting poor households and SMEs. In addition, the project facilitated the construction of 375 kilometers of distribution lines that have extended services to previously underserved regions. Smart subsidy grants to off-grid companies also improved rural electricity access to remote areas where grid connections were not feasible. There were challenges to expanding access. ZESCO arrears to independent power producers (IPPs) affected investment in the country: during the CPF period, MIGA continued its support of the 120MW Itezhi-Tezhi hydropower plant which supplies power to ZESCO; however, the arrears required MIGA intervention for its covered client. 19. During the 2019–2024 period, WBG engagement played a pivotal role in strengthening the transport sector, which also allowed agriculture’s structural barriers to be addressed. The WBG support to the government in addressing the structural barriers in agriculture and the transport sector nexus focused on investing in improving rural road connectivity, particularly in the country’s poorest regions, and building institutional capacity to plan, implement, and maintain rural road infrastructure. In addition to providing investment lending and technical assistance, the WBG implemented a third-generation output and performance-based road contract methodology that was new to the government. The methodology provides instruments for improving the rural population’s road access by constructing all-season roads and rehabilitating feeder roads. As a result, 1,700 kilometers of severely neglected feeder, main, and district roads were rehabilitated, contributing to improved transport connectivity, addressing border crossing inefficiencies, and enhancing road safety. Lessons learned emphasize the importance of a strong project coordinator in complex projects. Additionally, IFC supported trade facilitation through the establishment of a national trade facilitation committee, leading to enhanced trade policy coordination and reforms, including the introduction of online tax and value-added tax filing. B. Focus Area 2. Better Job Prospects for Underemployed Groups – Moderately Satisfactory 4.3 Objective 3. Increased Access to Health, Education, and Social Protection – Mostly Achieved 20. Three of the outcome indicators achieved their targets, and one was mostly achieved. Under this objective, the World Bank aimed to assist in building a healthy and educated workforce by investing in better health, education, and social protection, especially in rural areas; addressing the tuberculosis (TB) burden and its economic consequences34 through improved TB-control services; and encouraging productive outcomes such as educational attainments for girls, women, and children at risk in rural areas. The first indicator (3.1) tracking maternal deliveries supervised by skilled health personnel was achieved by sustaining 34 TB is a major cause of morbidity and mortality in Zambia within the most economically viable population cohort of 25– 44 years, which makes up 51 percent of the population. 40 99 percent of its target (that is, the baseline).35 The indicator (3.2) reporting on the number of students enrolled in grades 8–12 in the expanded secondary schools with additional classrooms and facilities achieved 53 percent of its overall target (23,124 students, from the target of 43,840); and 51 percent of the target for female beneficiaries (11,133 students enrolled, against a target of 21,920). The indicator measuring the tuberculosis treatment success rate (3.3) achieved a 93 percent success rate against a target of 90 percent (with a baseline of 85 percent) among new and relapsed TB cases. The fourth indicator number of girls supported by the project who enroll in secondary school (3.4) exceeded its target 164 percent (reaching 133,632 girls against a target for 2024 of 80,000).36 21. The education intervention under this objective significantly increased the number of beneficiaries, especially the level of female enrollment in secondary schools. The main inputs for this objective were provided by the Education Enhancement Project (P170513; P180401), which invested in infrastructure— particularly for girls in remote areas—to improve access to secondary education and exceeded initial targets. School construction efforts were mainly concentrated in rural areas, with completed construction projects in 82 secondary schools and construction underway in a further 120 schools. These efforts increased the female enrollment level to 50.8 percent of the students. While progress has also been made in increasing enrollment, challenges persist in meeting the national targets for secondary education in rural areas. To address one such challenge, World Bank support under the Emergency Health Service Delivery Project (P176214) facilitated the Ministry of Finance in ensuring timely wage payments, which is a crucial incentive for retaining workers, and sustaining service provision within the health facilities for maternal deliveries. This support enabled the Ministry of Health to allocate additional resources for hiring 11,000 workers to compensate for absenteeism due to illness and maintain overall productivity among healthcare workers. 22. The World Bank's assistance in the health sector enabled the government in the delivery of essential public health services to address the debt crisis and the COVID-19 pandemic. Through the Emergency Health Service Delivery Project (P176214), the World Bank provided emergency support for the payment of salaries to 36,000 frontline healthcare workers. This allowed the fiscally constrained government to recruit an additional 11,276 workers (16 percent of the health workers currently on the payroll) nationwide, which represents 50 percent of the wage bill. The World Bank's engagement under this objective achieved most of the project indicators by 2023, and it supported the Ministry of Health's financial management and resource allocation systems with recommendations for identifying and rectifying gaps. Another achievement under Objective 3 is the increase in deliveries attended by skilled health providers, which rose from 45 percent (2016) to 63 percent (2020),37 indicating a substantial improvement in maternal and neonatal healthcare services. The interventions under this objective contributed to the healthcare facilities’ ability to adopt an integrated management approach to childhood illness based on new standard guidelines. Objective 3 also made a strong contribution to public health outcomes, particularly in vaccine-preventable 35 This indicator is context-specific and has an inverse measurement direction. The target is to sustain the baseline (see Annex 2). 36 At the PLR, the initial indicator “Extremely poor households in 16 targeted districts receiving support to keep girls in secondary school” was revised to “Number of girls supported by the project who enroll in secondary school” (Source: Girls Education and Women’s Empowerment and Livelihood Project (151451). In 2023, the actual number for this indicator is 133,632 to date, against a 2024 end of project target of 80,000 girls, from 81,118 households. Achievement is therefore 167 percent. 37 See Health Services Improvement Project (P145335), ICR, June 30, 2022, table 1, 58. 41 diseases among children in the region.38 The supported interventions aiming to prevent or contain the impact of TB 39 also extended the project's impact beyond health care. 23. Through the GEWEL project,40 the outcomes achieved under Objective 3 stand out due to their scale and efficacy in increasing access to livelihood support for women and disadvantaged adolescent girls in extremely poor households, along with providing cash transfers to vulnerable households. The World Bank–supported interventions (see indicator 3.4, para 20, and footnote 24) exceeded the target by enrolling over 150,000 impoverished and adolescent girls from SCT households into secondary schools across 65 districts and providing education grants to cover schooling costs for at-risk girls. Progression rates have improved, with 80 percent of girls advancing grades. GEWEL provided a comprehensive livelihood package to over 140,000 poor women, resulting in a 38 percent increase in household consumption, a 62 percent increase in income, an 80 percent increase in business profits, and a 234 percent increase in savings. In addition, the World Bank effort reached 1.3 million households with cash transfers and measures to address gender-based violence and strengthened institutional systems. 24. The strong government commitment was a key factor in delivering results under Objective 3. The adequate staffing of each Project Implementation Unit (PIU) was essential for emphasizing diligent supervision in the community construction model. Although delays in the effectiveness were attributed in part to low project implementation capacity, especially in procurement and the construction sector, the implementation picked up and expanded to reach additional beneficiaries. An important lesson from the World Bank TB effort, also under this objective, is the critical importance of investments in mitigating cross-border diseases as public goods with transboundary benefits. It benefited cross-country disease surveillance and domestic emergency preparedness proving crucial during the COVID-19 pandemic. 4.4 Objective 4. Strengthened Economic Management for Sustainable Growth and Regional Integration – Mostly Achieved 25. The CPF Mostly Achieved Objective 4; two indicators reached their targets, and one could not be achieved. Under this objective, the WBG sought to contribute to the government’s efforts to assist Zambia in addressing the debt and fiscal crises with a focus on improving debt management, reducing the country's debt risk, improving revenue administration and public investment management, and supporting regional integration. The number PPG loans approved by Parliament (4.1) reached 100 percent (2023). The variance between actual and planned primary spending in the budget (4.2) decreased to 4 percent from a baseline of 27 percent and against a target of 20 percent (2023). The third indicator, reduced crossing time for truck cargo at selected border crossings (4.3), was Not Achieved as the Transport Corridors for Economic Resilience Project (P180801) was only approved in FY24 and has yet to achieve results. 26. The results under Objective 4 contributed to easing the pressures and constraints on the government— namely fiscal governance and public financial management practices—by addressing the root causes of the macro-fiscal imbalances and the weaknesses in service delivery. Overall, the strong support to Zambia provided by the First Macroeconomic Stability, Growth, and Competitiveness DPF series (P174911; P181011) to tackle these governance issues was effective. Additional support was provided and results achieved under this objective included the Devolution Support Program-for-Results (PforR) (P178492), which has been supporting the government’s Decentralization Implementation Plan by introducing performance-based financing and technical 38 World Bank health interventions under the CPF have achieved a significant improvement in the percentage of fully immunized children at 12 months of age, increasing from 80 percent at baseline to 99.8 percent at project completion. 39 The WBG supported the GRZ through the AFR RI-Southern Africa Tuberculosis and Health Systems Support Project (155658). The treatment success rate climbed from 85 percent at baseline to 93 percent during the project period. 40 Girls' Education and Women's Empowerment and Livelihoods (P181391). 42 assistance support to strengthen the institutional performance and service delivery performance of all the 96 rural local governments in Zambia. The Zambia Judicial Sector Public Expenditure and Institutional Review (2022) and the follow-up ASA on Judicial Sector Public Expenditure and Institutional Review (P177497) opened up the engagement with Zambia’s judiciary and the Ministry of Justice to explore investment support to the sector. The World Bank and IMF collaborated effectively in supporting the authorities to comply with only concessional borrowing under the IDA’s Sustainable Development Financing Policy and the IMF Debt Limit Policy. 27. The IFC Zambia Investment Climate (IC) Program III (601863) was focused on implementing the World Trade Organization (WTO) trade facilitation articles to enhance the efficiency of importing and exporting goods. Goals include reducing the time and procedures involved by at least 10 percent and aligning processes with WTO principles to boost regional trade. The program has already shown tangible results, with export time decreasing from 44 days to 38 days and import time decreasing from 56 days to 45 days. This was achieved through various improvements such as increased staffing and operating hours at border crossings, decreased clearance times, implementation of the Automated System for Customs Data (ASYCUDA) World, and the introduction of e-payment systems and pre-arrival processing. (Source: End of project survey). MIGA continued its support for Hitachi Construction Machinery (signed 2011)41, a remanufacturing plant in Lusaka. The investment supports job creation, state-of-the-art technology transfer, and technical skills transfer through structured training programs. A 2015 self-evaluation found that these objectives were achieved as the company grew to sustainably support local engineering jobs, with an emphasis on local training. 4.5 Objective 5. Improved Livelihood Opportunities, Especially in Rural Communities42 – Mostly Achieved 28. All five indicators were achieved. With this objective, the CPF aimed to support the government in strengthening climate resilience by adopting smart climate policies and sustainably protecting communities from negative environmental impacts. The number of households adopting diversified livelihood activities in supported areas (5.1) reached 31,514 (of which 9,195 were female-headed) against a target of 30,000 (of which 8,730 should be female-headed). The land area under sustainable landscape management practices (5.2) increased by 99,515 hectares (against a target of 75,000 hectares). The indicator tracking the number of women who receive support for improved livelihoods (5.3) reached 90 percent of its target by 2023 (116,891 women against a target of 129,400). Further, 259 additional SMEs receiving credit from Market Connect (5.4) against a target of 100, and 207 women entrepreneurs and women-headed SMEs accessed financial services totaling ZMW 34,701,743 (US$1,982,975) in the form of grants and loans. As of June 2023, 2,829 SMEs were granted credit totaling US$238 million secured with movable property (5.5) against a target of 867 SMEs and a baseline of 102 (2017). In addition, the value of financing to SMEs facilitated through this project is US$350 million (as of June 2023). The indicator extremely poor households in 51 targeted districts receiving livelihood and empowerment benefits (5.6) was achieved. According to the GEWEL Project (P151451), 116,891 women (August 2023) have received support for improved livelihoods since the project’s inception, with a projected project target of 129,400 women by the end of FY24. 29. Addressing the vulnerabilities of women and youth through an integrated landscape approach yielded tangible results and important operational lessons. The World Bank’s progress under Objective 5 can be attributed to mainstreaming actions to mitigate climate change’s negative effects on communities at various levels, including wards and districts. This was supported by investments in infrastructure and technology solutions for monitoring climate change. The impact of World Bank 41 Project ID 9371; a 2015 self-evaluation found that the expected development impact was achieved. 42 All indicators under this objective, except credits to SMEs, directly track rural areas. 43 interventions on women’s consumption and earnings was primarily driven by the capital component of the intervention. However, larger impacts were observed when combined with human capital improvements through business and life skills training. The private sector is an essential off-taker of small farmer produce. Improved results under this objective also suggest enhancing internal World Bank collaboration across departmental boundaries and strengthening intersectoral synergies at the environment-climate-gender nexus. IV. WORLD BANK GROUP PERFORMANCE 30. The CLR assesses the WBG performance as “Good.” The FY19–FY24 CPF program’s design and implementation successfully contributed to its operations and achievement. Notably, the CPF employed diverse and fit-for-purpose instruments that fostered the flexibility to rapidly respond to crises and emergencies, and the results framework effectively linked government programs with the SCD priorities, CPF objectives, and supporting interventions. Further, the selected indicators facilitated measurement against baselines, targets, and timeframes, and the PLR strengthened the CPF’s realism. Risks were also adequately identified, and collaboration among the WBG, IFC, and MIGA supported the achievement of the four initial objectives. Lessons from evaluations (including the 2019 CLR Independent Evaluation Group [IEG] evaluation) were also integrated for continuous improvement, and knowledge products informed the WBG’s operations and extended high-value technical advice to the client in a timely manner. The program is exiting the CPF period with a strong program and pipeline, reflecting the very effective partnership with the client. A. Design and Relevance 31. The CPF design was relevant to and aligned with Zambia’s development challenges. The CPF program, anchored in the 7NDP and the 8NDP and aligned with the SDGs, focused on diversification, job creation, poverty reduction, inequality, human development, and governance environment. The SCD filtered these government priorities against the most critical constraints to achieving the WBG’s twin goals and the WBG’s comparative advantage to identify 10 CPF program priorities.43 32. Overall, the program design and results framework made accurate assumptions with realistic result chains and selected attainable objectives derived from the SCD and supporting interventions. The initial CPF design (through FY23) encompassed six strategic objectives and an ambitious measurement framework with 30 indicators relevant to the government’s development priorities but exhibiting varying degrees of alignment. The CPF strongly emphasized agriculture, rural development, secondary cities, and decentralized public services, seeking substantial regional transformation by piloting spatial alignment. The realism and the built-in flexibility of the program design made it possible for the WBG to provide a quick crisis response during the debt crisis and the COVID-19 pandemic. Also, the engagement with fiscal institutions and for alleviating private sector financing constraints envisaged leveraging maximizing finance for development (MFD)44 approaches across the portfolio where feasible (see paragraph 33). Some objectives were originally multidimensional (e.g., original objectives 1.1, 2.1, and 3.2), presenting measurement and reporting challenges, and were later streamlined during the PLR review. 43 See 2019 SCD, p.96. These relate to agricultural productivity, fiscal decentralization, human capital formation, and mechanisms for managing shocks and fostering asset accumulation. These efforts were geared toward breaking the intergenerational cycle of poverty, particularly in rural and disadvantaged areas. 44 The terms “maximizing finance for development” (MFD) and “private capital mobilization” are used interchangeably in this document. 44 33. The choice of instruments and approaches matched the diverse CPF objectives and presented a wide- ranging set of IPF, DPF, PforR, MFD, and knowledge services. At the design stage, investment lending was intended to carry the program; however, because of external shocks, instruments supporting public transfers became equally essential for strengthening Zambia’s economic resilience. The CPF envisaged applying the MFD approach by utilizing private sector funding of national priorities, leveraging IDA, IFC, and MIGA instruments. The CPF also introduced the PforR instrument—the Growth Opportunities and Devolution Support PforRs— for building institutions for results in promoting agricultural diversification and strengthening devolution. Also, poverty mapping and spatial alignment were meant to focus the WBG program on the highest poverty density, and built-in crisis and emergency risk communications supported emergency needs in infrastructure and social protection (objectives 2 and 3). Further, the CPF was committed to playing an important role in knowledge creation and informing WBG interventions in Zambia in agriculture, health expenditures, jobs, nutrition, and private sector diagnostics. 34. The CPF design made several high-risk/high-payoff calls. This included support for reforms or sectoral interventions that involved high political and governance risks, as in the case of the DPL series, the TRALARD, and the work on climate and carbon finance in the Eastern Province. Introducing the PforR as a new instrument in the country’s engagement carried significant risks considering capacity constraints; however, this presented an opportunity for significant pay-offs due to the bold reforms these interventions support in agriculture and devolution of services. 35. The indicators used to measure objectives could be validated against baselines, targets, and timeframes. They varied in scope and target types, focusing on specific outputs (e.g., indicators 1.1, 2.1, 2.3 and 5.2) or sector-wide outcomes (2.4, 2.6, 3.2, and 5.1). Improvements could have been made to align indicators more strongly with objectives for indicators 1.2 and 2.3 and set more ambitious targets for indicators 2.1 and 4.3. Some indicators under-measured results (4.2), while others lacked well set baselines (2.2 and 3.2). 36. The risks to the program implementation were properly identified at the outset and rated against the implementation challenges and the outlook at the CPF preparation stage. During the implementation period, the macroeconomic risks materialized—Zambia entered a debt crisis. Although the program could not foresee the shock from a COVID-19 scenario, the overall risk to the program was already rated as “high” given the high macroeconomic risk and risks related to institutional capacity. The CPF accurately identified the mitigation measures to support the program’s implementation by focusing on reforming debt management; enhancing portfolio management; improving public service delivery, particularly in health, education, and social protection; and reforming public investments for debt sustainability goals, which is crucial for securing support from international financial institutions. 37. The CPF design was informed by key lessons from the FY13–FY17 Country Partnership Strategy CLR (see the FY19–FY24 CPF, sections B and C). Because inadequate project design had significantly contributed to poor implementation in the past, this CPF accounted for that in the implementation considerations. Relevant recommendations included aligning design with client capacity and stressing the importance of closer collaboration and coordination among stakeholders, including the WBG and the government, to enhance portfolio quality. The 2017 CLR underlined the significance of bolstering implementation capacity to enhance resource absorption and the necessity of establishing comprehensive coordination mechanisms. Furthermore, the FY19–FY24 CPF integrated the lessons from the IEG Zambia Country Program Evaluation, which recommended addressing copper price volatility, enhancing governance capacity, refining priority project selection, optimizing agriculture strategies, and prioritizing rural poverty alleviation. All IEG recommendations were reflected in the design of the results framework and World Bank intervention logic under original objectives 1.3, and 3.1. 45 38. The design lessons for the upcoming CPF suggest that enhancing WBG effectiveness requires a more integrated approach within the World Bank to address the complex challenges of poverty, climate, and gender externally. Although the CPF design featured territorial focus and climate change priorities, these could be better-integrated pillars. Balancing internal specialization with increased cross- sectoral integration, both within the WBG and with the government, could render not incremental but substantial gains to bolster WBG’s effectiveness. B. Implementation 39. Against the initial design, the WBG implemented a well-resourced program spanning two IDA cycles (IDA19 and IDA20); the World Bank programmed all IDA allocations, including the top-up. The WBG leveraged and mobilized additional IDA resources through the regional integration program, crisis response, scale-up window, and private sector windows to enhance the CPF program. With the additional resources mobilized, the total actual financing for Zambia more than doubled under the FY19–FY24 CPF compared to the FY14–FY18 CPF period.45 During the FY19–FY24 CPF, the program absorbed a total of US$2,764 million of new financing. 40. Budget support and the DPF series were pivotal for achieving strategic implementation results. The extended external financing during the CPF period was crucial for creating fiscal space, which was eroded severely by the debt crisis, COVID-19 impacts, and are more volatile external environment. Prepared in close collaboration with the IMF, the DPF series provided US$400 million of budget support (P174911; P181011)46 and facilitated essential reforms that have had a strong impact on fiscal and debt sustainability by supporting critical growth-enhancing and competitiveness reforms, increasing farmers' productivity, expanding access to electricity and finance, generating private sector dynamism, creating jobs, and diversifying Zambia's energy mix. The Zambian government's commitment to macro-fiscal consolidation and structural reforms has led to significant progress in restructuring debt47 and implementing reforms to stabilize the economy, promote inclusive growth, and create jobs. These steps have accelerated growth and gained creditors' trust, resulting in strong fiscal performance and a high growth trend of 4.7 percent in 2022 and projected at 5 percent for 2023. 41. The PLR streamlined the results framework to reflect new realities, shifting government priorities, and the increased focus of the CPF program to address them. By adjusting the program to respond to COVID-19, the CPF supported the government's comprehensive emergency response and reinforced critical national and regional operations to build resilience. The PLR realigned the CPF around the priorities of the 8NDP and simplified the initial design to two focus areas and five objectives (see paragraphs 3 and 59), consolidating less relevant and under-performing parts of the program and reducing the number of indicators to 21. Initial CPF Objective 3.1 was adjusted to "Strengthened economic management for sustainable growth and regional integration" to better align with the Government's 8NDP priorities and the World Bank's macroeconomic program supporting Zambia's economic recovery and growth and strengthening accountability and transparency. Initial Objective 3.2 was dropped and integrated into the new Objective 5, "Improved livelihood 45 Besides the country allocation, this also includes the regional program, and the IDA windows. 46 During the FY19–FY24 CPF period, Zambia used two DPFs to support key policy decisions to resolve the debt crisis. Under the First DPF, the adopted 2022 Public Debt Management Act (PDMA) strengthened public debt management, accountability, and transparency, laying the foundations for debt management improvements. The GRZs implemented new requirements, including parliamentary approval of the 2023 annual borrowing plan and publication of the 2023– 2025 Medium-Term Debt Management Strategy. 47 The authorities reached an agreement with official creditors on June 22, 2023, on debt restructuring. The ECF Arrangement with the IMF (SDR 978.2 million, about US$1.3 billion) at the time of the program approval, on August 31, 2022, sought to support GRZ’s economic reform plan to restore macroeconomic stability and economic growth. 46 opportunities for rural communities," to address the need for increased resilience and economic opportunities in rural areas and reduce poverty. 42. The effective division of labor and strong collaboration among the World Bank, IFC, and MIGA supported four objectives,48 in key sectors such as agriculture, energy, and infrastructure. The World Bank and IFC collaboration involved promoting regulatory reforms to enhance the private sector's business environment, engaging with policymakers and the private sector, providing advisory services and blended finance, and implementing joint sectoral interventions. For example, MIGA has been collaborating with the World Bank, private sector energy advocacy groups, and the government to promote mini-grid regulatory reform, which would allow private sector investors participation. Additionally, the Scaling Solar program was considered a platform for a more comprehensive Partial Credit Risk Guarantee model for the energy utility ZESCO. The joint World Bank–IFC–MIGA involvement in knowledge sharing, convening, and partnering with other organizations has particularly advanced the CPF program goals. The WBG collaboration provided analytical and advisory services, with most activities coordinated and some jointly delivered. The PSW primarily supported the IFC, while the World Bank provided ASA for sectoral discussions. The preparation of the CPSD resulted in a high level of collaboration. However, challenges were noted in the collaboration with MIGA due to structural issues, particularly in project involvement. Some of the emerging lessons point to the untapped potential for using the WBG array of instruments for MFD and private capital mobilization in Zambia. Considerable opportunity still exists to improve coordination, especially in addressing low productivity and policy issues in the agriculture and infrastructure sectors. Other lessons learned include proactive communication, early project engagement, and leveraging strengths exemplified in successful joint initiatives like the Scaling Solar program (see Section VI, Lesson 3). 43. IFC’s US$157 million portfolio prioritized financial, agribusiness, manufacturing, tourism, retail, construction, and infrastructure, including telecom, media, and technology—with infrastructure representing the largest portion through investments in IHS Towers and Airtel Zambia. IFC’s investment in IHS helps provide telecom towers critical for delivering affordable connectivity through shared infrastructure especially during the crisis and economic recovery post COVID while Airtel provides access to quality and affordable mobile connectivity. IFC also focused on renewable energy, including investing in two solar projects with a total capacity of 84 megawatts, and agribusiness, supporting Zambia’s economic diversification. The extension of the IDA public sector window to Zambia (for example, investment in agribusiness and telecoms) has been crucial to IFC’s engagement by de-risking IFC transactions and allowing for local currency financing to multiple clients. IFC issued two local currency-denominated bonds for approximately US$20 million in the local market and used the proceeds to support its local currency investment program. These issuances marked the return of IFC to the Zambia domestic capital market after ten years. Further, IFC's advisory portfolio aimed to enhance the investment and regulatory environment for private sector investments, with priorities for energy access, financial inclusion, agriculture, and the investment climate. IFC has also supported the Public-Private Dialogue Forum, a platform that brings the private and public sectors together to discuss and resolve investment climate issues. 44. Private capital mobilization has been challenging because of the Zambian debt crisis—real and perceived investment risks have remained high. While IFC syndicated US$49 million of parallel financing during the CPF period FY19–FY23 in telecoms and manufacturing projects, catalyzing private capital across sectors remained difficult. The overall enabling environment, namely policy inconsistencies and competition from state actors, contributed to deterring overall investments and increasing operating costs for private players, especially in the high-interest rate environment. Additionally, high returns from low-risk government 48 Objectives 1, 2, 3, and 5. 47 securities have distorted incentives for domestic financial institutions to fund working capital and expansion needs for firms, particularly MSMEs. 45. MIGA has supported projects in the country—particularly in financial inclusion—despite the default because of its confidence in the banking sector. During the CPF period, MIGA’s portfolio grew to a peak of US$169 million, with seven projects covering foreign private investment in the financial, agribusiness, mobile money, manufacturing, and energy sectors.49 The portfolio primarily supported capital optimization projects, enabling two South African banks to increase lending in Zambia. In addition, in FY22, MIGA supported The Rise Fund’s investment in Airtel Mobile Money Zambia. World Bank mobile money experts supported MIGA in underwriting the transaction, preparing background papers for each country in the transaction, and leading the due diligence efforts. These three projects have improved financial inclusion and domestic private sector lending, which have proved crucial throughout the COVID-19 crisis and the macroeconomic challenges. For example, the IDA PSW enabled MIGA to support the Airtel Zambia investment despite the sovereign default before the project closed. MIGA also supported the electricity infrastructure through Tata’s equity investment in the 120 megawatt Itezhi-Tezhi hydropower station, which aimed to expand power generation by 611 gigawatt hours annually. Finally, MIGA’s support helped the client navigate a prolonged period of arrears from ZESCO to independent power producers. 46. The ASA program, overall, was relevant to the CPF objectives and deepened the country's knowledge base, informing project design and implementation. The CPF planned at design stage for 17 analytical and advisory products; nonetheless the World Bank initiated and delivered 28 tasks during the FY219–FY24 period (see Annex 5). Although the focus of the program broadened during implementation, the ASA portfolio drew on a wide range of products—analytical reports, policy notes, impact evaluations, advisory and technical assistance. The ASA program filled in knowledge gaps identified by the SCD, especially in agricultural productivity (Maize Trade Policies in Zambia: Options for Growth (P177068)) rated highly satisfactory; wealth accounting (Zambia Wealth Accounting and the Valuation of Ecosystem Services Project (ZWAVES; P1631500), rated satisfactory; small and medium towns’ (Zambia Urbanization Review (P1777290), rated satisfactory; economic impacts of climate change (Climate Shocks, Vulnerability, Resilience and Livelihoods in Rural Zambia); as well as cash transfers (Strengthening Cash Management and Local Revenue Policies and Practices (P1797960) and Zambia Social Protection and Jobs Public Expenditure Review (P17474400), rated highly satisfactory. 47. ASAs informed strategic program shifts in water, energy, transportation, urban, education, and social protection (P177068, P179809, P156680, P171333, P177729, P166843, P170796, P179195, P180855). Several ASAs were highly valued by the GRZ (e.g., Wealth Beyond Mining: Leveraging Renewable Natural Capital) for their impact on policy decision-making. Three core ASAs were conducted and completed during the CPF period—the public expenditure reviews (P174744) for social protection, education, and judicial sectors (P174910; P175891), as well as the country economic memorandum (CEM; P178103) and the poverty assessment (P500517) for addressing macro-fiscal issues, especially during the debt crisis, outlining policy reforms for growth and poverty reduction. WASH was essential for mitigating the declining nutritional and public health outcomes and the high prevalence of stunting, promoting economic development, and advancing gender equality and environmental sustainability. 48. Overall, the ASA program was relevant with satisfactory or better quality, and well received by the GRZ and stakeholders. The ASAs facilitated policy reforms to unlock agricultural growth potential, create jobs, and enhance food security in Zambia. The ZAMGRO PforR was informed by findings from the Maize Trade 49 Two guarantees supporting Silverlands Ranching and Silverlands Zambia matured in FY23, as scheduled, reducing MIGA’s outstanding portfolio to US$144 million across five projects. 48 Policies in Zambia (P177068) and the Role of Strategic Grain Reserves in Enhancing Food Security in Zambia and Zimbabwe.50 The new government adopted these reforms through the ZAMGRO program, focusing on reducing input subsidies and redirecting resources to productive investments like extension services and infrastructure. Similarly, the Zambia Water Supply and Sanitation Sector Diagnostic (P166843) and Improving Water Services in Growth Centers in Zambia (P172786) laid the groundwork for the Zambia Water Supply and Sanitation Services in Growth Centers PforR (P179237) and the Global Gateway Nexus Energy Water Zambia Program. These ASAs informed stakeholders about sector challenges and supported sustainable natural resource management through the ZWAVES project, which produced natural capital accounts used in policy planning in the 8NDP and the 2021 National Budget for further analysis and scenario modeling. These ASAs were disseminated through workshops with respective line ministries and other developing partners. The Social Protection and Jobs Public Expenditure Review (P174744) was jointly launched at a high-level event with the GRZ. Supplementary policy notes derived from the report were presented to the new government after the 2021 general elections.51 49. IFC AS programs have contributed to the various CPF objectives related to access to energy, markets, and finance, and also in improving irrigation and farmer’s productivity by supporting clients in energy, agriculture, financial sector towards adopting best practices in the respective industries, and addressing market regulatory issues—Zambia Scaling Solar project 2601536), Zambia Inclusive Climate Insurance Program (607090), Zambia Secured Transactions Phase 2 (602541), Access Bank Zambia Limited AS (602828), Zambia Distributed Energy Services Companies (DESCO) Project (602413), SSA Energy Access program (602685), Investment Climate Program III (601863). 50. Despite the hidden debt crisis and the COVID-19 pandemic, proactive portfolio management led to gradual performance improvements and satisfactory supervision quality. The current portfolio size stands at US$3.2 billion (credits and grants), comprising 28 operations (22 national52 and 6 regional), marking a threefold increase from 2019 (US$1.1 billion). The Zambia program implementation shifted to prioritize fewer but larger investments. The portfolio management made continuous and persistent efforts to consolidate and center the portfolio around a limited number of large, impactful projects. Even though the lending volumes increased by 60 percent, the project fragmentation was contained by doubling the average project size from US$63 million in FY19 to US$133 million in FY24. Disbursement rates improved over the past two fiscal years after being sluggish and uneven during the early years of the CPF. Older or underperforming projects in the portfolio were either restructured or are in the process of cancellation of components. The principled approach has been to identify “champion” projects to scale up to transformational impact. Under this performance-based approach, projects like the GEWEL, Health Services Improvement Project, Electricity Services Access Project, and Zambia Agribusiness and Trade Project were identified as strategic platforms. 51. Through adaptive learning, the WBG adjusted interventions and CPF program priorities. The World Bank played a crucial role in Zambia's debt crisis, coordinating with stakeholders and donors and adapting lending and non-lending interventions for Zambia’s debt restructuring under the G20 Common Framework. This included adapting the World Bank's lending portfolio, supporting the government's adjustment program to restore debt sustainability, mobilizing sector teams to provide analytical and technical support, and working closely with the EU and other development partners. The World Bank effectively adjusted its inputs and technical advice to adapt to the changing macroeconomic environment, enhancing its trusted advisor and 50 Hanbal, Hazem Ibrahim; Mekonnen, Azeb Fissha; Chigumira, Easther.2021. The Role of Strategic Grain Reserves in Enhancing Food Security in Zambia and Zimbabwe. Washington, D.C.: World Bank Group. 51 Here are reflections from the government, IMF, FCDO, and UNICEF, as well as from the World Bank: https://www.worldbank.org/en/events/2021/10/28/social-protection-and-jobs-improving-lives-and-powering- zambia-s-economy-into-the-future. 52 These include two small Recipient Executed Trust Funds (RETFs) for US$3.175 million. 49 financier role. Portfolio performance reviews and intensive engagement reflecting lessons learned and feedback from Implementation Status and Results Reports (ISRs) and CLRs, along with the introduction of the PforRs, addressed complex development and institutional challenges. The PLR’s lessons and adjustments reflected learning and operational adaptability. 52. The portfolio management in Zambia faced challenges such as delayed project effectiveness, setup of dedicated PIUs, and procurement delays. These issues, along with slow disbursements and the need for additional financing, hindered the efficiency of delivery. Early stakeholder engagement with government officials, community leaders, and citizen groups in project planning and implementation was one of the important lessons for improved implementation. Furthermore, the portfolio reviews highlighted the need to address project start-up delays, implement standardized project management guidelines, and improve procurement processes through better collaboration between the government and the World Bank and agreeing on clear milestones and disbursement triggers. With World Bank trust-funded support, the ZPPA upgraded its electronic procurement system and brought it on par with the advanced procurement systems in other countries in the region. 53. Collaboration with development partners strengthened during the CPF period and contributed to the results achieved in key areas. Recognizing the decline in official development assistance (ODA), partnerships were deemed crucial for knowledge generation and leverage of development finance.53 The 7NDP set up a comprehensive framework for donor cooperation, with the WBG active in advisory and technical groups. The Coordinating Partners Group, chaired by the Secretary to the Treasury and Cooperating Partners, was the main mechanism for facilitating donor coordination, while the Secretary to the Treasury engaged on a bi-weekly basis with the IMF and the World Bank to discuss key program and macro-fiscal issues. Partnerships were developed with various stakeholders, including universities, civil society organizations, private sector entities, and the Extractive Industries Transparency Initiative (EITI). Strong collaboration with multiple donors was demonstrated by GEWEL with UN agencies and with the United States Agency for International Development (USAID) on health projects. Transparency International Zambia partnered with the WBG for third-party monitoring during COVID-19. Other examples of good donor alignment are the Lusaka Sanitation Project (P149091), which includes the World Bank, the African Development Bank Group (AfDB), Kreditanstalt für Wiederaufbau (KfW), and the European Investment Bank (EIB); and the Devolution Support PforR (P178492), in cooperation with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and USAID, which provided technical assistance to districts and financing support to the central government. IFC supported and participated in the PPDF, coordinating between the government and private sector. 54. No significant fiduciary and safeguards issues materialized during the CPF period. Implementing agencies maintained compliance with procurement and financial management requirements for WBG-funded operations. The World Bank offered hands-on support to improve fiduciary practices, assisting procuring entities and government officials in effective project implementation. The government improved PIUs’ performance through their early establishment, coordination, guidance, harmonization of incentives, addressing delays, and project monitoring. The World Bank assisted with simplifying bureaucratic procedures, clear guidelines, decision-making delegation, and exploring digital solutions for approval processes within ministries and PIUs to streamline processes. 53 The World Bank, which remains Zambia's largest donor, supports approximately 5 percent of annual public investments. 50 55. The CPF is exiting the cycle with a strong portfolio and pipeline and an effective partnership with the Government. Five projects are under preparation, and a solid portfolio of 28 projects totaling US$3.2 billion will be carried over into the next CPF cycle, providing strong country engagement continuity. V. ALIGNMENT WITH CORPORATE GOALS 56. The FY19–FY24 CPF resources were committed to objectives that squarely supported corporate priorities and policy commitments under Agenda 2030 and IDA Special Themes during IDA19 and IDA20. Five aspects of Zambia’s country program had the strongest alignment and contribution with the WBG’s corporate priorities: poverty reduction and inequality, gender, climate change, governance and institutions, and debt sustainability. Zambia delivered on 10 of its 11 IDA policy commitments, and five IDA20 policy commitments are in progress.54 The FY19–FY24 CPF program objectives were broadly aligned with the SDGs, and the CPF directly addressed eight of them. 57. The FY19–FY24 CPF program had a strong poverty focus across all strategic objectives. The CPF aimed to address high poverty rates and domestic regional income disparities, enhance access to services for farmers, improve infrastructure, and increase access to health, education, and social protection. However, Zambia’s poverty reduction progress has been slow. The country remains one of the poorest in the world. Rural poverty rates remain persistently high, and the country's progress in rural poverty remains uncertain because of high agricultural sector volatility, structural barriers to productivity, and exposure to external shocks. The next CPF needs to explore new pathways for structural transformation, including a stronger focus on agricultural productivity commercialization and integration into global markets. 58. The CPF prioritized addressing climate change as a key aspect of sustainability by dedicating strategic objectives to building resilience and improving rural areas' access to irrigation and infrastructure. Under both objectives in Focus Area 1 and Objective 5, the WBG shifted its priority from responding to building resilience and improving the sectoral access to irrigation for farmers. For example, the Irrigation Development and Support Project (P102459) and the Zambia Integrated Forest Landscape Project (P161490) aimed to enhance livelihoods and promote climate resilience. The next CPF needs to sustain the FY19–FY24 CPF’s efforts by scaling up climate-sensitive financing instruments, supporting climate-resilient investments, and targeting small- and medium-scale farmers for initiatives such as crop diversification and efficient energy generation. 59. During the PLR stage, the WBG shifted the CPF program to assist Zambia with debt sustainability and restructuring amid a severe debt crisis worsened by the COVID-19 pandemic. The government, supported by the World Bank, the IMF, and other international financial institutions, through the DPF series and the Sustainable Development Finance Policy framework, assisted55 with and implemented policy reforms and fiscal adjustments and negotiated debt restructuring agreements to improve transparency, public investment risk, and debt management (see paragraphs 26 and 40 above). Strengthening institutional frameworks for managing public resources remains a strategic World Bank priority. 60. The CPF program was dedicated to promoting women's empowerment in Zambia by integrating gender considerations into projects and sectoral interventions, aiming to address striking gender disparities that hinder social and economic inclusion. Gender challenges in Zambia are driven by poverty, gender inequality in agriculture, gender-based violence, and disparities in education and literacy. Limited access to 54 See DFI Policy Commitment Dashboard for IDA19l. 55 Zambia implemented the Performance and Policy Actions (PPAs) under the IDA Sustainable Development Finance Policy in the areas of debt transparency, debt management, and fiscal sustainability under IDA19 and IDA20. 51 resources and productive inputs inhibits women's agricultural productivity, economic empowerment, and livelihoods. Efforts to enhance women's access to resources and decision-making processes, such as through GEWEL and gender mainstreaming in projects like the Irrigation Development and Support Project, remain crucial for advancing gender equality and empowering women in Zambia. VI. LESSONS LEARNED 61. Lesson #1: Boosting Zambia’s agricultural productivity and incomes remains essential for the World Bank's long-term country engagement. Considering the slow pace of poverty reduction during the CPF period, the World Bank needs to adjust its objectives to increase effectiveness and focus on structural transformation and the rural-to-urban transition. This requires reconsidering causes and factors to accelerate the transition, such as access to farmers' services, agricultural markets, and infrastructure; addressing gender disparities; and factoring in resilience to environmental degradation and climate change impacts. The internal team organization of the WBG will also need to adjust its approach toward greater internal integration of delivery to match the interconnected and complex relationship of poverty, climate, and gender challenges. 62. Lesson #2: Selectivity of the WBG interventions in Zambia benefits from applying three CPF program- specific lenses—geographic targeting, climate-smart growth policies, and economic governance. The World Bank's interventions effectively targeted population segments with high poverty incidence, the lowest quality of services and the most underserved and low-performing districts, yielding the highest returns on CPF’s program resources. For instance, by focusing on the neediest beneficiaries, specifically farmers, women, students, schools, and hospitals (P102459; P114949; P145335; P151451; P162760; P164764; P158570; P174185),56 the FY19–FY24 CPF achieved the strongest outcomes. Prioritizing strategic initiatives that align with national development priorities and continuing to address governance and corruption vulnerabilities remain key to maximizing the impact of WBG interventions. 63. Lesson #3: An array of instruments are available to the Zambia program for private capital mobilization, but they are not fully utilized. These include technical assistance, advisory, risk mitigation, and financing from various IDA windows and trust funds. The next CPF can navigate the private capital mobilization landscape to better leverage the private sector's role through these WBG instruments. IFC engagement in the next CPF can further explore how to leverage the private sector window, blended finance, and local currency lending, as well as other risk-mitigating instruments (for example, partial risk guarantees to alleviate currency volatility and the high cost of lending, putting greater focus on capacity building through investments in advisory programs. In the next CPF period, MIGA could use more guarantees to ease investors’ concerns about noncommercial risks and encourage long-term engagement under public- private partnerships. This will require advancing institutional reforms and strengthening a PPP framework to reduce regulatory risk and the cost of capital. MIGA engagement in the next CPF has opportunities for continuous focus on financial inclusion, digital access, and energy access and enhanced upstream engagement with the Government. 64. Lesson #4: The number and design of projects should adequately consider the country's institutional capacity for planning and implementation. Institutional capacity was a lever for the success of regional 56 Irrigation Development and Support Project (P102459); Water Resources Development Project (P114949); Health Services Improvement Project (P145335); Girls Education and Women’s Empowerment and Livelihood Project (P151451); Electricity Service Access Project (P162760); Transforming Landscapes for Resilience and Development (P164764); Education Enhancement Project (P158570); COVID-19 Emergency Response and Health Systems Preparedness Project (P174185) 52 connectivity projects, particularly in the areas of cooperation and information exchange. In the case of the Transport Corridors for Economic Resilience Project (P180801), institutional and sectoral capacity development effectively integrate climate policy considerations and strategy development to strengthen the provision of road maintenance services. Another essential institutional aspect is the engagement of stakeholders at various levels. The next CPF needs to increase the involvement and engagement of key stakeholders, including government officials, community leaders, and citizen groups, in project planning and implementation. Doing so bolsters ownership, as evidenced by the success of the GEWEL project (P169975; P175955) in reaching beneficiaries, expanding coverage, and surpassing targets. 65. Lesson #5: Early detection and resolution of delays are crucial for maintaining steady implementation progress and preventing cost overruns. Such factors as simplified project management (especially in the case of complex projects), establishment of clear disbursement triggers, and procurement modernizations sped up project implementation. The DPF's prior actions supported and pushed some of these factors, as in the case of Zambia's Public Procurement Act No. 8 of 2020 and the Public Procurement Regulations (2022). 53 CLR Annex 1. Status of Zambia FY19–FY24 CPF Results Matrix (Summary Table) Focus Area 1: Increase resilience of rural households to climate change and other shocks – Moderately Satisfactory Objective 1: Increased Access to services for farmers Mostly Achieved Indicator 1.1 Area provided with new/improved irrigation or drainage services (hectares) Achieved Indicator 1.2 Share of Farmer Input Support Program budget under e-vouchers (percentage, custom) Partially Achieved Objective 2: Increased access to and quality of resilient infrastructure services in selected rural areas and small towns Mostly Achieved Indicator 2.1 Share of Zambia’s rural population with access to an all-season road Not Achieved Indicator 2.2 People provided with new or improved electricity service (number) Achieved Indicator 2.3 Hectares of land protected and/or restored Achieved Indicator 2.4 Number of people in low-income areas in Lusaka gaining access to improved sanitation services Achieved Indicator 2.5 Power transmission capacity Achieved Indicator 2.6 People with increased monetary and nonmonetary benefits percentage share (of which women) Achieved Focus Area 2: Better job prospects for underemployed groups – Moderately Satisfactory Objective 3: Increased access to health, education, and social protection Mostly Achieved Indicator 3.1 Deliveries supervised by skilled health personnel Achieved Indicator 3.2 Number of students enrolled in grades 8–12 in the expanded secondary schools with additional classrooms and facilities Mostly Achieved Indicator 3.3 Tuberculosis treatment success rate Achieved Indicator 3.4 Number of girls supported by the project who enroll in secondary school Achieved Objective 4: Strengthened economic management for sustainable growth and regional integration Mostly Achieved Indicator 4.1 Number of public and publicly guaranteed loans approved by Parliament Achieved Indicator 4.2 Variance between actual and planned primary spending in the budget Achieved Indicator 4.3 Reduced crossing time for truck cargo at selected border crossings (Mokambo, Chembe, Kasumbalesa) Not Achieved Objective 5: Improved livelihood opportunities especially in rural communities Mostly Achieved Indicator 5.1 Number of households adopting diversified livelihood activities in supported areas Achieved Indicator 5.2 Land area under sustainable landscape management practices (hectare) Achieved Indicator 5.3 Number of women who receive support for improved livelihoods Achieved Indicator 5.4 Number of additional SMEs receiving credit from MarketConnect Achieved Indicator 5.5 Number of SMEs granted credit secured with movable property Achieved Indicator 5.6 Extremely poor households in 51 targeted districts receiving livelihood and empowerment benefits (percent) Achieved 54 CLR Annex 2. Zambia FY19–FY24 CPF Results Matrix Evaluation CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Objective 1:  The measurement linkage between a  Irrigation Development and Increased between objectives and indicators Support (P102459) and Access to needs to be strengthened. Additional Financing Services for  Address delays in implementation by (P172140) Farmers streamlining the integration of country  Zambia Growth systems into World Bank procurement Opportunities Program Indicator 1.1: guidelines. (P178372) Achieved Area provided  Make the grievance redress  Zambia Agribusiness and Baseline: 0 with new/ Result: 9,150 hectares mechanism (GRM) accessible to all (FY19) Trade (P156492) improved project beneficiaries.  First Macroeconomic irrigation or Source: Irrigation  In cofinanced projects with others, a Stability, Growth, and Target: 6,000 drainage Development Support clear division of activities with agreed- (2023) Competitiveness services Project (P102459) upon modalities for joint supervision Development Policy (hectares) to minimize risks is essential to Operation (P174911) mitigate delays.  Transforming Landscapes for Mostly  Explore options for clearing Resilience and Development Achieved procurement plans with the attorney (TRALARD) (P164764) general's office to streamline implementation and cut prolonged ASA procurement procedures.  Assessing the Impact of Partially Achieved Maize Trade Policies in  This is a very challenging reform Zambia (FY23) Indicator 1.2: Result: 17 percent politically—one beyond the World Share of IFC Farmer Input Baseline: 0 Bank's leveraging power.  Assessing the Impact of Source: Zambia First Support percent (2021)  Sharing targets with the IMF program Maize Trade Policies in Microeconomic Program created some, but not definitive, Zambia (FY23) Stability, Growth and budget under Target: 50 leverage. Competitiveness DPF  Agrivision (34461) e-vouchers percent (2023)  It is needed to make ZAMGRO GRM (percentage, (P174911) training in supported areas more  Zambeef III (46603) custom) gender sensitive.  Zambia Secured Transactions Source: ZAMGRO Phase 2 (602541) (P178372) 55 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Implementation  Zambia Inclusive Climate Status and Results Insurance Program (607090) Report #4  ETG Zambia AS (607181) MIGA • Silverlands Zambia Objective 2:  Explore new approaches to addressing Increased access gender-based violence by considering • Improved Rural Connectivity to and quality of the hiring of a dedicated, specialized (P159330) resilient company. • Lusaka Sanitation (P149091) infrastructure  Mainstreaming climate change takes a • Electricity Service Access services in Not Achieved long time, so it is crucial to (P162760) selected rural continuously engage with regional • Regional: Kariba Dam areas and small Result: 18.7 percent development agencies. This Rehabilitation (P146515) towns (Index measurement collaboration is especially critical ASA pending due to project under the Transport Corridors for • Transport Sector PPP- Indicator 2.1: extension; significant Economic Resilience Project. Support (FY22) Share of Baseline: 18.7 progress made in road  Streamline procurement processes to • Programmatic ASA for the Zambia’s rural percent (2016) Mostly access for a mitigate delays by incorporating new Energy Sector in Zambia population Achieved considerable portion of procedures. (FY23) with access to Target: 20 the population.); See  Emphasize strong PIU coordination to • Regional: Tanzania-Zambia an all-season percent (2023) paragraph 17, footnote ensure effective project outcomes. Interconnector (P166099) road. 21.  Incorporate lessons learned from • Green, Resilient, and output and performance-based road Transformational Tourism Source: Improved Rural contract modalities, particularly those Development Project Connectivity Project focusing on health and safety planning (P180337) (P159330) from project inception. • Transport Regional Corridors  Build on the potential multiplier effect for Economic Resilience of rural connectivity, emphasizing (P180801) thorough development and design to • Regional: Tanzania–Zambia maximize socioeconomic benefits, as Interconnector (P166099) evidenced by unplanned economic 56 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating activities generated from urban • National Energy Access section development. Transformation Project (P179180) • Green, Resilient, and Achieved Transformational Tourism Development Project  Plan for the provision of connections (P180337) Result: 291,299, with beyond grid expansion, particularly for 16,878 women off-grid areas, by investing more up Baseline: 0 household heads; front before rolling out the project. IFC Indicator 2.2: (2018) general target has  Encourage the retention of dedicated • Scaling Solar Zambia 2 People been achieved by 120 teams with strong coordination among (38685) provided with Target: 243,807 percent, women implementing agencies. • Scaling Solar Zambia (37811) new or (2023) household heads improved  The lack of readiness in the pre- • Zambia Distributed Energy target by 250 percent Services Companies (DESCO) electricity Of which, investment stage has affected service women heads of preparedness for off-grid electrification Project (602413) Source: ISR • SSA Energy Access program (number) household: initiatives. (Implementation 6,800  Scale up current access results through (602685) Status and Results • Zambia Solar Round 2 the new CPF, focusing particularly on Report) Electricity (601536) gender inclusivity. Services Access • IHS ZM COVID (44235) Project (P162760) Achieved MIGA Guarantees • Ithezi-Tezhi Hydro Power Result: 111,245 Indicator 2.3: Baseline: 0 hectares of forest Hectares of (2016) were protected from land protected deforestation and and/or Target: 90,000 degradation restored. (2021) Source: COMACO (P144254) Landscape Management Project (ICR July 2020) 57 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Achieved Result: 334,886 people gained access to sanitation services, Indicator 2.4: Baseline: 0 71,672 improved Number of (2016) sanitation facilities people in low- and 263,214 income areas in Target: 213,000 improved fecal sludge Lusaka gaining of which half management access to (107,500) are services), of which 50 improved women percent are women sanitation beneficiaries (167,443); total services (2021) beneficiaries exceeded target of 305,000 (Dec. 2022) Source: Lusaka Sanitation Project (P149091) Indicator 2.5: Baseline: 230  Prioritize the advance preparation of key Power kVA (2013) Achieved technical studies, safeguards transmission assessments, and major procurement capacity Target: 700 kVA Result: Transmission packages to expedite project (2019) capacity between implementation. Kafue Town and  Ensure that infrastructure development Livingstone is accompanied by adequate technical substations increased assistance to effectively bolster sector from 230 kVA to 700 strength. kVA (Dec. 2018)  Establish a clear division of labor when cofinancing projects with development Source: Kafue Town partners to mitigate potential delays and Muzuma - Victoria minimize changes to the project 58 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Falls Regional development objective. Agree on Transmission Line modalities for joint supervision to Reinforcement minimize risks of delay. Project (124351)  To shorten protracted procurement processes, which may be frequent in Zambia, explore the option of clearing the procurement plan with the attorney general's office, rather than each individual contract.  Consider developing a standardized methodology to accurately assess and reflect regional benefits in national grid projects. Achieved Indicator 2.6: Baseline: 0  Engage extensively with stakeholders to People with (2017) Result: Over 160,000 reach a much higher number of project increased people have higher beneficiaries. monetary and Target: 40,000 benefits, 47 percent  Hold dedicated GRM capacity building nonmonetary (2022) are women (Feb. activities, ensuring that 50 percent of benefits 2024) the direct beneficiaries are women, to percentage Of which 30 ensure that the GRM is operational and share (of which percent are Source: Zambia accessible to all project beneficiaries. women) women Integrated Forest Landscape Project (P161490) Objective 3: Increased access Indicator 3.1: Baseline: IDA to health, Deliveries 558,702 (2021) • Girls’ Education and education, and Mostly supervised by Achieved Women’s Empowerment Achieved skilled health Target: 558,702 and Livelihood (GEWEL) social protection personnel (2023) (P151451) 59 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Result: 555,378, • Scaling-up Shock Responsive sustained 99 percent Social Protection (SSRSP) of the target57 (P179095) • Education Enhancement Source: Zambia (P158570) Emergency Health • Regional: Africa Centers for Service Delivery Disease Control and Project (P176214); Prevention (P167916) Implementation Status and Results • Regional: Eastern and Report #4 Southern Africa Higher Education Centers of Indicator 3.2: Baseline (2017):  Successful implementation would Number of 0 Mostly Achieved Excellence (P151847) require strong commitment and students accountability mechanism on the part of • Regional: Southern Africa enrolled in Target (2024): Result: 23,124 the government to deliver results. Tuberculosis and Health grades 8–12 in 43,840 (21,920 students (11,133  Functional and effective project Systems Support (P155658) the expanded female) female); reached 53 governance structures, as well as • Lusaka Sanitation (P149091) secondary percent (51 percent) competent and adequately staffed PIU, schools with of target (Nov. 2023) are crucial. ASA • Improving the Effectiveness additional  The community mode of construction classrooms and Source: Zambia of Social Protection Systems requires strong, close supervision. in Zambia (FY24) facilities Education  Strong leadership and implementation Enhancement Project capacity during Parent ZEEP • Zambia Poverty Monitoring (ZEEP) (P158570) implementation helped. and Analysis (FY22)  Strengthen project implementation • Zambia- Programmatic capacity, especially in procurement and Public Expenditure Review- construction, as changes in the design of COVID (FY23) the school construction package delayed construction. 57 This indicator is context-specific and has an inverse measurement direction. That is, the target is to sustain the baseline. Hence, its target and baseline are identical. Many frontline medical workers were discouraged by the heightened risk of infection during the COVID-19 pandemic, resulting in significant absenteeism among trained delivery staff. World Bank support under the Emergency Health Service Delivery Project (P176214) assisted the government in preserving the status quo, that is, access to sustained service delivery supervised by skilled health personnel. 60 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating  The additional financing had a strong • Zambia Gender and Inclusion scaling-up effect, as additional financing Platform (FY24) grew significantly and allowed for the initial target of 30,000 beneficiaries (of which, 15,000 were women) to be surpassed. The World Bank‘s responsiveness to Government's request for design changes and additional financing increased the effectiveness. Indicator 3.3: Baseline:  Investing in public goods to generate Tuberculosis 85 percent Achieved benefits beyond national boundaries is treatment (13,571) (2015) key to preventing cross-border diseases. success rate Results: For indicator The project invested in cross-border Target: "TB Treatment disease surveillance and emergency 90 percent Success Rate among preparedness initiatives that proved (15,472) (2021) New and Relapse TB invaluable in responding to the COVID- Cases in target 19 emergency. geographic areas  Working with regional organizations (Percentage, such as East Central and South Africa Custom),” 93 percent, Health Community and African Union but likely to increase Development Agency-NEPAD to provide when the third technical assistance and implementation quarter results are support contributed to better results. out.  A multisectoral approach to implementation (across the health, Source: AFR RI- labor, and mines ministries) yielded Southern Africa positive outcomes. Tuberculosis and  Frequent changes in senior Health Systems management staff in the implementing Support Project agencies disrupted implementation (155658) progress.  The next CPF could benefit from including indicators that reflect more 61 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating systems strengthening indicators than those that are disease specific. Indicator 3.4: Number of girls supported by the project who enroll in secondary Achieved school. Result: 133,632 (Aug. This indicator  A comprehensive package of support Baseline: 0 2023) substituted in acts as an incentive for parents to keep percent (2016) the PLR the their female children in school. Source: Girls initial CPF  Awareness and sensitization are critical Target: Education and indicator 14,000 girls (7 Women’s for smooth implementation. “Extremely percent 189,828 Empowerment and  Effective communication, constant poor households) Livelihood Project follow-ups between the World Bank and households in (2021) (151451) the client are key for project success. 16 targeted Implementation districts Status and Results receiving Report. support to keep girls in secondary school (percent)” See PLR p. 26. Objective 4: Baseline: Achieved  An indicator is needed to link debt Indicator 4.1: Strengthened not applicable contracted and its connection with IDA Number of economic Mostly Result: 100 percent economic growth. • First Macroeconomic public and management Achieved Target (2023):  Technical assistance was essential for Stability, Growth, and publicly for sustainable all public and Source: First the preparation and passing of Public Competitive4ness guaranteed growth and publicly Macroeconomic Debt Management Act. 62 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating regional loans approved guaranteed Stability, Growth, and  Efforts to work through country systems Development Policy integration by Parliament loans approved Competitiveness and close collaboration with IMF paid Operation (P174911) by Parliament Development Policy back. • Regional: Tanzania-Zambia Operation (P174911) Interconnector (P166099)  Budget credibility and variance • Second Macroeconomic Indicator 4.2: Baseline (2019): Achieved improved for the year 2023, yet not Stability, Growth, and Variance 27 percent because of improved cash management Competitiveness between actual Result: 4 percent (in improvements. Cash management plans Development Policy and planned Target (2023): 2023 budget, latest are not fully deployed and used by Operation primary 20 percent available) ministries, provinces, and agencies • Zambia Agribusiness and spending in the (MPAs). Trade Project-II (ZATP-II) budget Source: First  Enhance coordination between the P179507 Macroeconomic Ministry of Finance and MPAs to ensure • Regional Statistics Project Stability, Growth, and that MPAs are adequately informed (P175731) Competitiveness about rationalization practices, enabling Development Policy them to accommodate changes in their MIGA Operation (P174911) spending plans.  Establish a specialized Cash • Hitachi Construction Management unit within the Accountant Machinery General's Office to oversee and IFC implement cash management plans.  Investment Climate Program III (601863) Indicator 4.3: Not Achieved Reduced ASA crossing time • Zambia Judicial Sector Public Baseline (2017): Result: Project is yet for truck cargo Expenditure and Institutional 0 percent to be approved at selected Review Project is yet to be approved border • Zambia: Accelerating Private Target (2023): Source: Transport crossings Sector Recovery and 5 percent Corridors for (Mokambo, Financial Inclusion Economic Resilience Chembe, (P180801) • Zambia Strengthening Fiscal Kasumbalesa) Management and 63 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Transparency for Effective COVID-19 Response • Country Economic Memorandum (P178103)  Public Expenditure Review (P174910) Objective 5: Ensure adequate safeguards budget for IDA Operations Improved Mostly Indicator 5.1: Achieved project operations to address the • Girls’ Education and livelihood Achieved Number of Baseline (FY19): challenges across the portfolio. Women’s Empowerment opportunities households Result: 31,514 (9,195 0 Prioritize improvements in waste and Livelihood (GEWEL) especially in adopting female) management and occupational health and (P151451) rural diversified Target (2023): safety supervision and monitoring to communities livelihood Source: Transforming • Mining and Environmental 30,000 (8,730 mitigate risks and enhance project activities in Landscapes for Remediation and female) effectiveness. supported Resilience and Improvement (P154683) Provide support to the government in areas Development in • Integrated Forest Landscape enhancing mining regulations to mitigate Zambia (P164764) (P161490) environmental and social impacts associated with mining activities. • Zambia Agribusiness and Indicator 5.2: Achieved Trade (P156492) Emphasize training and savings as crucial Land area Baseline (FY19): components of women's empowerment under Result: 99,515 Trust Funds 0 initiatives. sustainable • PPCR Phase II (P127254) Fostered effective communication, regular landscape Source: Transforming • PPCR Additional Financing Target (2023): follow-ups, and engagement between the management Landscapes for (P165442) 75,000 Client, implementing partners, and the practices Resilience and • Zambia COMACO Landscape World Bank, contributing to project (hectare) Development in Management (P144254) success. Zambia (P164764) 64 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Allocate dedicated resources for • EITI Post Compliance Achieved monitoring and evaluation, address Implementation Support funding gaps, and establish a pool of (P159717) Result: 116,891 locally available providers of business • Integrated Forest Landscape women have received development services (BDS). (GEF) (P157521) support for improved Address challenges related to attribution • Green, Resilient, and livelihoods since by distinguishing between similar Transformational Tourism Indicator 5.3: project inception, government and donor programs. Baseline (2017): Development Project (Scale Number of indicating steady Maintain agility in the model for BDS 0 Up Window and Regional women who progress toward an provision. Integration) receive support end-of-project target Target (Apr for improved of 129,400 women ASA 2024): 129,400 livelihoods (Aug. 2023) • Supporting Women-Led SMEs in Zambia: Access to Source: Girls Finance and Capacity Education and Building (FY23) Women’s • Women Entrepreneurship Empowerment and Financing Initiative (WEFI) Livelihood Project (P151451) IFC • Metalco GVL (33340) Achieved • Metalco GVL AS (601876) Baseline (2017): • Protea Bonanza (41451) 0 Result: 259 SMEs. Indicator 5.4: • Great North Mall (38397) Target (2023): Number of • DCM Bayport Zambia 100 Source: Zambia additional (33794) (of which 40 Agribusiness and SMEs receiving • ABZ RI 2015 (37355) percent are Trade Project credit from women-owned (P156492) • FNB Zambia (36658) MarketConnect or women- Implementation  Zoona (38220) controlled) Status and Results Report #14; • ABZ RI 2017 (39906) 65 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Result: 207 women- • ABZ RI 2018 (42283) led SMEs obtained • Stanbic ZM SL (38700) financial services to • Zambia Secured Transactions access Kwh 34,701, Phase 2 (602541) 743 (US$1,982,975) in form of grants, loans • Access Bank Zambia Limited AS (602828) Source: Supporting • DFS Zoona Zambia AS Women-led SMEs in (601707) Zambia: Access to MIGA Finance and Capacity • Absa Group/ Barclays Building Pilot Zambia (14390) (P168398) • FirstRand Bank Zambia Achieved (14565) • Airtel Mobile Money (14898) Result: 2,829 (June 2023) SMEs granted Baseline: 102 credit totaling US$238 (2017) million, secured with Indicator 5.5: movable property Number of Target: 867 through IFC’s Zambia SMEs granted (2020) Secured Transactions credit secured Phase 2 project; value with movable Revised of financing facilitated property cumulative to SMEs through target: 3,162 (by project is US$350 2025) million (June 2023) Source: IFC Zambia Secured Transactions Phase 2- 602541 66 CLR Indicator Lessons Learned and Suggestions Objective CPF Indicator Baseline/Target Status at CLR for the New CPF WBG Program Instruments Rating Achieved Baseline: Indicator 5.6: 0 percent (2016) Result: 25 percent, Extremely poor 116,891 women of households in Target: 454,977 households 51 targeted 16 percent have received support districts (75,000 of (Aug. 2023) receiving 454,977 livelihood and households) Source: Girls empowerment (2021) Education and benefits Women’s (percent) Empowerment and Livelihood Project (P151451) 67 CLR Annex 3. ZAMBIA World Bank Financing Program FY19–FY24 Project Approval Closing Financing Financing Project ID Project Name Status FY FY ($US million) Instrument P164764 Transforming Landscapes for Resilience and Development in Zambia Active 2019 2026 100 IPF P172140 Irrigation Development Support Project – AF Active 2020 2025 30 IPF P170513 Education Enhancement Project – AF Active 2020 2026 120 IPF P169975 Girls' Education and Women's Empowerment and Livelihood Project (GEWEL) - AF Active 2020 2024 142 IPF P167916 Africa CDC Regional Investment Financing Project (RI) Active 2020 2026 90 IPF P176400 COVID-19 Emergency Response and Health Systems Preparedness Project – AF Active 2021 2024 14 IPF P175955 Girls Education and Women Empowerment and Livelihood Project – Second AF Active 2021 2024 105 IPF P174185 COVID-19 Emergency Response and Health Systems Preparedness Project Active 2021 2024 20 IPF P179095 Scaling-up Shock Responsive Social Protection Project (SSRSP) Active 2022 2025 155 IPF P178492 Devolution Support Program Active 2022 2028 210 PforR P176214 Emergency Health Service Delivery Project Active 2022 2024 155 IPF P179507 Agribusiness and Trade Project-II (ZATP-II) Active 2023 2029 170 IPF P180337 Green, Resilient and Transformational Tourism Development Project (GREAT-TDP) Active 2023 2031 100 IPF P180401 Education Enhancement Project Second – AF Active 2023 2026 53 IPF P178372 Growth Opportunities Program Active 2023 2027 300 PforR P174911 First Macroeconomic Stability, Growth and Competitiveness DPF Closed 2023 2024 275 DPL P175731 SADC Regional Statistics Project (RI) Active 2023 2029 30 IPF P181011 Second Macroeconomic Stability, Growth and Competitiveness DPF Active 2024 2026 125 DPL P181391 Girls' Education and Women's Empowerment and Livelihood Project (GEWEL 2) Active 2024 2029 150 IPF P180801 Transport Corridors for Economic Resilience (TRACER) Active 2024 2030 270 IPF P179380 National Energy Advancement and Transformation Program (NEAT) Active 2024 2027 100 PforR P505188 Health Emergency Preparedness, Response and Resilience Project Active 2024 2029 50 IPF Total 2764 68 CLR Annex 4. World Bank Zambia Active Portfolio FY19–FY24 Ratings, Ratings, Net Disb. Project Project Name Type App. Instru- Dev. Impl. Comm. Cum. Un-disb. Un-disb. ID FY ment (US$m) (percent) Objective Progress (US$ m) (US$ m) P102459 Irrigation Development and Support Project National 2011 IPF MS MS 145.00 132.11 3.64 2.7 P151451 Girls Education and Women Empowerment and National 2015 IPF S MS 312.00 293.94 12.75 4.2 Livelihood Project Mining and Environmental Remediation and P154683 Improvement Project National 2017 IPF MS S 51.18 46.78 3.32 6.6 P159330 Improved Rural Connectivity Project National 2017 IPF S MS 200.00 84.22 115.78 57.9 P162760 Electricity Service Access Project National 2017 IPF S MS 26.50 25.44 1.19 4.5 P158570 Zambia Education Enhancement Project National 2018 IPF MS MS 233.00 106.22 122.98 53.7 P164764 Transforming Landscapes for Resilience and National 2019 IPF S S 87.54 77.00 6.83 8.1 Development in Zambia P174185 COVID-19 Emergency Response and Health Systems National 2021 IPF MS MS 34.00 22.92 9.15 28.5 Preparedness Project Voice and Accountability: Community Empowerment P173472 for Improved Local Service Delivery Project National 2022 IPF S MS 2.75 1.48 1.27 46.0 P174012 Enhancing Early Learning Project National 2022 IPF MS MU 39.01 10.95 28.06 71.9 P176214 Zambia Emergency Health Service Delivery Project National 2022 IPF S S 155.00 154.53 0.47 0.3 P178492 Zambia Devolution Support Program National 2022 PforR MS MS 210.00 50.86 159.14 75.8 P178539 Strengthening Public Procurement System for Economic National 2022 IPF MS MS 0.43 0.37 0.05 12.0 Development P179095 Scaling-up Shock Responsive Social Protection Project National 2022 IPF S S 155.00 154.40 0.60 0.4 P178372 Zambia Growth Opportunities Program National 2023 PforR S MS 300.00 112.01 187.99 62.7 P179507 Zambia Agribusiness and Trade Project-II (ZATP-II) National 2023 IPF S S 170.00 0.00 170.00 100.0 P180337 Green, Resilient and Transformational Tourism National 2023 IPF S MS 100.00 1.21 98.79 98.8 Development Project (GREAT-TDP) Eastern Province Jurisdictional Sustainable Landscape P155827 National 2024 IPF 43.96 0.00 43.96 100.0 Program P179380 National Energy Advancement and Transformation National 2024 PforR 100.00 0.00 99.89 100.0 Program Zambia Second Macroeconomic Stability, Growth and P181011 Competitiveness DPF National 2024 DPF 125.00 127.77 0.00 0.0 P181391 Girls' Education and Women's Empowerment and National 2024 IPF 150.00 0.00 149.10 100.0 Livelihoods (GEWEL 2) P505188 Zambia Health Emergency Preparedness, Response and National 2024 IPF 50.00 0.00 0.00 0.0 Resilience Project (MPA) Total National 2,690.37 1,402.19 1,171.01 45.5 69 Project App. Instru- Ratings, Ratings, Net Disb. Un-disb. Un-disb. ID Project Name Type FY ment Dev. Impl. Comm. Cum. (US$m) (percent) Objective Progress (US$ m) (US$ m) P146515 Kariba Dam Rehabilitation Project Regional 2015 IPF MS MS 95.00 41.31 46.26 43.5 Eastern and Southern Africa Higher Education Centers of P151847 Excellence Regional 2016 IPF S S 12.00 12.02 0.04 0.4 P155658 AFR RI-Southern Africa Tuberculosis and Health Regional 2016 IPF S S 45.00 44.65 0.08 0.2 Systems Support P167916 Africa CDC Regional Investment Financing Project Regional 2020 IPF MS MS 86.11 9.82 73.26 85.1 P175731 SADC Regional Statistics Project Regional 2023 IPF S MS 30.00 2.00 28.00 93.3 P180801 Transport Corridors for Economic Resilience (TRACER) Regional 2024 IPF 270.00 0.00 265.44 98.3 Total Regional 538.11 109.79 413.09 76.8 S = Satisfactory MS = Moderately Satisfactory MU = Moderately Unsatisfactory WBG Zambia Portfolio FY19–FY24 – Closed Projects Project ID Project Name Type Bank Approval Date Closing Date P149091 Lusaka Sanitation Project National 2015 30-Apr-2024 P155658 AFR RI-Southern Africa Tuberculosis and Health Systems Support Project Regional 2016 31-Dec-2023 P151847 Eastern and Southern Africa Higher Education Centers of Excellence Regional 2016 31-Dec-2025* P161490 Zambia Integrated Forest Landscape Project (GEF) National 2017 29-Feb-2024 P156492 Zambia Agribusiness and Trade Project National 2017 30-May-2024 P154683 Zambia - Mining and Environmental Remediation and Improvement Project National 2017 28-Jun-2024 P162760 Electricity Service Access Project National 2017 30-Jun-2024 P176214 Zambia Emergency Health Service Delivery Project National 2022 31-Dec-2023 P174911 Zambia Macroeconomic Stability, Growth and Competitiveness DPF National 2023 31-Dec-2023 * Zambia part is closed 70 CLR Annex 5. ASA Program FY17–FY24 Initiation Completion Task ID Task Name Status FY FY P156249 Zambia Wage Bill Management TA 2015 2019 Delivered P157243 Zambia - Macro-Fiscal ASA 2016 2019 Delivered P157777 Zambia NFIS and M&E 2016 2019 Delivered P157791 Zambia CPFL 2016 2019 Delivered P157793 Zambia: Diversified Financial Services for Individuals and Enterprises 2016 2019 Delivered P157790 Zambia Financial Infrastructures 2016 2019 Delivered P159610 Productive Use of Electricity by MSEs in Urban and Peri-urban Zambia 2016 2019 Delivered P162287 Zambia Health Sector Public Expenditure Review 2017 2019 Delivered P163380 Developing an Innovative Payment Platform for the Social Protection System 2017 2019 Delivered P165210 Zambia Climate Smart Agriculture Investment Plan 2018 2019 Delivered P165972 Assessment of Zambia Procurement System 2018 2019 Delivered P167096 Zambia - Debt Management Performance Assessment and Reform Plan 2018 2019 Delivered P167831 Zambia - Review of Country Systems to Support the Use of PforR 2018 2019 Delivered P145271 Renewable Energy Resources Mapping and Geospatial Planning 2013 2020 Delivered P156680 Zambia Financial Inclusion Country Support Program 2016 2020 Delivered Insolvency and Secured Transactions Reform to Promote MSME Access to P165590 2018 2020 Delivered Credit and FI P164723 Zambia Forest Sector Analysis 2018 2020 Delivered P165468 Zambia Poverty Monitoring and Analysis 2018 2020 Delivered P166843 Zambia Water Supply and Sanitation Sector Diagnostic 2018 2020 Delivered P168846 Capacity Building Support to the Ministry of National Development Planning 2019 2020 Delivered P169566 Zambia Macroeconomics and Fiscal Work 2019 2020 Delivered P170738 Impact Evaluation of Market Connect Intervention in the ZATP Project 2019 2020 Delivered P171145 Zambia DMF Debt Management and Government Bond Market Development 2019 2020 Delivered P171333 Digital Economy for Zambia Diagnostic 2019 2020 Delivered P158551 Fostering Long-term savings Impact Evaluation 2016 2021 Delivered P163150 Zambia Wealth Accounting and the Valuation of Ecosystem Services Project 2017 2021 Delivered P174744 Zambia Social Protection and Jobs Public Expenditure Review 2021 2021 Delivered P175593 Zambia Review of Project Implementation and Supervision Arrangements 2021 2021 Delivered P170276 Transport Sector PPP-support 2019 2022 Delivered P172786 Improving Water Services in Growth Centers in Zambia 2020 2022 Delivered P172596 Strengthening Property Tax Policy and Administration in Zambia 2020 2022 Delivered P174864 Zambia Poverty Monitoring and Analysis 2021 2022 Delivered P175891 Zambia Education Sector Public Expenditure Review 2021 2022 Delivered P175769 Strengthening Capacity for Environmental and Social Framework Implementation 2021 2022 Delivered P177068 Maize Trade Policies in Zambia: Options for Growth 2021 2022 Delivered P177497 Zambia Judicial Sector Public Expenditure and Institutional Review 2022 2022 Delivered P177174 Zambia: Accelerating Private Sector Recovery and Financial Inclusion 2022 2022 Delivered Supporting Women-led SMEs in Zambia: Access to Finance and Capacity P168398 2019 2023 Delivered Building Pilot 71 P177729 Zambia Urbanization Review 2022 2023 Delivered P179809 Promoting Skills Development for Youth in Zambia 2023 2023 Delivered P170796 Programmatic Advisory Services and Analytics (ASA) for the Energy Sector 2019 2024 Delivered P174910 Zambia - Public Finance Review 2021 2024 Delivered P177348 Zambia Gender and Inclusion Platform 2022 2024 Delivered P178103 Core Zambia Country Economic Memorandum 2022 2024 Delivered P180159 Zambia Judicial Sector Reform Support 2023 2024 Delivered P179796 Strengthening Cash Management and Local Revenue Policies and Practices 2023 2024 Delivered P500517 Zambia Poverty and Equity Assessment 2023 2024 Delivered P168188 Improving the Effectiveness of Social Protection Systems in Zambia 2019 2025 Active Zambia Investment Enabling Environment in Africa, Caribbean and Pacific P176090 2021 2025 Active Countries P179195 Development of PSP options for road infrastructure 2022 2025 Active P179207 Zambia Poverty Programmatic ASA FY23-24 2022 2025 Active P179395 Zambia Financial Sector Development 2023 2026 Active Technical Support for Drone Utilization in Public Health Supply Chain and P181304 2023 2026 Active Diagnostic P180855 Universal Health Coverage and Quality in Zambia 2023 2026 Active P502030 Zambia Governance for Transformation PASA 2024 2026 Active 72 CLR Annex 6. IFC Committed and Outstanding Portfolio (a) Zambia Committed and Outstanding Portfolio by Industry Group (as of June 15, 2024) Committed Client Product Commitment Year (US$, millions) Financial sector Bayport Zambia LN FY14, FY23 16.6 Stanbic Bank LN, QL FY07, FY19 3.9 Access Zambia ET FY11, FY19 2.6 Manufacturing, Agribusiness and Services Zambeef LN FY10, FY22 24.9 Twyford Zambia LN LN FY20 FY2020 13.3 Protea Hotels LN FY19 7.1 Woodside LN FY17 2.7 Infrastructure and Natural Resources Western Power Company Limited QL FY23 0.3 HIS Zambia LN FY21 56.3 Zamcell ET, LN FY19, FY23 10.1 Bangwelu (scaling Solar) LN FY2018 10.5 Ngonye (scaling Solar) LN FY2018 7.4 Total 155.8 (b) Zambia Advisory Services Portfolio (as of June 15, 2024) Amount Sector Project Name (US$, millions) Non-sector-specific Zambia Farm Blocks Program 0.5 Advisory Services Non-sector-specific Zambia PPD 1.0 Advisory Services Zambia Inclusive Climate Insurance Program Finance and insurance 1.1 CnC Ngonye Falls Hydropower Project Electric power 0.0 ETG Zambia Agriculture and forestry 2.1 Zambeef Biochar Agriculture and forestry 0.1 Zambeef Food safety Agriculture and forestry 0.4 Total 5.1 73 CLR Annex 7. MIGA’s Guarantee Portfolio (US$ million) Expiration Project Name Effective Date Sector FY19 FY20 FY21 FY22 FY23 FY24* Date Silverlands Ranching 5/22/2013 5/21/2023 Agribusiness 11.9 11.9 11.9 11.9 0.0 0.0 Silverlands Zambia Limited 4/13/2017 1/26/2023 Agribusiness 13.4 13.4 13.4 13.4 0.0 0.0 Itezhi Tezhi Hydro Power 11/22/2016 5/23/2031 Infrastructure 29.1 29.1 29.1 29.1 29.1 29.1 Hitachi Construction Machinery Zambia 3/31/2011 3/30/2031 Manufacturing 13.5 13.5 13.5 13.5 13.5 13.5 Reman Factory Project ABSA/Barclays Zambia 12/06/2019 12/05/2034 Financial 0.0 38.1 38.1 38.1 38.1 38.1 FirstRand Bank Zambia 06/30/2020 06/29/2035 Financial 0.0 33.2 33.2 33.2 33.2 33.2 Airtel Mobile Money Zambia 06/30/2022 06/30/2027 Financial 0.0 0.0 0.0 30.2 30.2 30.2 Total Outstanding Exposure 67.8 139.0 139.0 169.2 143.9 143.9 Number of projects 4 6 6 7 5 5 * FY24 exposure as of June 1, 2024 74 Annex III: Streamlined Systematic Country Diagnostic Update Objective: identify the most critical constraints and opportunities to effectively and sustainably achieve the World Bank goals of “ending extreme poverty and promoting shared prosperity on a livable planet” Changes to the corporate scorecard PROSPERITY: the new headline indicator for shared prosperity as pro-poor growth is the Prosperity Gap, which is the average factor by which incomes need to be multiplied to bring everyone to a prosperity standard of US$25/day. Any growth reduces the prosperity gap, but growth at the bottom has a significantly higher impact than growth at the top.58 A second indicator is going to track the number of countries with High Inequality, defined as those with a Gini index above 40. LIVABLE PLANET: five vision-level indicators are included in the scorecard. Two related to climate mitigation and adaptation (Greenhouse gas emissions and Millions of people highly vulnerable to climate risks), one on nature and biodiversity (Millions of hectares of healthy terrestrial ecosystems), and two on life essentials (Millions of people facing food and nutrition insecurity and Percentage of people without access to drinking water, sanitation, and hygiene). Approach: focus on updating the set of priorities in line with the new mission, drawing on the constraints and opportunities identified in available core diagnostics, ASAs, and past SCD. Country Context and Key Recent Economic and Social Developments 1. The period studied under the last SCD was characterized by sluggish poverty reduction and increasing inequality despite sustained economic growth. Despite growing an annualized GDP per capita rate of 3.2 percent per year during 2006–2015, poverty only fell by an average of 0.5 percentage points per year (Figure A1). Meanwhile, the absolute number of poor increased. Weak growth-poverty linkages were particularly salient during the mining-led growth period (2006–2010), but they remained constrained by the poor quality of jobs during the subsequent services- and construction-led growth period (2010–2015). In this context, Zambia held the 5th highest inequality level in the world and the 5th lowest growth-poverty elasticity in the Eastern and Southern Africa (AFE) region. Consequently, the two pathways highlighted by the SCD were more income growth among the poor and more and better redistribution and protection. 2. Since 2015, the growth and fiscal vulnerabilities highlighted in the last SCD materialized, triggering a sovereign debt crisis when COVID-19 hit. Zambia was on an unsustainable fiscal and debt path, driven by a rapid increase in investment and public consumption throughout the 2010s. However public investment was ineffective at catalyzing and diversifying economic activity. Growth was already slowing down since 2011, with 2015 marking the first contraction since 1998. The collapse of copper prices, low export volumes, climate hazards, and the high import content of public spending exacerbated the economic slowdown, which ultimately ended in a recession and external debt default in 2020—only 15 years after having reached the completion point in 2005 under the HIPC Initiative. In 2022, the country 58 For example, income growth of a person earning US$2.5 receives 10 times the weight of that one earning US$25. The Prosperity Gap replaces the previous measure of Income Growth in the Bottom 40 percent. 75 was re-classified as a Low-Income country. Ongoing debt negotiations and an ambitious reform package underpin the recent recovery, but the country will remain in a constrained fiscal environment in the foreseeable future. 3. Poverty—already among the highest in the world—reached 60 percent of the population in 2022 (up from 54.4 percent in 2015). The reversal was concentrated in urban areas, which saw an 8.5 percentage point increase in poverty incidence (reaching 31.9 percent in 2022). The spike is undoubtedly linked to the COVID-19 pandemic and subsequent debt crises, but the growth deceleration that preceded the crises was already manifesting in weakening labor market indicators such as formal employment and earnings. Meanwhile, rural poverty remained widespread and stagnant, surpassing 75 percent since 2010. Rural/urban disparities in access to essential services are stark, hindering human capital development and labor productivity. As a result, Zambia holds the 6th highest poverty incidence in the world, which is misaligned relative to the country’s GDP per capita. 4. Similarly, food insecurity, malnutrition, and learning poverty are ubiquitous. The country ranks amongst the lowest in the Global Food Security Index (102 in 113 countries) and the International Food Policy Research Institute Hunger Index (116 in 118 countries). The prevalence of severe food insecurity has been on an upward trend since 2014-16 (FAO stats). As of 2015, Zambia held the fourth-highest under- 2 stunting rate in SSA (WB 2019). The incidence of learning poverty and learning deprivation are close to universal (at 99 percent and 98 percent, respectively), significantly above the SSA average. At 0.4, the HCI is right at the SSA average, but well below the Lower Middle Income (LMI) average of 0.48. Zambia’s Multidimensional Poverty Measure (MPI)—which encompasses monetary poverty, education, and basic services including electricity and WASH—is the 7th highest in the world (MPM 2015). 5. Zambia fairs well in terms of environmental sustainability compared to its peers, attributed largely to its high carbon decoupling score and abundant natural capital. However, recent trends indicate concerning deterioration. In global rankings, the country is well placed in terms of biodiversity and habitat and greenhouse gas emissions per capita (2nd and 50th place among 172 countries). However, the country jumps to the other end of the ranking when analyzing 10-year trends (158th and 168th, respectively) (Environmental Performance Index (EPI) 2020). Evidence suggests escalating air pollution, rapid increases in emissions, heightened greenhouse intensity, and significant tree cover loss. Declines in natural capital stock and quality, including water, forests, and land, further exacerbate environmental challenges. Zambia lost more than 60 percent of its forest during the 20th century, though deforestation has slowed down substantially since 2001. The stock of renewable natural capital has decreased over the last 20 years primarily due to land use change driven by the expansion of agriculture, settlements, energy needs, and infrastructure development. 6. The three structural characteristics underpinning Zambia’s development path identified in the previous SCD persist, namely extractive-based growth, uneven territorial development, and stability coupled with weak governance (Figure A2). Economic transformation is not taking place. Economic growth remains heavily reliant on the mining sector, with limited spill-over benefits to other sectors. Over the last 20 years, labor productivity fell by almost 50 percent in agriculture and grew by less than 2 percent in services. Yet these sectors account for about 90 percent of new jobs. Economic activities and services continue to be highly uneven across the territory, rural and urban areas, and concentrated along the line of rail, with very limited domestic and regional integration. The disparity in access to basic services between rural and urban areas remains staggering. At the same time, cities are growing informally, exacerbating vulnerabilities and constraining quality job creation. The share of formal employment has 76 been on a steady decline since 2017. Governance has notably deteriorated, particularly over the period 2015–2020, led by “voice and accountability”, “rule of law”, and “control of corruption”. Since 2020 all governance indicators improved, but they remain below 2015 levels. Weak institutions hinder policy effectiveness, including policy formulation, resource allocation, coordination and implementation of reforms, and service delivery. Failures to leverage the agriculture and mining sectors are an example of the structural nature of poor policy effectiveness, as is the country’s re-incidence on debt negotiations. 7. Zambia is grappling with rapid population growth, prompting a focus on human capital development and job creation. Total population grew 3.4 percent annually compared to 2.8 percent in the previous decade (ZamStats 2023). Despite the ongoing decline, the total fertility rate remains significantly above the LMI average. Adolescent fertility rates are especially concerning, with their subsequent detrimental effects on human capital accumulation, labor force participation, and economic empowerment. They have been falling at a slower pace than total fertility and are significantly above the SSA average. Scaling up job creation is imperative to leverage the demographic dividend. The projected number of annual jobs needed to keep labor force participation and unemployment rates constant is 2.5 times the number of jobs created annually during Zambia's rapid growth period 2000– 2014 (WB 2017a). At 43 percent in 2019, the share of Youth Not in Education, Employment, or Training (NEET) is about two times the global and regional averages, and it is about 40 percent higher among women than men. Meanwhile, female labor force participation remains low (27 percent compared to 44 percent among men). With 42 percent of the population aged 14 or younger, addressing human capital deficits becomes urgent. 8. Urbanization has yet to deliver its expected economic benefits. Zambia is among the most urbanized countries in SSA, but its GDP per capita levels do not match its level of urbanization (WB 2022b). While cities contribute to 83 percent of the GDP (2015), lack of adequate investments and a high prevalence of informal and low-productivity jobs hinder cities’ further economic contribution. Furthermore, the urbanization process seems to have decelerated. At 44.7 percent in 2022, it reflects an annualized growth rate of 1 percent compared to 1.3 percent in the previous decade, therefore falling below previously projected rates (ZamStats 2024). 9. Climate change presents a major threat to Zambia's development trajectory which the country is ill-prepared to face. The country is exposed to multiple extreme weather events, such as droughts, seasonal and flash floods, extreme temperatures and dry spells, which are all expected to increase in frequency, intensity, and magnitude. Over the past three decades, the estimated disaster- related losses associated with floods and droughts amount to over US$13.8 billion, equivalent to 0.4 percent of annual economic growth (GOZ 2017). Climate change will have a swiping impact across vital sectors such as agriculture, water, energy, health, and infrastructure. However, Zambia ranks in the bottom 30 percent of economies in terms of readiness, defined as the country’s ability to leverage investments and convert them into adaptation actions (2021 Notre Dame Global Adaptation Initiative (ND-GAIN) country index). The worst dimension is on social readiness (185 out of 186), followed by governance readiness (125 out of 188), and then economic readiness (94 out of 185). 10. Yet the country holds significant potential to reverse its path. There is abundant natural wealth to support sustainable and inclusive development. Agriculture holds potential for diversification, value addition, and export. Mining stands to benefit from the global energy transition. There are abundant clean energy sources to support green growth, and untapped potential in the tourism sector. The country holds a strategic position to benefit from regional integration and global markets, and a young population to 77 harness the benefit of a demographic dividend. For that to happen, the country needs to massively improve public policy efficiency, accelerate structural transformation, invest in infrastructure and human capital, build resilience to climate change, and ultimately unleash private-sector-led growth. Prioritization approach 11. Determining Zambia’s current development priorities took the last SCD as a point of departure, with adjustments made in light of upfolding events and new analytical work. The core analytical work underpinning the updated set of priorities include the recent Country Economic Memorandum and Public Expenditure Review, a draft CPSD, and emerging messages coming from the Poverty and Equity Assessment. Additional cross-cutting analytical work includes the 2022 Urbanization Review, 2022 Gender Assessment, and 2022 Green, Resilient, and Inclusive Development Diagnostics (GRID), complemented with various sectoral assessments (eg, education, health, water & sanitation and social protection). Priorities also strategically build on the ambitious reform package implemented by the current administration to reinstate macro stability and reinvigorate growth. New priorities were also vetted with Government during upstream consultations. 12. Aligned with the corporate mission, the priority matrix is organized around the three dimensions of the WB mission: Prosperity, Poverty, and Planet. Within each dimension the main development challenges are identified, followed by a limited set of development priorities to address such challenges. Given the prominence and spread that governance-related challenges had in the initial consultation phase, “Weak Governance and Institutions” was defined as a cross-cutting issue through which priorities were either defined or screened. Often other challenges and priorities including private sector development, a focus on women and youth, and climate change are core and integral parts of Zambia’s development and are therefore embedded throughout the three dimensions and development challenges. The most prominent interlinkages are highlighted when needed, and the prioritization criteria explicitly accounted for such complementarities. Additional prioritization criteria included impact on jobs, sequencing, and time frame. The combined application of all criteria resulted in the ranking of priorities into three tiers that indicate some level of sub-prioritization within the matrix. Areas of future opportunities – such as the priority sectors identified in the forthcoming CPSD, can be used later as an additional lens through which one can focus/strategize within the priorities. Annex 3 presents the past SCD priority matrix, and Annex 4 presents the updated matrix. 13. The three dimensions—Prosperity, Poverty, and Planet—and their underlying challenges and priorities are highly intertwined. Lack of diversification and value addition—under Prosperity—hamper job creation which ultimately underpins sustainable poverty reduction. Poor human capital and low- quality service delivery—under Poverty—undermine pro-poor growth and heighten environmental degradation and climate vulnerability. Poor management of natural resources and vulnerability to climate change—under Planet—threaten economic growth and poverty reduction efforts and increase macro volatility. Low agricultural productivity among small-scale farmers—under poverty—hinders economic growth and amplifies vulnerabilities to climate change. As a result, while linked to a specific pillar, all challenges and priorities are mutually reinforcing and inherently linked to ultimately deliver on the WB’s mission of “ending extreme poverty and promoting shared prosperity on a livable planet”. Development Priorities under PROSPERITY 14. The main challenges to promoting inclusive growth remained largely the same, though the country is now immersed in a prominent resource-constraint environment due to the consequences of 78 the 2020 debt default. Despite the significant progress achieved through the ongoing reform package aimed at restoring macroeconomic and financial stability, macroeconomic volatility continues to hamper private sector investment and limits the government’s capacity to deliver quality public services. The economy remains largely undiversified, with low and declining productivity across most sectors, and comprised of too many small and informal firms that fail to grow and create quality employment at scale. The country has yet to harness the benefits of the mining sector to the broader development process. In this context, the country needs a significant scale-up of private-sector participation to create employment and help finance major infrastructure gaps, while strengthening fiscal policy and management and DRM)to ensure the productive use of public sector resources. Strong job creation is paramount not to fall again into an inequality-increasing growth path, which not only decouples growth from poverty reduction but also hampers structural transformation (WB 2024b). Relative to the last SCD, a new priority on market-relevant skills development is added to enhance inclusivity, and more focus is given to infrastructure connectivity gaps to scale-up private-sector-led growth. Development challenge: Macroeconomic volatility and constrained access to external finance 15. Strengthen fiscal policy and management, increase Domestic Revenue Mobilization, and build fiscal stabilization mechanisms. Zambia's fiscal position is weak due to governance challenges and ineffective public investments. Enhancing fiscal policy and budget management is crucial for economic stability and growth. Past debt-driven investments with low returns have increased the deficit without boosting growth, and lax spending controls have worsened fiscal imbalances, leading to default. Zambia's tax system is underperforming, partly because of generous tax breaks and administrative shortcomings, which hampers its ability to buffer economic fluctuations. Tax revenues are volatile and rely heavily on the mining sector, with a small taxpayer base. To improve this situation, especially with limited development finance, Zambia needs to expand and diversify its tax base and strengthen tax administration. It is also important to manage resource revenues effectively throughout economic cycles. In the short term, Zambia should focus on concessional financing and robust debt management to avoid accumulating liabilities, prioritize spending in key areas while ensuring fiscal sustainability, and enhance public investment and financial management. Adopting technology can increase transparency and combat corruption and the misappropriation of public funds. Development challenge: Lack of diversification and value addition 16. Streamline the regulatory and business environment and enhance investment policies. Zambia is a leading country in Africa on regulatory governance reforms, but the implementation of the new legislation targeting the business environment has been slow. Significant challenges encompass the necessity to secure various licenses, navigate through regulators with limited capacity and overlapping jurisdictions, confront an inefficient land administration system and a deficient insolvency framework, as well as contend with a sluggish and burdened court system. Technological solutions—such as rolling out the e-registry of business licenses to local authorities—and risk-based regulatory approaches should significantly improve efficiency and transparency. At the same time, strengthening investment policies, including investment promotion, incentives, investor protection and retention, are paramount to attracting much-needed FDI. Significant changes to domestic legislation are needed to put in place a strong and balanced investor protection framework and align it with the country’s international commitments. Potential short-term measures include the consolidation of FDI entry rules and the forthcoming adoption of a ‘negative list’. 79 17. Scale-up access to finance and markets (transport connectivity and trade facilitation). Access to finance has consistently remained one of the top constraints cited by firms, with high domestic borrowing costs (average lending rate of 26 percent) due to government borrowing crowding out the private sector. While significant progress has been achieved in mobile money access, limited interoperability, gaps in credit infrastructure, and nascent financial consumer protection, among others, limit its potential.59 Immediate actions include accelerating the dismantling of arrears; scaling up credit guarantee schemes for bank loans to SMEs; and improving collateral registry and credit reporting systems. Also promising is the adoption of non-traditional collateral, tapping into alternative private sector capital sources such as venture capital and crowdfunding, and leveraging digital technologies, including digital finance and fintech solutions. Special consideration should be given to priority sectors such as agriculture and green industries, and to underserved populations such as women and youth-led SMEs. At the same time, despite its strategic location, inadequate transport connectivity and trade policies hinder much-needed access to markets—local, regional, and global. Production is concentrated along the central corridor, contributing to 75 percent of GDP. Only 17 percent of the rural population lives within 2km of a road in good condition (Rural Access Index). Improving urban-rural connectivity is vital for the growth of secondary cities, which in turn are essential to fostering balanced urbanization, job creation, and productivity. At the same time, accelerating growth requires increased integration into regional markets, including capitalizing on the AfCFTA opportunities. Enhancing connectivity not only demands investments in resilient infrastructure but also heightened collaboration in managing and maintaining corridor systems across the involved countries. Forceful application of maintenance discipline is critical to realizing the long-term benefits of such investments, as current upgrading projects of poorly maintained roads are crowding out higher- return investments. Regional integration can be further strengthened by establishing digital trade corridors with neighbors to accelerate the establishment of deeply integrated digital markets. Excessively restricted and inconsistent trade policies, in turn, have substantially hampered export growth, particularly in the agricultural sector. Removing trade barriers, coupled with coordinated border and customs management and the implementation of modern automated systems, will establish a more predictable regional trading environment. Trade reforms and infrastructure improvements are highly complementary, making improving one without the other likely insufficient. 18. Improve equitable access to quality and market-relevant skills development for youth and enable economic opportunities for women. Despite comprising over half of the labor force, the youth’s contribution to economic growth is hindered by inadequate skills and limited job opportunities. Approximately 66 percent of the 6.4 million youth are economically disengaged, while 33 percent are only partially engaged in informal or low-pay formal employment (WB 2023b). Skill shortages persist across most sectors (WB 2023b), encompassing technical and innovation, digital and communication, and foundational literacy and numeracy. The Technical Education, Vocational and Entrepreneurship Training (TEVET) system encounters capacity constraints, misalignment with skills demand, and inadequately trained teachers. Most training institutions barely meet the minimum quality standards and are poorly connected with the industry. Addressing these challenges requires remediation of foundational skills, productivity enhancement programs, reactivating disengaged youths, and reconnecting your women and men with formal education. This, in turn, needs coordination among various ministries including Labor, Technology and Science, Community Development and Social Services, Education, and Youth Sports and 59 Gender gaps in financial inclusion exist but have significantly reduced over time (access to finance services stands at 68 percent among women and 71 percent among men). 80 Arts. Addressing women’s constraints in accessing productive jobs includes strengthening targeted and market-relevant training, addressing informational and skills barriers in the formal market, and childcare assistance. Leveraging digital technologies remains an untapped potential for both vulnerable populations. 19. Maximize the potential from energy transition minerals in the global decarbonization. Mining has been, and will continue to be, a key driver of economic growth. However, its contribution to the overall development process has been limited. Private investment has been hampered by an unpredictable and unstable fiscal regime and unmet electricity needs. Localization efforts for job creation and local economic impact have fallen short. Copper price volatility has translated into fiscal and macroeconomic instability, while realized fiscal revenue has failed to deliver economic impact due to poor fiscal and investment management. Amidst the global push for energy transition minerals, Zambia can redefine the sector’s impact, with lower volatility risks owing to the anticipated sustained demand. For this to materialize, several development priorities highlighted elsewhere in the matrix become crucial. These include improved use of public resources, adequate investment climate, closing infrastructure gaps (transport and energy), and better management of natural resources while adapting to climate change. These should be complemented with streamlining sectoral governance, designing a competitive fiscal regime for mining and value addition, and strengthening links to local employment and community partnerships. An ASA is underway to further identify the strategic actions to address these priorities. 20. Interlinkages. Missing from this section is a direct focus on the agriculture and energy sectors, which feature prominently in both the CEM and CPSD, and are essential to promote inclusive growth. Given the prominent role of agriculture in poverty reduction, the major constraints to small-scale agriculture are described in the next section. Nonetheless, the priorities from this section address many of the most notable constraints to agricultural productivity and commercialization, including more predictable investment and trade policies, increased access to finance, and improved connectivity. Similarly, related to priorities listed under Planet, investments in agronomic solutions and resource- efficient irrigation, increased access to climate-financing instruments, and more predictable and sustainable energy access have a direct impact on agriculture resiliency and productivity. Energy, in turn, is a major constraint to growth. Mining and agriculture alone are expected to account for over 50 percent of electricity demand in the coming years. Energy is placed under Planet due to its high vulnerability to climate change coming from the overdependence on hydropower. This high vulnerability, in turn, threatens growth and inclusion. But energy needs go beyond matrix diversification. Generation must scale up significantly to meet the demands of economic growth, and access gaps need to be addressed to support poverty reduction. Development Priorities under POVERTY 21. The three main challenges highlighted in the last SCD remain, but one will be broadened in scope in light of recent developments. The first one, low agricultural productivity among small-scale farmers, has remained largely intact. Agriculture employs close to 60 percent of working age population yet it contributes only 3.4 percent of the GDP (2021). Despite the country’s natural capital and strategic position, subsistence agriculture remains widespread. About 90 percent of farmers are smallholders, who largely depend on maize and rainfall, and are seeing crop yields decline over time. Among the key reform priorities initiated by the current administration, agricultural policy saw the smallest progress. The second one, poor human capital, not only stands but in some cases deteriorated, and women and girls continue to be significantly disadvantages. Basic education enrollment rates fell between 2014 and 81 2019 because the system expansion has failed to keep pace with the growth in the school-age population. Stunting is not only unacceptably high, but new evidence suggests that it has increased in the recent past.60 With the third challenge, insufficient benefits from fiscal policy, on the other hand, significant progress took place. Some of the most regressive subsidies were eliminated (fuel and electricity), and many of the recommendations outlined in the SPJ Public Expenditure Review (PER) were implemented, including a significant expansion in the SCT program coverage. The new priority matrix will therefore build on this progress but will place it within a broader challenge that encompasses limited and low-quality service delivery. Underserviced and tenure-insecure informal settlements house 70 percent of urban residents and host most informal jobs, significantly hampering the economic potential of cities. Stark rural/urban gaps in access to services persist, hampering human capital accumulation and economic opportunities. The government is embarking on an ambitious decentralization agenda that requires tackling multiple angles if it is to deliver its intended benefits. Development challenge: Low agricultural productivity among small-scale farmers. 22. Improve efficiency and effectiveness of agricultural policy for small- and medium-sized farmers. Whether for employment or consumption, the livelihoods of the rural population are intricately linked to the agricultural sector, which has failed to deliver sustainable poverty reduction. Among the various factors underpinning this poor performance, inefficient and distortive public policies stand out. More than 70 percent of Zambia’s agricultural budget is spent on FISP and the FRA, which distort markets and have failed to increase productivity. Fertilizer subsidies have amongst the lowest returns to rural poverty reduction and agricultural growth among alternative public investment options (WB 2022f). Farms that benefit from both the FRA and the FISP are the least socially efficient (WB 2023), and FISP is not helping close the gender productivity gap (Ngoma et al. 2021). Overreliance on maize contributes to high malnutrition and reduces climate resilience. As a result, resources should be redirected towards productive investments in knowledge, capacity building, and innovation, irrigation and other infrastructure services, and climate change adaptation. Closing gender productivity gaps through gender- sensitive agricultural extension services results in higher investment and productivity (Donald et al. 2022). Despite political will, reform in this area has proven difficult. Development challenge: Poor human capital. 23. Improve learning outcomes and ensure equitable access to secondary education. Zambia is immersed in an education crisis. Demand is growing, access and learning are worsening, and public financing has been declining. The share of education over total budget fell from 19 percent in 2015 to 11 percent in 2021. The country ranked last in the 2018 PISA assessment. The allocation of resources is inequitable, augmenting rather than closing socioeconomic gaps. At 26 percent, out-of-school rates at age 14 is over three times higher among children in the poorest quintile relative to the wealthiest quintile. The dropout rate for grades 8-12 stood at 1.8 percent for girls compared to 0.7 percent for boys, with early childbearing and marriage being significant factors, especially in rural areas. The impact of COVID- 19 on learning and attainment is yet to be analyzed. Funding is insufficient and inequitable distributed. Improving enrollment and achieving minimum standards would require a seven-fold increase in the education budget, which is unfeasible in the short term. At a minimum, budget allocation should be kept at the projected 2024 target of 14 percent. At the same time, more efficient and equitable use of available resources is essential. Recurrent cost savings could be achieved by improving the utilization of secondary 60 Zambia MCDP II Midline Survey Result. Mimeo. 82 school teachers. Infrastructure savings can be achieved, for example, by temporally increasing shifts and year-round staggering policies. These should be complemented with demand-side support to promote girls’ and boys’ enrollment and attendance and boost school retention and completion among teenage girls. 24. Strengthen resilient health systems, with a focus on primary healthcare and WASH. Most maternal health indicators have improved, but rates of maternal mortality and pregnancy-related mortality remain high and continue to correlate with socioeconomic status (WB 2022d). Notwithstanding the increasingly diverse healthcare needs of a rapidly growing population with longer life expectancy, the primary healthcare system remains foundational. It is the first point of contact for individuals—the only one for remote populations—and it covers a wide range of services including reproductive, maternal, neonatal, and adolescent health and nutrition (RMNCAH-N), infectious and non-communicable diseases. It is instrumental for addressing gender gaps in human endowments, the high prevalence of malnutrition, and the rise of infectious diseases as climate changes. It enhances resilience by focusing on preventive measures and early detection of diseases, and by providing surge capacity during a public health emergency or natural disaster. At the same time, improving access to WASH is highly complementary to all these objectives—malnutrition, health, gender, climate resilience. Conservative estimates suggest that Zambia loses the equivalent to 1.3 percent of the country’s GDP annually because of poor sanitation. Mortality caused by unsafe WASH services is nearly double the LMI average (GRID), while diarrhea is the second leading cause of death of children under five in Zambia (averaging 10 percent of all deaths). Cholera occurs regularly. Improving access to WASH has a disproportionate effect on women and girls, by freeing time to devote to education or income-generating activities (they are usually responsible for collecting water) and by supporting higher education (improved sanitation in schools is associated with higher enrollment, and reduced dropouts and repetition (WB 2022d)). To meet expectations, the health sector must improve the equity in the allocation of resources across districts (e.g., by reviewing the current resource allocation formula and improving the distribution of available health workers); maximize the efficiency and effectiveness of donor funding, while developing a strategy for transitioning out of donor support; and improve spending efficiency. Improving WASH services requires strengthening of institutional capacity, prioritization of investment, financing strategies, and sector reforms. Given the magnitude of investment needs, the prioritization of investments needs to be guided by public health data, as targeting areas or groups at high risk of diarrhea and stunting—rather than trying to achieve universal coverage by reducing rural/urban or poor/rich gaps—is much more likely to improve human development outcomes (WB 2017–Wash poverty diagnostic). Complementary demand-side interventions should focus on boosting the utilization of health services and promoting behavioral changes, particularly concerning nutrition and maternal and infant health interventions with a focus on the first 1,000 days of children in poor households. Development challenge: Limited and low-quality service delivery 25. Ensure an adequate intergovernmental fiscal architecture, strengthen the infrastructure and capacity of local governments, and promote effective citizen engagement mechanisms. Strengthening local service provision is crucial to improving inclusive and climate-resilient service delivery and the local business environment, and ultimately reducing spatial and socioeconomic disparities. Despite an ongoing devolution process, the anticipated benefits from increased Constituency Development Fund (CDF) and new devolved functions are yet to materialize. Challenges persist in balancing resource distribution both vertically and horizontally to effectively implement the “Money follows Function” principle and ensure 83 equitable and transparent allocations among Local Governments (LGs). The localization of the business agenda is hampered by the absence of a proper legal and regulatory framework for devolved functions, limited LG capacity to support business enablers, and the lack of a local social contract between LGs and citizens. Significant investment is needed to strengthen PFM and accountability in LGs and foster citizen engagement. Mainstreaming digitalization in government systems and enhancing data systems are essential to improve efficiency, transparency, and accountability. One fundamental component is the development of a Digital ID as a fundamental building block of the digital economy and key to streamlining citizen-facing services. 26. Strengthen urban planning, land administration, and infrastructure in towns and cities. Widespread informality has been a major obstacle for urbanization to deliver significant poverty reduction. Most of the poor reside in informal settlements and operate in the informal economy. Rapid and unplanned urbanization has strained infrastructure and services, lead to environmental degradation, and heightened disaster risk—especially flooding. The high share of urban population living in informal settlements is one of the three dimensions of resilience where Zambia performs worse relative to top- performing lower-middle-income countries (WB 2022a). Informality also leaves potential fiscal revenues unrealized and hinders SME development and quality job creation. Land administration, urban planning, and informality are three of the five reform areas highlighted in the Urbanization Review. Urgent reforms on land administration include expediting Occupancy Licenses, minimizing duplication in land allocations, fostering formal real estate markets, rolling out web-based digital land information systems, and allowing the use of e-signatures and e-payments. Gender-sensitive interventions should help improve women’s currently weaker tenure security. Addressing the implementation complexity of land use planning and disaster risk management requires establishing planning agreements between local councils and Chiefs to steer urban expansion and peri-urban development. To bridge existing service gaps in informal settlements, it is essential to roll out a structured informal urban upgrading program making use of the new planning regime which gives power to councils to declare informal settlements as “Improvement Areas”. 27. Sustain coverage and adequacy of the Social Cash Transfer program as a foundational social assistance program, while strengthening sustainable graduation pathways through a cash ‘plus’ approach and a shock-responsive social protection system. There is ample evidence on the positive impacts of integrated cash ‘plus’ approaches in enhancing human capital through improved consumption and productive investments. In Zambia, the multiplier effect of select social assistance programs is estimated at 1.68 (Handa et al. 2018). Sustaining the high program coverage of the poor is critical, particularly amidst the escalating poverty rates. There is now a need to ensure that the adequacy of the cash transfer value is maintained against rapidly growing inflation, and that graduation pathways are strengthened. For example, complementary interventions, such as Keeping Girls in School (KGS) and Supporting Women’s Livelihoods (SWL) interventions that are layered on SCT for improved education outcomes and enhanced economic independence currently only reach about 11 percent and 9 percent of the SCT caseload, respectively. Strengthening the existing multisectoral linkages with human capital investments is also crucial. Lastly, the sector needs to increase its adaptive capacity. An effective shock response social protection system, including but not limited to a Social Registry, will enable timely and cost-efficient emergency assistance, and support coordination and linkages to other relevant social programs. This is increasingly pressing to increase resilience to climate change. 84 28. Interlinkages. Missing from this section are critical barriers to job creation and vulnerability to shocks. Sustained poverty reduction is ultimately about raising households’ labor market incomes, for which several priorities to promote SME growth and private investment under prosperity and planet are critical. These include a more friendly business environment, access to finance and markets, and access to energy. The first two coincide with the remaining reform areas highlighted in the Urbanization Review to harness urbanization for inclusive growth. Similarly, the poor are significantly more vulnerable to climate change and environmental degradation. The risk of exposure is higher, and the consequences of the shock are larger. Resilience is embedded in most of the priorities in this section (agriculture, health, urban, social protection), but also highly relevant are natural resource management and climate-smart agricultural priorities under planet. Lastly, ensuring macroeconomic stability is fundamental, as macroeconomic crises are among the most important causes of large increases in monetary poverty, with known long-term damages to the human capital of the poor (Lustig 2020). Development Priorities under PLANET 29. Zambia faces two significant challenges when it comes to ensuring a livable planet: environmental degradation and limited resilience to climate change. Despite Zambia’s overall good ranking in terms of sustainability, environmental degradation is a significant threat to the country’s development (WB 2022a). It threatens major sectors such as agriculture, energy, and tourism, heightens food insecurity and rural poverty, and puts at risk ecosystems and biodiversity. Degraded natural capital spills over into human capital, reducing health, productivity, and longevity. Similarly and interrelatedly, Zambia is exposed to a high and increasing vulnerability to climate change, with pervasive impacts on key economic sectors, infrastructure, and livelihoods. High exposure to extreme weather events is paired with highly inadequate preparedness. Over the next decade, climate variability could cost the country US$4.3 billion in lost GDP—reducing annual growth by 0.9 percent.61 Development challenge: Environmental degradation and poor management of natural resources 30. Promote sustainable and efficient use of natural resources. Zambia’s economy heavily relies on natural resources such as water, land, forests, and minerals, making their sustainable management essential for growth and stability. High soil degradation, inadequate soil fertility management, and poor water management contribute to declining agricultural productivity. Many environmental liabilities from mining are yet to be addressed. At the same time, tension over access to resources is likely to increase. Water use for hydro-power and large-scale irrigation will have to balance against demand from other industrial and household uses. Cross-country coordination will be critical to manage transboundary river basins. Cropland expansion and build areas are likely to increase at the expense of forestlands. Addressing weak sector governance, inadequate regulations, and promoting transparency are crucial to halt unsustainable exploitation practices, attract investment, and prevent conflict. Bringing sustainability to public procurement policy, and investing in data systems, including on natural capital accounting, are essential. Supporting businesses in developing climate-smart bankable projects, particularly in agriculture, water, and energy, will contribute to overall sustainability. 31. Develop climate-sensitive financing instruments to manage natural resources and support climate-smart investments. Enhanced access and strategic use of available climate financing sources is crucial to meet Zambia’s green growth objectives while safeguarding fiscal and debt sustainability. Implementing the recently developed Green Loans Guidelines and emerging Green Finance Framework 61 Makondo et al. 2014, MTENR 2007, Sishekanu 2013. 85 require increased capacity and incentives among financial institutions and regulators. Focus areas may include high-potential sectors (such as renewable energy and agriculture), as well as dedicated support for SME and smallholder financing. Challenges can be addressed through dedicated credit lines, PPPs, and credit guarantees, while exploring innovative financial mechanisms such as green bonds or debt-for- climate swaps. There is also significant potential for further leveraging results-based climate finance and carbon markets in the Agriculture, Forestry, and Other Land Use (AFOLU) sector, carbon crediting potential in the areas of renewable energy and energy access, and sector-specific opportunities in various areas such as sustainable landscapes, green mining/energy transition minerals, and resilient infrastructure. Leveraging these opportunities requires improved institutional coordination and management capacity. Vital components include strengthening technical and institutional capabilities, improving the policy and regulatory environment, better-functioning capital markets, enhancing public sector management, and targeting concessional financing. Development challenge: Limited resilience to Climate Change 32. Diversify the energy matrix, while expanding generation capacity and closing access gaps. The energy matrix is overdependent on hydropower and geographically concentrated in the Zambezi catchment area, making it highly vulnerable to weather shocks. Operations below maximum capacity due to insufficient water availability are not uncommon. Poor energy access ranks among the top constraints for businesses, with power outages costing the private sector nearly 8 percent of Gross Value Added (GVA) (WB 2024a). Projected demand is expected to increase by over 300 percent by 2050, mainly driven by agriculture and mining (GOZ 2023). Access remains strikingly low and highly unequal: access to electricity is the 5th lowest in the world (MPM 2015); only 6 percent of rural households report using electricity as main source of energy for lightning while another 25 percent report solar panels (Living Conditions Monitoring Survey 2022). Substantial investments in generation, transmission, and distribution systems are therefore crucial. Diversifying the energy matrix, including non-hydro renewables like solar and wind and developing hydro in the north, is vital for climate resilience. Meeting the country’s ambition and ensuring the stabilization of the power sector may require complementary carbon emitting non-variable generation sources such as coal, heavy fuel oil, petroleum/diesel. Closing access gaps requires scaling up private sector-led off-grid models, for which critical regulatory reforms are needed. Restoring operational efficiency of utilities like ZESCO and clearing outstanding arrears to IPPs are a prerequisite to crowding in private sector engagement in the power sector. Furthermore, arrears clearing will have a broader impact on private investors and the overall ability to provide breach of contract guarantees in the country, thereby critical to scaling-up private sector growth throughout the economy. 33. Implement agronomic solutions at scale and invest in resource-efficient irrigation. Climate change- related agricultural losses could reach US$2.2–3.1 billion in the next 10 to 20 years under a business-as- usual scenario (WB 2018). Dry spells and heat stress will impact the western and southern regions, while flooding and waterlogging will affect the north. Among smallholders, rainfed production is widespread and irrigation methods are rudimentary. About 80 percent use wells, streams, or rivers as water sources and buckets to distribute it. Solutions like crop diversification, improved soil fertility management, liming, and agroforestry have been identified, but need rapid and widespread implementation to address environmental degradation and climate change adaptation. Irrigation has one of the highest returns on public spending in SSA (Goyal and Nash, 2017). Public-private partnerships could also be promoted to invest in resource-efficient irrigation systems among farming communities and establish well-defined user 86 rights and fees. Complementary water-conserving tillage practices such as minimum tillage, cover crops, and residue retention should continue to be promoted. 34. Interlinkages. This section highlights the two sectors most prominently exposed to climate change – energy and agriculture – but building a climate-resilient agenda is highly multisectoral. Climate-resilient infrastructure, services, and land-use planning were mentioned under prosperity and poverty. The localization of climate change adaptation actions should be strengthened through an enhanced decentralization agenda. Digital development, financial inclusion, and increased private-sector participation – under prosperity - are critical to reducing climate change vulnerability. With regards to the corporate scorecard on planet, the priorities in this pillar cover well the “climate mitigation and adaptation’ and ‘nature and biodiversity’ components. Food and nutrition insecurity under ‘life essentials’ is partially addressed here and complemented with agricultural policy and social protection priorities under poverty. WASH is both directly and indirectly addressed under improved local service delivery under poverty. Cross-cutting. Governance and Institutions 35. Governance and institutions underpin effective public policy and service delivery, and therefore governance-related priorities are embedded throughout the full matrix. While the format of institutions has moved towards global best practices, their de facto functionality has not. Major weaknesses remain in policy coordination and implementation, coupled with limited accountability and transparency which have allowed vested interests to shape policymaking. Each dimension has one development priority that is primarily concerned with addressing governance issues: Public finance and investment management systems under Prosperity; local public service mechanisms (intergovernmental fiscal architecture, local governments’ capacity, and citizen engagement) under Poverty; and natural resource management systems under Planet. Additionally, the key institutional functions that underpin policy effectiveness (commitment, coordination, and cooperation) are crucial to unlocking economic diversification (prosperity), improving public service delivery (poverty), and strengthening resilience to climate change (planet). The difficult political economy behind the two major economic sectors (mining for growth, agriculture for employment) has historically hindered their development impact. Improved sectoral governance – including the engagement of the private sector as well as technical, regulatory, and implementation capacity – comes in strongly in various development priorities such as energy, mining, climate finance, education, and health. Investing in data systems and mainstreaming digital technologies have been highlighted throughout as effective means to significantly improve public sector efficiency and accountability. Affordability and last-mile connectivity challenges of the digital agenda are expected to improve as a result of the expected improvements to the business environment and investment climate supported under the prosperity pillar. Knowledge gaps 36. The most significant knowledge gap is the lack of a CCDR report, which is scheduled for next fiscal year (FY25). A new fiscal incidence analysis is needed to update the assessment of fiscal policy’s impact on poverty and inequality reduction and to guide the upcoming fiscal reforms. Many fiscal interventions have changed since the last assessment in 2015, and many more are expected in the near future. Similarly, a distributional assessment of agricultural policy—particularly the removal of market distortions and trade liberalization—is crucial to identify winners and losers and designing appropriate mitigation measures. The green minerals agenda is new and will therefore require additional analysis to guide policymaking as 87 well as to evaluate its impact, particularly on value addition and job creation. Wealth accounting is needed to monitor growth sustainability. A better understanding of the institutional reform space to unlock technology as a development solution is also warranted. As three core ASA are being finalized (PEA, CPPR, and PER), additional knowledge gaps will likely emerge. 37. Data needs are also ubiquitous. The current system does not allow to adequately monitor and evaluate the implementation of the recently launched 8NDP or progress towards the SDGs. GDP rebasing is long overdue. The latest economic and agriculture censuses were collected in 2012 and 1992, respectively. High-frequency economic statistics are limited, and major socio-demographic and health surveys are infrequent. Administrative systems are ill-equipped for statistical use. 88 References Donald, Aletheia, Goldstein, Markus, Rouanet, Lea, 2022. Two Heads Are Better Than One: Agricultural Production and Investment in Côte d’Ivoire. Policy Research Working Papers;10047. © World Bank, Washington, DC. http://hdl.handle.net/10986/37454 License: CC BY 3.0 IGO Goyal, A. and Nash, J. 2017. “Reaping Richer Returns: Public Spending Priorities for African Agriculture Productivity Growth”. Africa Development Forum Series. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-0937-8. 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Green, Resilient, and Inclusive Development Diagnostics (GRID). WB 2022b. Zambia Urbanization Review. Leveraging Cities and Towns for Zambia’s Future. WB 2022c. Getting to the basics with green growth. Mimeo WB 2022d. Zambia Gender Assessment. WB 2022e. Zambia Education Knowledge Brief 1 & 2. WB 2022f. Discussion Note. Zambia’s Farmer Input Support Program and Recommendations for Re- designing the Program. Mimeo. WB 2021. Republic of Zambia. Social Protection and Jobs Public Expenditure Review WB 2019. All hands on deck. Reducing stunting through multisectoral efforts in Sub-Saharan Africa. WB 2018a. Zambia Systematic Country Diagnostics WB 2018b. Zambia Health sector public expenditure review WB 2017a. Jobs Diagnostics. Zambia ZamStats 2024. 2022 Census of population and housing. Population Summary report. Volume Two. ZamStats 2020. Zambia’s 2020 National Skills Survey GOZ 2017. Ministry of National Development Planning, 2017 GOZ 2023. Ministry of Energy. Integrated Resource Plan for the Power Sector in Zambia. Summary Report 89 SCD Update Annex 1. Figures Figure A1. GDP growth and poverty trends 1400 65 62.2 1308 1350 60.5 60.0 GDP pc (Constant 2015 US$) Povert incidence (Percent) 1300 60 57.0 1250 54.4 1200 1258 55 1150 1100 50 1050 1000 981 45 950 900 40 2006 2010 2015 2020 GDP per capita (lhs) P.I. 2006-2010 (rhs) P.I. 2010-2022 (rhs) Source: Poverty trends: 1996-2006 from CSO Poverty Trends Report 2010; 2006-2010 from 2012 WB Poverty Assessment; 2010-2015 own calculations from LCMS data; 2015-2022 ZamStats 2023; GDP: MFMoD as of May 2023 Figure A2. Snapshot of Zambia’s underlying development path Past SCD: Sluggish poverty reduction and increasing inequality despite sustained economic growth Copper mining has led to a volatile economy, while many of the benefits have not been fully realized Extractive-Based Growth Accelerating Climate Change High Population Growth Stability but Weak Uneven Territorial Governance Development Weak institutions and limited accountability have Low productivity and insufficient structural hindered the effectiveness of public policy on transformation have halted both rural and urban service delivery and growth development Stalled Urbanization New context: economic, weather, and health, shocks led to … … re-classification into Low-Income status … widespread poverty and food insecurity … constrained access to external finance Note: adapted from WB 2018a 90 SCD Update Annex 2. Past SCD priority matrix 2018 SCD Challenge 2018 SCD Binding constraint The full benefits of the mining sector have not been Too few mining sector links and the inefficient transfer of realized mining sector revenues to invest in other sectors Small firms and farmers struggle to integrate into regional Poor infrastructure, low skills, and the high cost of and domestic value chains PROSPERITY Policy uncertainty and costly access to finance constrain the doing business means that most enterprises do not private sector, especially SMEs expand beyond the household level and create Ineffective planning and infrastructure investments in small employment towns and cities result in weak links among firms and sluggish job creation A lack of macroeconomic stabilization mechanisms and Volatile macroeconomic outcomes and an systems to ensure the productive investment of borrowed unsustainable fiscal and debt path resources Ineffective agricultural policy (maize-centric and badly Small-scale farmers’ low agricultural productivity targeted support programs, and insufficient investment beyond inputs) POVERTY The low quality and lack of inclusiveness of Low access and quality of education and health services education and health services hinders opportunities Too few girls complete secondary school due to financial for the poor, especially women constraints and social norms The poor get insufficient benefits from fiscal policy Fiscal policy is not pro-poor (e.g., subsidies are ill targeted due to vested interests and limited safety nets and cash transfers coverages is too limited) A lack of tools and incentives for the poor to manage natural PLANET Environmental degradation affects communities’ resources and support climate-resilient livelihoods and a health, livelihoods, and resilience to climate shocks lack of compliance with environmental regulations 91 SCD Annex 3. New proposed matrix Sequencing Short/medi Past PROSP POV PLANET Jobs (before um/long- summ SCD Development Challenge Development priority others) term impact Macroeconomic volatility and Strengthen fiscal policy and management, increase Domestic Revenue Mobilization constrained access to external 1 2 1 1 2 2 8 refined (DRM), and build fiscal stabilization mechanisms finance Streamline the regulatory and business environment and enhance investment 2 1 1 1 1 2 6 new policies PROSPERITY 3 Scale-up access to finance and markets (connectivity and trade facilitation) 2 1 2 1 1 7 refined Lack of diversification and value addition Improve equitable access to quality and market-relevant skills development for 4 2 1 1 1 1 6 new youth and enable economic opportunities for women Maximize the potential from energy transition minerals in the global 5 decarbonization (competitive fiscal regime, streamline sector governance, enhance 1 2 1 1 1 6 refined community partnerships) Low agricultural productivity Improve efficiency and effectiveness of agricultural policy for small- and medium- Weak governance and institutions 6 2 2 2 2 1 9 same among small-scale farmers sized farmers 7 Improve learning outcomes and ensure equitable access to secondary education 2 1 1 1 1 6 same Poor human capital 8 Strengthen resilient health systems, with a focus on primary healthcare and WASH 1 1 1 2 1 6 same POVERTY Ensure an adequate intergovernmental fiscal architecture, strengthen 9 infrastructure and capacity of local governments, and promote effective citizen 2 1 1 2 2 8 new engagement mechanisms Limited and low-quality service Strengthen urban planning, land administration, and infrastructure investments in 10 2 1 1 1 1 6 refined delivery towns and cities Sustain coverage and adequacy of the SCT as a foundational social assistance 11 program, while strengthening sustainable graduation pathways through a cash 1 2 1 1 2 7 refined ‘plus’ approach and a shock-responsive SP system Promote sustainable and efficient use of natural resources (including water, land, Environmental degradation 12 1 2 1 2 1 7 refined forests, minerals) and poor management of natural resources Develop climate-sensitive financing instruments to manage natural resources and PLANET 13 2 1 1 2 2 8 new support climate-smart investments Diversify the energy matrix, while expanding generation capacity and closing access 14 2 2 2 2 1 9 new Limited resilience to climate gaps change 15 Implement agronomic solutions at scale and invest in resource-efficient irrigation 2 2 1 1 1 7 new 92 Annex IV: Selected Indicators of Bank Portfolio Performance and Management (as of June 30, 2024) Indicator * FY22 FY23 FY24 Portfolio Assessment Number of Projects Under Implementation ᵃ 15.0 19.0 17.0 Average Implementation Period (years) ᵇ 4.8 4.2 3.2 Percent of Problem Projects by Number ᵃ˒ ͨ 13.3 5.3 0.0 Percent of Problem Projects by Amount ᵃ˒ ͨ 12.3 5.6 0.0 Percent of Projects at Risk by Number ᵃ˒ ͩ 26.7 5.3 0.0 Percent of Projects at Risk by Amount ᵃ˒ ͩ 21.6 5.6 0.0 Disbursement Ratio (%) ͤ 47.2 26.3 35.4 Memorandum Item Since FY80 Last Five FYs Project Evaluation by IEG by Number 86 3 Project Evaluation by IEG by Amount (US$ millions) 3,670.9 139.7 % of IEG Projects Rated U or HU by Number 45.3 0.0 % of IEG Projects Rated U or HU by Amount 40.9 0.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 93 Annex V: Operations Portfolio (IDA and Grants) (as of June 30, 2024) Closed Projects 109 IBRD/IDA* Total Disbursed (Active) 1,289.55 of which has been repaid (1) 23.47 Total Disbursed (Closed) 4,629.47 of which has been repaid 1,025.41 Total Disbursed (Active + Closed) 5,919.01 of which has been repaid 1,048.88 Total Undisbursed (Active) 1,139.16 Total Undisbursed (Closed) 2.99 Total Undisbursed (Active + Closed) 1,142.15 Difference Between Active Projects Expected and Actual Last PSR Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Development Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd Objectives Progress Year P155827 EP-JSLP # # 2024 0.0 0.0 0.0 0.0 0.0 0.0 P181391 GEWEL 2 # # 2024 0.0 150.0 0.0 149.1 0.0 0.0 GPE-funded Education Sector P174012 # # 2022 0.0 0.0 0.0 28.1 2.4 12.1 Program E P179380 NEAT Program # # 2024 0.0 100.0 0.0 99.1 0.9 0.0 P179095 Shock responsive social protection S S 2022 0.0 155.0 0.0 0.6 18.5 -52.7 P180337 Tourism Development Project # # 2023 0.0 100.0 0.0 98.8 1.8 0.0 P164764 TRALARD # # 2019 0.0 100.0 12.5 6.8 -3.6 -43.4 94 Difference Between Active Projects Expected and Actual Last PSR Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Development Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd Objectives Progress Year Zambia COVID Emergency P174185 MS MS 2021 0.0 34.0 0.0 7.1 0.1 24.0 Response Pro P178492 Zambia Devolution Support Program MS MS 2022 0.0 210.0 0.0 130.1 40.1 0.0 Zambia Education Enhancement P158570 MS MS 2018 0.0 233.0 0.0 123.0 -46.2 53.8 Project Zambia Growth Opportunities P178372 S MS 2023 0.0 300.0 0.0 164.0 35.8 0.0 (ZAMGRO) P505188 Zambia HEPRR # # 2024 0.0 50.0 0.0 49.9 0.0 0.0 P179507 ZATP-II # # 2023 0.0 170.0 0.0 159.3 -6.7 0.0 Girls Education & Womens P151451 S S 2015 0.0 312.0 0.0 10.1 -231.5 32.3 Empower Improved Rural Connectivity Proj- P159330 # # 2017 0.0 200.0 0.0 109.5 89.1 76.7 SUF P102459 Irrigation Development Project # # 2010 0.0 145.0 0.0 3.6 -17.1 3.7 P181011 Macro Stability and Growth DPF-2 # # 2024 0.0 125.0 0.0 0.0 0.0 0.0 Overall Result 0.0 2,384.0 12.5 1,139.2 -116.3 106.4 * Disbursement data is updated at the end of the first week of the month. a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. 95 Annex VI: IFC Committed and Outstanding Portfolio by Industry Group (as of June 30, 2024) Committed Client Product Commitment Year (US$, millions) Financial sector Bayport Financial Services Zambia Limited LN FY23 17.8 Stanbic Bank Zambia LN, QL FY19 3.1 Access Bank Zambia Limited ET FY19 2.6 Manufacturing, Agribusiness, and Services Zambeef Products PLC LN FY22 25.7 Twyford Zambia LN FY20 11.5 Protea Hotels Zambia LN FY19 6.9 Woodside Mall Zambia Limited LN FY17 2.7 Infrastructure and Natural Resources Western Power Company Limited QL FY23 0.3 HIS Zambia Zambia LN FY21 56.3 Airtell Africa PLC ET, LN FY23 10.8 Bangweulu Power Company Limited LN FY18 10.2 (scaling Solar) Ngonye Power Company Limited LN FY18 7.4 (scaling Solar) Total 155.4 IFC Advisory Services (as of June 30, 2024) Amount Project Name Sector (US$, millions) Non-sector-specific Zambia Farm Blocks Program 0.5 Advisory Services Non-sector-specific Zambia PPD 1.0 Advisory Services Zambia Inclusive Climate Insurance Program Finance and insurance 1.1 CnC Ngonye Falls Hydropower Project Electric power 0.0 ETG Zambia Agriculture and forestry 2.1 Zambeef Biochar Agriculture and forestry 0.1 Zambeef Food safety Agriculture and forestry 0.4 Total 5.1 96 Annex VII: MIGA’s Guarantee Portfolio (as of June 30, 2024) Gross Project Effective Expiry Investor Business Investor Risk Exposure Name Date Date Name Sector Country Covers (US$, mn) The Tata Power TR; EXP; WCD; Itezhi-Tezhi Hydro Power 11/22/2016 05/23/2031 Company Infrastructure India 29.06 BOC Limited FirstRand EMA FirstRand Bank Zambia 06/30/2020 06/29/2035 Holdings (Pty) Financial South Africa EXP 33.16 Limited The Rise Fund II Airtel Mobile Money Zambia 06/30/2022 06/30/2027 Financial Luxembourg EXP; WCD 23.53 Aurora, S.A.R.L Absa Group Absa Bank Zambia PLC 06/24/2024 12/05/2034 Financial South Africa EXP 59.47 Limited Absa Group Absa Bank Zambia PLC 06/24/2024 06/23/2027 Financial South Africa EXP 11.96 Limited Hitachi Hitachi Construction Construction Machinery Zambia Reman 03/31/2011 03/30/2031 Manufacturing South Africa TR; EXP; WCD 12.15 Machinery Factory Project Africa Pty. Ltd Hitachi Hitachi Construction Construction TR; managing Machinery Zambia Reman 03/31/2011 03/30/2031 Manufacturing Japan 1.35 Machinery Co., EXP; WCD Factory Project Ltd. Grand Total 170.68 97