Cooperation in International Waters in Africa: Annual Report FY2018

Results by Project or Basin – Zambezi

OUTCOME AREA 2. Shared data, knowledge, and analytical tools enable timely, transparent, and regionally beneficial decision making.

Decision Support: The Zambezi Watercourse Commission (ZAMCOM) has made progress with the Decision Support System (DSS), legal studies, and strategic plan, which are all interlinked and address river basin development from different and complementary perspectives.

Phase I of the system design for Zambezi Water Information Management System (ZAMWIS), a DSS for the Zambezi River Basin, was completed in July 2016 and is one of the initiatives meant to operationalize the ZAMCOM agreement. ZAMWIS comprises an integrated system that includes a data collection platform linked to member states’ data collection platforms and management systems, a knowledge portal and time series data, along with a platform for spatial data. The second phase currently underway entails the design and operationalization of the DSS, including modules for monitoring and forecasting, reservoir operations, and planning. The first ZAMWIS DSS training, as part of its development process, was held in Harare in June 2018. The training brought together 31 participants from eight riparian countries for five days of training in the use of the Hydro Basin model and other functions of the system. ZAMWIS will support the member states in improved decision making on water resources planning and operations amid increasing climate variability, decreasing resource predictability, and increasing demand from competing water users. The improved ZAMWIS is also expected to facilitate implementation of the Procedures for Notification of Planned Measures adopted by ZAMCOM. ZAMWIS is also designed to enable timely and informed water management decisions through forecasting and early warning systems, along with longer-term planning and management of the basin’s water resources through the application of integrated basin models and information management systems. ZAMCOM will employ forecasting and analysis from ZAMWIS, informed by national data and development plans, in facilitating the basin-wide strategic plan for the member states to cooperatively manage and develop shared water resources.

OUTCOME AREA 1. Strengthened, adaptable, institutional structures enable robust water management amidst growing uncertainty due to climate change and competing demands for water.

Legal Studies: Legal equivalence studies meant to inform the process of the harmonization of laws associated with the Zambezi Watercourse States as required under the ZAMCOM agreement have been completed and are awaiting final approval. A compendium of water-related policy and legal instruments from the member states has been compiled. Gap analyses, including a comparative assessment of the ZAMCOM agreement, have been carried out to assess the degree of equivalence and identify any potential areas of conflict. Final outputs have been completed and include equivalence assessments of national water laws among riparian states in the Zambezi River Basin, a comparative assessment and gap analysis, and an options paper outlining key options and modalities on how to improve harmonization and equivalence of the national legal frameworks related to water resources in the basin. The outputs have formally been approved by the ZAMCOM Technical Committee of Member States, and the next step is to operationalize them which requires more investments. These studies will inform the form and character of future institutional structures associated with infrastructure development across the basin and the SADC region.

Strategic Planning: The strategic plan is almost complete. It is being carried out in four phases – inception, diagnostic assessment, basin development scenarios, and basin investment scenarios. The diagnostic phase has been completed, including the situation analysis and strategic direction reports. The activity is being carried out through a consultative process that primarily relies on national and basin-wide committees established under ZAMCOM to facilitate communication and consultations. Other consultative arrangements include workshops with government officials and other representatives with legitimate interests in each of the member states. The diagnostic phase identified five major issues affecting the basin including 1) persistent poverty, 2) the appropriate management of competing uses, 3) an infrastructure deficit, 4) environmental degradation, and 5) a lack of climate resilient development to manage disaster related risks. Member states have agreed to focus on addressing the infrastructure deficit and increasing regional and basin-wide collaboration through ZAMCOM for watercourse management as guiding principles for the development of future planning scenarios.

OUTCOME AREA 2. Financially and institutionally sustainable regional organizations provide effective water management services to countries.

Financial Sustainability: The Permanent ZAMCOM Secretariat, hosted by Zimbabwe, was established in 2014 and is making progress toward financial sustainability. Following the 2016 endorsement by the Council of Ministers of a shared definition and cost of its minimum functionality, member states have increased contributions from US$25,000 in 2016 to US$70,000 in 2018 and committed to increase these by US$10,000 each year up to US$100,000, the agreed target. Governments will need to honor these commitments for ZAMCOM to develop into a sustainable institution and allow for the establishment of a reserve fund to finance contingencies. The sustainability of ZAMCOM is still a work in progress but is moving in the right direction. Central to long-term financial sustainability is ensuring that ZAMCOM continues to build on the momentum toward institutional sustainability by ensuring that it realizes value for money and delivers on the key water resource management and development issues among the member states.

Communication: A ZAMCOM communication strategy, which was informed by a mapping of its stakeholders and approved by the Council of Ministers, is now guiding development of targeted communication products around the principles of sustainable development and utilization, harm prevention, inter-generational equity, and cooperation, among others. The products inform part of a public information program that creates awareness at the regional and national levels as an essential basis for cooperation. In addition, stakeholder coordination committees were established at the inception of ZAMCOM, both at regional and national levels. These coordination committees, comprising government officials, NGOs, and civil society representatives, are being used as a conduit for the participation of legitimate interests in the development of the strategic plan for the basin.

OUTCOME AREA 1. Improved technical and resource mobilization capacity enhances investment quality and advances preparation of regional projects.

Institutional Strengthening: RGI will include an institutional component to support regional capacity in groundwater development and management by identifying institutional needs and regional cooperation opportunities. The institutional component will identify institutions with responsibility and interests in groundwater management along with any associated capacity gaps. Weaknesses identified therein will be targeted, and capacity building and regional cooperation will be promoted by facilitating activities such as pilot programs, study tours, and inter-institutional engagement. Some activities under this component will focus specifically on the nexus between groundwater and drought resilience and on transboundary cooperation. Some capacity building activities proposed will be more tailored to state-level needs. The institutional component will also include different sub-activities that aim to strengthen capacity of the IGAD Water Unit for the overall coordination of the project.

OUTCOME AREA 2. Financially and institutionally sustainable regional organizations provide effective water management services to countries.

Feasibility and Impact Assessment Studies: The engineering, environmental and social, legal and transaction advisory studies for the Batoka Gorge Hydro-Electric Scheme (HES) will be completed in 2019. The geotechnical investigations have been completed, along with the draft Environmental and Social Impact Assessment Report (ESIA) and the draft Environmental and Social Management Plan. The panel of experts financed under the Kariba Dam Rehabilitation Project are also responsible for reviewing and providing guidance on these studies.

Financial Sustainability: With CIWA support, the Zambezi River Authority (ZRA) explored several alternative project development models. The Council of Ministers has endorsed a three-in-one development model involving 1) public financing for the dam, 2) a special purpose vehicle for the north bank power station, and 3) a special purpose vehicle for the south bank power station. This model was found to be the right balance between public control and financing of the dam and the ability to mobilize private finance in support of special purpose vehicles able to raise finance against future revenues. The ZRA, with the support of the transaction advisers, has participated in a series of consultations to assess the appetite for financing the Batoka Gorge investment. The AfDB was appointed by the two governments of Zambia and Zimbabwe as the Lead Financial Arranger and will work closely with the ZRA and the countries to further develop financial structuring for the planned investment. The World Bank’s technical support and the AfDB’s financial guidance can be leveraged to secure private sector confidence for financing of the two power stations.

In order to understand the bigger-picture affordability and macroeconomic ramifications of the scheme, the Bank has supervised a Macroeconomic Assessment of Public Investment Options (MAPIO). The MAPIO model assesses the impact of the program in two ways: 1) the increase in demand that occurs as a result of the program’s implementation and 2) the additional impact on the economy’s output as a result of the program’s completion.

Basin Perspective: Concomitant analytical studies supported by CIWA have leveraged additional support for improved implementation of investments in the Zambezi Basin. Additional grant financing from Sweden improves coordination among dam operators in the Zambezi Basin, ZAMCOM, national power utilities, and the Southern Africa Power Pool, primarily by cultivating understanding and application of the Hydropower Sustainability Assessment Protocol as a tool for sustainably developing hydropower in the Zambezi Basin. This will help ensure that the technical studies are completed in a robust manner, to ensure that the countries and potential investors have a technically sound and robust analysis on which to base future design and financing decisions. Under this parallel work supported by the World Bank, training, capacity building, and a platform for dialogue are provided to operators in the region to strengthen their understanding of and ability to sustainably design and operate hydropower schemes. As part of this work, the ZRA has completed a self-assessment of the Batoka Gorge scheme and is now integrating some of the lessons learned into the preparatory studies underway. The grant financing is also providing support to the development of a dam break analysis for the Zambezi River Basin. This has been contracted by the ZRA as part of the Kariba Dam Rehabilitation Project but is being implemented jointly by the dam operators along with the Zambezi Watercourse Commission. This builds on the detailed topographic LiDAR data acquired through a range of parallel activities, including a U.K. Department for International Development (DFID) contribution to the World Bank-financed National Water Resources Program in Mozambique, the IDA-financed Water Resources Development Program in Zambia, and additional surveys financed under the Zambezi River Basin Program.

Climate Resilience: Innovative approaches to decision making under uncertainty will support the ZRA and the countries as they consider how to design and operate the Batoka Gorge HES as the climate changes. Resilience of the Batoka Gorge HES investment to climate change and other development-related factors is an important consideration during preparation of the bankable design. Additional study and support is needed in relation to this preparation, particularly related to the potential impacts of climate change on the flow in the Zambezi River and planned upstream abstractions. A CIWA-supported study is underway that will provide a detailed assessment of the effects of climate change on the daily expected inflow for the HES and the effects that change may have on robustness of the selected design and operational parameters. It will be necessary to set those changes in runoff in the context of other performance risks such as upstream land-use changes and water abstractions, energy price fluctuations, and development scenarios. Extreme flood and drought must also be considered as their likelihood increases as the climate changes. The analysis will complement CIWA support provided to both the ZRA and ZAMCOM as it will also investigate the role of the Barotse Wetlands in attenuating the hydrological variability in the Zambezi basin and provide an initial examination of hydrological boundary conditions or trigger points for financial products that could be used to offset hydrological risk.

OUTCOME AREA 2. Coordinated investment planning and inclusive stakeholder engagement ensures equitable benefit sharing and effective risk management.

Design Coordination: Through CIWA support, the ZRA is facilitating coordination between the engineering design and ESIA teams to conclude the two studies in a harmonized manner. In this way, trade-offs can be considered under different design options to jointly achieve a shared design plan that presents an agreed design solution balancing engineering, social, economic, and environmental aspects.

Institutional Arrangements: CIWA-supported technical assistance and transaction advisory services for Batoka Gorge HES have helped the ZRA evaluate options for structuring ownership and finance of the Batoka Gorge infrastructure and plan for required resource mobilization. This builds on earlier World Bank-executed analytical work to explore a range of options for institutional evolution of the ZRA and alignment with the changing nature of institutions in the basin with the establishment of the Zambezi Watercourse Commission. In close collaboration with the ZRA and the two governments, transaction advisers facilitated the evaluation of options for the dam and two power plants based on the ability to finance them, risk management, cost over lifetime, innovation capacity, economies of scale, and competitive tension. Future work on financial structuring will be led by the AfDB, appointed by the two governments as the lead financial arrangers.

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