UK ONLY withheld funds to the Social Cash Transfer and Education Sector Budget Support Programme

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Minister of Finance Margaret Mwanakatwe has strongly expressed the Government’s concern about the reported financial irregularities surrounding the Social Cash Transfer Programme and the Education Sector Budget Support Programme. Speaking this afternoon in parliament when she responded to questions by Choma Central Member of Parliament Cornelius Mweetwa, Mrs. Mwanakatwe was said that

Mr. Mweetwa asked the Minister the following questions:

1) Whether the United Kingdom has frozen all bilateral funding to Zambia; if so why;

2) Which other countries have frozen their aid to Zambia;

3) What the impact of the frozen aid on the 2018 Budget is; and,

4) What immediate measures the Government is taking to mitigate the impact of the frozen aid.

In giving a background to the questions, the Minister stated that the United Kingdom (UK), through the Department for International Development (DFID) has been supporting Zambia in many areas. She outlined the major areas of cooperation as:

1) Zambia Social Protection and Expansion Programme (Social Cash Transfer) which provides small grants to vulnerable households to assist them with regular monthly incomes to meet their basic needs;

2) Education sector budget support;

3) Governance;

4) Conservation agriculture aimed at raising the productivity of small scale farmers;

5) Sanitation and hygiene;

6) Financial sector deepening;

7) Public financial management and anti-corruption initiatives aimed at improving financial management and revenue generation by reforming and modernizing core financial and management tax systems; and,

8) Technical support in the area of tax policy.

The Minister clarified to the House that the UK has withheld its financial assistance ONLY to the Social Cash Transfer Programme and the Education Sector Budget Support Programme. “SUPPORT TO OTHER AREAS HAS NOT BEEN AFFECTED,” she clarified.

Ms Mwanakatwe further said the donor’s action of withholding support was necessitated by reported concerns of financial mismanagement under the two programmes. Under the social cash transfer programme, the issues include possible cases of misapplication of funds; underpayment of beneficiaries; irregular payment of gratuities; non-adherence by Zampost to the signed Memorandum of Understanding [MOU]; and, insufficient capacity by Zampost to facilitate payments to beneficiaries.

In the education sector, the suspension of support is on account of cases of mismanagement of funds.

The Minister listed the Cooperating Partners rendering financial support to the Social Cash Transfer Programme as UK, Finland, Ireland and Sweden. She added that these are, therefore, the ones which from June 2018, have put their support on hold. Under education, The UK is the only Cooperation Partner that has suspended support.

The impact of withholding support to the 2018 budget is to the extent of the COMMITTED FUNDS FOR 2018 WHICH AMOUNT TO US$20 MILLION FOR SOCIAL CASH TRANSFER AND US$13.9 MILLION FOR THE EDUCATION SECTOR. No more.

The Minister strongly expressed the Government’s concern about the reported financial irregularities concerning the Social Cash Transfer Programme and the Education Sector Budget Support.

“We are confident that these matters will be addressed in a manner that is satisfactory to both the Cooperating Partners and the Government of Zambia,” Mrs. Mwanakatwe said, adding that once satisfactory corrective measures have been undertaken, “it is expected that funding will resume.”

She stated that the Social Cash Transfer Programme supports the most vulnerable households in the country. As a follow-up to the reports, the Government, through the Controller of Internal Audit, conducted a Risk-Based and Compliance Audit in Sixty (60) districts of the Ten (10) Provinces of Zambia where the programme is being implemented.

Arising from the Audit, Government will undertake to do the following:

1) Re-evaluate the payment and identification systems to ensure that the rightful beneficiaries are paid. We will consider benchmarking the payment system to the E-Voucher under the Farmer Input Support Programme;

2) All unpaid beneficiaries will be paid by end of 2018;

3) The government will review the agency agreement with Zampost and strengthen oversight over the whole programme through quarterly meetings at which the programme will be reviewed under a multi-institutional and donor represented committee; and,

4) Conduct a comprehensive forensic audit of the programme.

With regard to putting on hold of support to the Education Sector Budget Support, the Minister reported that the Government has instituted a Forensic Audit. Once the Audit has been concluded, appropriate corrective action will be undertaken. The report will also be shared with our Cooperating Partners.