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While Zambia suffers from great inequality and rural poverty and is seriously off track on several Millennium Development Goals, over the last decade it has enjoyed significant economic growth and has become a lower middle income country. Zambia has greatly reduced its dependency on Official Development Assistance: the average annual ratio of ODA disbursements to GDP fell from an average of 22% for 1990 to 2005 to 5.6% in 2010. DFID remains a major donor and is spending about £60 m per year on its bilateral programme, but is considering how Zambia should graduate from aid. DFID should consider how all countries should graduate from aid; however, given the extent of poverty we do not believe that Zambia will be in a position to do so for many years.
The priority areas of DFID's bilateral programme are human and social development (including health and education), wealth creation and governance. The report addresses each of these issues in turn. On health, we welcome DFID's decision to increase its spending on reproductive health and recommend that increased spending be particularly focused on rural areas, young people and providing Long-Acting and Permanent Method contraception such as contraceptive implants. We recommend that the increased expenditure be continued from 2012-13 into future years. We encourage the further development of links between UK and Zambian health professionals and universities, in particular to help train their Zambian colleagues.
On education, we recommend that DFID give higher priority to secondary, tertiary and vocational education. There is a lack of competent middle management across the Zambian economy in the public and private sector. We recommend that DFID look at how to assist Zambia make improvements to business education.
On wealth creation, there is clearly a major role for CDC. Following CDC's major reorganisation last year to focus more on development in difficult areas, we see a major role for the organisation in initially investing with partners and subsequently directly investing in Zambian businesses. This will generally be more appropriate than DFID providing grants for private businesses. We recommend that CDC and DFID Zambia work closely together.
Smallholder agriculture is a key area for economic growth and employment. We welcome DFID's proposed rural markets development programme which seeks to increase the productivity of poor smallholder farmers. We note, however, that there has been a significant decrease in proposed funding for this project since our visit. In its response to this report the Government should provide more details of the new funding arrangements for the rural markets development programme.
In terms of governance, an effective Parliament is of the utmost importance. DFID's main programme to assist Zambia's National Assembly ended in 2011. The Commonwealth Parliamentary Association (CPA) is working with the Zambian Parliament to develop a new programme. We welcome the DFID Minister's support for the CPA's proposal and recommend that DFID fund it.
The Government of Zambia spends about 8% of its budget— about £225 million in 2011—on a maize subsidy. We consider this to be excessive. Its abolition would free up funds to provide much-needed services, for example free secondary education. We urge the UK to continue to provide the greatest encouragement and support to the Zambian Government for the removal of the subsidy.
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