The report follows the diagnosticmethodology as outlined in Rajaram et al. The diagnostics isbased on interviews, a survey questionnaire with governmentofficials, central statistical office (CSOs), and privatesector and desk review of related documents. The paperidentifies the weaknesses in processes and institutions thatcontribute to poor outcomes of public spending. Thegovernment has been conducting a number of reforms in thisfield, such as overarching public financial management andprocurement reforms. However, the public investmentmanagement (PIM) remains largely inefficient and certain keyfunctions of project evaluation are missing or inrudimentary forms. To succeed, all the pieces of reformshave to be woven into a coherent framework targeting theweakest links in the PIM system. Multiple factors, includingthe absence of necessary institutions, unclear institutionalmandates, weak capacity, lack of vertical and horizontalcoordination, and misaligned incentives drive theinefficiency of PIM. This also implies that pure technicalsolutions do not guarantee success. As a result this papersuggests that strengthening of the challenge function of theministry of finance in Zambia is critical for better PIM buta gradual, incentive compatible approach is probablynecessary in the current context.
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