Presented at: Vienna, July 2, 2009 Zambia: Governance, Political Economy and Development Strategy Presented at: Vienna, July 2, 2009 Presented by: Brian Levy Advisor PREM Governance

RELEVANCE FOR ZAMBIA: I “By and large, agreeing on policies and programs was the easy part of the Bank’s relations with the government. The really difficult part was and continues to be implementation.”. - Completion Report for 1999-2003 CAS => why?

SECTORAL REFORM IN ZAMBIA: PROPOSALS AND RESULTS

ZAMBIA: GOVERNANCE DRIVERS OF DEVELOPMENT DECISION-MAKING Authority is centralized in the presidency, which enjoys wide discretion. Checks and balances institutions create enough space for citizen voice to ensure that impunity is not unbounded An extreme tilt to the status quo is a consequence of Zambia’s ‘bounded impunity’ Elite economic nationalism is a resurgent part of Zambia’s developmenet discourse

ZAMBIA: HOW GOVERNANCE CONSTRAINTS INHIBIT SECTORAL REFORM

FEASIBLE WAYS FORWARD 1: GENERAL PRINCIPLES Seek out incremental POLICY reforms that are feasible given a country’s political economy realilties Stakeholder interests are key, and…. Stakeholders want better results for concrete goals that matter to them Draw on knowledge of economically ‘optimal’ policies …as a ‘north star’ to help navigate change… ….with the best route not necessarily the most direct one… Consider options for strengthening INSTITUTIONS ….institutions mediate between private interests and public goals… ….better policy and implementation with stronger capacity and accountability ….feasibility is also key for institutional reform

FEASIBLE WAYS FORWARD 2: ZAMBIA GOVERNANCE-ALIGNED SECTORAL REFORMS Focus engagement narrowly – targeting very specific interventions where development goals are aligned with incentives of Zambian elites Electricity generation: incentives of mining companies Telecommunications: cost-based interconnection Build local coalitions for change – organized around very specific interventions Urban water and electricity distribution Engage consumer groups and business associations

RELEVANCE FOR ZAMBIA II: A DIFFERENT APPROACH TO WBG ENGAGEMENT FROM…. …… ”should” ………… (prescription) TO ……. ….. ”why?” ………….(seek to understand) TO… “feasible next steps” .. (for poverty reduction), ..an approach, NOT a prescription…(more humility) …but not a recipe for inaction!!!