Northrise University

30029 Kitwe - Ndola Dual Carriage Highway. P.O Box 240271, Ndola, Zambia.

ASSIGNMENT COVER SHEET

Student ID: 1905368

Student Name: Mercy Munalula

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Instructor Name: Business Information Systems

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Declaration:
I acknowledge that submitting this document binds me to the following:
To the best of my knowledge, I assert that no part of this assignment has been copied from the work of anyone else, be it another stude
or any other author or from any source except where due credit is given in the text below, or has been written for me by someone else
except where the relevant instructors and authorities have explicitly permitted such collaboration .

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This assignment is going to discuss cost effectiveness analysis and describe how cost

benefit analysis can be used to help government choose among alternatives investment projects.

The remainder of this paper is structured as follows; In the first section, the paper will define

public finance. The next section will define a public good, followed by a description of cost

effectiveness analysis and how cost benefit analysis can be used by the government to choose

alternative investment projects. Then the fourth section will discuss how the benefits and costs

arising from a chosen project can be measured, and finally the conclusion in the last section. 

Public Finance

The function of the government in the economy is studied through public finances. The

economics branch evaluates government revenue and public spending, and adjusts them to

achieve the intended outcomes and minimize unwanted consequences (Trade Finance Global,

2020). Trade Finance Global (2020) further alludes to that to achieve a sustainable high rate of

economic development, public financing is essential. In order to boost both total demand and

overall supply, the government employs fiscal tools such as taxes, debt, and governmental

expenditure. The aim of this act is to stabilize and prevent market failure by striking a balance

between private goods, and public goods.

Public Goods

Economics refers to a public good as a good which is made available to all members of a

society. These services are usually handled by governments and collectively paid for through

taxes. examples of public goods are, enforcement of law, national security and rule of law

(donders, 2012, p. 9). In addition to this, it is worth noting that for a good to qualify as a public
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good, it should have certain characteristics. In that regard, the characteristics of a public good

are; non-excludable, non-rivalrous and non-rejectable.

The first feature of a public good being non-excludable implies that it is expensive or

impossible to exclude anybody from the use of the good (donders, 2012). For example, If Joshua

purchases a private good like a bottle of water, then Joshua can decide to exclude Andrew from

consuming the water. However, if national security is provided by the state, it is impossible to

exclude anyone from benefiting from it (2012, p. 12).

The second major feature that a public good has is non-rival, this implies that someone

can also use it when one uses the public good. If Joshua is consuming a bottle of water. With a

private good like a bottle of water, Andrew cannot consume it, such that. The two are rivals. The

consumption of national defense by Andrew does not decrease the amount left to Joshua. With a

public good such as national defense, therefore in this sector they are not competitive

(Samuelson, 1958). Further, for the government to provide these goods and services, they need to

way the costs and benefits of providing them to the citizens of the country.

Cost Benefit Analysis

The public sector reform initiative lies at the heart of Zambia's growth difficulty, poverty

persistence, and policy reform difficulties. Best practices in public-sector reform identify three

areas where governments can improve their performance and impact on the economy and the

poor: (1) macroeconomic discipline (the stabilization problem); (2) strategic priority setting (the

allocation problem); and (3) efficient public-service delivery (the execution problem). Zambia

looks to have a difficulty in all three areas. The overall performance, allocation, and execution of

the budget, in particular, are critical to the success of Zambia's public sector reform initiative.
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The current PER addresses all three aspects, notably the allocation and execution difficulties as

they pertain to public expenditure (BOZ, 2012).

Measuring the Benefits and Cost of Government Initiative.

In my opinion, the cost-benefit study was commissioned to determine whether there was

a relevant link between quality employment and investment in a labor-intensive sector. In 2011,

the education and health sector were labor-intensive and large, accounting for 86.8% of urban

employment, 66.7% of overall employment, and 12.6% of real GDP (CSO, 2012).

The country also has a vast endowment of fertile land (43 million hectares) as well as

abundant water resources that may be utilized for irrigation and hydropower to benefit the

agriculture industry. However, the industry has suffered from low production due to a lack of

technical expertise among many of the country's smallholder farmers. When these aspects are

considered together, the Zambian agricultural and livestock sector becomes a strategic target for

development efforts and investment promotion since it has the ability to alleviate poverty while

also generating money if productivity is boosted to acceptable levels (SNDP, 2010).

As a result, the incentive to invest in education outweighs the cost of growing an

economy with an uneducated population. Be that as it may, the issue here is whether investment

stimulated by government incentives through education will generate significant decent

employment in the agriculture and other vital sectors of the economy, when special investment

incentives were first offered for the sector (SNDP, 2010).