DCOcUMS of

The World Bank

FOR OMCLAL USE ONLY

Report No P-5896-ZA

IEKO4RANDUM AND RECOMMEDATIlON

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

IN TME AmOUNT EQUIVALENT TO US$32 MELLION

TO THE

REPUBLIC OF ZAMBIA

FOR AN

EDUCATION REABILITATION PROJECT

SEPTUER 29 ,1992

MICROFICHE COPY

Report No. :P- 5896 ZA Type: (PM)Title: EDUCATION REHABILITATION PROJEAuthor: KAGIA, RExt. :33314 Room:J11082 Dept.:AF6PH

This docmeot has a restricted distribution aod may be used by recipients only in the performance of

thdi ofcial duties. Its contents may not otherwise be disclosed without World Bak authorization.

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CRREN EOlUlVALENTS(May 1992)

Currency Unit = Zambian Kwacha (K)K1 = US$Q.0051

US$1.00 K195SDRl.00 = EC282

CALNJhMj-- F-ISCAL YEAR

1 January to 31 December

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

AfDB1ADF African Developmnt Ba/Afican Davelopmet FundCDC Currculum Dvelopma CetreCSO central Statistls OfficeCFB Central Tender BoardDEO Distrdt Educatio OfficeBC Burope CommumityECZ Examinations Council of ZamnbiaEMIl Educatin Maeials UnitFIMNIDA Funnisl nternationd DJevelopmea AsncyFNDP Fouth National Development PlanORZ Goenmen of the Republic of Zambia3BRD bumenaional Bank for Reconscdon and DevelopmntIDA ltemado Development AssociationDM Inernational Moneta FundMOE Mistry of EdceationMOP Minisy of FinanceMPU Micro-Projec UnitMWS Minity of Works and SuppiesNESIS National Educaton S ais Ioman Systm NESCO Poject)NIPA Natonal hntiue for Public AdminitronNISbCOL National In -ervice Training CollegeNORAD Norwegian Agency for Internonal DevlopmenODA (British) Overseas Developmet AgencyOPEC O nizon of Petroleum Expouig CousPrA Pan Teachers' AsoiationSAP Social Acton PgramSHAPE SelfHelp Action Plan for EducationSIDA Sweh Internadonal Development AuthoitySRP Socal Recovery ProjectSRPU Soial Recovery Prqject Unit (also Social Recovery Fund)TTCS TeacherTrining CollgeUNDP Unitd Nation Development ProgtammeUNESOO Uied Nation Educt, Scinific and Cul OrgniuiUNICEF Unted Nations Childen's FundUNZA Univesity of ZambiaZEMCC Zambia Educaton Materials Coordinaig CommiteZeMP Zambia Education Mateials ProjectZEPH Zambia Ed Publishing HouseZEPIU Zambia Educion Ptojects Impleenttion Unit

FOR OMCML USE ONLY

EDUCATION RERIABIL-ITATION r°

!CREDrr AND RC Sa MMAR

Borrmver Government of Zambia

leefidary Ministry of Education

Amount SDR 22.2 million (US$ 32 million equivalent)

Termki IDA Standard Terms with 40 years mauurity

Flnandnt En Government US$ 5.2 millionCommunities US$ 0.7 millionCo-Financiers US$ 5.0 millionXDA US$32.0 million

TOTAL US$42.8 million

-Stff A_ sS RtM: Report No. 10843-ZA

kbaa No. IBRD 11542 R

.

This document has a restricted distribution and may be used by recipients only in the perfomance|of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

MBIORANDAM AND RECDIOMMAMIN OF PEIITOE THE 2aRALN DEVELPMENTASOIlQ

IY) THE E%EU IREUC:RSON A EROPOSE CREDIT 10ZABI

FOR aNED25,CATIO REABHrT PROJEiCT

1. I submit for your approval the following memorandum and recommendation on aproposed credit to the Republic of Zambia for the equivaleL' of US$ 32 million (SDR 22.2million) to help fmance an Education Rehabilitation Project. The proposed credit would be onstndard IDA terms with a maturity of 40 years. Co-financing for this project is expected fromseveral donors.

2. &algo : Economic decline in Zambia has been steep and prolonged as a result ofprotract decline in copper revenue, a deterioration in the terms of trade, a failure to develop adynamic and diversified economy, and high population growth rate of 3.2 percent per year. As aresult, per capita GDP declined by more than one third between 1974 and 1990.

3. Several efforts to restructre the economy failed because of lower than anticipated copperprices and Government ambivalence towards economic reform and also because Governmentfailed to sufficiently address the effects of adjustment on the poor. Recent political developmentshave improved the climate for adjustment and put the country at a critical threshold to reverse theeconomic decline and to repair the socio-economic fabric. Government has embarked on acomprehensive adjustment program to restore macroeconomic stability, reduce poverty andgenerate growth. Integral to this program is the improvement of the delivery of basic socialservices..

4. Public educational expenditures, which in the 1970s compared favorably with those of thestronger economies in the region, fell sharply in the 1980s to become some of the lowest in theworld. Total education expenditures expressed as a proportion of GNP fell from an average of6.5 percent inthe 1970s to 4.6 in 1985 and 2.5 in 1990. This decline was due to: (a) a faU inthe total fisca outlay because of falling revenues, aid (b) diversion of resources away fromeducation. Betwen 1985 and 1990, Government spending on education fell, in real terms, by42.3 percent at the same time as expenditures on food subsidies increased by 52.7 percent. Inaddition, sectoral policies exacerbated the decline. Allocation of the education budget to primaryeducation fell from 42.3 percent to 25.5 percent during this period, and the expenditure perprimary student declined from the equivalent of US$43 in 1980 to US$12 in 1989. Statedominamce in the provision of basic services undercut resource augmentation from the non-government sector.

5. Prolonged resource starvation has precipitated a crisis in primary education - a crisis ofaccess, of quality and of management Between 1985-1990, the primary school gross enrollmentratio fell from 96 percent to 88 percent. Ihe decline was more severe in poor urban areas (whereone-third of seven-year-olds are unable to enroll in grade one because of shortages in classmspace) and in sparsely populad rural areas, where about 10 percent of those who completedgade 4 failed to obtain grade 5 places. There is virtual gender equality of enrollments up tograde 4, at which point girls have a marginally higher chance of dropping out in places where thegrade S botdeneck exists. Primy education quality indicators are poor. The average pupil totextbook ratio is 5:1 in English, 8:1 in mathematics and 20:1 in social studies. Teaching andwriting matis are virtully non-existent. Multiple teaching shft, including triple andquadruple shifts, have reduced pupil-teacher contact to less than three hours per day, whilesanitation facilities are so poor that every year schools are closed for long periods as a quraine

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measure because of cholera In the community. The sector has weak capacity to manage the fast-expanig system: in one year, school inspectors are able to vistz less than 20 percent of primayschools and about 12 percent of secondary scaools. In the last three years, grade 8 classes havestarted more than 10 weeks late because examination processing delays have held up grade 8selecdon.

6. .e ObJe4e: The project would support Government in its efforts to reverse thecontinued deterioration of the education system and to sustain education revitalization In a contextof severe fiscal austerity. Specific project objectives are to: (a) arrest futher decline ineducation quality, starw at the primay level; (b) increase access to education and improve thelearning environment; and (c) increase the capacity of the education sector to manage anincreasingly complex sector in a context of severely constrained resources.

7. l The project has three intefrelated components. The first focuseson qual e renewal and would support the provision of learning and teaching materials andimprovements in examination quality and management. The second component consists ofrehabili ction of physical facilities in primary schools, which would increaseaccess and improve the educatiL environment. The third is a component whichwould stren professional and administrative support to teachers and to schoois; establish aninformation management system including a system for mainta g teachers' records; andundertako a series of policy studies that are essential to planning further development of thesector. Given the immense gap between the needed expenditures in the sector and the resourcesavailable, the proposed interventions were selected on the basis of their catalytic impact oneducation revitalization.

8. Poe lmg ntffo: The project would be implemented by the Ministry ofEducation under the overall guidance of a Project Steering Committee chaired by the PermanentSectawy of Education. Each component would be implemented by the responsible department inthe Ministry of Education, with logistical, procurement, accuntn and management support fromthe exting donor-ported Zambia Education Project Implementation Unit under the PlanningDepartment of the Ministry. This unit has experience with implementing past Bank-groupsupported projects and other donor projects and has efficiently managed the Project PreparationFacflity for this Project. To ensure community participation and involvement of the Parent-Teacher Associations, the Social Recovery Project Unit will manage the school rehabilitation andexpansion sb-component. This Project Unit has experience in similar works fromimplementation of the IDA-supported Social Recovery Project. The capacity for imple tonhas been evaluated, and targeted technical assistmce and other institon-building efforts havebeen included to enable successful implementation. All components of the project will beimplemented in close collaboration with existing donor and Government projects and would usesmilar impleaention procedures to the extent that they are acceptable to I1DA.

9. Ired r.: The project has several features to foster sustainability. Fist, anincrease in the budgetary share of education expenditures is a condition of both this project ardthe ongoing adjustment operation. Increased funding for education is more likely than in the pastbecause: (a) the revenue base of Government is broadened by the adjustment program; and (b)Goverment is establishing a core expenditure program of which education is part. The projectentails a relatively small increase in recurrent budgetary cos0t: because classrooms, not teachers,are the main bottieneck, new facilities do not entail significant increases in teacher costs. Second,the project establishes a school maintenance fund, which is managed by the Parent TeacherAssociation; community involvement is also expected to reduce vandalism Thid, the project

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implements a book development policy, maing the future supply of books less vulnerable tobalance of payment disruptions. Fourth, capacity will be built in ZEPIU, several Departments ofMOE, and In the ECZ to ensure the sustainability of institutional development efforts.

10. .Ms I4re from Previm Bank/IDA Involnt Between 1969-1987 Bankgroup support to education comprised four IBRD loans and one IDA credit amounting to US$79.7millionL Implementation of these projects was ponderous and the impact weak because of theunstable macro-econouic situation, wbich made it difficult to obtain countep funds and theachievement of Govermnent objectives impossible. Four important lessons drawn from thedifficult experiences of these projects are: (a) because of weak implementaion capacity, projectsneed to be simple in design and not too broad in scope - this project takes this lesson intoaccount and focuses mainly on primary education; (b) a maintenance component as part of projectdesign is a valuable investment in physical inhrastructure projects - this project includes theestablishment of a school maintenance fund; (c) Government priorities need to be carefullyweighed against the macro-economic reality - this project incorporates inter- and intra-sectoralexpenditure switching policies and the improvement of policy planning and analysis; and (d)donor coordination is an important strategy for improving project sustaibility - dowrs,including the development agencies of Finland, the Netherlands, Swe4en, and the UnitedKingdom, as well as UNESCO, UNICEF and WHO, have been closely involved in projectpreparation.

11. aoale fo IDA inalemmt: As the main lender for suctur reform in Zambia andthe main coordinator of donor support, IDA's involvement would: (a) ensure the sstainability oftt i economic program through the strengthening of human capital and (b) assist in harnessingdonor support to the sector. Teachers comprise about 35 percent of the public service;involvement in this project, therefore, would reinforce IDA involvement in Public SectorManagement Reform.

12. Feed Actions: As a condition of negotiations, the Government agreed to increase thebudget of the Miistry of Education to at least 15 percent of total Government expenditures by1995 and has guaranteed that 40 percent of the education budget would go to prmary education.It was also agreed that for the intervening years, the Ministry of Education would receive not lessthan 13.8 percent of the total Government budget in 1993 and 14.4 percent of the same in 1994.During negotiations, agreements on the following key actions were obtained: prior toeffectiveness, the Government will submit an affordable school building design acceptable to theGovernment and IDA; by May 31, 1993, it will develop and adopt a strategy document for thedevelopment of primary and secondary education acceptable to the Association; by September 30,1995, it will furnish to IDA a draft plan to revise the management structure of the Ministry ofEducation; and by Septmber 30, 1995, it will develop and establish a book development policyfor the provision and development of leaning matWeis.

13. Environenttl hnpact: The project finances school inputs and infrastucurerehabilitation with minor effects on the environment. The project would also finance theconstuction of 20 new schools, for which sites have been set aside by the Government and thesupporting inastructure already put in place. The selection and appraisal criteria for inclusion ofschools to be rehabilitated includes environmental concerns. The project is rated category C.

14. G:flc Inad.: Even though enrollment rates I we remained relatively constanbetween the genders, girls have suffered disproportionately from the precipitous drop in accessand quality. As a result, the gender gap in access and learning achievements has widened. It is

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eXpeited that the impovements in access and quality that wouW be brought about by this projectwould also have a greater effact on girls' eduction, with all the related benefits that this wouldbring. The project addresses gender-specific concerns by (a) supporting improvemes in thesanitary facilities to take into account the special needs of mature, adolescent girls; (b) gedersensitivity training for education managers; and (c) itducing gender appraisal criteria in thedevelopment of textbooks and the setting of examination questions. In addition, the project wouldsupport a specific study on gender issues In education, the results of which would be used tomonitor gender-specific impact in this and related projects.

15. Itv Dimens The project would contribute to poverty alleviation in various ways.The ce.atruction of new schools in lcxr-income, peri-urban areas of Lusaica, Kitwe and Ndolawould increase educational provision for children from poor families and would reduce the needfor such children to travel long distances in search of school admission. Since schools in poorura areas suffer more than those in better-off areas because of overcrowding, triple/quadruplesessions, and closures due to the threat of cholera in the community, considerable benefits willacuue to the poorer sectors by targetig extension and rehabilitation work for schools to theseareas. Providing educational materials, strengthening the administrative and professionalcompetence of school heads, and facilitating regular and meaningful iteractions betweenInpectors and schools have potentiU for effecting significant quality improvements in schools inrural and poor urban areas. In addition, the project would reinforce ongoing effos to alleviatepoverty, particuLry through the employment possibilities for unskilled labor in poor urbanlocations while scaool construction, rehabilitation or extension is underway. In a broaderpepective, the project would enhance human capital formation that contributes to economicdevelopment and to a reduction in overall poverty levels.

16. Iaoic Benefits: The benefits of the project would be long-ter improvemens inhuman capital through improved access to better quality education. The immediate beneficiariesof the project would be about 1.5 million primary school pupils and about 5,000 educationmanagers. Learning achievements would be boosted through the provision of about 5.3 milliontxtbooks, teachers' guides and basic teaching materials. The reduction of triple and quadrupleshifts and the reduction in class size through rehabilitation and construction of physical flitieswould improve the leaning environment. Through gradual elimination of the bottlenecks at theExaminations Council, delays in start-up of secondary school classes would be eliminated. Theexamnation system would be streamlined and made appropriate for monitoring progress of bothindividual schools and the global reform program. Management a, the individual school levelwould be improved by training of head-teachers and education officers and strengthening of theirsupport system through improvements at the inspectorae. In addition, the project would: (a)support the economic recovery process both because It would strengthen the human resource basethat would catalyze economic growth and because It is a powerfil socio-political instument formaintaining popular support for the adjustment program; (b) provide inputs that would stemfurther erosion of the sector and start a process of sectoral policy reform that would help thesector become self-ustaining; and (c) strengthen local capacity for research and analysis throughthe studies component.

17. ojet Risk: There are two main risks associated with this project. The first is thatGovenmuent would allocate insufficient resources to primary education either because of adeterioration in the macro-economic siuaion or because resources are divered to post- primayeducation This risk is minimized by (a) the conditionality attached to the project; and (b) thediversification of the revenue base of government in the course of adjustment. The second risk isdelayed project implementation due to weak implementation capacity. This risk is minimized by

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(a) management training for core implementation agencies; (b) targeted technical assistance for theimplementation of then; (c) the relative simplicity of the project; and (d) substatial donorInvolvement In the project, which would provide more broad-based implemention support.

18. Recomdat0n: I am satisfied that the proposed credit would comrly with the Articlesof Agreement of the Association and recommend that the Executive Directors approve it.

Lewis T. PrestonPresident

Washington D.C.September 29, 1992

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Amex

Country PoFeU and Bank Group's Assistance' St4rate

1. Th'is s statemenan update of thestatementas was presented to the Board onSeptember 8, 1992 (Repot No. IDA/R92-119) in the Agricultura Marketing and ProcessingInfratuctre Project.

A. Xitor Al bw d

2. ITe Zambian economy faces major distortions which require structural adjustment if theyae to be overoome. Falling world prices of copper and general deterioration in the trms oftade, coupled with the faflure to diversify an economy dominated by inefficient parasts,caused overal economic decline. Attempts to support a high level of consumption in spite ofpoor economic pfomance through deficit-financing and borrowing failed to stinulate economicgrowth and instead fueled inflation and created an exceptionally severe debt problem. Per capitaGDP is now more than athird below its 1975 level.

3. After several unsuccessful efforts at economic reform in the late 1970s and early 1980s,Zambia adopted a comprehensive adjustment program in 1985, with Bank and IMF support. Theprogram tan ino difficulties, in part because of poor fiscal and monetary control. in 1987 theGovenmenlt abandoned the program and reversed many of the reforms undertaken In the previoustwo yeas. The exchange rate was overvalued, administrative controls on foreign exchange andimports were reintroduced, and some parastats were given privileges while others weresubjected to price conols. Ihe Govement also stopped most exter debt service;cnsequendy, the Bank suspended disbursements to Zambia in May 1987. Support from thedonor community was progressively withdrawn. The debt continued to grow, and the economy todecline. After a hiatus of one year, the Government resumed a policy dialogue with the Bank andIMP in late 1988. In June 1989, the Government abolished all price controls except mose onmaize, mealle meal, fertilizers, petroleum and public utilities. Subsequently, in mid-1989 theGovernment agreed with the Bank and IMP on a Policy Framework Paper (PFP) outlining amedium-term development strategy and objectives fot the period 1989-91. The PFP was followedby an IMP-monitored program for 1990. A second PFP covering the period 1991-93 wasreviewed by the Committee of the Whole of the Board of Executive Directors in March 1991.Arrears to the Bank were cleared and a new Economic Recovery Credit (ERC) of US$210 milionwas approved on March 5, 1991. Zambia began a rights accumulation program approved by theIMP Board in April 1991.

4. Implementaton of the agreed economic reforms began to slacken in the run-p to themultiparty elecdons in 1991. The Government reintroduced price controls and public expendituregot out of control as a result, inter alla, of increases in public sector pay and in maize andfertilizer subsidies. Becase of the slippages, donor support for Zambia was delayed, arrears tothe Bank mounted and dibursements were again uspended in September 1991.

5. In the October 1991 multiparty elections, the Movement for Multiparty Democrya(MMD) was elected to office and given a strong mandate for a reform program that includes

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moving to a full market economy and signiflcantly reducing the role of Govenment in productiveand commercial economic activities.

6. Zambia faces three major constral i In ha ejbrts to break out of As past econowmcfallures. Fist, the coutry has an exceptonally large debt burden. Total debt at ind-1991amounted to US$6.7 billion, of which US$2.9 billion was multilateral, US$2.5 bilion bilateral,US$0.6 billion medium/long-term commercia (including export credits) and US$0.7 billion short-term. Excluding short-term debt, Zambia's eteral debt represents US$766 per head ofpopulaion, one of the highest anywhere. At the Paris Club meeting in July 1992, donors agreedto generous reschedtuing of Zambia's official debt. In addition, a commercial debt buy-back(with the support of the IDA Debt Reduction Facility) is planned for later in 1992. Alleviatingthe debt burden was a prime focus of the March 1992 CG. These efforts, which are contiuing,wM require substantial and concerted donor support. A rights azcumulation program wasapproved by the IMF on July 17, 1992, amounting to $1.2 billion over a tre-year period.

7. The second major constraint is the heavy dependence on copper. Copper accouts fornearly 85 percen of the country's exports, contributes about 15 percent of GDP, and Is an

lmportat source of revenue. The problem is worsened by the poor prospects for copper pricesand a projected shari decline in copper output around the end of this decade. IDA is providingdirect support to improve the efficiency, profitability and longer-term outlook of copperproucdon in Zambia through the Mining Technical Assistance Credit.

8. The third major constraint is the dominncf the pratatal sector, the consequentstifling of competition and initiative, and the imposition of high prices and low quality in thedomest industrial sub-sectors where parastatals have an effective monopoly. The mparastaas have not kept up with product developments elsewhere. The tourism secor hasexploited only a fraction of the potential market. The gemstone parastal has exploited anegligible portion of Zambia's rotenial, with most exports avoiding official channels such that theearns have been placed directly into foreign bank accounts. With a few exceptions, parastatalshave been inward-looking, and content to rely on the small Zambian market; they have generalyfaled to diversify the economy or to develop fully Zambia's natural advantages. In the publicutility sector, the position is no better: the railways are extremely slow and unreliable, the powercompany has been unable to maintain a sufficiently steady voltage for the operation of sensitiveindustrial plants, and telecommrunications service is substandard in areas important to business.To help the Government privatize parastals, IDA has provided a credit of US$200 million underthe Privatzation and Industrial Reform operation.

B. 1a SmonIj and St1rutural Policies and Stat

9. The short-term priority is to reduce inflation by eliminating the Government's budgetdeficit, restainng borrowing, curbing monetary expansion and achieving a balance of paymentsequilibrium, while contnuing to address the underlying structural issues. The mediumtermstrategy calls for providing a less intusive and more supportive private invesment regulatoryframework, together with appropriate financial incentives to encourage signifcant strengthening ofphysical and social infrastructure; increased atention to social and poverty issues; implementationof environmental policies; and a renewed effbrt at enhancing the efficiency of public institutions.

10. The Governent's stabilization policies for 1992-94 are set out in the Policy FrameworkPae (PFP) considered by the Committee of the Whol 5 on March 17, 1992. The programobjective set out in the PFP (pre-drought) was to achieve real GDP growth rates of 2 prcet in

1992, 3 percent in 1993 and 4 p3rceint n 1994, implying a positive real per capita growth by theend of the 1992-94 PFP peilod. As a result of the drought, 1992 GDP is estimated to decline by9 percent. With norma rains, the 1993 GDP should rebound to near the original target. Grossinvestment is planned to grow to nearly 20 percent of GDP in 1994, more In line with theexperience of the 1980s. The rise in private investment wlll be facilitated by a fiscal policydesigned to increase public savings by shifting financial resources to the private sector, and amonetary policy seeking to attract savings through a positive interest rate policy. Controls oninterest rates were abolished as of September 1992. The most daunting task is to lower inflationfrom the over 100 percent rates of the past few years.

11. The stabilization plan is to achieve a primary budget deficit (excluding grants) of no morethan 2 percent of GDP in 1992, full balance in 1993 and a small surplus in 1994. The originaltarget of inflation for 1992 based on these flscal results was 45 percent, but the rate of monetaryexpansion in late 1991 turned out to be muc h'gher than expected, leading to continued highinflation in the first quarter of 1992 despite good fiscal resuts. It is still hoped that the rate ofinflation will be reduced to 2 percent per month by the end of 1992, but the rate for the year willonce again be over 100 percent. The most Woran of the fiscal measures are the rapidelbulnadon of the prinial subsidies (on maize, fertUizer and parasta deficits), repriorWitzngpublic ependus, enhancing revenues by broadening the tax bUse and reducing loopholes(while lowering tax rates), and civU service re,finn to create a smaller but more efficient, better-paid and motivated staff. Civil service pay is to be conrolled by maintning aggegateemoluments at a constant proportion of GDP, with any extra pay raises being offset by savingsfrom redundancies. The Government's success in implementing these measures will constitute thekey indicator of its determination to achieve economic recovery and sustainable growth.

12. Revn Msu: The Government's revenue strategy is to simplify and reduce directtaaion and simplify indirect taxation, while lowering protection and encouraging exports.Overall revenues will be increased, mainly by removing tax loopholes and by higher dividendsfrom pastats.

13. The Government has already made a major start on tax reform. Progress on indirecttaxes has been good. In the 1991 budget, most imported goods were brought into three tariffbands at 15 percent, 30 percent and 50 percent, with a few exceptions such as food and fertilizerat zero tax, and minor luxury goods at 100 percent. Trade distortions were reduced, andGoverimt revenues enhanced, in the 1992 budget by harmonizing the sales taxes at a uniformrate of 20 percent on both imported and domestically produced goods. Petroleum currenty isimported tax-free, but there is no local oil production and the minimum excise tax on petroleum is15 percent. In relation to the 1993 budget, the Government's program s to lower fiuther thehighest tariff band so as to reduce protection, but to do this in conjunction with smootheroperation of the Open General License (OGL) system, and only after the impact on business andemployment has been well-studied. Government plans to raise new revenues from theintroduction of a value added tax and mandatory dividends from parastatals.

14. In addition to the above, Government has cut the basic company tax rate from 45 percentto 40 percent, beginning April 1, 1992, offsetting this by phasing out non-cash fringe benefis asdeductible business expenses, and is undertaking a detailed examination of the strucre ofcompany tax with a view to implemening further reforms in 1993 or 1994. Personal income taxeswere also reformed in the 1992 budget, the main emphasis being a widening of the tax net to taxcash frige benefits, (such as housing allowance) to offset a reduction in tax rates and an increasein the tax threshold.

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15. E _b: The expendiure reduction plan Includes reform of the public andparastatal sectors, increased devolutlon of authority to local governments, better coordination andcontrol of commitments and expenditues, reprioritization of expenditwre especially in favor of thesoci sectors, and phased eliminaion of subsidies. The major reductions In spending will be incrop financing and subsidies. The change in crop financing is primarily a resut of the greaterprivat sector role in maize purchasing and marketing. The reduction in subsidies comes frommaize transport, fertilizer, and maize meal.

16. The Zambian pub23 did not generally benefit from the previous Government's maizesubsidies as intermediaries bought up the stocks and many families had to buy at parallel nmarketprices. The new Goverment moved fast to correct this situation by a speedy cu In maizesbes balaned by a stronger s4fety net to cushion the Iyact on the most vulnerable. In littlemore an a month after taing office, subsidy cuts resulted in price increases for roller meal by103 percent and breakfat meal by 165 percent. Further increases were made three months later.Consequently, within its first four months in office, Government had eliminated the subsidy onbreakfast meal (the more refined product) and reduced the subsidy on roller meal (the lessrefined, and hence more nutritious, product) to about 30 percent. Government removed theremaining subsidies on roller meal during May, and all into-mill subsidies on domeeic productionhave now been removed. As a response to the drought, Govenment pays the cost of transport,handling and storage for locally produced maize to ease the transition to the new higher prices.The phase-in to the higher prices will be achieved by May 1993 such that the into-mill cost willbe at about the level that would have applied in a non-drought situation. This will then be anappropriate base point for the 1993 crop. In addition, there will be a program of limitdquanities of half price and free yellow maize to be channelled to the poor (including subsistencefarmers severely affected by the drought) through local groups supported by the World FoodProm and NCOOs, and additionally a 15 percent subsidy on yellow maize supplied to:_mmermils, to encourage consumption of the more nutritious straight-run mealis meal. Thesepoverty-focussed subsidies will be phased out by mid-1993. Subsidy reduction Is a particulariyvible measur of Government resolve for economic reform, and becomes a key indicator ofprogress. Price controls and subsidies in the fertilizer sector were eliminated in March 1992.

17. Government has already announced a shift in expenditure priorites such that more moneywill be spent on non-wage recurrent expenditures in areas such as equipment and buildiogmaintenance. Further, a realistic Public Inver-nent Program (PIP) for 1992-94 has been adopted,and expenditure outside of the PIP will not be authorized save in exceptional circumsances.

18. M l=-landInterest Rate Polici: The Bank of Zambia established a target forbroad money growth of 25 percen for 1992. ITis was lower than the original year-on-yearinflation objective (45 percent) since it is anticipated at it will take some time for inflation todecelerae as monetary policy is tightened. In addition to monetary restraint, Government hasincrsed the mimum effective inrest rates charged to borrowers in Janiwry to about 70percent, which was equal to the Inflaton rate targeted for the end of the fist quart of 1992. Allihre rates were decontrolled in september. To encourage savings, effos will also continue tobe directed at raising bank deposit rates relative to lending rates, particularly through reducing theproportion of non-interest bearing deposits placed with the Bank of Zambia. A limitted amount ofdebt-equity swaps will be permitted at conversion rates prescribed by the Bank of Zambia.

19. t 8 : The centerpiece of the strategy iw r:mdg non oewpot by 1045 percent a year over the next decade is r eachange rate poliy that aligns thevalue of the Kwacha closely to the parallel market rate, such that the efficient allocation of

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foreign exchange is promoted, and to give added incentive to exporters through a liberalizedexwrt retention scheme. To that end the Kwacha was devalued by 30 percent on February 1,1992. The Government's plan is to adjust the official exchange rate in Installments to a level thatwill permit the OGL system to be shifted to a negative list and steadily broaden the coverage ofthe OGL. Government has arnounced complementary reforms to encourage exports through animproved duty drawback scheme and further development of bonded warehouses. Continueddevelopment of the OGL system is a key test of progress in Zambia's macroeconomic reforms.

20. oA1M Delopmenl Strat and Issm: The Government's strotegy torestore long-term growth calls for the creation of an enabling environment conducive to thegrowth of the private sector, so that it can provide most goods and services, and to limitGovernment's role in the economy to the provision of essential services. Government regards themost important of these to be the development of the basic physical infrastructure and of Zambia'shuman resources, the provision of social services (and of a soci safety net) and theimplementation of appropriate environmental policies. Government is also aware that for thisstateM to succeed It needs to deal quicldy with the overwhelming debt situation.

21. ate Seto DeveJo pment and Public Sector Reform: Government is embarking on amaorprdvatizatonprogram and seeking to make the public utlities more efficient, and tointrduce further reforms in incentives and in the legal and regulatory framework, with a view todevelopng of a strongprvate sector. TheIprivatk4tonprogram aims to put all new copperdevelopments under the control of private investors, to reform ZCCM, and to privatize all othercommercially-oriented parastatals, except for the public utilities, (140 companIes to be divestedout of 155 parasttals), over a period of five years. The parastatal refonn program will involve areassessment of the management, staffing, policies and finances of the public utlities, efL-.ncymeasures and establishment of performance targets, and instittion of an incentivebaedregulatory system. lvil Service Reform is also an important element ia Government's plans for amore efficient but smaller public sector. The reonn program includes improvements to theincentives offered in the 1991 Investment Act, and simplification of procedures. It continues thestreamlined import and export licensing system, now operated quite efficiendy tdrough thecommercial banks, and an exchange rate policy that will move to a small negative list system byend-1992; and enhanced competitiveness through further cutting of import tariffs. Government isalso starting a coapehenstve review of business-related laws that are out-of-date; a prioritizedaction plan has been drawn up to make early amnmes of Acts that affect the privatizationprocess (incliding laws regulating the banking system and capitl markets), and to deal with alother business-related legislative modernization over a five-year period.

22. lhyal InEastum: The Government hitends to put renewed emphasis on a betterroad system to ensure that crops can be brought to market quicldy, on a more reliable freight-railsystem, and on a better quality telecommunications system that is seen as essental for thedevelopment of an outward-oriented and efficient productiva sector.

23. Human Resource The centerpiece of the human resource strategy is therehabilitaton and sustainable expansion of d 9 education and health sectors. These sectors haveborne the brunt of the deterioration in fiscal performance in the past, and the country is facedwith a dilapidated and under-funded soclai infrastructure.

24. In educaton the new strategy means a sharper focus on improvements in primaryeducadon, with a special emphasis on the provision of much-needed infrastucte, rehabiitationof existng schools, improvement of management capacity and supply of learning materals. The

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Govenment has sought, with success, donor support for this. Other acivities in educadon aregeared towards ensuring the necessary supply of skilled manpower for the development needs ofZambia, focusing on key skills relevant for private sector development.

25. In health the Goveroment is re-emphasizing service delivery and is in the process ofdecentralizing health services to ensure community participation and good governance in thesector. The Government is working with key donor agencies finalize a health sector strategy andmanagement set-up to meet the new challenge of a decentralized system of health delivery. A keyarea of emphasis is the prevention of AIDS and support for family-based care of AIDS patients.With prevalence of HIV as high as 20 percent in urban areas, the treatment of opportnisticinfections and support for home-based care is important to limit the otherwise devastating effectsthe AIDS epidemic could have on the human resource base and the economy. In nutrition theGovernment is working towards streamlining management of national programs and furtherencouraging the development of local initiatives.

26. The Government is aware of the key role women could play in poverty alleviation andgrowth of the economy and is focussing social service de!lvery, particularly education andprimary health care, on women. Government is also working towards removing obstacles forwomen's participation in the labor force, and in their access to credit, and is looking to relievingthe all-important time-constraint on poor women in Zambia.

27. et Govermment is taking stWs to alleviate the impact of the drought andof the economic adjustment program on the poor and disadvantaged. Specifically Governmentwill: (i) implement a transitional subsidy on imported yellow maize to cushion the price impactof the drought; vii) channel special assistance through local groups supported by the World FoodProgram and NGOs to ensure that drought-stricken families can feed themselves and have theseed for next year. Further, Government will assist poorer families for one year only through asmall (15 percent) subsidy on maize supplied to hammermills, in an effort to encourage use ofstraigbt-run maize because of its greater efficiency and nutritional value. In addition, Govementhas (iii) allocated savigs from subsidy removal to expand social welfare program implementedrough the Ministry of Community Development and Social Welfare; (iv) iS expanding small-

scale labor-intensive public works (supported by IDA and other donors) and convertng some ofthose to paid-work instead of self-help; and (v) is increasing the share of the national budgetallocated to basic social services, with emphasis on primary education and health care and otherservices of particular importance to the low-income population. Specific interim targets have beenset for the above. Particular attenion will be paid to rural infrastructure. A program ofseverance pay and business counselling will be offered to those made redundant through theretrenchment program. For the medium-term the various measures to sfimulate small-scleindustry will provide income-eaning opportunities in both urban and rural areas.

28. Enhn Slrs: Zambia has a keen interest in preservlng and improving thephysical environment, and there is common acceptance in Government of the priority thisdeserves. The main issues are first, some deforestation, particularly along the line of rail, causedby land clearance, over-ctting of fuelwood, overgrazing and buring. In these same areas thisleads to soil erosion, a problem made worse by the high natral erodibility of Zambia's soil.Second, there is a local pollution problem from the mines and factories, particularly affectingparts of the Copperbelt and areas adjacent to industrial operations. Although not widespread oraffecing large numbers, such pollution has to be reduced. More pervasively, the poor control ofagricultural chemicals and inadequate treatment of hulman and industrl waste has an obviousimpact on water supplies and health. Cholera is a serious issue. And third, in relation to

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wildlife, poaching is rampant, and elehant and rhino are found in mbers only in a fewlocations.

29. The National Strategy for Coevation was prepared in 1986 and provides the basis forpolicy and institutional framework and udelines for Improved management of environmentalissues in the country. It seeks to define and establish policies, plans, organization and action toensure the sustainability of the natural resource, and to maintain biological diverity and theesse ecological processes and life support systems. Specific plans and guidelines bave beendrawn up for all sectors, in conjunction with the Intnational Union for Consevation of Natureand Natur Resources. There has been progress in some areas, yet in others, particularlywoodfuel cuWtting, it has not yet been possible to achieve measurable success.

30. The new Government has reafirmed its concern for eniroment issues through theestablishment of a Ministry of Environment and Natural Resources and National EnvironmentCouncil (NEC). A new national enviromnental action plan Is in the early stages of preparation,but because of the need for proper quantification of the copper mining and industial pollutionissues, and the preparation of the natural resources strategy, it is not due for completion until1995.

31. External Ca"ital Reremets - The Debt Issue: Zambias external debts areenormous in relation to GNP, and cannot be serviced from Zambia's own export earnings. Thelimited foreign exchange available in recent years for copper investment has led to decliningoutpu, and for 1992 (even excluding drought-related imports) the trade balance is expected to benegadve. When taken together with net no-factor services and other payments, the currentaccount deficit, excluding interest payments and official transfers, is estimated at US$287 million;t rises to US$587 million when the extra costs of the drought are included. Debt serviceobligations amount to US$503 million for non-multilaterats and US$260 million for multilaterals,and targeted arrears reduction is US$294 million. Thus, excluding any change in its officialreserves, Zambia faces a gross financing requirement of US$1644 million, including the droughtneeds.

32. While Zambia is putting high priority on a rapid growth in exports to move toward abetter external balance, for as long as the debt overhang persists the aernat financial picture willbe difficult. The main areas for expected improvement are a modest reduction each year in thecurrent account deficit and steady reductions in debt service obligations.

33. Closing the external financial gap has been one of the more difficult aspects of theZambia economic recovery program, due in part to the heavy debt service requirement.Rescheduling and donor support have been generous when policies were good, but the largeamounts required, coupled with the on-again/off-again policy performance have resulted in a verythin margin of exernal finance. This problem has been made more difficult in 1992 by therequirements of the drought, esimated at US$300 million in 1992. After the March ConsultativeGroup meeting a financing gap of US$330 million remained. Since that time, the AV agreed toreduce payments due by US$12 million and to defer payments by US$88 million; the Paris Clubagreed to a more generous rescheduling than assured at the CG; and several donors haveincreased their aid commitments, particularly for food aid. As a result, the external financing gapwiUl be closed for 1992 provided all of the donor pledges result in 1992 disbursements.

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C. Rseit Ruo&*

34. Overall economic performance under the 1991 program was poor. Policies wentsubstantially off track in the second half of the year under the previous Government, especially Inthe run-up to the October 1991 elecdons. While some progress was made in the implementationof strucr refom, particularly with respect to trade and the exchange rate, slippages ocrredon the macroeconomic stabilization measures. Real GDP declined by 2 percent, mainly reflectinga sharp fall In copper and maufcing output. Becuse of the drought, GDP is expected todecline by a firther 9 percent in 1992. Inflation declined to an annual rate of 46 percent in thethird quarter of 1991, but rose sharply to reach 111 percent for the year as a whole, comparedwith a program target of 40 percent.

35. The overall budget deficit swelled to 7.1 percent of GDP, compared with the programtarget of 4.0 percent of GDP. Major weaknesses were evident in boh -the tax and expenditureareas. The decision to tax cash allowances and fringe benefits was withdrawn for a second time,and mining income tax payments fell short of projections. Mealie meal subsidies rose sharplywhen consumer prices were not adjusted after a tripling of producer prices, and substantialbudgetary funds had to be lent to the agricultural cooperatives to purchase maize. FinaUy, largepay awards were granted to the public sector.

36. The external current account recorded a deficit of US$93 million (2.5 percent of GDP),slightly below the program target of US$101 million, largely because of a compression of importsin the second half of the year when most donor support was suspended. With favorable copperprices, copper export revenues were US$25 million above the programmed level, but these weremore than offiet by a 26 percent decline from 1990 in the surrender of foreign exchange earnigsfrom nontaditional exports in anicipation of exchange rate movements. Gross foreign reservesdeclined slightty in 1991, with uncommitted reserves virtually exhausted; at end-1991, Zambia'sarrears to the IF exceeded program levels by SDR 85 million, arrears to the Bank reached $40million, and arrears had also arisen to other multilateral creditors (about US$70 million) and toParis Club creditors (about US$30 million).

37. Prgess conned in the liberalization of the exchange and trade system. The opengeneral license (OGL) system was expanded; the first and second window exchange rates wereunified well ahead of schedule; and the number of controlled or prohibited exports was reducedfrom 48 to 4. Throughout 1991, adjustments in the official exchange rate were sufficient togenerate a gradual depreciation in the real effective exchange rate. However, these gains ininternational competitiveness were eroded toward the end of the year as inflation accelerated.

38. The new Government moved quickly to implement its econmic reform program. In itsfist seven months in office the Govenment, put in place a number of fundamental and politicallydifficult policy reforms aimed at restoring macroeconomic stability and transforming Zambia intoa market economy. In a move to cut subsidies, maize meal prices were increased by more than165 percent in December 1991. This and subsequent adjustaent in the fist half of 1992 resultedin a fivefold increase in the consumer price of maize meal. In early Jamnuy 1992, domesticprices for petroleum products, which had been frozen since late 1990, were raised to cover costsplus excise duty. The 1992 budget, introduced on January 31, 1992, aimed at largely reversingthe fiscal sippages of 1991. The overall deficit was to be reduced from 7.1 percent of GDP to asurplus of 0.3 percent in 1992, with the prinary deficit (excluding grants and interest) to be cutby 6 percentage points to less than 2 percent of GDP. If the target of the overall deficit isachieved, there will be no need for recourse to inflationary borrowing from the domestdc banking

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system Key budgetary acos included: (i) a reduction in maize- and fertiz-rlatedexpenditurefrom 6.0 peent of GDP in 1991 to 2.7 percent of GDP in 1992 as the result ofaction on maize meal pricing, elimination of fertlizer subsidies, and a reduced need to financecooperatives, becue of increased agricultural liberalizadon; and (i) a fundamental reform ofpersonal income tax, including bringing cash allowances and fringe benefits fully within the taxnet whfle cutting tax rates - the top marginal tax rate was lowered from 50 percent to 35 percent,and the former personal allowance was replaced by a tax credit sufficient to remove a largenumber of low-income taxpayers from the tax roll.

39. The official exchange rate was devalued by 30 percent on February 1, and wassubsequeny adjusted at weekly intervals beginning in early March. In mid-March theGovernment increased the share of foreign exchange earnings from exports of goods and servicesthat exporters could retan for their own use or sell in the export retention market at a freelydetermined exchange rate from 50 percent to 100 percent. At the same time, the Bank of Zambiaceased to provide official foreign exchange for a range of transactions, primarily services, andshifted them to the retention market. In the weeks following this change, the exchange rate in theretention market dpnrciated rapidly and the spread between the official and the retention rateswidened from 20 percent to 30 percent. During the second quarter of 1992 the authoritiescontinued the policy of frequent sma1l devaluations of the official exchange rate, increasing thepace of devaluation after June. On June 19, a number of steps were taken to liberalizequani ve limits and administrative sequirements on transactions in the retention market,including eliminating the requirement of prior Bank of Zambia approval of the provision offoreign exchange for small transactions and for business travel, and pemitting non-govermnentalorganizations and foreign investors to sell the foreign exchange they bring into the country in theretention market.

40. While money and credit developments were broadly on track, the consumer price indexrose by 50 percent in the first quarter (an average monthly rate of about 15 percent). Thisadverse development reflected the confluence of the inflationary momentum carried over from late1991, the administered and parastal price adjustments, and the February I devaluation.

41. Difficulties were encountered in the implementation of financial policies in the secondquarter of 1992. Available information indicates that fiscal performance slipped significandy,primarily as a result of a very sizable increase in wages. Effective April 1, a pay award taresulted in an increase of 130 percent in the wage bill was graned to the civil sevice. Theprogram had been based on an increase in civil service pay and benefits of 50 percent as fromJuly 1. This increase was expected to raise the wage bill to K 7 billion (1.3 percent of GDP)more than the PFP level, although the net increase was esmated at K 5 billion, in view of thebroader tax base following the income tax reform. The Govermment is, therefore, estimated torequire net recourse to the domestic banking system of K 6 billion in the second quarter, after anet repayment of K 5 billion in the first quarter. Inflation decelerated to about 6 percent a monthin April and May and to 2 percent a month in June and July.

42. The picture on fiscal performance is mixed. Performance in the first quarter of 1992 wasgood, but deteriorated in the second quater, it was not so good. The wage increase turned out tobe 130 percent instead of the 70 percent provided for. Government agreed measures with theIMP in June, but expenditures in the second quarter will still be significanty higher than in theprogram budget. On September 11, the Government decided to remove anomalies from the civilservice pay structure effective October 1. The total cost of the package is estimated at K 900million. However, third quarter revenues are runmning well above program levels. The situation

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is under discussion between the Government and the IW and a joint Bank/IMF mission isscheduled to visit Zambia in October to review the mater further with a view to agreeing onmeasures to mitigate the impact of the package on the budget.

43. In terms of the social safety-net programs, some progress has been made: (i) the PublicAssistance and Welfare Program is now disbursing funds and providing food and other items inkind to the absolute poor; (ii) District Social Welfare Committees have been established in eachdistrict, composed primarily of NGOs, to implement the program; (iii) the Microprojects Unit andthe Bank-supported Social Recovery Fund operations have been expanded considerably; and (v)there are encouraging signs that increased attention will be given to promoting and supporting theInformal sector.

44. Nevertheless, despite the Bank raising the importance of these actions repeatedly at theMinisterial and Vice-Presidental level, slow progress is still cause for concern, particularly: (i)there is not institutional home for coordination and formulation of a poverty alleviation strategy;(ii) the Public Assistance and Welfare Program is not fimctioning well; (idi) aid money has notbeen disbursed; (iv) counselling and retraining services have not yet been established for thoseretrenched through privatization and civil service reform; (v) there is an urgent need to integratesocial policy concerns more fully into the formulation of economic policy; and (vi) Governmentfunds for labor-intensive public works have not been forthcoming.

45. In terms of coping with the catastrophic drought, Zambia is doing reladvely well. It hasnow secured its maize import needs of a million tons. The Government's energy in tackling theproblems has been impressive, and key donors have done an admirable job, both in makingpledges and in helping build up the logistics planning system. NGOs are now fully mobilized forthe distribution of food through food-for-work and sale in the drought-affected areas in theSouthern half of the country. Overall, domestic marketed food supply is significanty higher thanearlier estmates, and less maize has flowed out of Zambia than anticipated. Despite this goodprogress, several critical areas remain:

(a) the intermal distribution system is still fragile in some areas;

(b) increased attention needs to be given to water supply, which is now the primary problem inmany areas; and

(c) the Government needs to get the drought recovery program into full gear with theprocurement and distribution of fertilizer; the provision of adequate iWput credit is an extremelyhigh priority.

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-ANK GR- AS-IffCE

D. Bank QWeh etdvefi and ani e Sbatga

46. Zambia has to design, finance, and implement its adjustment program under particularlydifficult conditions. First and foremost is the very high external debt (including to the Bank andFund) which would result In debt service ratios near 70 percent in the absence of rescheduling.Even with extraordinary levels of rescheduling and direct support from the donors and multilateralinstitions such as the Bak, import levels are highly constrained and reserve levels at the bareminimum. Dealing with the debt issue over the medium term is, therefore, a key focus of theZamblan authorities and of the Bank program of assistance. The precariousness of the extenalfinancing situation also takes up much of the attention of senior officials in the Governmen andthe Bank. This problem Is even more serious this year because of the drought. Another majordifficulty is the on-againloff-again history of the Zambia program (and hence of the Bankprogram of support) which has created difficulties both in program design and implementation.The Bank's emphasis in recent years has been on the extraordinary financial measures needed toclear the arrears and restart the program (twice) and to reach an understanding on some basicmacroeconomic policy issues. As a result, the Bank has strted with a low klowledge base inmany areas, and the Government has not had sustained donor support in many sectors. Thisonstrains both program design and implementation; it also results in an emphasis on technical

assistance and a particular need to focus Bank support on a relatively small number of high-priority areas. In some sectors, enough is known to get strted on priority issues while launchingsome broader sectoral studies. In other areas, direct Bank support would not be prudent untilafter the proper sector work has been done.

47. The Bank strategy is to cont4iue to play a leading role in assistng the Government todesig and implement the adjustment program, to place the economy on a sustainable growthpath, and to mobilize the necessary financial resources. This will be accomplished throughcontinued policy dialogue, economic and sector work, adjustment and investment lendingoperations, and effective aid coordination. The sategy aims to support structural adjustment,while creadng a climate conducive to povery alleviation through sustainable economic growth andthe provision of a safety-net to protect vulnerable groups from the adverse impact of adjustment.The stategy implies substantial balance of payments support to help Zambia redressmacroeconomic imbalances in the economy, and to reduce its overwhelming debt burden tominageable proportions. To this end, the Bank plans to lend for at least one adjustment operationfor each of the next four calendar years. The primary emphasis of the operations will altenatebetween macroeconomic adjustment and sector adjustment. Each year, the Bank witl assessachievements under the ongoing adjustment operation to determine the priority measures to becarried out under the successive opertions. Thus, in the earlier years, Bank assistance will beprimaily in the form of balance of payments support, supplemented by investment operations inthe priority sectors. As identified by the Government, these are agriculture, industry, transportand social services. In addition, it is envisaged that IDA would assist Zambia more directy,including through the Debt Reduction Facility, to reduce Its debt burden to a more manageablelevel.

48. The main elements of the Bank's strategy are to support efforts to:

- achieve macroeconomic stability and initiate a path of sustainable and equitablegrowth through eliminaion of the budget deficit, attaiment of a competitive

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exchange rate, and increasing the allocation of resources to economic and socialsectors by restructuring the composition of public expenditure;

ensure sufficient access to import, and an adequate reserve cushion, droughmaintenance of an appropriate exchange rate and other measures to encourageexports md to use imports wisely, and through coordination of donor assistamceand efforts to secure ne. led debt elimination and rescheduling;

- improve the climate for pdvate sector development through deregulation,provision of infrastructre and privatization of parastatals;

- strengthen human resource capacity by rehabilitating the education and healthinfrastructures and improving the quality of education and health services; and

- implement an effective environmental statey.

49. In the context of this strategy the Bank is providing support to mitigate the efects of thisyear's drought. Thus the allocation for the Privaization and Industrial Reform Credit (PIRC) wasincreased to US$200 million and existing and new operations were reviewed to determine if theycould provide funding for drought-related activities. Ihe Bank is also actively soliciting donorsupport for Zambia.

50. The aleviaion ofpovety is central to the Bank's strategy and program in Zambia.While the most powerful weapon against poverty in the long run will be sustainable and equitableeconomic growth, a number of other considerations will play a vital role in combatting poverty.One is the re-orientation of public spending to meet the basic human needs of the poor,particularly in the areas of primary education, primary health care, and clean water andsanitation. Another is degulation of the economy to reduce the prolifration of rents going tothe relatively advantaged and to open up opportunities for small businesses and small farmers.The availability of credit to all levels, and without gender discrminti, is a vital part of thisstrategy of increasing opportunities. Similarly, a labor maket free of special privileges andbarriers to entry will be important if growth is to be as labor-intensive as possible. Finally, asocial safety-net will be important to protect those least able to protect themselves from thedisruptions likely to accompany this program, particularly the sharp increases in the prices of vitacommodities and the retrenchment of employees in the public and parastatal sectors.

51. Women already play a vital role tn the Zambian economy not only as primary caretakersof the famly but also as direct laborers at the farm level and, increasingly, in formal sectoremployment. To reach high levels of equitable and susainable growth, however, the barriers tofull participation that stil exist for women will have to be addressed urgently. Many elements ofthe Bank's lending and ESW program will be directed at this issue, most particularly theprogms in educaion, health, credit, and deregulation. The Agricultural Marketing andProcessing Infrastructure Project includes specific requirements to ensure that women have equalaccess to credit facilities. In fact the majority of beneficiaries of the credit component areexpected to be women.

52. The donor community is giving strong su#ppor to Government's actons to protect dieenvirtonment. IDA is providing assistance in particular to deal with industrial pollution in Kafue,to improved agricultural practices, and (through ESMAP) to reduce the impact of fuelwoodcuing. The major local company, NCZ (a frtilizer manufcturer and a recipient of past IDA

- 18-

fhnds), has brought all the local facories together to draw up an inegrt action plan forensuring that the industrial wast water is treated before it reaches the river. This plan isawaiting donor finance (US$1-2 m). A review of mining pollution issues is included in the IDAwork program. Donors are placing special emphasis on water quality. Support fbr the widlieconservation program is planned in the IDA work program, but it is also expected to get renewedemphasis as Government actively promotes the country's tourism potential.

E. Lndlng Prog and Economie and Sedor Work

53. Zambia's withdrawal rights under Bank loans and IDA credits were suspended betweenMay 1, 1987 and March 1991 on account of accumulated arrears. The Economic RecoveryCredit, approved by the Board in March 1991, marked the resumption of normal Bank operationsin Zambia. Relations were interrupted again in September 1991 when disbursements weresuspended because of arrears. The suspension was lifted at the end of January 1992 and normaloperations resumed again. These interruptions account, in part, for the relatively low volume oflending during the period 1985-1991. Schedule I) details the Bank's lending program during theperiod 1984-92. In March 1991, IDA provided the second economic recovery credit of US$210million to Zambia, which was disbursed in two tranches. Since 1984, IDA committed a total ofUS$861.3 million to Zambia fi't adjustment operations and investment projects. The creditssupported the Government's economic recovery and adjustment program, agriculualdevelopment, rehabilitation of infrastructure, strengthening of institutional capacity, andestablishing a social recovery fund.

54. A recent dialogue between Bank staff and Govenment representaives culminated in anagreed approach to priority sectors for Bank assistance. These include agriculture, industry,minig, transport, and social services. Assistance in these sectors would complement balance of

payments support. The Goverament's goal is to generate rapid economic growth, with equit,through increased investment in the productive sectors and human resources and infastudevelopment. A high rate of economic growth is essena for poverty reduction, and for thedevelopment of human resources and infiatucture, as well as for progress in incomedistribution. Ilvestments in productive sectors, and for human resources and infrastrucuredevelopment, would be supported by effrts to enhance efficiency and effectiveness in the publicsector so as to promote pnivate sector development.

55. Over the next four years, the Bank's lending and economic and sector work (ESW)programs will constitute the main vehicles for implementng the strategy described above. Amongthe areas covered by ESW are agriculture, mining, public expenditure, education, public sectormanagement, environment, populaion, health and mntrition, gender issues, natura resources, andfilizer distribuion. A poverty assessment is planned to be completed in FY94. It will bepreceded by an analysis of data gathered under work initiated in FY92 for the preparation of theCountry Economic Memorandum (CEM), to be issued in early 1993, which will have thealleviation of poverty as a central focus. These activities will culminate in the formuation of astrategy for Bank assistance toward poverty reduction in Zambia. Three major activities dealingwith the environment are included in the ESW program for the next three years. Within theagiculture sector program a natl resources study is to be carried out in FY93. It will besupplemented by studies on the environmental impact of mining operations and an overallenvironmental strateg study in FY94. The Bank ESW program also includes a A*y on woisenin dbvelopment, scheduled to be completed in FY94, which should broaden the Bank'sundersding of these issues and help in developing a more comprehensive picture of theproblems women face and the steps that must be taken. The results of the study, together with

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lessons learned from the various other related studies and operations, will be used instrengthening the Bank's assistance strategy for enhancing women's participation in developmentactivities in the productive and social sectors.

56. Economic reform measures were Initiated under the firs! two Economic Recovery Creditsand the Privatization and Industrial Reform Credit (PIRC) and the parallel Technical AssistanceCredit (PIRCTA). On the basis of an assessment of the achievemets in macroeconomi- mdstructural reform under the three operations, additional measures will be proposed for the Multi-Sector Adjustment operation included in the lending program for FY94 and subsequent adjustmentoperations.

57. Concurrent with the PIRC, the Bank will provide assistance to agriculture, education andinfastructure through the Agricultural Marketing and Processing and Inrascture, InfrastructureEngineering projects and the proposed Education Rejabilitation Project in FY93. Theseoperations will be followed by others in FY94 in Petroleum Sector Rehabilitation and AgriculturalDiversification, with Telecomimunications and Public Sector Management as reserve projects.The FY95 program includes a Industrial and Financial Adjustment Credit, a Health and Nutritionproject, and a Power Rehabilitation project, with financial intermediation and fifth Ralwaysproject in reserve status. Finally, in FY96, Bank operations will include a follow-on Multi-SectorAdjusment operation, and support for Agricultural Research and Extension and TransportRehabilitation; Community Development, Small-scale Mining, and Natural Resources Preservationand Development are the reserve projets.

58. IC and MIGA: IFC's portfolio in Zambia consists of ten investments for a total grosscommitments of US$106.6 million; one of IFC's largest in the Southern Africa region. Whilequite diversified (mining, agriculture and ma ing), tis portfolio has not performed wel inrecent years; the bleak economic siuaion and heavily regulated policy environment adverselyafected most investments. IFC, however, expects that with the recent policy changes and theanticipated large privatization program, prospects for existing and new investments will improve(particularly in agriculture and in companies being privatized). IFC is keeping in close touch withthe Zambian authorities and the Bank on progress on the privatization program. Zambia has beena member of MIGA since 1988 and has paid up its subscription. MIGA has as yet no outstandinginvestment guarantees in Zambia.

F. Aid Coordination and Relatiom with the IMP

59. The coordination of donor assistance has been central to the Bank's program in Zambiabecase of the extraordinary efforts needed to clear arrears and restart the program, the very largeexternal finacing needs of the country due to falling copper revenues, and the large debt burden.Formal Consultative Group meetings were held in April and July of 1990, March 1991, andMarch 1992. In addition, informal donor meetings were held in Paris several times a year toprovide urgent updates and opportunities for donor consultation. Regular informal briefings ofExecutive Directors and their staff have also held at both the Bank and the Fund. A considerabledonor consultation process has also been established in Lusaka to coordinate the amounts ofassistance and of donor policies at the sector level, with different donors taking the lead role indifferent sectors. Finally, the SPA meetings have provided a useful forum for the overallcoordination of donor amounts and the discussion of general donor coordination issues such as theuse of counterpart funds.

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60. All of the major donors and multiaterl institutions are supporting Zambia's economicrefom program. IIs support as expressed at the latest CG and SPA meedngs, has been strong.'he broad agreement on policy has meant that an increasing amount of donor assistance is nowavaflable as gener balance of payments support, and that the project assistance is increasinglybeing coordinated within an overall agreed program of donor support.

61. A Fund-monitored program was endorsed by the IMP Board in June 1990. In April of1991, the Fund Board approved the first ever rights accumulation program with Zambia whichestablished conditions under which Zambia would grad;L:y accumulate rights to withdrawals ofIMF resources such that, after three ycars, the accumwulated rights could be used to withdraw

* enough resources to clear completely Zambia's arrears to the IMF, which were about US$1.2billion in mid-1990. Due to poor fiscal performance, Zambia did not qualify to accumulate rightsin 1991. A rvsed rights accumulation program was approved by the IMP Board in July 1992,involving US$1.2 billion over a three-year period.

G. dai:n for :l MuIdrn glim

62. Despite policy reversals, Zambia has made generally good progress in economic reformsince 1989, and remarkable progress since the new Government came to power. Yet a great dealremains to be done. In addition to the major emphasis now being placed on private sectordevelopment, privatization and parastatal reform, fi2ther structural measures are needed onmacroeconomic issues such as foreign exchange, external tariffs, taxation and controllingiation. The financial sector needs modernizing, and greater focus has to be placed onencouraging exports, particularly in non-traditional sectors. All sectors (agriculture, transport,local government, energy, and social services) neea o address issues that were neglected duringthe post-Independence years. Civil Service reforr is an important component of the reformprogram as it addresses the public sector's ability to formulate and implement these reforms. TheGovernment's PFP and the Bank's country assistance strteg seek to address these needs.However, the magnitude of the challenges faced by Zambia is so great that economic adjustmentand achievement of Zambia's full potential will be a lengty process. Substandal foreignassine, tnduding debt relef, will continue to be required to provide essential inputs and ti oseconsumer goods that cannot be competitively produced domestically, to develop the nation'shuman resources, and to strengthen the basic infastructure.

63. Progress in mplementing ths long-term strategy wUIl be evaluated on the basis of thefllowingfour criteriz Thefirst is the Goverment's ability to implement macroeconomicpolicies (monetary, fiscal and exchange rate policies) that can accomplish and sustain financialstabilization, measured against the achievement of targets for inflation, the fiscal deficit and creditexpansion. The second criterion is the Government's success in public sector reform, includingprogress in divesting itself of parastatals and in reforming public utilities, (to be judged againstthe volume of privatizations and performance and financial targets for the remaining publicutilities), and also civil service reform. The third is future growth and diversification of theeconomy, measured against an expected decline in dependence of the economy on copper forexport earnings and government revenues and against more rapid private sector growth. Thepolicy framework should encourage private sector investment and continued rehabilitation anddevelopment of the social and economic infrastucture. Thejfboth is Government commitment toimproved delivery of social services, as reflected in: (a) an increased budgetary share foreducation and health; (b) strengthening of the Government's stratWy of social services; and (c)improvement in the delivery of social welfare assistance.

-21 -

64. Successful implemn of this adjustment program depends on three key factors.First, is the need for ustained commitment of the Zambian authorities to prgramImplementation. Lack of commitment and policy reversals have conibued to implementationfailure in the past. This risk is miiie by the new Government's decisive actions toWdate andthe strong mandate it received on the basis of its unambiguous economic strategy. Second, is theneed for substantial debt relief and highly concessional external assistance to be extended toZambia, to ensure adequate financial resources are available for the adjustment programpaticularly given the effects of th s drought. The Bank is appealing to donors to makeetraordinary effots to increase their commitments to support the Zamblan program and foodimport requirements. Third, successful implementation of the adjustment prgram will requirerestraint and sacrifices on the part of all Zambians. Lack of mass support for the program couldimpede its implementaton, and the safety-net provisions are critical as will be the Government'sability to present and explain its policies cleady. The criteria noted above for monitoringperformance should help ensure that the program remains on track.

-22 -

1989 1990 1991 19 19 1994

an t chaes

* 1Red GDP -1.0 40.5 -1.8 -9.0 13 4.0Redl na°n GDP .1.7 40.7 -0.7 -10 14 4.1Real per capi GDP -4.4 3.9 5.1 -11.8 9.7 0.5Real onmpto per capita -10.1 -3.0 -2.8 -15.2 5.9 0.2To= of tUd 9.4 -1.1 -7.3 - 8.8 -6.9 -3.8Conmepr (and peo 158.0 105.0 .0 99 25 10UXpogt volme 3.1 6.8 -17.4 7.6 4.8 3.5

Copr 8.4 2.0 -14.8 4.1 2.2 2.3Noncopper -14.9 27.9 -27.1 39.2 12.5 6.6

mpot voluw 8.4 15.9 -11.5 24.8 10.9 4.6

Realeoap _to (d iaton -) 32.2 -7.5 0.7 - - -Money Supply (M2) 65.3 45.8 98.1 5571 15 7

IOwn domestic avIos 13.7 16.6 12.0 -4.2 9.2 10.3anrss natinal sainp 6.0 13.8 15.3 3.2 13.1 11.9

Cental GovL -4.9 -1.8 1.2 - - -Non-Sgovenment 10.9 15.6 14.1 - - -

Unrequbod tmansufe and net f&dwor Incom -7.7 -2.8 3.3 5.6 2.9 07Gass domnotic Invesment 9.9 17.3 13.5 11.5 17.5 18.0

Cetral Govt* 4.7 5.4 7.3 4.9 4.5 4.7Non-gvernment 5.3 11.9 6.2 6.6 13.0 13.3

Coumtion 86.3 83.4 88.0 104.2 90.8 89.7CestaalGo VL 14.1 11.1 10.3 23 20 20No _gvmmt 72.2 72.3 77.7 81.2 70.8 69.7

bxturaluunt accouti 4.0 -3.5 1.8 -8.3 -4.4 -6.1MeOa seodx 18.0 16.9 15.7 - - -Non-metal sector -22.0 -20.4 -14.9 - - -

-23 -UE A

PmJxf Cot 9W= bl ProLeet cgMgMUM

TOl% Ba

L"1 Eard I" LL CA

A. IMPROVEIM S IN QUALXTY1. Instuctional Matals 898 8,05S 8,954 90 2S2. Examination Inputs 562 2,423 2,986 81 8

B. REHABIL=ATION &CONSTRUCTION 7,122 6,616 13,738 48 38

C. PLANNING AND MANAGEMENT1. Head-teacer Traing 705 340 1,044 33 32. Inspectors Course 335 272 608 45 23. satnoihonSpport 453 3,469 3,922 88 114. Teachers' Records 177 599 776 77 25. Inomato Management 21 87 108 81 06. Major Studies 650 975 1,625 60 5

D. PROJECT MANAGEMENT 1,5S1 681 2,196 31 6

TOTAL BASELINE COSTS 1X439 23L518 3527 aZ INPHYSICAL CONINGENCIES 1,031 2,296 3,328 69 9PRICE CONTINGENCIES 1,409 2,095 3,505 60 10

OTALPROJETCS 14879 2 72910 42872 Q 119

(US$ moo)

Laol Foreigt ITatl

Zambia 5g-Govenmen 3.3 1.9Communities 0.7 0.0

IDA 9.3 22.6 31.9

Co-financiers JiA A £D

Total 14.9 27.9 42.8

-24- CRMH il- BPage 1If 2

(US$ Million)

Procurement Method

lKQi; h F LO LO Qte N.A.F.i

A. Civil Works - New Schoolsanid ECZ/MOE upgrading 5.6 1.7 0.3 b 1.6 9.1

(5.6)* (1.7) (0.3) (-.-) (7.6)

B. Rehabilitation and Extension of Schools

(1) Civil Works -.- 1.8 0.201 0.2 2.2(1.8) (0.2) (-.-) (2.0)

(2) Construction Matials 1.0 0.2 0.80 0.2 2.2(1.0) (0.2) (0.8) (-.-) (2.0)

C. Education Materials 6.8 3.4 -.- 0.3 10.5(6.8) (3.4) (.) -- (10.2)

D. Equipment, Furn iture & Vehicles 3.0 1.8 0.1 0.3 5.2(3.0) (1.8) (-.-) (--) (4.8)

E. Tedcnical Assistance & Studies -.- -.- 5.1 0.1 5.2* . ) (_._) (3.4) (.)(3.4)

P. Trahinyg & Workshops -.- -.- 1.6 1.9 3.6( ,) (. ) (0.7) (.)(0 7)

0. PPF -.- -.- 0.2 -.- 0.2( . ) (-.-) (0.2) ( )(0.2)

H. Incremental Operating Costs -.- -.- 1.0 3.8 4.7k L-.- LL2Q (1; f.2)

TOTAL 16.4 8.9 9.3 8.3 42.8(16.4) (8.9) (6.6) (-.-) (31.9)

* Figres in pumntme indicate IDA financn. Some additin diopans ae duo to rounding.

-"Nat Assoeio fnned," indcdes m re coas, tuaiing, wodchop and inind conunuiy oot&uin for schoola d extinajonot fined out of the proceds of ti adit. Most recnat coos am finane by tho

Govnment, whbile tiig and wmesrhps an financed by oo-finanse uder paMld oo-firanig .ungaments

w ncludes form account ipgmdins of seurity of ECZ and MOE buldis.

d/ Pudet spng for cont on m ab iasm value equimnt and specialid laboervice on the bas of thwe

-25 £CIIUPae 2 ef2

IDA -eretag of Eh _dirD~~~hl_n hm-I

1. CivilWorks

(a) Now S ools 7.0 100% of oregand 90 of local

(b) El Itsoand Rehilationof Existn Schools (SRPU) 2.0 10o%

2. Matras, including fbr e for l(b) 2.5 100%

3. EducatIon Matials 8.9 100%

4. OLher urne, Veicles, & Equipent 3.5 100%

S. Cosulta Servces, Trainingand Studies 3.7 100%

6. accrmentda Opeating Casts2:

(a) of MOE 0.9 100%(b) of th SRPU 0.1 100%

7. Project Prepaton Advce 0.2 Amount due

8. Unallocated 3.2

IDA lMisSehduule(US$ MilUao)

i22 m ~ i im mAmount Disbursed 1.9 3.8 9.0 9.3 6.7 1.3

umulave hAmou 1.9 5.7 14.7 24.0 30.7 32.0

Pe _ena of Total 6 18 46 75 96 100

v/ NNtoftaxee

~f ncldesoffice afiplss wu and travL.

Page 1If 1

ZAMA

EDUCATION RIHADllO POJC

Timetble and Kay rcimng SIM

(a) Time taken to prepare Project 14 months

(b) Prepared by IDA (AF6PH)3/ I Ministry of

Education, Zambia

(c) First IDA mission June 1991

(d) Appraisal Mission April 1992

(e) Negotiations August 1992

(f) Planned Date of Effectiveness November 1992

(g) List of Relevant PCRs and PPARs PCR report mumber 10677 (1992)

PCR report number 5551 (198)

PCR report numbar 5552 (1985)

PPAR report number 4508 (1983)

Ruoth Kgia, Taik Manag.t Steen Jorgasmn, Boomia and Mesdkeun Mulatu, Financial Analyst incm colaboraio widt a team from the Ministry of Educaton, Zambia

27 -

$CAMEDZ DPage of 3

S1tat Of Bs* Growa Orat ion In ZAWIAPF115 - SANIY StatuInt Of Los ad 10D Credlts(LOA dta as of /30/92 - MiS data as of 06/1V92)

By Cottrycitry: ZAMiA

At In LrAUS el I Ion(IeSS ca=llatlns)

Lo or Fiscal Lldis- ClosingCredit No. Year 8Brrower Puros Ba* IDA bursed Oate

Credits

19 Credits(s) closed 461.76

C14370-ZAM1 1S64 ZA1A FORESTRY III 22.40 8.23 6W/92(R)C15290-ZAM 1905 ZMBIA FIMIES 7.10 8.16 131/91(R)C15750-ZAM 1965 ZAWIA RUYS.IV 20.00 25.17 06/92(R)C187S7ZAJ 1986 ZAUIA TAS II 8.00 7.02 1231/92CC17430-ZAM 1867 ZA&SIA COFFEE II 20.40 22.72 06/30/95C17460-ZAM 1867 ZAWSIA AGR. RES.& EXT. 13.00 14.02 12/31/95C17530-ZAU 197 ZAWiA Q9Z III 10.00 12.00 06/30/92C22690-ZAM 1991 ZAWSIA MINING TAS 21.00 21.51 W0I3I7C22730-ZAM 1991 ZASIA SOCIAL RECOVERY PRMJ 20.00 17.05 01/31/97C22142ZAM(S) 1992 ZWIA RECOVERY CRIDT 10.00 1.05 0/01/93c24050-ZAm(S) 1992 ZASBIA PRIVATIZATION/IN. R 2D0.00 211.14 06/30/94C24C60-ZAJ 1992 ZMIA PIRC TEOUICAL ASSIS 10.00 10.56 1231/97C24220-ZAM 1993 ZWBIA VTB. & PROCESS. 33.00 33.00

TOTAL nuosr Credits * 13 394.90 391.64

LOnSS

28 Loam(s) closed 512.13

All closed for ZAUIIA

TOTAL nMWr Louis * 0

TOTAL*" 582.13 . 862.68of ,Eich raId 360.38 1.31

TOTAL hold by Bar* & ICA 221.7? 861.35AOnt sOld 28.58

of idhlch repld 28.58

TOTAL Uidisbursed 391.73

HotS:

* Not yet effectivea'Not yet timed

Total Awroved, RePanuts, and tstding balan reprnt bhactive ard irnctiv Lom Ad Crdits.(R) Indicates foa I ly revised Closing Mte.(S) Indicates 5AU/SECAL Lons ad Credits.

Ihe Not Arooed and B* RapayMnt ar historical valUh, all others WS rt wIUs.

Tm Slglng, Effective, d Closing date ae bmsd mn tr Loan Deartant off loal data ad are not tamfrco thi Ta* SEdpt file.

I.-4o~~t

5it-X X1c cT|||} g WE&SEtSES|§FW~~~~~~~~~~~~~~'

@ ~ ~ o~ p . st |888888t

'S~ ~~ g. 1i

a, [0

-29-Peo 3 qf3

ZAMBIA

STATEMENT OF IFC iNESTMENT

as of July 31, 199*

rw_t PY bigor Busness Loan Equity Totl

Number -USS wmiion-

216-ZA 1972

250-7A 1973 Zsmbia BaoS Shoe Shoes 2.1 0.2 2.3

307-ZA 1975

394-ZA 1978 Cenutu Productions LAd. Pbstic Wrap 0.9 0.2 1.1

324-ZA 1976 Davt Bank of Zambia D.vt FQSna 0.5 0.5

632-ZA 1982 Ethanol Co. of Zambia 110 3.7 0.6 4.3

1001-ZA 1988 Gwembe Vally Dv't Food/Food Pro 3.7 0.8 4.5

1U32-ZA 1989 Mastock (Zambia) Food/Food Poc 8.2 8.2

527-ZA 1980

721-ZA 1985 Kafie Textiles Texie 10.7 10.7

743-ZA 1985 Mpoagws Dov't Co. Food/Food Proc 1.8 0.3 2.1

709-ZA 1984 Zambi Hotl Pop. Tourism 22.4 22.4

483-ZA 1980

60-ZA 1982 ZCCM Mining 53.1 53.1

Total Gros8 Commitments 106.6 2.6 109.2

Less. Cancetio e, tnnnonaw echagoe u- . repaymets,wteoff., and syndicte sae

52.1 2.4 54.5

Totatl oommbm hed by IPC 54.5 0.2 54.7

Total undisbursed 6.5 0.0 6.5

Toal disbursed " 48.0 0.2 48.2

NO ca hbave oCCUrod e S l,: IN em et

halud Paic4pAton

I B RD 115421

REPUBLIC OF ZAMBIA --- :S fo_

POPULATION DISTRIBUTION ' T A, N Z A N I A

t9S CENRSUS: - Rodt )-J

One dotne rqeVm, 500 ppemseq -* Rallways I V4)0r*k

Town pop: iof-i cns_IQ.000 ; ~RiversMbsh50.000 gm SWOS wmvs

\ '- 'e 100,000 + Airfields

't ( ') 200,000 ---- Provincial boundarers

Iw A hlA } {pt _ 1\~~~~~~_* ZAIRE! 3 o A P U 4, f

*-1internot- nal bOundarieN0 "O R

A\

k I t 4 ~~~~W E S T F N '' . |r s a~~~~~~~~~~~~~.COPPER8ELT + k I -s ~e ¶> j

1m C E N T R A L )

* - OZ A M I Q U E

w 1O5~~~~~~~~~~~~~~~~~~~~~~~~~~~SO*K KNY 7! ; : ~~~~/ N -, Aut * -ANZANI

N A M I A

ZIMBABWE /e