The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
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Program Information Document (PID)
Appraisal Stage | Date Prepared/Updated: 02-Feb-2025 | Report No: PIDPA00198
The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
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BASIC INFORMATION
A. Basic Program Data
Project Beneficiary(ies) Region Operation ID Operation Name
Zambia Water Supply and
EASTERN AND SOUTHERN
Zambia P509550 Sanitation Services in
AFRICA
Growth Centers Program
Financing Instrument Estimated Appraisal Date Estimated Approval Date Practice Area (Lead)
Program-for-Results
30-Jan-2025 20-Mar-2025 Water
Financing (PforR)
Borrower(s) Implementing Agency
Ministry of Finance and
National Planning, Ministry
Republic of Zambia
of Water Development and
Sanitation
Proposed Program Development Objective(s)
The Program Development Objective is to improve water sector accountability and strengthen the operational
efficiency and financial viability of selected water supply and sanitation commercial utilities
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COST & FINANCING (US$, Millions)
Maximizing Finance for Development
Is this an MFD-Enabling Project (MFD-EP)? To be decided
Is this project Private Capital Enabling (PCE)? No
SUMMARY
Government program Cost 180.00
Total Operation Cost 25.00
Total Program Cost 22.50
IPF Component 2.50
Total Financing 25.00
Financing Gap 0.00
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
FINANCING
Total World Bank Group Financing 25.00
World Bank Lending 25.00
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Decision
The review did authorize the team to appraise and negotiate
B. Introduction and Context
Country Context
1. Zambia is a landlocked, resource-rich, sparsely populated country at the heart of Southern Africa. The country
has a total area of 752,614 km2 and borders the Democratic Republic of Congo, Tanzania, Malawi, Mozambique,
Zimbabwe, Botswana, Namibia, and Angola. The population, much of it urban, is estimated at about 19.6 million with a
growth rate of 2.7 percent per year.1 Zambia ranks among the countries with the highest levels of poverty and inequality.
The country’s Human Development Index places it at 154 out of 191 countries and territories.2 Zambia’s growth has been
volatile, with the country achieving middle-income status in 2011 and then slumping by 2019 to the lowest growth in two
decades, resulting in the country’s reclassification as low income in 2022. Economic growth has fluctuated due to
vulnerabilities in agriculture and mining.
2. After four years, Zambia is nearing the completion of its debt restructuring, but fiscal and debt pressures
continue, exacerbated by climate-related shocks with significant impacts on economic growth. The Government of the
Republic of Zambia (GRZ) reached agreements with bilateral creditors and international bondholders in 2023 and 2024.
Despite these developments, Zambia will remain shut out from international markets in the near term, and financing will
be limited. In this tight financial situation, improving fiscal management and climate resilience is essential.
3. Over the past 40 years, changes in temperature and rainfall patterns have resulted in more frequent weather-
related disasters such as floods, droughts, and landslides with a profound impact on Zambia’s economy and people’s
well-being. A World Bank report3 highlighted a sequence that implies that the country experiences drought every 4 to 5
years, and intensified droughts due to projected climate conditions could lead to between US$29 – US$180 million losses
in the agricultural sector. The country is also prone to seasonal floods and flash floods, which have increased in severity
and frequency in recent decades people. In February 2024, a national disaster was declared due to a drought in the
central-southern half of the country, resulting in crop failure and food shortage affecting over half of the population, water
scarcity, and energy crises due to reduced hydroelectric power generation. In addition, the country has faced a cholera
epidemic since late 2023, resulting in over 23,000 cholera cases and 740 deaths countrywide. As poor water quality and
droughts contribute to the spread and severity of cholera and other waterborne diseases, climate change also poses a
threat to human health. Because of all these factors, real gross domestic product (GDP) growth is projected to drop from
a 2021–23 average of 5.6 percent to 1.2 percent in 2024.
1 World Bank. 2023. World Development Indicators database. https://data.worldbank.org/indicator/.
2 Zambia Statistical Agency. 2023. Highlights of the 2022 Poverty Assessment in Zambia.
3
Zambia Southern Africa Drought Resilience Initiative (SADRI) climate profile (CIWA)
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
Sectoral and Institutional Context
4. In the 1990s and early 2000s, Zambia’s water supply and sanitation (WSS) sector underwent significant reforms,
but these changes yielded limited results. Two major national programs, the National Rural Water Supply and Sanitation
Program (NRWSSP) and the National Urban Water Supply and Sanitation Program (NUWSSP), have faced challenges in
meeting their goals. The 2005 NRWSSP and the 2011 NUWSSP were exclusively focused on large-scale infrastructure
development with no emphasis on service provision, operations, and maintenance. This limited oversight has resulted in
continued considerable water losses and hindered progress toward improved coverage. Sanitation initiatives have
similarly struggled from underinvestment, and open defecation rates have remained stagnant at 19 percent for a decade.
5. As it stands, access to basic WSS services among the Zambian population is concerning. In 2023, only about 68
percent of the total population had access to basic water supply, and about 36 percent had access to basic sanitation. 4
Despite some progress, the pace of improvement in access to basic services is outstripped by population growth and the
impact of climate change. 5 Where services are available, the quality and quantity remains inadequate, particularly in rural,
small-town, and peri-urban areas. This situation has resulted in health crises such as cholera outbreaks, in 2017-2018, and
2023-2024. Furthermore, inadequate WSS access is linked to high child mortality rates, as diarrhea alone accounts for
approximately 10 percent of deaths among children under five, and it is also a factor contributing to stunting.6
6. Zambia’s WSS sector urgently needs public health and economic investments; the sector currently is managed
by 11 commercial utilities (CUs) across the 10 provinces urban areas. Since 2020, the Government has delegated service
delivery responsibilities to these CUs. While local authorities (LAs) remain accountable to their communities, they have
devolved WSS management to CUs. The Ministry of Water Development and Sanitation (MWDS) plays a significant role in
appointing CU boards, while the National Water Supply and Sanitation Council (NWASCO) serves as an independent
regulator. A governance and institutional assessment by the World Bank revealed that the appointment processes for the
CU Boards of Directors do not ensure sound governance.7 There is also a need for the GRZ to establish the criteria and
processes for allocation of financing that meet both the objectives of equity and efficiency.
7. The World Bank’s systematic review of the NUWSSP highlighted several bottlenecks that hinder effective WSS
service provision. Inefficiency of service providers, coupled with fragmented governance due to decentralized mandates,
has created significant sector performance barriers. Chronic inefficiencies in the CUs stem from low cost recovery, high
non-revenue water (NRW) levels, and low staff productivity, which collectively place a physical burden on public resources
and hinder service expansion. Institutional challenges and governance issues have resulted in weak accountability and
operational inefficiencies in service delivery. From 2001 to 2017, the combined loss for the 11 CUs due to elevated levels
of NRW and low bill collection efficiency is estimated at around US$858 million, which corresponds to the total investment
needed annually for the sector.
8. The financial sustainability of CUs has been further compromised since 2016, with their revenue and cost
recovery ratios declining significantly, exacerbated by the economic impacts of the COVID-19 pandemic. Consequently,
4 Joint Monitoring Program 2023.
5 Climate change impacts on WSS include, among others, the following: droughts reduce the availability of surface and groundwater resources; rising
temperatures (warmer waters) can lead to algal blooms, which reduce water quality and increase treatment costs; intense rainfall events wash
pollutants, chemicals, and sediments into water sources, likewise raising treatment costs; and higher temperatures and water scarcity can damage
infrastructure, causing service disruptions.
6 IHME (Institute for Health Metrics and Evaluation). 2016. GBD Compare Data Visualization. Seattle, WA: IHME, University of Washington
(accessed November 25, 2019), http://vizhub.healthdata.org/gbd-compare.
7 The report found some evidence to suggest that changes in boards have been made based on political considerations rather than on the interests
of the sector.
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
CUs have struggled to raise capital and thus remain dependent on public funds, which consist of concessional loans and
limited grants.
9. Moreover, Zambia’s CUs have not adjusted their tariffs since 2019, creating an unsustainable financial
environment threatening the WSS sector stability. WSS operational costs have surged dramatically since 2019, making
the CUs’ situation increasingly untenable and thus delaying necessary capital investments and maintenance. Lack of
operation and maintenance (O&M) funds results in a vicious cycle for CUs, where the lifespan of assets is shortened and
O&M cost increases. Deferred capital investments and maintenance means that the country is falling further behind in
the provision of clean water and sanitation services, exacerbating adverse health and economic conditions. CUs are
struggling to fulfil their financial obligations, with debt to statutory bodies and suppliers rising from ZMW 485 million in
2019 to 2.2 billion in 2023, equivalent to US$85 million. This situation could result in a system failure. Additionally, since
2024, consumers are experiencing reduced daily water supply due to load shedding and lower water tables, caused by
2024 drought impacts.
10. In response to these recurrent challenges, the Zambia Water Investment Program (ZIP) was introduced in July
2022, aimed at overcoming deficiencies in previous programs by enhancing water security and sustainable sanitation
across the country.
11. In summary, the WSS sector in Zambia is at a critical juncture. While reforms and initiatives like the ZIP aim to
enhance service delivery and sustainability, substantial challenges remain, including governance inefficiencies, inadequate
infrastructure investment, and an urgent need to address tariff sustainability. Coordinated efforts between the
government, regulators, service providers, and the community will be essential to improve access to more climate resilient
WSS services and enhance the overall health and economic well-being of the Zambian population.
PforR Program Scope
Summary of Ongoing Government program
12. The Government program, the ZIP, aims to ensure national water security and sustainable management and
utilization of Zambia’s water resources for socioeconomic development by 2030. The program, to be implemented at a
cost of US$5.75 billion from 2022 to 2030, aligns with the 8th National Development Plan. To ensure national water
security the program not only increases access to physical infrastructure but also targets investments on human and
institutional capacity building and mobilization of non-public financial resources.
Program Boundary and Results Areas (RAs)
13. The proposed Program for Results (PforR) will support part of the ZIP over a five-year period (2025–2030). To
maximize the Program’s transformative effects, its geographic reach will be restricted to 4 of Zambia’s 11 CUs, Kafubu
Water and Sanitation Company Limited (KWSC), Luapula Water Supply and Sanitation Company Limited (LpWSC), North
Western Water Supply and Sanitation Company Limited (NWWSC) and Western Water Supply and Sanitation Company
Limited (WWSC). The Program will contribute to results under Components 3–9 of the ZIP, focusing on increasing access
to WSS in urban areas and efficiency of urban service providers, building climate resilience, enhancing environmental
sustainability, enhancing gender and social inclusion, addressing human capital gap in the sector, tracking and mobilizing
financing, and strengthening the enabling environment for PPPs and international cooperation.
14. The proposed Program is a hybrid PforR with an Investment Project Financing (IPF) component. The total cost
of the operation is US$25 million. The PforR component cost is US$22.5 million. Due to the debt situation in Zambia, no
government contribution is expected. The IPF component consists of US$2.5 million to provide technical assistance,
capacity development, and program delivery support to key implementing agencies (IAs).
15. The PforR scope centers on two RAs:
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
• RA 1: Sector Governance Reforms. This RA will enhance CUs’ governance by incentivizing MWDS
accountability and compliance with best practices in their oversight and supporting role. This includes
defining, adopting, and disclosing a set of performance-based criteria for annual and timely budget support
to Commercial WSS utilities and compliance with the Companies Act No. 10 of 2017, amended articles of
association No. 15, that specify the composition of the boards and the appointment of their members.
• RA 2: Service Performance Improvements focusing on supporting implementation of measures identified in
the ZIP, CU strategic plans, and Technical, Commercial and Organizational Inefficiencies (I-TOC) analysis for
improved data collection and application to enhance operational systems and efficiencies, all of which are
expected to reduce losses and strengthen revenue collection while optimizing the CUs’ costs and achieving
positive OCCR. This RA will also incentivize better access to at least basic water supply thus increasing
revenue and the customer base for the selected CUs.
16. Disbursement Linked Indicator (DLI) 1 aims to improve the accountability mechanism within the MWDS
regarding the budget support given to CUs and the appointment of their Board of Directors. A first result will give
incentives for the MWDS, in close collaboration with NWASCO, for defining, adopting, and disclosing a set of criteria for
annual and timely budget support. This will help CUs improve their budget request proposals to MWDS, based on
transparent and well-known criteria, improving predictability of GRZ funds for CUs. The second result will incentivize
MWDS, LA, and CUs’ shareholders to annually adhere to the articles of association for each CU under the Companies Act
No. 10 of 2017, amended articles of association No.15 - Directors which govern the composition of the board and how the
directors shall be appointed and define their terms.
17. To improve the CUs’ operational efficiency and financial viability, DLI 2 provides incentives for the four CUs to
design, prepare, formally adopt, and disclose PIAPs as the primary vehicle for implementing reforms and actions aimed
at enhancing the operational efficiency and financial viability of the CUs. PIAPs will serve as part of the CUs’
business/strategic plans and provide a road map for substantial performance improvements. They will incorporate a series
of key performance indicators (KPIs) that represent the main variables for improvement. Based on the Utility of the Future
(UoF) diagnostic and outputs,8 the Program Assessments, and the I-TOC analysis, the PIAP will include minimum content
acceptable to the World Bank.
16. The estimated number of direct beneficiaries under the Program is 95,800 people, of which 82,540 will benefit
from access to at least basic water services and 17,260 from improved sanitation facilities . The number of indirect
beneficiaries in areas served by CUs whose efficiency and financial viability will be improved is 1,787,000. The Results
Framework and intermediary results indicators tables are provided.
Role of development Partners
Actions Identified to Be Implemented
Name of Partner Nature of Involvement/Description
within the Program
WASH Troika (African Advocacy for tariff adjustment or equivalent Incentives for setting PIAPs and
Development Bank [AfDB], mechanism to support CUs’ financial viability improving the OCCR
German Cooperation, World
Bank) + UNICEF
Studies and works for services extension and Strengthening the monitoring system
AfDB monitoring improvement in Luapula and and extending the water production
Western Water capacity in Luapula and Western
8 UoF has been implemented in each of these utilities between 2023 and 2024, and the close-out meetings have been completed for all the 11 CUs
in Zambia.
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
Actions Identified to Be Implemented
Name of Partner Nature of Involvement/Description
within the Program
Assessment of existing Enterprise Resource Procurement of the ERP/billing system
Planning (ERP) and billing systems of seven CUs, recommended and implementation
of which Luapula
EU/KfW/GIZ/UNICEF (NEWZA)
Financing and implementation of
Data maturity assessment for six CUs (of which
recommended actions for strengthening
Luapula)
data system and digitalization
Additional financing for solar system
GIZ Co-financing of solar system for NWASCO office
Potential to increase the partnership via
Support to LpWSC (through UNICEF) for
KfW a potential NEWZA II, which could
operationalizing the rural mandate
overlap all four selected CUs
C. Proposed Program Development Objective(s)
Program Development Objective(s)
18. The Program Development Objective is to improve water sector accountability and strengthen the operational
efficiency and financial viability of selected water supply and sanitation commercial utilities.
19. The achievement of the PDO will be measured through the indicators as follows:
• Outcome 1: Improved water sector accountability
o Performance-based criteria for budget support to CUs designed, adopted and disclosed (target:
Yes/No)
• Outcome 2: Strengthened operational efficiency and financial viability of selected commercial utilities
o Operation and Maintenance Cost Coverage Ratio (OCCR) (target: 100% Number).
D. Environmental and Social Effects
20. The ESSA assessed the Program’s E&S features, including (a) the adequacy of the country system to manage the
ESHS risks and impacts; (b) the system as prescribed and as practiced; (c) E&S compliance monitoring, reporting, and
feedback; and (d) the existence and effectiveness of the grievance redress mechanism (GRM).
21. The scope of subprojects to be undertaken under the Program will cover small to medium scale infrastructures,
such as expansion and O&M support of water supply infrastructure, including the development of boreholes and surface
water intake sources, storage tanks, distribution network improvement, and last mile connections to households (under
RA 2). Potential E&S risks are linked to civil works subprojects which include vegetation clearing; generation and unsafe
disposal of construction waste; soil and water pollution; increased demand for water for construction; obstruction of
access roads/paths and increased road accidents; community and occupation health and safety incidents; soil and water
pollution; disruption of existing infrastructure or services; land/wayleave acquisition without compensation; physical and
economic displacement; loss of livelihoods; labor influx; sexual exploitation and abuse/sexual harassment (SEA/SH); elite
capture/political interference; exclusion of vulnerable and marginalized groups and other vulnerable individuals and
groups from Program benefits; use of forced and child labor; inadequate stakeholder engagement and information
disclosure; social conflict over scarce resources; ineffective management of labor risks;
ineffective/inadequate/inaccessible GRM; weak ESHS capacity of IAs; and institutional ESHS gaps identified in the ESSA.
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
22. To mitigate the Program’s ESHS risks, the exclusion principles for PforR programs a re applied and mitigation
measures included in the PAP. High-risk investments which are sensitive, or which have likely significant, adverse, or
unprecedented impacts on the environment or people, for example, large dams or resettlements affecting over 200
people, are not financed under the WSS Program. Enhancing the Program’s ESHS risk management involves integrating
the following measures into the PAP: (a) actions to strengthen environmental, health, and social systems, including
adequate human and financial resources; (b) actions to build the capacity of implementation staff; and (c). actions to
strengthen environmental, health, and Sustainability Risk Management practice and monitoring.
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Legal Operational Policies Triggered?
Projects on International Waterways OP 7.50 TBD
Projects in Disputed Area OP 7.60 No
Summary of Screening of Environmental and Social Risks and Impacts of the IPF Component
23. The environmental and social risk classification is rated Moderate. Since the project is a hybrid of PforR and IPF,
the PforR activities relate to (i) improved efficiency of service delivery by CUs (ii) sector reform (iii) improved access to
water and sanitation services which have been covered by the Environmental and Social Systems Assessment (ESSA) of
the program, consistent with the core principles of the ESF. The IPF component will have two sub-components which are
(i) program management; and (ii) Independent Verification. The capacity building and TA will sit under the program
management subcomponent. The program management subcomponent will (iii) finance the TA to the MWDS and CUs to
implement and report on program activities (iv) support the MWDS to provide TA to the CUs and (v) TA to MWDS and CUs
to address gaps identified in the ESSA. According to the definitions of the OESRC Advisory Note Technical Assistance and
the Environmental and Social Framework (2019), the IPF component will include only Type 3 Strengthening borrower
capacity and TA because the Type 2 activities (supporting the formulation of policies, programs, plans, strategies or legal
frameworks) are likely to be covered under the PforR component. To ensure the Type 3 environmental and social risks are
controlled an ESMP will be developed during project preparation in line with the requirements of the Environmental and
Social Standards (ESSs). ESS 3, 5, 6, 7, 8, and 9 are not relevant because the potential resource efficiency, pollution
prevention, community health and safety risks are associated with the PforR component. ESS 2 and ESS 10 are relevant to
the IPF component because of the Type 3 capacity building and TA activities could heighten the risk of Covid 19
transmission, GBV/SEA/SH among workers and the need to ensure meaningful consultations are held with relevant
stakeholders.
E. Financing
Program Financing (Template)
Source Amount (US$, Millions) % of Total
International Development Association (IDA) 25.00 100%
IDA Grant 25.00 100%
Total Program Financing 25.00
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Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
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CONTACT POINT
World Bank
Ousmane Yida Yaya Bocoum
Senior Water Supply and Sanitation Specialist
Ruth Jane Kennedy-Walker
Senior Water Supply and Sanitation Specialist
Borrower/Client/Recipient
Republic of Zambia
Implementing Agencies
Ministry of Finance and National Planning
Mumba Chanda
Director Local Government Finance
mumba.chanda@mof.gov.zm
Ministry of Water Development and Sanitation
Romas Kamanga
Permanent Secretary
info@mwds.gov.zm
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 473-1000
Web: http://www.worldbank.org/projects
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APPROVAL
Task Team Leader(s): Ousmane Yida Yaya Bocoum, Ruth Jane Kennedy-Walker
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The World Bank
Zambia Water Supply and Sanitation Services in Growth Centers Program (P509550)
Approved By
Practice Manager/Manager: Francis Ghesquiere 08-Jan-2025
Country Director: Nathan M. Belete 02-Feb-2025
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