An analysis of local authorities' debt and arrears in Zambia
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Highlights
This report examines the accumulation of debt and arrears for all 116 Local Authorities in Zambia, analysing key factors contributing to their financial strain and evaluating policy interventions aimed at enhancing fiscal sustainability. The study covers the period 2022–2023, drawing on primary data from key informant interviews and secondary data from audited financial reports.
Over time, Local Authorities have faced increasing financial pressures, driven by historical policy shifts, reduced revenue bases, and rising expenditure needs. Decentralization efforts have not been fully implemented, leaving Local Authorities dependent on transfers form Central Government while struggling to generate adequate own-source revenue (OSR). The debt burden among Local Authorities has risen significantly, with total outstanding liabilities reaching K4.6 billion as of September 2023 — a 67.9% increase from June 2020.
The largest portion of this debt stems from pension arrears owed to statutory bodies such as the National Pension Scheme Authority (NAPSA) and the Local Authorities Superannuation Fund (LASF), as well as unpaid taxes and penalties owed to the Zambia Revenue Authority (ZRA).
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