We welcome you to this press briefing, which will focus on sharing Transparency International Zambia (TI-Z)’s analysis of the Special Audit Report on the Constituency Development Fund (CDF), done by the Office of the Auditor General. As you may be aware, we conducted a comprehensive analysis of the CDF Audit Report for the year ended 31st December 2023, in order to encourage improved local-level implementation of the CDF programme, through improved central government monitoring and public scrutiny.
We believe that this analysis and its publication will contribute to enhanced protection and accountability of public resources, and strengthened citizens’ demand for transparency and accountability in public resource management at local-level. In terms of approach, the analysis asks critical questions around the management of the CDF, including the capacity to utilize CDF allocations, the scale of corruption and mismanagement, and the major governance weaknesses. It is important to note that TI-Z did not collect this information directly from the constituencies, we simply made use of tables contained in the 2023 CDF Audit Report to rank the performance of provinces and constituencies with respect to the utilization of funds made available through the programme.
Our analysis reveals a concerning picture of limited capacity of local authorities, significant financial irregularities and governance weaknesses, as well as underperformance of constituencies in utilizing CDF funds. It is deeply concerning that despite increased CDF allocations over the past years, many constituencies have struggled to effectively utilize these resources. According to our assessment, less than 42% of the funds allocated for community projects were utilized, while 53% of the total CDF allocation remained unspent.
In terms of funds utilization across the provinces, 8 out of the 10 provinces had utilization rates lower than 50% on Community Projects and all the 10 provinces had utilization rates of less than 60% for the total funds made available. Therefore, this analysis reveals that there is limited capacity among local authorities and constituencies in implementing the CDF programme, thereby putting into question the political motive behind the annual successive increase in budget allocations.
Further, the 2023 Audit identifies three main categories of financial irregularities in the management of the CDF programme. These include the change of projects without approval, failure to account for funds and failure to recover loans. The highest irregularity in terms of value is failure to recover loans, at over ZMW254 million, as compared to failure to account for funds at ZMW8.3 million and change of projects without approval at ZMW9.4 million. Surprisingly, Lusaka City Council appears among the top 10 local authorities for all three financial irregularities assessed, while Mongu and Isoka Town Councils appear on two of the three categories. It is also notable that the majority of the top 10 councils failing to recover loans are in the ruling UPND party’s political strongholds, which raises concerns on possible patronage and abuse of the CDF programme by political elites.
The CDF programme also has critical weaknesses, which undermine the programme’s objective of delivering essential social and economic services to the Zambian population. These include ineffective budget monitoring, which has led to available funds remaining unspent at the end of the financial year; and weak monitoring and accountability mechanisms resulting in delayed implementation of projects and culminating in project backlogs. There is also poor contract management, lack of due diligence, and weak enforcement of penalties leading to abandoned projects after making advance payments to contractors. The prevalence of these governance weaknesses indicates that there is a high risk of financial leakages and corruption in all components of the programme.
In light of these findings, TI-Z recommends for the halting of any further increases in the budget allocation to the CDF programme until there is evidence of improved monitoring and institutional capacity to mitigate the high corruption risks and financial leakages. Further, we call upon local authorities to improve information sharing through community dissemination meetings, local authority websites and the media, on the status of project implementation. Given the findings on possible patronage in the CDF programme implementation, TI-Z calls upon the UPND administration to take action to eliminate the dominance of political elites in the CDF programme by encouraging broader and non-partisan participation of all citizens.
Following our dissemination of the preliminary findings from this analysis not long ago, several local authorities, Members of Parliament and other government officials have reached out to engage with us and to share additional information on the challenges they face in implementing the CDF programme. These discussions revealed that beyond local[1]level issues, there are critical governance and institutional challenges that require urgent attention if the CDF programme is to function effectively. These include:
- Government red tape in the approval processes: The lengthy bureaucratic approval processes for large contracts have significantly hampered the ability of local authorities to implement community projects. The delays caused by these procedural bottlenecks hinder timely service delivery, project completion and thus accounting for the lower utilization rate on community project funds. Further, the varying utilization rates across constituencies may also be due to the choice of projects, as construction-based projects suffer the most delays in the approval process as compared to other projects.
- Challenges with the Electronic Government Procurement (EGP) system: While the EGP system is an essential tool for enhancing transparency and accountability in the procurement process, local authorities noted that it is often unreliable, frequently experiencing downtimes that delay the uploading of tenders thereby exacerbating project implementation inefficiencies at the local level. Further, there is also limited capacity among users, including both public officials and suppliers or contractors, leading to difficulties and delays in managing procurement processes.
While the findings of our 2023 CDF Audit analysis resulted in a very positive and solution oriented discourse in some councils, other stakeholders have chosen to discredit our report findings—despite the fact that all the information we presented originates from the Auditor General’s official CDF Audit report. We reiterate that the Office of the Auditor General has a constitutional mandate to conduct audits as an essential accountability measure, and it is the role of civil society organizations like TI-Z to analyze and simplify these reports for public understanding, and we are happy that our analysis of the 2023 CDF Audit report has generated so much interest from various stakeholders.
As I conclude, we encourage all stakeholders, including policymakers, civil society actors, and the general public, to take keen interest in the findings of the 2023 CDF Audit Report. The full report is available on the Auditor General’s website, and TI-Z will continue to disseminate the key insights and infographics based on our analysis of this important document.
TI-Z remains committed to promoting transparency, accountability, and good governance in the management of public resources, and we urge the government to take swift action in addressing the inefficiencies and weaknesses in the CDF programme to ensure that it serves its intended purpose of fostering local-level development, as part of the decentralization agenda.
Thank you all for your attention, and may God bless Zambia.
Maurice K. Nyambe (Mr.)
EXECUTIVE DIRECTOR
