Case Study

Examining Budget Credibility in Zambia’s Agriculture Sector

Although Zambia’s agriculture sector historically has accounted for a significant share of the country’s employment and gross domestic product (GDP), that share has begun to wane in recent years. The sector’s contribution to GDP, for example, declined from approximately 10 percent in 2011 to 3 percent in 2020. Between 2017 and 2021, the sector contributed only 0.1 percent of real GDP growth. Currently, smallholder farmers dominate Zambia’s agriculture industry, accounting for over 80 percent of total agricultural output. These farmers, however, face a number of obstacles, including limited access to inputs such as seeds and fertilizers, inadequate market access, and low productivity. Furthermore, the sector is vulnerable to climate change, with irregular rainfall and rising temperatures affecting crop yields. 

While positive developments in the sector have been seen through increased access to finance for farmers and a range of other initiatives aimed at improving productivity–most of them focused on diversification, with a particular emphasis on high-value crops such as soya beans, wheat, cotton and tobacco, improved horticulture and livestock rearing/farming/breeding. Zambia still has a long way to go before it can boast a sustainable and inclusive agricultural sector contributing to Sustainable Development Goal (SDG) 2, which calls for “zero hunger.” 

To address the challenges facing the sector, the Zambian government has allocated substantial resources to agriculture in its annual budgets. However, the credibility of these budgets has been questioned with concerns over the effectiveness of spending and the transparency of budgetary processes. Findings from an earlier International Budget Partnership report, for example, revealed that budget deviations were highest in the agriculture sector, with spending at 236 percent over the budgeted amount. The education sector, by contrast, underspent its budget by 15 percent. At the same time, over-spending of the agriculture budget has not yielded the desired outcomes for the sector. Productivity has remained stagnant while very little progress has been made to diversify agricultural spending away from its current focus on maize, a low value crop. Instead, current policy approaches allocate much of the agricultural budget to subsidizing inputs for maize production and maize markets. 

This brief analyzes budget credibility challenges in the agriculture sector, particularly in light of the negative effects of climate change and the Covid-19 pandemic. The Ukraine-Russia war, as well as Zambia’s unsustainable debt position, also remain threats to achieving SDG 2. To assess the impact of these challenges, this brief used a mixed method approach, including document reviews of budget statements, annual performance reports, and reports by international organizations, as well as interviews with key stakeholders involved in budget formulation and implementation in the agriculture sector. The brief focuses on the period between 2019 and 2022, during which the Zambian government changed its approach to monitoring performance output, migrating from conventional, activity-based budgeting to output-based budgeting. This change limited the availability of reliable data. Despite these limitations, the available data pointed to trends and patterns influencing the agriculture sector’s performance.

This publication is a part of Exploring the Connections between Budget Credibility and SDG Implementation.

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