ZAMBIA

As enshrined in Article 2 of the Constitution Amendment No.2 of 2016, Zambia is a unitary, multi-party and democratic state with three organs of governance, namely the executive, the legislature and the judiciary. The executive is headed by the president of the country, the legislature by the speaker of the National Assembly, while the judiciary is headed by the chief justice. The executive is responsible for policy formulation and execution. Legislative powers are vested in the National Assembly and the judicial authority vests with the courts. The president is elected through 50+1 majoritarian rule while the members of parliament (MPs) are elected through first-past-the-post system in their respective constituencies for a term of five years. 156 MPs are elected and eight are nominated by the president. The chief justice is appointed by the president and ratified by the National Assembly.

The Constitution of Zambia (Amendment) Act No.2 of 2016 provides for a system of devolved governance with two levels of government, which are the national and local governments. According to Article 147 (1)(a), the management and administration of the political, social, legal and economic affairs of the state are to be devolved from the national government level to the local government level. The government Gazette Notice No.1123 of 2021 reaffirms that decentralisation is a portfolio function under the office of the president, which has been the case since 2016. In his address to the first session of the 13th National Assembly on 10 September 2021, the president Hakainde Hichilema of the Republic of Zambia, committed to accelerating the decentralisation of functions from the central government to local authorities with matching resources as stated in Article 151 of the Constitution. The local government system in Zambia is established in Article 151 of the Constitution which promotes people’s participation in democratic governance.

Decentralisation in Zambia has its roots in the Public Sector Reform Programme of 1993. For the first time in the 1996 Constitution, local government was recognised in Article 109. The National Decentralisation Policy (NDP) launched in 2004 contains the government’s vision for the establishment of a devolved system of governance and introduces provincial, district and sub-district levels (referred to as wards in the Constitution). The policy considers the provinces as the central link between the central government and the districts, the latter providing a platform for local communities to play a role in development and service delivery. The NDP also aims to a) empower local communities by devolving decision-making, functions and resources from the to the lowest level of governance, b) enhance local political and administrative authority, c) build capacity for development and maintenance of infrastructure at local level, and d) provide legal and institutional frameworks to promote decision-making at local level. The Decentralisation Implementation Plan (DIP) of 2009-2013 brought forth the means to operationalise the main elements of the decentralisation policy. In 2013, the NDP was reviewed, henceforth recognising and putting emphasis on public participation and traditional authority within local governance. The DIP of 2013 is aligned to the 7th National Development Plan for 2017-2021, which is the main national plan for accelerating implementation of the NDP for effective devolution of functions to councils with matching resources. In December 2021, the government launched the latest decentralisation plan for Zambia for 2022-2026, themed “actualising decentralisation for local government”. The draft of the 8^th National Development Plan is being finalised based on the review of the previous national plan and is likely to be launched in 2022.

The Local Government Act No.2 of 2019 operationalises an integrated local government system for an effective decentralisation of functions, responsibilities and services at all levels of local government including sub-district levels such as the Ward Development Committees.

At the central government level, the Ministry of Local Government was renamed to as Ministry of Local Government and Rural Development on 24 September 2022 through the government Gazette Notice No. 1123. The new ministry is responsible for local government policy, local authorities’ training, rural development, solid waste management, district health services, feeder/township roads, etc. One of the MPs is appointed minister by the president, and, as head of this ministry, presents bills on local governance to the parliament.

TERRITORIAL ORGANISATION
Municipal Level [1]	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
97 town councils, 14 municipal councils, and 5 city councils
Average municipal size: 158 482 inhabitants
116			116

[1] Name and number of sub-municipal entities:
Ward development committees 1 858

OVERALL DESCRIPTION: Zambia is divided into 10 deconcentrated provinces and 116 districts, which are further divided into 156 constituencies, themselves composed of 1 858 wards. The highest status a local authority can attain is that of a city. Currently there are five cities,14 municipalities and 97 town councils. City and municipal councils are located in provincial centres which are urban areas characterised by a dense population and substantial economic activity. Town councils are located in rural districts with less economic activity and slower development characterised by high poverty levels.

Because of the strong population increases in some districts, there have been calls to establish new district councils pursuant to Section 3 of the Local Government Act Cap 281. In this sense, 13 districts were established between 2016 and 2018 through Statutory Instruments No. 45, No. 24, No. 30 and No. 68. The government increased the number of districts from 103 to 116 to take services and governance to the local level in line with the decentralisation policy.

MUNICIPAL LEVEL: Among the five city councils in Zambia, the largest one is the capital city Lusaka, with a population of 1.5 million, followed by Kitwe and Ndola with around 500 000 inhabitants each, the two smallest city councils being Livingstone and Chipata with 133 793 and 109 531 inhabitants respectively.

In Zambia, local authorities are composed of a council and its secretariat consisting of persons appointed by the Local Government Service Commission. The council is headed by a mayor (for city and municipal councils) or a council chairperson (for town councils) and is composed of councillors including three chief representatives. Mayors/council chairpersons and ward councillors are elected according to the first-past-the-post system for each district and ward respectively, for a five-year term. The previous election for local governments was held on 12 August 2021. The secretariat of the local authority is headed by a town clerk for city and municipal councils and by a council secretary for town councils. The Local Government Services Commission is responsible for recruitment and deployment of human capital in the local government service. The Service Commissions Act of 2016 provides for the decentralisation of this function to the local level.

According to Article 148(1) of the Constitution, local governance is to be undertaken through substructures below the municipal level. Section 38 of the Local Government Act No.2 of 2019 operationalises the formation of ward development committees (WDCs) to promote community participation in decision-making at the local level.

STATE TERRITORIAL ADMINISTRATION: The provinces are a deconcentrated level of national government and are headed by provincial ministers appointed by the president. As heads of government in the provinces, ministers are mandated by section 117(3) of the Constitution to ensure the implementation of national policies in all districts and that local authorities fulfil their exclusive functions.

At the district level, there is deconcentrated district administration representing the national government. The district commissioner, appointed by the president, is the head of the district and is responsible for coordinating developmental activities. According to a 2012 UN-HABITAT report, district administrations consist in various sector ministerial departments performing specified government functions, implementing programmes and reporting to their respective provincial heads of department.

HORIZONTAL COOPERATION: At the national level, local authorities are represented by the Local Government Association of Zambia (LGAZ), which is the voice for all local authorities. The association is headed by a president who is elected from amongst mayors/council chairpersons and councillors for a term of two and half years. The LGAZ serves as an intermediary between local authorities and the central government. According to Article 151(1)(j) of the Constitution, local authorities have the right to manage their affairs and to form partnerships, networks and associations to assist in the management of their respective districts and further their development. The association develops information-sharing platforms and spaces such as the Annual Conference that brings together all the 116 local authorties.

The concurrent and exclusive functions of the national, provincial and local government levels are as listed in Article 147(2) of the 2016 Constitution. The functions for local authorities are operationalised in the second schedule of the Local Government Act of 2019, which replaced the Local Government Act of 1991, Cap 281. The new act includes general public administration; advertisements; agriculture; public streets; community development; public amenities, public health, public order; registration; sanitation and drainage. In 2015, the Urban and Regional Planning Act was enacted and embedded all the housing functions in the urban and regional planning sector.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level
1. General public services (administration)	Administration of Chief’s Affairs; Cemeteries; Crematoria and Burial Sites; Registration of Marriages; Registration of Villages
2. Public order and safety	Public order (Shared); Fire services (Shared); Street lighting (Shared); Liquor licensing
3. Economic affairs / transports	Advertisements; Agriculture; Business Hours (Shared); Feeder/Township roads (Shared); Markets and Bus stations (Shared); Levies and Rates (Shared); Communication services (Shared)
4. Environment protection	Sanitation and Drainage (Shared); Solid Waste Management (Shared)
5. Housing and community amenities	Urban and Regional Planning
6. Health	Public Health (Shared); District Heath Services (Shared)
7. Culture & Recreation	Public amenities; Amusement parks (Shared); Chief’s Policy; Gardening and Landscaping (Shared); Museums (Shared)
8. Education	Secondary Boarding Schools; Skills Development Bursaries
9. Social Welfare	Youth, Women and Community Empowerment

Scope of fiscal data: 67 out of 116 local authorities

Office of the Auditor General Report

Availability of fiscal data: Low

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The following legislative tools regulate and set the financial provisions in which councils are allowed to operate: Article 198 of the Constitution provides the guiding principles of public finance that apply to the different levels of government. One of the principles is that revenue raised nationally should be shared equitably among the different levels of government. Prior to 2014, there was no formula for sharing nationally raised resources with local authorities. The vertical share of resources was determined year by year through an ad hoc decision.

In 2013, a study on the intergovernmental fiscal architecture (IFA) was commissioned for a stable, transparent, and predictable fiscal arrangement. The study was completed in 2014 and recommended for the introduction of the Local Government Equalisation Fund (LGEF), at 5% of the total income tax raised nationally. The LGEF was operationalised through the Local Government Amendment Act of 2014. When this Local Government Act was amended in 2019, the provision of the allocation to the LGEF of a minimum of 5% of total national income tax was omitted from the Act.

Article 161 of the Constitution states that local authorities are competent to levy, impose, recover and retain local taxes. Part VI of the Local Government Act No.2 of 2019 and the Public Finance Management Act No. 1 of 2018 form the basis and context for the financial management of councils.

ⓘ No detailed data available for this country

EXPENDITURE: The level and nature of consolidated local government expenditure in Zambia is unknown. A study carried out by Kema in 2018, based on data from 2016, showed that employee-related costs accounted for the largest share of expenditure at 47%, other administrative expenses at 35%, and services were the least at 18%. Staff expenditure more than doubled between 2011 and 2016 as a result of the massive recruitments that were undertaken by the Local Government Service Commission and the harmonisation of conditions of service for employees in the local government services. Before 2013, local authorities had unique conditions of service for their employees which were based on their ability to settle their payroll obligation. Today, local authorities do not have autonomy over their largest expenditure item as recruitments are done by the Local Government Service Commission which is under the office of the president. As a rule, 40% of own-source revenue has to be spent on service delivery.

ⓘ No detailed data available for this country

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	20	-	-	100.0%
Tax revenue	4	-	-	18.9%
Grants and subsidies	10	-	-	49.0%
Tariffs and fees	6	-	-	29.5%
Income from assets	-	-	-	-
Other revenues	1	-	-	2.6%

OVERALL DESCRIPTION: The sources of revenue for local authorities can be categorised into own-source revenues and intergovernmental fiscal transfers. Local authorities (LAs) receive transfers from the central government through the Local Government Equalisation Fund and the Constituency Development Fund. The central government also provides other grants to LAs such as the grants in lieu of rates.

Laws and regulations on own-source revenues for local authorities include the Constitution Amendment Act of 2016, the latest Local Government Act of 2019, as well as the 2018 Rating Act, the 2014 Business Regulatory Act, the 2011 Liquor Licensing Act, the 2007 Markets and Bus Stations Act, the Public Health Act Cap. 295, Personal Levy Act Cap. 329 and other bylaws. According to section 25(1), 26, and 27(1) of the 2019 Local Government Act, local authorities may make bylaws to impose a levy or introduce a licence permit or certificate, proposed by a law or council resolution, and may impose fees or charges payable to the local authority subject to the 2014 Business Regulatory Act.

TAX REVENUE: Tax revenues in local authorities are derived from property tax and personal levy, which accounted both for 18.9% of the total revenue for 67 of the 116 local authorities in 2020. Property taxes are collected from rateable properties under the Rating Act No.21 of 2018. Properties are defined by the Act as including “land on statutory lease, sublease, underlease or offer letter with or without any improvement on it”.

Personal levy, an income tax, is not a significant revenue source and is considered to be a regressive tax, as in some cases, personal levy paid by workers in companies headquartered elsewhere are be paid to the local authority where the employer’s headquarters are, rather than where the employees are located. The levy has not been reviewed since 1997 and the cost of collection may outweigh its yield.

GRANTS AND SUBSIDIES: Intergovernmental fiscal transfers account for 49% of the total revenue for 67 local authorities in 2020. The main grants local authorities receive from the central government are the Local Government Equalisation Fund (LGEF) and the Constituency Development Fund (CDF). The LGEF is established in Art.163 of the Constitution and annually, the parliament is mandated to appropriate monies to this fund, which are to be disbursed to local authorities by the ministry responsible for finance. According to Section 47(2) of the Local Government Act No.2 of 2019, 20% of the LGEF is earmarked for capital expenditure.

The Constituency Development Fund (CDF) is established in Art. 62(1) of the Constitution and is operationalised by the CDF Act of 2018. This fund is meant to encourage community participation in decision-making within community-based projects. The budgeted allocation to the CDF increased by over 1500% from K 249million in 2021 to K 4 billion in the 2022 National Budget, as way of demonstrating the central government’s commitment to decentralise.

TARIFFS AND FEES: Tariffs and fees represent 29.5% of the total income collected by 67 LAs in 2020. The tariffs and fees that LAs receive include fees and charges (such as market fees, parking fees etc), as well as regulatory fees such as permits and licenses, which cover for administrative costs, in line with the Business Regulatory Act 2015. LAs are also competent to impose levies on persons or chargeable businesses such as business levy, crop levy and communication mast levy, etc.

Vehicles licensing, electricity tariffs and tolls are exclusive functions of Las, as enshrined in Article 147(2) of the Constitution. LAs have not been able to exploit these tariffs and due to pieces of legislation which are inconsistent with the provisions of the Constitution such as the National Road Fund Act of 2002, the Road Traffic Act No.11 of 2002, and the Electricity Act No.11 of 2019.

OTHER REVENUE: Other revenue sources represent 2.6% of the total revenue received by 67 LAs in 2020. These include commercial ventures and miscellaneous income. Income-generating activities (manufacturing and selling school uniforms, public transport, motels and rest houses) are also a source of revenue for local councils in Zambia. Finally, local councils receive rents for the use of their buildings, offices, shops, market stalls and residential housing.

ⓘ No detailed data available for this country

FISCAL RULES: The financial year of a local authority runs from 1 January to 31 December. The financial accounts of a local authority are audited annually by the auditor general or an auditor appointed by the auditor general. According to Section 44(4) of the Local Government Act of 2019, LAs should issue audited financial statements within three months of the preceding financial year and submit them to the Ministry for Local Government and Rural Development. This has proved to be unpractical and unattainable, considering, for instance, that the audited financial report of local authorities for the 2020 financial year was realised on 29 December 2021.

Local authorities prepare budgets in accordance with the National Planning and Budgeting Act of 2021. The Ministry of Local Government and Rural Development issues budget guidelines on the principles of costing expenditure and revenue for local authorities on an annual basis. Among these guidelines is the fact that 40% of own-source revenues raised are earmarked for service delivery. The estimates of revenue and expenditure prepared by each local authority are subject to the approval of the Minister of Local Government and Rural Development.

DEBT: According to Section 48 of the Local Government Act of 2019 and Section 26 (2) of the Public Finance Management Act of 2018, a local authority may borrow for the purpose of carrying out its functions by way of a loan, the issue of stock or bonds, a mortgage; a temporary loan or overdraft from a bank or other source with the written authority of the Secretary to the Treasury.

The government recently launched the 2021-2025 debt management strategy for local authorities, which revealed that as at 30 June 2020, the consolidated debt for all local authorities was estimated at K 2.8 billion or USD 30 billion PPP. Among this debt, other payables accounted for the largest share at 29%, including statutory obligations, personnel-related debt and debt to suppliers of goods and services and to other creditors. Financial debt accounted for a small share of 0.4% and stood at USD 4 million PPP. According to the IFA 2018, local level long-term borrowing is virtually non-existent and certainly linked to the weak financial position of LAs and their inability to repay loans.

TERRITORIAL MANAGEMENT OF THE CRISIS: The government of the Republic of Zambia reported the first case of COVID-19 in March 2020. The Local Government Association of Zambia (LGAZ), with the support of USAID and GIZ, established a COVID-19 Advisory Centre for Local Authorities (C19 ACLA) in 2020, to provide support services to all local authorities in Zambia, including gender-sensitive, socially inclusive, tailor-made and non-pharmaceutical interventions. This advisory centre enhanced the local authorities’ capacity to respond and manage the pandemic as well as to build their resilience and preparedness for any other disaster they faced.

A C19 ACLA study on the measures mounted by LAs to combat COVID-19 revealed that most of the local authorities (94%) followed the health and administrative provisions as provided by the Ministry of Health and Secretary to the Cabinet, such as public sensitisations and disinfections. Local authorities formed district task forces to conduct community engagements, sensitisations, legal enforcements of health guidelines provided by the Ministry of Health, robust disinfections and fumigation of public places such as markets, bus stations, public offices, schools, clinics, as well as integrating of COVID-19 protocols in all programmes of the local authorities. It can be noted that local authorities have been involved in the COVID-19 response in a supplementary capacity and manner to central government initiatives.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The short-term measures that local authorities undertook to cope with the COVID-19 crisis included providing a temporary unannounced pause to the disconnection of water supply services to households. In addition, relief in the form of rebates on property taxes was provided to residents and businesses in both 2020 and 2021 across the country and continued in 2022 in some local authorities.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: The C19 ACLGA’s study on the impact of COVID-19 on the operations of local authorities revealed that a majority of the local authorities’ functions and services were adversely affected by the pandemic. The local authorities were not operating at maximum capacity as the government issued a directive for employees to work on a rotational basis. Several businesses closed during the peak of the pandemic and therefore most local authorities witnessed a sharp drop in revenue as they could not collect levies and other charges. An assessment on revenue generation in 77 local authorities revealed that budgeted revenue targets were realised at a rate of 51% in the first quarter of 2020 and 42% in the second quarter.

ECONOMIC AND SOCIAL STIMULUS PLANS: In December 2020, Zambia launched the Economic Recovery Programme (ERP) 2020-2023, named Restoring Growth and Safeguarding Livelihoods through Macroeconomic Stability, Economic Diversification and Debt Sustainability. The ERP outlined a set of necessary multi-sectoral policies and interventions aimed at restoring the economy. In 2022, the unprecedented allocation of K4 billion (equivalent to USD 21 billion PPP) to the Constituency Development Fund (CDF) is being used to drive local economic development through two new components: youth and women empowerment and human capital development.